Agenda item

This report sets out the draft Annual Governance Statement (AGS) for 2025-26 as required by the Accounts and Audit Regulations 2015 (as amended) which details the outcome of the annual review of the effectiveness of the Council’s governance framework, including its system of internal control.

Members are asked to note that the the format and structure of the AGS has been refreshed for this year and is aligned with the CIPFA/SOLACE Delivering Good Governance in  Local Government Framework Addendum (2025) and is being presented to the Audit & Standards Advisory Committee for consideration, in advance of referral on to the Audit and Standards Committee for formal approval.

Darren Armstrong (Deputy Director Organisational Assurance & Resilience) introduced a report from the Corporate Director finance & Resources that set out the draft Annual Governance Statement (AGS) for 2025-26 as required by the Accounts and Audit Regulations 2015.

In presenting the report the Committee noted that the Annual Governance Statement (AGS) was a statutory requirement bringing together the outcome of the annual review of the Council's governance framework and system of internal control with the statement having been developed collaboratively between Organisational Assurance, Legal, Finance and senior management across the Council, ensuring it reflected a full council perspective and a balanced body of evidence.  Members were advised that the format had changed significantly this year, aligning to the CIPFA/SOLACE “Delivering Good Governance” framework and its 2024 addendum to improve clarity and strengthen the link between governance principles, evidence and outcomes for residents.

Pameel Crowther Newman (Head of Litigation and Dispute Resolution & Acting Monitoring Officer) then presented the statement in detail, with the following key points noted:

·            The AGS evidence compliance with the Accounts and Audit Regulations in providing a structured evaluation of how the Council's governance arrangements, including internal control, risk management and organisational structure, supported delivery of its priorities. The statement was noted to have been prepared with reference to the seven core principles of the CIPFA/SOLACE “Delivering Good Governance in Local Government” framework.

·            In developing the 2025–26 AGS, particular emphasis had been placed on moving away from a standardised, compliance-based approach towards a more organisation-specific and reflective narrative. The aim had been for the Statement to present a clear and transparent account of how governance arrangements had operated in practice over the course of the year. Accordingly, the AGS had been positioned not only as a statement of compliance, but as a narrative of assurance, improvement, and accountability including a clear, comprehensive and transparent account of how the Council’s governance arrangements had operated, how their effectiveness has been reviewed and how the Council intended to strengthen them further moving forward.

·            The Council was reported to have continued to operate in a challenging financial, economic and regulatory environment, with sustained demand-led pressures (particularly in temporary accommodation and social care) and increased regulatory expectations relating to housing safety compliance and financial reporting. Despite this, the Council had maintained a robust and mature governance framework, supported by strong statutory officer leadership, effective member oversight and well-established assurance arrangements.  The Significant governance issues identified had been identified in Section 6 of the AGS, which members noted had related to housing compliance (including the Council's self-referral to the Regulator of Social Housing), the Procurement Improvement Plan (following the procurement peer review), and the asset register and valuation process with an Improvement Action Plan having been developed to address the main issues and key actions identified as a result, as detailed within Appendix 1 of the AGS.

·            Details were also provided in relation to progress made in delivery of the Improvement Plan from 2024-25, as set out in Section 5 of the AGS.  This had included action to strengthen housing compliance (fire safety, water safety and asbestos management) in collaboration with the Regulator of Social Housing, continued development of the corporate performance framework incorporating Corporate Peer Challenge recommendations, delivery of the Procurement Improvement Programme, and the launch of the new People Strategy.  The AGS had also focussed on key governance achievements during 2025–26 which were noted to have included the Embrace Change portfolio, the Digital Transformation Roadmap, improvements to AI governance and the Housing and Tenant Satisfaction Improvement Programme alongside continued delivery of the Youth and People Strategy Member Induction and Senior Leadership development and progress in procurement practice, performance management and financial resilience.

·            Looking forward the Section 7 of the AGS included a focus on activity during 2026-27 which had been focussed on strengthening the governance foundations set out in the 2025-26 assessment and ensuring that improvements identified through the review process were fully embedded across the organisation.  This included a continued emphasis on enhancing transparency, refining the Council’s assurance mechanisms, and developing the capacity and capability needed to meet emerging strategic, financial and regulatory challenges based on an approach designed to ensure decision?making arrangements remained resilient, responsive and aligned with long?term organisational priorities.

Having thanked Darren Armstrong and Pameel Crowther Newman for presentation of the report, the Chair advised members that they were being invited to comment on the draft AGS in advance of its formal consideration and approval by the Audit and Standards Committee. As a result, the following issues were highlighted:

·            In beginning the discussion, two significant areas of progress were highlighted: the Procurement Improvement Programme, which had improved oversight of the procurement process and value for money for residents, and the Council's work with the Regulator of Social Housing, noting the Committee was now in a more robust position in respect of the self-referral. Officers were asked how the Committee would monitor progress against improvement actions identified in the statement during 2026–27 which it was confirmed, in response, would be achieved through the ongoing and planned work of Internal Audit and the Committee continuing to maintain overview of progress in monitoring delivery of key actions 2026-27 identified within the Significant Governance Issues Improvement Action Plan (as set out within Appendix 1 of AGS).

·           In response to a query, it was confirmed that reference to 3 week delay in completion of 2024-25 external audit and Statement of Accounts as a result of work required to complete reconciliation process in relation to PPE Assets and Valuation referenced at paragraphs 142 and 148 within the AGS would be checked and updated (as required) prior to final sign off.

·            Regarding the Council’s self-referral to the Housing Regulator, members queried how the Regulator of Social Housing would continue to engage with the Council following the C3 judgement in May 2025, and how this would align with the Committee's wider governance oversight.  In response, it was agreed to request that details of ongoing engagement between the Council and Regulator of Social Housing as part of ongoing delivery of Housing Compliance Improvement Plan be included as part of the next progress update on the issue scheduled for Committee.

·            Following on from this, it was queried how a proposed new Housing Scrutiny Committee would interact with this Committee's role, given the crossover on housing-related issues such as the self-referral. The Chair confirmed that a clear distinction was maintained between scrutiny of operational activity and the Committee's independent oversight of governance arrangements, with regular meetings held between the Committee Chair and Vice Chair and Scrutiny Committee Chairs to clarify boundaries and avoid duplication of resources, with the Vice-chair also highlighting a need to update reference to scrutiny within the AGS to the proposed Housing Scrutiny Committee. Officers confirmed that consultation was underway with the Group Leaders on establishment of the proposed Housing Scrutiny Committee, with a report expected to Full Council in July 2026 clarifying its remit and seeking approval to its establishment.

As there were no further comments raised, the Chair thanked officers for the report and it was RESOLVED to recommend the Annual Governance Statement to the Audit & Standards Committee for formal approval, subject to the comments detailed above and clarification regarding the delay in completion of 2024-25 external audit and Statemen of Accounts as a result of work required to complete reconciliation process in relation to PPE Assets and Valuation referenced at paragraphs 142 and 148.