Agenda item

The purpose of this report is to update the Audit and Governance Committee on the Council’s response in relation to the Section 24 Statutory Recommendation received from the Council’s external auditors, Grant Thornton, in the spring of 2023:

Demonstrate clearly to Council taxpayers how the additional Council tax for 2023/24 has been properly controlled and demonstrates improvements in value for money arrangements.

As well as giving an opinion on the financial statements and assessing the arrangements for securing economy, efficiency and effectiveness in the Council's use of resources, Grant Thornton have additional powers and duties under the Local Audit and Accountability Act 2014. These include powers to issue a public interest report, make written recommendations, apply to the Court for a declaration that an item of account is contrary to law, and to give electors the opportunity to raise questions about the Council's accounts and to raise objections received in relation to the accounts.

Following the two Public Interest Reports they issued in October 2020 and February 2022 and the Report issued on 18 November 2022 by the Council’s Section 151 Officer under s.114 of the Local Government Finance Act 1988, Grant Thornton concluded that it was appropriate to make written recommendations under section 24 of the Act.

Progress against most of the recommendations has been reported to the Audit and Governance Committee via the regular monitoring of the Annual Governance Statement. This particular recommendation required a report to be made to the Committee in June 2024. This report has been slightly delayed due to the Audit and Governance Committee being deferred to July 2024 due to the General Election.

There are two parts to this report:

·       The first is the Provisional Outturn report for 2023-24 which, in line with the Statutory Recommendation, demonstrates that the Council managed to balance its budget for the year through tight budget assurance processes. This report is due at Cabinet on 24 July 2024 and will be available from 16 July 2024 on the Council’s website.

·       The second part is the draft Productivity Assessment which is attached as Appendix A to this report. The Productivity Assessment is being produced at the request of the previous Local Government Minister, Simon Hoare MP, in a letter to all councils in May 2024. The Productivity Assessment will be presented to the Mayor for sign off and will be submitted by the deadline of 19 July 2024. It demonstrates how the Council has improved productivity during 2023-24, in line with the Statutory Recommendation.

Jane West, Section 151 Officer introduced the report to the Committee.  

Following the council’s 14.99% increase to the council tax in 2023/23 the council’s external auditors Grant Thornton had requested the council to demonstrate the council’s budget had been properly controlled in 2023/24 and improvements had been made to the council’s Value for Money arrangements.

The council’s provisional outturn report for 2023/24 had been published and was available on the council’s website. The report demonstrated that the council was within budget in 2023/24, one of only three London boroughs. It was noted that London boroughs were suffering from increased demand in Children’s placements, SEN transport, Homelessness and whilst managed well in Croydon elsewhere also in Adult Social Care. The report illustrated the council had been within its budget and that the budget monitoring and adjustments had been accurate and well managed throughout the year.

The second part of the report set out the council’s VFM response via the Council’s Draft Productivity Assessment as requested by the Local Government Minister, Simon Hoare MP under the previous Government.  

Councillor Jason Cummings, Cabinet Member for Finance noted the difficulty in framing the council tax rise and advised the response demonstrated the money had been spent in an efficient way and achieved the task of not cutting back council services further. The comments of Tony McArdle Chair of the council’s Improvement and Assurance Panel within the report were noted as articulating that if it were not for the gap in Croydon’s finances it would be operating as a normal council..

In response to questions from the Committee, Cllr Cummings advised that the council had no plans of raising council tax above the cap in any future year at this time. The £38 million gap in the council’s finances was unsustainable going forward. However if the council could reach an arrangement with national Government to deal with this, it would be operating at the same level and subject to the normal pressures experienced by all councils. It was noted these negotiations were ongoing.

The thanked officers for the report and noted the public perception of the improvements which had taken place were likely behind. Also, the culture transformation was not articulated within the report and was a critical element of the improvements taking place.  

Matt Dean, Grant Thornton noted the improvement work the council had realised and was on a journey to complete. The detailed VFM work would be reviewed for 2023/24 and the external auditors concurred with officers’ assessment. It was noted that there was a limit to the work local authorities could do under the current funding arrangements when in financial distress.

The Committee thanked the external auditors for their work and recommendations.

The Committee RESOLVED;

1.     To note the Council’s Provisional Outturn Report for 2023-24 which has delivered a balanced budget through tight budget assurance processes.

2.     To note the Council’s Draft Productivity Assessment, to be submitted as requested by the previous Local Government Minister, Simon Hoare MP.

3.     To note that the above demonstrates how the following recommendation of the external auditor has been met: “Demonstrate clearly to Council tax payers how the additional Council tax for 2023/24 has been properly controlled and demonstrates improvements in value for money arrangements.”