What skills and understanding do councillors need?

Councillors need specific skills to understand and ensure the robust scrutiny of transformation.

The skills needed for making decisions, enabling and scrutinising transformation align closely with wider leadership skills that are needed in any councillor role.

You can find more about the leadership skills that all councillors need by reading our Local Leadership Framework for Councillors.

Specific skills are needed to understand and ensure the robust scrutiny of transformation:

It is also useful for councillors to have knowledge of specific service areas, or to seek external advice, benchmarking or peer support where they don’t have this insight directly – so for example digital, place-shaping knowledge, and so on.

Understanding and scrutinising business cases

Business cases are used to justify and make the case for transformation.

They may be developed in phases, reflecting the information available at each stage of a process, so for example an outline business case might set the key considerations to support more work being done, or a procurement taking place, which is then moved to a full business case once costs and likely benefits are fully known.

Business cases are not just about financial benefits and costs – they focus on how the proposed changes align with strategy. The Government recommends a ‘Five Case Model’ that looks at Business cases from five perspectives – you can find out more in the Business case guidance for projects and programmes (www.gov.uk).

At a summary level, to make a decision on or scrutinise a business case there are several key questions to ask:

Strategic

Why is change needed?
What problem are is the council trying to solve, or what outcome is it we trying to achieve?
Does this align to the council’s strategy?
What are the key objectives that the change will support, and how will we know?
What is the starting point? And do we have enough data to know?
What options have been considered and how have they been assessed? What are the risks, benefits, costs and effort required for each?
What is the recommended solution, and why?
What happens if we do nothing?

Benefits

Who will benefit from the change?
What are the proposed benefits and are they clearly defined, and quantifiable? If not, is there a process in place that will achieve this during the course of delivery, and what guardrails will be put into place?
How have assumptions been validated?
Is there clear ownership for each benefit?
How will the council monitor benefits realisation?
What is the point at which a transformation should stop, if benefits are not realised?

Costs

What are the costs of the change – and the long-term costs ongoing?
How have costs been validated?
Is there a contingency included?
Is there any risk to costs increasing beyond the budget in the medium to long term?
How will costs be managed?

Risk

What potential risks have been identified? Is this list sufficiently comprehensive?
What mitigation is in place to prevent risks occurring, or to mitigate impacts if they do?
Are risks within the council’s risk appetite?
Is there clear ownership of each risk and related action?
How will risks be managed and reported on?

Management and oversight of risk

Councillors need to be assured that strategic risks are well controlled and do not pose a material threat to the council that extends beyond the Council’s risk appetite.

Officers should routinely identify, record and manage risk as part of normal service delivery.

Transformation projects should also have their own risk registers, linked to the corporate risk management approach, to ensure that risks are well managed throughout the change.

Councillors, and in particular lead members/ committee chairs and members of scrutiny and audit committees, have a role in ensuring that:

there is an effective risk management framework in place
the risk management framework is actively used and mitigating actions are progressed
there is adequate capacity to manage risk and related actions.

What does good risk management look like?

The following list summarises what should be in place to effectively manage risk in transformation:

Risk assessments should be completed to map all potential risks. Risks should regularly be reviewed and updated/added.
Risks should be analysed to assess likelihood and impact.
Risks should be visible on a risk register and available to all who need to see them.
Risk tolerance (the amount of risk a council is prepared to accept) should be communicated and considered for each risk in isolation and collectively.
There should be a joined up approach to risk management that ensures central oversight of all risks and a flow up and down to enable the highest risks to be reported on and cumulative risk to be understood and well controlled.
Actions to avoid risk or to reduce its likelihood or impact should be set out with clear owners and timescales for completion.
Risks and associated actions should be tracked.
Risk should be an active consideration at all stages of a project, along with adequate capacity to monitor and mitigate them.

While councillors are not operationally responsible for day to day risk management, by asking key questions you will be able to understand whether appropriate controls are in place.

It is important to understand the respective roles of audit and scrutiny in relation to risk, and this guide aims to help:

'Audit, scrutiny and risk' - Centre for Governance and Scrutiny (cfgs.org.uk)

Ensuring financial oversight and controls

Portfolio holders or relevant service committees (in councils with the committee system) are responsible for overseeing the delivery of transformation, including associated financial targets.

Scrutiny committees (in councils with the Mayor or Leader and Cabinet system) scrutinise that delivery. Scrutiny of the council’s financial controls is the responsibility of Audit Committee: this includes council-wide systems and controls specific to individual projects and programmes.

Respective roles of audit and scrutiny in relation to financial controls (cfgs.org.uk)
Guidance on the approach to be taken when considering financial controls: Ten questions for audit committees