Agenda and minutes

Please note that this meeting may be filmed or recorded by the Council for live or subsequent broadcast via the Council’s internet site or by anyone attending the meeting using any communication method. Although we ask members of the public recording, filming or reporting on the meeting not to include the public seating areas, members of the public attending the meeting should be aware that we cannot guarantee that they will not be filmed or recorded by others attending the meeting. Members of the public participating in the meeting (e.g. making deputations, asking questions, making oral protests) should be aware that they are likely to be filmed, recorded or reported on. 

By entering the meeting room and using the public seating area, you are consenting to being filmed and to the possible use of those images and sound recordings.

The chair of the meeting has the discretion to terminate or suspend filming or recording, if in his or her opinion continuation of the filming, recording or reporting would disrupt or prejudice the proceedings, infringe the rights of any individual or may lead to the breach of a legal obligation by the Council.

The Chair referred Members present to agenda Item 1 as shown on the agenda in respect of filming at this meeting, and Members noted the information contained therein.

Apologies for absence were received from Cllr Blake, Cllr Culverwell and Cllr Morris.

Cllr Hakata gave apologies for lateness.

None.

There were no declarations on interest.

None.

To consider and agree the minutes of the meeting held on 3^rd December.

The minutes of the meeting of 3^rd December were agreed as a correct record of the meeting.

*Clerk’s Note – The Chair agreed to amend the order of the agenda so that  the Housing Benefits Subsidy Certification Report was taken as the first substantive item. The minutes reflect the order that each item was discussed, rather than the order on the published agenda.*

The Committee received a report from BDO which provided an update on the main issues arising from certification of the housing benefits subsidy for the financial year ended 31^st March 2018. The report was introduced by Lee Lloyd-Thomas and was included in the agenda pack at pages 47-55. The following points were noted in discussion of the report:

a.    The Committee was advised that the housing benefits subsidy process provided an allowance each year to allow local authorities to recover overpayments resulting from local authority errors and administrative delays, through a DWP subsidy.  However, this allowance was capped to provide subsidy in full for overpayments where the total did not exceed 0.48% of total benefits, provided for subsidy at only 40% where these overpayments did not exceed 0.54% of total benefits, and penalised local authorities by not providing any subsidy for these overpayments which exceeded 0.54% of total benefits.

b.    As a result of clearing a large part of the backlog in 2017/18, the Council had created a higher than usual number and value of overpayments arising from local authority errors and administrative delays, which exceeded the 0.54% threshold. As a result, the Council had not been able to recover any amounts for the £1.445 million local authority error and administrative delay overpayments in 2017/18. 

c.    The Committee was advised, that ideally, the Council should seek to minimise such errors so that these fell below the 0.48% threshold to be able to recover those amounts in full through subsidy from DWP. BDO advised that they welcomed the fact that the Council had taken action and obtained external support to clear many of the backlog cases and claimant changes.

d.    In discussions with management, BDO advised that the current position (to 14 January 2019) suggested that the overpayments total to date of £577,504 was only 0.30% of benefits awarded and should be recoverable in full this year.  However, this was subject to continued good performance for the remainder of the year.

e.    The certification process was set by DWP and required that BDO test an initial 60 benefit cases in full. Where an error was advised in any of these cases, and for all error types found in the prior year, BDO then tested a further 40 cases with similar characteristics to the identified error. Whatever the percentage rate of error was within those 40 cases, this was then extrapolated across the board to determine amount of subsidy claimed. This year, this resulted in 29 separate error types where an additional 40 cases were tested.

f.     Overall, the auditors advised that the direction of travel showed a significant improvement in 2017/18. Over the duration of the year, the Council had more than halved its  ...  view the full minutes text for item 59.

The Committee received the Treasury Management Strategy Statement for 2019/20-2021/22 for comments, following its submission to Overview and Scrutiny Committee and before it was presented to Full Council for approval. The following was noted in response to the discussion of the statement and the accompanying cover report:

1. The Committee sought clarification about who the Council borrowed money from and the interest rate that was being paid. In response, officers advised that the £670m forecast borrowing over the next three years would be done through a combination of loans from the Public Works Loan Board (PWLB) and loans from other local authorities. Officers advised that new loans from the PWLB were budgeted at an average interest rate of 3%, while loans from other local authorities were 1%. However, loans from other local authorities were only taken out for 1 year and effectively had a variable interest rate, whereas loans from the PWLB were up to 50 years in length and a fixed rate. In response to a further question, officers advised that the length of a PWLB loan would be partly determined by the spread of existing debt and the date at which those loans matured. 
2. The Committee requested that future treasury management reports be broken down by the capital spend allocated to each service area. (Action: Thomas Skeen).
3. In response to a query, officers advised that around the majority of newly introduced capital schemes were self-financing, i.e. the net cost to the Council was neutral, either because there was a revenue generated to offset the interest or because it generated a saving elsewhere.
4. In response to a question around the potential for the Council to pay off its LOBO loans, officers advised that it was ultimately the decision of the Section 151 Officer as to whether this was in the Council’s interest. Finance officers were continuing to monitor the situation but had not yet received an acceptable offer. In response to concerns about what would happen if the lender suddenly increased the interest rate, officers advised that it was not in the interests of the lender to do so unless interest rates rose significantly, as the Council could refinance the debt using another provider.
5. In response to a question around recent cases where local authorities had taken particular lenders to court in relation to LOBOs, the Committee was advised that these court cases were in relation to a specific type of LOBO which linked the interest rate to the LIBOR rate. The case related to taking specific banks to court who had been found guilty of manipulating the LIBOR rate. The LOBO loans that the Council had taken out were different and therefore not related to the legal cases in question. Officers advised that it was very unlikely that the Council would be able to walk away from its vanilla LOBO loans and suggested that the interest rate paid was similar to the rate that would have been available from the PWLB at that time.
6. From an external audit perspective,  ...  view the full minutes text for item 60.

The Committee received a report from BDO, which provided an update on the progress of the work programme for the external auditors for 2018/19. The following was noted in response to the discussion of the report:

a.    In response to concerns raised in relation to the Council using an old version of SAP, and a consequent lack of an IT ledger system and  control points, officers advised that discussions were underway with a software developer to build a patch on to SAP and improve its functionality. The Head of Pensions agreed to bring an update back to the Committee at its next meeting. (Action: Thomas Skeen).

b.    In relation to the current objections to the Statement of Accounts, the Committee requested to see a copy of the housing maintenance objection, as well as the auditors judgement when it was available. BDO agreed to send the original objection to the clerk for circulation to the Committee. (Action: BDO).

c.    In relation to a request for further information on the reasons behind an increase in audit costs, BDO advised that the fees were increased by around £20k to reflect a number of additional areas of work undertaken. The Committee was advised that some of this work related to an inaccurate dataset being sent to the valuer in relation to buildings and land. Further areas of work included an underestimation of all of the costs accrued for care placements, largely due to delays in payments, which resulted in bills being higher than estimated. The Committee expressed concern with these errors and in particular the potential for creating further budget pressures. BDO advised that officers were working to address these issues. It was noted that work was being done to ensure that more accurate valuation reports were compiled in future.

d.    The Chair requested further information in relation to the review of the pooling of housing capital receipt returns and the specific issues involved. (Action: BDO).

e.    The Committee expressed concern with some of the issues raised in the audit report and, in particular, the fact that this was the first time that they had heard about them. The Committee suggested that, in its role as the Committee responsible for audit, it should receive information at an early stage and requested that a process be developed to ensure this. The Committee requested that it receive a full report on the two issues that were raised in relation to the asset register and the underestimation of care costs. (Action: Thomas Skeen/BDO).

RESOLVED

That the audit progress report was noted.

To consider any items of urgent business as identified at item 3.

N/A

26^th March

26^th March