11:09AM, Thursday 18 June 2020
A final report on the council’s financial management record has identified a ‘large range of issues’ that the Royal Borough needs to address.
The document, which is due to go before cabinet next week, is the follow-up to an earlier Chartered Institute of Public Finance (CIPFA) review, seen by the Advertiser in September, that recommended a ‘detailed review of the way financial management operates within the Royal Borough… as a matter of urgency’.
CIPFA was then commissioned to assist the Royal Borough with the issues raised and was asked that any further governance or compliance weaknesses are identified in a final report.
Work started in September, and CIPFA has found that weaknesses ‘that required urgent attention’ have been ‘largely addressed’.
But the report was heavily critical of the borough’s record on financial management in a number of areas.
CIPFA criticised the council’s ‘lack of financial transparency and medium term financial planning over a number of years’ for masking financial problems which ‘could have been avoided’.
Using the example of the borough’s decision to reduce or freeze council tax over a number of years, the report hits out at ‘poor officer culture and lack of physical capacity and capability coupled with dominant members’ leading to ‘no appropriate challenge’.
The report identified a series of governance issues, including reporting and transparency, debt collection and a need for a review of the member protocols that govern relationships between councillors and officers.
CIPFA found ‘key budget decisions did not comply fully with statutory requirements’, while the level of reserves, which are ‘very low’ compared to other unitary authorities, ‘is a concern given the risk facing RBWM in relation the delivery of large savings’.
A review of budget estimates for 2018/19 and 2019/20 found a ‘number of budgets were unrealistic’, while ‘bad debt provisions were inadequate and unrealistic’ and ‘council officers did not fully understand the risks surrounding business rates retention'.
The borough ‘did not have a robust and transparent medium-term financial strategy’ and the report found ‘officers appeared overly sensitive in providing bad news’ about the council’s financial position.
Concerns were raised that the treasury management strategy ‘did not highlight the significant risk of borrowing plans which involved £167m of temporary borrowing by 2020/21’ and the report found the borough ‘did not have a compliant capital strategy’.
The report said councillors ‘were able to circumvent RBWM’s approved policy framework to include additional schemes in the capital programme without appropriate challenge from officers’.
Since the initial findings, the report said the council has put in place a number of measures to improve its financial management.
The 2020/21 budget is described as ‘robust’ and ‘includes a contingency for unforeseen items’.
Staff and councillors are now ‘fully aware of the financial position’ of the borough, and the council is ‘embarking of a radical transformation programme’ to address its financial challenges.
Although it faces a difficult financial situation, the report found the council ‘is now doing all it can to ensure its future resilience’.
It found the council has ‘made good progress in resolving its weaknesses’ but ‘it will take time and a change in culture to embed the changes’.
Council leader Cllr Andrew Johnson said he would give his full statement on the report at cabinet next week, but speaking to the Advertiser this morning, he said: "I'll be giving the administration's full position on the issue at cabinet.
"It was due to go to the Corporate Overview and Scrutiny Panel next month. I have read that report and brought it forward to cabinet next week because I want to deal with it. I want to make it clear what our response is going to be.
"I think it's fair to say my statement next week will surprise some people."