Transcript

And we're live streamings. Okay, good evening and welcome everyone attending this meeting. This meeting is being live streamed on YouTube so welcome to everyone viewing online. Concerning meeting etiquette, these may ask that you indicate you wish to speak by raising your physical hand. People online should raise their virtual hand and we will monitor the screen for virtual hands. Please be mindful that as the chair, I cannot see the screen behind me. Please direct any questions yourself as chair. Anyone attending remotely must turn on their camera when speaking. Please note that the chat function on Zoom will not be used for questions and answers on the agenda, but you may communicate via the clerk. In addition, if there's an issue with the sound in the chamber, please let me know as the mics can accidentally switch off. May I remind members and officers in the chamber so the clerk and the public can hear you. As you will recall, the meeting scheduled for the 12th of February 2025 was cancelled and the date of the quarter end in December 2024 was not considered. As we are now in March, I have agreed that the quarter reports be considered today and will be on the date to date, not to the December quarter end, and that will therefore not need to take the quarter reports in April. The procedure document annual review is currently under review for completion by the end of March, and I've agreed to take that report at the April committee. You will notice too that we've added a report this meeting financing the 2025-26 capital program. The committee has also been sent the external auditors report since the last meeting. I asked for this to be added to the agenda so the members could ask questions on the reports if they wished. External auditors are attending online. Agenda item 1. Apologies for absence and substitutes. Independent member Culpus-Som has indicated she's online and will need to leave the meeting at 8pm. Councillors Childrie and Chadder have indicated they will join the meeting online. Are there any other apologies from members? There's no apologies but Councillor O'Day is here as a substitute member. Thank you. Item 2. Declarations of interest. agenda members who are physically present, are there any declarations of interest? Item 3. Minutes of the last meeting. Members are requested to consider the accuracy of the decisions and minutes of the last meeting of the Audit Committee held on 15 January 2025. Are there any matters of accuracy? Okay, and that's agreed. Are the minutes agreed? Yes, agreed. Thank you. Item 4. Action log. Committee is asked to note the contents of the action log. Are there any questions on the action log? Okay, to members present in the room, may I see by a show of hands is the report noted. We'll now consider the substantive agenda items. Item 5. Auditors report to those charged with governance. ISI, that was 260. I'm allocating 20 minutes to this item. I invite the officer, Meneer Hall, to introduce the report briefly and will be followed by members questions. Thank you. Thank you, Chair, and I believe colleagues from EY are online to answer any questions about the report as well. Just to briefly introduce this report, members will recall you approved the accounts in the January meeting. This is just the final bit where the officers have issued their report on their conclusions and findings. As said at the last meeting, the new and main statement of accounts were given a disclaimed opinion because the officers didn't do the work on it, although they did form a conclusion on the value for money. And they've also formed an opinion on the pension fund because they did conclude that audit. So, any questions? Councillor Paul, please. Thank you, Chair. I've got two questions. First question, page 37, section saying recoverability of loans with related parties. The phrase there, it says recoverability of the loans at the balance sheet date requires management judgment. Can I have the order to explain to me what does that phrase mean and what sits behind that comment, please? I might have a supplementary depending on the answer, Chair. OK, thank you. Thank you, Chair. Very happy to pick up that question. So that page of the report highlights the areas of audit risk and the areas of audit focus of similar to prior years. It draws to the committee's attention that recoverability of loans with related parties and how management accounts for that is a judgment area. And as part of the normal planning of the audit, we determined that we would consider the evidence which management can provide around the recoverability of those loans. And then therefore, how they were represented within the balance sheet as of the 31st of March 2024. Complimentary, Chair. It says required management judgment, which implies, let's say, there was no management judgment. There's a lack of management judgment in recoverability of those loans. I'm just interested in the evidence you reviewed, which led you to that judgment. That was, through you, Chair, that was a risk that we assessed that as auditor we needed to consider. As the member will be aware, we issued a disclaimer of opinion, so it did not indeed carry out any substantive work in that area. OK, Chair, just to follow up, could perhaps the auditor write to us. I'd like to know whether you looked at the 2023 external audit. I think it was Verito report, whether you considered that in your judgment and whether you considered there has been an incidence of popular approving loans about their business plans. And I wonder, did you review that piece of information in how you got to your judgment? I'm here to confirm again, we issued a disclaimer of opinion on the council's twenty three, twenty four financial statements. So I'm not able to issue I was unable to issue an opinion over any area of financial statements. OK, Chair, my next question. On page 50, your value for money executive summary. You say there's no significant weakness in financial stability in governance. However, when you look at the report, it adequately spell out the problems of the council, i.e. it's going to government and asking for a significant EFS. You talk about the use of reserves. You talk about the financial challenges in some certain key areas. The council subsequently took £67 million out from the EFS. There was an LGA report which was quite negative regards to the governance. Again, business plans were approved before loans. I wondered, surely there are significant weaknesses. And you state the evidence that seems to be a disconnect in the evidence you put in the report and your final judgment. I wonder, do you want to have an opinion as to why there appears to be a disconnect? Through you, Chair, I don't believe there is a disconnect. Our responsibilities are specific in terms of the role of the external auditor, which is set out within the code of audit practice by the National Audit Office. Our responsibilities in relation to value for money are to consider the arrangements in place of the council, not whether there are any risks in this case associated with the council's financial position or financial sustainability. So I am content in terms of the areas which were subject to review by us as external auditor. That was not everything that was subject to review. Only those areas where we viewed that there may be a significant risk, that the arrangements in place did not represent a significant weakness. That is very different, Chair, from whether any significant risks exist in relation to the financial sustainability of the council, which the Member has highlighted. It doesn't provide me the answer, Chair, and I might refuse some voting on this item. Could you just explain what it is? Well, Chair, within the report, it says there are no significant weaknesses identified in financial stability or governance. The report sets out financial weaknesses with governance and financial stability. Therefore, how can the report say there is no significant weaknesses identified? Just based on plain English, there appears to be a disconnect from the evidence in the report from the judgment given by the auditor. And for that reason, Chair, the answer given to me, whatever justification, I'm not happy with the answer. And I'd like to record in the minutes my reservations over the answer. Stephen, are you able to provide any further clarification on the distinction that you stated in the previous comments? So the risks attached as opposed to a process of governance that you didn't identify weaknesses in? Yes, well, I'll try again, Chair. So as the external auditor and planning our value for money work, we're required to identify where we view there to be any significant risks to value for money. We identified four significant risks based on our responsibilities set out in the Code of Audit practice. They were in relation to financial sustainability, how the council ensures that it makes properly informed decisions. Three elements to that, one in relation to the governance arrangements over the subsidiaries, one in relation to the report received in October 24 from the regulator of social housing and the C4 grade provided to the council. And the council's arrangements for the production of financial statements and being able to support an audit in relation to set out on summary on page 50. The risk on the reporting criteria was around how the council plans and manages its resources to ensure it can continue to deliver services. And we set out what we view as the risk of significant weakness and arrangements there. And we have concluded that there is no significant weakness identified in the context of that risk identified. We did identify two significant value for money weaknesses, one in relation to the council's arrangements for social housing. And secondly, in relation to the council's ability to prepare draft financial statements and to support the audit process in respect to the 23-24 financial statements. OK, Councillor Paul. Just have a difference of opinion. Like I said, there might be a process rushing out why the auditor did what they did. But looking at the actuality of what we see here and the words used by the auditor, I say there seems to be a disconnect. Now, in terms of a process point of view, you know, there's justification for the process. That's what the auditor did cite. But looking at it, I think there is significant weaknesses. As Dave pointed out in their report, we just have a different opinion share, which we're not going to meet in the middle. OK, any further questions on the report? Yes, Councillor Garfield. I wondered if regarding the financial statement issue, regarding the casting errors and the line items without verifiable notes and the inconsistencies. I wondered if people online might like to enlighten the committee and those who might be reading the minutes of the meeting at a later date. As to what the level of concern regarding those inconsistencies are. Remind us of the page that you're looking at, Councillor, please. All on a slightly different page, I think. I think it is from right, Councillor Garfield, page 27, going by the numbering, the auditor's own report. Looking for their numbering myself. I think Pauline is just trying to get the number on the printed list as well, just for ease. Page 27 of the auditor's report is page 51 of the pack. Yeah, no, it's not that I remember seeing that about the casting errors, it's a bit further down. That's what Councillor Paul was asked about. No, no, I'm just going to try to help him make it work. Page 21 of the auditor's pack. Page 21 of the report. Agenda. Thank you. Yes. Yes, you're absolutely right, thank you. Page 21 of the report. The conclusion of the report is helpful for both the committee and for those online, or for yourself at least. The conclusion by EY was the findings indicate potential inaccuracies in the financial records. I know that, you know, with a somewhat trained eye, the level of inaccuracies are not so great as to have flagged the concern in the executive summary. But an explanation, nonetheless, of what those inconsistencies were, I think would benefit from this. Sure, thank you, Chair. So, yes, on my page 45 of the pack, or 21 of the report, we summarise some of the detailed matters. So, as I said, we issued a disclaimer of opinion. Despite issuing a disclaimer of opinion, we are required to draw to management and those charged with governance any errors that we've identified from a high level review of the financial statements. And as the member quite rightly notes there, we identified, I would say, a significant number of casting errors, differences between primary and line items within notes, inconsistencies in terms of the prior year financial statements and numbers brought forward, some missing numbers on referencing and formatting errors. The purpose of reporting these at this level, and clearly we have shared the detail with officers and we'll pick that up as part of the preparation for the 24-25 audit, is to illustrate and support the recommendation on the right hand side around the action required for officers to address these matters as part of the preparation of the 24-25 financial statements. Nia, did you want to come in on that point, or Andrew, please? Yes, I think last year and the last few years we've been hitting the 31st of May deadline, which has always been tight and hasn't allowed us the time that we'd have liked to review the accounts to do results in these areas. Now, legislation has changed. So we are now producing on the 30th of June the draft account. So we're still aiming to get everybody to do their things by the 30th of May. So we've got the review process in June to try and resolve as many of these issues. We won't get all of them, but it should reduce these sorts of errors down. Andrew? Thank you, Councillor, for the question. Just to add, the percentage have beefed up the closing team by a few posts. Skilled and experienced people come in to give us more capacity to do those checks and hit that deadline. And of course, follow up on our external audit partners have brought to our attention. Thank you, Councillor Garfield. That's sufficient. Any further comments, questions? OK, this report is for noting to members present in the room. May I see by show of hands is the report noted. Thank you. Thank you, Stephen. Item six quarterly report on the savings delivery programme. I will take this item as read and allocating five minutes for this report. Are there any questions? And Andrew will be available for questions. Councillor Ford, please. Thank you, Chair. In view of our financial situation, can we afford to have 14 per cent of savings being in the undeliverable bracket? Number one. Number two, why have savings undeliverable? Making the assumption that these were agreed by senior management at the start of the year and now they've been undeliverable. Therefore, in view of our financial situation, what is being done to recover all the savings? To have 14 per cent of savings been undeliverable, meaning every penny, seems to be an unsustainable situation. Yeah, if that's all right, perhaps I could start off on that and then hand over to other members in the team. So the first thing to say, you know, I completely agree with the sentiment. The budget is set. To be honest, realistically, delivery is never 100 per cent. We have to accept the world as it is. Missing 14 per cent of savings, which would be some four and a half, four and a half million pounds on our numbers, wouldn't be a satisfactory outcome. As I say, a sort of realistic delivery target accepting that the world is not perfect will be between 90 and 95 per cent. I think it is important to make the factual point. And I'll just go in and read out part of paragraph 1.1, because I think it's important. The 27 and a half million, 86 per cent delivered. And at this point, slippage of three and a half million, 11 per cent. And then the balance, three per cent, one million non-delivery. So that three and a half million doesn't mean those are all sort of written off yet as undeliverable. We don't know yet what the final delivery against that will be, and it will certainly be later than intended. But just on the factual point, we're not saying that the final delivery figure will be as low as 86 per cent. It will be higher than that, but we don't know the exact final figure on that. But I agree with the sentiment that the importance of delivery of an agreed budget can't be understated. In order to ramp up delivery, we've been doing quite a bit of work through something internal, titled the Finance Management Board, that has been going through over the last two or three months, savings that were going into the budget and have been agreed, and making sure that there are clear delivery plans against those, where those delivery plans haven't been as sharp as they need to be, for example, ensuring that managers prioritise, for example, a head with the staff and the organisation that will deliver the saving more quickly than they had otherwise planned. That's a board chaired by myself, with support from colleagues in finance, and also, importantly, I think colleagues from across the council, who bring different skills, attributes, abilities to that, to test and challenge ourselves. That won't get us to 100 per cent delivery, much as I would like that. The realist in me says it will always be a bit below that. But with the extra work that we have put in with that, and we are still some two or three weeks before the start of the financial year, I am more confident than I was last year in the delivery of the savings. Having said that, it was a very large package of savings to be delivered there. It's straightforward, but will need a lot of attention. I don't know, Andrew, if you want to add to that, if that's all right? One thing I would probably like to add, actually, is that the budget papers are prepared through this budget round that we have all just come through. We did outline the MTFS position for the following two financial years as well. The board that I mentioned, and indeed just management across the council, are working on thinking on delivery for those savings, assuming they will get approved for the following year's budget, of course, further in advance. There's much more chance in those scenarios of those savings being able to be marked and ticked off as delivered from the start of the respective financial years, given the longer lead up and run up to that. So that's, well, I think an important development as well. We'll carry on. I would like to just carry on reporting as accurately as we can on the delivery and show where I don't think things are fully delivered, because I think it's important that these discussions and these transparent discussions take place on this matter. Councillor Hall, please. Thank you for those two explanations, but it doesn't answer my third point. If at the start of the year you said to the managers, this is the savings target, then that is the savings target. I do not understand how during that year certain managers are saying to you, the target you gave me a couple of months ago, I can't deliver it. And they agreed that target at the start of the financial year. Right. Number one. Number two. So why aren't those deliverable savings put in the box, find the savings through substitution? Because it does seem, I still don't understand, I do not accept, if you give somebody a target and they accept it, and a few months later they say, you know what, I can't do it. That is not, well, that is not the way the world works. Because basically what you're saying to people, you know, get through the line, get the budget done. And then the next course you can say you can't deliver it. It's a game. So therefore, what I'm saying is, why can't those deliverable savings and the slippage savings and the one-off delivery given to the manager and say, I don't care, find the saving, substitute it. Okay. Cora, could you comment? There's a couple of points there. I mean, I don't accept that it's a game. I think if some managers were treating it that way, that would be a serious matter. Performance management framework absolutely involves an assessment of managers' financial performance. Again, I make my point. If some managers haven't quite delivered all the savings for whatever reason, sometimes we have to accept that things change in the world. So some things that were perfectly plausible to build into a budget in February, come June, it may be that circumstances have changed and they're not deliverable. But it is really important to have that focus on delivery. Again, I agree with the sentiment about managers should find substituting savings. And indeed that, as the report shows, has happened during the year where managers have not always been able to deliver everything but have found something else they can do. We do have to have a framework with which we work. Council doesn't just set a budget, it sets a policy framework. It's not open to officers then just to say without significant authority, well, you know, we can't make this saving because something has happened. And therefore, for example, we've got this service that council did not vote to be cut. And so the process absolutely needs to enable, as we do through the quarterly reporting issues, to enable decisions like that to be made. That's not always in the gift of the individual manager who may not indeed have anything else in their budget that can reasonably cut outside of that. Again, I don't disagree at all with the sentiment of what Councillor Paul is expressing. I completely agree that there is a really important point about financial responsibility for managers. And we have done as much as we can in the current pay framework to make that as real as we can. There are some limitations properly. The manager's ability to just cut something else if one thing can't be delivered. Okay, Councillor Leopold, quick. I have a couple of questions if that's okay. Yes. I guess Terri picked up on one of my questions. What specific strategies are being considered to ensure the £9.7 million in rolled over savings from £23 to £24 is fully delivered in £24 to £25? Well, they're part of the whole package of what's being monitored here. I'm not sure I've sufficiently picked out, you know, where all that £9 million are in terms of delivery in this table, though. So we certainly not lost sight of them and they remain on the tracker until the year that they are fully delivered until that year completes. They remain in our sights and remain on the tracker so that they are followed up on. In some instances, you may get a saving written out by the sort of budget setting and MTFS process. But I don't think I've got the £9 million broken down delivery. Sorry, Councillor Leopold, I asked if you said written out some of the savings during the budget process. That can happen, yeah. I guess my next question will be then, just off the back of that. Those of us that have been in the Council for a while will know that there have been savings that still haven't been delivered from 2020 to 2021, including the slippage of £1.4 million in children's services. So just with my initial question, what is the strategy? What assurances can we then have that we won't be talking about slippages from this year in 2030? Well, I think as we, I think really it's the work that Kwame was describing slightly earlier, how we're doing more work to seek assurance on the savings can be delivered from the outset, that there are plans in place to deliver it in the year and then, like I said, that we don't lose sight of them and eliminate or that they're not sort of overlooked as time goes on. I mean, what we can't sort of give absolute assurance is a 100% delivery rate on savings. I don't think I could honestly sit here and say that to members of the committee. But, you know, we have learned from what we've done in previous years. There was at one point, you know, quite a lot put in as procurement type savings, and you should see, you'll see less of those savings. And they are an example of, I think, a couple of years ago where we had to face facts on the levels of inflation that you weren't going to achieve those procurement savings and they were written out of the budget through the budget setting process. So, that's sort of facing facts and with some failures there, but you won't see new procurement savings coming through the same way, coming through that budget setting process. I think there's a bit more rigor as to the proposals in the first place. Yes, cancer. I'm listening to what you're saying. Anyone that knows me likes normal language, language that everyone understands. And I'm hoping that what you're not suggesting is that the or actually all savings are all tied within the procurement process on those savings, because I look at all these savings. I just think my concerns are you can't spend what you don't have. When do we save no money left in that feedback? Stop spending. So, using procurement savings as an example. So, you know, that's where we did through the budget setting process, make a decision to, well, essentially to write out, you know, not achieve those savings and do something else through the budget. I understand that, but I guess the point of my question is, what are the assurances, your strategy to ensure that, you know, if I haven't got £10 in my purse, I can't buy a £10.99 meal deal. I just can't do it. But the reason why we're overspending is we're spending money what we don't have. So, my question is, what do we do to ensure that the next year, when we look at these documents, or the year after, we're not looking at such fair amounts of savings that need to be made, because we're not spending money we don't have. I'll try again, and apologies. I'll try not to completely repeat myself. I think I understand you a little bit better. So, through the budget setting process, there is sort of more rigour and budget scrutiny, an important part of that, in the production of savings that can actually be achieved. Then we go through budget setting, you know, there is scripting, as I said, and then we load the budgets onto the fusion system, the general ledger, so it's there, that's where the budgets are contained. Budget holders own those savings, and what they will see is, if they had a budget of £100 and there was a saving of £10, then going into next year, they would have a budget of £90 to work to. It's an important part of the performance appraisal system that they manage and work to budget. There's regular budget monitoring in place, so finance will challenge any forecasts. If I have a £90 budget, and clearly I've already spent £80, by the end of month two of 12, that's going to be open to challenge, so that sort of budget monitoring and challenge and reporting, that exists. And in addition to that, in a sort of risk-based manner, the Finance Management Board, which Comrade was describing earlier, are going through the list of savings, and we are seeking not just details on how will you save in that instance, the £10, how will we know that you've saved the £10, what are we counting, or that's not happening, or the additional, you know, it varies from saving to saving, but what are the metrics that we can look at to show that that saving is indeed delivered? And in some instances, it's really quite easy, because the saving was effectively lander spent from a previous year, that activity doesn't happen anymore, and we can be pretty assured that that is going to be achieved. In other instances, it's much more complicated, especially when I'm thinking about social care savings, which are more complex by nature, because they are preventative in nature. So, you know, that one's a really, we've had some really, I suppose, they're really interesting and engaging sessions with management, thinking about, well, if it's a preventative saving, how do we measure that that's happening? Because you could achieve a preventative saving through some really good work, but if an inflation rate, so just the cost, so you are doing less of something, because you're dealing with need early and upstream, and that would be a very good thing, but your inflation rate, possibly in a sector of the care market, might then sort of increase the cost so much, that just a simple budget monitoring wouldn't show you the saving was delivered, but the work, good work could have been done, but costs could increase. And, you know, we are, like I said, the sort of risk-based approach from Finance Management Board, asking those questions and delving into the delivery of savings. And I do hope that that will come through in the reporting next year as well. Thank you. So, just so that I can understand, except for external factors such as inflation and stuff, that would just increase pricing, if a manager does, using the example that you just gave, spend the 90 in two months, up until now, what are the consequences of that, what happens? Well, there's line management consequences to that. An overspend will prevent, you cannot get a good rating performance appraisal through the performance appraisal system, and that can prevent things like pay rises. Ultimately, you know, there is line management action that could be taken through failure to, or gross failure to, or failure to manage a budget. So that sounds like an individual consequence to the manager, but is there more of like an intervention to the whole department to say like, okay, what can we do to like stop this situation? Is there some sort of intervention to, you know, have a cap or something like that? Yeah, so the budgets are built on a hierarchy. You'll have a manager in charge of a cost centre and responsible for those budgets, but then there's a hierarchy above them. So, through, you know, more senior managers and then getting onto departmental management teams, they increasingly become responsible for a lot, you know, as you go up, it's a larger and larger budget until you get to director level, at which point, you know, they're essentially responsible for the spend across the whole directorate, so that's the sum total of the budget. And in line with the scheme of delegation, so decision-making being made at the right level, so, you know, capital decisions, for example, are needed for anything over a million pounds, but that sort of filters down and those levels come down. Managers are empowered to make decisions, so perhaps tolerate for some good reason and overspend on one cost centre, but mitigate that by, excuse me, ensuring an underspend on another cost centre that they may be responsible for, so holding a vacancy in one team to manage an overspend in the pressure area somewhere else. But that's the sort of normal, you know, good management you'd expect within the year. You know, we'd expect budget holders to feel empowered within that scheme of delegation to take those decisions and manage till their budgets are causing the layout at that level. So, and of course, you know, savings delivery is just part of that. There's lots of other things that develop and happen within the year. Okay, final question of Councillor Paul, please. Yeah, just to come... Oh, sorry. Just to come back to Councillor Lee Parkworth's question about assurance. The transformation agenda in the Council, I think is it five million over three years? Correct? How much? Much more. Much more. How much is that? How much more? Ten? Over the MTFS period, we've got 23 million pounds of transformation savings. Okay, so just about assurance, because I don't think the answer was strong enough, I can be honest. Could you not bring forward the transformation savings that come in the box down there? Because ultimately, there's no link. What I'm trying to factor in is the link between the transformation agenda and the tracker. And therefore, the question asks, what is the assurance? And Councillor O'Day's question was, we should make sure the savings come in. So could you not pull forward the transformation savings and take them earlier and stick them in the savings tracker? And that will be your plan B in the event your managers or our managers don't deliver. So really, what I'm asking is how you're using the heft of the organisation to achieve the savings? Because what I'm not hearing is the plan B and the backstop. And the backstop to Councillor O'Day's question is, and that conclusion is, if adults is overspending, will the adults executive director get their spine point increase next year? Because it seems to be deputy heads take the can, but not the executive director. Just to be clear on that, the pay system for all staff on senior management grades, that's somewhere between 250-300 staff in the organisation. One of the conditions for them getting a pay increment is that they have managed within their budget, or else are able to demonstrate some extraordinary reason why they could not. Without going into performance-related pay, which is very much not the norm in local authorities, that's about as far as you can take the direct link between pay and financial, unless you took that further step. I don't disagree with the principle about trying to deliver transformation savings earlier. And indeed, my basic point is, what's in the budget is something that we would like to try and meet and exceed and try and deliver. We do have to balance that with disruption to services to residents if you try and implement programs like that too quickly. But you can find that taking cost out is an easy part of it, but maintaining and improving services to residents at the same time is harder. And so it's not, you have to balance these things off. I agree with the basic point, trying to deliver it fast away. I accept the challenges, but if we're not prepared to do it, then it never gets done. But you haven't answered the question. If, for example, executive director at B doesn't hit its savings, does the executive director still get their bonus points? And also the one about the transformation, I know it's difficult, but sometimes you've got to do the most difficult things. Surely it would be a plan B assurance to bring forward the savings on transformation. Because if I take the match confusion, what you said, Conrad, if we can't do the difficult things, then some of the transformation savings are not going to be delivered. So to prove the point now, I would then find that in many years later, those transformation savings are really, really difficult and we couldn't do it. Why can't we just test the organization's ability to deliver? Put in the link to transformation savings directly into the savings tracker and say, if 13% of the savings are not going to be delivered, we will uplift the transformation by 13% or whatever the appropriate figure and bring it forward. If you don't do that, you're saying it's oh so difficult, we can't do it, da da da da, same old, same old. I appreciate how difficult it is. But the backstop is, if we don't do it ourselves, somebody else will come and do it for us. And that's what I'm worried about. I think we're agreeing. It's not stated explicitly in the report. Perhaps could be, probably agree that's not a bad way of highlighting the issue. Just to be clear, that 23 million, I think, but don't quote me, I think the budget profile for that is 5 million this year, then 8 million, then 10 year. I may have got the exact timing of that wrong. That doesn't mean we wouldn't want to deliver more of that and faster. There's a difference between wanting to try and achieve that and actually formally building it, which then gets us right back into the whole issue where we started a non-delivery of savings. Okay, thank you. Final question, Councillor Crawford. I'm going to take the lead out of my colleagues, but I'm going to try and use Blenheim's terms. Forgive me. But some of the plans in the savings document, to be honest, just feel like madness. And by madness, I mean, the definition of insanity would be shooting the same thing over and over again and expecting different results. We have achieved 86% of the savings set out for the year. The year before that, it was 77. Before that, 81. Before that, 62. We've never hit 100% of our savings targets. And the only reason the local authorities have been able to balance the budget for the forthcoming year is with the government bailout and by increasing council tax beyond the usual 5% limit up to 9%. This strikes me as a repeat of previous savings plans that we are inevitably not going to achieve. So next year, when it comes to setting another budget, what part of the results of not this one plan, but five years worth of plans where the savings trajectory has not been met, is going to inform the executives that very different political decisions will need to be made or savings can only be achieved through another government bailout. So I think the figures that you've quoted there show a steady upward trend in delivery. That's not to say, and I haven't suggested that the current performance is as good as it needs to be. But I think over those four years that you've quoted, that does show that an upward trend in that, with further work that we have described, my hope and expectation would be that that rate of improvement continue. The budget properly does include contingencies precisely to deal with unexpected events, or indeed the possibility that some savings, I think there were 71 separate saving lines in the budget that's just been agreed for 25, 26. So even a couple of those would be a high rate of delivery. You have to have some contingency against that. And I'd stress again, this is not new information. We report on this quarterly throughout the year, so there's a very substantial, one might even argue it's an overload of information, certainly a very substantial report that goes to the executive quarterly. This is just one extract from that, showing that actually all the financial performance is being monitored precisely to do as you said, that actually the point of it is not to find out where you are, or that's the first part of the point of it, a really important reason for that, is to decide what to do when that's not the way, not how you want it to be. So those mechanisms do exist. I would not pretend that they are as good yet as they need to be, but they have been steadily improving. So on the back of that, if I may, Chase, the answer is, Conrad, the trajectory has been an upwards one for those four years I quoted. And we can, if we're to be optimistic, as it seems is part of your answer, and assume that for this forthcoming year, we will achieve at least a steady increase in line with the previous four years. That would put us at around about, and I haven't done the full maths, 89 to 91% of target. So has the savings, given the history and the trajectory that you described, been modelled on 90%? Has that feedback been given to the executive? And in fact, could it be given to us as to what would happen or need to happen in terms of slippage for savings into the subsequent year if we hit 90% of our target, which based on history is likely what we're going to meet? I think the short answer to your question is yes. I said earlier, I think that's a helpful thing also to build into these reports, although I do just want to emphasise the point I made. This is one extra from a long report. We keep adding more and more to that. At some point you do just have to sort of ask yourself, we've got too much information to enable us to make decisions on that. My hope is that delivery would be closer to, let's say, 95% rather than 90%. I wouldn't quite try and do the maths during the meeting, but I'd say the budget properly does include some contingencies to respect the real world fact that you don't get to 100%. Something always happens that you didn't plan for. The basic point about saying yes, this is the current impact of all of our forecasts, non-delivery of savings, or indeed just other real world events going against us as we planned, and hence this is the remedial action that is required. I think it would probably be fair comment to say that those reports I've referred to are probably better at describing the causes of the situation than they are at remedial action. I think that would be fair. Okay, thank you. Thank you, Councillor Toomey. The final question we need. Very quickly, so what is the actual expectation then, when budget holders are sort of saying we can save here, what is the expectation or the mindset? Is it I can 100% deliver this, or is it always this just might not happen? The expectation on managers is to deliver the target set. I wouldn't want anything I've said here about, well, 95% or whatever, to sort of mean that some managers can choose to slack off or anything like that. That's not the point at all. It's just to say there are 71 separate savings lines just in the budget that's just being agreed alone with the best will of the world. Something's going to happen to derail one or two of those things, because that's just sometimes the way the world is. We would be doing pretty well up to 95%. I wouldn't want to stop there. I'm not implying any of this, any sort of casualness, and it's okay to miss 5% of a large number. There's still a lot of millions of pounds, so we have yet taken. We have to keep trying, but we just also have to be a little bit realistic and accept that not everything will work out as we planned. Okay, thank you. The report is for noting. To members present in the room, may I see by a show of hands the report noted? Thank you. Item 7, financing the 2025-26 Cabinet programme. I'm allocating 30 minutes for this item. This report is brought to the committee for scrutiny and discussion ahead of the report presented to Cabinet in April 2025. Cabinet will be asked to authorise the Corporate Director of Resources to enter into new long-term borrowing of up to £454 million. That will fund the Capital programme in 2025. I will invite Officer Andrew Ward to briefly introduce the report and then followed by questions. Thank you. Thank you, Chair. I will try and be brief. As we've been discussing, we have just come through the budget-setting process of the budget for the 2025-26 year set on the 27th of February. That included the Capital programme. This report, which is to go to Cabinet in April, is about how to borrow to fund a large portion of the Capital programme. It's certainly a large number, the best part of half a billion pounds. It's quite right that this report receives scrutiny at the Audit Committee. I would also ask, actually, we're very keen to take your feedback and points to improve the explanations in this report. You've already, if I'm here to the committee, made comments about plain English. We will take on board that feedback and look to improve the report so that people do understand. All readers will have a good chance of understanding the report. The report does seek to break down how that large number is formed. Some of it is to replace long-term borrowing that already exists and just happens to be maturing over the next 12 months. Some of it is to replace temporary borrowing, which has already been taken out and we think will be necessary to replace that. It's taken place to fund a Capital programme at this point in time. Then there is borrowing that may be needed over the course of the year. The report does say up to that amount to fund the HRA Capital programme. Opportunities are right and make sense financially. The acquisitions programme, which has been quite an essential part of the strategy to deal with the temporary accommodation crisis and also the other housing development and regeneration programmes and then to a lesser extent, but still in the millions of pounds, the Capital programme, the projects within the Capital programme that have been approved by full finance. That's what the report is seeking to do. Really happy to take your questions and of course feedback on how well the report does in explaining this. Councillor? I want to go first though. If I could let someone else go first, I'd get some questions. Councillor Lee-Parkway? Okay. Hold on. Do you want me to go first? What is that? Go on. I guess one of my questions I have is in a different place, I've had reservations about some of this borrowing, which resulted in a calling. And what am I asking? Good. Right. How will the council ensure that projected 278 million allocated to housing initiatives delivers the expected long-term savings and revenue generation, particularly in relation to the acquisitions programme and the popular regeneration schemes? I'll try and make a start on that. So with the acquisitions programme, for example, there's a lot of modelling done as to the cost of the acquisitions, what it's likely to cost in terms of borrowing, and then there's sort of expected benefits that we get from that. So would there be a project where the rents achieved from the housing would cover all the costs in terms of the acquisition programme? And I think the reports that come through to cabinet on each acquisition seem to do this, is to show that this is overall, there is a financial benefit to doing them because you are avoiding excessive costs elsewhere in terms of finding and paying for accommodation. So I know that there are many more schemes looked at than reports that come to cabinet, and there is a, I'm looking for the right word, so it's not, I don't think failure rate is the right word, but there is a, it's not like everything comes through, things don't come through if they don't meet certain viability tests. It is challenging, I think, to find those schemes, and it may be that we don't need to borrow as much as these total subs here for acquisitions because we are unable to make viable acquisition schemes stick and work, and that would be unfortunate, but it's less unfortunate than going ahead with schemes that don't work, so that's, I hope, some level of assurance there, and we will be, and we are monitoring the performance of acquisitions as well, things like, you know, in those models, you make sure that there is an allowance for a void allowance, you know, even if there's a block of flats, you would expect a small number of those flats to be void at any one particular time, for example. Obviously, that's a cost, and we are, I think we've got increasingly sort of detailed and extensive modelling done on those sort of things, but it's not enough to just present Cabinet with a model that's viable. We then monitor the performance of those schemes as well, going forward. All right, please. Sorry. No, I think that's really good. Just one point to add to that, although to emphasise what Andrew's just said, I mean, I probably get at least an average of an email a day, if not more, about people trying to put proposals to us, whether just individual acquisitions or more complicated schemes, and many of those are at least superficially attractive, and probably more than that. If the only concern was, well, next year or two, they might be worth signing up for, but when you think about some of the issues we've had with 25-year PFI deals, and they weren't as straightforward towards the end as they seem to be at the start, that winnowing out process is really important, and so inevitably, of course, that's not going to be publicised, because what goes to Cabinet is what's supposed to be done, rather than what's proposed not to be done, if you see what I mean. But I can give you that assurance that there are, as Andrew says, many more things that are pitched to us or looked at that do not proceed, and there are things that do proceed. Yes. So I think, as members of this committee, but just as elected members, we're quite privileged when we see papers like these and various papers that come through the Council, because as a normal person, you would never see on a piece of paper 278 million pounds worth of borrowing in any kind of way. I guess my thought around this is, when I look at the paper and it talks to – this specific talks to potential accommodation, it talks to acquisitions of properties to help that need, and what we've been told in other places, regeneration projects that will help the need in regards to our temporary accommodation crisis. Is somebody somewhere in these departments thinking about, for every property we obtain and let, who else is coming through the front door? So let's just say, in the next year, we house 1,000 people in temporary accommodation into properties that we've acquired, which would be brilliant. But is it really those numbers? Because it sounds great when I think about 7,000 people being on the list, 1,000 of those people being into properties, but there are still people walking through that front door. It doesn't stop. It doesn't close. So we're still going up in numbers. So really, what is actually – what are we trying to achieve here in regards to the amount of money that ultimately this crisis that we can't control is going to continue bringing us? Because I guess my worry is we're looking at these figures today, but in the next quarter, we're going to be looking at another set of figures, and I can guarantee they're not going to be less than these. So I guess when do we say, actually, it's a little bit difficult. We're never going to be able to acquire the amount of properties that are needed for the level of need. I think there are several parts to the answer to that. I mean, in terms of the front door and access to housing and all the rest of it, of course, we've had many discussions on those previously happened, all of the same, we do, in fairness to ourselves, need some of the housing officers here as well, but they would, if they were here, would talk a lot about what they're trying to do to try and minimise homelessness, a lot about what they're doing across London, so on and so on and so forth. I just think it's important to emphasise again what this report is doing. The council passed a budget which includes sums to acquire properties and do other capital investment. On a very strict reading of the constitution, which, to be fair, I think is what most London boroughs do, I would then just go away and borrow this money as we needed. I think I've never felt comfortable with that and I've always wanted to bring a report like this specifically to cabinet and by the Audit Committee just to emphasise the point precisely to have a discussion like this, but it's nonetheless important to just understand that this report is explaining how we will put into practice what council voted for with the greatest possible respect. It's not quite the report to sort of discuss what council should have voted for if you say, yeah, what the policy ought to be, but clearly it would be possible to adopt a policy of saying, well, we won't borrow to acquire more housing. You'll still have the same housing obligations, you'll still need to, you know, if someone meets the criteria you will still need to house them, and I think the evidence has shown that because of the way we are managing the acquisition programme, that probably would be a bit more expensive in the short term, but you would not have the long-term debt associated with this programme, and that's a valid policy choice. As I said, I do think there are good arguments for wanting to intervene in this way. It's very different to, for example, speculative investment in commercial property or something like that, and these are, I'm about to use the phrase, safe as houses, because something will then happen, but I mean, you know, since we are for very good policy reasons investing to try and give people a secure home, we do have an asset behind it, you know, that home, so it's not, as I say, it's not speculative, but clearly it would be open for Council to, you know, I think, clearly get the point about, you know, this leads to very substantial levels of long-term debt, and it would be open to Council to vote for different policy. What I'm doing here is very transparently showing how I'm going to go about implementing the policy that Council has voted for. Okay. Council Garthwall, please. Thank you, Chairs. Obviously, the committee, we're here to consider the structure of the borrowing, which I appreciate, but I think it's important to the benefits of the minutes of this committee that we reflect on what the borrowing is required to finance, ergo much of it going to Populo, and that we're considering one without the other. If a private developer were to borrow this amount of money to build, their shareholders would be taking on a great deal of risk. Only shareholders, Populo, is the Council, which means really the shareholders, the taxpayers, and most recently it's been decided that the taxpayer will suffer the burden of a 9% increase in their Council tax to continue funding, among other things, this level of borrowing. On the acquisitions programme, equally something which the borrowing is intended to fund, I think financially this is something that the Audit Committee should really be considering. We're combining two quite different concerns. We're combining statutory responsibilities of a local authority with a financial investment. We're investing in property in the most expensive and most valuable real estate in the country, which is in London, in order to meet a statutory responsibility. So we're competing in the open market with the very people looking to buy in the borough who would go on to be the Council taxpayers to fund the borrowing of the person bidding against them in the property in the borough. There's a real financial game here, if you like, that I find confusing and difficult from an audit perspective. If we're seeking to meet a statutory responsibility, why would we request the audit approval, note I should say, this level of borrowing to invest in the most expensive real estate in the country? Fully if that statutory need required people to be housed and housed full stop, we find that housing where it's most affordable for the taxpayer, where it is most conveniently located but married with that affordability, we're instead competing with the taxpayer on the open market in the borough. It's almost quite a difficult conundrum to swear as an audit committee to say that we approve this borrowing to make said investment knowing that it's to meet the statutory need, which will only grow. I think the one, I get the point entirely, I think the one clarification I need to add though, yeah the policy is not, if we're just looking at acquisitions for the moment, the policy is not to buy only within Newham or only within London, it's to buy within 90 minutes public transport distance of Stratford. That gets you quite a long way and indeed some of our acquisitions have been some distance outside of London. I thought that's gone. If you go further than that, my view would be at least you're no longer enabling people to sort of continue with some link to the borough and that then, relocation isn't it, once you're beyond that. So you're meeting statutory needs? Yes. That policy was amended because of the fiscal risk. So the policy at the moment is 90 minutes public transport. What else? He's being looked up to see whether that can go further. Again, I'm not an expert on the assessment of housing need. I know as part of that you do need to consider things like obviously links to jobs, links to children's schools and so on and so forth. But just to be clear on that point, on the acquisitions are not just competing in... Check out the point of information there. Most expensive bit of real estate in the country. Just point of information. At a previous meeting, Candida Thompson, who was sitting there, corrected me on the 90-minute rule and told me we don't have it anymore. You just said we do have a 90-minute rule. I'm sure that previous overview meeting, she corrected me because I said exactly the same thing. She said the 90-minute rule has been abandoned by Newham. You said we still got the 90-minute rule. Well, I really hope that I'm not mistaken. Candida, who sadly is no longer with us at the council, is more likely to be right than me on that. I could be wrong. I think the point either way would be maybe it's not 90 minutes, maybe it's some other factor, but the point is it's... All it emphatically isn't is just Newham or East London. It's a much wider geographic area than that. But the fact that it's commutable to strap within that timeframe would make it among the most valuable real estate in the country. It's the south-east of England still. It probably goes beyond the south-east, but yes, I don't disagree with the general point that you're making. And again, I do make the point that in assessing housing need, do you need to take account of the ability for the household being relocated to continue, for example, with children's schooling or whatever? But yes, I think you absolutely would want to continue to look at that policy and whether you could go further afield. I just make the point that once you're beyond that, that's relocation, isn't it, for all practical purposes, and that's an important policy matter. I'm not exactly the subject of this report. I agree it's an important area. If I may, I think that the structure of the borrowing from an order perspective is not my concern. It's an auditing perspective. My concern is that an aspiring homeowner in this borough is contributing via their council tax to finance a level of borrowing which helps to price them out of the market. That is what we're seeking to note in this report. And that, I appreciate, you're not here responsible for the strategy that's requiring borrowing. I completely understand that. But I think it would be remiss of the Order Committee to not know that is what the borrowing finances. And that is what the taxpayers who will be bearing the burden of the financing of this borrowing will no doubt be thinking. I would just say this is more coming to be back to a policy issue. It's not necessarily, I don't agree with what you've just said, Councillor Garfield. I think it's conflating two different things. The policy statement you're making is not directly related to the borrowing issue and us seeking assurance on whether that borrowing, what the risks are associated with it. That's something separate. I have a way forward, Chair. My question may be helpful. Okay. Yeah, I'm all helpful now. Can I ask a question? My question is really based on three points. Policy assumption, section 8, which is the financial section in this paper, and the next section which will lead to factors. Andrea, I take the spirit you said you're willing to take comments to improve the paper for cabinet, right? Therefore, reading this paper, she's not here, but Councillor Chadder said about optimism bias. Reading this paper, I wouldn't know we've got £6 million, £7 million from the government on EFS, which we have to pay back in some formal fashion, right? There is no thread in this paper which says to me we've just got a government bailout, right? We're about to borrow just half a billion quid. I think it's germane, the paper refers to the EFS and the implications of paying £67 million back, or whatever way we need to. I know it's split into two, £16 million capitalisation and £50-50-odd for the thing, right? But this paper doesn't reflect the EFS, the financial statement which is going on. Number two, on the policy assumptions, it doesn't state in the paper, coming back to Councillor Garfield's point, so we're spending money because of our TA situation, but you're not telling me what the TA policy is, how that differs from the rest of London and why our TA is so high, right? I wouldn't accept this paper in its current form because it doesn't state the assumptions on why we're borrowing the money, right? There's no paper which says, which answers the question, why is our TA so high? And it's not down to national factors, it's down to issues we have taken as a council over a couple of years. That needs to be in the paper to justify why we're spending so much money on the HRA. So, there should be something on the policy assumptions which sit behind this capital programme, you split it between acquisitions and HRA. I do accept some of the, actually, Councillor Garfield's thrust of his point, I also accept the thrust of the point made by the chair, and I think those two points together should be incorporated in this paper. Section two, on the finances, you say, for future years, budget growth will be required and supported by revenue savings, budget savings, use of reserves, generation and application of capital receipts. What you do not tell me is the scale and scope of those things, how much, when, by what, by how, right? The paper is inadequate on those points, right? You're telling me there's a risk of future, financial risk in the future, you don't tell me what those risks are, therefore, why would I give you authority to borrow half a billion pounds? The other point, you talk about external factors, what you don't do, you don't adequately cover off the external environment, it's as if the paper's written in aspects without any relation to external factors. For example, you don't include in there the Bank of England fan chart, you don't talk about current government policy. Remember, local government is a non-protective department, there are implications for us on future bailouts in the future. There's also issues about inflation. You put in, we are subject to different types of inflation, normal inflation, inflation for adults, inflation for building, you only talk about one type of inflation and one type of interest rate. For example, in interest rates, there's development costs and public costs, you don't talk about that. You talk about the, using your own chart here, you talk about interest rate outlook, Public Loan Works Board, we don't only borrow PWLB, we borrow other rates, you don't tell me what those other rates are. So what I'm saying, if you're asking for comments to improve the paper, A, you should include a section on the impact of the EFS, 2, what policy assumptions you are basing our current capital programme on, acquisition of HRA, 3, on the financial issues on section 8.2, what's the scale and scope of those issues, and section 4, on external factors, you adequately don't capture the external environment. For example, you know, Trump's been in power for 60 days, the world has changed, right? We've got three and a half years of him. Ukraine knows what happens there. You can't predict the future, but you can say what the assumptions are, which you're basing your decisions. So if the underlying decisions change, we can make better decisions. What I'm saying, this report has got optimism bias contained within it. I'm not feeling, but we've captured all the risks. Can I respond to those helpful... They are helpful. They are, I'm trying to be helpful. I wasn't making a joke. Yeah, yeah, yeah, yeah. You seem sharp. Councillors, please. So, you know, I genuinely think that those comments are helpful, particularly about power of 8.2, which I agree with. You know, that's less precise than it ought to be. Yeah, there is further data that can go in there. Again, we do need to be careful about just adding... Yeah, yeah, yeah. Yeah, inflation fan charts might be a useful addition to it. Frankly, anyone can Google them who wants, so I know it was... But sometimes they don't Google them. But I accept the point about, you know, unpacking some of that a bit more. I'm not sure I agree with the point about sort of stating the kind of policy assumptions. As I say, this report is to deliver in the budget that was agreed two or three weeks ago, which includes all those policy assumptions. So we'd sort of just be repeating ourselves, maybe some cross-references. Yeah, cross-references. Maybe a good way of dealing with that. And again, I think we just need to be a bit careful about our ability as one council to make meaningful forecasts about global events. You know, I don't have and nor do I want to spend taxpayers' money on a, you know, large policy team that could assess the likely inflationary consequences of whatever deal may or may not be alive, just in respect of Ukraine, for example. We're going to rely on the local government association and one or two of the other. If it's helpful comments, that's how I thought. The reason why I mentioned that, often I've heard it before and you said it tonight, we're only delivering policy assumptions. It's as if the policy assumptions of this council are correct. Often things change and they are not correct. And what I'm asking for is a realisation that some of the, in the corporate plan and whatever, some of the things we put in the corporate plan, years gone by on past assumptions, might not be correct today. Therefore, when we make decisions, I think it's perfectly feasible for authors to say to elected members, I know what you want, you said this, at the time it's correct, the world has changed, here's the evidence and it sounds like tweaks. I completely agree. As an assurance, this report gives me authority to undertake that borrowing. It doesn't require me to do it. You should say that in the report, Conrad. Big letters. Because obviously it seems like you're here and you want me okay to go and spend half a billion. And I'm going, whoa, based on this report. I think Andrew mentioned that schemes may come forward that may not be approved. So it is subject to review. I think I can make that comment. And just, I get it. Yes, to say that you're asking for approval up to a limit, but it doesn't mean you're going to spend to that limit. Absolutely right. On the basis of the schemes that will be verified and diligence. Some of those assumptions need to be implicit in the report and they're not. You can specify, yes, that could be specified. Councillor. I have a question. Just off suddenly, you said, Andrew, you were very lucky to write those useful comments. I guess, personally, I would ask you, will this document be written in a way that our resident would be able to understand it? And I would go back to a 10 year old having to read it to a member of the family that English is not their first language. I suspect that might be challenging. And genuinely, you know, there are terms and things that perhaps we've overlooked that you, Scott, I think could be put into more plainer English and we'd genuinely like to achieve that. There are some fairly complex ideas or concepts in there. Could you have a glossary then? Yeah, glossary might be a good idea. Of the key points. A summary, maybe. OK, I do appreciate that summaries have to be quite exact if it's going to be in a summary. I guess thought as a resident would be, well, my council checks are still on, the budget just has happened and everyone's talking about it, so it's almost there. One and a half a billion. What does this mean? If I was thinking about this, I would think, well, how are they going to pay for this? How to schedule this? That's what I would think as a normal person on the street. And I would be thinking, well, what are they going to stop in order to pay for this? So I guess my thought would be is how are the council planning on managing the risk of rising interest rates and the inflation on this amount of borrowing and how does it become affordable? Can I add to that, Chip? One of the things is, is how much each year this is costing council taxpayers. For example, you put in there some of the stuff is going to be capitalised. At the end, you will start paying for it. But a very, you know, how much a year did this borrowing going to cost people, right? That could be, I think, what Councillor Billy Parkway said. It's not like Janet and John language, right? It's about people want to know how much is this costing me? But we don't actually implicitly say that. All this borrowing is chunky. How much a year, especially after the capitalisation period ends, it goes up, right? How much does it go up by? The capitalisation period ends in many of those schemes. The income from the asset that you've created from the buildings that are now renting out comes on stream and pays for that cost. To you, right? Yeah. Very simply, you can show that in a way. I'm not sure how simply we can. I'm certainly trying to take the feedback on. I think there is a challenge to communicate all of that succinctly in these reports. There certainly is. I mean, it is always a difficulty in getting the balance of these rights and so the comments are very helpful. I do think, for example, we took, let's say, the carpenters programme, which is the most advanced of the regeneration schemes. That's backed up by a financial model with a cash flow that shows cash inflows and outflows, even if we just took the summary cash outflows in years one to five, for example, six to ten, to sort of demonstrate. There's something that we can work on. We've often tussled over that example, haven't we? Right? And that's a good example. Something like that. And then we'll have to find a way of adjusting for that for net present value using Treasury Green Book. That's fine. Some of us like those sort of things. I do think there's something really important about a process that we adopted. Actually, Terry, when you was having many finance, when we was explaining to residents around the increase in council tax, and we made it, and what we did is we did a piece of work around what it looks like for two adult, two child family, family four children. There was something really important because, you know, John over in Custom House couldn't care less about why we're building houses in Stratford. Let's be clear. So he wants to know why it is that his taxpayer's money is going over there to fund something that he's never going to benefit from. But actually, John might be of use to remind John, actually, in his area, there's been a level of redevelopment that will benefit him and his family in years to come. For instance, let's say shipments is one of the things that's on my head. So it's just, I guess it's about making it personable. It's about making people, not necessarily under every single figure, but just making them understand that we're not just spending money for money's sake. We're not just borrowing money for money's sake. It's for a reason, and it's a vegetable. I think that's helpful. It's worth remembering, isn't it, you know, the nature of the services local authorities deliver. Most of the money we spend goes for the benefit of a relatively small proportion of residents. That is the nature of local authorities. Okay. Okay, I think we can draw this item. It's not closed. So the report is for noting to members present in the room. May I see by show of hands as the report noted. Thank you. Chair, could they send the revised report? Just the links. So we want to see how you take on our comments. You're going to get to cabinet in April, right? So just send us the link. Be great. Okay. Just the link through the clock. Yes, please. Thank you, Andrew. Okay. Item eight, quarterly report of contract waivers. I'm allocating five minutes for this item. Any questions on this at all? Alison is. Sorry, anybody else want to go? The reading agency cannot believe, but for 240 grand, they're the only provider of reading week. And it needed a contract waiver. I've asked for the documentation. I am skeptical over that one. Thank you, Councillor. Just to be clear that there is not a contract awarded for 240,000 pounds for that one item. I know that's what it says. But it's not a contract for five years that has actually been contracted. It's an annual agreement. It's an annual spend per summer for 48,000 pounds. I do understand that it reflects like that, but it's not. I've checked. There's not a one year contract and it is a charity. It's more of a commissioning project via a charity partner. They provide reading facilities and a challenge, an online challenge for every school in Numa. Every single child receives that through this charity arrangement. So what it is, it's a network with British National Library Association. And they're the only people that provide this facility. It's not just books for schools. It's a whole programme of network. And I will send the link to the website around it. They're the only provider in the country that does do this. You can see from the information, I'm good, but I'm not a mind reader. So 240,000 to 48,000 is a big gap. And when you see unique only provider, you do smell a rat. But your explanation is fine. Perhaps some detail. And I think going forward, this was the value on the form. And I think, again, this was a while ago, that the service has prepared the document to enable them to recommission. But there is not a contract awarded for that value with that provider. I accept that. I accept the rationale. Except in the cold light of day, it doesn't… Cold light of day, 240 grand. Agreed. Special contract for reading. Every single pre-school child is participating, as I understand, and available in that scheme, which is a fantastic thing. And actually, when you listen to it, you think 48,000 pounds for every single child in… Absolutely. It sounds fantastic value, but I completely accept on that line of information, it doesn't reflect. 240 grand, I would apply for myself. And stickers will be provided for 240,000 pounds. Thank you. Thank you, Jo. But I will follow that up as requested with all the information. Councillor Garfield, please. Thank you. My only query was regarding the adult social care. Just because similar to that support point, I have something that's well made. It's one of two one-offs given. The other is explained in the explanation. But is there a reason… Would this one-off extension be provided again? Is it going to be required at this time? Again, at the time of completing this, the lots are in the market and we have done… 30 providers have applied, have registered for those lots. So, that actually is in the active in the market at the moment. I have been told, as you can see, this extension expires on 28th of April. We will not be in a position because the number of… it's one of these things. When you run a procurement, you get a lot of suppliers. It takes longer to evaluate and select. So, I have been notified, I haven't told Comrade yet, that there will be another waiver request for this. In order to… For the same amount? Half a million pounds? Hopefully a bit less. I don't know that, but what I'm saying to the committee here is being upfront. We are on program in terms of the… that lot too is out in the market. But the evaluation of the amount of bidders we've got and the continuity and high risk of the service, we… and that's… There is a good response to that lot and there's a very good chance we will be having an extension to that because of the time it takes to evaluate them properly. And our evaluation of procurement contracts as an improvement was an example earlier given by Andrew to a separate item. That had no reference to any of the procurement work. We are market-led in terms of pricing, as you can imagine, and the main impact on procurement award is the specification of the purchase as opposed to market-led and things like that. We'll expect to see it again next quarter. I… Unfortunately, I believe there will be another extension to enable this care provider. Can I just… It will come later in the risk register later on, but in various times on the council, I've often heard that adults say they can't control the market and I've always disputed that. You helpfully said you're evaluating bidders from different… The question… Are you doing a wider piece of work to inform the market for adults and help them shape the market? I've never believed what they say to me. They're just price takers. I do believe you can make the market. It interestingly just said you've got a few… I just want to know, are you doing a wider piece of work to help adults? I can come back to you with a detailed response to that, I think, in terms of… I understand the question. There is a desire to shape the local market. It takes time. It takes a lot of time. I can answer that question, I think, more fully when I've spoken to the teams involved. All I would say is this lot, I know, because I checked. We have over 30 providers that submitted bids to that lot. That is a good response to the market. As you can imagine, if you have two providers, it doesn't take very long to evaluate and assess and you can start your competitions. That was very useful. Great. So, somebody actually thinking of making the market, whereas in the past, it's as if we're just order takers. Yeah. Understood. Understood. Yeah, thank you. We'll be far quick. Thank you. I just had a process question. It's about something Josh said in regards to… I just wanted to be sure that we're not using the contract waiver as a business as normal, and that contract waivers are only being granted in exceptional circumstances. Yeah, absolutely. I mean, six awards in five months, six waivers, and two of those are under £50,000. I think, bear in mind, our annual spend is over £400 million. I think that is quite robust, actually. They are looked at by myself and Conrad. We are undertaking some new training for our procurement officers. I'm new in post. We've got new legislation, which I will be sharing with all councillors, all member briefing around the new procurement act, which is enabling in some ways, and they'll be refreshed with people around internal processes and use of waivers. But genuinely, six in six months and two under £50,000, I think, is quite good practice. We're a complex, large organisation. You're always going to get the urgency with regards to the ceiling works and the bridge depot. That is in the market. That security contract is a big contract, and that is out in the market at the moment. So some things just take a bit longer. I totally understand that. I guess it ties back to some of the questions earlier in regards to savings. Because this will create an overspend if it's not done. Agreed. I guess the reality is, as an audit committee, we can't look at things in isolation. We have to look at it as a whole, and all the pieces are coming together. I reviewed all the contract waivers for another piece of work. And there was 22 last year. And the majority of them are around running out of time. They're not what we want to say with incumbent or particularly bad practice. It's just office of resource and priorities and time. I'm not saying that's an excuse, but I think that is probably a furor around emergencies, unforeseen items, expenditure that we didn't foresee. But the majority are around time. And that is a training issue. That's a resource issue. And that's an issue that we're always going to be up against. So we're a large, complex organization. And the program for this year we are going through is training and awareness and some streamlining of some of our internal governance processes to enable officers to start the market earlier. I think that will help. There are lessons learned. Oh, yeah. I've got a small question. Final question. You mentioned you're going to be reviewing our strategy in regards to procurement. Yes. Okay. Are you looking at the moral hazard of social value? Value. And I bear in mind Liverpool. I've read Liverpool's report. Part of it is because of the application of social value within the NS postcode and implications. Will you be looking at how we apply social value within the council so we avoid moral hazard of each application? Absolutely. We've just created a working group around developing our social value policy in Newham because we need a refreshed policy, a clearer policy to understand what our deliverables are, building on the community wealth building, ambition and our climate change emergency. And we're really going to focus on tangible, reportable social value deliverables that are agreed and set throughout the organisation. That policy will be coming for circulation. Community wealth building and social value, the moral hazard of those two concepts underpinned by what happened in Liverpool. You will be taking that into your policy. You will be considering it. Yes. Yes. And Birmingham as well. And North London. Yeah. Well, there's plenty of good and bad practice around. But yeah, we will be, say, it's on the procurement development plan to develop and implement a new procurement strategy because it's really important. Thank you. We've got a lot of officer support for it. Okay. Thank you, Alison. This report is for noting to members, may I see by a show of hands if there's a thought noted? Thank you. Okay. Item nine. The internal audit update. I'll take this item as read. It's the GDPR thing, yeah? No, no. All right. That's the next item. All right. We're doing which one? All right. Number nine. Number nine. Sorry. So this item is covering the work that's been completed since last report. And excellent services are here if you've got any questions about the questions that they've reached. We've also got the Director of Education, Annabelle Bates, online as well. If you've got any questions about that, that should submit. Tell us about Plachette School. We've got a few questions, Chair. Yes, Councillor Ford. I would like to know about Plachette School first. What went wrong? Why did it go wrong? What's been done? Please. Good evening, everyone. Thank you. In summary, most of the issues relate to governance, school governance. And as you can see in the report, there was one particular concern around the appointment of an LA governor. Unfortunately, we hadn't been informed as a local authority that they had changed their governors. And that's due to the outsourcing of governor services, which was in place until last summer when that particular part of our contract, which was with MPW, came back in-house in September. We weren't given the details. The governor has been appointed, so the most critical risk within that report has been dealt with. And we've now appointed Councillor Sarah Ruiz to the governing body of Plachette. The other aspects relate, a number of them also relate to outsourced services to the school. And the school has responded. We've met with the school with the auditors and gone through each one. And there are strong plans in place now to address each aspect. The school outsources those services directly with MPW, for example, the payroll issue, and is now looking at sourcing a different provider so that they don't fall into the trap again. A number of aspects should have been picked up, but the service hasn't been doing what it needed to do for the school. Yes, Councillor. Just to follow up. And there's something about something being in-sourced from MPW. Obviously, MPW provide other services to schools, so the implication is something's not quite right between the relationship between the two, and I suspect there are other serious issues in the mix. Can you give us a flavour that you've got those issues under your radar, please? Yes. We have monthly contract meetings with MPW, myself, one of my heads of service, and a number of other members of the team, depending on the areas we're discussing. We've now escalated our concerns around these areas because you're right to say they've appeared in other schools, and I think that was captured in the report for Plachette, my comment in that regard. We've now taken it to the board of MPW and to the chief executive, and we're currently consulting with all of our school leaders and chairs of governors as to whether to withdraw from the contract from September and provide the services to schools in a different way, and predominantly in-house through our own teams. That's in the middle of a consultation process, so we haven't concluded yet. We're working closely with our colleagues in the finance team to see what's feasible in terms of withdrawing from that contract. We're on a one-year, one-yearly contract with MPW, so we can end the contract in time for September should the consultation lead us to that, but we have escalated it and we're meeting monthly. Some aspects have been addressed, others are yet to be addressed, and we continue to raise those directly with the organisation. On those issues, with regards to payroll, there was an issue a couple of years ago where, how can I put this, the teacher was trying to pay her staff from a mountain in Peru because MPW had not paid, they paid the payroll twice, I think, in one school, the school didn't get the money, and there was an issue where they asked us, I think, to subsidise their pension with a bond. Are those issues on your radar, and what's the financial implications to the authority, please? Thank you. I wasn't aware of the Peruvian example. I was, I have to sign it up. Through my monthly meetings, they're more frequent now with our finance colleagues, we have much tighter scrutiny of the work of our school business managers, the finance committees. Historically, there wasn't any scrutiny happening in a routine way with the business managers, so we meet, my team and the education service, but also our finance colleagues meet regular business managers to look at processes. We also are much more focused on accountability of finance committees and governing bodies, so not just the governing body meetings themselves, but the scrutiny of those finance committees, making sure they're following due process. The audit process itself, so for example, this report is shared as lessons learned with our governors so that they can audit what has and hasn't happened. I don't want to be too optimistic and say that all of everything picked up here is related to legacy issues that we are resolving, because obviously, I need to scrutinise very carefully, but I do think the improved ways of working between the education service finance team, business managers, head teachers, chairs of governors and finance committee leads is making it much more robust, and to be honest, it has led to a number of occasions needing to refresh governing bodies, bring new skill sets in. Some governors have stepped away, they've potentially been in post for too long. We have also had a number of cases where we've spoken to the trade unions of our head teachers because they provide very good training for head teachers around financial governance. It is, although it sounds like there have been some very troubling situations in the past, it is also one of the things that the teacher regulation agency now takes extremely seriously, financial misconduct of head teachers, much more so than in the past. So, we are trying to make sure we are preventative with our training for our heads, and they come into that role as well. Thank you, Annabelle. Councillor Garfield, please. Thank you, Chair. I wanted to ask Annabelle, and it is very good to see you FYI, about your comments regarding future plans for potentially bringing the services of MPW in-house, because as I'm sure you're more than aware, anyone who has worked, I mean, the officer of political side in that department knows that the unique structure of MPW is a particular issue, given that it is co-owned by a number of local authority-maintained schools, and so I know that it's not an easy or straightforward process to just offer those services from the council. I think the resources, that's my first theory, as to how much, not necessarily how much they are going to do, but are along the fork of having a solution. Definitely, bringing those resources in-house surely would result in a growth proposal for the department, because it's not something that I believe, and if I'm wrong, please correct me, could be done with existing resource, and I'm not aware, and again, correct me if I'm incorrect, that that growth proposal will be in the most recent budget passed by council, so what's the status of those two items? Or in the transformation plans. So thank you for the question, Councillor Garfield, good to see you too. So the two questions, I'll take them in that order. It is very complicated, the set-up, and the two sides of it, the relationship with those involved in MPW, and also the practicalities, and I'll come to the financial side of it last. We are going through a process of decoupling to consult, first and foremost, on what would be directly commissioned by the local authority, and what is a service bought by the schools. Schools have delegated decision-making around where they purchase some of those services. Some of those services, they can still purchase from MPW. Some schools have already begun to purchase things from other providers. It's completely up to the head teacher and the governing body, as long as they're meeting standards within the governance code. So we are going through the process, and to be honest, at this stage, things have evolved due to some of these issues we've already discussed, and a few others, to a point where some of the head teachers on the board of MPW have also raised some of these issues directly with us, which I think has opened the door to not necessarily make it easier, but make it much more transparent and open that we need to revisit this, because obviously when a school receives an audit report like this one, or when there is a comment made in a complaint about a governance approach, and it comes back to the service that they're buying into, or that they're on the board of, that then has ramifications for that head teacher. So we have good buy-in from those head teachers on the board that we need to, at the very least, review whether this is working for schools. In terms of the financial, and actually, I'm not sure we could have done this a couple of years ago, but because of the way this has evolved over time, we've got to a point where we're consulting with those schools too, and it's our maintained schools. Although academies buy services, that's not our business, we're not the employer of the academy schools, so this is very much the service to maintain schools. In terms of finance, the amount that we currently spend on the NPW contract will cover, in the first instance, the service that they provide if we bring it back in-house. Now, it may be over time that we want to expand that service, because actually it's whittled down over the years to something relatively small as a service to schools, but we've costed this with our colleagues in finance, and we've worked with colleagues in legal as well in terms of whether there are any two-pay implications, given the fact that NPW now do provide services for lots of other boroughs. We are quite a small percentage of their contract, and although it's a sizeable sum, we're talking around £250,000 a year, that covers quite a lot of what we can do within the service. The pieces we haven't yet found a direct solution for, although we have got options, which we will be taking, first of all, to our CAM with Councillor Ruiz in a couple of weeks' time, because it's recently been to our DMT, and then it will go through the various processes before it reaches cabinet for discussion, is the pieces that we can't deliver directly in the education team, so payroll would be an obvious one, some of the technical functions, but it looks like we can almost meet that with a bit of restructure of our own, and also bringing the funding back into the council. That's why we haven't needed to put a growth bid in this year. We may want to extend the service in the future, depending on how it grows, at which point we would take that approach. Thank you, Annabel, I just congratulate Annabel on that progress, because it's been a long journey to that point, I must say. Noted, thank you. Councillor Paul, quickly. Annabel, thank you for the honesty and the transparency in your comments, and just to support the mission and journey you're on, perhaps, Chair, this is one should go on the transformation risk register, because one, this looks like it's a growth bid. It's going to be a growth bid, but it's not in any of the papers at all. It's not probably on the children's services plot. It looks like there's going to be huge integration issues, going from pension liability, going from governor training, and it looks like this is a bigger task, wider than just for Annabel and education. So through you, Chair, could I ask that you have a conversation with Conrad and other senior people, whether this actually goes on the transformation register, because this is a big project, and if it goes wrong, it's just reputational issues for the authority and for schools, and I speak as a school governor, and I see the other side as well, but I think to have no growth bid down, which means your organisation has not captured all its potential costs in the medium term financial will put in view. I'm happy for finance officers to challenge me on that, but I think I'm on solid ground. Do you want to come in there? Okay, let's close this item, and then if there's no further questions. Thank you. Okay. Thank you. Okay, the report is for noting. Report is for noting to members present by show of hands as the report noted. Thank you. Item 10, GDPR audit update. I'm allocating five minutes for this item. Are there any questions on it? Officer Lauren White in line, who can respond to any questions from the committee. Just got three very basic ones. Hi, Lauren. Who is the S-I-R-O, who is the digital officer, and who is the chief information officer? So the S-I-R-O is now Rachel McCoy, the director of legal services. Yeah, digital officer. The digital officer, that was the previously employed Amit Shankar. That is now the interim chief digital officer, Damien Mayer, and the chief information officer is the current existing OneSource IT director post, which myself and two of my colleagues are jointly acting up into. Can you just put your names in the reports, please, so they actually live in brief and accountability rather than job titles? Yes. Thank you. Yeah, I know. Yeah, I know. But, yeah, that's all for me. Any other questions? Councillor Lee-Parkway. No, I don't think I've got any questions. Okay. This report is for noting, thank you, Lauren, to members present in the room. May I see you by a show of hands, is the report noted? Thank you. Item 11, Portly Ford progress update report. I'm allocating five... I'm running out of questions. Sorry, no, I didn't mean to interrupt. Okay, I'm allocating five minutes for this item. And Officer Nick Sharp is available to answer any questions from the committee. Thank you, it's right in five minutes. I have a query on the temporary accommodation project in the fraud report. So it'd be item one then on big page. That the county fraud team at the start of the project tackle this problem and it's temporary accommodation costs to ensure the right people are in the right place. Can I suggest we don't include the word hopelessly in any council document that requires noting by the Audit Committee. I have no reliance on hope. And I really strongly think that that should be removed or reworded. Nick, do you want to respond, please? Remove the word? Is there another adverb that could be replaced for us with note tonight? Well, how about we said the objectives of which are two. So it just became a factual statement, the objectives of the project are two, and so on and so forth. And then that's just a factual statement, isn't it? That's what the project's objectives are. We can't give you a guarantee that they will achieve. But Nick, I'm sure, could talk about a lot of the good work that's been done in that area. If the expression in item 110 were to become contingent on the objectives being met, I think that would be acceptable to the committee. Okay, Nick, did you note that? Yeah, I mean, I'll note those. Please. Councillor Paul, please. Just three quick points. On the council tax, on the sample, 5% is fraudulent. Yeah. My initial comment was surely we should roll this out across a sample, across the whole subset of the TA subset. Obviously, we've got about 31,000 people in our temporary accommodation. 7,000. That's the weighting that you were thinking of. Sorry, it's 7,000 people and I'm weighting this. No, no, other way around. 7,000 people. Sorry, 7,000 people on temporary accommodation. 5% is a big, it's a chunky number. So surely we should roll this out across the whole subset rather than a sample. Yeah, so in terms of the temporary accommodation project itself, obviously this was started out and it was sort of almost testable because we hadn't worked in that area directly before. So in the next report, you'll see we're going to be moving into what we've at the moment described as sort of a business as usual setting of us looking at temporary accommodation. This was a pilot to kind of see what worked, what didn't work. But fully take on board the 5% and perhaps some of the reality side of it as well in terms of not always being able to capture, you know, 5% is, you know. It's cheaper for you to find the fraudulent cases than it is for Andrew to go and borrow money, right? So I think there's a good use of time and you've got to have a conversation with Conrad where how you can roll this out. But on the balance of probability, this is cheaper than we going and borrowing stuff, right? Yeah, and we are doing one. That's fine. So the council tax, is that right? We found 1.3, 1.4 million pound. Is that right? That figure correct? From adding the 971 to the 404. The two figures together, are they? No, so I think it's so the total was identified as the 971 underpaid council tax, the other is what's been added to the bill for the next. So the two together are the quantum benefit of your work, right? Well, I mean, arguably you could say it was more than that because the 400,000 would be in the bills each year. The point is not all of the areas identified translate into an additional ongoing bill. So again, can we not roll this stuff out and make it business as usual? So with the council tax investigations, we employed to the billion post, this is just one person at the moment, one person. So this is this is kind of represented their work the last probably 11 months. Okay. And how many people are you wanting to get then? Because one person has got nearly a million. So in turn, I would need to come back to you to understand whether or not an increase in resource would directly increase the numbers. So I'd have to revert back into that. Just to be again about the sort of thrust of this, the point of the work is to demonstrate the value from it, we don't stop them, we then consider what are the resources needed for it. There is always a sort of diminishing returns thing in these, although Nick says, we've kind of looked at what worked and what actually focused on what was likely to be areas. So it doesn't follow the doubling the resource or doubling of the identification or whatever. The point is, of course, you do the pilot, demonstrate what works, and then you continue it and you invest in it. It's a decision you've got to make. And the second final point on this, you give a very helpful after the table what each thing is. And what struck me, some of those could be systemic changes. You could change a system like the rising 18s. I thought, well, why don't you have a system that says when you reach 18, automatically the system gives you a bill for the full council tax or whatever, right? So some of these are systems add-ons, some of these are process add-ons. And I'd wondered whether in a sort of a work plan over the next three years, you can work with the actual service area to design in the systems change. Is it a switch on whatever system or is it a process change? Because obviously, you can design out some of these. And I take the rising 18s, why isn't that an automatic system? It made me think what system, ERS system we got, which is clunky enough, it doesn't send an automatic bill. So perhaps it's a longer-term piece of work. I can automate some of this stuff, see how to do business case approvals for the work. But thank you, I like it. How can we get it more automatic, more systemated? Because obviously, we had a conversation about savings earlier on. This is like closing the hole in the bucket, right? No points taken, I will take that away and find out more about the individual. Thank you. Any further comments? Okay. The report is for noting to members present in the room. I see by a show of hands is the report noted. Thank you. Item 12, quarterly update on risk management and risk register. I'm allocating 15 minutes to this item. Are there any questions on the report? Nick Sharp and Conrad Hall will be presenting. So if you have any questions for the officers. That's a really basic question, Sharon. Yes, yes. When you mean residual risk rating and risk appetite, can you explain to me the difference? I think it's a really basic question, but I can't find it in my brain what they mean. Okay. So classical risk management, you start off by saying this bad thing may happen. And you assess how likely you think that is and how severe it would be if it did happen. And that's your initial risk score. We've not presented all of that in the space and so on. You then do things to try and stop it happening or to make it less bad if it does happen. And that gets you to what is, in technical language, the residual risk rating, which is still a function of how likely it is and how bad it would be. But that's after you've done the things that you're planning to do to control it. Your risk appetite is how willing you are to tolerate risks. It's very easy to say, well, we would like all of our risk ratings to be one of the lowest possible score, please, because that means everything's completely controlled. If you did that, well, we would need military-grade software on our IT system so you could forget any hope of residents being able to interact with us digitally, for example, to choose a ridiculous example to make the point. And so you set a risk appetite, which is the level of risk. If you got to that level, well, we'll just carry on as we are then. Obviously, as the world changes, we'll change, but you sort of carry on as we are. That's what we have accepted is just the nature of doing business. The cost of reducing the risk more is too high. So ideally, in a perfect world, all of those risk ratings would have been brought down to that risk appetite level. So for example, as you would probably expect for a range of the risk appetites on the low side, we have consciously accepted that, and it goes back to the earlier discussion, that it should have a relatively high appetite for risk in some of the housing interventions that we want to try and do, because if we set a low appetite for that, then we would be tolerating homelessness, and the direction is to try and tackle it, and if it necessarily involves taking some risks. So that, I hope, is a decent, plain English explanation of the terms. Okay, and just to make the point, if I can, if you look at the one on decent homes, and it's number 12, it's red, and its risk appetite is low. So it's high, in terms of our residual risk rating, red. Explain that to me. That's because the regulator of social housing, everyone knows, has said that services, in terms of the quality of housing, are not as they should be. The risk of us providing housing services to the standard we would like to is quite high, because evidence demonstrates that that is the case. And so the risk register is saying, we'll need to do more in order to get back to the risk type level. Where the two colours match, essentially what the report is saying is, you probably don't need to pay too much attention to those risks, because they're being managed in a way that's consistent with what we think the world is like. And if the residual risk rating, the first of those two column is a different colour to the risk appetite, then probably, depending on exactly what, if the residual risk rating is higher than the risk appetite, that means we need to do more in order to reduce the risk. If it's the other way round, that probably means we're actually spending too much trying to control something that's just the nature of doing business, if you see what I mean. Okay, so taking that last example, financial, commercial investments, residual risk rating is yellow, but the risk appetite is high, which is the reverse of the one above, which is the financial. So I'm just trying to get to the exact, the usual problem of, sorry, 2060, yeah? Yeah, 2060, yeah. So, you know, the actual risks associated with the assets that are required, and the regeneration activity are being controlled relatively well, we would be prepared to take some further risks, in other words, to see that risk rating increase, because we think it is appropriate to take risks in that area in order to try and intervene in the housing market as a way of managing long term costs, and yeah. So, probably another way to think of it, the residual risk rating, that's how well we're doing, the risk appetite, that's the policy choice, which you may or may not agree with, but yeah, so yeah, the first one is sort of the operational, how well are we doing, the second is the strategic, what should we be doing. Thank you. Open up my asking app, because that's just fine. Yeah, that's it. I don't want to make it ignorant, but I'll ask. That's a different verification. Yeah. Okay, please. I just want to go on this. Risk reference 801. Just thinking about the conversation, I don't know if it's part of the agenda. You have the page number, please. Oh, I don't have it. It's page 9. Failure to implement the... That's page 216, 801. It's about whether or not we successfully implement the procurement act. That's when you're looking. Well, my question is actually just listening to what was told earlier. I'm quite surprised to see that we have taken two years, depending on what part of the year it came, to implement the procurement act. I just, I guess I want some narrative around that, because it just, when I read this, it talks about the risks are about not being compliant with legal requirements. So I just wondered, is that going to be sooner rather than later? It's a mistake. It's a mistake. It's a mistake. It's a mistake. It's a mistake. It's a mistake. It's a mistake. It's a mistake. Yeah. Well, I appreciate you wasn't here at that point. I might not have been here. I was here for when it... It was two weeks ago. It went live, the new act, on the 24th of February. I think the plan here was around, we have done a lot of work. We've had to change some of our procedures and policies and update our documents. We're in the process of training the organisation to be aware of the new procedures and rules. We've communicated the information to our suppliers, and we've implemented a new e-tendering system, which can publish notices. One of the new requirements of the act is a high level of transparency for all contracting authorities. So for example, there's 17 notices now that if you're publishing above threshold tender, you publish saying, I'm about to come to market. Then you publish again saying, this is what I need. You publish an annual pipeline for all contracts over two million pounds for the next 18 months in advance. Our systems weren't set up to do that. You publish for large contracts, KPIs, publicly, annually. So the organisation and the staff need to understand how to do that, and we purchased and implemented a new system to do that. It has been a lot of work, and there's still work to continue, because we're still in the implementation phase now. Our first procurement hasn't gone out yet under the new act. The other thing to remember is that we'll be running both sets of legislation in parallel. So current contracts awarded at Christmas, say, on the old regime, that went out and started. So you may have gone out to the market for X, Y, and Z in January. You started your tender. Bids are coming in now. Even though it might not be awarded till May, you're under the old regulations. If we start tomorrow, which one of Nick's internal audit was one of the last, the service provision for internal audit services, one of the last procurements we've done on the old regs. So if we go out tomorrow and say, well, Andrew never buys anything, but say Andrew wants to buy something, that he wants to buy something. He never buys anything. Let's say someone wants to buy 10 refuse freighters. We go out tomorrow, that's under new regs. So we've got to have both lots of legislation happening at time. So I don't think it has taken two years. I think the implementation of the legislation went through Parliament and was due to go live on the 24th of October last year. So the organisation before I got here was planning and doing a lot of work. It got pushed back just because of central digital platform cabinet office. So there probably was a bit of lead time. I think it got to the point and then everyone sort of slowed down a bit. Now we've perked up a bit, as it were. So it certainly hasn't been consistent work for two years, but it is a large change for us in the procurement world. It's the biggest change in the whole of public sector procurement. So it is quite exciting for people like me. I am training, members will be given an awareness training as well around the differences, because the main issues are transparency reporting requirements are included and social value. And access for SMEs to our contracts is one of the main drivers that cabinet office are trying to push. I have a suggestion then. So this reads as if we've been sitting on it since 2023. But if it's only just come in, then maybe that discussion should say that. So it doesn't look like we've just seen it. Yeah, sure. I accept that. We've had another risk register for the project, for the programme, us and legal services for the actual procurement team. And that risk register probably hasn't fed up, to be fair, into this one. But we can happily show those green, I think. Yeah, I think it's important to take credit where credit is due. Thank you. Just a quick, you're thinking of full transparency. Yeah. Producing the scores for the actual successful bidder. Yeah. We'll be producing the little table of scores. So who got what scores? Well, interestingly, there's a change to the feedback letters. So award letters, as you would be known, you know, like you won, you got 90%. You know, the next person got 70%. There's a change to that, which is called assessment summaries. And the idea is that if you won and you didn't win, you won at 90% and you came in at 82% score, you'd get the same information saying supplier A won and they got 90%, you got 82%. And this is our feedback we gave supplier A, the winner, in order to help unsuccessful bidders rebid and get feedback on their bids. I think the risk around that for us as an organisation is, well, I think there's a risk for the suppliers in that the analogy I use is, you know, say you went for a job interview and you didn't get it. And then we phoned you up and said you didn't get it. But this guy is amazing. This is why we gave it to him. It's a bit, you know, it's quite difficult to balance to be able to say this is why the successful bidder won. Yeah, I think we're in the process of training our moderators and evaluators to ensure that we've got consistent feedback in the scoring, because it's always been public information if requested. But now there's going to be a higher level of scrutiny over that feedback on the above threshold awards. And we want to ensure that we're, you know, we're professionally, transparently fair treatment to all suppliers and all evaluations. And the principles of the Act haven't changed. Public sector procurement principles haven't changed. But what has changed is the level of scrutiny and transparency and certainly supplier performance. There's other changes around debarment lists from Cabinet Office. So post-Grenfell, certain suppliers will be able to refer to Cabinet Office. They'll be deciding whether they're appropriate or not for contracting authorities, not as an individual authority. So if somebody had a ban on mail practice or tax evasion or some issue, a central government department will be doing that as well. So there are quite a lot of technical changes, but they're coming on stream throughout the year. But the readiness was for the 24th of February. Our systems are ready. Our documents are ready. We're ready. The lawyers are ready. We're as ready as we can be. What was that date? 24th of February. Okay. Any further questions? Is there no team to members present in the room? May I see you by a show of hands? Thank you. Item 13, ahead forward plan. Are there any questions or comments on the report? It's on the work plan, is it? What is on the work plan? On the forward plan, work plan. Yes, yes. Just the comments about, we had Annabelle coming from Education talking about local space. I think there's a conversation, MPW, of the conversation between perhaps you and Conrad and officers about, does a plan come back to audit, perhaps later in the year, to update us? Final request. And whether, and in that plan, whether that plan is incorporated into the transformation plan, because there isn't the organisation, there is no plan mentioned by my colleague here, there's no plan of budget bid at all noted for bringing that in house, which is an organisational risk. Bearing in mind, we've had a conversation about savings and a conversation about transformation. That is, cost is nowhere on the organisation's map. It's not correct to have a conversation. I wouldn't give any more work, but it just seemed there's something there and there's no visibility on it. Yeah, I mean, let's not make more of it than it is. We're told the current cost was £250,000 a year. If that's increased by 20%, that's £50,000. That's by no means a trivial sum, but, you know, it's bear in mind the council does spend well over a billion. You're right. And that's why I said for you to have a conversation, because it might be you write a paragraph of that note, Conrad, and that's in the note and we take it. But that's why I don't want to give you work. That's why I specifically said you guys have a conversation, balance and cheat and you tell us whatever. Okay. Any further comments? All right. The report is for noting to members present in the room. I see by a show of hands, this report noted. Thank you. Item 14, date of the next meeting. The date of the next meeting is currently scheduled for Wednesday, 30th of April, 2020. Date agreed? Agreed. This concludes tonight's business. I'd like to wish everyone good night and thank you to those watching on YouTube. I now declare the meeting closed. Will members please wait for the clock to confirm that the live stream has ended. And thank you to officers who have attended tonight.