Agenda item

Mr Barber introduced this item.

Ms Morgan commented on the Grant Certification Letter issued on the 25 January 2018. Members noted that as a result of errors identified the Housing Benefit subsidy claim for 2016/17 was amended and qualified, though the financial impact of the error was relatively insignificant in relation to the total subsidy receivable. The number of errors, however, was quite high. She drew attention to the details of errors identified (agenda pages 13-14) and the recommendation that the Council should, as part of its internal quality assurance process, increase its focus or level of testing in the areas where errors had been identified.

A Member said that while the Council was fully prepared to accept criticism and to strive to improve its processes, he was concerned that the manner in which the information about errors was presented could create an unduly negative impression. It was a question of balance: the total extrapolated error was exceedingly small when expressed as a proportion of the total Housing Benefit subsidy claim. Public concern should not be aroused when it was not justified. Mr Barber responded that the Member had raised a very valid point, and in fact the Certification Letter stated in its fourth paragraph: “The extrapolated financial impact on the claim, which we have reported to the DWP, was relatively insignificant in relation to the total subsidy receivable”. However, the external auditors had a duty to report all Housing Benefit errors to the DWP, irrespective of their amount. Moreover the quantum and rate of error in Bath and North East Somerset was greater than he had seen elsewhere, and the direction of travel gave cause for concern, in that the number of errors had increased in successive years.

The Divisional Director – Business Support assured Members that the problems identified by the External Auditors were being addressed. The claims process had been reviewed, the amount of claim testing had been increased, with senior officers carrying out checks, there was now a training calendar for staff, and a quality dashboard had been introduced to ensure that improvements were made.

A Member said that the emphasis in the discussion had been on getting payments right from an accounting point of view. However, it should not be forgotten that it was important to get payments right in the interest of claimants, who needed these payments to get by, and did not have the flexibility in their personal budgets to be able to repay overpayments easily. It was important for them that both under- and over-payments were minimised. In response to a question from another Member, the Divisional Director – Business Support explained that overpayments made as a result of an error by the local authority could not be recovered from the claimant.

A Member asked whether there was any data showing how the roll out of Universal Credit was impacting on the error rates of different local authorities. Mr Barber replied that he was not aware of any. The Divisional Director – Business Support said that it appeared that local authorities would be left with the most complex cases and the most vulnerable claimants, which was one of the sources of error. Transfer to Universal Credit was not taking place at the rate expected. The Chair asked whether the application form for Universal Credit was actually too complicated for vulnerable claimants, and whether therefore they should not be expected to complete it by themselves, but with the assistance of an officer. The Divisional Director – Business Support replied that the Council did not calculate the rate of Universal Credit to be paid to claimants, but only the Housing Benefit element. She said that the way complex cases were handled needed to be reviewed.

Mr Barber commented on the External Audit Plan for the Council. A Member wondered why no significant risks had been identified in relation to Bath Tourism Plus; he understood, for example, that there were issues relating to staff pensions in the organisation. Bath Tourism Plus was a major earner for the Council, and he would have thought there were significant risks for the Council associated with them. He suggested the Committee needed assurance so that it was comfortable with Bath Tourism Plus’s accounts being incorporated in the Council’s accounts. Mr Barber referred to the information on agenda page 27. In terms of ISA (UK) 600 Bath Tourism Plus does not constitute a significant risk for the Council’s accounts, and no specific audit work in relation to them was proposed. They might have an impact on the Value for Money opinion, for which Council services were assessed on the basis of risk.

Mr Barber said that the challenges facing the Council were shared by all local authorities, which could be addressed by a mixture of measures, including increases in Council Tax and non-traditional ways of delivering services. He referred to the situation of Northampton Council, which had declared bankruptcy. The Chair said that some neighbouring councils were in a much worse financial position than Bath and North East Somerset.

Mr Barber commented on the External Audit Plan for the Avon Pension Fund, for which Julie Masci is the auditor. The accounts for the Avon Pension Fund were included in the Council’s accounts, but were subject to a separate audit procedure.

A Member noted that the materiality figure calculated as 1% of net assets remained the same as the previous year at £43.5m. He asked how often the assets were revalued. Mr Barber assured him that the Pension Fund assets were revalued every year. The previous year’s actual figure was used as the materiality figure for the plan, but would be revised after the revaluation of assets at the end of the year before the accounts were audited. The Member asked about the impact of redundancies and the early payment of pensions on the Pension Fund. Mr Barber replied that redundancies reduced the contributions to the Fund and, depending on the circumstances of the individual, potentially increased pension payments. The redundancy business case should take into account all costs, including pension costs, if applicable. The Divisional Director – Business Support said that the impact of Pension Fund costs would be considered to calculate the payback period of each redundancy.

RESOLVED to note the report.