Agenda item

1.       The report was presented by Auditor from Grant Thornton, Mr Paul Dossett.

2.       In answer to questions and comments from Members, it was said that:

a)       Mr Dossett commented that in relation to the implementation of Internal Audit recommendations, he would expect significant prospects for improvement. The report reflects where the Council was in 2023 / 2024 but by the end of the calendar year Internal Audit were expected to give a positive perspective, although this was depended on the responses to their reports.

b)       In terms of savings, the Council has continued to move away from a siloed approach and is focused on looking across the organisation at the impact of various decision making. In terms of sensitivity analysis, it was difficult to forecast, however scenario modelling was worth conducting as it was possible to add in percentages of growth and funding. Although these were scenarios and may not come to fruition, Mr Dossett explained that it was helpful to give Members the understanding of both the range and scale of the challenge.

c)       Mr Betts commented that in relation to a One Council Budget approach, there was a process in place whereby the Corporate Management Team had reviewed and shaped the budget and gained a wider understanding of the Corporate implications of savings proposals. In terms of the scenario testing and sensitivity analysis, it was acknowledged that the Council were struggling with another 1-year settlement to understand how much additional insight this could provide, as opposed to a multiyear settlement which would allow longer term planning.

d)       Mr Dossett commented that it was difficult to compare Local Authorities as different areas had different markets; the Council needed to look at the issues they were presented with in the context of the overall budget and overall negotiation with contractors. It was stated that the Council could not continue to overspend on Adult Social Care and needed to take action, whilst taking into account the complexities of how care can be provided going forwards.

e)       The Leader commented that the savings programmes in Adult Social Care were wide ranging and there were many levers which enabled services to be delivered differently and in a way that was more financially sustainable. He continued to explain that the Executive would analyse the delivery rate to see where it is being reached or not  and then determine what further work is required. External advice would also be sought.

f)        In answer to a Member’s question regarding both Financial Stability (Areas for Improvement) and Staff Training and Revenue Account Repairs, it was explained that these two areas reflect the wider challenges the Council faced in terms of balancing capital spend. It was explained to Members that it was a balancing act and caution needed be exercised when making cuts to one area to ensure that it did not have a negative knock-on effect in the longer term.

g)       In response to a Member’s question regarding whether the Council had enough resources going forwards in order to meet the backstop in the future, it was stated that the central Government were looking at leadership of the Local Audit System as well as changes to the CIPFA (Chartered Institute of Public Finance and Accountancy) Code which would simplify the asset valuation process for Councils and Auditors. The National Audit Office were also looking at a number of other  aspects to ensure nationally there were sufficient Auditors to be able to conduct the work and FRC (Financial Reporting Council) were also looking at a work strategy with MHCLG (Ministry of Housing, Communities and Local Government).

h)       In answer to Chairman’s question, the Deputy Leader commented that it had been stated numerous times that it was not possible to continue to reduce a budget as this would ultimately lead to a significant decrease in services provided, therefore he agreed with Grant Thornton’s indication that spending control could not last forever and that a review was necessary. The Deputy Leader explained that 81% of Councils who provided Adult Social Care were in a similar position to that of Kent County Council in forecasting an overspend.

i)        In response to a Member’s question, the Interim Corporate Director Finance explained that the general level of reserves available for drawn down is on the point of the minimum required and over the next 12-18 months the Council had to either sustain this amount or increase it, but this was dependent on delivering to the budget in 2025 / 2026.

j)        The Leader commented that the short term spending controls that were in place would continue to be applied.  In relation to an earlier point made by Mr Dossett, the Leader commented that it was recognised that difficult financial decisions needed to be made in specific areas however, even with all of these savings, it would not equate to the pressures in the big spending areas, particularly the pressures in Adult Social Care. He commented that a short term solution was not a substitute for a structural issue and this was recognised by the Executive.

k)       The Head of Internal Audit drew Members’ attention to some of the wording contained on page 8 of the Executive Summary and explained that this was not in relation to Internal Audit, rather a response to issues raised by Internal Audit. Mr Dossett agreed with this.

3.       RESOLVED to note the External Auditor’s Annual Report on Kent County Council 2023/24 for assurance.