The Audit and Governance Committee of Newham Council convened to discuss a range of critical issues, including the election of a vice-chair, review of past minutes and action logs, and updates on the LGA peer review, treasury management, external audit plans, and the draft statement of accounts. A key focus was the progress made on the LGA peer review action plan and the council's financial strategy amid ongoing economic challenges.

Election of Vice Chair

Councillor Terri McCool was elected as vice chair of the Audit and Governance Committee for the municipal year 2025-26.

Action Log

Councillor Terence Paul raised concerns about action AC 264 regarding the conditions for exceptional financial support¹ from the government, noting the lack of an update. Officers responded that the Ministry of Housing, Communities and Local Government (MHCLG) had not yet set out the conditions.

Progress on the LGA Peer Review Action Plan

Abigail Bowe, the chief executive, provided an update on the progress made against the Local Government Association (LGA) peer review action plan. She noted that seven of the 11 recommendations were expected to be completed by the end of the summer, with ongoing work in member development, member relations, and workforce culture.

Councillor Thompson inquired about partnerships related to homelessness and social care packages. Bowe explained the partner innovation labs launched by the mayor, involving collaboration with partners such as UAL² for predictive analytics.

Further discussion covered the value for money-based budgeting exercise, with officers explaining delays due to conflicting deadlines and ongoing benchmarking. Concerns were raised about the seriousness and resources directed to this exercise, especially in light of the best value notice.

Councillor Paul questioned the difference between progress reports given to the committee and the gravity of the best value evidence, particularly since the October 2024 progress check. Bowe clarified that the MHCLG's best value notice was issued before any formal meetings or evidence was provided by the council.

Councillor Paul Allen asked what actions had been taken since the best value notice was issued. Bowe outlined the development of an overarching delivery plan, strengthening the Voluntary Improvement Board, and focusing on high-cost areas such as temporary accommodation, housing, children's and adults' services, governance, relationships, and organisational stability.

Councillor Allen also inquired about plans to sell council assets. Officers clarified that the council was relying on capital receipts from asset disposals to cover day-to-day expenditure, rather than borrowing from the government.

Councillor Roy Al-Anabed raised concerns about the delay in delegating portfolios and responsibilities from the mayor to senior officers and members. Bowe explained that the mayor's choices regarding portfolios were at her discretion, and she had added several people to her cabinet and changed portfolios, including a transformation cabinet member.

Treasury Management Year-End Report

Andrew Ward introduced the treasury management year-end report, highlighting an increase in borrowing from just under £1 billion to £1.4 billion, with a shift from temporary to long-term borrowing. He stated that this was in accordance with the treasury management strategies and prudential indicators.

Councillor Paul raised concerns about the economic conditions, rising inflation, and the increasing cost of debt. Ward responded that the council primarily used long-term fixed rates and that asset disposals could be considered to reduce debt.

Going Concern Report

Andrew Ward presented the going concern report, stating that the council had sufficient resources and access to resources to continue operating for the next 12-18 months.

Councillor Paul challenged the assumption that the council would continue indefinitely, expressing concerns about economic conditions and the potential for the government to allow councils to fail. He suggested the report should consider alternative scenarios and tough decisions that may need to be made.

Draft External Audit Report

Hayley Clark from Ernst & Young (EY) introduced the draft external audit report, outlining several audit risks, including fraud in expenditure and revenue recognition, valuation of property assets, and exceptional financial support disclosures. She noted that the planned materiality level was 1.8% but could decrease due to additional risk factors.

Councillor Paul inquired about the scope of value for money assessments and whether recommendations could be made regarding financial sustainability. Clark explained that EY would assess the arrangements in place to check and challenge reserve levels and the management of risks.

Draft Statement of Accounts

Andrew Ward introduced the draft statement of accounts, apologising for its late submission.

Councillor Paul raised concerns about a £257,660 payoff to a former employee, calling for a full explanation of why payoffs were being used as a human resources tool. He also questioned why only three headteachers' salaries were included in the report.

Draft Annual Governance Statement

Kurt Dede introduced the draft annual governance statement, summarising the council's internal system controls.

Councillor Newton raised concerns about a claim against the council lodged with the employment tribunal, questioning why the report stated the council robustly defended the claim when it was settled out of court and why the settlement amount was not disclosed.

Councillor Paul supported this, stating that the figure should be included for transparency. Councillor Hughes noted that there may have been a non-disclosure agreement in place.

Year Ahead Forward Plan

The committee noted the cancellation of the 8 September meeting and the scheduling of an online training session on internal audit reports. The committee requested deep dives on agency staffing, commercial issues and contract performance, and follow-up reporting of governance issues.