The Audit Committee of the West of England Combined Authority met on Monday, 27 April 2026, to discuss treasury management, reserves policy, the UK Shared Prosperity Fund, and the committee's forward work plan. Key decisions included noting the Treasury Management Monitoring Report and approving the revised Financial Reserves Policy.

Treasury Management Monitoring Report

The committee noted the Treasury Management Monitoring Report for the third quarter of the 2025/26 financial year. Discussions focused on the performance of pooled funds, which have experienced unrealised losses but continue to offer higher returns than other investment options. Councillor Jonathan Hucker raised concerns about the Net Zero Banking Alliance having closed down, but was assured that this was a known development and did not impact the council's investment strategy. The committee was informed that while pooled funds have seen capital depreciation, these losses are not realised in the income and expenditure accounts due to a statutory override, allowing them to be held as an unusable reserve until 2029. A treasury management reserve has been built since 2019 to cover potential losses.

Review of Reserves Policy

The committee reviewed and noted the revised Financial Reserves Policy. The updated policy provides 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, specifically in relation to the pooled funds, and 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. 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 concessionary fare reimbursement rates. The committee agreed to consider tightening the wording around the aim for this reserve. A request was made to include a statement within the policy confirming that investments do not adversely affect the risks of the mayoral combined authority, which was agreed to be added in the next iteration.

United Kingdom Shared Prosperity Fund (UKSPF)

An update was provided on the UK Shared Prosperity Fund (UKSPF) programme, which is due to conclude in September 2026. The committee noted that the West of England Combined Authority (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. While the programme is ending, it was confirmed that 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, preventing a gap in service delivery. Similarly, staff funded by the UKSPF are expected to be retained through this continued investment. The committee discussed the potential for a national evaluation of the programme, led by the Ministry of Housing, Communities and Local Government (MHCLG). 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.

Interim Audit Committee Annual Report and Forward Work Plan

The committee noted the Interim Audit Committee Annual Report for 2025/26, which summarises the committee's work over the year. A minor typo in the report was identified and will be corrected. The committee then reviewed and commented on 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 committee also discussed the timing of offline briefings. Councillor Tshabalala raised a question regarding the attendance of the Chief Executive of WECA at Audit Committee meetings, which was noted and will be followed up. The committee voted to approve the forward work plan.

Finally, the committee discussed points to be referred to the main committee and provided feedback on the meeting.