This meeting included a report on the council's strategic and operational risks, as well as reports on fraud, internal audit work and the council's financial sustainability. The meeting was also scheduled to receive an annual report on the council's procurement activities.

Financial Sustainability

The report pack included a report on the council's financial sustainability.

The report notes that the financial outlook for the council is very challenging, and that the 2024/25 budget, which was approved in February, required the use of £61m of reserves to balance the budget. The report goes on to say that the underlying budget gap was forecast to increase in future years, from £61m in 2024/25 to £111.9m by 2026/27.

The report also provided some information on the reasons for the budget gaps. This includes the long-running impact of austerity, in which the budgets of services other than social care were cut by 53% in real terms between 2010 and 2020, as well as the impact of the COVID-19 pandemic and high inflation, and pressures on the cost of care for children, and temporary accommodation for people experiencing homelessness.

The report also notes that, in light of this difficult financial picture, other authorities have issued Section 114 notices, which indicate that the authority cannot balance its budget.

The report goes on to list some of the work that is taking place to try to address the budget gaps. This includes a programme of savings that has reduced the budget by £23.7m, with a further package of savings currently under consideration. This also includes focussed work in areas of high demand for services, such as the costs of adult social care and high-cost placements for children in care.

The report also lists some new controls on spending, such as a requirement for new contracts to be scrutinised by a Strategic Procurement Panel, as well as a requirement for a business case to be approved by the Chief Operating Officer before entering into any new spending commitments of over £5,000, as well as new controls on the recruitment of staff.

Strategic and Operational Risks

The meeting included an update on the council's strategic and operational risks.

The report pack included an update on the Strategic Risk Register (SRR) which is a list of risks that could affect the achievement of the council's strategic objectives. The report highlighted 16 high-rated risks, four of which had a risk score of 25, the maximum possible risk score.

The highest-rated risk in the register was the growth in demand due to rising cost of living, population growth and greater complexity of need . The report explained that this risk relates to increasing pressure on services, especially housing, children’s services and special educational needs, and described some of the control measures that are in place to try to reduce the risks, including a “policy scanning” resource that will help to identify and understand relevant national policies.

Another high-rated risk related to impacts arising from numbers and complexity of needs of asylum seekers and refugees , which has a score of 25. The report stated that this was placing major demands on the council, particularly in relation to housing and children's services, causing significant financial pressures related to the cost of temporary accommodation, and children's services placements.

A third high-rated risk in the register related to medium to long term financial sustainability and also had a risk score of 25. This refers to the council's challenging financial position, and the report detailed some of the work that is being undertaken to address these challenges, including the use of non-earmarked reserves and an ongoing strategic budget review.

Another high-rated risk relates to the risk of disruption to technology infrastructure due to a cyber-attack . This refers to the recent cyber attack experienced by the council, and the measures that have been put in place since then.

The report also included the council's Operational Risk Register, which is a list of the operational risks that face the council, and the measures that are in place to mitigate them.

The highest-rated risk, with a score of 16, related to budget pressures on the council's housing stock, specifically the Housing Revenue Account (HRA)¹, and the general fund that is available for housing. The report stated that this related to inflationary pressures, as well as a cap on how much rents can be increased, which was below the rate of inflation in 2023/24.

The report also stated that a lack of suitable temporary accommodation (TA) for people experiencing homelessness was putting pressure on the HRA, leading to the use of bed and breakfasts and nightly paid accommodation, as well as the need to increase the number of staff working in the service.

The report listed some of the measures that are being used to mitigate these risks, including the delivery of a plan to eliminate the use of bed and breakfasts, a £10.45m package of measures to increase the supply of temporary accommodation, including the purchase of 225 new units of accommodation, and a recruitment drive that aims to increase staffing levels by 25 members of staff. The report also noted that a Homelessness Prevention Grant of £1.07m had been secured, with a further £120m potentially available.

The second highest-rated operational risk, also with a score of 16, related to the ongoing pressure on homelessness services. The report stated that this was being exacerbated by the cost of living crisis, a shortage of housing, the number of people seeking asylum, and pressures on the council's budget. The report listed a number of risks to the council relating to homelessness, including a risk of legal challenge if Suitability of Accommodation Orders are being contravened , a risk of harm to people experiencing homelessness as a result of understaffing and excessive caseloads, and a risk of poor performance on statutory performance indicators relating to homelessness. The report stated that St Mungo's had decided to withdraw their Everybody In service from Leicester at the beginning of the 2025/26 financial year.

The report went on to list a number of control measures that are in place to mitigate these risks, including the delivery of a homelessness strategy, a focus on preventing homelessness to reduce the number of people entering temporary accommodation, a new partnership board to oversee homelessness services, and the delivery of 225 new units of temporary accommodation, and 125 leased properties.

Procurement Annual Report

The report pack included the Procurement Annual Report, which provided a summary of the council's procurement activities during the 2023/24 financial year.

The report explains that the council has three procurement teams, Procurement Services, DDaT and ASC Procurement, and that together they completed 154 procurement exercises during 2023/24, with a total lifetime value of £98m.

The report also listed some of the changes to procurement legislation, including the new Provider Selection Regime Regulations 2023, which came into force on 1 January 2024 and apply to health and social care services, and the Procurement Act 2023 which the report states is likely to be implemented in February 2025.

Counter Fraud Mid-Year Update

The report pack included a report on the work of the Corporate Investigations Team (CIT) during the period 1 April 2024 to 30 September 2024.

The report stated that the team had been involved in work that had generated £1,202,776.56 of savings.

This included £138,000 of financial savings from validating Right to Buy applications for council homes, preventing sales in cases where there were irregularities with the application, such as the tenant no longer being resident at the property.

It also included £251,000 of savings from investigating unoccupied properties where an Empty Homes Discount had been claimed. The report stated that this involved identifying properties that were occupied but where the discount had been applied, correcting the accounts, and reclaiming the council tax owed.

The report also stated that the CIT had been working with the council's school admissions team to validate applications for school places, leading to the identification of 25 fraudulent applications for secondary school places, where the applicant had given a false address. The report also detailed some work that had led to the identification of overpayments of Housing Benefit, as well as work to prevent fraud, such as sharing information about new phishing emails and fraud risks with council staff.

Internal Audit Update

The report pack included an update on the council's internal audit work for 2024/25. The report stated that the internal audit work was being undertaken by Veritau, and that the plan for 2024/25 had been approved by the committee in September 2024.

The report listed the work that Veritau had undertaken since their last report to the committee, which included finalising an audit on the council's information governance case management processes, which the report stated had identified five moderate findings, and one opportunity finding. The report also stated that an audit of central schools finance had reached draft report stage. It also listed the other audits that were in progress, including audits of agency staff, procurement compliance, sundry debtors, ordering and creditor payments, housing benefits, council tax and non-domestic rates arrears management, housing rents, and school traded services.

The report also provided an overview of the planned internal audit work for the remainder of the year, including planned audits of the council's risk management framework, the Strategic Procurement Panel, the use of direct payments and short breaks services for adults and children, and cyber security.

The report went on to describe some of the changes to the Public Sector Internal Audit Standards (PSIAS), which the report stated will be replaced by the Global Internal Audit Standards (GIAS) from 1 April 2025. The report stated that Veritau does not expect these changes to lead to any significant changes to its working practices.