The Audit and Governance Committee of Sutton Council met on 18 January 2024, addressing arrangements for Code of Conduct hearings and reviewing the council's risk register. Decisions were made regarding the establishment and delegation of authority to a Code of Conduct Hearing Panel, and the committee noted the outcome of a recent panel hearing.

Code of Conduct Hearing Panel Arrangements and Outcome

The committee discussed the establishment of a Code of Conduct Hearing Panel, its purpose, and its authority to sanction councillors found in breach of the Code of Conduct. Officers explained that the council is legally required to have a mechanism for handling complaints, and that the panel would not have the power to suspend a member. The importance of timely complaint resolution was emphasised, with officers confirming that decisions on whether a complaint warrants a formal investigation would typically be made within 14 days. The committee resolved to establish the panel and delegate authority to it to conduct hearings, subject to Council approval.

Following this, the committee discussed the outcome of a recent Code of Conduct Hearing Panel. It was noted that while the panel's findings were not unanimous, a member was found to have breached the Code of Conduct. The committee discussed the limitations on the panel's power to impose sanctions. While acknowledging the length of time taken between the initial complaint and the decision, officers outlined the process involved. The committee resolved to note the outcome of the panel and requested that the Chair of the Audit and Governance Committee write to Councillor Mattey to encourage compliance with the panel's recommendations. Councillors Tim Crowley, Mike Dwyer, and Sheila Berry voted against this second recommendation.

Review Risk Register and Discuss Mitigation

A significant discussion focused on the emerging risk of financial and service pressures stemming from increased demand for Education, Health and Care Plans (EHCPs). Officers explained that EHCPs are funded from the Dedicated Schools Grant (DSG) budget, and that many local authorities, including Sutton, are facing deficits in this area. While current government financial policy means these deficits do not impact the council's overall balance sheet, this could change in the future. The financial pressure is attributed to a disproportionate rise in the number of EHCPs supported by the council compared to DSG income.

The committee also raised concerns about the risk of financial pressure due to increased demand for temporary accommodation and the risk of technology failure and cyber security. The risk rating for unregistered residential homes for children was noted to have reduced following the registration of Willow Rise with Ofsted, with ongoing support provided for other facilities to register. The committee sought clarification on whether transport for children with special educational needs and disabilities (SEND) is means-tested and was informed of an ongoing consultation on future SEND transport options. Further information was requested regarding changes to the council's procurement processes, with officers confirming enhanced financial checks and agreeing to circulate more details. The complex relationship between the NHS and the Council in determining care funding responsibilities was also discussed as a challenge being addressed collaboratively. The committee resolved to note the council's updated Risk Statement and Corporate Risk Register.

Mid-year Treasury Update

Officers provided an update on treasury management activities during the first six months of the year. It was clarified that interest earned on capital investments using grant money can be used as general revenue. The committee discussed the council's strategy for long-term borrowing, including the decision of whether to fund capital expenditure through borrowing or by utilising cash balances. The practice of borrowing from other local authorities was discussed, with officers deeming it low risk, even when dealing with a financially distressed council, provided it is approved by the Section 151 Officer. The committee resolved to note the treasury management activity.

Internal Audit Progress Report

The committee reviewed the Internal Audit Progress Report, which included a discussion on duplicate creditor payments. Officers confirmed the effectiveness of the system in identifying and resolving duplicates, attributing them primarily to human error and noting steps taken to reduce this, such as staff training. Regarding the capacity of the internal audit team, it was confirmed that external auditors would not be affected by the council's recruitment freeze. A modest increase in audit days for the following year was anticipated, balancing service needs with financial pressures. The committee requested that future reports include target dates for outstanding actions related to external quality assurance (EQA). The issue of IR35 checks for agency staff not being readily available for auditing was also discussed, with officers agreeing to investigate and report back. The committee resolved to note the Internal Audit progress report.

Learning and Development Plan for Members of the Audit and Governance Committee

The committee resolved to note the proposals for learning and development for its members, aimed at ensuring they are adequately trained to perform their roles effectively.

Provisional Work Plan

Officers indicated that an in-person training session on treasury management would be organised before the next committee meeting. The Value for Money External Audit Progress Report was deferred to a future meeting.