The Corporate Committee meeting on 27 November 2025 addressed significant financial challenges, including a substantial budget gap and ongoing issues with the council's statement of accounts, leading to a disclaimed audit opinion. Key decisions included noting the progress on the council's action plan in response to external auditor recommendations, agreeing to a revised approach for internal audit planning, and considering updates on procurement, contract management, and counter-fraud activities.

Update on the Council's Action Plan Response to External Auditor Recommendations

The committee received an update on the council's action plan to address recommendations from external auditors, Forvis Mazars. Corporate Director of Resources, Zena Cooke, presented the updated action plan, highlighting that while significant work had been undertaken to improve financial stability, these measures would take time to have a full impact. The council is facing unprecedented financial pressures due to reduced government funding and increased demand for services, particularly in temporary accommodation, adult and children's social care.

Key actions being taken include:

• A plan to rebuild reserves through the Medium-Term Financial Strategy (MTFS), aiming for £15 million annually.
• Early approval of savings totalling approximately £28 million across the MTFS period, which includes difficult decisions regarding service reductions.
• Addressing the cost of debt by factoring it into the budget for 2026/27 onwards, a significant factor in last year's overspend.
• A pause in the capital programme to reduce borrowing costs.
• An independent review of the MTFS to provide assurance and identify further improvements.
• External commissions on demand-led services to reduce costs.
• A comprehensive review of fees and charges, and commercial income to increase revenue.
• Implementation of a flexible use of capital receipts policy to fund relevant revenue spending and reduce overspends.
• Strengthened spend controls with stricter approval limits.

The council is also building a pipeline of asset disposals to fund transformation work and is in discussions with the government regarding potential Exceptional Financial Support (EFS) for the current and next financial year. Despite reporting an overspend for 2025/26, it is noted as significantly lower than the previous year, with demand-led areas showing stabilisation. Actions taken in homelessness are reducing the numbers in nightly paid accommodation, which is a primary driver of the overspend.

Councillor Scott Ainslie, a substitute member, raised concerns about the budget gap, questioning the effectiveness of a data-led approach to savings that was costing £2.5 million in consultancy fees. He also highlighted concerns about senior management staffing levels and the sale of council assets, suggesting leasing arrangements might be more beneficial.

The committee agreed to close actions where indicated in the action plan, acknowledging the progress made.

Statement of Accounts Update

Peter Hesketh, Deputy Director of Finance, provided an update on the progress of the external audit of the council's 2024/25 statement of accounts. He confirmed that it would not be possible to complete a full audit, and a disclaimed opinion would be issued by the external auditor. This follows a disclaimed opinion on the 2023/24 accounts due to national backstop dates and issues with Homes for Lambeth (HfL) group accounts.

Significant work has been undertaken to align accounting policies between the council and HfL, including prior period adjustments and asset valuations for HfL properties. The council aims to republish its statement of accounts for 2024/25 by the end of November 2025.

The council is implementing a project management approach to the audit, establishing clear escalation routes, and improving communication with external auditors. A dedicated team is being created to focus on accounts preparation and servicing audits, with plans to enhance capacity, skills, and experience. A Closedown and Accounts Improvement Plan is being developed to address these areas.

Councillor Jackie Meldrum questioned the uncertainty surrounding the accounts and the implications of using backstop dates. Glenn Hammons, Interim Director of Finance, explained that the backstop date is the final deadline for accounts, and delays in previous years had impacted the current preparation timeline.

The committee agreed to consider and comment on the update, the actions being taken, and to receive regular future updates on accounts preparation and related improvements.

Procurement and Contract Management Update

Mark Pearson, Assistant Director of Procurement and Contract Management, presented an update on procurement and contract management services for the financial year 2024-2025. The council's total recorded spend on procurement was £719,252,095, with the largest proportion (£259,865,267) allocated to Adults, Health and Children's services. Expenditure with local suppliers has seen a steady increase, with £179 million spent with 744 local suppliers in 2024/25.

The procurement function operates a Category Management approach, split into four areas: Adults, Children and Health; Housing, Property and Construction; Community and Environment; and Energy and Corporate. A Procurement Hub provides officers with access to all procurement information, policies, and training materials. The Procurement Plan outlines 149 potential projects with an estimated value of £803 million.

Training programmes are in place for council staff, with 14 training sessions delivered in 2024. A Procurement Board, chaired by the Corporate Director of Resources, will be relaunched in early 2026 with revised terms of reference to strengthen governance.

Contract management remains an area for improvement, with disparities in practices across the council leading to poor performance in areas such as contractor performance, spend control, variations, and extensions. A standardised meeting agenda is proposed to improve consistency in contract monitoring. Social Value commitments are also being streamlined, with a proposal to centralise this function within the Procurement Team.

Purchase Order (PO) compliance remains low at 34%, with purchases often made without a PO raised until an invoice is received. An internal audit review of current arrangements has been commissioned. Formal action will be taken for ongoing or persistent non-compliance.

Councillor Meldrum expressed concern about the low PO compliance and the potential for increased bureaucracy. Councillor Matthew Bryant echoed concerns about poor performance, particularly in contract management and non-compliance. Councillor Timothy Windle questioned the value of the consultancy fees for the savings approach.

Zena Cooke, Corporate Director of Resources, acknowledged the concerns and highlighted that the Procurement Board would be chaired by her to align with Spend Control arrangements. She also noted that the issues were cultural as much as systemic.

The committee agreed to consider the level of assurance provided by the report and requested that the issue of procurement and contract management be revisited.

Six-Monthly Update – Complaints, Member's Enquiries, Subject Access Requests, Freedom of Information Act Requests and Ombudsman Cases

Sara Hagley, Head of Customer Service, presented a six-monthly update on complaints, Members' Enquiries (MEs), Subject Access Requests (SARs), Freedom of Information (FOI) requests, and Ombudsman cases for the period April to September 2025.

The total number of complaints received was 5,613, an increase from the previous period. Housing Management remained the largest area for complaints, although its percentage share decreased slightly. Resident and Enabling Services saw a significant rise in complaints. The number of MEs received was 5,189, also an increase, with Housing Management showing a decrease in enquiries while Resident and Enabling Services increased.

Ombudsman cases totalled 166, with Housing Management accounting for the largest proportion. Compensation payments amounted to £128,261.86, primarily related to Housing Management. FOI requests increased by 43% over two years, with Resident and Enabling Services and Housing Management being the largest contributors. SARs also saw an increase, with Housing Management and Children's Services showing the highest volumes.

Key root causes for complaints included delays in service, disagreements with policies and charges, and failure to deliver or complete tasks. For MEs, delays in service and policy disagreements were prominent.

The report highlighted learning from complaints, including the need for better contractor appointment management, improved communication, a greater focus on first-time fixes, and clearer policy communication. Recommendations included developing an online portal for leaseholders to report communal repairs and creating concise policy factsheets.

Councillor Jackie Meldrum suggested improving clarity on service requests versus problems and advocated for more online systems for reporting issues. Councillor Timothy Windle requested more assurance-based reporting rather than just performance data and asked for a breakdown of upheld complaints by trend.

Sara Hagley agreed to provide further details and noted that work was underway to improve online offerings and develop clearer reporting. The committee agreed to note the contents of the report and to pick up actions offline.

Internal Audit Progress Report 2025-26

Paul Rock, Assistant Director of Internal Audit and Counter Fraud, presented the progress report on the internal audit plan for 2025/26. He acknowledged that delivery had been slower than anticipated due to challenges in management engagement and requests for audit deferrals. The Chief Executive has written to all Corporate Directors to set clear expectations for engagement and adherence to timescales.

Of the audits planned for 2025/26, 45% are in fieldwork, 16% in planning, 23% in reporting, and 16% are completed. The report highlighted a significant backlog of overdue high and medium priority actions (71% of high and 81% of medium actions are overdue), indicating capacity or capability issues within directorates. To address this, a business case for Audit Management Software (AMS) is being prepared.

The report detailed findings from specific audits, including No Assurance for the Loughborough Estate Management Board (TMO) due to weak financial stability and governance, and Limited Assurance for St Saviours CE Primary School due to issues with policies, budgetary control, and bank mandates.

A revised approach for planning internal audits for 2025/26 and 2026/27 was proposed, including starting next year's plan earlier and incorporating an audit on contract management in Housing.

Councillor Meldrum raised concerns about the slow progress and the need for management to accept audit findings. Councillor Rebecca Spencer, Chair of the Corporate Committee, emphasised the committee's role in seeking assurance and holding officers accountable.

The committee agreed to consider the progress made against the internal audit plan, approve the revised approach for planning, and consider progress on actions arising from the Corporate Committee Effectiveness Review.

Counter Fraud Progress Report 2025-26

Michael O'Reilly, Head of Counter Fraud, presented the progress report for 2025-26. He highlighted that new investigations were at a higher rate than the previous year, and active investigations were also up. While tenancy recoveries were slightly lower at this stage, an increase was expected. The report indicated that the council's counter-fraud team is performing well above national averages, particularly in recovering tenancies.

The report noted that fraud represents 41% of all criminal activity in the UK, with an average fraud value per case falling nationally. However, Lambeth focuses on high-value tenancy fraud investigations. The council's fraud team is reportedly the second most successful in the UK for recovering tenancies.

Fraud prevention reviews are ongoing in areas such as Homelessness Prevention and Tenancy Allocations and Verifications. Training on fraud risks within the procurement lifecycle and the Economic Crime and Corporate Transparency Act has been delivered to Procurement staff and will be rolled out to Contract Managers.

The Lambeth and Croydon Counter Fraud Shared Service is participating in a peer review as part of its membership in the Government Counter Fraud Profession (GCFP).

Councillor Matthew Bryant and Councillor Timothy Windle commended the team's effectiveness and the value they bring in ensuring resources reach those in need. The committee agreed to consider the progress and outcomes of counter fraud activity.

Annual Governance Statement 2024/25 Action Plan Update

Paul Rock, Assistant Director of Internal Audit and Counter Fraud, presented an update on the progress made against the action plan developed from the Annual Governance Statement (AGS) review. The AGS, presented in July 2025, identified issues and challenges, and the action plan aims to address these.

The report noted that the council still faces significant financial challenges, but these are recognised, managed, and reported on. The AGS covers various aspects of governance, including financial management, procurement, and staffing.

Councillor Timothy Windle commented positively on the proactive approach of adding new weaknesses and enhancement areas to the plan during the year. He noted that many of the issues discussed in other agenda items were covered within the AGS. Councillor Ibtisam Adem raised concerns about the level of change within the organisation and the potential uncertainty and risks associated with it, particularly regarding capacity and staff retention.

Zena Cooke, Corporate Director of Resources, acknowledged the risks associated with transformation projects and assured the committee that these are discussed at the most senior level and managed through risk registers.

The committee agreed to consider the progress made against the issues and challenges identified in the 2024/25 AGS.

Treasury Management Mid-Year Performance Report to 30 September 2025

Robert Browning, Acting Assistant Director of Finance, presented the mid-year treasury management performance report. The council's net debt has decreased by £22 million in the six months to September 2025, and investment balances have increased from £1 million to £68 million. Cash outflows are significantly lower than the previous year, attributed to cost-saving measures and a pause in the capital programme.

The council's gross external borrowing stood at £1.107 billion, with a weighted average interest rate of 4.26%. The forecast for total interest payable on external borrowing in 2025/26 is £48.2 million, against a budget of £34.6 million. Investment balances totalled £68.2 million, earning an average interest rate of 4.16%.

The report highlighted that while the council's borrowing limits are within approved strategy, long-term PWLB borrowing rates have increased due to market influences. The council's investment strategy prioritises security and liquidity over yield.

Councillor Meldrum questioned the achievability of the budgeted income from investment interest, noting that current returns did not align with the £5.4 million forecast. He also asked if the projected overspend on interest payable had been considered in Cabinet reports. The Director of Finance acknowledged that initial estimates were made before all accounts were finalised and that the Medium-Term Financial Strategy (MTFS) has been updated to reflect revised budgets.

The committee noted the Treasury Management Performance Report.

Internal Audit Progress Report 2025-26

Paul Rock, Assistant Director of Internal Audit and Counter Fraud, presented the progress report on the internal audit plan for 2025/26. He acknowledged that progress had been slower than anticipated due to challenges in management engagement and audit deferrals. The Chief Executive has issued clear expectations to Corporate Directors regarding engagement and adherence to timescales.

Currently, 45% of audits are in fieldwork, 16% in planning, 23% in reporting, and 16% are completed. A significant backlog of overdue high and medium priority actions (71% of high and 81% of medium) remains, indicating capacity or capability issues within directorates. A business case for Audit Management Software (AMS) is being prepared to improve efficiency and tracking.

The report detailed findings from specific audits, including No Assurance for the Loughborough Estate Management Board (TMO) due to weak financial stability and governance, and Limited Assurance for St Saviours CE Primary School due to policy gaps, budgetary control issues, and outdated records.

A revised approach for planning internal audits for 2025/26 and 2026/27 was proposed, including starting next year's plan earlier and incorporating an audit on contract management in Housing.

Councillor Meldrum expressed concern about the slow progress and the lack of management acceptance of audit findings. Councillor Rebecca Spencer, Chair of the Corporate Committee, emphasised the committee's role in seeking assurance and holding officers accountable.

The committee agreed to consider the progress made against the internal audit plan, approve the revised approach for planning, and consider progress on actions arising from the Corporate Committee Effectiveness Review.

Counter Fraud Progress Report 2025-26

Michael O'Reilly, Head of Counter Fraud, presented the progress report for 2025-26. He highlighted an increase in new investigations and active investigations compared to the previous year. The council's fraud team is reportedly performing well above national averages, particularly in recovering tenancies.

The report noted that fraud constitutes a significant portion of criminal activity nationally, but Lambeth focuses on high-value tenancy fraud. The council's fraud team is recognised as highly successful in recovering tenancies. Fraud prevention reviews are underway in areas like Homelessness Prevention and Tenancy Allocations. Training on fraud risks in procurement is being delivered.

The Lambeth and Croydon Counter Fraud Shared Service is participating in a peer review as part of the Government Counter Fraud Profession (GCFP).

Councillor Matthew Bryant and Councillor Timothy Windle commended the team's effectiveness. The committee agreed to consider the progress and outcomes of counter fraud activity.

Annual Governance Statement 2024/25 Action Plan Update

Paul Rock, Assistant Director of Internal Audit and Counter Fraud, provided an update on the progress of the Annual Governance Statement (AGS) action plan. The AGS, presented in July 2025, identified issues and challenges, and the action plan aims to address them. The report acknowledged the council's ongoing financial challenges but stated that these are being managed and reported.

Councillor Timothy Windle praised the proactive approach of adding new weaknesses and enhancement areas to the plan. Councillor Ibtisam Adem raised concerns about the level of organisational change and its potential impact on capacity and staff retention. Zena Cooke, Corporate Director of Resources, acknowledged these risks and assured the committee that they are addressed at the highest level and managed through risk registers.

The committee agreed to consider the progress made against the issues and challenges identified in the 2024/25 AGS.

Treasury Management Mid-Year Performance Report to 30 September 2025

Robert Browning, Acting Assistant Director of Finance, presented the mid-year treasury management performance report. The council's net debt decreased by £22 million in the six months to September 2025, and investment balances increased to £68 million. Cash outflows were significantly lower than the previous year due to cost-saving measures and a pause in the capital programme.

The council's gross external borrowing stood at £1.107 billion with a weighted average interest rate of 4.26%. The forecast for total interest payable on external borrowing in 2025/26 is £48.2 million, exceeding the budget of £34.6 million. Investment balances earned an average interest rate of 4.16%.

Councillor Jackie Meldrum questioned the achievability of the budgeted investment income and whether the projected overspend on interest payable had been considered. The Director of Finance acknowledged that initial estimates were made before accounts were finalised and that the MTFS has been updated.

The committee noted the Treasury Management Performance Report.

Internal Audit Progress Report 2025-26

Paul Rock, Assistant Director of Internal Audit and Counter Fraud, reported on the internal audit plan for 2025/26. He noted slower progress than anticipated due to challenges in management engagement and audit deferrals. The Chief Executive has issued clear expectations to Corporate Directors regarding engagement and adherence to timescales.

Currently, 45% of audits are in fieldwork, with a significant backlog of overdue high and medium priority actions (71% of high and 81% of medium). A business case for Audit Management Software (AMS) is being prepared to improve efficiency. The report detailed findings from specific audits, including No Assurance for the Loughborough Estate Management Board (TMO) and Limited Assurance for St Saviours CE Primary School.

A revised approach for planning internal audits for 2025/26 and 2026/27 was proposed, including starting next year's plan earlier.

Councillor Meldrum expressed concern about the slow progress and management's acceptance of audit findings. Councillor Rebecca Spencer, Chair of the Corporate Committee, stressed the committee's role in seeking assurance and accountability.

The committee agreed to consider the progress of the internal audit plan, approve the revised planning approach, and review progress on actions from the Corporate Committee Effectiveness Review.

Counter Fraud Progress Report 2025-26

Michael O'Reilly, Head of Counter Fraud, presented the progress report for 2025-26, highlighting an increase in investigations and a strong performance in recovering tenancies. The council's fraud team is reportedly outperforming national averages in several financial indices. Fraud prevention reviews are ongoing, and training on fraud risks in procurement is being delivered. The Lambeth and Croydon Counter Fraud Shared Service is participating in a peer review. Councillors Bryant and Windle commended the team's effectiveness. The committee agreed to consider the progress and outcomes of counter fraud activity.

Annual Governance Statement 2024/25 Action Plan Update

Paul Rock, Assistant Director of Internal Audit and Counter Fraud, updated the committee on the progress of the Annual Governance Statement (AGS) action plan. While acknowledging the council's ongoing financial challenges, he stated that these are being managed and reported. Councillor Timothy Windle praised the proactive approach to the action plan, while Councillor Ibtisam Adem raised concerns about the impact of organisational change. Zena Cooke, Corporate Director of Resources, assured the committee that risks associated with transformation are addressed at the highest level. The committee agreed to consider the progress made against the AGS action plan.

Treasury Management Mid-Year Performance Report to 30 September 2025

Robert Browning, Acting Assistant Director of Finance, presented the mid-year treasury management performance report. Net debt decreased by £22 million, and investment balances increased to £68 million. Cash outflows were significantly lower than the previous year. The council's gross external borrowing stood at £1.107 billion with a weighted average interest rate of 4.26%. The forecast for total interest payable on external borrowing in 2025/26 is £48.2 million, exceeding the budget. Investment balances earned an average interest rate of 4.16%. Councillor Meldrum questioned the achievability of budgeted investment income and the projected overspend on interest payable. The Director of Finance acknowledged that estimates were made before accounts were finalised and that the MTFS has been updated. The committee noted the report.