Agenda, decisions and minutes

1.1   There were no apologies for absence.

2.1    Councillor Gregory declared that she was a member of a TMO.

3.1  The minutes of the previous meeting were agreed as a correct record.

RESOLVED to note the finance update.

4.1   Ian Williams presented to the Committee on work underway together with planned work to protect the Council’s position during the Pandemic, referring to a strong track record on financial management.  He highlighted the following points:

·  Pre-Covid-19, further in the February budget the need for further savings of £19m was identified, taking account of the impact of ‘fairer funding’ and the impact of any impacts from business rates reduction

·  Since Covid-19, financial pressures of £25m have been identified, with income pressure of £37m, totalling £62m for the general fund alone

·  Financial pressures for the HRA of £9m had been identified

·  There had been two tranches of funding amounting to £18m

·  It was expected to complete a third return this month

·  There had been a falloff in the number of people able to pay Council Tax, resulting in a reduction in the Council’s tax base/ work was ongoing on this to show the impact beyond March 31, 2021.

·  Fairer funding had been deferred

·  Business rates retention had been deferred

·  A spending review was unlikely

·  Clarity was required from the Government on next year’s funding

·  Closure of Leisure Centres had impact on income. It was not known when these would reopen. A modelling and forecasting measures was being considered

·  May see an increase in the uptake of car parking as lockdown is eased

·  Rent arrears had increased

·  2500 Council tax direct debits had been cancelled

·  Significant increase in numbers claiming universal Credit

·  Business rates grants had been paid out in good time

·  In relation to commercial property estates some business were struggling and the council was working to support

·  Much work done in relation to commercial waste portfolio

·  In relation to cash flow the council was still in receipt of significant sums and monies were not expected to run out

·  Investments of £112 had been made by the end of May

·  It was now possible to borrow from other Local Authorities and PWLB continued to be a reliable source of income as was the municipal bond agency

·  A report was to be made to cabinet setting out the financial position with a review of income and expenditure streams and any investments that were planned, looking at reserves and balances and any possible repurposing

·  Work was ongoing with the External Auditors on accounts closure by 21 July / work was ongoing on the Pensions Fund

·  £3m had been allocated for track and trace

4.1  The chair stated that he was reassured that the Council’s cash position was sound with work carried out to look at the medium term.

4.2  Councillor Rebecca Rennison told the Committee that the Council’s financial position had been reported to Council on two occasions.  A deeper dive was to be carried out to look at impact and explore structural changes, considering what the timescale for these may be and considering mitigating actions and ways to manage the council’s finances. A working group with audit and scrutiny had been formed for this purpose. It was hope to submit a report  ...  view the full minutes text for item 4.

RESOLVED to note the performance indicators at appendix 1, the Risk Management Scorecard at appendix 2 and the current capital monitoring update in appendix 3.

5.1  Bruce Devile introduced an updated set of reports that were selected to be reviewed by the Committee on a regular basis as part of the Committee’s overview of the Council’s performance. It provided an updated set of key performance indicators along with an update on risk management with a Corporate Scorecard and accompanying commentary on the Council’s risk approach. Bruce Devile referred to the current pressures on income and expenditure and referred to the increase in rent arrears, which amounted to £1m over two months to the end of April 2020. He confirmed that parking income had decreased.  Call centres were performing well with good contact with the single management structure now in place. It was considered unlikely that there would be a move back to separate call centres. 

5.2  Councillor Spence asked for an update on current levels of rent revenue. Ian Williams told the Committee that as of mid-march there had been a 97 % collection rate. The total number in universal credit was 2600. Those in arrears stood at 7000. As at the end of May the overall collection rate was 94 %. There had been a significant increase in the numbers of tenants in receipt of universal credit.  Numbers in arrears stood at 8300.

5.3  Ian Williams told the Committee that some tenants were struggling to pay their rent and that the Council was working to support them. He stressed the importance of engagement on this and that alternative methods of payment were discussed. The option of paying at the Post Office was not currently available.  Ian Williams told the committee that there had been a decrease in direct debits and standing orders.  Work was ongoing with Councillor Rennison on corporate debt ad alternative methods of making payments. 

5.4   Councillor Gregory referred to increased enforcement at this time in relation to social distancing and risk assessment in businesses and who would undertake the additional enforcement.  It was confirmed that the Health and Safety Executive had responsibility for much of this. Bruce Deville would circulate details of any intervention that the Council could make.

  Action: Bruce Devile

5.4   The Chair referred to the capital update with a spend of £230m and a revenue budget of £247m, emphasising the need for the Council to improve its financial estimating ability. Consideration was being given to carrying out a deep dive into this issue.  

5.5  The chair asked if the Council’s service was resilient at this time.  Bruce Devile confirmed that the service was broadly resilient. Ian Williams referred to the success of bringing all contact centres under single management. 

  Action: Ian Williams.

RESOLVED to note the performance indicators at appendix 1, the Risk Management Scorecard at appendix 2 and the current capital monitoring update in appendix 3.

RESOLVED to note the contents of the report and the attached risk registers and controls in place.

6.1  Matt Powell introduced the report updating the committee on the current Corporate Risk Register of the Council as at June 2020.  The report also identified and managed throughout the financial year and the Council’s approach to embedding risk management. Matt Powell highlighted the following areas:

-  The escalation of the pandemic risk

-  The risk of the pandemic lasting longer than expected or a second wave

-  Risk relating to an increase in expenditure ad decrease in income, although this was partially mitigated by central government funding

-  Brexit continued to be a risk 

-  Workforce and Universal credit was impacted on by Covid 19

-  Risk around climate change continued

6.2  The Chair highlighted the broad ranging risks for the Council arising from the Pandemic, including in relation to finance, the supply chain, risk of fraud/ safeguarding vulnerable children, food poverty and homelessness. He stress that there was a need for management to understand and tightly control these

risks.

6.3 Councillor Gregory asked for an update on contract enforcement and insurance.  Ian Williams told the Committee that the Insurance team had been active over the past months and he agreed to circulate an update on this to the Committee.

  Action: Ian Williams  

6.4  The Chair asked for clarification on risk around commercialisation and the creation of new companies. He stressed the need to a corporate approach to building up the commercial arm and the continuous monitoring, both long and short term, in particular as the Council had less experience of this type of commercialisation. Ian Williams told the Committee that there was a need to have greater consistency in this area, assessing capability and understanding the market.  Further there was a need for clarity in relation to accounting and that directors understand their responsibilities.    

6.5  Councillor Potter asked about the impact of the Pandemic on the Capital supply programmes for regenerating estates.  Ian Williams told the Committee that the council had progressed with as many schemes as it could.  However, some could no proceed because of difficulties around social distancing. Work at the Brittania had continued while observing social distancing rules.  Ian Williams agreed to circulate an update on the Council housing programme.

  Action: Ian Williams

6.6   Councillor Potter asked for an update on the impact of the Pandemic on the Council’s Pensions Fund.  Ian Williams told the Committee of meetings with the Chair of the Pension’s Committee and the Actuaries on the Pension Fund and that there was no indication of a cause for concern in relation to the Fund.

RESOLVED to note the contents of the report and the attached risk registers and controls in place.

RESOLVED to note the report.

7.1  Michael Honeysett introduced the first of the treasury reports relating to the financial year 2020/21 for the Audit Committee. The report set out the background for the treasury management activity from April to May 2020 and the actions taken during this period.  Michael Honeysett told the Committee that Cash available to the Council had increased, with £116m invested at present. £57m was liquid with £28m available in 28 days. Inter local government borrowing had recommenced following a cessation during the early stages of the Pandemic. He told the Committee that cash flow and income was being tightly monitored.  Section 31 grants had increased and used for business rates.  It was confirmed that there had been to the Treasury Management Strategy

RESOLVED to note the report.

RESOLVED:

1.  To note the report of the Internal Audit’s performance and opinion of the Council’s framework of governance and internal control.

2.  To approve the update Internal Audit Charter and Strategy.

3.  To note the Annual Governance Statement 2019/20.

8.1  Tracy Barnett introduced the report providing details of the performance of Internal Audit during 2019/20 and the areas of work undertaken, together with an opinion on the soundness of the control environment in place to minimise risk to the Council.

8.2  Tracy Barnett reported as follows:

-  That the overall assurance levels had improved and was adequate

-  The control environment was robust

-  As at 31 March 80% of the internal audit and performance implemented/ 13% partially implemented  (the figures may be underestimated as no chase up  had taken place

-  79% of audits completed or in progress (this had been affected by Covid 19.  Contingency had been built in to help the ability to undertake audits)

-  Background work was ongoing to the plan to assist with ease of implementation)

8.3  Tracy Barnett reported that there had been a significant overhaul of the Document and asked for member committees.  Members indicated that they were happy with the new format.  Following comments from the chair was agreed to include details of the deep dives carried out by the committee.

RESOLVED:

1.  To note the report of the Internal Audit’s performance and opinion of the Council’s framework of governance and internal control.

2.  To approve the update Internal Audit Charter and Strategy.

3.  To note the Annual Governance Statement 2019/20.

RESOLVED to note the content of the report

9.1  Michael Sheffield introduced the Annual Fraud and Irregularity report for 2019/20. The Committee was provided with status reports and analysis of reported fraud and irregularity within the London Borough of Hackney.

9.2  Michael Sheffield highlighted the following to the Committee:

-  Estimated savings arising from enquiries was £5,698,149 compared to 4.6m in the previous year  

-  A doubling in the blue badge financial output

-  In relation to ‘No recourse to Public Funding, there was an investigation into the CYTS scheme

-  A 20 % increase in performance outcomes IN RDF work during the year

-  Tenancy fraud investigations showed the biggest return and was back on track

-  Significant returns from investigations arising from the National Fraud Initiative Data Match Exercise/ Report related to achievements for the year and showed a significant increase in outcomes

-  In relation to RIPA activity there had not been any investigations. This remained as an option if needed.

-  The inspection at the end of the year had been passed

-  The shift to working from home had impacted on investigations.  Desk based investigations were being carried out.

-  70 parking investigations

-  240 tenancy investigations

-  Considerable support had been given to the Business rates team.

-  Some audit officers had been redeployed to other functions within the council, including the Borough’s Emergency Contact Centres

-  There had been disruption to some investigations as a result of Covid 19, with face to face engagement not possible unless essential

-  There had been changes to legislation that impact on the work of Audit.

-  No evictions were taking place for housing at present

-  Levels of referrals of work into the team had decreased significantly in areas such as Blue Badge and tenancy fraud while referral in other areas had held up

-  For the first two months of last year outcomes from parking was 15 compared to 6 with tenancy fraud reduced to 3 in first two months of this year.

-  There was a renewed focus on housing applications with a higher number of outcomes

9.3  The Chair thanked officer for the flexible response that had been made to change risk and suggested a re-profile of targets. He asked for a further report on risk areas such as business grants and track and trace.

    Action: Ian Williams/Michael Sheffield  

9.4  Councillor Spence asked about numbers of temporary fraud investigations and Right to Buy applications. Ian Williams told the Committee that with the increase in house prices, right to buy applications had reduced and he agreed to circulate figures on this reduction.

  Action:  Ian Williams

9.5  Councillor Patrick asked for an update on work being carried out on pensions and fraud. Ian Williams reported to the Committee on this, referring to the National Fraud Initiative (NFI) section of the report. He said that there were conditions under which pensions are paid. The NFI match pensions payments to other data bases, for instance, to check if any payments were being made by other  ...  view the full minutes text for item 9.

To note the work programme.

10.1  Lucy Nutley (Mazars) told the Committee in relation to the Annual accounts that field work had started during that week. Work was ongoing on the Pensions Fund.  She told the Committee that a number of technical issues were arising. Remote audit arising from Covid-19 was not considered as efficient as previously.  Lucy Nutley confirmed that that there was no indication that that the accounts would not be completed in good time.  The Chair stressed the need to hold to the target date as this was relevant to establishing the Council’s baseline going forward.  Ian Williams confirmed that teams recognised the merits of presenting the accounts in a timely way.  

RESOLVED to note the work programme.

It was noted that the Chief Executive’s Departmental Risk report would be submitted to the Committee in October.

To note the update on TFL finances/ concessionary fare passes/ freedom passes.

11.1  Councillor Odze asked for an update on TFL’s current financial difficulties and asked if the commitment to the Freedom Pass was for a fixed amount. Ian Williams told the Committee that TFL now had a bridge to the end of September to assist with financial difficulties. He explained to the Committee that about the expected change under 18s access to the concessionary fares pass.  Working was going with other boroughs on the implication on finances. Ian Williams agreed to update the Committee on this matter.

  Action: Ian Williams

Ian Williams Williams explained that the funding was allocated by average use by Boroughs residents who are in receipt of a concessionary fares pass over the previous two.  He told the Committee that this was a cost pressure for the Council. 

To note the update on TFL finances/ concessionary fare passes/ freedom passes.