The Audit and Risk Management Panel noted the 2022/23 Annual Audit Letter, the Draft Statement of Accounts for 2023/24, and the Treasury Management and Capital Outturn for 2023/24. The panel also voted to recommend to full council that an additional £1.3 million of approved contingency is earmarked towards the Woolwich Future High Street Fund programme of works.

Annual Audit Letter 2022/23

The Panel considered the Annual Audit Letter 2022/23 by Grant Thornton, which identified two significant weaknesses in the council's arrangements for securing value for money in 2022/23. The first related to the challenging financial outlook and the council's approach to mitigating overspends against the budget. Grant Thornton noted that the council had delivered a £25.1 million overspend on services, which was mitigated through one-off measures, including the use of reserves. Grant Thornton stated that:

Repeated use of one-off mitigations, especially the use of reserves, is not a sustainable financial strategy for the council to take.

The second significant weakness related to the regulatory notice issued by the Regulator of Social Housing with respect to the identification of failure to meet minimum service standards. Grant Thornton acknowledged that this notice was a result of a self-referral by the council and that the council was taking steps to resolve the recommendations of the notice. However, they also stated that:

It is a Grant Thornton firm-wide national approach that any local authority subject to regulatory notice has a significant weakness in securing arrangements for achieving value for money.

Damon Cook, the Director of Finance, explained that officers had responded robustly to the issues raised in the audit letter, and that a savings programme had been agreed with a value of £33.7 million. In particular, he said that 30 of the proposals put forward were of a 'rethinking services' type, and that these savings would be recurrent, i.e. they will occur each year.

The Panel noted that there were six recommendations from previous years that had not been addressed. Councillor Matt Hartley said that he was surprised not to see more about rethinking services in the management response to the audit letter, and that he was probably, in a way, most worried about the recommendation relating to delays in management acting on internal audit recommendations. Mr Cook said that there was now an escalation process in place to flag issues that had not been addressed.

Councillor Ivis Williams urged officers and members to adopt a culture that promotes compliance and good governance, and asked the panel whether it was possible to create a tracker to follow up on audit recommendations. Councillor David Gardner agreed that a tracker was a useful idea, and the Panel agreed to recommend that a tracker report on the external audit recommendations for the last two years be created.

Councillor Hartley also proposed that the panel recommend that full council consider appointing a second non-voting independent member to the panel, with the relevant accountancy expertise. He said that this would help the panel, who are not experts by any stretch, to scrutinize what's in front of us. The Panel agreed to recommend this to full council.

Draft Statement of Accounts 2023/24

The Panel considered the Draft Statement of Accounts 2023/24 which had been submitted to the external auditor, Mazars Forvis. Mr Cook said that the Council's capital investment had totaled £318 million in 2023/24, of which £251 million was deployed on housing related projects. He explained that all borrowing undertaken was sustainable.

Councillor Gardner asked about the huge difference in the Housing Revenue Account (HRA) between 2022/23 and 2023/24, where gross expenditure had gone up from £120 million to £218 million. Mr Cook said that this was due to the revaluation of the housing assets themselves, which resulted in a loss. He said that there can be some very, very significant swings up and down, just depending on how they go.

Councillor Denise Hyland, the Cabinet Member for Finance, Resources and Social Value, drew the panel's attention to a table on page 13 of the draft statement, showing the amount of work the council was doing in terms of investing in new homes.

Treasury Management and Capital Outturn 2023/24

The Panel noted the Treasury Management and Capital Outturn 2023/24.

Mr Cook said that the Council had maintained an under-borrowed position during 2023/24 and that this was prudent as long-term borrowing costs were expected to fall during 2024 and 2025. He said that moving forward, the primary focus of the Council's borrowing strategy would shift to external borrowing.

Councillor Gardner asked whether the £4 million contribution to the Elizabeth Line station now complete[d] our contributions and free[d] up resources for other priorities, to which Mr Cook replied that it did.

Councillor Hyland drew attention to the investment that this council is making in new homes, highlighting that [t]hat figure could have easily got lost in the report. She noted that the housing emergency was costing us over £19 million a year in temporary accommodation costs alone and that the council had been forced to make some difficult decisions to balance our budget and continue to fund vital frontline services. Councillor Lade Olugbemi agreed that this was a good move, and said that acquiring properties for use as temporary accommodation would be a good thing.