Minutes:
A joint report of the Director of
Legal and Governance Services and Director of Finance was presented to outline
the lessons learnt following the issue of a Section 114 Notice at Croydon
London Borough Council.
The report and planned actions
were intended to provide the Corporate Affairs and Audit Committee with sufficient
information to ensure it was able to keep the Council’s arrangements for
Corporate Governance under review, in line with the Committee’s terms of
reference.
In October 2020 Croydon London
Borough Council’s (CLBC) 151 officer issued a Section 114 Notice, meaning that
in their opinion they were required to trigger section 114 of the Local
Government Finance Act 1988 that stated: ‘the expenditure of the authority
incurred (including expenditure it proposes to incur) in a financial year was
likely to exceed the resources (including sums borrowed) available to it to
meet that expenditure.’ The report
outlined the key findings from CLBC’s auditors on the causes of that notice
having to be issued.
On 23 October 2020, CLBC’s
external auditor, Grant Thornton, issued a public interest report. The Council had experienced deteriorating
financial resilience for a number of years with spending pressures within both
Children’s and Adult Social Care and low levels of reserves which created a
significant financial challenge in 2020/21. The size of the financial gap in
2020/21 increased due to the additional financial pressures as a result of the
Covid-19 pandemic.
The Public interest report outlined the key factors
including:
The Director of Finance outlined the position in
Middlesbrough with regard to the key factors highlighted as follows:
Approval
to proceed could only be given by the S151 Officer, in consultation with the Executive Member for Finance and Governance,
on a case-by-case basis.
The Director of Finance gave a
detailed explanation of the specific recommendations of Grant Thornton’s Public
Interest Report and provided an assessment of their applicability to
Middlesbrough Council, which was also included the submitted report.
In relation to the scrutiny
process within the Council, the Director commented that the approach at
Middlesbrough was to be as transparent as possible on the budget and on finance
issues.
Several Members commented that
the financial information provided was clear and comprehensive. The Chair suggested that any future financial
training should be provided for all Members, not solely the Corporate Affairs
and Audit Committee Members.
Responding to a question, the
Director explained that with regard to the purchase of the Captain Cook
Shopping Centre, the conservative assumption in the budget was that there would
be sufficient income to cover the cost of borrowing. In the short term, any surplus would go into
a specific reserve fund. Once the Future
High Street funds had been deployed and the medium term position was that there
was a surplus, a decision would be made whether to budget for that or re-invest
in another project.
AGREED that the
report and the planned actions to ensure lessons were learnt from events at
Croydon London Borough Council (LCBC) were noted, and the following planned
actions were endorsed:
Supporting documents: