Agenda item

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 year 2024/25.

Councillor Rowan Ree (Cabinet Member for Finance and Reform) highlighted that this report summed up well the efforts of LBHF in making sure its services were delivered in a ruthlessly, financially efficient manner.

Sukvinder Kalsi (Executive Director of Finance & Corporate Services) said that the auditor was required to review the Council’s value for money arrangements in the areas of Financial Sustainability, Governance and Improving Economy, Efficiency and Effectiveness.  He was pleased to note that the overall assessment by the auditor against the five criteria was Green or Amber (page 422), which should give residents and businesses assurance that the council’s finances were being well-governed.

Paul Cuttle (Key Audit Partner, Grant Thorton) introduced the Annual Auditor’s Report on Hammersmith and Fulham Council 2024/25 (Appendix 1) and highlighted

Auditor’s various responsibilities in terms of its value for money work. He referred to a range of different recommendations that could be raised by GT, including statutory recommendations, key recommendations and improvement recommendations (page 469).  He then elaborated that statutory recommendations used to be rare but they were now more common which reflected some of the issues within the sector. There were a couple of key recommendations relating specifically to the Housing Revenue Account (HRA) and a lot of work had been carried out in those areas in the past 12 months which made them no longer a significant weakness in their value for money arrangements.  On improvement recommendations, there were a few with some having an amber rating but none had particular concerns.  Paul reiterated that this value for money report was very positive and reflected very well on the council’s financial sustainability around the governance arrangements.

Councillor Lisa Homan sought clarification on the Improvement Recommendation 1 (page 445).  Sukvinder Kalsi explained that the recommendation was about reviewing the HRA budget and its 10-year financial plan to ensure they were based on pragmatic assumptions in terms of interest rates and inflation etc through conducting scenario planning, sensitivity analysis and stress testing.  The results would be set out in the report to be presented to the Cabinet in February 2026.

Councillor Homan referred to the financial reporting arrangements (page 453) and asked about improvements on the timeliness of some financial reporting.  Sukvinder Kalsi highlighted the internal governance and other processes which in his opinion were conducted in an optimised manner now.  He undertook to review these needed procedures to see if they could be further streamlined to reduce the timescale of reporting to the Cabinet.  James Newman (Assistant Director of Finance) noted that it was related to the current time-lag for the outturn report, which was much longer, and agreement had already been made to take that report to the Cabinet earlier.

ACTION: Sukvinder Kalsi

Noting the big drop of the HRA Reserves in 2024/25, Councillor Adrian Pascu-Tulbure was concerned about the liquidity position at about 50% which might affect the council’s sustainability over a long term.

Councillor Rowan Ree pointed out that monies were put in reserves for rainy days and the resources in the HRA general reserves had been spent to address the well-reported issues within the housing systems in Hammersmith and Fulham, including compliance with all the new building regulations.  The council was topping up the general reserves year on year.  He stressed that, coupled with the new rent policy, the HRA and its 10-year business plan as well as the housing services were now in a better and stable positions than they were two years ago.

Charlotte Moar (Independent Member) noted a key recommendation (KR2) in 2023/24 had progressed onto an improvement recommendation (IR4) in 2024/25 (page 466). According to the prior recommendation, the Council should continue on its improvement journey with the operational performance of its housing service to ensure it was meeting a minimum core service standard. In terms of current status, the Council was on an upward trajectory towards minimum standards being met by the March 2026 target (page 458).  She expressed concern about the current acceptable minimum core standards and asked if there were other options to pace up or prioritise actions to prevent any slippage. 

Sukvinder Kalsi gave an account on the organisational history in terms of the HRA. He said during the period between late 2016 and 2020, there was a significant change in the housing policy and rent policy when a -1% rent reduction was imposed which had taken out huge amounts of resources from local authorities’ HRA. It was 13% in the case of LBHF. This had impacted on the level of investment on decent homes to maintain the minimum core standards.  Sukvinder agreed that all LBHF residents deserved a decent home including central heating system and the council would make sure resources in HRA and its reserves would be invested to meet the standards and legal requirements such as the latest one about damp and mould. Sukvinder stressed that the pace would be determined by the amount of resources available to meet this need among other priorities such as building more affordable new homes for residents. Nevertheless, he assured the Committee that stock conditions were surveyed on an annual basis.

RESOLVED

That the Committee agreed to note the report.