The Lambeth Council's Corporate Committee met to discuss the council's financial situation, audit progress, treasury management, limited assurance reports, and workforce equalities. The committee reviewed actions and provided feedback, focusing on financial stability and governance.

Council's Response to Statutory Recommendations

The committee reviewed the council's action plan in response to recommendations from external auditors, Forvis Mazars¹, which were issued under Section 24 and Schedule 7 of the Local Audit and Accountability Act 2014². The recommendations concerned the council's financial position, budget, medium-term financial strategy, reserves, and the decision to bring Homes for Lambeth (HFL) in-house.

Zena Cooke, the Corporate Director of Finance, noted that the external auditor acknowledged the council's challenging financial situation, particularly regarding temporary accommodation and the Housing Revenue Account (HRA).

The action plan included detailed actions and improvements related to the council's financial position, covering the 2024-25 financial year, the 2025-26 budget, the medium-term financial strategy, the council's reserves, and the financial implications of bringing HFL in-house.

Key points from the discussion:

• Savings and Efficiencies: Savings and efficiencies were identified across service directorates but were offset by increases in corporate costs, particularly servicing the council's borrowing for capital schemes.
• Spend Control: The spend control panel, in place since September 2024, continued to operate to minimise avoidable staffing and non-staffing expenditure. The panel approves agency and workforce expenditure, as well as non-staffing expenditure from £10,000 and above.
• Budget Monitoring: Monthly budget monitoring reports were provided, setting out the revenue and capital position, including income and debt recovery, savings, and management actions.
• Reserves Strategy: The reserves strategy for both the General Fund and the HRA was to be reviewed and revised to reflect the council's approach to replenishing the level of unallocated reserves.
• MTFS Update: The updated Medium Term Financial Strategy (MTFS) was reported to the July cabinet and included plans to replenish reserves to a target of 10% (£45 million) of the net revenue budget over the next three years.
• Capital Programme Review: The capital programme was under review to identify options to reduce debt costs. Schemes not 100% externally funded or contractually committed were paused for review.
• HRA Financial Recovery Plan: A financial recovery plan for the HRA was being developed to deliver a sustainable budget.

Councillor Jackie Meldrum asked for clarification on the variability in council tax education income, and Zena Cooke agreed to provide a narrative to explain the fluctuations.

The committee agreed to note the progress set out in the action plan and to close actions where indicated.

External Audit Progress Update

The committee received an update from Suresh Patel and his team from Mazars, the external auditors, on the audit progress for the year ending March 2025.

Key points from the update:

• Delays in Account Preparation: The council struggled to prepare a complete set of accounts for the March 2025 year-end, which delayed the start of the audit. Three sets of draft accounts were prepared, but significant elements still needed rectification before the audit could commence.
• Likelihood of Disclaimer Opinion: Due to the delays, it was highly likely that a disclaimer of audit opinion would be issued in February of the following year.
• Objections Received: Two objections were received for the 2024-25 accounts, one of which related to deficiencies in the published accounts.
• Value for Money Arrangements: Work was ongoing to assess the council's value for money arrangements, with a draft auditor's annual report expected by the end of November 2025. Two new risks of weakness in arrangements were identified, linked to internal audit and financial reporting.

Councillor Scott Aynes asked why the draft accounts had so many errors and missing information, and what plans were in place to improve finance department processes. He also asked about the risk of not meeting the November 2025 deadline for the auditor's report and the likelihood of a public interest notice being issued.

Treasury Management

The committee received a quarterly update on treasury management performance for the period ending 30 June 2025.

Key points from the report:

• Debt Portfolio: The council's gross debt as of 30 June 2025 was £1.116 billion, with a weighted average interest rate of 4.27%.
• Investment Balance: The investment balance as of 30 June 2025 was £65.9 million, earning an average interest rate of 4.33%.
• Borrowing Less Than Anticipated: The council was borrowing less than anticipated due to the slowing down of spending and the pause of the capital programme.
• Interest Payable: The forecast for total interest payable on external borrowing in 2025/26 was £49.4 million, against a budget of £34.6 million.

Councillor Jackie Meldrum questioned why so much money had been invested in building societies, and Rob Browning, the Acting Assistant Director of Finance, explained that security and liquidity were the main priorities for investments.

The committee agreed to note the treasury management report.

Management Update on Limited Assurance Reports

The committee received an update on actions arising from limited assurance internal audit reports. Paul Rock, the Assistant Director Internal Audit and Counter Fraud, provided an introduction, and directors from relevant services provided updates.

The limited assurance reports discussed were:

• Highways Maintenance: John Bosley, Contract Manager, reported that high-risk issues had ceased immediately, and progress was being made on other actions.
• Tree Maintenance: John Bosley, Contract Manager, reported that the 10,500 outstanding tree inspections had been completed, and 95% of newly planted trees had survived the summer.
• Corporate Health and Safety: Nigel Lambert, Assistant Director, reported on progress with risk assessments and training.

Councillor Paula Mills noted that there was a lot of use of will be in the action plans, which gave her some assurance of what was going to be put in place but did not give her assurance of what was in place.

The committee noted the updates and requested more assurance that actions were being completed.

Annual Workforce and Equalities Report 2024-25

The committee received the Annual Workforce and Equalities Report 2024-25. Zena Cooke introduced Shireen Russell-Alexander, the new Director of HR and OD, who presented the report.

Key points from the report:

• Headcount Increase: The headcount increased by 6.2%, mainly in Children's Services.
• Sickness Absence: The average number of days lost to sickness per employee was 9.8, a decrease from 10.2 in the previous year.
• Agency Spend Reduction: Agency spend decreased from £42 million to £35 million, a £7 million reduction.
• Turnover: The turnover rate remained the same at 8.6%.
• Equalities: Women made up 45% of the top 5% earners, and more disabled staff were represented at senior levels. The workforce exceeded the borough demographic from an ethnicity profile perspective.

Councillor Matthew Bryant asked about the discrepancy between the reduction in agency headcount and the reduction in spend, and Zena Cooke explained that it was due to a part-year effect.

Councillor Paula Mills asked about the higher sickness rates in adult social care, children's services, and housing, and Shireen Russell-Alexander agreed to provide more information.

The committee noted the report.