Agenda and draft minutes

In opening the meeting, David Ewart (as Chair) took the opportunity to welcome Councillor Lesley Smith as a newly appointed member on the Committee.

Apologies for absence were received from Councillor Molloy, who it was reported was recovering from surgery, and Sophia Brown (Grant Thornton).  The Committee asked for their best wishes to be passed on to Councillor Molloy for a quick recovery.

Members are invited to declare at this stage of the meeting, the nature and existence of any relevant disclosable pecuniary or personal interests in the items on this agenda and to specify the item(s) to which they relate.

David Ewart (Chair) declared a personal interest as a member of CIPFA.

To receive any deputations requested by members of the public in accordance with Standing Order 67.

There were no deputations considered at the meeting.

4.1      To approve the minutes of the meeting held on Wednesday 25 September 2024 as a correct record.

4.2      To approve the minutes of the meeting held on Thursday 31 October 2024 as a correct record.

4.3      To note the updated log of actions arising from previous meetings of the Committee.

RESOLVED that the minutes of the previous meetings held on Wednesday 25 September 2024 & Thursday 31 October 2024 be approved as a correct record, subject to the following amendments:

• Minutes – 25 September 2024: review and amendment of wording of 4^th bullet point under the comments and issues raised section of Min 6: Report on i4B Holdings & First Wave Housing Ltd.

Post meeting note: Following review the proposed amendment to the wording of the minute has been agreed as follows with the underlined wording to be added and wording that has been struck through deleted:

In considering the update on the financial performance provided in relation to regarding i4B, further details were sought on the changes identified in relation to the Income & Expenditure Statement within the report.  These related to the reasons why in terms of expenditure on the Service Level Agreements (SLA) and the provision of supplies and services being were higher than budget. In recognising these concerns raised, Andrew Hudson advised of the Board’s continued focus regarding on accuracy of the budget monitoring and forecast process.  Current with issues, as an example, highlighted included in relation to delays in the submission and processing of invoices from third parties and also management due to the demand led nature of the costs associated with repairs and maintenance of the stock, given the demand led nature of the service and in seeking to avoid disrepair claims with preventative measures works seen as the best way to prevent overspending in these areas.

As a follow up issue, details were also sought on the forecast void rent loss which it was noted had been calculated at £443k for the year based on Brent Housing data over the first 4 months. Highlighting reference to the availability of data from those properties managed by Mears, members were advised that whilst details were awaited, the current assumption remained that losses would equate to 4%.

Members noted the updates provided in relation to the Action Log of issues identified at previous meetings.  Updates were provided in response to the following actions:

(a)        Dedicated Schools Grant – Deficit Management Plan (24 July 2024) – members were advised that further clarification was awaited on the VAT arrangements to be included in relation to SEND provision under the private school initiative.

(b)        Statement of Accounts – Interim External Audit Findings (31 October 2024) – confirmation was provided that work on submission of the relevant supporting information relating to Plant, Property & Equipment (PPE) was progressing with Audit Findings Report and Statement of Accounts scheduled for consideration at the Committee meeting on 4 February 2025, in advance of the backstop for finalising the 2023-24 Statement of Accounts coming into effect at the end of February 2025.

To consider any matters arising from the minutes of the previous meeting(s).

None.

The purpose of this report is to update the Audit and Standards Advisory Committee on (a) gifts and hospitality registered by Members and (b) member training.

Marsha Henry (Deputy Director Law) introduced a report updating the Audit and Standards Advisory Committee on gifts and hospitality registered by Members during Q2 2024-25 and Member Learning & Development activity.  The following updates were highlighted for the Committee:

·             The details on Gifts and Hospitality registered by members in the second quarter of 2024-25, as detailed in Appendix A of the report.

·             The inclusion of a recommendation within the External Audit Annual (Value for Money) report (due to be considered as item * on the same agenda) relating to the enhancement of the register of members gifts and hospitality to include additional detail on the receipt of “exceptional items” such as tickets to events being hosted at Wembley Stadium in order to enhance transparency.  Members were advised that arrangements were being made for this issue to considered by the Constitutional Working Group, prior to a further update being presented to the Committee on any action taken in response.

·             In relation to member attendance at mandatory training sessions, the Committee was advised (following the update outlined within section 3.8 of the report) that all members had completed their core mandatory refresher training, including Data Protection.  Members noted the measures in place to ensure members were required to complete their mandatory Data Protection and action available should that not have been undertaken within the required timescale.

The Chair thanked Marsha Henry for her report and invited the Committee to raise any questions they might have, which are summarised below:

·             Discussing invites issued for member training sessions, members highlighted a need to ensure these clearly specified when the sessions were mandatory, which it was agreed would be fed back to the Members Services team for action moving forward.

·             In seeking further details on the rationale and considerations needing to be taken into account by members receiving gifts and hospitality, particularly in relation to sporting and other events being hosted at Wembley Stadium, the Committee was advised that whilst there were no specific restrictions prohibiting the receipt of these type of gifts or hospitality members would need to consider whether acceptance was appropriate and, if so, that anything received was properly registered, in accordance with the Member Code of Conduct.  In highlighting that many gifts were often provided by local organisations as part of broader community engagement initiatives a review of existing guidelines would be included as part of consideration of the recommendation within the External Audit Value for Money report.

As there were no further questions, the Chair thanked officers for their responses, and the Committee RESOLVED to note the updates provided in relation to:

(a)        Gifts and Hospitality registered by members; and

(b)        Member Training

This report presents the draft Treasury Management Strategy for 2025/26 for consideration by the Committee. The final version of the TMS incorporating the views of this Committee will be included in the annual Budget Setting Report to be presented to Cabinet and Full Council in February 2025.

The Chair welcomed Sam Masters (Head of Finance) and Nadeem Akhtar (Senior Finance Analyst) to the meeting who were then invited to present the draft Treasury Management Strategy (TMS) for 2025-26 for consideration by the Committee. It was noted that the final version of the TMS, including any comments made by the Committee, would be included in the annual budget report to be presented to Cabinet and Full Council in February 2025.

In considering the report key issues were highlighted as follows:

·             The strategy (attached as Appendix 1 to the report) was currently in draft format and would be finalised for inclusion in the annual budget setting report that would go to Cabinet and Council in February 2025.  At the request of the Chair, officers advised they would ensure non councillor members of the Committee were provided with a copy of the final Treasury Management Statement included within the Council’s 2025-26 Budget Report.

·             The Strategy set out the framework for the Council’s Treasury Management activity in 2025 - 26 and included an outline of the Council’s borrowing strategy and sources of debt finance (including the Liability Benchmark), investment strategy (including types and prescribed limits), Treasury Management Prudential Indicators for 2025 – 26 (which it was noted included security, liquidity, interest rate exposure, the maturity structure of borrowing and principle sums invested for periods of more than a year), alternative options and strategies along with an external and local context including the Capital Financing Requirement (CFR).  This included details (within Table 1 of the Strategy) of the Council's medium-term borrowing requirements based on budgetary forecasts, which for 2025-26 had been estimated at £360 million. 

·             The Strategy had been produced in compliance with the CIPFA Treasury Management Code of Practice & Prudential Code for Capital Finance.

The Chair thanked Nadeem Akhtar for their outline provided and then invited the Committee to raise any questions they might have, which are summarised below:

·             On the subject of interest rates, the Committee sought further details on the basis of the assessment from the Council’s Treasury Adviser regarding the level of Bank interest rate and reliability of the predicted rate at 3.75%.  In response officers advised this was based on a moving average for the year.  Whilst the current rate was 4.75% and the position was subject to regular fluctuation subsequent changes were anticipated moving forward based on the latest forecasts within the Bank of England Monetary Policy Report, which were subject to ongoing review and would be reflected within the final report.

·             Regarding investment limits, further clarification was sought on the limits identified under the alternative investment options within the strategy.  Given the financial pressures being experienced by the Council and revenue reserves available to cover investment losses were forecast at £513.3m. Members, whilst noting the 10% or £20m limit identified as a means of limiting risk to any default, queried the reference regarding lending to other organisations within the strategy.  In response, Amanda Healey (Deputy Director of Investment and Infrastructure) advised that this was  ...  view the full minutes text for item 7.

This report updates Members on Treasury activity for the first half of the financial year 2024/25 (Q 1 & 2) in accordance with the Local Government Act 2003 and the Local Authorities (Capital Financing and Accounting) Regulations 2003 which require that regular reports are submitted to the relevant Council Committee detailing the Council’s treasury management activities.

Nadeem Akhtar (Senior Finance Analyst) introduced the Treasury Management Mid-Year Report, which provided Members with an update on Treasury activities for the first half of the 2024-25 financial year.

In considering the report key issues highlighted were as follows:

·             The Council had maintained compliance with its Prudential Indicators (as set out in Appendix 4 of the report) as of Quarter two 2024-25.

·             Outstanding borrowing as at 30 September 2024 was £791.9m representing a decrease of £22.4m from £814.3m at the start of the financial year with this change related to the repayment of loans.

·             Cash investments as at 30 September 2024 totalled £38.6m, which had decreased by £56.7m from £95.3m over the financial year. This reduction was attributed to the repayment of maturing debt and ongoing investment in the Council's capital programme in lieu of borrowing.

·             As at 30 September 2024, the Council had incurred £15.7m in interest payments related to servicing its loan portfolio as set out in Appendix 2 of the report.

·             The Council had generated £3.6m in interest income on cash investments as at 30 September 2024, which in part reflected the Bank of England's Bank Rate, that was reduced from 5.25% to 5.00% in August 2024.

·             The ongoing volatility in relation to the national economic context under which the Council’s Treasury Management Strategy had been operating as detailed within the economic commentary within Appendix 1 of the report.

The Chair thanked Nadeem Akhtar for their report and then invited the Committee to raise any questions they might have, which are summarised below:

·             Referring to the update on the Capital Financing Requirement (CFR), further details were sought on the monitoring and forecasting process in relation to delivery of the capital programme given the slippage reported during the current financial year and associated impact on the CFR and costs associated with borrowing for capital purposes.  In response, Amanda Healey (Deputy Director Investment & Infrastructure) assured members that borrowing to for capital purposes was not undertaken in advance of projects being included on the capital programme with short term trends monitored in terms of the CFR forecast based on expected demand.  Whilst acknowledging the slippage in delivery of the capital programme it was highlighted that 80% of the programme remained on track which provided acceptable levels of certainty in terms of the forecasting process and was subsequently built into the CFR.  Performance in relation to delivery of the capital programme was also subject to regular review as part of the quarterly budget monitor reports to Cabinet.

Responding to a follow up query, officers advised that trends in relation to the CFR were also subject to regular monitoring based on analysis conducted with the Council’s Treasury Management Advisors, including performance in relation to delivery of the capital programme to support the modelling process.  In noting the current challenges identified in relation to delivery of schemes on the capital programme (given current viability assessments) and associated impact on the forecast process the Committee noted the impact which development of the capital pipeline  ...  view the full minutes text for item 8.

This report outlines the work undertaken by Internal Audit as at end of October 2024.

Darren Armstrong (Deputy Director of Organisational Assurance and Resilience) introduced the report, outlining the work undertaken by the Internal Audit function as at the end of October 2024.

In highlighting the role of the report in providing assurance that the Council had a sound framework of governance, risk management and internal control in place supported by a summary of Internal Audit activity, updating on the performance of the function, highlighting areas where high priority recommendations had been made and commenting on the level of implementation of audit recommendations by management, the following key issues were highlighted:

·             The report reflected adoption of the new method towards audit planning for 2024-25, moving away from the previously used ‘annual plan’ approach and towards a less rigid and more flexible process which would still provide assurance over areas of inherent risk, core systems and processes regarding key foundations to Council governance and control frameworks but was now based on the following areas - Core Assurance, an Agile Risk-based Plan, Consultancy and Advice & Follow-up Activity with the current Plan having been agreed by the Committee in March 2024.

·             The summary provided within section 3.3 of the report relating to delivery of the 2024-25 Internal Audit Plan including progress (as detailed within Appendix 1 of the report) in relation to the Core Assurance Plan and development of the Agile Risk-Based plan listing the potential high risk and high assurance audit areas prioritised for activity during the remainder of the year.

·             The summary of risks and issues identified in relation to individual audit reviews as detailed within section 3.4 and Appendix 2 of the report.  As a result of the work undertaken as part of the 2024-25 Plan a total of 43 issues had been raised with a breakdown by risk category having been detailed in section 3.4.4 of the report alongside a comparison with previous years.  The initial Internal; Audit Progress report provided for the Committee in September 2024 had included a summary of completed work against the agreed plan with details of any critical, high or medium risk issues raised, alongside the responses and actions agreed by management/auditees. For audits completed since then, a summary of issues identified (high and medium risk) and agreed with management had been provided within Appendix 2 of the report.

·             The summary of follow-up outcomes and activity, as detailed within section 3.5 of the report, from planned audit work in relation to implementation of agreed actions.  Between 1 April and 31 October 2024, seven follow-up reviews had been completed (with 14 in progress) relating to work carried out in 2023-24 with 31 actions implemented as agreed and further details on the detailed within Appendix 3 of the report.

·             Whilst Internal Audit continued to review implementation of recommendations with management, in line with usual practice, will the ability to report any instances of persistent non-implementation to the Committee further details on the monitoring undertaken in relation to outstanding and overdue audit actions which had failed to meet their original and revised  ...  view the full minutes text for item 9.

This report presents the Council’s Interim Counter Fraud Report for the financial year 2024-25.

Darren Armstrong (Deputy Director Organisational Assurance and Resilience) introduced a report which summarised the counter fraud activity that the Council had undertaken in 2024-25, up to 31 October 2024.

In considering the report the Committee noted:

·             That the report was intended to support the Audit and Standards Advisory Committee in obtaining assurance that the Council had robust and sound counter-fraud arrangements in place,  which included a summary of the activity undertaken by the Counter Fraud team across multiple fraud types (including internal fraud, housing tenancy fraud, external fraud and proactive work undertaken to identify and reduce fraud). The report also fulfilled the requirements of the Local Government Transparency Code 2015, which required local authorities to publish details of their counter-fraud activity.

·             The report followed a format similar to previous versions, and officers noted that the team continued to deliver a robust counter-fraud plan and preventative measures across the fraud types outlined.

·             The details provided in relation to internal fraud which, whilst typically having the fewest referrals, were often more complex in nature as detailed within the “Proactive” section of Appendix 1 of the report.

·             The update provided in relation to Tenancy & Social Housing Fraud (as detailed within section 3.4 and Section 2 of Appendix 1 in the report) with the recovery of social housing properties by the Counter Fraud team demonstrating a notional saving of £42,000 per property and positive impact on the temporary accommodation budget as a high-priority fraud risk for the Council.

·             The update provided in relation to External Fraud activity cases as detailed within Section 3 of Appendix 1 within the report.  This activity included (but was not limited to) fraud cases involving Blue Badge, Direct Payments, Council Tax, Business Rates, insurance, finance, concessionary travel and grant applications.

·             The team continued to undertake a broad range of proactive activity including National Fraud Initiative (NFI) data matching, fraud workshops and targeted operations to support the identification, investigation and reduction in other fraud risk activity across all service areas with further details having been summarised in section 4 of Appendix 1 within the report.

The Committee was then invited to raise questions and comments on the report which have been summarised below:

·             Reporting on developments in relation to Blue Badge fraud, Councillor Chain (as Vice-Chair) took the opportunity to update members on the introduction of the new digital Blue Badge initiative, which it was felt would assist in addressing ongoing concerns regarding their fraudulent.  Thanks were extended to Councillors Long, Councillor Chaudry and other Committee members who had continued to highlight concerns regarding operation of the scheme with further clarification to be sought on roll out of the digital scheme and whether the virtual badges would work on a borough wide basis.

·             Further details were sought on the changes in relation to the discounts available under the Right To Buy scheme and whether this had impacted on the activity being undertaken in relation to Tenancy and Social Housing Fraud.  In response, Darren Armstrong confirmed that this had been  ...  view the full minutes text for item 10.

To receive the External Auditor Annual Report for the year ended 31 March 24.

Having been welcomed by the Chair, Sheena Philips, Senior Audit Manager, Grant Thornton, was invited to introduce the draft External Audit Annual Report 2023-24.

Key issues highlighted in presenting the report were as follows:

·             The report provided the auditors commentary relating to the Council’s proper arrangements in relation to three areas, Governance, Financial Sustainability and Improving economy, efficiency and effectiveness.

·             The Executive Summary provided in relation to the Value for Money assessment of the Council’s arrangements.  Whilst no significant weakness had been identified in the Council’s arrangements for Governance or Improving Economy, Efficiency and Effectiveness a significant weakness had been raised in respect of the Council’s Financial Sustainability.

This had been raised as a result of the risk assessment undertaken which had identified the use of £13.5m of reserves during to balance the Council’s revenue budget. In 2023-24, going financial pressures identified (particularly in relation to homelessness), a forecast overspend of £14.4m in 2024-25 with a further budget gap of £16m forecast for 2025-26 and £7m in each year for 2026-27 & 2027-28, with the Future Funding Risk Reserve balance being £10m at July 2024.  Taken together these had been assessed as representing a significant weakness in financial stability.  As such Grant Thornton had identified the need for significant and challenging decisions to be made in order to ensure a realistic budget was set the Council was able to avoid continued use of reserves to meet unplanned expenditure. Sheena Phillips added that Brent’s situation was not an uncommon one in the current local authority sector further noting that whilst identified as a significant weakness Brent was not currently at risk of needing to issue a section 114 notice.

·             The detailed commentary in terms of the review of arrangements supporting the significant weakness identified in relation to the Council’s financial sustainability which included the plans in place to address the significant financial pressures identified in relation to the short and medium term plans (rated red), action being taken to address the funding gaps identified and deliver achievable savings in response (rated amber), plans to support the sustainable delivery of services in accordance with strategic and statutory priorities and other key programme ( rated amber and green respectively)and identify and manage risks to financial resilience (including unplanned changes in demand) (rated green).

As a result of the assessment a key recommendation had bene made in term of the need for the Council to urgently take the difficult decisions needed top ensure that a realistic budget could be set for 2025-26 which could be delivered without the need to further draw on reserves with an additional area for improvement had also identified in relation to the Council demonstrating how revenue investment in services was designed to support delivery of the priorities within the Borough Plan.  It was also noted the prior year recommendations in relation to a cumulative Equality Impact Assessment being undertaken to cover the life of the Medium Term Financial Strategy and options to address budget shortfalls arising from the planning process  ...  view the full minutes text for item 11.

To consider the Audit & Standards Advisory Committee future work programme 2024 – 25.

The Committee RESOLVED to note the Committee’s Forward Plan and Work Programme for the remainder of the 2024-25 Municipal Year.

No items have been identified in advance of the meeting that will require the exclusion of the press and public.

There were no items of business considered at the meeting which required the exclusion of the press and public.

Notice of items to be raised under this heading must be given in writing to the Deputy Director Democratic Services or their representative before the meeting in accordance with Standing Order 60.

The Committee received and noted brief updates provided in relation to:

(a)        Recruitment and retention of Finance accountancy staff, with members noting the progress in addressing the outstanding positions to be filled.

(b)        Initial assessment of the Chancellors Autum budget statement (including extension of DSG deficit statutory override and provision for NI additional employer contributions) with the final local government finance settlement, expected towards the middle of December 2024 and further details awaited on specific allocations.  Members were advised that confirmation on the extension of the statutory override in relation to management of the Dedicated Schools Grant (DSG) deficit had also been confirmed.