This week in West of England Combined Authority:

Council Navigates Financial Waters Amidst Shifting Markets

The West of England Combined Authority (WECA) Audit Committee met on Monday, 27 April 2026, to scrutinise the council's financial health, with a particular focus on treasury management and the effective use of reserves. While the committee noted positive returns from some investments, concerns were raised about the performance of pooled funds and the impact of market volatility.

Treasury Management: Balancing Risk and Return

The committee reviewed the Treasury Management Monitoring Report for the third quarter of the 2025/26 financial year. Discussions highlighted that while pooled funds have experienced unrealised losses due to market fluctuations, they continue to offer higher returns than other investment options. Councillor Jonathan Hucker raised a point about the closure of the Net Zero Banking Alliance, but was reassured that this was a known development and did not jeopardise the council's investment strategy.

It was explained that capital depreciation in these pooled funds is not realised in the income and expenditure accounts due to a statutory override. This allows these investments to be held as an unusable reserve until 2029, with a dedicated treasury management reserve built since 2019 to cover potential losses. This approach aims to protect the council's financial stability while still seeking to maximise returns.

Reserves Policy: Strengthening Financial Resilience

The committee also reviewed and approved the revised Financial Reserves Policy. This updated policy aims to provide clearer definitions for key reserves, including the General Fund Reserve, Treasury Management Reserve, and Transport Levy Smoothing Reserve. It also establishes clearer benchmarks for reserve levels and strengthens the link between reserves, the medium-term financial strategy, and corporate risk.

Councillor Jonathan Hucker questioned the level of the Treasury Management Reserve, particularly in relation to the pooled funds. He was informed that the £5 million reserve is considered appropriate. The policy aims to maintain a General Fund Reserve of 5% of net annual revenue expenditure, a figure aligned with external auditor recommendations.

However, the Transport Levy Smoothing Reserve, which aims to hold at least 5% of expenditure, was noted to be drawn down to zero during the current financial year due to unexpected pressures, such as increased concessionary fare reimbursement rates. This highlights the real-world impact of external factors on local government budgets and the need for robust reserve management. The committee agreed to consider tightening the wording around the aim for this reserve. A request was also made to include a statement confirming that investments do not adversely affect the risks of the mayoral combined authority, which was agreed to be added in the next iteration of the policy.

UK Shared Prosperity Fund: A Legacy of Support

An update was provided on the United Kingdom Shared Prosperity Fund (UKSPF) programme, which is due to conclude in September 2026. The committee noted that WECA received a lower allocation of UKSPF funding compared to other combined authorities, due to a government formula based on needs such as deprivation, population, and unemployment.

Despite the programme ending, key projects, including local regeneration schemes, the Regional Business Support Service, and the We Work For Everyone programme, have secured continuation funding through WECA's investment fund. This proactive approach aims to prevent a gap in service delivery and ensure that staff funded by the UKSPF are retained.

Councillor Sibusiso Tshabalala inquired about what fund would directly replace the UKSPF, given the UK's departure from the European Union. It was noted that while there is no direct replacement for the MCA, the government has introduced funding streams like the Pride in Place fund and town centre funding that go directly to unitary authorities. This transition underscores the evolving landscape of government funding and the need for local authorities to adapt and seek out new opportunities.

Other Matters

The committee also noted the Interim Audit Committee Annual Report for 2025/26 and reviewed its forward work plan for the upcoming year. Concerns were raised about the density of the agenda, with a suggestion to explore the possibility of additional meetings to alleviate the workload. The attendance of the Chief Executive of WECA at Audit Committee meetings was also raised and will be followed up.

• West of England Combined Authority Audit Committee meeting on Monday 27 April 2026

• Note: One scheduled meeting, the West of England Combined Authority Audit Committee, was cancelled. The information above pertains to the meeting that was held.