Agenda item

Officers introduced the update on the GRIP.

Governance of the Housing Revenue Account and capital had been strengthened, with senior officer meetings feeding into CMT to provide more robust oversight.

A draft Annual Performance Report was scheduled to go to Cabinet before being presented to Select Committees.

Lawyers in Local Government (LLG) had been appointed and had started to review workstream 3.

On the Finance Modernisation Programme, officers had been working with Grant Thornton on the 2024/25 Statement of Accounts. Significant due diligence was underway to ensure accuracy and robustness. Monthly budget and savings monitoring was ongoing and would be presented to Cabinet.

The budget setting process for 2026/27 was underway and included Star Chamber sessions, challenging the current savings, and looking at savings over the next three years.

On Oracle, a monthly cycle of ERP improvements was ongoing, including integrating capital monitoring into budget monitoring within Oracle. An overarching review programme was also in place to prioritise improvements throughout the financial year.

Members asked about previous inaccurate figures. Officers noted that a review of the balance sheet had identified an historical asset transfer from the General Fund to the HRA where the calculation of how debt provision had been calculated in the balance sheet and accounts did not match the asset transfer, which required updating. Also, there had been an overdrawn reserve in the 2023/24 accounts that could not be carried forward, which was written out in 2024/25.

Officers had also set a more prudent bad-debt provision policy, and a Council-wide debt project was underway to consolidate the debt position.

Officers further advised that the outturn position had moved by approximately £20 million from month 10 to outturn. £14 million of this was related to one-off accounting adjustments.

Members asked if there should have been a warning about unreliability of records when the budget was set in February 2025. Officers noted that the calculations and asset transfers between the General Fund and HRA were very technical and were part of the minimum revenue provision. This asset transfer occurred in 2013/14 which was before EY were the external auditors. It was also noted that the accounts were grouped into categories and individual categories were not overdrawn. A review of the General Ledger would be required to identify these things.

Members asked about monthly budget monitoring and the systems used for this. Officers clarified that monthly budget monitoring was ongoing and had migrated to a new system that had gone live in May 2024. During bedding?in, Excel had been used for Months 2 and 4 of 2024/25, with Oracle EPM used from Month 5. While there had been teething issues with the new system, opening balances from the legacy system had now been reconciled and confirmed with the new system. A programme of training for budget managers and finance staff was underway, with workshops engaging services to ensure the Oracle improvements met both finance and operational needs.

Members asked when the Oracle improvements would be completed, and if other systems had been considered. Officers advised that Oracle had quarterly enhancements. The Council had a funded, month?on?month improvement plan through 2025/26. Oracle remained the market leader in local government. The ERP side was functioning, while EPM needed further improvement. Focus was on training and processes, not replacing the system. It was confirmed that the old system was no longer being used.

Members asked if officers were confident that their plans were sufficient to address the recommendations made by external and internal audit. Officers stated confidence had increased since the last meeting, citing a coherent plan that spanned the rest of the financial year, weekly governance meetings, and specific work such as integrating capital monitoring into Oracle.

On organisational engagement, officers acknowledged the need to accelerate training and update budget manuals, using a blend of external and internal expertise including finance business partners and heads of finance to implement changes effectively across services.

Members asked if there was enough capacity to conduct and receive training. Officers referred to the partnership with Grant Thornton and their expertise. This had also given additional capacity. Improvements to Oracle had been identified early, with corporate management oversight and regular updates to senior management.

Members asked about Star Chambers, and officers advised that three Star Chamber sessions had been scheduled up to December Cabinet, with focus including Adult Social Care, Children’s Social Care and Homelessness. These sessions would allow greater confidence in the consultation budget; give more robustness; and allow broad thinking into how the organisation was run. It also allowed consideration of future years as well as the current year. For example, there was a procurement review underway which would enable officers to look at operating models and sourcing models for different services. It was noted that the outcome of the Fair Funding Review was expected by 30 November.

Members asked about involving the Select Committees in this process. Officers noted that budget monitoring reports that go to Cabinet will be scheduled for every Select Committee meeting for scrutiny. The Annual Performance Report will also go to Cabinet and then to Select Committees as part of a more transparent governance approach.

The first phase of the FMP was originally due to conclude in October 2025, but officers indicated elements were likely to extend, with a fuller plan to be brought to the next Committee.

On costs and charging, officers stated work was funded through the Capital Transformation Programme as set out in Appendix G of the Council report. Therefore, they were not revenue costs.

Members asked why Grant Thornton, rather than CIPFA, had been engaged for the substantial FMP/ Oracle work, and officers advised that CIPFA had provided a review which helped identify areas of focus but without granular detail and a plan which spanned 3 years.  It was also felt to be suboptimal to have CIPFA and another organisation for Oracle improvements Learning from that review had been combined into a shorter, focused programme with Grant Thornton, who were already in place and able to cover both the finance and Oracle strands together, and this was viewed as the optimal, approach.

Members queried reported DSG accounting errors related to assets. Officers explained that this related to accruals added to the DSG account that recognised additional income that was due from the Department of Education. This should have been reversed in the following year when the cash came in, but as the entries were entered late into the DSG accounts, the auto-reverse window was missed. This meant that some debtors that had already been paid were carried on the balance sheet. The adjustment was to write those back through the DSG account to remove the debtors from the balance sheet as they were no longer valid debtors.

On the RAG status of items on the GRIP, Members queried the high proportion of Amber statuses given the Section 24 report. Officers maintained that Amber was appropriate, reflecting active progress to plan and timeline, with quarterly reporting, and that items would only be Green once fully achieved; none were assessed as Red.

RESOLVED: That the work on the GRIP and the FMP was noted and the Committee sought clarifications and assurances.