Agenda item

Paul Grady introduced the report. He informed Panel Members that there was nothing new in respect of matters reported before. External Auditors had positive responses from Senior Management on issues that were raised during the Audit and both parties were now working together to address them.

Paul Grady said the appointment and departure of the former Chief Executive in 2018 was a new issue and a recommendation raised for Members to reflect upon the outcome to inform future appointments.

Paul Grady reminded Panel Members that three key issues were identified:

·         Budget Management 

·         Savings Plan

·         Transformation Arrangements

As previously reported no significant issues were identified with the first two. He added that the review of transformation arrangements had now been completed with the conclusion that there were governance weaknesses in respect of the transformation programme in 2017/18. For this reason the VFM opinion was qualified in this respect and high level recommendations raised to support the Council’s improvement plans.

Panel Members noted that the recommendations had been agreed with Management, and Management had responded positively. This would be the final report for issue of the audit letter.

Stephen Warren said he welcomed Management’s response, as this gave an indication of acceptance, because these were audit recommendations on a strategic level. He requested that a regular update be done for Panel Members showing specific actions and timetable, so they can monitor the progress closely.

The Chief Financial Officer told Panel Members that he had tried to do this with the recommendations but it was difficult, given their deliberately high level nature, but he would keep this under review and bring regular updates to Audit Panel. Mr Warren said Panel Members would need something they could monitor that went beyond the narrative, for example with milestones and accountability. The Chief Financial Officer said this would be done.

Action >>>>>>> Chief Financial Officer

Carole Murray asked how Management would address the resourcing issues for more assurance to review Transformation Governance, and was told in the immediate future they would be addressed by temporary and permanent staff. Ms Murray mentioned that some local authorities had done this and after two years seemed to still have temporary staff. The Chief Financial Officer noted there seemed to be a shortage of experienced qualified Audit staff in the public sector.

Panel Members noted that interim arrangements were still in place and Management would try to make it work, if not possible they would go back to Members for additional resources. The Chief Financial Officer stated that some risks had to be taken because of continued savings.

Councillor Maslin asked what was going to be done to address the mistake made in connection with the former Chief Executive. He asked how the process would be different. The Chair said as far as he was aware the report that went to Council for the recruitment of the former Chief Executive is the same as what had gone out for the recruitment of a new Chief Executive. He said it would be good to hear from the External Auditors about their findings.

Paul Grady said Grant Thornton did not do a review on the process in detail. He said the arrangements were lawful and not inappropriate, but given the outcome the situation had been expensive, with some element of turmoil and management resources used. He said the Council could have done without this, and Council Members needed to reflect on what could have been done differently.

The Chair said the only difference he could see in the current report to Council was the exclusion of the recommendation to look at the possibility of a black Chief Executive. He said the report was a direct lift from the last one. He asked whether officers were aware of LGA and SOLACE guidance, and was told by the Executive Director for Customer Services that this query would be fed back to the Head of Human Resources for a response.

Action >>>>>> Chief Financial Officer

Paul Grady stated that the recommendation from Grant Thornton was for Council Members to address, not officers. Councillor Maslin said he was aware that this was a sensitive issue but it would need to be addressed. Councillor Millbank said she was sure it was being addressed.

There was a detailed discussion on the issue of the appointment of the former Chief Executive. 

The Chair asked about Transformation and the expected overspend in the Children and Young People budget. He also asked how officers would be addressing the IT overspend of £1.2m. The Chief Financial Officer explained the Financial process and decisions that had to be taken to ensure that Management was able to provide services and also work towards savings while managing the risks to what the Council was trying to achieve.

Panel Members noted that although most local authorities were going through similar difficulties with 90% reporting children services overspends in 2017/18, Lewisham officers were doing their best to ensure they try to keep to their savings objectives.

Councillor Krupski said the Council should be realistic, as the reality was that these measures would take time to become effective. She said she was confident that the structures that had been put in place to address the budget issues would work. Councillor Krupski said Children and Young People Directorate officers had reported to the Public Accounts Select Committee (PAC), and PAC would continue to monitor progress to ensure budget deficits are addressed effectively.

RESOLVED that:

i.              the VFM report and Opinion be noted.

ii.            Officers response to the VFM recommendations be noted.

iii.           the Pending audit certificate, subject to the auditors completing their consideration of objections related to the accounts for the year ended 31 March 2017 be noted.