Agenda and draft minutes

To receive apologies for absence.

No apologies for absence were received.

To receive declarations of interests in respect of any item on the agenda.

Councillor Paul Gleeson declared an interest as, although he had resigned from his position, he would remain a board member of PSPSL until the end of the month.

To sign and confirm the minutes of the last meeting.

The minutes of the previous meeting held on 18^th November 2024 were agreed and signed by the Chairman.

To note the actions from the previous meeting.

The actions from the previous meeting had been tabled.

The Chairman thanked the Democratic Services Team Leader and requested that she obtain updates and deadlines for ongoing actions, to be presented at the next meeting.

To answer any written questions received from members of the public no later than 5 p.m. two clear working days prior to the meeting – for this meeting the deadline is 5 p.m. on Wednesday 22^nd January 2025.

No questions were received.

(A report by KPMG, External Auditors)

The Engagement Director, KPMG presented the final external audit completion report. Key updates included the finalisation of work associated with the valuation of land and buildings and the local government pension scheme liability. The report concluded with an unmodified, unqualified audit opinion on both the Council's financial statements and value for money arrangements. Members noted that the draft report had been considered by the Committee at its meeting on 14^th October 2024.

The Engagement Director, KPMG highlighted the following key sections:

·       Uncorrected audit misstatements (page 24-25)

·       Corrected audit misstatements (page 26)

·       Audit misstatements in disclosures (page 27)

·       Control deficiencies (page 32 and 36)

·       Value For Money

The Engagement Director, KPMG advised that a lot of positive assurance could be taken by the Committee on the status of the organisation now and going forward into the future.

The Chairman requested clarification on the billing arrangements and the additional fees charged. The Engagement Director, KPMG advised that the additional fees were due to inefficiencies, timeline changes, and additional audit effort required for the valuation of land and buildings and pensions arrangements. He agreed that the details would be circulated to Committee members outside of the meeting.

Independent Co-opted Member, Mr Gideon Hall, raised a question regarding the rationale behind the increase in audit fees from £42,000 in 22/23 to £131,000 in 23/24. The Engagement Director, KPMG advised that the increase was due to the re-tendering of the public sector auditors' appointment contract, reflecting the issues within the market and the new agreed fees.

Independent Co-opted Member, Mr Adam Cartwright, sought clarification on property valuations and whether they include prior adjustments. The Engagement Director, KPMG advised that the identified issues were for the current year only. The predecessor auditor's work had been reviewed, and no re-audit of their conclusions was necessary.

Mr Cartwright sought clarity on the materiality threshold and its agreement with the Section 151 Officer. The Chief Finance Officer (PSPSL) advised that the disclosure for related parties needed further detail, and a threshold would be agreed with the Section 151 Officer for future disclosures.

Mr Cartwright queried the status of the Council's whistleblowing policy and anti-fraud and corruption policy. The Chief Finance Officer (PSPSL) advised that a review of the whistleblowing policy had commenced, and an update would be provided following the meeting.

Councillor James Cantwell sought clarification on the communication issues relating to the department responsible for expenditures. The Engagement Director, KPMG advised that extensive procedures had been carried out, and that had been the only issue found. No wider communication issues were identified.

Councillor Mike Gilbert queried the additional liability arising from the minimum funding commitment. The Engagement Director, KPMG advised that it was a technical accounting requirement associated with IFRIC 14, recognising the value of secondary contributions needed to cover the deficit.

Councillor Paul Gleeson requested that future agendas pages be created more consistently in respect of page numbers and landscape pages.

RESOLVED:

That the report be noted.

[Councillor Helen Staples entered the meeting at 6.39 p.m.,  ...  view the full minutes text for item 42.

(A report by KPMG, External Auditors)

The Engagement Director, KPMG presented the draft external audit annual report, which provided a more decipherable summary of the conclusions reached in the previous report. The report highlighted the Council's arrangements and provided a clean conclusion based on the organisation's arrangements.

Independent Co-opted Member, Mr Adam Cartwright, inquired about the feedback mechanism on the Council's website and how it was managed. The Deputy Chief Executive - Corporate Development (S151) advised that the feedback mechanism was monitored, and responses were managed by the relevant service managers. The level of traffic and responses to feedback would be provided to members to ensure that the service was effectively publicised and utilised.

Mr Cartwright sought clarification on the three-month reports provided by Lex Leisure and how the Council monitored performance. The Deputy Chief Executive - Corporate Development (S151) advised that Lex Leisure was no longer the contractor; the current contractor was Parkwood. She added that performance was monitored through regular contract management reviews by the service manager.

Independent Co-opted Member, Mr Gideon Hall, queried the impact of identified efficiencies on the running of the Council. The Deputy Chief Executive - Corporate Development (S151) advised that efficiencies were reported within the quarterly Cabinet reports. Members were keen to ensure there was no service impact from these efficiencies, and that they were being managed to avoid any negative effects on service delivery.

Councillor Mike Gilbert sought clarification on the valuation of assets purchased during the year and their inclusion within the asset register. The Engagement Director, KPMG advised that the assets purchased within the year were valued based on the purchase price, which was a solid indication of their value. He added that valuations for the asset register had been conducted in subsequent years.

RESOLVED:

That the report be noted.

(A report by Matthew Waller, Internal Audit Manager – Lincolnshire County Council)

The Internal Audit Manager presented the internal audit progress report, summarising the progress of the internal audit plan, key findings from recent audits, and the status of outstanding actions. The report highlighted the performance dashboard, feedback from officers, and specific audits conducted since the last meeting.

The Internal Audit Manager highlighted the following key points:

·       Performance Dashboard: 80% of the internal audit plan had been delivered, indicating good progress.

·       Feedback: 100% response rate from officers on all audits, with positive feedback.

·       Recent Audits: Limited assurance reports on bank reconciliation and insurance, and a substantial assurance report on housing benefits and council tax.

·       Outstanding Actions: Three overdue actions, with requests for extending the dates.

The Chairman queried the reason that the bank reconciliations were three months behind and what actions had been taken to resolve the matter. The Chief Finance Officer (PSPSL) advised that the delay was due to staff resources, capacity turnover, and changes in systems. Management action included daily monitoring, reporting to senior management, and setting a KPI for bank reconciliations to be completed within 10 working days of the month-end.

Independent Co-opted Member, Mr Adam Cartwright, inquired about staff upskilling and training for bank reconciliations. The Chief Finance Officer (PSPSL) advised that work instructions had been drafted and were due to be signed off. An assessment of skills and knowledge within the team was also being conducted in order to develop a training plan.

Councillor Chris Mountain queried the status of the process for maintaining the Council's asset registers for insurance purposes. The Deputy Chief Executive - Corporate Development (S151) advised that the new procurement was on track and the data had been reviewed. A new IT system had been implemented for asset management, which had significantly improved the situation.

Councillor James Cantwell sought clarification on the roles and responsibilities between PSPS and the Council regarding insurance. The Deputy Chief Executive - Corporate Development (S151) advised that clear roles and responsibilities had been established, and a central database (insurance portal) had been launched for officers to access insurance information and report directly to TRF.

Councillor Gilbert sought clarification on the funding allocated for moving away from manual quality assessment processes. The Chief Finance Officer (PSPSL) advised that the funding had been allocated, and the officer responsible for housing benefits was to provide further details.

RESOLVED:

That the report be noted.

(A report by John Medler, Assistant Director – Governance & Monitoring Officer)

The Group Manager - Insights & Transformation presented the Quarter 2 Risk Report 2024/25. The report included updates on strategic risks, partnership risks, and fraud risks as of the end of September 2024. Key changes were included as the addition of new risks, updates to existing risks and a review of the risk scoring matrix.

The Group Manager - Insights & Transformation highlighted the following key points:

·         Strategic Risks: Thorough review of risk wording, reduction in the risk score for internal communication, and addition of new risks related to the local plan and safeguarding.

·         Partnership Risks: Updates on the likelihood of not having a clear shared vision, removal of the risk of one partner taking over, and addition of a new risk related to PSPS.

·         Fraud Risks: Overview provided, with a promise of more detailed information in future meetings.

The Chairman raised concerns regarding the lack of detailed information on employee risk management, including health, well-being, and mental illness. The Group Manager - Insights & Transformation advised that there were elements of this in the capacity risk and confirmed that more detail would be added. Additionally, she agreed to liaise with HR to invite a representative to attend a future Committee meeting to discuss the matter further.

Councillor Mike Gilbert queried the impact of the new food waste collection services on existing risks, particularly those relating to waste services. The Group Manager - Insights & Transformation advised that more information would be provided within the Quarter 3 report, including updates on the depot options and round reviews.

Councillor Chris Mountain referred to the pressure on staff and the potential impact on their mental health. The Group Manager - Insights & Transformation advised that the focus would be on ensuring that staff could raise issues with their line managers and access available support. More links to mental health and well-being initiatives would be included in the risk register.

Councillor Paul Gleeson queried the impact of the Local Government Reform (LGR) on various risk categories. The Group Manager - Insights & Transformation advised that the entire risk register would be reviewed in light of LGR, not just the specific LGR risk.

Councillor Anton Dani referred to the high risks related to safeguarding and queried the potential impact on the Boston market due to increased prices. The Group Manager - Insights & Transformation advised that those concerns would be discussed with the lead officers, and updates would be provided within future reports.

RESOLVED:

That the report be noted.

(A report by Christine Marshall, Deputy Chief Executive – Corporate Development (S151))

The Treasury & Investments Manager (PSPSL) presented the update on changes to statutory guidance on minimum revenue provision. The new guidance required the Council to make an annual MRP charge based on the lifetime of the asset, with a maximum useful life of 20 years for equity investments. The Council would use a 50-year term for property fund investments.

The Treasury & Investments Manager (PSPSL) highlighted the following key points:

·       Background: The Council was required to approve its MRP policy each year as part of the budget setting report. The MRP was the annual charge to the revenue account for the repayment of debt.

·       New Guidance: The Secretary of State issued new guidance on 10^th April 2024, effective from 1^st April 2025. This guidance impacted how the Council calculated its MRP, particularly for unfinanced capital loans and equity investments.

·       Unfinanced Capital Loans: The Council currently had no unfinanced capital loans, so this change did not affect the Council.

·       Unfinanced Equity Investments: The Council must now make MRP for unfinanced equity investments, including property funds. The Council currently made an annual MRP charge of £50,000 for its property fund investments.

·       MRP Calculation: The Council could use either the straight-line method or the annuity method for calculating MRP. The recommendation was to use the annuity method based on a 50-year term and the PWLB annuity rate at the date of the policy change.

·       Financial Impact: The new MRP policy was to increase the annual MRP charge, starting with an additional £5,248.52 in 2025-26.

Councillor Paul Gleeson queried whether there was a need to set aside money for investments. The Deputy Chief Executive - Corporate Development (S151) advised that the new guidance aimed to ensure that councils were prudent in their financial planning. Even if the assets retained or increased in value, the MRP ensured that the debt associated with them was repaid over time.

Councillor Chris Mountain queried when the policy was to take effect and whether it was a control tactic from central government. The Deputy Chief Executive - Corporate Development (S151) advised that the policy was due to come into effect on 1^st April 2025. She added that it was a measure to ensure councils were cautious with their investments and to discourage excessive risk-taking.

Councillor Anton Dani queried what was to happen to the Council’s assets should a local government reorganisation take place. The Deputy Chief Executive - Corporate Development (S151) advised that the in the event of a reorganisation, the assets would be transferred to the new unitary authority, and the balance sheets would be combined.

The recommendation was moved by Councillor Anton Dani and seconded by Councillor Chris Mountain.

RESOLVED:

1.     That the changes to Statutory Guidance “Capital Finance: Guidance on Statutory Minimum Revenue Provision” be noted;

2.     That any feedback be provided to Cabinet on 19th February 2025 and Full Council on 3rd March 2025 as part of the Annual Budget report; and

3.     That the increased MRP budget pressure on the Council, in relation  ...  view the full minutes text for item 46.

(A report by Christine Marshall, Deputy Chief Executive – Corporate Development (S151))

(Revised Appendix 2 attached)

The Treasury & Investments Manager (PSPSL) presented the Treasury Management Policy and Draft Strategy Statement for the 2025/26 financial year which sought consideration by the Committee. It was stressed that information in the Draft Treasury Strategy Statement was subject to change to reflect any changes made as part of the budget setting cycle. Members noted that following their scrutinising of the report any feedback would be submitted within the Annual Budget report to Cabinet on 19^th February 2025 and Full Council on 3^rd March 2025.

The Treasury & Investments Manager (PSPSL) highlighted the following key points:

·       Capital Strategy: a capital strategy report would be prepared, and included as a separate Appendix to the budget setting report to Cabinet and Council. This is in addition to the prudential and treasury indicators and various treasury strategy reports.

·       Training: Members with responsibility for treasury management were to receive adequate training, and the training needs of treasury management officers were periodically reviewed.

·       Treasury Management Consultants: The Council used Link Group as its external Treasury Management advisors.

·       Capital Expenditure and Financing Plans: The Council's capital expenditure plans and how those plans were financed were summarised. The funding requirements and borrowing needs were outlined.

·       Capital Financing Requirement (CFR): The Council's CFR, a measure of its indebtedness, was detailed, showing an increase from just under £17 million to just under £20 million over the next five years.

·       Core Funds and Investment Balances: The expected core funds and investment balances were presented, showing a reduction in reserve balances over the next five years.

·       MRP Policy: The MRP policy was discussed, with reference to the previous report on changes to statutory guidance.

·       Current Portfolio Position: As of December 31, the Council held investment balances of £57.7 million, with net Treasury investments of £56.7 million.

·       Borrowing Strategy: The Council was maintaining an under-borrowed position, which was prudent given the expected fall in medium and long-term borrowing rates.

·       Annual Investment Strategy: The criteria for investments, including specified and non-specified investments, were outlined. The Council's investment strategy aimed to maintain yields by investing long-term where possible.

·       Investment Return Expectations: The forecast for investment returns over the next five years was provided.

·       Prudential Indicators: The prudential indicators for capital expenditure, financing costs, and the Council's borrowing limits were detailed.

The recommendation was moved by Councillor David Scoot and seconded by Councillor Mike Gilbert.

RESOLVED:

That the report be noted and that any feedback be provided to Cabinet on 19^th February 2025 and Full Council on 3^rd March 2025 as part of the Annual Budget report.

(A report by Christine Marshall, Deputy Chief Executive – Corporate Development (S151))

(Revised Appendix 1 attached)

The Deputy Chief Executive – Corporate Development (S151) presented the budget overview 2025/26 - 2029/30 report which sought consideration of the Draft budget and Medium Term Financial Strategy for the period 2025/26 – 2029/30, with a particular focus around budget risks. Members noted that following their scrutinising of the report any feedback would be submitted within the Annual Budget report to Cabinet on 19th February 2025 and Full Council on 3rd March 2025.

The Deputy Chief Executive – Corporate Development (S151) gave a presentation, highlighting the following areas:

·       Local Government Finance Policy Statement

·       Grant Settlement 2025/26

·       Collection Fund

·       Budget Pressures and Future Risks

·       Capital Programme 2025/26 – 2029/30

·       Capital Bids and Financing 2025/26 – 2029/30

·       Treasury Management

·       Reserves

·       Efficiencies Requirement

·       Section 25 Statement

·       Future Matters Looking Forward

·       Risk Review

The Chairman reviewed the risk table and asked for an explanation of how the high and medium scores were determined. The Deputy Chief Executive – Corporate Development (S151) explained that regarding 'likelihood,' it was considered whether the risk was present in the system and if it could eventually emerge. In terms of 'impact,' the financial consequences for the authority were assessed. Given Boston's modest-sized budget, it is more susceptible to fluctuations compared to a larger authority. The Chairman queried whether there was any movement on being able to reduce the actions. The Deputy Chief Executive – Corporate Development (S151) advised that she would be reviewing all of the actions and updating them once the likelihood and impact had been reviewed.

Councillor Richard Austin BME mentioned the Government’s Unitary Authority proposals and questioned whether the reserves were adequate to cover the associated risks. The Deputy Chief Executive – Corporate Development (S151) Officer responded that the Council was in a reasonable position but reliant on receiving IDB funding from the Government.

Councillor Mike Gilbert referred to page 196 of the report and asked if BTAC should be included as a precepting authority. The Deputy Chief Executive – Corporate Development (S151) explained that it was included in Boston Borough as a special expense area, embedded within the Council Tax requirements. Councillor Gilbert also inquired why the New Homes Bonus (NHB) was identified as a high-impact risk. The Deputy Chief Executive – Corporate Development (S151) stated that the Government was conducting a comprehensive review of the NHB system concerning the funding methodology.

Councillor Chris Mountain expressed concerns about the IDBs and the risk of not receiving any funding, which would necessitate the Council using its reserves. He asked how long the Council’s reserves would last in such a scenario. The Deputy Chief Executive – Corporate Development (S151) indicated that it depended on the Government’s final settlement and allocation to Boston.

Councillor David Middleton asked whether the Government would encourage Councils to spend their reserves. The Deputy Chief Executive – Corporate Development (S151) could not comment on the new Government’s direction but confirmed that not being able to balance and having reserves could put an organisation in a challenging position. It was noted that across the  ...  view the full minutes text for item 48.

(For Members to consider the Committee’s work programme.)

The Chairman presented the annual Audit and Governance Work Programme 2024/25 and asked members if they wished to add any additional items into the programme.

RESOLVED:

That the work programme be noted.

Prior to the closure of the meeting members agreed that the next meeting on Tuesday 22^nd April 2025 would start at the earlier time of 6.00pm.