Max Caller, an independent inspector, was called in by local government secretary Sajid Javid after allegations of financial mismanagement. He was also tasked with seeing if the local authority was being run properly by bosses and the cabinet's Conservative councillors.
His report published this morning says all existing councils in the county should be abolished - save for parish councils - and two new ones created, delivering all local authority services. One would cover the south and of the county and the other the north.
But this afternoon the council has welcomed the recommendation within the report to move to unitary governance in the county and is now committed to working alongside partners to achieve this in the timescale outlined.
The leader of the council Councillor Heather Smith this afternoon announced that she would be resigning and the process to find a new leader will now take place.
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Councillor Matthew Golby said: “While I am pleased the report recognises the hard work and dedication of the staff and recognises recent progress in financial management it is clear that the inspector has found what he believes to be significant failings at the council.
“We accept the findings and we will now be acting accordingly and responding directly to the secretary of state.
“While the report accepts the figures we use in arguing our case for fairer funding, it states we are in no worse position than other councils. We would argue that the sector as a whole does face significant financial challenges and we will continue to work with our local government partners to present our case.
“While we will make these points in our response, we should in no way hide away from the general thrust of this report.
“We will now be reviewing the report is far further detail and respond directly to the secretary of state.”