Agenda item

The Committee considered a report which presented an in-depth review of how the budget risks were managed, reviewed and reported following consideration of the Strategic Risk Mapping report to the Audit Committee on 17th August 2016.

The Chair reminded members that the Committee should focus on the process of risk management and not on the details. Members were presented with a brief overview of how risks were managed within the service and the reporting mechanisms of those risks i.e. focussing on particular seasons such as gritting in the winter months.

A query was raised with regard to the pension deficit identified at page 26 of the report and why the Council were in the position it was. Members were advised that in the 1990’s Local Authorities were given the opportunity to take a pension holiday, of which Doncaster did along with other authorities. Since that time, the recovery rate had been up and down but there was still a significant deficit to recover. It was noted that it was the Council’s single biggest debt but the amount was going down and will continue to do so. With regard to pre-payment on debt recovery the Council would be looking to do this again to achieve resulting revenue budget savings. If the Council were to have good years then the deficit would decrease quicker. Members were assured that the Council were in a reasonably positive position compared to other local authorities.

It was asked whether the smaller risks were taken into consideration as well as the significant risks. Members were advised whilst the quarterly monitoring report details those risks which were above £250,000 it didn’t mean that the others were not considered. As Members will see within the budget report due to be submitted to Cabinet on the 14^th February, it will supply Members with a breakdown of the risks on reserves. It was noted that so far the risks come to less than the Council has within its reserves. It was also advised that within that Cabinet report a further breakdown of the risks would be provided within the risks and assumptions paragraph of that report.

Comments were sought from an Internal Audit perspective. It was reported that it had been a couple of years since this issue had been looked at in detail, but through examining quarterly monitoring reports there was no evidence of the Council not having any financial resilience and this wasn’t an area of significant risk for the Council.

It was queried whether Brexit would be considered as part of risk management. It was reported that Brexit was on the risk register but it was noted that business rates presented a fluid picture at present and the ebbs and flows of companies was high. Unfortunately at this time it would be too far in advance to predict what may happen but the Council would be making every effort in devising long term plans. The Chair indicated that there could be potential opportunities for the Council and should be seeking the advantage now to enable Doncaster to get the best available deals. It was reported that work was continuing by bringing business into Doncaster. Members were reminded that brexit was still an unknown quantity and it was likely that the same rules would apply as they do now in relation to EU procurement. With regard to inward investment Doncaster is ahead in terms of growth, the Council is in a much better position than other local authorities.

With regard to Pensions, it was asked whether it would be possible to report back to the Committee so Members could be assured of the financial situation. It was reported that at present it wouldn’t be the right time to send information to Members as the picture was still unsure. It was advised that there would be six pools of investment within the Country and as far as the Council were aware, Doncaster would still work with South Yorkshire Pensions, it will be the person who is employed to deal with investment that would sit somewhere else within the country. It was noted that there would be no change to administration but this may change in the future and would be subject to another debate.

In relation to the Children Trust realistic annual budget target identified at page 30 of the report, the Chair asked whether the target score of 2 was realistic and what monitoring takes place on the projections. It was reported that the Council were working closely with the Trust through the contract review process. The Council had also asked for KPMG’s input and opinion from both sides. It was advised that regular meetings take place as well as the quarterly performance cycle. There had been marginal positive changes and the Council were fairly positive regarding the projections. Further work was required with regard to robustness of practices and the Council were seeking information on a much quicker basis. With regard to the risk share for 2017/18 it was envisaged that this would reduce but the Council should not forget that the children were still under the Council’s responsibility as a corporate parent.

Concern was raised as to whether enough pressure was being applied on the Trust. It was also queried whether any effort had been made into working more closely to try and mitigate expenditures. It was reported that discussions had taken place with regard to collaboration of services for example an Adoption Service, of which the Trust may take a lead. Other examples included residential/home investment to avoid the need to use external/out of the borough placements. It was advised that all these issues were being looked into not just at a senior level meetings but throughout the staffing levels.

The Chair sought a financial opinion on the medium term future prospect for the next 3 to 4 years. It was reported that the prospect was reasonably positive. Levels of savings should be secure and management levels should be back to normal. It was envisaged that by the year 2020 the Council should be back to normal levels of budgetary reductions. However, investment and demand management may prove to be a challenge for the Council but it was felt that the Council were self aware of these issues.

The Chair asked whether there were any other ways where directorate service risks identified can be improved. It was reported that a pragmatic approach had been the preferred approach for a number of years and where risks had needed to be escalated then this has happened. Officers were reasonably happy with this approach and it had yielded good results.

With regard to the Children’s Trust, KPMG had identified this as a risk within their report, it was asked how the work KPMG were undertaking would fit in with the work of the Council. It was reported that this would be carried out with the continuation of liaising with Finance to ensure there was a clear conclusion at the end of the process.

            RESOLVED that the report be noted.