Agenda and minutes

There were no apologies for absence.

If a Councillor has a disclosable pecuniary interest in a particular item, whether or not it is entered in the Authority’s register of interests, or any other significant interest which they consider should be declared in the public interest, they should declare the existence and, unless it is a sensitive interest as defined in the Member Code of Conduct, the nature of the interest at the commencement of the consideration of that item or as soon as it becomes apparent.

At meetings where members of the public are allowed to be in attendance and speak, any Councillor with a disclosable pecuniary interest or other significant interest may also make representations, give evidence or answer questions about the matter.  The Councillor must then withdraw immediately from the meeting before the matter is discussed and any vote taken.

Where Members of the public are not allowed to be in attendance and speak, then the Councillor with a disclosable pecuniary interest should withdraw from the meeting whilst the matter is under consideration. Councillors who have declared other significant interests should also withdraw from the meeting if they consider their continued participation in the matter would not be reasonable in the circumstances and may give rise to a perception of a conflict of interest.

Councillors are not obliged to withdraw from the meeting where a dispensation to that effect has been obtained from the Standards Committee.

There were no declarations of interest.

To approve the minutes of the previous meeting and to note any outstanding actions.

The minutes of the previous meeting held on 12 September 2023 were agreed as an accurate record.

This report presents the external auditor’s Interim Annual Audit Report concerning the Council’s arrangements for securing economy, efficiency and effectiveness in its use of resources (commonly known as “Value for Money” reporting). The report covers the financial years 2021/22 and 2022/23.

Sukvinder Kalsi (Strategic Director of Finance) introduced the report and explained that the Annual Audit Report (Value for money) 2021/22 and 2022/23 concerned Hammersmith and Fulham Council’s arrangements for securing economy, efficiency and effectiveness in its use of resources. He invited the Council’s External Auditor – Grant Thornton LLP (GT) to brief the Committee on its Interim Annual Auditor’s Report.

Paul Dossett (Key Audit Partner, GT) gave an overview of the report and highlighted their role in commenting on the local authority’s arrangements in respect of financial sustainability, governance, and improving economy, efficiency and effectiveness.  The report covered both 2021/22 and 2022/23, with differentiated comments and assessment presented separately for the Council’s General Fund Account and Housing Revenue Account (HRA). 

Alexa Ngini (Public Services Consulting Manager, GT) briefed members on each of the three areas for the General Fund Account in 2021/22 and 2022/23.  In terms of financial sustainability, the Council was able to deliver a stable financial outturn against the general fund revenue budget in both years and finishing them with underspends.  The Council’s strong budget management and its relatively healthy reserves balance made its medium-term position better than that of some local authorities.  The Auditor considered the current savings plan was generally achievable though required greater development to meet the medium-term gap.  On governance, the Council had appropriate risk management arrangement in place for both years and improvement recommendations had been made relating to risk management and the Audit Committee.  Lastly, the Council had adequate arrangements to safeguard value for money regarding performance management, procurement and partnership working.   

Alexa Ngini continued that significant weakness had been identified in Housing relating to the financial sustainability of the HRA.  It was also noted that the Housing Service at the Council had been underperforming, as demonstrated in the high number of maladministration findings, poor complaint-handling, and a lack of reasonable communication with the tenants.  She referred members to the key recommendations in the report.

Councillor Florian Chevoppe-Verdier sought elaboration about the strategy of maintaining a minimum HRA balance of £5 million, i.e., at about 6% of all rent/service charge income (page 24). Paul Dossett considered that the Council was currently managing a situation that was risky to a local authority’s governance.  He said that with a robust management of the General Fund Account, there was a need to keep the balance at a strong level to meet future demand.  He anticipated that future demand might happen in 2024 as exemplified by continuing inflation, spiking costs in the housing services for children and increasing homelessness across the sector.  Paul remarked that the Council was not alone as the whole spectrum of difficulties in housing management had posed real challenges for local authorities across the country, but the Council’s General Fund Account was in a relatively strong position compared to that in other councils that GT was working with.

Noting the response, Councillor Chevoppe-Verdier asked about the general trends on medium-term forecast that had set this Council apart from its counterparts.  Paul Dossett  ...  view the full minutes text for item 4.

The following is presented by the external auditor for discussion and noting:

·   External Audit Progress and Sector Update November 2023

Paul Dossett (Key Aduit Partner, GT) introduced the report. He briefed members on the audit progress in November 2023 and explained the reasons for delayed publication of audited local authority accounts in England including the current local audit deadline “unachievable”.  He expected to complete the ongoing work for the Financial Statement Audit 2021/22 soon and sign the unqualified auditor’s report prior to Christmas 2023.  As regards the Financial Statement Audit 2022/23, he said that it was the central government’s initial plan to set a statutory cut-off date by 31 March 2024 to deal with the backlog, and to introduce a statutory disclaimer qualified opinion for those who failed to do so.  Regardless whether the backstop plan would proceed or otherwise, Paul said he was confident that the final Audit Finding Report for the Financial Statement Audit 2022/23 could be considered by this Committee at its March 2024 meeting, with the audits to be signed off right after.  He added that the value for money report and sector update for both 2021/22 and 2022/23 had been done.

Noting the current September audit deadline was unlikely to be met due to, among others, low capacity in council finance team (page 73), Councillor Ashok Patel was concerned about the implications of audit delays as some councils had years of unaudited accounts when they declared themselves effectively bankrupt due to excessive levels of debt (page 75).

Paul Dossett outlined the three causes of delays, namely, capacity gap in audit firms, increasing volume of Audit work for 30% – 40% in the last 5 years and the increasing complexity of the local authority accounts. In some councils, there was a lack of capacity in their finance department which might not be able to deliver a compliant set of accounts or fail to produce them for several years.  Paul said that the accounts produced by the Council’s finance team was relatively up-to-date.

Regarding the Chair’ question on officers’ providing timely updates to the External Auditor and their interaction, Sukvinder Kalsi (Strategic Director of Finance) highlighted that regular meetings between the two sides were held every week to follow up matters on the action lists. Finance officers were fully supported by service colleagues in responding promptly to the External Auditor’s queries. They also forwarded to the External Auditor any questions or concerns received in the first instance. Sukvinder remarked that he would ensure the Finance team had the right expertise and capacity to carry out the statutory duties up to the required standards.

RESOLVED

That the Committee agreed to note the External Auditor Progress Report and Sector Update.

This report provides an update on the implementation (six months to 30 September 2023) of the 2023/24 Treasury Management Strategy, approved by Council on 23 February 2023 and presents the Treasury Management Strategy 2023/24 mid-year review. 

Phil Triggs (Director of Treasury & Pensions) introduced the report which provided an update (six months up to 30 September 2023) on the implementation of the 2023/24 Treasury Management Strategy and its mid-year review.  He briefed members on the Council’s debt and investment positions (paragraph 3), borrowing position (paragraph 9), treasury investments (paragraphs 10 -15), and Prudential Indicators (paragraphs 16 – 18).

Noting the levels of cash deposits for money market funds and term deposits, Councillor Ashok Patel asked whether consideration could be given to putting more monies to term deposits.  Phil Triggs noted this was the case as the money market funds was used much less in September than six months’ ago. He assured that both of them were very secure way of investing with a reasonable rate of return.

Councillor Florian Chevoppe-Verdier commended the good work of the Treasury team which had managed very well the Council’s Treasury and Pensions responsibilities (as reflected in the recent national award).

RESOLVED

That the Committee agreed to note the Treasury Management Strategy: Mid-year Review 2023/24.

Each year the Council is required to publish a self-assessment against the Housing Ombudsman Complaint Handling Code and take it for discussion and approval at an appropriate governance board annually.

The Council’s self-assessment was updated in September 2023 and is now coming to the Audit Committee for approval. 

Sukvinder Kalsi (Strategic Director of Finance) briefed members on the report which set out the Council’s self-assessment against the Housing Ombudsman Complaint Handling Code.  He said that the Council had prioritised and focused considerable resources on improving complaint handling, especially around Housing Services.  Over the past year, the Council’s Corporate Complaints Policy had been reviewed and updated to ensure compliance with the best practice.  Appendix A set out a positive picture of compliance with the code with some actions for further improvement. 

Jon Pickstone (Strategic Director of the Economy) highlighted the integration of several teams, including the Resident Experience Team and the dedicated Dispute Resolution Team into a more strategic single function.  Housing repairs and housing management complaints were brought into the one-stop Housing Hub where complaints were handled by officers experienced in customer service to address the failings of not handling complaints well in the past.  This involved investment on additional staff training on both effective complaint handling and wider customer service skills both of which should be exercised alongside the physical intervention of the property by the Repairs Team under the wholistic approach.

The Chair expressed concern about ownership of a particular complaints case at an early stage and resolving it by coordinated effort to prevent it falling through the cracks of the division of the three teams concerned.  Jon Pickstone confirmed this was the case.  He elaborated that it was important to improve the repairs service and get them done as quickly as possible because this would in turn help improve complaints handling.  The teams would meet on a weekly basis to bring the cases under constant checks to prevent the complaints from escalating to the Housing Ombudsman.

Councillor Adrian Pascu-Tulbure was concerned whether the Council’s updated policy and improvement measures would bring about a better experience with the Housing Ombudsman.  Jon Pickstone believed they would as the Council had taken a multi-facet approach by improving its policy alongside complaint handling measures and coaching skills.

Councillor Florian Chevoppe-Verdier asked about the accessibility to the feedback surveys linked to complaint responses launched by the Resident Experience Team and its formats between digital and in-person/post.  Jon Pickstone said the Resident Experience Team was beginning the root cause analysis and exploring the organisational learning themes.  The Council, through surveying satisfaction about housing/repairs works, was now more aware of the performance of individual contractors. He noted that satisfactory quality repairs had gone up in recent months as a result of the tighter management of the main contractors and clearance of repairs backlog.  Jon further noted that to capture a more realistic picture of customer satisfaction via a bigger sample size, the Council would reach out to residents on different digital and non-digital ways from verbal response to text messaging.  In reply to the Chair’s enquiry, residents could still receive full range of housing services by phone with the Council’s contact numbers being listed on its website.

Councillor Ashok Patel noted that according to the Code requirement, landlords must respond to the  ...  view the full minutes text for item 7.

The purpose of this report is to provide members of the Audit Committee with an update on risk management across the Council.

Jules Binney (Risk and Assurance Manager) introduced the report and said that the SLT Assurance had reviewed the Corporate Risk Register on 1 November 2023 and agreed to reduce the risk score for two risks (Risks 6 and 16) and amend the narrative for two risks (Risks 9 and 18). They also noted that there was no addition of new risks.   Moira Mackie (Head of Internal Audit) added that the Corporate Risk Register was quite stable and the three risks (Risks 3, 18, 27) in high score were closely monitored.

Cllr David Morton asked why a risk related to the Community Schools Programme was not included in the Corporate Risk Register when £2.4m was committed to the programme.  He said that while the Cabinet had recently approved £800k in respect of Mund Street for decant accommodation for Avonmore School, the planning application had not yet been submitted and there was no indication that the Department of Education would approve the Council’s plans.  He noted that the Programme had been identified as a risk area by the Cabinet.  

Moira Mackie said that for risks across the Council, some would sit on a local register but would not necessarily be included on the Corporate Risk Register.  She agreed to provide the required information after discussing with the department concerned.

The Officers’ response is attached at Appendix A

Councillor Morton asked about the financial impact resulting from the failure to deliver the Civic Campus Programme (Risk 14).  Sukvinder Kalsi (Strategic Director of Finance) advised that it was a complicated and complex project involving a lot of issues.  More detailed report would be submitted to the Council and the Audit Committee in due course.

ACTION: Sukvinder Kalsi

Councillor Adrian Pascu-Tulbure noted that contractual levers were being used to deal with performance failures under Risk 27 and asked for further information. Jon Pickstone (Strategic Director of the Economy) noted that weekly performance meetings were held with contractors on their schedules, capacity and attendance of repairs work to ensure their responsibility and accountability.   In addition, there were ongoing commercial discussions with contractors around financial and operational arrangements.

Councillor Ashok Patel asked if there was any improvement to Risk 12 - Unable to retain talented people in key posts at LBHF.  Sukvinder Kalsi (Strategic Director of Finance) gave a brief account on the changes to the key posts at LBHF because of staff turnover and most of them were now filled.  He said that the Council was carefully monitoring its turnover position to identify workforce planning needs going forward.

The Chair recalled discussing Risk 12 with the Chief Executive at the July meeting and considered it worth noting that in regularly reviewing the Corporate Risk Register, the Committee could ensure the risks therein were adequately owned and managed.

RESOLVED

That the Committee agreed to note the Risk Management Update.

This report summarises the status of work included in the 2023/24 Internal Audit Plan as at the end of October 2023.  Two audits have been finalised, both of which received positive assurance opinions, with a further six audits at draft report stage. 

The status of audits confirmed for inclusion within the Plan, is shown in Appendix 2. 

Moira Mackie (Head of Internal Audit) presented the report which summarised the status of work included in the 2023/24 Internal Audit Plan as at the end of October 2023. She noted that two audits had been finalised, both of which received positive assurance opinions, with a further six audits at draft report stage. A total of 69 recommendations had been followed up in the year to date, and a majority of medium and high priority recommendations had been fully implemented with some partly implemented. She then briefed members on the status of audits confirmed for inclusion within the Plan as shown in Appendix 2.

Councillor Ashok Patel asked about the recommendations for one of the finalised audits, i.e., Modern Slavery Strategy (2022/23).  Moira Mackie noted that it was a good piece of tri-borough work attaining substantial assurance, with a sound system of internal control designed to achieve their objectives with good engagement, so there were no recommendations. 

RESOLVED

That the Committee agreed to note the Internal Audit Progress Report (April to October 2023).

This report provides an account of fraud-related activity during the first half of the financial year to minimise the risk of fraud, bribery and corruption occurring within and against the Council.

For the period 1 April 2023 and 30 September 2023, the Council identified 235 positive outcomes. The fraud identified has a notional value of over £680,000.

Andy Hyatt (Head of Fraud) briefed the Committee on the report and noted that for the period between 1 April and 30 September 2023, the Council had identified 235 positive outcomes and the fraud identified a notional value of over £680,000.

Councillor Florian Chevoppe-Verdier commended on the Corporate Anti-fraud Service’s increasing value for money in terms of staff cost to notional value ratio. He asked about the reasons for abandonment of the Council’s properties. Andy Hyatt referred to some tenancy cases whereby the tenants returned the keys after being found sub-letting the property.  Although data matching and use of technique had helped identify possible frauds, there were cases of unproven sub-letting with the tenant leaving no associated financial footprint while the sub-tenant not answering the door upon investigator’s visits.  

Councillor Chevoppe-Verdier asked further question on people’s moonlighting by working for two councils at the same time.  Andy Hyatt noted that the local authority had just completed the data impact assessment and signed a data sharing agreement with some London agencies. Such data sharing might soon be expanded to nation-wide scale as the hybrid mode of working allowed people taking up jobs in London and another city simultaneously.   As to how the local authority could share data with local and overseas banks, Andy referred to the Council’s participation in the National Fraud Initiative’s data matching exercise which helped uncover data identity theft in conjunction with the police.

Regarding the enquiry of Councillor Adrian Pascu-Tulbure about the calculation of the notional value, Andy Hyatt noted that it varied depending on the type and use of value for prevention or detection. For example, the formula adopted by the Tenancy Board was based on the amount of money spent on temporary accommodation linked to the number of rooms in the property concerned. Some local authorities would also take into account other actual loss such as benefits entitlement.

Councillor Ashok Patel referred to case 1 on Appendix 1 in which the tenant was an Albanian faking as a Kosovan homeless in late 2002 when he was granted a one-bed tenancy and housing benefits.  He was found sub-letting the property between July 2008 and October 2012 (during the period of his absence from the UK following deportation).  All these came to light upon the due diligence checks on his right-to-buy application. Councillor Patel asked for the rationale behind the barrister’s advice  against criminal charges.

Andy Hyatt noted that criminal prosecution with a not guilty plea involved lengthy trial and high legal cost even if the technicalities of the case met the standard for prosecution.  He remarked that in this instance, the Council was the Prosecting Authority as only really big cases would go through the Crown Prosecution Service which might not incur cost to the Council. Andy said he was pleased to share with Councillor Patel outside the meeting more details as to why criminal charges were not pursued for this case.

ACTION: Andy Hyatt

Councillor Chevoppe-Verdier opined that those fraud tenants might not hand back  ...  view the full minutes text for item 10.

This report provides an update on the external audit fees for 2023/24 as set by Public Sector Audit Appointments and the Council’s response to the recent consultation on the proposed framework for fees.

James Newman (Assistant Director – Finance) introduced the report which provided an update on the external audit fees for 2023/24 as set by Public Sector Audit Appointments (PSAA) and the Council’s response to the recent consultation on the proposed framework for fees in Appendix 1.  He said that it had provisionally been indicated to increase the scale fee for 2023/24 by 151%.

Councillor Adrian Pascu-Tulbure found the proposed fee increase disappointing and agreed it was necessary to address potential market failure.  He asked if consideration could be given to engaging with other local authorities further at the ministerial level to deal with the situation. 

James Newman said that the Council had carried out sizable engagements with different parties through various channels and provided a lot of feedbacks in addition to the Council’s consultation response.  He also noted that the procurement process was moving to a new kind of framework with a view to addressing the frailties and the weaknesses that had been seen in recent years.

Councillor Ashok Patel considered the proposed audit fee increase of 151% mindboggling and the agreed deadline might end up in failure.  The Chair considered it might be helpful to outline PSAA’s procurement process and any changes made during the period.

Sukvinder Kalsi (Strategic Director of Finance) noted that economies of scale had been achieved through the PSAA’s external procurement process which validated everything needed.  To illustrate, Sukvinder noted the cash term fee in 2010 was in the order of £420,000, or 3 – 4 times in real term. He said that the audit sector had re-balanced itself having dealt with some structural and capacity issues.  Sukvinder assured that the Council had expressed its general view in the response letter and would monitor the trend with a view to reducing the audit fees in the future.

Summing up, the Chair highlighted the Council’s strong emphasis on achieving financial efficiency, to be reflected in the quality of service and timeliness of reports provided by the External Auditor.

RESOLVED

That the Committee agreed to note the update on the external audit fees as set by Public Sector Audit Appointments and the Council’s response to the recent fee consultation (Appendix 1).

The next meeting will be held on:

·       11 March 2024

The Committee noted the next meeting would be held on 11 March 2024.