The Kensington and Chelsea Audit & Transparency Committee met to discuss a range of issues, including a review of delays in addressing safety concerns at the Pembroke Road depot, the management of medium-term financial risks, and the annual governance statement. The committee also reviewed internal audit activity and the anti-fraud efforts of the council.

Pembroke Road Depot Review

The committee reviewed a report regarding delays in addressing structural safety concerns at the Pembroke Road depot. The review, prompted by concerns raised in late 2023, examined events and actions dating back to 2019.

The report concluded that the council had failed to take appropriate action following a structural survey in September 2019. There was a lack of clear responsibility, accountability, and escalation of the issues. While the Covid-19 pandemic contributed to initial delays, senior officers should have ensured the work was either reassigned or that the Executive Directors and Lead Members were briefed about the delays.

A resident of Borobud Terrace, above the waste depot, and chair of the Warwick Road Estate Leaseholders Association (WRELA), addressed the committee, contesting the use of Covid as mitigation, stating that the issue came to light in May 2019, and that structural reports identified serious issues that needed to be addressed urgently. They added that none of the 12 recommendations in the 2019 report were followed, and that the tender docking was prepared sometime in March and that it was never followed through. They also stated that there were multiple opportunities for escalation that weren't taken up, and that there were individuals within this scenario which were negligent.

The committee requested that Dan Hawthorn, Executive Director of Housing and Social Investment, return in six to eight months with concrete examples of improvements.

Managing Medium Term Financial Strategy Risks

The committee discussed the management of financial risks, particularly in light of the government's consultation on funding reform for local government from 2026/27. Councillor Kamal, Lead Member for Finance, Digital and Efficiency, stated that London has not seen such challenging times financially in its metropolitan history. Mike Curtis, Executive Director of Resources, reported that the fair funding paper issued on 20 June had completely changed the position, with potential losses of £82 million over three years on top of other pressures.

The committee discussed lobbying efforts to persuade the government to change the funding formula, which currently disadvantages inner London boroughs. Concerns were raised about the potential impact on services and the need for significant changes to the council's budget.

The committee discussed scenario planning, potential savings, and the status of the transformation programme. Lisa Taylor, Director of Financial Management, noted that the consultation closes on 15 August, with a policy statement expected in October.

The committee discussed the possibility of increasing council tax by 5% and the potential impact on the poorest residents. They also explored options for savings, including reducing access to services and facilities.

The committee requested a revisit of the work stream project in January.

Local Code of Corporate Governance and Annual Governance Statement

The committee considered the draft Local Code of Corporate Governance for 2025/26 and the draft Annual Governance Statement for 2024/25. The Local Code is based on the CIPFA/SOLACE framework and incorporates the 12 principles of good governance proposed by the Centre for Public Scrutiny.

The committee discussed the self-assessment process, areas of good practice, and areas for improvement. Concerns were raised about ensuring that governance arrangements can prevent issues similar to the Pembroke Road depot situation.

The committee also discussed whether the Code of Conduct and governance arrangements can address cultural issues identified in the Grenfell Tower Inquiry report.

The committee requested that the annual governance statement be aligned with the new requirements in the CIPFA addendum.

Annual Report on Internal Audit and Internal Control

The committee reviewed the annual report on internal audit and internal control for 2024/25. The report summarised the outcome of audit work and provided the Head of Internal Audit's opinion on the adequacy and effectiveness of the council's framework for governance, risk management, and control.

The report highlighted a positive outcome, with the majority of audit work receiving substantial or satisfactory assurance. However, three pieces of work received limited assurance.

Liz Murrall, Co-Optee, raised concerns about the organisational independence of internal audit, given their involvement in other matters. David Hughes, Director of Audit, Fraud, Risk and Insurance, clarified that internal audit's role is to advise and support, not to make decisions.

The committee requested more detail on the walls between the front ends.

The committee also discussed the internal audit process, the handling of flagged problems, and the timeline for addressing deferred items.

Anti-Fraud Annual Report

The committee received a briefing on the work undertaken by the Fraud Service from 1 April 2024 to 31 March 2025. The report highlighted emerging fraud risks and trends.

The committee discussed the slight increase in fraud outcomes, internal investigations, and the use of technology to detect fraud.

The committee also discussed the whistleblowing hotline and the investigation mailbox.

Action Tracker and Forward Plan

The committee reviewed the action tracker and forward plan.

The committee noted that an action to change the way Grant Thornton presented data on AQRs was not in the action tracker.

The committee also requested an update on the Oracle project.