Agenda item

The S151 Officer will give a verbal update on this item. Please see below for a link to the Cabinet report that was presented on 2^nd July 2020.

https://democracy.bathnes.gov.uk/documents/s61514/E3210%20Covid-19%202020.21%20Financial%20Recovery_Final.pdf

The Chair invited Andy Rothery (Section 151 Officer) to introduce the report.

Andy Rothery gave a presentation (attached as Appendix 1 to these minutes) where he highlighted the following points:

·  Covid-19 Financial Impact

·  National Funding Position

·  Financial Risk Identification

·  Increased Governance

·  How we are tackling in-year pressures

·  Financial Planning Implications

The Chair thanked Andy Rothery on his presentation.

A Member of the Committee asked about grant fraud and on any fraudulent activity in audit (and how that would be mitigated), whether the £20.7m of cost savings would be deliverable and whether £10.3m of reserves could be used now (and how we compare with other Unitary Authorities).

Andy Rothery replied that one of the first steps from the Council was to be mindful of fraudulent claims and ensuring to put in place good control measures through the application process by identifying valid and operating businesses.  This was done via identification checks for that business owner to make sure that they were the correct claimants. 

Andy Cox (Head of Audit & Assurance) added that the Council did get involved very early on in the payment processing by liaising with the relevant officers in giving advice about the internal control framework and on a number of tools that were available, such as Cabinet Office Spotlight Tool, Bank Account Verification Tool (available through National Fraud Initiative). The audit, which would start soon, would look at the processes that have been used, and at the records management. Andy Cox also said that a post payment review had started, which initially was focused on the discretionary grants, and data matching has been done in liaison with other WECA Authorities.

Sophie Morgan-Bower (Grant Thornton External Audit) said that cost saving of £20.7m would be looked at as part of value for money work. In the report (later on the agenda) it was included within value for money arrangements review of the Council, and a review of the medium-term financial plan. The external audit reviewed the actions taken to identify savings and how these have been challenged and would consider the plans to identify further savings. It was worth noting that a number of these grants may not have been paid out and may not fall within the scope of the audit, at that point, But the 2020/21 savings would definitely be considered as part of the value for money work that was ongoing. The audit deadline has been extended to the end of November, so that work was ongoing now.

The Chair asked about difficulties with Leisure Services (as per presentation), in particular the current situation and likely implications.

Andy Rothery responded that Leisure Services were contracted services reliant on their income from memberships: the financial impact falls into the category of supplier relief if the provider requests support from the Council and this was a part of an ongoing discussion. The loss of income for externally contracted Leisure providers has been excluded from the income reimbursement scheme, Council operated leisure centres where there is income loss from membership bookings was included. There was a regular dialogue with our leisure providers to ensure that they can keep operating successfully.

The Chair also asked about Council reserves strategy of £10m which was agreed by the Cabinet, and asked how would support money coming from the Government be used when it comes in.

Andy Rothery responded that the Cabinet has agreed to use any amount of reserves needed to help mitigate the difficult financial position. That has been done in a balanced way to ensure that reserves were still retained. The first thing to be mindful of was to fully understand the long term impact on the Council's finances and how that financial transition and change was managed. That is where financial reserves can be very useful; for helping transition annual budgets and funding change, and to enable the Council to become more resilient.  The announcement from governments about the income scheme would allow flexibility to revisit some of those plans and reconsider alongside the financial mitigations that have been put forward.

John Barker asked about the potential implication in the recovery risk assumptions, and particularly if there was a second wave of Covid-19 with the impact it would have on social care delivery.

Andy Rothery replied that the risk of social care delivery has been assessed and it was factored into the cost projections within the Council’s recovery plan.

John Barker also asked what sort of dialogue about the continuing financial position and the projections of the Council's budget had been held, and on the implications around the pension fund cash flow.

Andy Rothery responded that he was conscious of the cash flow impact of the in year income and, through its treasury management activities, the Council were doing regular cash flow forecasting.

It was RESOLVED to note the presentation.