Agenda item

Value for Money Report 2019/20

Minutes:

The Committee was provided with a report that informed of the outcomes of a review completed by Grant Thornton regarding the impact of the Council’s arrangements during 2018/19 and 2019/20 in relation to the St Georges’ Shopping Centre.

 

The report at appendix one provided Members with key findings and recommendations

arising from Grant Thornton’s assessment of the St George’s Shopping Centre transaction in 2018/19 and 2019/20.

 

The External Auditor, Grant Thornton advised that his colleague Tom Foster had conducted the review and authored the report and had no prior involvement in any auditing of the 2019/20 accounts.

 

The External Auditor, Grant Thornton (Value for Money) took Members through the report and directed Members to page 171 of the report which held the conclusion and recommendations of Grant Thornton.

 

The Chair advised the Committee that the parcel of land and regeneration opportunities were broader than just the St Georges Shopping Centre.

 

The External Auditors from Grant Thornton fielded questions from Members and explained that:

 

  • Back in 2018, income strip deals were new and untested opportunities with a number of Council’s considering various deals. Following a question from a Member, it was acknowledged that the accounting treatment of such transactions, at the time, was not very well established and Council’s would have had different views on the correct treatment. Technical details and the legal structures of the deals would have caused them to be treated differently such as the substance of who controlled the asset at the end of the deal.
  • Due to Grant Thornton accepting the accounting treatment proposed by the council in the 2018/19 audit and the need to consider the need for the review, the External Auditor, Grant Thornton, advised that .to avoid any conflict of interests, he had consulted with the Legal department and Ethics department of Grant Thornton. The two departments reviewed the issue with the accounting treatment and their advice was that Grant Thornton was duty bound to continue the work but without anyone involved with the previous audit. Tom Foster and his colleague had therefore reviewed the transaction and created a ‘lessons learned’ type of report for the Committee.
  • In preparing the review, Grant Thornton had had many discussions with senior Council officers regarding the report, though the report itself had not given the opportunity for a management response to be recorded.  It was confirmed that at the proposed special meeting of the F&A Committee, a management response to the two recommendations made would be considered.

 

The Committee raised the following points:

 

  • Cllr Burden was happy to accept the general content and direction of the report as well as the technical aspects but disputed the opinion that Members were not provided with the information, they needed to make an informed and appropriate decision. It was noted that it was a well-considered and innovative idea in 2018 and it received cross party support from all three political parties and was debated thoroughly in numerous meetings over a lengthy period of time which was not reflected in the report.
  • With regards to the report referencing having sequential Cabinet, Overview Scrutiny Committee, and Cabinet meetings on the same evening, the report did not accurately reflect that there a significant number of briefings held before those meetings to discuss the proposed transaction and all political groups were involved and actively supported the decision made
  • Additionally, the proposed transaction was brought to Grant Thornton’s attention at the time of the 2018/19 Statement of Accounts Audit and the external auditors did not raise any concerns over the accounting treatment
  • Cllr Burden drew attention to paragraphs 5.27, 5.46 and 5.55 of the report as examples of where the language and tone of the report could be read as being emotive, rather than providing a balanced view of the facts.

 

The External Auditor, Grant Thornton (Value for Money) agreed that some of the language he used was clumsy and the messages of his wording were being misinterpreted and he agreed to amend the wording in the report.

 

The External Auditor, Grant Thornton stated that Grant Thornton should have identified the issues with the accounting treatment for the St Georges Transaction in 2018/19 and challenged at this time whether the transaction should be treated as a financing arrangement rather than a lease.  The External Auditor, Grant Thornton pointed out that the external auditors had no role in making decisions for the Council, their role was to assess the Council’s arrangements in delivering value for money.

 

In light of the increasing prevalence of S114 Notices and the financial challenges facing local government, Members were keen to understand what the Council had changed and learnt in the five years since the St Georges transaction and reflected on the recent decision to bring forward a new leisure centre.

The Director (Corporate Services) provided the following clarification:

 

  • In October, Cabinet considered a report on local authority interventions and the information produced by DLUHC on common characteristics of local authorities where intervention had taken place.  A self-assessment had been undertaken of the council against the common characteristics and an action plan has been prepared to identify how further improvements to the council’s governance arrangements and culture could be made. The report was an opportunity to improve current arrangements in place and it was agreed that a report would be brought back to Cabinet in six months’ time to provide an update on the Councils position and would be reviewed through the annual AGS process.
  • At the time when the decision was made to move forward with a new leisure centre, the opportunity to refurbish the current leisure centre instead was considered, however it was deemed unviable due to the significant cost and the layout of the current leisure centre not being right to support leisure faculties in the modern age.
  • The Director (Corporate Services) advised that over recent years the council had looked to continuously improve and develop the presentation of information to Members; following receipt of the review the council would be looking to consider further improvements to the way business cases were presented to ensure consistency and to further support Members in their decision-making processes.

 

Supporting documents: