The Audit Committee of Tower Hamlets Council met on Wednesday 01 December 2021 to review the Annual Governance Statement, the Corporate Risk Register, and progress on internal audits and fraud investigations. Key discussions included the council's financial reporting improvements, the impact of COVID-19 on governance, and the effectiveness of complaint handling processes.

Annual Governance Statement

Mayor John Biggs presented the Annual Governance Statement (AGS), highlighting steady improvements in governance since 2015. He acknowledged the challenges posed by COVID-19, which have required a refocusing of attention, and expressed confidence in the council's response to the crisis. The Mayor noted that opportunities for improved governance and leadership have emerged from the pandemic, particularly in areas such as remote working and accelerated digital transformation. Paul Rock, Head of Internal Audit, explained that the AGS is a draft for the committee's review before its inclusion in the Statement of Accounts in January 2022.

Councillor David Edgar commended the report for its transparency and balance, acknowledging both successes and difficulties. He inquired about the governance and leadership opportunities arising from COVID-19 and the direction of travel for the council's governance. Mayor Biggs elaborated on remote working and channel shift as key opportunities, noting that productivity has not been significantly affected. He also highlighted improved cross-departmental working facilitated by remote methods.

Councillor Rabina Khan raised concerns about a letter from the Local Government and Social Care Ombudsman dated 21 July 2021, which criticised the council's complaint handling. She expressed deep concern over the council taking over four weeks to publish public notices and the Ombudsman's statement that the council's complaint handling had fallen below expected standards, indicating corporate and systemic issues. Mayor Biggs acknowledged the letter and confirmed that the council is reviewing its information governance team and complaint handling processes, with Raj Chand, Director of Customer Services, leading efforts to improve these.

Councillor Kyrsten Perry acknowledged the positive aspects of the report, including the empowerment of corporate directors during the crisis and the transformation in financial management. She expressed confidence in the council's direction of travel.

Corporate Risk Register Quarterly Progress Report

The committee reviewed the quarterly progress report for the corporate risk register, with a particular focus on the Place directorate's risk register. Paul Rock, Head of Internal Audit, noted that while the register is comprehensive, it can be difficult to digest. He agreed to explore ways to present changes in risk scores and highlight top risks in future reports.

Councillor Rabina Khan raised concerns about the potential for council overspending and the lack of reference to COVID grants in mitigating this risk. She also questioned the absence of existing control measures for the EU Trade Corporation Agreement risk and the triggers for complaints regarding vulnerable adults, particularly in light of the Ombudsman's letter. Councillor Khan also highlighted the need for greater accessibility of information for leaseholders affected by issues such as the Grenfell fire tragedy.

Denise Radley clarified that the Ombudsman's letter did not relate to adult social care, but confirmed that adult social care complaints are reviewed regularly, with an emphasis on informal resolution. Karen Swift, Division Director for Housing and Regeneration, shared that new web pages have been launched to provide more information to leaseholders regarding fire safety and the Building Safety Bill. Jennifer Peters, Director of Planning and Building Control, provided clarification on local land charge searches, noting ongoing work to automate the process and ensure real-time data.

Councillor David Edgar raised questions about the budget overspend risk, the EU Trade Corporation Agreement, and the Grenfell fire tragedy, seeking clarity on control measures and their timelines. He also inquired about the town hall delivery timeline and the assessment of target risks. Mayor Biggs commented on the town hall delivery, suggesting it would likely be physically finished externally by May next year, with internal fit-out continuing afterwards.

Vicky Clark, Director of Integrated Growth and Development, addressed the risks related to the capital programme, acknowledging that control measures for resource allocation have not been updated recently but are an ongoing challenge. She highlighted the maturity of new infrastructure for managing the capital programme.

Councillor Edgar also raised concerns about the gap between current risk scores and the council's risk appetite, particularly regarding Chater House, and questioned the logic of risk assessment and the relationship between current and target risks. Paul Rock acknowledged that risk register entries need updating to accurately reflect control measures.

Councillor Rabina Khan raised concerns about the COVID risk not being explicitly included in the risk register for vulnerable adults, despite its significant impact. Paul Rock explained that COVID-related risks are managed through a separate gold and silver command structure with its own risk register, which he offered to make available to the committee.

Internal Audit and Anti-Fraud Progress Report

Paul Rock presented the Internal Audit and Anti-Fraud Progress Report, noting that overall delivery has been slower than desired due to recruitment challenges for qualified internal auditors and slow responses from management in resolving internal audits. He has secured permission to engage BDO for additional audit work to help finalise the plan. The revised plan means that the majority of Priority 2 audits will not be delivered, but the majority of Priority 1 audits will be completed. The implementation of High Priority Actions remains lower than desired, with around 35% fully implemented. Fraud outcomes are positive, with properties being recovered and a recent conviction for housing fraud.

Councillor Val Whitehead expressed disappointment at the low percentage of fully implemented agreed actions and questioned the resourcing of fraud matching. Paul Rock clarified that fraud matching is coordinated by his team but resolved by various officers across the council, highlighting a resourcing challenge for the entire council. Councillor Whitehead also requested that the deferred climate change audit be prioritised.

Councillor Kyrsten Perry seconded the request to prioritise the climate change audit, citing increasing scrutiny on the issue. Councillor Rabina Khan emphasised the importance of connecting the climate change agenda with equality, particularly for Black, Asian, and minority ethnic communities, and requested more information on how equality impact assessments are integrated into climate change policies. She also inquired about the Adult Safeguarding Board audit and empty property rates and inspections. Paul Rock confirmed that the Adult Safeguarding Board audit is proceeding and that the committee will receive a summary of the report. He also confirmed that an audit on empty properties is underway.

Councillor David Edgar noted the NNDR report's delays and questioned the management response to agreed actions. He also suggested an aged listing of outstanding actions to identify blockers. Paul Rock agreed to reflect this in future reports. He also addressed the climate change audit, stating it was on the cusp of Priority 1 and 2 and that he would reflect on its prioritisation.

Vicky Clark and Stephen Shapiro responded to the limited assurance response regarding asset management. They acknowledged the need for an updated asset strategy and improved collaboration with the legal team. They also discussed challenges in income collection, including legacy targets and COVID-related limitations on evictions. Stephen Shapiro added that they are addressing outstanding rent reviews and lease renewals and are working to build relationships with legal teams. Councillor Edgar expressed his long-standing interest in asset management and welcomed the team's awareness of issues and commitment to change.

Internal Audit Charter and Anti-Bribery Policy

Paul Rock presented the annual review of the Internal Audit Charter and the Anti-Bribery Policy, confirming they have been updated to reflect current roles and contact details. The committee noted the comments and approved both documents.

Treasury Management Mid-Year Report

Nisar Visram presented the Treasury Management Mid-Year Report for 2021-22, summarising the council's investments and borrowing as of 30 September 2021. The report included an economic summary from treasury advisors, forecasting gradual interest rate increases from June 2022. The council's investment portfolio stood at £328.2 million, with an average credit rating of A+. Investment income was £753k year-to-date, on target to meet the annual budget. Borrowing remained unchanged at £71.5 million. All prudential indicators were within limits.

Councillor Kyrsten Perry and Councillor David Edgar commended the report for its clarity, comprehensiveness, and positive performance compared to benchmarks and other local authorities. Kevin Bartle, Corporate Director of Resources, added that the council has a strong funding level for pensions and is prudent in its investments, prioritising security, liquidity, and yield.

Complaints Report and Lessons Learned

Raj Chand presented the report on complaints and lessons learned, responding to the Audit Committee's request to understand how the council learns from complaints escalated to the Local Government and Social Care Ombudsman. The report detailed the Ombudsman's annual review letter for the year ending 31 March 2021, noting a reduction in complaints referred to the Ombudsman since 2018-19. While the performance rate for timely responses has increased significantly, further improvement is needed. The report highlighted historical issues and weaknesses in complaint handling, alongside remedies and improvements already implemented, including a new process for Ombudsman complaints, improved use of technology, better staff guidance and training, and a new outcomes-based protocol.

Councillor Val Whitehead expressed concern about the significant impact of missed timescales on members' inquiries and the need for improvement. Raj Chand acknowledged the issue and confirmed ongoing work to align data with housing associations and upgrade the IT system. Councillor Edgar found the report useful, particularly the details on IT system improvements and training, and welcomed the ambition to drive change. He also suggested that reporting on members' inquiries and providing residents with background information on service impacts would be beneficial.

Councillor Rabina Khan questioned why the Ombudsman's letter, published in July, was only presented to the committee in December. She highlighted the distressing nature of the 25 upheld decisions, particularly those relating to adult social care, housing, and homelessness, and requested that a grid of upheld decisions be provided to members in the future. Raj Chand agreed to work with Paul Rock to structure future reports to include this level of detail, subject to anonymisation.

Committee Work Plan

The committee noted the committee work plan for 2021-22.

The meeting concluded with thanks to all attendees for their contributions.