Transcript

and are now live streaming. Okay, that's about 60 seconds behind. Okay, shall we? Okay. We'll go now. Yeah. Ready? Okay. Good evening. Welcome, everyone, attending this meeting. My name is Councillor Terry Paul. I'm Vice Chair of the Committee and I'm Chair for this evening. The meeting is being live streamed on YouTube, so welcome everyone on YouTube, online. Concerning meeting etiquette, please may I ask for you to indicate your wish to speak by raising your physical hand. People online should raise their virtual hand and we'll monitor screen for virtual hands. Please be mindful, but as Chair, I cannot see the screen behind me, but I have a screen in front of me which should aid my proceedings today. No problem, Conrad. Please note that the chat functions on Zoom will not be used for questions and answers on the agenda may be communicated with the Clerk. Pauline Egan is on my right. In addition, if there's an issue with the sound on the Chamber, please let me know if the mic can accidentally switch off. I remind officers and members to speak up clearly in the Chamber so that the Clerk and the members of the public watching can hear your contributions. In respect of the item agenda number seven, the local government peer review or LGA progress on the action plan. Please be advised that this agenda about since publication, the chair Fiona Marsh has agreed to defer this item to the next meeting. And the report will not be considered this evening committee. Is that okay? So we move on to the agenda item one, apologies for absence and substitutes. Apologies for absence have been received from the chair, independent member Fiona Marsh. Apologies for absence have been received from Councils Garfield and Lee Parkway. Noted but labour group substitutes were not available this evening. That's item one. If you move on to item two on declarations of interest. To those members who are physically present, are there any declarations of interest? I see none indicated, so I'll move on to the next item. Item three. Minutes of the last meeting, members are requested to consider and agree the accuracy of the decisions and minutes of the last meeting of the audit committee held on the 12th of March. Are there any matters of accuracy? I note none from the members. I note none from the members. So we take that as a trial. Are the minutes agreed? Yep. Okay. And no matter the rise from the log. So we go on to item four, actions log. The committee is asked to note the contents of the actions log. Are there any questions on the actions log? Questions from the committee? I've just got one pulling. Obviously, there was two there with an end date of 17th of April. One is Fiona's, the chair who's on holiday. One is Alison Chur's world. Could we put some new dates in there when that will be done? Okay, I'll move it to the next meeting. There's four. There's four. Yeah, I'm sorry. There's four. So we've just put some new dates. I know you were. Yes. 259 is closed today. Okay. Yep. Okay. Lovely. Thank you for that. To members present in the room, my seat by show of hands, is the report noted? Great. Thank you. Great. We'll now consider the substantive agenda items. Item five. RIPA policy and procedure. Document annual review. I'll allocate 10 minutes. This item. I invite the officer Mandy may hat. I hope I've pronounced that correctly. To introduce the report, which will be followed by member questions. Mandy. Mandy. Hi. Yes, thank you. I'm really far away. I just want to flag that the it's actually Alison Sherwood who's prepared this report as well. She's also online. She's also online. So I looked at it from a legal overview. Okay. Sorry. Mistake on my part. That's okay. But obviously I'll stay on if there's any questions. Alison, my bad. How could I forget you? I apologise. Okay. So over to both of you, if you want to do a combined show. Over to you. You've got like 10 minutes. Yep. Sorry. I'm struggling to. Right. Yeah. So the report has, does have a couple of updates to it. They're marked in red. Also. Sorry. I'm just trying to open it. Yeah. So obviously the lead officer is Sean in community, director of community safety along with myself. And then we've obviously got the assistance from legal services as well. So there are only a few amendments in there to 1.4 where we've added the director of legal and governance into as a senior responsible officer as well. Pretty much everything is pretty much the same for that until you get to 4.6 where there's been a slightly, the policy has been slightly updated to take into account. The revised CHIS. And obviously we've added 2023 into the use of the under the covert surveillance 5.1. Actually within our service community safety enforcement, we don't actually, we haven't made any RIPA applications this year. We didn't make any last year. So all our CCTV is overt with signage. We've got fixed cameras and we've got 4G movable cameras as well. And we've also got the environmental team that use the cameras, but they all overt as well. So there's been no applications for RIPA. Okay. Okay. Thank you. Any questions at all? Cool. Cool. Cool. So a couple of things. One of the things is how is a serious criminal offence defined when you talk about these operations that you'll make an application for mandate, would you, would, I'm just, the policy to see if it's defined. So, um, I haven't got the code of practice in front of me in which the, it clues the full definition, but in terms of local authority matters, if you go to page 30 of the agenda, it does set out. So obviously RIPA, it applies to, um, covert surveillance where it's directed and we give the definition in the policy and, um, it does specify for local authority matters that it's to do, it's to do with a criminal investigation, which relates to an offence punishable by a maximum custodial sentence of six months or more for an offence relating to underage sales of alcohol or tobacco or nicotine inhaling products. And you're likely to obtain private information. So we, we tend to look at offences that would fall within that category. Um, but obviously we do conduct other, um, criminal cases and, you know, if RIPA we were to, you know, use RIPA or it was triggered, then we would look at whether, you know, I would look at the code of practice to make sure whether the definition would meet that criminal offence that the local authority is investigating, but generally that's what in 1B on page 30 is generally what we've, we've looked at it for in the past as well. Um, I guess where I'm coming from with this is, um, since October 2023, there is a lot more activity where we have had surveillance, um, investigative natures and in this report, this is, there's no applications that RIPA made. I know there's one of the fields in 18 who's actually from Newham. So I, what, what does Newham, what does the council get involved in? What, how, how does that compare to the things that we are seeing out in the press? Um, where I know people, Newham members are actually involved, um, does that not, is not part of this? Is it something else? Yeah. I mean, I, I don't know the specifics of what you're referring to, but obviously we'd have to look at what type of, obviously this, this policy is to do with particular surveillance that's carried out, that's triggered by the act, by RIPA. Um, so, um, you know, if you're, if you go to page, again, I'd just direct you to page 30, obviously we define what surveillance includes. So it's monitoring, observing, listening to persons and their movements and conversations and their activities and communications and recording anything in the course of that. So obviously if that's part and parcel of what an investigating officer is going to do, and if it's, um, covert so that the person doesn't, is unaware that it's taking place, then that's when we would have to think about is RIPA engaged and what's, you know, do we need to complete an authorisation? I don't know what you've seen in the press, but obviously there would have to be some, we, we always have to check out, oh, is the type of surveillance we're doing following the legal parameters within RIPA? Because obviously if that's the case, then we have to consider an authorisation. What you might have seen in the press might have been, you know, it could be any type of surveillance, but it doesn't necessarily mean that, you know, it's engaged in terms of what the investigating officers do. Yeah. So I guess I'm not saying that there's anything mentioned about Newham specifically. I do know one of the Newham 18 is a Newham member. So given that, I don't know kind of the background behind, and this says there was no evidence of what's happening in May since 2023. So what, where does that come under? Mandy, I want to ask this. Was that a particular case that you were referring to, Councillor? Mandy, I'm going to come up. Alison, do you want to come in? And I've got a supplementary to call something. Alison? Yeah, I think so. Obviously we've got, as well as what we're talking about now, we've got the, the, over quite, quite hundreds of cameras on the borough as well. And then the police will, there may be occasions when obviously the police will use their, will use that power. So, and then they'll, they'll, they'll cover that off themselves and they may use our control room for that. But, you know, and, and, and that might be where you'll see investigations, but it's the police using that power. Okay. Not the council. Can I ask a question to both of you? Over the years, sitting on the audit committee, I've been informed of various investigations of where ASB in social housing, gang activity on our estates and fraud in relation to benefit fraud, staff fraud, for example. Are we saying that those investigations don't meet the threshold or ripper? And if not, what were we doing to gather the evidence? Can you, just to add to Colson's question, there is a seem to be a paradox, because the organisation is very good at saying it conducts investigations, but you're saying we don't use any ripper powers. Can you explain the apparent paradox? So, so chair, just to explore, we, we don't always have to use this type of surveillance in order to gather evidence. So, for example, if there's antisocial behaviour, depending on, you know, what's happening, if it's in social housing, then usually officers can give their, you know, evidence of what they view in a, in a section nine witness statement, and that's sufficient. So, you know, this obviously surveillance is carried out if you're, you know, for example, we've had it in previous internal fraud cases where it's considered whether surveillance is necessary, but obviously though it's very few and far between, I would say, given, given the fact that, you know, I've been working with the legal service over 10 years. So the cases you're talking about, evidence is gathered, but it's not necessary, you know, that the, the evidence threshold doesn't need surveillance. So you can get officers' statements, we can get business records. Okay. Just for clarity. Yes. Where those cases, when we do investigations, we don't use RIPA, do we proactively say on the case files, RIPA is not required in this case? No, they, I mean, I haven't seen that they specified that, but obviously when the cases come to legal services, we do consider whether, you know, there's any evidential gaps. And if surveillance was necessary, then we would point that out. Yeah. But you can see where the committee is coming from. Yeah. We hear numerous investigations happening in the organisation and you'd naturally think a resident would look at it and will say, of course, they would have to do some investigation, right? And yeah. Yeah. And you're telling us you don't do any investigation. You can see from the lay person's. There is an investigation. It's just that it's not always necessary to monitor people and observe them directly, which is what surveillance is in effect. Okay. They're not aware of it. And obviously, like Alison said, the cameras are overt that they're using. If we, you know, we have had, I mean, it's just been a long time where we've had cases where that directed surveillance, where, you know, people are unaware of it is, has been necessary. We've been able to just gather evidence by other means and other ways. Okay. Yeah. Okay. Alison, then I'll take Councillor Chadder. Yeah. Just quickly. So because of the cameras are overt. So what we would say is that we don't actually, we know that it's a hotspot and we know it's a hotspot for maybe, say, street drinking or fly tipping, but we don't know who's doing it. So that's why we're not, it's not directed at a person or at a premise. It's just that we know we've got an issue and the camera is there overtly with a sign. You know, they're all numbered. It can be monitored loosely or it can be monitored closely, but it's because we don't know who's committing the offence. So we are using the overt cameras to gather the intelligence. And then the intelligence that we gather is what forms the investigation. And whether that's done through a body-worn video camera or a 4G or a CCTV or just through the officer's eyes, then obviously that's all over and not over. Thank you, Alison. Rita? No, I'm just going to clarify. So RIPA is one form, one tool that you have in your armour to undertake an investigation. It's not always applicable. There's certain cases where it's applicable. So it's not actually even about the threshold. It's about the circumstances of the investigation. Yeah, that's correct. So it's a set thing is that is directed surveillance necessary to obtain the evidence that's required. Thank you for clarification, Councillor Chatter. RIP? Not a written expert, obviously. This question might sound a bit stupid. But building on Terry's, people will be expecting the council to be taking action on things like fly-tipping, which, you know, you may have overt surveillance, but it's very easy to cover your face and get away with it. People aren't seeing that kind of progress. So has there been applications or considerations of using this kind of surveillance to tackle those sorts of issues? Because I guess people, residents will be expecting the council to get all our calls and tackling those sorts of issues. And overt surveillance is very easy to avoid. You would think that, wouldn't you? But even we put cameras up in hotspot areas and we do actually catch people committing offences or fly-tipping and they come by a vehicle and then, you know, we're able to trace that vehicle and then either give them a fine or prosecute them. So, you know, cameras don't necessarily put people off from doing things. Some of our high streets are full of cameras and we still have a lot of crime on there. So it's not all, you know, but, and we do put them up, they are there as a deterrent as well. So we might have hotspot areas where we've had it from vehicles and then, you know, you do put a camera up and it does prevent it as well. So not only does it detect it, it deters it as well. Okay. What I will say, I think it's a very useful short discussion. I think we've probed the boundaries of when it's applicable, when it isn't useful clarification and intervention from Councillor Chatter, we should see it as a tool rather than as a threshold to enter RIPA. I think that's quite a useful thing. And obviously, Mandy, we're not lawyers here. So we're asking questions from the perspective of residents and councillors. So hopefully you, you might from your trained legal mind, why don't they know that? But we're just asking from the perspective of what would a resident expect, like Councillor Childhood Comet, you know, residents would expect all the tools to be used to stop all the negative things. So maybe it's about, and I note, we're being inspected, what, 26, aren't we? Yes. Yeah. So it may be, as we look towards next year, to go above the tick box and we comply, a bit more explanation in there. Because I think that useful discussion about it's a tool, not the thing, there's not a threshold you go beyond, could be quite a useful clarification. One question I've got, it says in section 4.4, it sets out a number of compliance issues, which must be done to improve governance, right, before the section 2026. Perhaps the table in the next report saying when you did this would aid compliance. Because looking at this, I don't know when and if and how and when we did it. Yeah, that this report is... Yeah, I think that's probably referring to when it was the last inspection, that was what was noted. But yes, we were, I mean, that's obviously ongoing every year as well. For example, you know, refreshing the policy, training, updates. But I know your points about what you said about probably just defining, you know, how surveillance can be used more and the context in which you've explained from your point of view. And also what I noticed here, there's lots of the policy is on the website, which does send my heart cold because very rarely people go on the website and update themselves on a regular basis of what the policy is. So on section 4.4, perhaps next year it will be quite useful. I think in tables, there might be a better way of doing it. Just setting out when, how, when, when did the organisation do all these things, right? And especially as we're looking towards an inspection, I think that transparency and clarity might be useful in articulating our compliance with the regulations. Just a comment as a helpful form. On that note, everybody okay to note it? Can I thank you both, Mandeep and Alison, for adding some clarity and clear up some misconceptions on our parts really useful, but thank you very much. You're welcome to observe the meeting or go off and have a nice time in the garden. Up to you. The report is, the report is for noting the members might see a show of hands, but the report is noted great. Before I go on to item six, I want to welcome Hayley Clark from EY is our new auditor. Welcome to this meeting. It's a shame we haven't had more people here. Um, uh, the agenda is not as meaty tonight as it has been in previous months, but it will be, can I welcome aboard newly joined new and you will, I'm going to show you that. Um, I'm going to go into the next item. Item six accounting policy. I'm going to allow 10 minutes for this. I invite Meneer to briefly introduce the report, which will be followed by members questions. Meneer, over to you. Thank you, chair. Um, as is every year, we bring the accounting policies to the meeting at this time of year, um, for members to review and comment, um, there aren't many changes this year. There are two new accounting policies which were brought to members last year for their, um, preview. Um, so the two, the two changes are the capitalization of debt charges and the, um, impact of IFRS 16 on leases. Um, and just to be for me, we've, we've, haven't capitalized debt charges before. We are going to capitalize them from 24, 25 onwards. Um, and then it will only be then once the asset is in use, then we stop capitalizing them. So it's just to bring the asset up to use and leases, um, in summary form, effectively all leases where we are lessee, unless us will be brought onto our books and treated as if they are finance leases, um, in very briefly. Okay. Any questions for members? Rita? Um, just, I'm just. Wondering, the changes in the Procurement Act, do they have any bearing on 1.5 and the fair value measurement? Are there any accounting changes that you, that you have had to make in the Procurement Act? No, well, not that we're aware of. The Procurement Act, I suppose the point is it affects how you buy things or how you're required to process to go about to buy things, rather than how you account for them once you bought them. Thank you. Councilor Charlie? Um, so, like, capitalizing these charges means that you're increasing the value of the assets, right, or depreciating the costs over time. Um, we'll be initially increasing the value of the asset when it comes onto our books. Paying things off. Yeah. And then you're paying it slowly over time. Does that then make the accounts look on paper healthier in the short term, but lock you into a minute slowly over the long term, which you, which, if, if, if any reason council planets has got healthy, you could have actually been up earlier, which I feel is, I mean, uh, I think the point is, you know, we're adopting this because we think it is a, you know, proper and proportional, sensible accounting policy. So I mean, let me, let me give you a, the kind of thing that we're trying to get at suppose there's an asset, uh, that we're, uh, building directly ourselves and the construction cost is 10 million pounds and you have to borrow during construction costs. And the cost of that interest makes it 11 million pounds. Uh, so if we're doing this ourselves, the actual cost is 11 million, which only 10 million of that gets capitalized in the ordinary way by the building contract. Uh, whereas if we had acquired that, uh, asset, um, keeping this at principles rather than specifics in some way, uh, from a private contractor who had incurred all of those building costs and interest costs, so if we bought it for them, the 11 million that it would cost. Uh, so what we're doing, if you see that in practice, in both of those cases, we're getting an asset with that value, and this is ensuring that we treat it in the same way, uh, you, you are right capitalizing the interest means in effect that we will pay that off over the life of the building, typically 40 years, rather than in my example, capitalizing 10 million acquisition costs over 40 years and, and paying the 1 million interest costs upfront. So it does have that effect, but the purpose is to ensure that we're treating assets the same, according to their value, rather than differently, according to the exact means by which they were required. But it's only really changing on paper though, right? Because you're still paying off interest in the same- Yeah, I mean, the interest would be paid off over a longer period of time. So, I mean, of course, one could adopt a different policy of paying off interest much more quickly and would put more pressure on the budget in the short term. Like the point of the policy is to ensure that we're treating all assets the same, according to their value, rather than differently according to how they were required. That's a quick supplementary. Very quick. Um, why, why was it not a catapult like this previously? Well, that's probably a pretty good question. I mean, we've been constantly reviewing, uh, policies and treatment, uh, and, you know, this came up as an anomaly in that, you know, it is also the case, uh, that as the council's, uh, construction and acquisition, uh, capital program has sort of ramped up to speed, uh, getting a policy like this right is more important. A few years ago, when there was relatively little activity like that, it would have been a less important matter, which may well explain why it wasn't even the focus that we now think it ought to have through the supplementary. Um, looking at 1.25 accounting for heritage asset. So my reading of this is that because of complex nature of heritage assets, they're difficult to quantify it. And I understand that. Um, and this is based on the policies presented before us are based on national guidance. Are they tweaked from you in context? Um, I don't believe so. I think we, we value in accordance with what the code of practice says and how it's all treated. Okay. Just, I mean, might be a question that colleagues tonight can't answer, but I'd be grateful if we could get a written answer back. We're building and investing in a heritage center. People are going to be donating to that. There's also a process where the value of that heritage center is deemed in part by the value of the assets that are going into it. How are we going to account for that in the future? I think we may be having discussions with our auditors as to the best approach and what happens in other authorities as well. So I think it's consistency across. But I mean, the building, you know, is being used for an operational purpose, you know, the provision of service, a heritage center, as opposed to, I don't know, a depot from which lorries go out and collect rubbish. So we will continue to apply the same accounting policy in respect of that building as other buildings to ensure that consistency. Not so much concerned about the actual building, but about the assets within it. Yeah, but the assets within it, where it is material, we would apply the cottage asset policy here, which is, you know, just a standard one based on the national policy. I mean, clearly a number of assets within that, you know, would be very important culturally and locally, but not necessarily of high value. And this is one of the things the policy tries to deal with. Members may well know, I'm sure that, you know, one of the assets we hold is a box and table, which is not really something that accountancy was designed to sort of place a proper value on the importance of that. The policy is trying to put that in a proper framework. But it's probably fair to say that it's not one of the easier accounting policies to apply precisely because financial value is not always the key. Of course. I mean, the only reason why I'm raising it is because I can see further down the line, as a heritage centre opens, you've got a public request for donations to be made to it of assets. At some point, and also in order to sustain the value of the heritage centre and sustain in onward investment into it, we're going to have to provide match funding somewhere. And the match funding comes from the assets. Well, that may be the case. But again, to emphasise the heritage valuation, which this policy deals with an asset, may be very different to the open market value. You know, if one decided to dispose of an asset. I think my question is, is this being captured anywhere? Is that discussion happening anywhere? And does it need to happen to prepare you for the future? I think it's an important discussion more for the ongoing provision of the heritage centre service. I think the accounting for it is probably subsidiary to that. I mean, I would agree with you that ensuring that the funding for that continues would be important, because otherwise, as you say, if there was a gap on it and you were sort of meeting that by selling the assets in it, then clearly that's also saying we'll certainly see. Can I offer perhaps a small action there? I think what I hear, there is a need for some further consideration on how accounting policies will be taken into consideration of our heritage. Could, via your officers, Conrad, make sure that your officers are engaged with the heritage team? Because what you wouldn't want is them to go full on this way, and we go, well, hold on. If we did it this way, it would have helped us. So if you buy your tech, that would be useful. Are you happy with that, Rita? If you want to text forward? Also, you must have read my notes, Conrad. You know, the heritage of the Buxton table is a thing I always mention. And for those residents who don't know what the Buxton table is, it's the table where the Abolition of Slavery Act was signed in Parliament, and we own that. And obviously, for many of us, me included, it's the very reason why we're actually here. So I've always, on this committee, made sure. I fought a long battle, but we recognise it in the accounts. I thank officers for doing that. And also, I'm very pleased to hear, but we are mindful of those assets. Also, Conrad, there is another piece in our collection. We own some very detailed art drawings of some Pacific Islanders done in about the 1700s, which are unique. They're done by very important anthropologists back in the day. And I think it's one of those assets where we couldn't sell them without going to the tribe in the Pacific, wherever you want them back. The reason why I know that, because in a previous situation, previous members of the cabinet wanted to sell those assets, because there was no need for those words. The words were, there's no need for Newham to own such artefacts, which I had to remind the member that it's a global artefact. So it's useful to hear, but we are mindful of what our collection has. It also has global significance in some of our stuff as well. And there are other, I'm not going to go through the list. There are other artefacts which are of national things. For example, we hold a collection for Madge Gill, which at some point will be worth a lot of money. And I could talk to you outside about how other people are wanting to get their hands on that. And that will start in previous years because of the value of the freight. I have to confess, Chair, this is possibly one of those areas where the accountancy tells us the cost of things, but not the value. Absolutely right. And it's all about the value as well. As Newham, you know, we do have some very important things and we need to recognise those. Just, I think, Councillor Chowdhury, just give us some, why did we do these changes? Is it just for a little bit of tidying up? You did mention because of the increase in our debt for housing purposes, it was a necessary tidying up process. Was there any other reasons why we did these particular changes? Well, as Councillor Chowdhury rightly, I mean, the consequence of that, if we stick with my example, not done this, we'd have charged a million pounds to the account in interest in year one and spread 10 million over 40 years. Now we will spread 11 million over 40 years. So clearly in terms of the year one effect, it lessens that. That's been done because this is now a more significant area for us and because it is the right accounting treatment, because it means that we treat assets according to their value as opposed to according to how they happen to be acquired. But clearly, there's a purely abstract thing. It does have a consequence like that. And clearly if members wanted to change policy on that, that could either be done via the accounting policy or you could change your MRP, your minimum revenue provision policy to make it already perfectly sensible and logical and prudent. One could make greater payments through that if the political desire was to pay more. A member's happy with that explanation. And one question on, it's 1.7, you've used the weighted cost of borrowing costs at 3.93. Reading that, A, I didn't know how you got there. And B, in this sort of volatile world in financial markets, I wasn't sure, is that a fixed figure? Does it move? If it moves up, then the cost of our debt increase on our balance sheet. So can you say, 3.93, the weighted average cost of borrowing? I think we probably need to revisit that one. And that one may have just slipped through the proofreading so we can get back and come back with the... Well, that's a test to see whether the chair reads his papers. Yeah. So when you come back with a revised paragraph, I'm a bit nervous when I see weighted, because that's an average. And looking at our, I'm going through my mind here, the different types of loans we've taken out on different durations over the years. And all of those rates are at the same rates of borrowing. Yeah. So to say 3.93, it's like, well, how did we get there? So if you could take that away... Yeah. What page are you on there? Um, 68. Case 68, that one's all in, that one. 68, 1.7. The weight of it. I don't know. The weight of it. Oh, yeah. Oh, yeah. Yeah. Just if you're borrowing. Yes. I mean, just to emphasise, Joe, and we'll go away and double-check it, it is described as the weighted average cost. In other words, the average borrowing cost of all the council's debts, which will have been incurred over a period of 30 years or something like that. We will double-check. And it's not to change a great deal every year for the obvious weight. Absolutely. And just some observations, Craig. Obviously, every quarter, we have the Treasury report back to here. So I'm thinking, wherever the figure is, how does that figure relate back to the Treasury report? I'm looking for the line of sight going there. Current borrowing rates are higher, so that weighted average will be drifting higher, but it's a big weight. It's a slow movement. Yeah. And I think it'd be good to see, but the... This is a sort of emotional thing. But we're not locked in to a rate. Because I'm thinking, as a resident will go, 3.93 seems a bit low. So if the rates go up in the future, does it have a maturity impact on our debt? I know you might not, but from a resident's point of view, I might say, just the significant majority of our debt is fixed rate. Good. Yeah. So maybe just a... I know you're going to take that away, but maybe just a little bit of context. And also, if you can, you know, if there was a line of sight to the quarterly Treasury management report, how would we see that for that transparency purposes? Do you want to agree with that? Yeah. Yeah. Okay. So the recommendation... Thank you for that, Conrad and Munea. Pauline, if you've got the relevant actions there. So the recommendation is to improve the accounting policies for 24-25. I set out in the appendix 1. To the members in the room agree, may I see by serve hands? Also, I note for the record, there are some actions pertaining off this agenda, right, and which will go on the action log at various points to be updated. That's great. Can I thank the committee for that? And thank you both. So item seven, since the agenda's publication, the chair has agreed to defer this item to the next meeting of the committee, and the report will not be considered at this evening meeting. At the next meeting, the chief executive will be here, who owns the actions for the LGA peer review, and she will be here to answer questions on that. So do I note that as a committee? Thank you. Thank you very much. Item eight, the audit committee report, pages 99 to 108. This report is the draft annual report for submission to the council annual meeting in the next couple of weeks, in May 25. Members are asked to agree the draft report and comment on paragraph four, priorities for the year ahead. After this meeting, the feedback from tonight will be added to the report, and the final draft with the chair and myself for onward progress to the annual committee. Members, any comments on the report? Chair, just as a matter of interest, I don't know, I don't think it needs to be included in the report, but it is worth this committee knowing before membership changes, is that there are discussions going on at the Constitutional Review Group about changing the title of this committee to audit and governance, which I think is, wouldn't make any material change to what is discussed, but I think it does reflect the full breadth of the discussions that go on here. Okay, and that will be noted. Arik? The membership next to my name to join July 24th, probably should stick as May 22, probably, yeah. Okay. So I use, because Dave was on to the Greens, and then you, oh, I see. Yeah, the membership member. I see what you're saying, yes, yes. Yes. Yes. Okay, got that point? Yeah. Also, just this sort of drafting thing, section 3.1, there's lots of challenge considered, approved, examined, approved. Perhaps we can group them. Oh, yeah. Yeah. So. What paragraph is that? 3.1. Oh, 3.1. Yeah. Yeah, I think it's more of a drafting thing, but we can group them into key thematic areas, like, about highlights, because I think the challenge, I like the actual, and when we say considered, perhaps review is a stronger word than considered. Considered is a little bit, it's, you know, you can't be a little bit pregnant, if you know what I mean. Don't counsel me, please. Can we have a, you know, a little bit stronger, perhaps reviewed? Hi, Nick. Thank you for joining us. That's all right. Yeah. So that's that. So can that be done there? Also, I think, I would like to add in there, I think we've had a very good year, actually, in terms of some of the issues we've considered, I think we've had a very good year, and I think I will, Fiona, the chair's on holiday, and I'm short to leave the country on holiday. I will try to, via you, Pauline, we'll coordinate, and I'll speak to Fiona about this. But are there any comments, anything more, anything we should be emphasising or de-emphasising or pulling out at all? Rita? I just want to say, I mean, it's an accurate, thorough report. Is it also worth, in future years, kind of thinking more about celebrating the achievements in a bit more of a, I know we've got the section on highlights of 24-25. So things like saying challenge waivers made to the council's procurement policy procedures. Was that challenge worthy? Did it make any material difference? What was the impact of that challenge? It's a very good point. I think it goes back to the original statement you made, Rita, about the potential name change of this committee. I think if you look at what we've done in terms of challenging procurement procedures and keeping an eye on things like IT waivers over the years and some of those issues, I think we should possibly say something like, we've made sure our governance procedures are as robust as possible. And we've actually reviewed, we've been sure that the organisation is as best as it can be. If we, something like that. It just needs, it feels like it just needs another sentence at the end of everything, saying, and the impact was. Yeah. Right. So, all in that's more of a drafting thing. Can we look at, yes, we've done all these things and we can categorise them, but I think there's another section about impacts, maybe one or maximum, you know, minimum of three, maximum of five impact. And obviously, we can talk outside and if you, the committee will delegate me to do that. If Fiona will try and capture that comment. I'm sorry, on that, I was just going to say, Sharon, of course, you know, as needed, we can assist with that. I'm just mindful that this report is going on to council and in a relatively short order. Yeah, yeah, yeah. To be clear about the process for adding section four to that. Yeah, exactly. I think the comment I made on categorisation, I think by, and I think the Capturita's got to be perhaps a sentence, no more than that. Yeah, I think it as it is and just add a sentence on where there was a clear achievable outcome. Yeah, and maybe it's right, because some of these things have been impactful, actually. There might be a little bit of drafting we can get around that. I don't see a major rewrite, Pauline. Yeah, you just want to add impact. Yeah, and we can, yeah, and we can talk about that. But I think you were asking about three point long priorities for you. Well, as well, I mean, of course, we can assist with recasting section three of it, but I'm just, just mindful that if there's support needed from officers other than Pauline, obviously, you know, there's something you need from us, bear in mind, I think that needs to be finalised in a week or 10 days or something, if that may be helpful to clear, be clear how that's going to work. Yeah, I think that's a task from me as vice chair to work with the chair, if I can captain on a holiday and work with you, Pauline. Yeah, and it might be just a couple of bullet points. Yeah. Okay. 4.1. Yeah. Yeah. Also, the other thing. The other bit I think we need to do, as the organisation, we've had EFS, and my question will be, what is the role of the audit committee in overseeing the organisation? What does the impact of us gaining exceptional financial support mean for this committee? And it's something I was going to bring up in the forward plan, but we might need to just say, as a committee, we might need to look at this going forward. If the organisation had an exceptional financial support of 67 million pounds and the government would order to, if the word balance our figures would be accurate, Conrad, what would you say? That wouldn't be a bad plain English explanation of it. I mean, strictly speaking, what will happen is that we will dispose of capital assets and be able to use the capital receipt to cover data. So running costs rather than the use of capital. Yeah. Balance books is a fair plain English. Exactly. Because we couldn't balance out figures. We have to take some, take a sub from the government. Um, so therefore that does give additional responsibilities on your organisation. But there's an issue is how does your organisation, you know, guard the guard, you know, how do we know what's being done in our name? That's an issue for the audit board. And I think it's an issue for the chair of this committee and the chair of overview to decide who does what on that. But we'll take that forward. Okay. So Nick, are there any, um, comments or questions you want to on this one? No, the only thing was obviously 4.1. If there was any areas in which was suggested by the committee to be included as the priorities for the year ahead. Um, Nick, could you provide perhaps no more than three sentences of words to Pauline or what we could include in there in terms of looking forward from your perspective and the fraud elements? Yeah, I can, I can give my, my view. It was just, yeah. If the committee had any thing that they wanted us to consider. Yeah. Um, but the EFS monitoring. Yeah. The EFS monitoring. Yeah. And just a question for Conrad actually, technically in my mind, we've had EFS. The government has probably given us some conditions for that money. They wouldn't give us that amount of money without any by your leave. So the question is what conditions have been put upon us? And if they are conditions, what will be the, how, what will be the best way for the audit committee to provide assurance to residents that we're doing the right thing? So, uh, I can certainly answer that chair. The first thing to say is just the crystal clear for everyone. Government hasn't given us money and we haven't asked government for money. We have asked them for accounting flexibility on how we use our own assets. Uh, so I think that is just an important question. The current position, uh, frustration, maybe this is the way that process works. Is the, uh, local government minister, uh, has confirmed in principle support for, uh, that application, uh, which is 16 million pounds in 24, 25 and 51.2 million in 25, 26. Uh, what actually crystallizes that support in that form of the accounting flexibility is what's called a capitalization direction, which is not yet being issued. As and when that is issued, uh, government may or may not choose to attach, uh, any conditions to it. They have made it clear in, uh, uh, communication to the sector generally. Uh, that where, uh, authorities are relying on the disposal of community centers. This is not the case for Newham, uh, but where, you know, uh, authorities have requested that, you know, they would tend not to be minded to, uh, grant that support. Attach conditions to it, for example, around public consultation or whatever it might be. Uh, so we don't know what those conditions, if any, uh, will be yet. Uh, which is a, a long way of saying fair point, but you know, I don't have further information. Would at some point during 25, 26, that will become clearer. Okay. The experience of other boroughs who were in this process last year is that confirmation of those things can come pretty late in the financial year. Yeah. Now that may not stay the second, but just to be aware that, I mean, if it does, you may set yourself a goal of sort of monitoring that. And they're not really being very much to monitor until, um, in the area of purpose. Yeah. It's on my control. So obviously, thank you. That's a useful clarification. So obviously somebody needs to watch the watcher in this organization. And that is divided between audit committee and overview. I think we have, um, got better over the past year on putting some separation between the two committees. So we don't cross over would it be helpful if one action for you, which we can maintain the log as and when you get clarification from the government as to the conditions imposed upon us on the timelines. You can write to the chair of overview and the chair of the audit committee for clarity. Absolutely. Yeah. Yeah. I mean, yeah, as and when I get information, you know, we'll be kept informed as to what conditions, if any, are, or if this is an important thing for the council. I just don't have any other information to share with them. And I think as appropriate, um, inform all members as well. Cause I think, you know, I put the nuance there of, of balance our budget, but other languages are being used by council, which is perhaps not helpful. And I think, um, you and your section 151 role, um, sitting above the fray can put some clarity out there, which also helps the council and everyone else. Is that okay? I'm sorry, but you're saying that the government are not giving us money, um, but they've given you the flexibility to use your assets to create money. So is it selling assets? We have a program of disposing of assets. Absolutely. Yeah. Uh, so, you know, and we've disposed of assets to that value. Ordinarily the capital receipt could only be used for other capital purposes, buying a new asset or paying off borrowing. So the flexibility we've asked for this capitalization direction will allow us to, uh, pay for temporary accommodation costs of hotels and so on, which is, you know, the, the item that has driven our need for exceptional financial support. Against the ordinary accounting rule where capital receipts couldn't be used for those purposes. So you're saying normally capital receipts has got a restriction on how you're supposed to use it, but because of this, um, borough is housing needs. They're allowing you to use those capital receipts as you see fit. And currently that's for like housing need and stuff. Exactly. So, yeah. Okay. Thank you for that. Dr. Chaudhary. Um, so there's a new story recently, which I didn't follow, but maybe you probably did, which was the, um, CEO of Blackbox saying that UK is undervaluing its assets. Is that anything that applies to the council's assets? It was, as I understand, it was said to be widespread kind of undervaluing of assets in the UK. Uh, I'm not familiar with the particular story. So it's, it's difficult to comment. I mean, certainly in terms of, uh, the sort of assets that I imagine the CEO of Blackrock would, uh, talk about, you know, those would be assets typically held by the pension fund. You know, where there is, you know, careful, uh, valuation process, uh, undergone to, to ensure that we have the right value of those in, in, in our books. In some cases, that's very straightforward. In fact, cause it's just the market quoted price of the share. Uh, some of those called level three assets, uh, the valuation process is much more complicated and is a significant area of focus for the auditors. If the CEO of Blackrock meant, uh, assets such as housing, uh, we value those in, according with the accounting set, uh, standards for local authorities that produces a value in our books significantly lower than the open market value. So, you know, if you were going to sell a council house, you know, you would, uh, achieve far more for it than we value it in our books. Because, you know, that's, you know, the accounting laws that we follow because, you know, we're looking at this rental streaming, come on it and, and, and so on. Um, so if the CEO of Blackrock was, uh, referring to those sort of valuations, then in one sense, he, I believe it is a he, is correct. Uh, but yeah, maybe sort of slightly missing the point because those assets are not, not held for the purpose of generating financial value. They're held for the purpose of, of social value, if you like, which is why they are valued on that basis. Okay. Gawtham? Um, this is something more forward looking, but are we at risk of, if we're using all capital seats to deal with the current, you know, housing prices or in this borough, are we at risk of in a few years down the line having not much in terms of capital assets? Yes. I mean, yeah, there, there is, uh, a fundamental problem here in the local authority sector. I mean, uh, I would argue very strongly that Newham is sort of a sharp end of that. Uh, but other boroughs are, are there as well. Uh, there is a mismatch between level policy that is set in terms of really important services like housing, like education, health and care plans, and so on. And the resource is made available to local authorities. And that's widely acknowledged across the sector. Uh, and you know, in our case, we are using capital receipts to cover that gap. That's clearly can't continue ad infinitum. And, you know, in fairly short period of years, we would find ourselves in the position. Some other authorities are in where they are being forced to borrow to cover, uh, the gap in this year's budget. And then next year they borrow to cover the remaining gap, the continuing gap in that year's budget and the interest costs on the previous year's borrowing and so on and so on. So I would argue very strongly that this is not a sensible or sustainable model for local authority finance, but it is a sector wide issue. Uh, something like 30 of 350 odd, so close on 10% of local authorities, uh, are in this exceptional financial support process. Uh, were it not for, uh, government having legislated to pretend that we can ignore the national 8 billion deficit on education, health and care support plans. Uh, it would be around about a third of local authorities would be in this process. Uh, exceptional financial support, which the chief executive of SIPFA has described now being not really very exceptional, but quite normal, uh, and not terribly supportive. I think there's a real problem in local authority finance. I think new is just an example of that. And I do want to really emphasize that, you know, the council's finances have not been mismanaged. Uh, you know, this is not the case and there have been some in London. You know, Croydon is often quoted for example, or Slough and Perk and others. You know, there has not been mismanagement of the council's finances. Finance system is simply not working and that is recognized right across the sector. And is it on the risk register or does it need to be on the risk register if it's not? I'm not sure it's a risk. I think it's a live issue, but I mean, it's, it's, it's widely known. I mean, yeah, there may be a value in adding it to the risk register. I tend to say that this is something that's happening to us all at the moment, uh, rather than a risk of something new happening to us, but also look at those value and adding it to the risk register as well. What about the future as well, given it's a current risk, but what's, what is the future looking like? And how do we reduce the risk of it getting worse? Just something, just a big, obviously when we got the EFS, there's lots of talk about our type of accommodation, but in the conversation with the human course time, you mentioned education, health and care plans. That leads into SEND and the other elements on that. Going through in my mind, there are other directorates where there are issues with funding. Can you use the EFS for other things apart from housing? Is it up to, you can say little bit of housing, little bit of SEND, little bit of social care. Can you do that? Or has the IV been told you could only use it in temporary accommodation? Well, we are waiting for the conditions from government, but you know, our application was very clear that the pressure arose from housing. So, you know, our intent would be to use it to cover the gap caused by housing. You are right that there are pressures in other areas, which we are managing quite well, actually. I mentioned the, it's called the high needs block and the dedicated source grant, if you want a technical bit, the funding for educational health care plans. Newham does have a small deficit on that. You know, in some local authorities, you know, that deficit is over £100 million. As I say, government has for the time being legislated for us to be able to ignore accounting rules on that so that, you know, they aren't forced into bankruptcy or doubling their council tax or whatever. Okay, so if internally there is pressure on the budget in the high needs block, are you saying you will not use any funding arrangements given to you by EFS? That's certainly not the current intention. The legislation I've referred to goes until March 26. So there will be no obvious need to do this for in 2526 under any circumstances. You know, government is, I understand, considering whether to extend that legislation. It's called a statutory override. Balancing, you know, the obvious advantage to local authorities of that as against the fact that, I mean, if you want my plain accounting view, it's a bit of creative accounting. You legislate to say that you don't need to take account of the fact that you are spending far more on a service than you've got, but we've just followed the law of the land. So the question comes to mind, obviously you've got the application for housing, but there are other financial pressures on this organisation. And the question is, who checks you don't spend the money in other areas where you didn't get the authorisation to do it in the first place? So you do that, the external order to do that does that. There are also internal checks and balances. So much to my disappointment, mania would stop me, you know, buying a cup of coffee. I wasn't entitled to it in the councils. Sorry, I joke on a serious matter, but there were significant checks and balances within the organisation to prevent senior officers just saying go and do that or whatever. And you have this committee and the external auditor over that. I'm glad you said that because we did talk about early part of the meeting. It's what is the role of the audit committee and overview in making sure there is no slippage, you know, and where we can clearly see there isn't pressure on officers to spend money where it shouldn't be done. There are other examples in local authorities where, you know, it might be fully done for the right intentions, but it's been the wrong thing from a technical factory point of view. I will take it in terms of, I think as we go into the forward plan, there will be an action to, you know, a standing item for the committee, how it resolves the issue around governance around the EFS responsibilities, and the discharge of that. I think that useful discussion on the report. I think that was a useful discussion actually, which, which came. And so on that note. So to the members present in the room before. Is everyone okay? Good discussion on that. To the members present in the room subject to any amendments, which you talked about tonight. And finally, by myself and the chair of the committee, you might see a show of hands. It's a draft report noted. Thank you very much. Thank you, Nick. Enjoy what's left of the evening. We're going to item nine year ahead for the plan. Referencing my last comment in the previous item. There should be an item on EFS. How we look at that. I think an action there to aid duplication. Comrade has already given action, but when you do have more information, Comrade, you write to the both the chair, the overview and chair and, and say, this is blah, blah, blah. And this is how you could review me or whatever. Are there any questions on the year ahead, Rita? Can I just make a suggestion on the forward plan around training? Would it be helpful if this committee in the next financial year also had an update, a training update on the constitution and any changes related to that? Because I think that does then have a material effect on questions and issues asked here. I don't think it's taken as a report, but making sure members understand the changes. Yes, I don't think it's just limited to this committee, but we'll certainly be thinking about the best way to ensure that the changes to the constitution are clear to members. Just one comment, and we did talk about last meeting, is when you come forward, finance council with a quarterly savings tracker. I do think, I don't think I made the point well enough at the last meeting. We should also include the savings from the transformation program. Yeah, it's recorded in a minute. I did say, can we bring them forward? And I accepted Andrew's comment about, well, we have to care about service delivery. But I do think, I think it's 23 million quid in the transformation. And we've got like a 20% hole in the savings tracker roughly from the top of my head. Why don't we just put two together? It seems an artificial construct between the two. So, yeah. So when you bring the savings tracker, just for residents listening, the transformation program is a, I can't describe this and look. It's a program to using the jargon, right side your organization for the future. And at the same time, delivering good services and to get efficiency savings. Is that right? Would you agree? Right? Right. You wouldn't. I'm not getting into the debate. I'm trying to summarize because I can't know war and peace, Rita. And therefore there are some savings linked to that program, which should be put into the organization saving program. And what that will do is guard against double counting. Because part of me thinks there are savings in the transformation program, which have material impacts in the budget tracker. I just want to, we should have assurance that doesn't occur. Chair, I agree with the principle and I agree with the intention. My concern is that the transformation program in this local authority has spawned a life of its own, that it isn't clear what's the generic overall organizational savings and what are departmental savings. Transformation that impacts on frontline services in children's services is very different to back office efficiencies. So I think whatever we look at, or this committee looks at going in the future, we have to be able to draw that distinction on when there's a frontline service impact, where the efficiency comes into back office. And I think having the visibility of both of those programs, this committee would allow us a critical eye to make sure that only if it's distinguished. Absolutely right. A round number that says this is how much we've said that actually doesn't mean that much to us. Point made. And whoever's on the committee next year can sort of carry it forward. Okay. So the reports are noted. The members in the room, I see a show of hands. The report noted. Agreed. Thank you very much. Item 10, the date of the next meeting. The calendar of meetings for the year ahead will be agreed by the annual council meeting on the 22nd of May. The date of the next meeting of the audit committee is provisionally scheduled for Monday the 30th. That date agreed. Agreed. That concludes tonight's business. I'd like to wish goodnight to everyone watching on YouTube. Members, please wait for the clerk to verbally confirm, but a live stream.