Agenda item

To receive the interim external auditor’s annual report 2023-24.

Jackson Murray, Director, Public Sector Audit, Grant Thornton, presented the interim external auditors annual report 2023/24.

The representative noted that this was an interim report and not the final report. Annual reports for prior years were still outstanding and Grant Thornton would need Deloitte’s reports to conclude their work. Deloitte should also still be undertaking value for money work.

There could be recommendations made which ranged from improvement recommendations to key recommendations to statutory recommendations. The vast majority of recommendations so far were at the improvement level. The report covered to 31 March 2024. The financial commentary reflected the quarter 3 position. The final version would reflect the final outturn so numbers would change slightly. There were a couple of areas where Grant Thornton were still awaiting information and these were flagged red on the report.

There had been some key recommendations in relation to financial sustainability and the Dedicated Schools Grant (DSG) High Needs Block (HNB) which was one of the biggest risks to the council. With legislation as it was in relation to this, it was a key risk and a significant weakness. The statutory override was in place until 31 March 2026. Management felt this needed to be extended. If it was not extended, there was a significant deficit nationally which could not be met and the sector would fail. Wiltshire Council were not alone in facing this, and Grant Thornton had seen it in a lot of other local authorities. Grant Thornton felt that their report matched the Section 151 officers report.

During debate Members highlighted that pension funds were inherently risky and queried whether Grant Thornton were happy with the spread of investments. Grant Thornton stated that there was a pension fund strategy statement and that they were happy that it went through the appropriate governance arrangements. This was looked at by the Wiltshire Council Pension Fund Committee.

Members also queried whether underspends should be allocated to areas of high risk, rather than spent on what the public felt was appropriate. Officers stated that they could make recommendations, but it was ultimately a political decision. It was important to read the financial implications sections contained in all reports.

Other Members highlighted that there was not much that could be done other than to lobby central government, along with other council’s regarding the DSG HNB.

Furthermore, Members stated that the improvements recommendations on pages 151 -152 were in relation to known factors which had been discussed at the Financial Planning Task Group (FPTG). Members queried Grant Thorntons opinion on the management comments in relation to those recommendations. Mr Murray explained that Grant Thornton would give their view in the next report, after seeing further outturn reports.

Members also highlighted that the FPTG and the Overview and Scrutiny Management Committee (OSMC) had looked at outturns and treasury management in some detail.

Grant Thornton highlighted that they were looking at the previous year, so it would be reported next year that they had made a recommendation and that it was being acted upon.

Lizzie Watkin, Director of Finance and Procurement (S151 Officer) stated that there had been significant improvement but that the journey was not complete. The capital programme had major implications on revenue budgets so was very important. Grant Thornton looking at these things was also very important and helpful, as they had a view over lots of local authorities.

Members stated that the report from Grant Thornton was very clear and that they were pleased to see the things which Grant Thornton had identified, which matched with what the FPTG had identified. The DSG was a key risk and an enormous amount of work had been undertaken on capital budgets.

The Safety Valve agreement was discussed in some detail. Officers stressed that this was a very real financial risk for the council and that actions were taken to address the in year position. The council needed to build capacity to address the deficit situation. Things could be tricky if the government did not extend the statutory override by the time that the council started setting budgets. Officers explained that the situation had occurred due to a change in government legislation in 2015, and demand was rising in terms of Special Education Needs (SEN) such as Autism Spectrum Disorder (ASD) and Social, Emotional and Mental Health (SMEH) Needs.

Members queried whether such an important issue should be on every agenda until the situation was resolved. Officers stated that the appropriate conversations needed to be had at the right times in the right places, but it was not felt that it needed to be on every agenda at every meeting. A large tranche of funding had been received to help clear the deficit but there was a need to address what would happen if the Safety Valve agreement did not continue. The various lines of defence were detailed along with actions the council was taking. Such as the High Needs Sustainability Board, which the S151 officer was on; the transformation programme; trying to increase provision locally; early intervention and prevention and also creating reserves to deal with it.

It was acknowledged that awareness and communications regarding the situation for all Members of the council, particularly those who were not on committee’s where this was discussed needed to be increased. Officers would follow up to ensure that Members got assurance.

At the conclusion of the debate and on the proposal of the Chairman, seconded by Martin Smith, it was,

Resolved:

To note the interim external auditor’s annual report 2023-24.