Agenda item

The Audit Manager (Audit West) presented the report. He said that the aim of this item was to update Members and to allow them to contribute to the process. He drew attention to the diagram showing the high-level methodology used for preparing the Annual Governance Statement contained in Appendix 1, and said that he had met Divisional Directors during December and January to discuss events of 2017/18 and to consider  issues for inclusion in the Statement. The most important issue remained the financial challenge, as it had been for the previous two years. The previous day the Cabinet had received monitoring reports on the revenue and capital budgets and a paper on the 2018/19 budget, which would go forward to full Council. The current year end forecast for the 2017/18 budget was an overspend of £3.4m, with the largest overspend being in the Adult and Children portfolios. Measures are in place to mitigate the overspend, but further measures, such as use of reserves and capital receipts will be needed. In terms of savings £14.5m had to be delivered in 2017/18, of which £11.2m are on target to be achieved, but a balancing figure of £3.3m is at the moment unlikely to be achieved.

In terms of the 2018/19 budget there is a target of £26.8m savings, of which 61% are considered high  risk. The Operational Plan for 2018/19, which sets out the key activities and projects which the Council hopes to deliver in this period  (linked to the Corporate Strategy) had just been published.

The Divisional Director – Business Support said that Adult Social Services and Children’s Services had been reviewed with the aim of making them more sustainable.

The Audit Manager (Audit West) said that other issues to be considered for inclusion were the new Virgin Care contract, which commenced in 2017; the cancellation of the East of Bath Park and Ride; and the Modern Libraries Programme, all of which significantly impacted on the Council’s operations and resources.

A Member asked about the financial impact of the cancellation of the East of Bath Park and Ride, for which no assets had been created and for which he could not recall having seen a revenue reversionary notice. The Divisional Director – Business Support replied that a report on the revised capital programme had been included in the budget papers to Council. The Park and Ride Project was being replaced by a Strategic Transport Improvement Programme and some of the work done for the Park and Ride would contribute to that, though this had not been quantified yet.

A Member asked about the management of risks associated with the contracting out of services to companies, particularly those with very diverse businesses, such as Virgin, Capita and Carillion. The possibility of their failure was a reputational as well as a financial risk to the Council. The Audit Manager (Audit West) advised that an audit of the governance of the transfer of services to Virgin Care had recently been carried out and audits related to contract management were planned. The Member wondered whether assurances about the robustness of these companies should also be sought from external sources, such as the companies’ auditors. He noted that there might also be questions about the robustness of smaller organisations to which services were outsourced. He suggested this was an area the Committee should review. Another Member said that Councils had learned that entrusting the delivery of services to outside organisations, even if it did lower costs, did have inherent risks. He hoped that the Council had begun addressing these risks and was giving thought to some form of early warning system to detect when contracts might not be delivered. The Divisional Director – Business Support responded that continuity plans were being developed in case contracts failed.

Members agreed that the Committee should seek further assurance about the management of the risks associated with outsourcing contracts.

RESOLVED to note progress on the review, and to request that there should be an item about the management of risks associated with outsourcing contracts on a future agenda of the Committee.