Transcript

I usually have a little script, I don't usually rely on it, but sometimes I do that and worry about it. Oh, there is a script. Thank you, sir. Good, it says here, I'm Councillor Paul Convery, which is good to know. I'm the chair of tonight's meeting. No fire alarm this evening, so if the alarm is sounded, head out the door, down the stairs, out into the street. Meeting has been webcast, live on the council's website. If your microphone is not on or off, that affects what the webcast can broadcast. I don't believe there are thousands of people watching live. I've increasingly noticed how many people talk about having reviewed or replayed the proceedings of committee meetings. You should see who said what. So, you know, it's there, it's recorded, it's replayable for I think six months after each meeting, so it's a live record. Oh, does item B has an exempt appendix? Does it? Oh, oh, okay. I haven't read the exempt report. Not to worry. Sorry, I've realised that I've been reading the version which is the published version. Not to worry. Anyway, item B7, we will switch off the recording for that item, and at some point during the proceedings, I will get myself a copy of the exempt bit of B7. Have we got a copy there? I'm terrific. Right, this explains why I thought the report didn't say very much when I did a little briefing for members on a Sunday evening. Oh, yes, that's plenty of it. Good, all right. So, the next item on my script, which says members of the committee have read all the reports and attachments, is not entirely true, because I haven't read this one. But the principle, therefore, is that introductions to the reports be as brief as possible, and as usual, the main focus will be on members' questions to the reports. Questions does not preclude statements, so that's good. All right, a few formal matters. Apologies for absence. I don't think we do, although Janet is not with us. I know she is due to... Yeah, I think she's got a school of governors or something like that, but I know she will be attending in due course. No substitute members. Duckers of interest? Probably not. Let's look at the minutes of the previous meeting. I'm happy to agree those. I will sign those. We might just want to additionally add some remarks of thanks to Nazarene Khan. That was her last meeting on the 24th of March. Let's take B2, Membership Terms of Reference and Bates, of the audit meetings. That's on the agenda at this point, to say welcome to new members, Nurla as vice chair, Sataram as a new ordinary member. Sataram as a previous executive member for finance, therefore not a newcomer to any of this. Welcome also to Flora as the executive member, as you'll see from the terms of reference. Strictly speaking, no executive member is actually a member of this committee, but customer practice, we've always had the executive member resources present, and that's always been very, very conducive. Welcome also to Pardeep, who has now joined us as one of our independent members. We're very, very pleased to have Pardeep with us. Pardeep is a qualified chartered accountant, and is certified by the Chartered Institute for Securities and Investment qualification being in risk and financial services. So, marvellously qualified. He worked for NatWest Group as head of Prudential Risk. More importantly, you're a North Londoner. Pardeep lives in Crouch End, kids born at the Whittington, and he supports Arsenal. So, that's all good, yeah, and you have been, I think, up until just about now, Treasurer at the Manor Gardens Northale Trust. Yes, you're coming sort of to the end of a period doing that. Excellent, yeah. So, like I say, a wonderfully qualified, very experienced, North Londoner with us. Thank you very much indeed. Okay, let's move on to item B1. Matt, as the Deputy Acting Corporate Director. Welcome. Nothing wrong with that. Just brief us on the financial updates. We have the advantage that Paul Clarke circulated a note to me, which is simply a note which I've circulated to members. But, particularly, just bring us up to date with what the financial outturn is looking like. Yes, thank you, Chair. So, the outturn position is still being finalised. I have a draft report on my desk to review, but the headlines are positive. It's been quite a good news story for this quarter. So, we're looking like 3.5 million positive variants, which is for a number of different reasons. But the majority of that is in corporate items, which is favourable bad debt provision movements and other various treasury and capital items. So, including less interest expense and more interest income than we expected. So, generally, pretty positive there. And in the departments, overall, there's been a slight move positive as well. Not quite significant, but overall, small movement. Some ins and outs in different areas. But, generally, good news story. So, that's still being finalised. That will be taken to CMT and then the executive in the next few weeks for discussion. Broadly a positive story. And it's going to help us go into next year in a strong position. Good. Bearing in mind that the last committee, we were advised that the month 11 position wasn't looking – well, wasn't as positive as it has ultimately turned out. What do you think are the factors that led to the month 11 position looking a little bit negative that then would discover not quite be accurate? I mean, the point I'm getting at here is, if there's a little bit of inaccuracy in the forecasting, what have you sort of learned from that? So, the biggest movement is obviously in the corporate items, which is typically not all forecasted monthly. So, we don't forecast – well, bad debt provisions, for example, is something that we do not look at on a monthly basis, probably more like an annual basis, because it doesn't normally move significantly. So, that was one thing that we wouldn't have known about. Now, capital is also not forecasted monthly either. It's quarterly. So, those big items were not looked at at month 11. The services overall – some have moved more than others, but overall, the net movement of services is actually quite small. So, the forecasting in general is fairly accurate for most of the services, and some almost to the penny. So, it's more around those bigger items. Apologies for noting us, sir. I'm interested to know – is the capital item basically saying we spent less capital and we used revenue to pay for it, and therefore that's why we are earning – partly we earn more interest, because we didn't spend as much capital, and partly because we're not paying interest on borrowing for capital? Or was it slightly different? So, that is part of it. So, if you're not spending capital in the profile that you expect, if you're delaying that, then you're not incurring MRP charges, which is the cost of capital for borrowing, and you're not paying interest. And if you still have cash in your bank account, you're generating more interest. So, that is part of it. But generally, it's borrowing less than we anticipated, which is a management decision to delay some borrowing, because rates were very much not favourable, and try and really utilise that cash position. So, that has helped. Thank you very much. Shall we just take this moment to just give us a quick update on the shared service transition? Yes. So, we have interviews next week for the risk manager post. We've got five really strong candidates on paper, so I'll be interviewing those myself. So, I'm looking forward to meeting those next week and hopefully getting someone in post sort of three months after that or so. So, that's positive. I'm optimistic there. The shortlisting for the head of internal audit position is tomorrow, I believe. And there's a lot of – there's a very, very strong field. I would be – it's more the challenge of actually getting down the shortlist rather than anything else. There's several known high-profile people in London who've applied for the job. So, yeah, I think that there'll be no risk of not appointing, which is something the committee was fearful of. So, that's something abated. Clearly, that recruitment will not be in place by 1st of July, so there will be a transitional phase, which myself and Paul will help steward the team for any likely gap. There is still a lead for the audit. There's an audit manager and there's also a head of the forward team. So, they will continue to manage those teams under our stewardship until that person can start, hopefully sometime in the next three months or so. That's all good news indeed. However, on a slightly less positive note, there's a little bit of a delay with the principal risk register being refreshed as a result of this. So, yeah, I really think we were hoping to do that in June. That's going to be pushed back to September. But I think CMT wanted more of a deep dive on risk and there were a number of areas they wanted to look at. So, I'll probably touch on that a bit more when we're going through the AGS as well because there's a number of work streams attached to risk that CMT wanted to explore properly, agreeing their risk appetite and understand what that really means and things like that before we refresh that principal risk register as well. So, I think the delay is not ideal, but I actually think it gives us a bit more opportunity to implement some of the things we need to do anyway. Yeah, so I'm not very comfortable with that. Okay, no, that's helpful. I mean, Paul Clark has naturally put a positive spin on this. There's a capacity problem and the capacity problem speaks to the fact that the shared service hasn't quite been working the way we would like it to work. That's why we're probably going solo on the internal audit. So, there's a logic to that, indeed. Thank you very much. Okay, let's move on then. Item B2 we have done. Have we done item B2? No, it's there for noting. Membership terms of reference and dates of the meetings. If you note that, that would be very helpful. Paul, in a note earlier today, I just reminded members also what Article 8 of the Constitution says about the broad purpose of the audit committee, which is, to put it very crudely, it's also a sort of, this is a committee which has a sweeper function. So, if there's anything non-executive that isn't delegated to any other part of the council, it lands here, which is absolutely fine. So, once upon a time, this used to be the strategic planning committee, because, no, it's a long story, but, because that was an item that needed to be sweeped up. Big planning applications that were so big that they couldn't be taken by the four, on the four area planning committees. But that's all in the past. But anyway, this is where stuff that isn't covered anywhere else also lands, in addition to the principal audits and governance oversight function. Good. Okay, let's move on then to item B3, which is the external audit plan. Please say we have Badr here, and also Elizabeth and Anna. Is that correct? Welcome, indeed. You've presented to us an excellent-looking report. We're really pleased that the audit for the finished financial year went exceptionally well. I said earlier, you know, you landed that audit before the backstop day, date, and 19 out of 20 other councils didn't. So, we're really, really pleased with how that's all going. Given that was your first year, and there's a whole load of transitions to do, essentially what you're presenting us with now is a sort of business-as-usual approach to the audit. So, all good, indeed. Do you want to draw our attention to any particular aspects of the report that you've submitted? Thank you, Chair. Really appreciate your acknowledgement on 23-24 audit. Yes, Rashpal is on annual leave. I will be presenting the council's audit plan, while Lizzie will present the pension fund. I'm also joined by Anna, who has been in charge of the audit since last year. I will keep my remarks relatively brief, focusing mainly on the key points, and we'll take the audit plan as read. The purpose of the audit plan is to fulfill our responsibilities to the council by communicating the key aspects of the audit of the financial statements, as well as a review of the council's value for money arrangements. If I can quickly draw attention to page 11 of the pack, which is basically the materiality section. As members will be aware, we do not audit to the penny. Rather, we provide a reasonable assurance on the financial statements of the council. Therefore, for this year's audit, our materiality is set at $27 million, which is broadly consistent with the prior year materiality. We also mention on this page our audit misstatement threshold of $1.35 million, meaning that any accounting error or adjustment above this limit will be communicated to the community in our year-end report. Quickly moving to page 13 of the pack, we have outlined our significant risks and other audit risks. I will now hand over to Anna to present this part of the report, and then I will touch on the remaining areas of the report afterward. Thanks, Bada. The first audit risk, well, significant audit risk, is valuation of land and buildings. This is pretty much the same as last year, other than this year we've now stripped out non-specialised properties from this risk, and we've lowered the risk level for that, given there were no issues found in the prior audit testing. Our planned response over this risk is the same as last year. We'll utilise our in-house valuation specialist for this. Moving on to page 19, the second significant risk is valuation of post-retirement benefit obligations. This is over the LGPS pension scheme. No change in the risk profile head from the prior year, based on our risk assessment procedures performed, and no change in our planned response. Third, SIG risk is management override of controls. This is just an inherent risk we have on all our audit engagements. No specific fraud risk factors were identified during planning and risk assessment in relation to the entity. We did note last year there was no segregation of duty controls in place, and we're a system audit testing approach. And then finally, on page 22 of the PAP, we've got an other audit risk due to the adoption of IFRS 16 this year. This isn't a significant risk, given the size of the balances. Thanks, Anna. So, turning to page 23 of the plan, we have outlined our responsibilities in terms of the value for money arrangements. As statutory auditors, we are required to comment on the council's value for money arrangements. Similar to a previous audit committee report on the 23-24 financial year review, our focus will be on the same areas of financial sustainability, governance, and improving economy efficiency and effectiveness, or practically speaking, performance management of the council in the scope of value for money. Quickly, further in the plans are mainly on page 28, we highlighted logistics in terms of the audit timeline. Then our audit fee is mentioned on the next page, which is page 29 of the PAC and page 33 of the PDF PAC. And lastly, on page 30, we are basically confirming our independence as the role of the external auditor of the council, and we have not identified any issue in terms of our independence. I will pause here and invite the honourable members to ask any question regarding the plan. Thank you very much indeed. Well, listen, why don't I start off as is traditional. So, the risk of 1.35 million of misstatements, I mean, I call that only 1.35. I mean, is that a fair thing to say? That does seem like it's a lot of money, but it does seem quite small in the overall scheme. Is that correct? Yes, the council, so this is the individual one transaction level threshold of any error, which is individually will be above this, we will report. And then just looking at the way that the kind of hierarchy that you've got of the significant risks, I see essentially valuation of land and buildings and valuation of post-retirement benefit obligations. Those are relatively high likelihoods and risk of misstatement, but how high do you think that risk of misstatement or probability is? So, basically, this land and building risk is then split into the risk of misstatement related to the dwellings, which is then the, we explained, the beacon process of the valuation, which is complex in its nature, and the application of indexation. So, that's the complexity of the judgments involved on that, and the value of the dwelling, that's 3.3 billion on the balance sheet. So, that's one major part of this land and building risk valuation. And then the second part is basically your specialized properties in the land and buildings. So, specialized properties are 1 billion on the balance sheet. Again, since council go for the full revaluation approach every year, so the valuation process, the judgments involved, and the estimation and uncertainty involved in those decisions around the judgments of valuation and assumptions, we consider this as the significant risk area. One slight change from the, if you compare exactly this valuation of land and building risk of this year with the last year is that we have stripped out the non-specialized properties, which were roughly 200 million, we don't, based on our last year audit, we have not identified any significant issue. And since the value is 200 million, we, as compared to our materiality, we are comfortable to take that out from the significant risk. So, land and building is mainly dwellings and the specialized assets. The last time we discussed this, I mean, if the members are new to this, on the valuation of council dwellings, 25,000 or thereabouts of them, the methodology is to choose beacon properties, which are, if you like, a sample of dwellings, value those, and then multiply it up by the total number that we believe that we own to come to a figure. So, there's some risk involved in just basically getting that wrong if the beacon properties are not particularly properly representative of the entire population of 25,000 dwellings. Is that sort of the beacon process, in your view, becoming more accurate, or does it still have the same degree of inaccuracy, potentially? I would say, like, I think it's appropriate in terms of the methodology, but the process itself involves the assumptions, and then since we can present a big value of the big number of the sample of the properties, that's where inherently, like, the value involved and the assumption involved makes it as a area of risk. But we have no criticism on the methodology as itself in the beacon approach. Before I come on to other questions, can you just also just talk us through what you think are the risks involved on the pension scheme, bearing in mind that this is a triennial review year where some of that potential from the statement is going to be reduced, one would hope. Yes, I think the pension risk is mainly linked with only the local government pension scheme. And the triennial valuation, of course, I think, again, I think the complexity of the whole process is where and the value of the scheme on the balance sheet is where the risk is mainly emerging from. I think it will definitely, a triennial valuation will give us more assurance for the future years, but, of course, that is subject to the outcome of our specialist review, our in-house actuaries and in-house specialists team of pension. Okay. I mean, inevitably, we're hopeful that what mercers tell us as our actuaries and what your actuaries tell us are going to coincide or at least land pretty close to one another. I mean, is there any risk there that we get a significant variance between what mercers estimate and what KPMG's actuaries' judgment is? I think based on last year, I think we were able to, like, resolve some of the differences, like, very quickly on time with the mercers, and the mercers was very engaged in the process. So, I don't anticipate any issue with that, but, of course, like, the assumptions are very sensitive in terms of, like, small change in its demographic or any assumption can have a huge impact on the value. So, yes, but hopefully, like, I think last year we were very proactive and engage our actuaries and mercers very early in the process. So, hopefully, we'll be taking, we'll take the same approach this year. Good. Okay. There's a question. Yep. There we go. I'm just looking at the numbers. Sorry, looking at the numbers, just, you know, because we said the cancelled dwellings value is at 3.3 billion, and I think you said 25,000 cancelled buildings, roughly? So, it comes to, on average, 132,000 pounds per dwelling. Is that, I mean, is that, like, you know, the cost of building a dwelling rather than, you know, value, market value? Yes. So, these are, so, 3.3 billion is the reduced value of the social housing property. These are not exactly the market value. So, for London properties, the social housing impact factor is 25%. So, if market value is 100,000, the value we will take in the books will be just 25% of it because the assumption is that it's a social housing value. So, we, yes, so, so, 3.3 billion is just 25% of the market value of the 25,000, roughly, properties. It's a really good question. Well, we're not going to be selling, we are not going to be selling anything, but, yeah, we, there's a sort of gut feeling that they kind of, yeah, on the low side, these valuations. It's up to them. I mean, in practice, does sort of undervaluation or overvaluation have any significant impact? I mean, it may be that our balance sheet looks slightly right, but the land doesn't disappear, the houses don't disappear, they don't get stolen or misplaced and anything like that, do they? And so, it's, it's just a figure in our balance sheet or not having any significant impact on our ability to borrow or anything like that, does it? Well, yes, I would, I would be conscious of commenting on borrowing or that side of it, but from the financial statement audit point of view, the, our materiality is 25 million, which is based on the annual expenditure level. And that compared to the size of the, these assets on the balance sheet, they are quite very, very significant, materially significant. And since the valuation process is involved behind these numbers, and then the assumptions are very, it can be very complex and sensitive, that's where we think it's an area of all significant risk, but otherwise, not comment on the impact as an overall on the operations or outlook of the console, if it makes sense. Yeah, just to come in from, to answer Satnam's question, so he's, the session is broadly correct, so the value of the HRA stock on the balance sheet is an accounting requirement for the council, but it does not affect the council's financial position directly, whether the dwelling is valued at 100,000, 150,000, and that doesn't actually make any difference to general fund or HRA directly. So, yeah, and it doesn't, and our borrowing is not in, well, if we want to borrow to fund HRA new builds or whatever, they don't ever look at the value of our stock when doing that, that's not something they would do. Yeah, we wouldn't, we wouldn't borrow against our housing stock, in fact, the local authorities are prohibited from collateralised debt, so you cannot borrow against your housing stock under any circumstances, so it doesn't matter from that perspective. Yeah. Janet. Thank you. I'm curious. Page 15, which is the post-retirement benefit obligations, it meant, the last paragraph in the first section says, more councils are finding themselves moving into surplus. Now, should we ever get into that happy position, is that fund ring-fenced, or would it add to the council's overall income? Much. Yes, I'll just take that one. So, the pension fund is a separate pot of money that is ring-fenced to pay benefits, so it's effectively like a reserve that the council has set aside to pay future benefits. And so, it is not something that can be freely passported to or from general fund balances. However, if we are in a surplus position, when we were previously in deficit, that does help general fund balances, because we are no longer required to pay deficit funding contributions, so that has already been factored into our financial position going forward, that we won't be paying these deficit contributions. So, in that sense, it can provide some relief to general fund, but you can't sort of take 10 million out. If you're 100 million over, that's not how it works. And indeed, the current year of budget, overall calculation, the MTFS, has made some assumptions about the employer contributions reducing, so that deficit reduction has reduced because the last trial evaluation was pretty good, and the indications on the current trial evaluation are fairly positive. So, over the last six, seven years, we have had to add into the MTFS significant additional employer contributions, because six, seven years ago, there was quite a significant deficit emerging on the pension fund. At that time, we were about 84% funded. In other words, we could only meet 84% of all our liabilities if they all fell due at one time. Now, we're getting pretty close to 100% funding. It might be a bit less, it might even be a tiny bit more. But the Pension Committee has determined as a policy that we will not consider employer contribution holidays unless, I think, did we go for 120%? I think. I don't think we would ever consider a holiday, but if you had, say, a really overfunded position like 120%, you may consider having a small negative secondary rate. So, if your employer contributions were 18 and a half, you might decide to only pay 17. But that would be, you would have to have as significant surplus emerging as, that's a concrete point. Yes. And we would not ever want to go anywhere near. It's very, very unlikely we'll get anywhere near that. But the Pension Committee has set that 120%, you know, as a very, very cautious upper limit. I mean, many of you will remember what happened in the late 1980s, when many private sector pensions, you know, just exploded. I mean, they just completely collapsed because employers had taken very generous contribution holidays in the late 80s on the back of the stock market boom. And then there was a recession. And, in fact, taxpayers ended up paying for an awful lot of those bust pension funds. And then Robert Maxwell stole money. And so, you know, exactly, yes. So, 35 years later, especially in the public sector, there are safeguards and guardrails here that absolutely prevent that happening. Good. Other questions, observations from members? All right. Bada, unless you and the team have got anything further to add? Yes. Oh, I'm so sorry. Yes. I will likely be presented to the pension fund. Yes. Yep, take us through the pension fund. Thank you. So, like Bada and Anna, I'm not going to go through page by page. I'll take it as read. But I'll just highlight a few key parts of the document. So, starting on page 45, so that sets out, there's going to be some familiarity here because it will be similar pages to what Bada's already talked through for the Council's plan. So, we set out our audit materiality. What you will note here is that materiality has increased from last year, and that reflects the fact that the value of the fund assets went up over the course of that year. So, the materiality we have here is based on the 31st of March 24 values. What we will do is when we get the draft accounts through, we'll revisit that and take into account any movements on that if we need to recalculate materiality for the year-end audit. So, moving on to page 46, that sets out the communications and also the key developments we've noted for the pension fund during the year. And we've really just got one key development, which is around some changes to the investments within the pension fund. In terms of our response to that, that will be covered by our normal audit work over investments or we'll write to the investment managers and confirm the balances that are held with them as well as doing some work over the valuation of those investments. And then the following page, page 47, covers our audit risks. What you might notice if you were to compare this with the pension fund audit plan from last year is there's a lot fewer risks on here. Now, that doesn't mean that we think the audit has become a lot less risky or that the profile has changed. What it does mean is that last year, because it was the first year of our audit, we wanted to give you a full picture of the kind of risks and material in the statement that we consider as part of our audit. And since those risks haven't changed, as the chair mentioned, since this year is our kind of business as usual year for going forward, we've only included here the risks that we think are really important for you to be aware of from an audit point of view. And those are the one that the auditing standards says that we have to have around management override of control, which is a fraud risk that we have to have. And then two risks around the investments. So one around the existence, accuracy and completeness of the investments and one around the valuation of those investments. And particularly an elevated risk in relation to the valuation of the level three pooled investment vehicles, which are a bit more risky because they've got these unobservable inputs. And so that makes them a bit trickier to value. So the following pages in our report set out in detail our approach to those. And they also set out our rebuttal of the presumed fraud risk that we have to consider around revenue and expenditure. And as I said, I wasn't going to go through those in detail, although of course happy to have any questions on those. And then there's just a couple more points that I wanted to mention. On page 56 of the report, we set out our audit team, which you'll see hasn't changed from last year. From Rash, who is the director for both the council and the pension fund, myself as manager and are in charge. And Rajat, that's the same team as last year. So we're in a good position to kind of take on what we learned from last year and move forward. And then page 57 sets out the audit fees set by the PSAA. We've got our proposed timetable on page 48, which reflects the fact that we're kind of, as I said, we're setting an ambitious timetable for this year that we'll look to sign the accounts before the end of the year. And then page 59 has our confirmation of independence. Sorry, I hope I've got those page numbers right. I've got my own version here. So I've been adding on 42 to each of them. So I hope I'm pointing you to the right places. And constant mental maths as much as we commanded. Your numbers don't coincide with ours, but you've described what they are. And we've been able to keep up with the pages. So that's good. Thank you very much indeed. Let's see, that's really good news indeed. I've got the pension fund. We're very hopeful that, you know, the accounts will be available in good order. The pension fund has got an increasingly ambitious timetable for reporting to members of the funds. And so we'll probably be looking to do a public meeting in September. So if we've got accounts ready for that, then they'll definitely be ready for you. So that's all hopefully very good. Members got any other questions on the pension fund's audit plan? No? Good. Okay, well listen, thank you very much indeed. Grateful to all, Butter, Lizzie and Anna. Thank you very much indeed for attending this evening. And we'll see you at a subsequent meeting of this audit committee in due course, I think. Thank you very much indeed. All right. And as we always say, you're very welcome to sit in the back and watch the exciting proceedings. But if you have an urgent train to get, yep, go get that train. Thank you very much indeed. All right. All right. Let's move on then to item B4, which is our deep dive on the financial risks and opportunities associated with recycling. I think we've got Andrew Bedford and Matthew Homer, both officers of the council known to us, well known to us. Welcome. If this is your first time at the audit committee. Oh, this is a tough committee, I've got to tell you. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. You're wearing coordinated colours, which is good. Yeah. Through those conversations, what are you wearing? No, what are you wearing? Cool. Right. Well, listen, thank you very much indeed. As I said very briefly in our pre-meeting, we're not going to tread on the ground that the environment scrutiny committee dropped on at its December meeting. I personally reviewed the paperwork from that recently. Very, very comprehensive. And we're also that there's a new waste recycling plan scheduled for the executive sometime in the summer, I think. Well, we're almost in the summer now. July, something like that. So helpful. But what we would particularly want to look at is where the financial risks and opportunities are, and probably asking some questions about exotic things like return on investments for capital that's been expanded and so forth. But listen, take us through it. Thank you, Chair. My name is Andrew Beverley. I'm Assistant Director of Green and More Active, and I have responsibility for waste and recycling strategy, as well as other things. Matthew's going to take us through the detailed report. But really, the report sets out the current performance around recycling rates and the volumes of waste and recycling that are currently collected and disposed of. We've tried to put us in the context of the performance of the seven North London boroughs that form part of the North London Waste Authority, which is Camden, Hackney, Haringey, Barnet, and Enfield. And Enfield. And Enfield. Thank you, Matthew. I'm just telling you in the series of course, you don't remember those last two boroughs because one of them provides the chair of the NWA and the other has got the incinerator plants in it. Indeed it does. Well, yeah. Good to remember those. Obviously, there's some changing policy context at the moment around changes the government's bringing in around policy. The report sets out and obviously, which you'll have seen in the other report to environment scrutiny, there are some obviously challenges in a borough like Islington that is very, very dense without significant gardens producing green waste and a larger portion of flats where the barriers to recycling are greater as it's just less convenient for residents than for household kerbside collections. The council in its delivery plan has set the target of achieving 36% recycling rate from the current 30% by 2026 and 40% by 2030. A number of things that we're already doing in terms of investing in infrastructure on estates and food waste and other recycling campaigns that we are about to launch this summer. Council Cumbria, as you mentioned, we've got the waste reduction plan that sets out how we're looking to drive improvements and we're carrying out a significant piece of work at the moment to look at what we need to do to drive those targets a bit harder to achieve that 36% and that will include looking at a cost benefit analysis for those proposals. And where the greatest impact is going to be. So I'm going to let Matthew pick through the data for the report. Thank you. Hello. Yes, Matthew, I'm the head of Waste Strategy. So the report starts out by setting out Islington's current recycling rate and the waste arising performance. It puts this in the context of our neighbouring boroughs in the North Islander Waste Authority, which, helpfully, Anna has already listed so I won't attempt to do that again. It provides some commentary around Islington's recycling rate but also some of the challenges of trying to increase recycling rates within a borough such as Islington densely populated and so on. Section 3.10 onwards provides a brief overview of upcoming policy developments, which are substantial, and they'll have an impact on waste arisings and the costs of waste management over the coming years. Section 4 provides details around waste disposal costs and in particular around the NLWA levy arrangements which are based on a menu pricing system. So I'm showing you aware this is based around different materials being charged at different rates, and importantly this provides financial incentive for reducing waste and for recycling more. The table in section 4.10 gives some examples of the kind of disposal cost savings that arise from increased recycling. The table is where the error that we've mentioned previously is included, so apologies for that. An example of these sort of savings are, for example, a 1% increase in recycling rates would lead to a disposal cost in the order of £59,000 per year in the disposal in the levy. Different menu prices for food and mixed recycling mean that there is a greater saving from recycling more food waste than from recycling more mixed dry recycling. We go into section 4.16, a similar section but particularly relating to disposal costs for commercial waste, which are broadly, broadly similar arrangements. And then lastly, section 5 provides an overview of some of the projects and initiatives that we are delivering as part of our reduction recycling plan. Andrew's mentioned a couple of them, particularly the investment in Twin States recycling improvements, and also a reference to the the commitment to extend food waste recycling to all remaining properties, particularly the flats above shops in Eslington. And further proposals are being developed. So, thank you. Thank you very much indeed. Well, let's just kick off. It's always invidious to compare ourselves to other places. But I saw the other day that the city of Swansea, for example, city and county of Swansea, which is a mixed urban suburban and hinterland place, it's hit a recycle rate of 70%, 7-0. Now, it's not comparable, but all blocks are flat. They've got a lot of tight urban environment, a bit like inner central London. If we were to hit that sort of rate, we'd be saving 3.5 million or more a year by recycling that much more compared to general waste. And in context that it's true, the recycle rate has improved a little bit in the last year. But I mean, look at it over a long period of time, like 15 years or so, it's been pretty much at or around 30% constantly. And the current administration has a manifesto commitment to increase the recycle rate by one percentage point each year over the next 10 years. But we're still knocking around 30%. So these costs and opportunities aren't materialising. What are the things that can really be done to make these sorts of savings or to identify ways in which we can recycle more at less cost? So, obviously, there's two parts to achieving that target. One is to make sure that the recycling services we provide are as comprehensive and as accessible as possible. Thus, the rolling out the food waste to shops or flats, trying to improve the recycling rates for infrastructure on estates. Secondly, though, then, is actually you can put in place all the recycling facilities in the world, but if people don't use them and don't engage, then we're not going to increase that recycling rate. So we need to be bolder in terms of some of those. We need to invest in some of those. And I say trying to look at the business case because, yes, if you can achieve big increases to the recycling rate, then you start to see savings not just in disposal costs but potentially in terms of collection costs as there's less waste to do. And, of course, we need to focus on waste reduction because the biggest saving at £80,000 a year for each percentage reduced in the waste. So it's not just about how much we recycle. It's about the total residual waste tonnage. So there is opportunity with some of the government new burdens funding to look at that. And we've agreed a business case to extend the flats above shops, which is the statute of requirement. Otherwise, we are providing recycling facilities for all the other waste materials that the government policies require. Anything you want to add to that? I mean, I think in terms of Swansea, I mean, Swansea sort of benefits, I think, from a coordinated policy approach across the whole of Wales. There is a national policy that is applied by the Welsh regional government, the Welsh government, which applies to every local authority. And it sets down requirements and guidance and really drives policy. And, you know, I think in England and in London, there's been a sort of a piecemeal approach as local authorities have sort of delivered their own policy changes, their own initiatives. They will have different arrangements in Swansea around sort of the collection arrangements. So the frequency of collections will be different. The prevalence of wheelie bins in the public realm will be very different. They'll be everywhere you look. And I think, you know, the decisions we have to make to make step changes to recycling rates in this thing. So not only there are difficult decisions around how much we invest, but difficult policy decisions relating to, you know, what are we prepared to do in this thing? What impact are we prepared to have on the immediate local public realm, public environment in order to achieve those kind of changes? And, you know, there's no straightforward answers. Okay. Pamela? Thank you. I'm wondering whether you think that you are maximising the potential benefits of improving food waste collection, because the food waste, food waste is quite heavy compared to mixed dry recycling. So a ton of food waste actually takes up a much smaller volume of collection space than a ton of mixed dry recycling or even a ton of residual waste. And if you can get more of that food waste out of the residual waste and into the food waste, you're getting the benefits of not having to pay for that heavy food waste to be burned with the rest of the residual waste. And you're also getting the benefit of the much lower cost of disposal because the food waste is £16.77 per tonne for the current year to dispose of. And I just wonder whether you think that you are doing everything you can to maximise that potential saving from making sure that you're doing better on the food waste collection. And have you been through the sort of costs of doing a much, much bigger kind of broadcast telling everyone what a difference it would make if people don't put a single potato peeling or a single apple core in their black bin? You know, the difference that that can make and get everyone on a bit of a mission to help the council save an awful lot of money, because that seems to be where the biggest potential is. I'm happy to take that. I think the honest answer is no, we could be doing a lot more. I think one of the key things underpinning us achieving greater recycling rates, as Andrew pointed out, is residents making better use of all of the recycling services that we provide. So not everybody uses the dry recycling service. Fewer people, however, use the food waste recycling service. So engagement rates, participation rates for food waste recycling are substantially lower than for mixed dry recycling, and they're lower still for estates. So there is a real opportunity to drive up recycling rates by driving up engagement and participation in those services. We did have a significant food waste communications campaign that took place towards the back end of last year. It involved high-level communications backed up with some targeted door-locking in specific areas, not the whole, you may not have been personally visited, targeted area to engage with residents, to talk to them about, you know, the service and the barriers, but also to provide them there and then with the tools they need, i.e. the kitchen caddy, the containers, the compostable liners, to give them that kind of impetus to, you know, the motivation, the tools and so on, to actually engage. We're reviewing the final report at the moment, but there were increases in tonnages, there were increases in participation. You know, what we need to identify is, as I know the Chair mentioned in the introduction, is about what is the actual return on investment. So as I say, we're reviewing the final reports on those campaigns at the moment. But it is an area that we can, we need to do, in my view, we need to focus more on, because it's not about extending services, buying new vehicles or whatever. It's about getting residents to make better use, more efficient use of the services that we already offer to them. Can I, if I just add to that, just a little bit to that, it was also, because we've now split the green waste and food waste collection, we can now measure the food waste a lot better. And we've invested in a specialist vehicle to support the food waste collection rounds. We might have seen in the press the food waste muncher, which was named by local school children. So just trying to raise that profile, and I think that's something we need to do, you know, more ongoing campaign. But we'll see the results of that door-knocking campaign, and we can then start to say, OK, if you do this and scale that up, what will that result in, in terms of recycling rune? One of the things I wanted to ask about was bi-weekly collections every two weeks. I know Camden moved to a number of areas where they did collections every two weeks, but there didn't seem to have been any significant increase in or reduction in waste as a result of these collections every two weeks. So I know on my estates, in my ward, the thing they resent most is any discussion of collections every two weeks, because actually it really stinks on the estates if you don't collect one every day, virtually. And so there's considerable opposition to that, and it doesn't look like it had much impact in Camden at all. I don't know if you thought that was true or not. And the other thing was, I'm not sure I can work out what the benefit of the £2 million expenditure was, in terms of waste, cost reductions, or anywhere else. So there's a number of examples across the country, sort of over the years, of boroughs with particularly high recycling rates having less frequent residual waste collections. A lot of those examples, I think, have been, have arisen at times when, you know, recycling was evolving, behaviour change. There's a strong argument that reducing the collection frequency of residual waste sort of drives behaviour change. But I think in Islington, our dry recycling rate, our recycling rate for mixed dry recyclables is relatively strong. I'm not saying it couldn't be better, of course it could be better, but it's relatively strong. And I think that there have been a number of examples, particularly in London, and Andrew and I both live in Hackney, where this is particularly a case where they introduced fortnight residual waste collections quite recently over the last couple of years, and it hasn't had that significant impact on recycling rates that other boroughs, other more rural boroughs, maybe with less developed services to begin with, have seen. Now, that's not to say there isn't a benefit in Hackney, they did see an increase in food waste recycling in particular. And that's one, I think that's probably one of the key benefits to that service, that it does encourage, it gives people an opportunity, well, it requires them to use the food waste service if they want a weekly collection of food waste. So I think that's a significant factor, but it would be easy to overestimate, I think, the potential impact that going to that kind of service could have in a borough like Islington. I would stress as well that you do not deliver fortnightly refuse collections for estates, because, you know, it only works where you have ownership over your own waste facilities and where you have shared facilities, you know, you can do other measures to try to drive down waste, but just collecting less frequency will result in full bins and overflowing bins, I think. I don't think there's any doubt amongst most members that that's what you're going to get in dumping and so on. Can I just, is it worth just the estate recycling investment, just in terms of, so we've invested now into 51 estates, 4,200 estate households. That's primarily around increasing capacity for recycling. Some estates had like just a couple of recycling bins, so just not enough capacity for the volume of households. So increasing capacity and improving the bin enclosures to reduce sort of flight tipping. So improving the environmental appearance of the estates and increasing capacity. And we engage and consult with residents before implementing that. And we've had very positive feedback. What we've started doing, well, we're now trying to increase, because the key question is, how has that affected the recycling rate on those estates? So we've got figures now for one estate where we've got bin weighing equipment in. And that showed a 20% increase in recycling rates on that one estate. So we're now rapidly trying to roll that out across the others so we can start to get more data on that. But it looks like it is having an impact. I mean, what I mentioned earlier, return on investments. And I think that's the sort of discipline that you do need to apply. This is a very Audit and Risk Committee kind of observation. Because if you invest £2 million on a set of facilities that, let's say, have got a, I don't know, a 15-year lifespan, something like that. Then at a straight line, that means you've got to be making nearly £150,000 a year. Either an increased revenue or reduced costs. Now, if you're running a business and invested £2 million on something that's going to last 15 years, that's what your business case will say you've got to be making. So to increase on the estates that have got those 4,200 homes by a fifth the amount of recycling good. But the question is, is it actually more than 20%? Because I think you'd have to be more than 20% in order to make a rate of return on the investment. But it's not a rate of return on investment, it's just covering the costs. And I think that's the kind of discipline that you need to apply to these sorts of decisions. I mean, I'll actually give you a free pass on this. Because I think that most of that investment is just to make the visual amenity better. That, you know, recycled bins on estates are bloody ugly. Put them in a decent enclosure as you improve the overall look and feel on the estate. That itself is a good thing to do. But if the belief that just making them look nicer is going to increase recycle rates, I think it's probably a little bit illusory. The crucial thing that so many people say to us is that Recycle rates are not about a lack of awareness. It's about that it's just pretty difficult to do it, particularly if you live on estates. If you live in a terraced house, I do, recycling is a doddle. If you live on the fourth floor of a block of flats where you've got to go along, past the bin chute, incidentally, all the way down the stairs, across the estate to a lovely looking enclosure, and then go, oh yes, somebody's left a TV box in it, I can't get it in now. These are the kind of practical obstacles to people recycling. They just go, I can't be bothered, I'll just put it down the bin chute, why not? Well, that's what it's there for. Now, people have said some radical things about how and how about making Dyson recyclates the default on estates. And then the chute takes recycles, and the general waste goes in a dumpster out the back. Now, I'm not saying that's what you should do, but that would make recycling way, way more easier. Now, the contamination rate might be a bit alarming in the transition, I'm sure. But those are the sorts of radical things, which seems to me, that we need to be thinking about if we're really going to be making some of the sorts of financial gains that we should be making. Like I say, if we get up from 30% to 40%, which is the manifesto commitment to the current administration, that's going to be saving about three quarters of a million quid. That's well worth banking. But the things that you need to do, you've got to be able to demonstrate that there is a provable case on a return on that investment. So, it would be really helpful, I think, for the executive in due course to see those kinds of calculations, alongside some things which, you know, are genuinely a little bit of a ball breaker on this. I'll be honest with you, you know, when I look at Camden, I look at Hackney, I look at Harringham, all the other boroughs, just as bad as us. I never say, at least we're not as bad as Hackney, or Harringham is only slightly better than us, or we're all terrible. You know, we want to push the boat out here. We really, really want to up the recycle rates. The carbon footprint benefits of all of that is high. Most importantly, the financial benefits are really significant. Would you not agree? Yes, I would agree. It's a bit hard for me to argue against that. Obviously, one of the challenges is that return on investment and the business case. Because the amount of investment required to shift the dial and really start making a difference, like year-round comms campaigns, proper behaviour change requires a level of investment and can you make a clear business case for that? And also the confidence about what those interventions will yield in terms of change in recycling rate. So we can do some trials and tests and start to extrapolate that and I agree that more investment in the data side so we can use data, analyse the waste data flow, where the different, you know, which estates are recycling more, where do we target our resources to do the behaviour change work, where we're going to make the biggest difference. So it requires investment both, you know, in data analysis and performance as well as the services. So, yes, I agree with you, but it's a challenge to make that pure financial business case always stack up. But we also need to factor in, you know, the environmental benefits and the other policy objectives that we're trying to achieve. Just looking at the health of waste per head of population isn't being one of the lowest in the country. Do we understand why that is? It's just, it could be something we could use as a positive and provide lower or it could be a risk if it's something that could go up and make these sorts of conversations even harder. So just trying to understand the rationale for why it is so low. A bit. We, we, I think it is, it's, it's symptomatic of Islington being a very high densely populated borough with relatively small properties, very small areas of gardens. So, you know, some of the, some of the higher, you know, recycling boroughs have very high tonnages of garden waste that feed into those flows and that feeds into that total, that total figure as well. Um, there'll be an element of sort of socioeconomic sort of, um, aspects to it. So larger boroughs with larger households and sort of more prosperous boroughs will generate more, more waste overall. Um, but it's, it's not an exact science. So yeah, that's, that's my sort of best stab at that. Well, thank you for asking this question. I looked at that table and I just wanted to know the denominator was wrong. But I see Camden is very, very similar. So isn't Camden both 240-ish? The other more suburban boroughs are in the 300s. Uh, just understanding that fundamental question would really take us some way. Why are we such an outlier? Camden isn't such an outlier compared with, um, compared to the other boroughs. I mean, interesting, I mean, Hackney, you think of the demographics of Hackney and the population density. I mean, not very different to Camden and Islington. So there isn't, there's something there that needs a little bit of, uh, you know, deeper understanding. Like I say, the denominator might just be wrong. Um, that's what I'd start off. I'd check the population figure first, um, and really get to that. A really good question. Janet. Thank you. Yes. On the, on the business case scenario, uh, I'm really interested in what the government is saying that people have to do. Uh, and in fact, I know, for example, London Borough of Redbridge doesn't do food collection at the moment, which, which is a bit amazing. They've got a way to go. Okay. So will we have to invest any more in meeting the government's new rules? And if so, have you done this cost benefit analysis? Yeah, happy to take that one. Um, so the government's simpler recycling regulations, um, put in place a requirement for all local authorities in England to collect a specific range of materials. So particularly the dry recyclable materials that we already collect, glass, paper, cans, plastic. Um, and then from April next year, there'll be a legal requirement for local authorities to also collect house, uh, food waste from all, all households, including flats, buff shops, all blocks of flats, the whole lot, to support that, um, what they term a new burden on local authorities. They are providing funding for local authorities. So we've received 1.1 million pounds in capital, interim funding of 353,000 pounds to support the rollout of any additional services. And there is still a promise of ongoing revenue funding for local authorities to cover the cost of all food waste collections. That is subject to, well, it hasn't been confirmed yet, that figure. So, you know, we'll wait and see. So we are, so we, we've taken a business case, uh, through Sinti and it has been approved that we, we will be rolling out that service. The business case for that, just touching on what Andrew was saying about business cases, it was relatively straightforward to put that business case forward because we, we did a trial. We were actually the first council in the country to trial food waste collections from flats, buff shops, quite a small trial on Holloway road, but that gave us sort of, that gave us tangible tonnage data from the bins that we provided. And we were able to extrapolate that out to the whole of the barrow and come up with a reasonably good estimate of what that, what that might deliver. Um, and do the business case off, off, off the back of that. So yeah, we'll be rolling that out this current year. So it's not the huge cost of it? I mean, we, we, we estimate that it'll be a, it's an additional collection round revenue cost in the order of about 200,000 per annum. But as I say, there is a promise from the government to cover that and all existing collection costs costs for food waste. Okay. That's really good. Well, thank you very much indeed. I mean, I think just in conclusion, it does seem that, um, investment is, is critical to, you know, moving the dial. Um, so that's somebody who was a little bit skeptical about the belief that just by raising awareness, you know, we have been talking about raising awareness for about 30 years. And, you know, people are very aware. It's just, will they do it? Um, so it's clear that there are, there are capital investment solutions which will help with this. In which case, therefore, the business case iteration needs to be one in which you have a provable financial benefit from making those sorts of investments. I don't think we're ever going to be in a situation as council where we start saying, let's borrow from future savings in order to justify, to actually pay for current investment. But you do need that sort of logic. You know, it's invest to save as the treasury used to call it or probably still calls it. That's the kind of logic that we need to be, um, engaging here in order to be able to do significant investments, which will change, uh, really significantly change behavior. And for, for, for my part, I think it's very much about what sort of infrastructure to be put into council estates, which really make recycling easy to do. And there may be a little bit of a glitch whether, you know, we can put investments into housing estates without impeding the HRA financing rules and so forth. But, you know, where there's a will, there is undoubtedly a way. But that's what we've got to do. We've got to make recycling easier on estates. So it becomes more natural. It becomes just like us middle class people. We just put the bag out at the very front of your house next to the hedge, because that's a doddle. That's the sort of solution that we need to get. That requires investment, requires a good business case in order to be able to do it. So I do think that's the sort of thing that the council and the executive in the next waste recycling plan needs to be contemplating. Okay. Well, look, thank you very much indeed. Like I say, you come to this committee in order to have a sort of financial debate rather than the kind of, um, you know, why, why, why can't we have wheelie bins sort of debate? Um, but you know, it's, everything in this council is about money, how you invest, how you get, reap the benefits of that. That's the sort of thing that we're looking at. Okay. Guys, thanks ever so much indeed for attending this evening. Like I say, you know, you're very welcome to sit in the back and watch every other entertaining part of this committee, or you can go on as normal people do. Thank you very much indeed. Good. Thanks now. Uh, let's move on to item B6 then, sorry, B5, which is the RIPA. Uh, Farida, thank you for, uh, attending this evening. Um, I think there's very little we are to present in this report other than we ain't, we ain't doing anything that's REAPA declarable. So all good. Is that correct? Yeah. Okay. Go on. Go on. Sit down. Whilst it's, uh, commendable that we haven't used REAPA, but does that mean that we're actually not investigating the range of housing benefit fraud or housing tenancy fraud or council tax fraud or the whole series of frauds that occur in local authority, particularly around housing and benefits and council tax is what this is supposed to capture. And if we're not using it, then we're probably missing some of that fraud. Yeah. I think it's a very fair question. I remember writing down the other day, does this mean isn't it simply not conducted types of investigation enforcement, which requires use of REAPA powers? I mean, that's, you know, that's the number of the question. Are we missing a trick? Should we be using these powers more extensively, both covert and directed surveillance to deal with, you know, people breaking the law or defrauding us and the like? I am aware that housing team are pursuing tenancy fraud, but they must be obtaining their information and data through other means. We do have data sharing agreements with other authorities and other organisations, but just to make sure that we do raise awareness of the powers and to make sure that we are complying, we are developing a programme of training for all officers. Although recently, well, a couple of months ago, some of our concierge staff did undertake some training. I think that's a very helpful question, but what members are currently experiencing is quite a significant uptick in the number of people reporting suspected, particularly housing fraud cases, subletting and illegal and so on. And what we detect is a reticence on the part of the investigating teams. They've been doing great work, actually, that, you know, the number of cases have come in where people have been found banter rights and tenancies have been re-secured and the people have been prosecuted and all good stuff. But there seems to be a slight institutional reluctance to use the full extent of powers available. And it could well be that the Audit Committee and other parts of the Council have sort of transmitted this message that we really don't want to be using those awful reaper powers because it's all very controversial and it might involve traveling on people's civil rights toes and so forth. But I think the question here is, we probably should be using some of these investigatory powers, both directed and covert surveillance, more extensively. Caroline? I'm just interested in what other boroughs are doing and whether other boroughs are using these powers or not. I mean, personally, I don't like the idea of using covert surveillance powers. I think using overt surveillance powers is fair enough. But I think the sort of covert side of it can actually just feel a bit kind of a bit sleazy. Yes. Thank you, Janet. So, yes. So, what are other boroughs doing? How do we benchmark against other boroughs? And, yes, that's the main thing. I'm not saying don't investigate. But are other boroughs actually using the overt surveillance methods rather than the covert? And, you know, these reaper powers are, you know, it's quite a big deal to start using those. So... Chair, can I take that away as an action? Yes. Yes. Yeah, very much so. I think it would be very good to benchmark ourselves with other boroughs. I mean, to describe this as sort of sleazy, yeah, okay. But, you know, we're not saying that we should be using gum shoes, you know, gum shoe guys in, you know, Dirty Max or anything like that. There are some very, very sophisticated tools available. There's a clear line that you're at risk of crossing. That's why the reaper legislation is there in order to be able to regulate and control that. But if the mood, if the vibe is that we may not be using available powers quite as extensively as other boroughs, then that's something that I think we really ought to take into account. Because we are a borough like other inner-lander boroughs that's facing a massive onslaught of people, regrettably, utilizing tenancies to make themselves a lot, a lot of money. Airbnb, complete and total subletting, you know, use of premises for all kinds of criminality. Admittedly, there's other powers to deal with, you know, closure orders and so forth. But there's a very strong vibe at the moment that people with council tenancies in Islington and housing association tenancies have the potential to make quite a lot of money. And, you know, the vibe really needs to go out that we're on top of it. Yeah. Okay. Good. Thank you very much indeed for that. Let's move on then. Item B6, Annual Governance Statement. Matt, walk us through this. Thank you, Chair. Okay. So, this should be familiar to yourself, although we've got a lot of new members who probably aren't aware of what the Annual Governance Statement is. So, I'll just briefly touch upon that for their benefit. So, this is a statutory document that we must produce alongside our Statement of Accounts, alongside our Draft Statement of Accounts every year. Under this committee, we have been bringing a mid-year review for discussion on the live governance issues that we're facing and that are relevant to us. We tend to treat this as a working document. We update it when there's issues that crop up or things that are solved and bring that to audit committee's attention quite regularly to have discussion on what we think are some of the big governance issues. So, it's more of an interesting live document than something that sort of just gets spat out every May to go alongside our Statement of Accounts. So, we streamlined this document this year. We've taken a lot of stuff out of it to make it an easier read, but we've still kept the core of what we want to do, which is mainly focus the committee and anyone else who wishes to read this report on the big governance issues we're facing and what the action plan is to resolve them. So, these come to us through a variety of different means. Corporate directors report on what they think their big issues are. Any time we have any internal audit risk where they highlight something particular, where there's a national issue that springs up that we think we might want to look at. So, these issues can come from a variety of different places. And then once we think we have something that we need to be paying attention to, that's how it gets on this list. So, there's a number of issues that have been with us for a while. So, the corporate governance review, for example, we've had that for a number of years. That's been a long process. We've been looking at that. School deficits has been an issue that this committee has looked at before in deep dives, and it's something that we're aware of and we're managing. So, there's a few things that are quite difficult to solve, but we don't want to lose sight of them, so we keep them on here. And then, of course, we've got plenty of new things that crop up and get sold and so on. So, there are a few new issues that I think would be good to draw the committee's attention to, which we've put on for this year. So, the first one I'd just like to raise is around partial exemption. So, this is a very complicated thing, I think it's fair to say. And it's essentially that the local authority is, in turn, is a Section 33 body. So, what that means is it can reclaim its VAT on exempt activities, whereas a normal business, if you're providing exempt activities, like you cannot claim your VAT back because you're not paying the VAT effectively. So, why should you get to claim it back? So, that's kind of how it works. But in order to give local authorities a better funding mechanism to go, well, you can claim that all back unless it gets to such an amount that you're distorting the market. So, if you were to go around and buy a load of properties and rent them all out and not charge any VAT on them, you could arguably distorting the market because you're unfair competition. So, it gives you this 5% level where you're able to do it. So, the authority has actually breached that level, which is a problem. So, once you've breached that level, you have to pay all your VAT back that you're claiming on exempt activities. On the exempt activities, not your total VAT amount, but on the exempt activities. So, we are able to not fall foul of this because you can average it out over 7 years because we had a lot of work done on the crematorium, which crematoria are exempt. So, if you do a lot of catheter works on crematoria, it's going to put your partial exemption at risk. But without wanting to overcomplicate this, it is a very tricky area. I think the main message to members on this one is that this is a risk that we face and we need to stay on top of it. So, we need to make sure that officers are very much aware of this issue when they're making capital decisions and that partial exemption is at the forefront. So, that if you've got a decision where you're renting out a building, you may need to opt to tax it, which means essentially charge VAT on your rent rather than just do it exempt, what you might do normally. If you're renting to a business, that's not a problem because they would just reclaim that VAT anyway as part of the process. So, it's just something we need to be aware of, make sure officers are trained in it, they're aware of it, and that it shouldn't be a particularly big issue going forward, but we just can't afford to forget about it, which is why it's in here. So, not a massive risk, I don't think, as long as we stay on top of it, but if we don't, it certainly can develop into something more serious. I don't want to stop there if anyone's got any questions on that one first, but if not, I'll move on. Yeah, let's do that, if the member's got questions on that first part. Yeah, thank you, it is a tricky one. So, the next one I want to cover is PFI contracts. So, this is around, we've got a number of PFI contracts expiring. This is a very complex and lengthy process in order to onboard previous, whether it's previous assets or functions or then go out again for these services. And although we've got the mixed five PFI contracts expiring in the next 10 years, that seems like a long time. These can take around four or five years to get sorted. So, we just want to make sure that this is something we're not losing track of, that we've properly got a plan for this. We've got a report that we'll be taking later in the year to CMT to discuss how this is managed. So, I think it's important that we do keep track of this and it is a potential for large sums of money involved with these PFI contracts. I think it's worth saying, members have been increasingly aware of this, not least because the hand back of the first tranche of HFI properties really revealed a lot of difficulties and also revealed that a lot of capital works that we thought had been undertaken didn't get undertaken. And, you know, the contract documentation with HFI, you know, which ran to 600 something pages, had a lot of algebra in it, was pretty much unintelligible. That, you know, these were not well drawn up contracts. It was one of those things, never mind the quality, feel the width. You know, they were massively complicated. I think we need to be able to just decipher some of the current contracts and make sure that they are really, really on point for what we were originally expecting 15, 20, 25 years ago to come out of these. So, these are, if I remember rightly, the remainder of the HFI contracts. We've got an adult social services, big care homes contract coming in so that we have a really good audit of what the assets are, what the condition is, what, you know, really understanding what the handover conditions are and, if necessary, you know, turning to our learned friends, if necessary, in order to make sure that we get the best deal back. I think there will be a lot of support from members to get that right. Yeah, I mean, just picking up on the points that Paul was just making about those kind of asset registers and the kind of condition registers, how well advanced is the Council in terms of having all that information at hand as these contracts come to an end? So, these PFIs are managed by the relevant services. So, I can't speak for every service, but they should be managing these contracts and keeping track of all this stuff and making sure performance is up to scratch and so on and knowing what these assets are. In terms of the sort of discovery piece of where something's been out for many years and you might not necessarily know what things are and that's something that does need to be fully undertaken as part of this. But I would say that all of this work will take time to ensure that what we think we have and what is there is correct. So, right now, you're not confident that that information... In terms of properties, we know the properties that we have, but it's more of the sort of technical things like street lighting and exactly what's where and some of that might be a bit more complex to kind of unpick. Are you confident that enough kind of resource is being put into that discovery work so that you've got all the information you need in time for those contracts coming to an end? So, we have a resource to get a permanent person in to start dedicating time to this and to support services, because services are the expert, but actually a central resource to lead on PFIs to help kind of bring this all together. And are we aware in this committee of the timescales and should we be making sure that we're getting an update on this? Because this feels like it's potentially massively risky for the Council financially. And I think we should be assured that you are, you know, that there is sufficient resource going into managing this whole situation so that there's not unpleasant surprises as this five years rolls out. Yeah, I think this is all part of what they're putting together in terms of putting this proposal forward in terms of how we're going to deal with this. So, we're at the early stages of managing it. So, I think we will make sure we assess what resources needed and make sure that is there and make sure it's sufficient. Obviously, we do have a long period. Some of these PFIs are over ten years into expiry. So, there's plenty of time to work on this and make sure that we're in a good position come the expiry. So, it's not going to be a problem that suddenly will appear in six months' time. But it is something we need to stay on top of because it will sort of get a bit out of sync quite quickly. But, you know, the lesson from the HFI handover was ten years will gallop by. They really will. Once you realise, once you discover, and then appreciate what the depth of investigation may be required. I mean, for what it's worth, my advice would be to have the most of this function done corporately in resources rather than in the service departments. You know, no insult to the service departments, but they basically manage contracts that they're not tooled up and equipped to be able to deal with the enormity of the eventual handover and the prep work that's required ahead of all of that. The responsibility does sit under me for this work. So, in this report, it's got my name against it. So, it would be up to me as it stands to be pulling this plan together. Good work and good luck. Excellent, thank you. All right, carry on. Yes, so, obviously, moving on, just want to talk on the new financial system. So, this project has been going very well and we've just finished our planning phase and we're in the build phase. So, the council is moving to a new financial system, which is a general ledger, a debtors and creditors system. And, ultimately, there's a long-term plan to reduce systems that we have to generate savings, build more efficiencies by having one system where all our information is kept for all of our financial data. So, there's a lot of governance benefits to this system. So, I'm actually very certain this will actually assist us in having a better environment for governance going forward. But, clearly, there are risks. If this is not implemented properly, there's plenty of stories in the news of that going wrong. So, we do need to make sure that we are on top of this. We've got a very tight project plan. We've got a really good project team, really strong governance. So, I'm very confident in the way this project is going, but it does need to be highlighted as a risk until that implementation has been fully gone through and has been a success. So, that is on here as a risk, but I do think it's got a lot of potential benefits as well. And then, finally, I'll touch on risk. So, just about what I started talking about earlier. So, we've agreed a number of work streams around risk in terms of how it's managed. So, this is best illustrated on page 121, which I've got more of the detail talking to this, but I'll mention it now. So, roles and responsibilities around managing risk. So, much more of an active role for everybody in the organisation, sort of thinking about it more strategically, bringing that message out. When you're thinking about risk, tying it back to the principal risk register and specifics, rather than that being something that's kind of just held corporately. It should be much more with everyone. Risk appetite. So, people, we haven't necessarily had discussion of what that is. So, CMT should be having annual discussions around what are the risk appetites for this council in terms of what does that look like? And how that all ties together. The principal risk register to be streamlined and try and get the key biggest 10 risks, focus on the biggest risk of the organisation rather than have an unwieldy document, which is hard to kind of read. Having those 10 key risks, for example, would sort of focus on those big areas. And then what our new sort of risk function will look like as we build it internally. How do we integrate that into the organisation? What is the role of our corporate risk manager? And how they're going to sort of service us as clients across the organisation? So, those are sort of the work streams that we need to kind of get through in the next few months. Which is all, so hopefully that will be very much progressed in the next few months as we work towards getting these documents online. So, those are all of the sort of the new things to report. But happy to take any questions. We've had a lot of stuff there. Questions on any of that so far? No? All good. Other than to state the obvious that implementing a very large mission critical IT system is one of the biggest risks you can undertake. And I think we all want to, you know, feel absolutely sure that the new financial system is going to be properly prepped, properly dress rehearsed, implemented with care, and absolutely working from day one. You know this. Yes. Good. Okay. Carry on. Yes, that was all I was going to say on the AGS. So, yes, just any questions on any of the AGS, happy to pick that up. So, yes, that's all I wanted to highlight to members at this time. Okay. Let's just focus on one little thing, which is the corporate governance review, which is essentially being reported as primarily done. One of the things this committee, or members of this committee, along with the relevant executive member, have done is formed a working group reviewing the constitution. The very first phase, which Maria Rosenthal got willing, was all done and dusted. Phase two, which we've been doing over the last year, is by and large done. There's a few leftovers. There's a number of things that members have raised, which I think we want to get cracking on. But I think probably the view of this committee, especially with the people that sit in the room and talk this stuff through, is let's get this done and dusted. It kind of feels like we've been reviewing the constitution forever. We want to get it done and dusted and then just put it onto a sort of care and maintenance annual review basis. And then we're not worrying too much about what rules say what and do we need to change them. But there clearly is a bit of work that still needs to be done. I think members probably, well, we'll await what the executive says about the LGA peer review. But this is something that the LGA peer review has sort of pinpointed that their assessment is that there are some things culturally in the council, which they wonder whether they are quite right and recommend that the constitution review process is a way of resolving some of those, some of those bolting down some changes, filling in some gaps, and in some cases perhaps making some of our practices here less customer practice, but a bit more sort of orthodox and in line with a lot of other local authorities. But that's something that needs to be discussed and debated. And I think members will probably agree that we want to get that done as soon as possible. Not least because, you know, you can do things in forever. We have four year terms of office. It's a good thing to get done before May 2026. Good. Members got any other comments? No? All right. Good. Matt, thank you very much indeed for that. Let's go to our almost last item, which is the cybersecurity annual report. Melanie's here. Come on down. Somebody once said. Oh, that's all right. Good. Thank you very much indeed. Right at the start of this meeting I said that I failed to read the report. I've sneakily been reading the report. So I can confidently say that we haven't. Yes, we're going to go into closed session. We're going to, you know, shut the doors, switch off the... No, we don't need to shut the doors. Switch off the cameras. And, well, thank you. Good. Thank you very much indeed. This is one of these...