The West of England Combined Authority Audit Committee met on Monday, 27 April 2026, to discuss treasury management, reserves policy, and the winding down of the UK Shared Prosperity Fund. The committee noted the Treasury Management Monitoring Report, approved a revised financial reserves policy, and received an update on the UK Shared Prosperity Fund, noting that continuation funding has been secured for key programmes.

Treasury Management Monitoring Report

The Audit Committee noted the Treasury Management Monitoring Report for the third quarter of 2025/26. Discussions focused on the performance of pooled funds, which have experienced capital losses but continue to provide investment income above 5% on average over the last five years. While the Net Zero Banking Alliance has closed, the council's treasury strategy incorporates principles of responsible investment by endeavouring to invest in banks that adhere to such initiatives. The committee was assured that despite unrealised losses in pooled funds, they are still considered valuable due to their higher returns compared to other local authority lending. A statutory override allows these losses to be held as an unusable reserve until 2029, with a treasury management reserve built since 2019 to cover any potential losses.

Review of Reserves Policy

The committee reviewed and noted the revised financial reserves policy, which was last approved in 2021. Key changes include clearer definitions for the General Fund Reserve, Treasury Management Reserve, and Transport Levy Smoothing Reserve, along with more defined benchmarks for the General Fund and Transport Levy Smoothing Reserves. The revised policy also strengthens the link between reserves, the medium-term financial strategy, and corporate risk, with annual reviews to be conducted through the outturn and medium-term financial strategy processes. The committee discussed the Treasury Management Reserve, which currently stands at £5 million, acknowledging the previous view that investing in pooled funds was a mistake but agreeing it is sensible not to exit these funds until their value recovers. The policy aims to maintain a General Fund reserve of 5% of net annual revenue expenditure, a figure aligned with external auditor advice. The Transport Levy Smoothing Reserve aims to hold at least 5% of expenditure, though it was noted that this reserve would be drawn down to zero during the current financial year due to unexpected pressures, such as increased reimbursement rates for concessionary fares. The committee requested that future reports include monetary figures for reserves and clarification on where these funds are held. A suggestion was made to include a statement within the policy confirming that investments do not adversely affect the risks of the mayoral combined authority, particularly concerning climate change, which was agreed to be added as a footer in future reports.

United Kingdom Shared Prosperity Fund (UKSPF)

An update was provided on the United Kingdom Shared Prosperity Fund (UKSPF) programme, which is due to end in September 2026. The report highlighted that the West of England Combined Authority (WECA) received a lower allocation compared to other combined authorities, based on a formula considering factors such as deprivation, population, and unemployment. The committee discussed the effectiveness of the funded projects, noting that while targets for physical outputs like tarmac were exceeded, quantifying success in people and skills programmes, such as the We Work For Everyone programme, proved more challenging, with a reported 1% success rate for employment after six months. However, it was confirmed that continuation funding through WECA's investment fund has been secured for key programmes like local regeneration schemes, the Regional Business Support Service, and the We Work For Everyone programme, ensuring no gap in service delivery. Similarly, staff funded by the UKSPF will continue to be supported. The committee also discussed the fund's role as a replacement for European Union funding post-Brexit and inquired about any direct replacements. While no direct replacement for the MCA has been identified, government initiatives like the Pride in Place Fund and towns funding are available, though these often bypass MCAs and go directly to unitary authorities. The committee was assured that unitary authorities can submit business cases to WECA for investment fund funding to continue successful initiatives.

Interim Audit Committee Annual Report

The committee reviewed and approved the Interim Audit Committee Annual Report for 2025/26. This report summarises the committee's work throughout the year and will be updated to include items from the March and April meetings before being finalised for the summer meeting. A minor typo in the report regarding the endorsement of the treasury management strategy was noted and will be corrected.

Forward Work Plan

The committee reviewed its forward work plan for the upcoming year. Concerns were raised about the density of the agenda, leading to discussions about the possibility of additional meetings or better spacing of briefings to avoid overly long sessions. It was agreed that the possibility of scheduling more meetings would be explored. The committee also noted that amendments to the Constitution would be included in the autumn. A question was raised about the attendance of the Chief Executive at Audit Committee meetings, with assurances that this would be taken up with the Chief Executive.

Points to Refer to Main Committee and Feedback

Members were invited to raise any issues to be referred to the main committee, with the next main committee meeting scheduled for 5 June. The committee also provided feedback on the meeting, with one member reiterating concerns about overloading meetings and the need to balance the forward work plan with the capacity for additional sessions.