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Agenda, decisions and draft minutes

Venue: Committee Room 2 - Waltham Forest Town Hall. View directions

Contact: John Williams, Democratic Services Officer  020 8496 4344 | Email: john.williams@walthamforest.gov.uk

Items
No. Item

30.

APOLOGIES FOR ABSENCE, SUBSTITUTE MEMBERS AND ORDER OF BUSINESS

Minutes:

Apologies for absence were received from Councillor Umar Ali, Vice- Chair.

 

It was noted that Councillor Saima Mahmud was present as substitute for Councillor Ali.

 

The Chair proposed and the Committee agreed that Item 6, External Auditor - Certification Of Rants And Returns 2017/18 Grants, be taken as the first substantive item (Minute 35 refers).

31.

MINUTES OF THE PREVIOUS MEETING pdf icon PDF 98 KB

Decision:

Agreed.

Minutes:

The minutes of the meeting held on 27 September 2018 were approved as a correct record and signed by the Chair.

32.

DECLARATIONS OF INTEREST

Members are required to declare any pecuniary or non-pecuniary interests they or their spouse/partner may have in any matter which is to be considered at this meeting. Interests are defined on the inside cover of this agenda.

Minutes:

None.

33.

TREASURY MANAGEMENT STRATEGY, MINIMUM REVENUE PROVISION POLICY STATEMENT AND ANNUAL INVESTMENT STRATEGY 2019-20 pdf icon PDF 87 KB

Additional documents:

Decision:

The Committee recommended Council to:

(a)       agree the Treasury Management Strategy Statement and Annual Investment Strategy Report 2019/20;

(b)       agree the MRP strategy for 2019/20 (as outlined in appendix 1);

(c)        agree the Prudential Indicators as set out in the Treasury Management Strategy, which demonstrate that the Council’s capital investment  ...  view the full decision text for item 33.

Minutes:

Consideration was given to a report of the Pensions and Treasury Manager and Senior Accountant.

The Chair referred to the training session that took place before the meeting, and wished to place on record the Committee’s thanks to David Whelan of Link Asset Services for an excellent presentation.

Vince Yeboah introduced the report and drew Members’ attention the context within which the Council’s treasury management activity operated, and the proposed strategy for the coming year. The report also considered the Council’s borrowing and investment strategy alongside required Prudential Indicators; and identified the risk reduction strategies that have been established to ensure the fundamental aims of security, liquidity and yield of the Council’s investments.

The Chair asked how significant the changes were this year.  Mr Yeboah said that they had broadly followed the same process, and no major or ambitions changes were proposed to the strategy of maintaining investments in strong credit rated companies.

Interest rates – John Turnbull highlighted that the Council will not borrow more than or in advance of its needs purely in order to profit from the investment of the extra sums borrowed.  As short-term rates are very low, the Council will use its internal balances to defer long-term borrowing.   Although it might seem attractive to reschedule more expensive older debts, interest rates tend to work against rescheduling, and it is likely that the Public Works Loan Board would require a premium to pack back debts earlier.  However, if short-term rates went higher, the loan can be paid at a discount.

Pensions – Councillor Doré asked why there had been an early repayment to the Pension Fund.  Officers explained that the Fund is a long-term investment, and covers a range of asset classes, with a higher rate of return.  There is therefore a higher rate of interest back from the Pension Fund.  This practice has worked for a number of years, but there must be vigilance as to interest rates going up again.

Delegations – Mr Yeboah clarified that the delegations sought were on an annual basis, although it was too early to say what the actual amounts involved would be.

Brexit – Councillor Mahmud said that the uncertainties around leaving the EU were bound to have an impact: for example on the major housing projects on which the Council’s strategy rests, especially as the cost of materials and construction go up.  Mr Turnbull acknowledged the uncertainty, but stressed the importance of distinguishing capital expenditure from treasury management.  A no-deal Brexit could lead to a recession, but the Bank of England could respond by cutting interest rates.  A fall in the pound brings advantages as well as disadvantages.

Capital strategy – Mr Turnbull said that the budget would go to Council on 28 February, but given the situation outlined, the capital programme could vary and could therefore be in the mid-year report.  Alongside the capital strategy, which is now the subject of a separate report required by CIPFA, the Council through Property and Asset Management is developing  ...  view the full minutes text for item 33.

34.

RISK MANAGEMENT UPDATE pdf icon PDF 74 KB

Additional documents:

Decision:

The Committee:

 

(a)  noted the contents of the report; and

 

(b)  agree the strategic risk register, detailed in Appendix A to the report.

Minutes:

Consideration was given to a report of the Insurance and Risk Manager.

 

Andrea Nitschke introduced the report, setting out an update on the progress being made to embed risk management within the Council, and presenting the strategic risk register for review and approval.

 

Brexit – the Committee returned to this them in the context of risk and raised a number of concerns:

 

Supply chain – it was important that this included contractors as well as the Council’s in-house services.  Ms Nitschke said that the Brexit Working Group had considered this further on 14 January.

 

Adult Social Care – the Chair said that in this connection, it was particularly critical that Adult Social Care should liaise with providers to ensure they can access and provide the labour.  Councillor Mahmud asked how well the new operating model for Adult Social Care had settled down since it went live in April 2018.  She also asked for an assurance that adequate investment had taken place in workforce development: Ms Nitschke said this had happened.

 

Community cohesion (SFRH001) – the Chairasked how, following an incident, the matter is fed back to the risk owner.  Ms Nitschke said that they would go through the relevant risk champion to check whether the mitigations needed to be adjusted.  The Director of Governance and Law said that following an incident as serious as the one in Leyton on 8 January, the matter would be picked up at strategic level by the Management Board, and in this instance the Deputy Chief Executive.

 

Working groups – the Chair enlarged on the idea that formal meetings did not provide enough time or the right setting for Members to interrogate risk and see it in the strategic and operational setting.  He looked convening to ad hoc working groups to examine risk and the register in more detail. 

 

Decision

 

The Committee:

 

(a)    noted the contents of the report;

 

(b)   agreed the strategic risk register, detailed in Appendix A to the report;

 

(c)    asked for Member-level working groups to be established as appropriate to examine risk in detail, from a strategic and operational point of view.

 

35.

EXTERNAL AUDITOR - CERTIFICATION OF RANTS AND REUTNS 2017/18 GRANTS pdf icon PDF 71 KB

Additional documents:

Minutes:

Consideration was given to a report of a report of the Strategic Director of Finance and Governance and the Chief Accountant, introducing the 2017/18 report produced by KPMG, the Council’s External Auditor for grants and returns.

Charlotte Goodrich summarised the findings of their grant claim and return certification work, including details of their 2017/18 certification fees, information on claims that were amended or qualified and recommendations arising from the assessment of the Council’s arrangements for preparing grant claims and returns.  Ms Goodrich drew the Committee’s particular attention to the qualification and significant adjustment to the Housing Benefits Adjustment, and the minor adjustments to the Teachers’ Pension Return and the Pooling of Housing Capital Receipts return.=

The Chair enquired into the whether the qualification was due to systems or human error.   Ms Goodrich explained that that having a qualification was by no means unusual – between 80 and 90 per cent of local authorities have one.  In an error as complex and high-volume as housing benefit with a myriad of different regulations, it is easy for errors to creep in.  There is also a realistic cost-benefit analysis required to determine whether the potential saving of a few pounds is worth the investment.

John Turnbull added that there are always lessons to be learned from housing benefits leading to an improvement of processes, and Mr Hewitson said the qualification and action taken should be seen in the context of overall enhancement of the control environment.

The Chair asked that the Committee’s thanks be passed on to the Finance Team.

Decision

 

The Committee noted the External Auditor’s 2017/18 Report on Certification of grants and returns at Appendix 1.

 

The Chair thanked Ms Goodrich and Mr Hewitson for their attendance, and they left the meeting.

 

36.

EXTERNAL AUDITORS' ANNUAL AUDIT PLAN pdf icon PDF 69 KB

Additional documents:

Decision:

The Committee noted the External Auditor’s Audit Plan for 2018/19 as set out in Appendix 1 to the report,

Minutes:

Consideration was given to a report of the Strategic Director of Finance and Governance and the Chief Accountant, introducing the plan prepared by the Council’s auditors EY for undertaking their audits of the Council’s 2018/19 Financial Statements and Pension Fund. It also outlined the work they will undertake to reach a Value for Money conclusion on the Authority’s arrangements to secure economy, efficiency and effectiveness in the use of resources is outlined. The report identified specific risks and included a statement of their fees.

Debbie Hanson introduced the report and built upon the presentation given to Members on the planning process at the last meeting.  She highlighted the following issues:

·         Capitalisation – there is a risk that incorrect capitalisation of revenue expenditure is open to manipulation, and the need for controls to ensure the definition of capital is met.

·         Management monitoring and override – and the need for robust procedures.

·         Valuation of property, plant and equipment – this has been an issue in previous years

·         Incorrect adjustments through the Movement in Reserves Statement -  which may be material or not

·         Pension liability valuation

·         Implementation of new accounting standards

·         Preparation of group accounts – the first year, so a risk they may not be prepared correctly

The presentation led to questions from Members.

Materiality – the Chair asked is this was a standard process, or tailored to the local authority.  Ms Hanson said it had a standard basis, which was then adjusted according to risk within a set range and checked by EY’s Professional Standards Department.  At 75 per cent of Planning materiality, Performance materiality is as high as it can be set, and the Committee was asked to confirm this.

Timeframe for closing group accounts – Brian Moldon said this should not involve additional resources.  Officers have been working towards this in the last couple of years and good practice is now established.  The aim is to bring the accounts forward by an entire week.

Decision

 

The Committee notedthe External Auditor’s Audit Plan for 2018/19 as set out in Appendix 1 to the report,

 

37.

2018/19 ACCOUNTING POLICIES pdf icon PDF 85 KB

Additional documents:

Decision:

The Committee noted and agreed the changes to the Council’s accounting policies that have been made as a result of changes to the local authority accounting framework for 2018/19.

 

Minutes:

Consideration was given to a report of the Strategic Director of Finance and Governance and Chief Accountant.

 

Liton Rahman introduced the report, bringing to Members’ attention the main changes to the local authority accounting framework in 2018/19, including their effect on the Council’s accounting policies and the statutory framework for preparing and reporting local authority financial statements.

 

Decision

 

The Committee noted and agreed the changes to the Council’s accounting policies that have been made as a result of changes to the local authority accounting framework for 2018/19.

38.

CORPORATE ANTI-FRAUD TEAM UPDATE pdf icon PDF 165 KB

Decision:

The Committee noted the report.

Minutes:

Consideration was given to a report of the Assistant Director, Internal & Anti-Fraud Shared Service.

 

Gemma Young introduced the report, updating Members on the work carried out by the Corporate Anti-Fraud Team for the period April to December 2018. She outlined the main areas of activity and drew Members’ attention to points of interest:

Jamila Walters – who was successfully prosecuted for false housing application and benefit fraud, and is now facing proceedings for the recovery of the Council tenancy.

Data matching –this is achieved in a number of ways including co-ordination by London Councils, although there needed to be caution about the quality of the matches, and whether subscription to the service was worth the benefits.  This was particularly the case with business rates, which does not generate significant fraud.

Tenancy fraud – Members entirely agreed with the Strategic Director that although it was difficult to identify the cash benefits generated by tackling housing fraud, the social and moral imperative was even greater than the financial.

The Chair wished the Committee’s thanks to the team for their work to be placed on record.

Decision

 

The Committee noted the report.

 

39.

INTERNAL AUDIT PROGRESS REPORT pdf icon PDF 421 KB

Decision:

The Committee noted the report.

Minutes:

Consideration was given to a report of the Assistant Director, Internal & Anti-Fraud Shared Service.

 

Gemma Young introduced the report, updating Members on the progress being made towards delivering internal audits in the 2018-19 Audit Plan; and unimplemented high-profile recommendations.

 

Hawkswood – Miss Young said that although an internal fraud had originally been suspected by this school group, the audit did not find any evidence to support this. However, the controls were very weak with a heightened risk of fraud given the poor control environment.  Governance, as described in the report, was found particularly wanting. 

 

Officers assured the Committee that the matter would be followed up further, and said that this would be over a longer term than normal in order to be realistic about meeting expectations.  The Chair said that Governors should have clear expectations, and he was particularly disappointed by the lack of a finance committee or proper record keeping.  Councillor Mahmud said that part of the road to recovery should include compulsory training.

 

The Chair asked if the matter had been raised with the relevant Portfolio Lead Member, and suggested that this be included in the recommendations.

 

Recruitment – Councillor Fitzgerald asked if Members could be satisfied that the Council’s recruitment processes were as robust as they could be.   While the areas of good practice identified were welcome, some of the shortcomings were of concern, especially with regard to reference checks from previous employment.  Miss Young agreed, and said that while there were high expectations of managers, HR should be able to provide a second line of defence, especially given the greater functionality afforded by the Hornbill system.

 

Supplier Resilience – the Chair felt that there were potentially serious business continuity issues raised by the audit findings, and in particular not knowing which of the Council’s suppliers provide key services.  He pointed to the collapse of Carillion and the volatility in the provision of home care services as particularly worrying examples.  Members agreed that the Director, Supply Chain should be asked to the next meeting of the Committee to explore their concerns.   

 

iWorld Housing Management Review – the Assistant Director, Internal & Anti-Fraud Shared Service introduced the second follow-up report and reminded the Committee that Waltham Forest Housing officers had indicated at the last meeting in September that there would be significant progress in the seven areas identified in the follow-ups to the original audit in 2017.

 

The Chair asked why actions arising from the audit had not been completed within the agreed timescales; and why the second follow-up audit came up with different findings from the first.

 

The Divisional Director, Housing Solutions, said that there were different ideas as to how the matter should be tackled.  The first non-implemented high priority recommendation had been explained to the supplier Northgate, who had said the issue of contracts would be resolved by Friday of that week. Several attempts have been made to resolve this with the supplier. They did not appear to regard the matter a priority, because the licences  ...  view the full minutes text for item 39.

40.

WHISTLEBLOWING POLICY pdf icon PDF 69 KB

Additional documents:

Decision:

The Committee approved the Whistleblowing Policy as amended.

Minutes:

Consideration was given to a report of the Director of Governance and Law.

 

Mark Hynes introduced the report, seeking Members’ approval of the recently reviewed Whistleblowing Policy which has by the Council’s Monitoring Officer and is considered fit for purpose subject to some minor amendments.

 

Decision

 

The Committee approved the Whistleblowing Policy as amended.

41.

POLLING PLACES REVIEW pdf icon PDF 87 KB

Additional documents:

Decision:

It was noted that any financial implications arising from changes to the polling districts or polling places are expected to be fully contained within existing budgets.

 

The Committee:

 

(a)       agreed the timetable for the review in part 3 of Appendix 1 to the report ;

 

(b)       agreed the proposed polling  ...  view the full decision text for item 41.

Minutes:

Consideration was given to a report of the Head of Electoral and Democratic Services.

 

Ian Buckle introduced the report, setting out the statutory requirement that a full review of polling districts and polling places to be used at parliamentary elections must be carried out at least every five years.

Mr Buckle said that this was the first stage to agree the process. The review must be completed between October 2018 and January 2020. Following consultation on the proposals, the Committee will receive the final proposals for consideration before agreement at Full Council.  Mr Buckle assured Councillor Fitzgerald and the Committee as a whole that ward councillors would be fully consulted on the proposals.

It was noted that any financial implications arising from changes to the polling districts or polling places were not as stated in the report, but were expected to be fully contained within existing budgets.  Officers apologised for this oversight.

 

Decision

 

The Committee:

 

(a)      agreed the timetable for the review in part 3 of Appendix 1 to the report

;

(b)     agreed the proposed polling places and districts for consultation as set out in Appendix 1;

 

(c)      noted the proposed list of consultees as set out in part 4 of Appendix 1

 

noted the intention to conduct a comprehensive review in advance of the 2022 local elections (para 4.3 of the report).

42.

AMENDMENT TO THE CONSTITUTION; PLANNING COMMITTEE TERMS OF REFERENCE pdf icon PDF 91 KB

Additional documents:

Decision:

The Committee approved the proposed amendments to the Terms of Reference for the Planning Committee at Appendix 1 to the report and recommended them to Full Council for agreement.

 

Minutes:

Consideration was given to a report of Democratic Services.

 

Mark Hynes introduced the report, setting out a revision to the thresholds for planning applications to be considered by the Planning Committee.  This was to address the situation where a number of minor applications are being decided at member level solely because the Council has a financial liability.  The proposal had come from the Planning Committee and had been approved by the cross-party Constitution Working Group.

 

Decision

 

The Committee approved the proposed amendments to the Terms of Reference for the Planning Committee at Appendix 1 to the report and recommended them to Full Council for agreement.