Devon County Council is set to agree an in-depth review to address "serious" failures in its governance.

A report due to be presented to the council's procedures committee next week says the authority "finds itself in a very different operating context and the need for a review of priorities is required."

Describing the council's internal position as "very challenging," it cites failing children's services and budget sustainability as two major factors, whilst accepting there is "concern from stakeholders regarding confidence in the council to address these challenges."

Devon's children's services, which excludes Plymouth and Torbay, are rated inadequate, with the government threatening intervention unless there are signs of improvement. This could involve the council being stripped of its responsibilities.

Westminster has already issued the council with an improvement notice, adding in December that it was "extremely concerned" about its children's services. A commissioner has been appointed to oversee improvement.

The report also warns there is a "material threat of a s114 notice" – an effective declaration of bankruptcy – due to a growing overspend on caring for children with special educational needs and disabilities (SEND).

Councils across the country have been told by the government to put their overspends into separate ring-fenced accounts while it develops a new funding model – an arrangement recently extended to 2026.

Since 2020, Devon's total running overspend on the SEND service – effectively debt – has risen to around £127 million, a figure projected to increase to £153 million by March 2024. The amount is more than the county has in reserves.

The report adds: "Linked to these formal situations and serious concerns, external assessment bodies such as Ofsted have reported in their monitoring issues relating to corporate governance and declared that there has been little or no improvement in services for three years since the last inspection.

"These are serious, material, well evidenced failures of the county council's governance."

It says long-serving council leader John Hart (Conservative, Bickleigh and Wembury) and new chief executive Donna Manson have therefore agreed the "urgent need for a review of corporate governance as a priority."

This will be in conjunction with the work to improve children's services, overseen by the commissioner appointed by a government minister and an SEND improvement board.

The governance review aims to put in place "effective scrutiny arrangements," to help members and officers "understand and respect" their roles, and to develop a culture where staff are "empowered to constructively challenge and improve ways of working."

It also seeks to develop and deepen relationships with the council's partners, ensure it has an "absolute focus" on residents and customers, and to maintain "political stability."

The report adds: "The proposed review seeks to rigorously examine and modify recent expenditure and to significantly improve governance to mitigate the current situation now facing the council."

It goes on to state, in light of recent management changes and the pandemic: "This is an opportune time to consider … future governance arrangements, making the necessary improvements as expected by the minister, the DFE, the commissioner and the SEND improvement board."

The "root and branch" review will be split into two phases, each lasting six months. It will be led by a cross-party working group of the procedures committee, which exists to review the council's constitution and how it functions.

"Strong, trusted governance is essential if the county council is to continue to be a credible and authoritative democratically accountable champion for the people and communities of Devon," the report adds.

Councillors will decide whether to go ahead with the review on Tuesday 25 April. Its decision will then need to be ratified by the authority's ruling cabinet.