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The decisions as the council's minutes record them. A plain-language summary follows once it has been written.
RESOLVED (a) That the update in respect of actions arising from the last meeting and recent Committee referrals be noted. (b) That the Director of Resources be required to present a report to the next meeting explaining financial impact of the delays in the letters sent on the calculation of rent setting levels for 2023-24.
RESOLVED (a) That the assurance provided in response to the concerns raised by the Chair of the Governance and Audit Committee in respect of the resolutions and outcomes of the Council meeting on 7 March 2024 in respect of the Pembrokeshire County Council Budget 2024-25 and Medium Term Financial Plan (MTFP) 2024-25 to 2027-28 be noted. (b) That a recommendation be made to the Constitutional Review Committee that a review of the budget setting procedures is undertaken which should conclude in time to either confirm the current procedures or recommend amendment of the current procedures. (c) That the Constitutional Review Committee be asked to review the means by which the Constitution can be suspended.
RESOLVED (a) That the concerns raised by Councillor Murphy and the assurance provided in response to those concerns be noted. (b) That it be noted that there were no procedural failures in the Council’s 2024-25 budget setting process. [Councillors Aled Thomas and Michael Stoddart wished that their vote against the above Decision be recorded.]
RESOLVED That the response to Audit Wales, as set out in the report, be approved
RESOLVED (a) That the Statement of Accounts for 2022-23 and the Tenby & Lower Fishguard Harbour’s Authority Annual Return for 2022-23 be approved; and the Audit Wales Audit of Accounts Report and Audit Opinion (ISA 260) be noted. (b) That the Vice Chair of the Governance and Audit Committee apprises Council, at its meeting on 9 May 2024 that no concerns were raised by the Governance and Audit Committee.
RESOLVED That the report of the Head of Internal Audit Opinion & Report for 2023-24 be noted.
RESOLVED That the approach to audit planning and delivery as outlined in the report be supported; and the Internal Audit Work Plan for Quarter 1 for 2024-25 be approved.
RESOLVED That the updated Local Code of Governance be endorsed prior to it being presented to Cabinet for approval.
RESOLVED That the update provided on Business Risk Management and the contents of the Corporate Risk Register be noted.
RESOLVED That the process and timescale for compilation and approval of the Annual Governance Statement 2023-24 be approved; and the timescale for compilation and approval of the Statement of Accounts 2023-24 be noted.
RESOLVED That the public be excluded from the meeting for consideration of Appendix 2 in accordance with Section 100A(4) of the Local Government Act 1972 as it involves the likely disclosure of exempt information as defined in Paragraphs 16 of Part 4 of Schedule 12A to the Act. The webcast was then paused and the Committee considered the exempt document and asked points of clarification on the status of the document. The Committee then resumed in open session and the webcast was restarted. The Motion to adjourn the debate was put to the vote by way of a roll call and carried. The votes were recorded as follows: For the Motion: Councillors Steve Alderman, Michael James, Michael Stoddart, Aled Thomas, Jacob Williams, Joshua Beynon; and Dr Norma Barry, John Evans and Martin Veale [9] There were no votes against or abstentions. RESOLVED That the debate be adjourned to an extraordinary meeting of the Governance and Audit Committee to take place following a seminar for all Members of this Committee to review and consider the historical background and circumstances of the Commercial Property Grants Scheme in Pembroke and Pembroke Dock.
RESOLVED That the report of Audit Wales and the organisational response form, attached as Appendix A to the report, be noted.
RESOLVED That the national report of Audit Wales be noted; and a more detailed response to its recommendations be considered at a future meeting.
RESOLVED (a) That dates of the Governance and Audit Committee meetings up until the end of 2024 be noted. (b) That the forward work programme for the remainder of the 2024 calendar year be approved.
RESOLVED That the updated Financial Procedure Rules, which will be reported to the next available Council meeting for noting, be approved.
There were no declarations of interest made at this point in the meeting.
The Committee considered the Minutes of the meeting held on 29 January 2024. Mr Martin Veale pointed out that himself and Dr Norma Barry had not been listed as in attendance. Moved by Mr. John Evans; Seconded by Dr Norma Barry The vote, undertaken by way of a show of hands, was carried. RESOLVED That the Minutes of the Meeting held on 29 January 2024 be approved as a correct record, subject to including Mr Martin Veale and Dr Norma Barry as being in attendance.
Decision as recorded
RESOLVED (a) That the update in respect of actions arising from the last meeting and recent Committee referrals be noted. (b) That the Director of Resources be required to present a report to the next meeting explaining financial impact of the delays in the letters sent on the calculation of rent setting levels for 2023-24.
The Head of Democratic Services introduced her report that provided an update on the status of action points from the previous meeting for information. With reference to the Action listed against Minute 41, Councillor Michael Stoddart pointed out that his understanding was that the action sought had been in respect of further information on the impact of the delays in the letters sent on future rent setting policy. In that regard, the Chair confirmed that a report would be presented to the next meeting to give an explanation on how the calculation is arrived at in order to give assurance that the Council’s position is safeguarded by it. This was agreed. Moved by Dr Norma Barry; Seconded by Councillor Michael James The vote, undertaken by way of a show of hands, was carried. RESOLVED (a) That the update in respect of actions arising from the last meeting and recent Committee referrals be noted. (b) That the Director of Resources be required to present a report to the next meeting explaining financial impact of the delays in the letters sent on the calculation of rent setting levels for 2023-24.
Decision as recorded
RESOLVED (a) That the assurance provided in response to the concerns raised by the Chair of the Governance and Audit Committee in respect of the resolutions and outcomes of the Council meeting on 7 March 2024 in respect of the Pembrokeshire County Council Budget 2024-25 and Medium Term Financial Plan (MTFP) 2024-25 to 2027-28 be noted. (b) That a recommendation be made to the Constitutional Review Committee that a review of the budget setting procedures is undertaken which should conclude in time to either confirm the current procedures or recommend amendment of the current procedures. (c) That the Constitutional Review Committee be asked to review the means by which the Constitution can be suspended.
The Committee considered a joint report by the Chief Executive, Director of Resources and Head of Law and Governance which provided an assurance in response to concerns raised by the Chair in respect of the resolutions and outcomes of the Council meeting on 7 March 2024 in setting the Council Budget for 2024-25 and the Medium Term Financial Plan 2024-25 to 2027-28. The Chief Executive introduced the report and highlighted that the report had been requested to address three questions in relation to the budget, namely on whether the additional use of £1.5m Reserves was compliant with Sections 25 and 26 of the Local Government Act 2003; whether the short notice Alternative Budget was deemed robust and financially sustainable by the Section 151 Officer; and whether the additional efficiency improvements of £1m could be delivered through an appropriate management control and monitoring programme. The Chief Executive drew the Committee’s attention to the Section 151 Officer’s statutory annual assurance opinion which was set out in the report to Council on 7 March 2024 and he stated that the statement covered the use of Reserves and furthermore that this was reproduced in the report provided to the Committee along with the verbal report on the Alternative Budget. With regard to the robustness and financial sustainability of the Alternative Budget, it was noted that this was addressed in the report for the Committee and in the Appendix to the report contained the Section 151 Officer’s opinion on the Alternative Budget which was provided to Council. He further clarified that both statements were provided in the Committee’s report and were definitive that the amended budget did provide a balanced budget and was robust. In respect of the third question, the Chief Executive advised that he had highlighted the challenges to Council in delivering those savings which would be delivered through a combination of the Voluntary Severance Scheme and through the operating model review. He stated that he was confident the savings could be found but could not be definitive as to the impact on service delivery across the Authority. Furthermore, he advised that he would report to this Committee and to Cabinet on the implementation of those additional savings via quarterly budget monitoring reports alongside the implementation of the other £12.5m savings accepted by Council. In summary, the Chief Executive stated that the report before Members gave sufficient assurance to the Committee on the three areas requested and concluded by stating that further consideration should be given to the whole budget setting process through the Constitutional Review Committee as the appropriate body to undertake such a review. In the absence of any questions on the report, the Committee considered the Recommendations as set out in the report. Dr Norma Barry Moved Recommendation (a); Seconded by Councillor Nicola Gwynn The vote, undertaken by way of a show of hands was carried. On a point of clarification from Councillor Jacob Williams on giving Members the opportunity to make representations, the Chair advised that this would be afforded to Members in the next item of business. Councillor Michael Stoddart Moved Recommendation (b); Seconded by Councillor Michael James. Councillor Stoddart then advised that he wished to amend his Motion to the effect that the Constitutional Review Committee be asked to review the procedures for suspending the Constitution at Council meetings given recent events. He suggested that his preference would be a super majority of two-thirds of Members rather than a simple majority of one-third. The Chair sought clarification from the Head of Law and Governance on whether it was within the remit of the Committee to make such a request. In response, the Head of Law and Governance advised that with the consent of the Seconder of the original Motion, Councillor Stoddart could add the amended wording to his Motion; and furthermore, it was appropriate for the Committee to ask the Constitutional Review Committee to look at that aspect. Councillor Michael James confirmed he was content with the amended wording. Councillor Nicola Gwynn sought clarification on the purpose of reviewing the suspension of the Constitution given that the majority of Members had found it acceptable on the meeting of 7 March 2024. In response, Councillor Michael Stoddart pointed out that a ruling group with a large majority could suspend the Constitution at any time and this was a concern as he considered it a governance issue. Councillor Aled Thomas requested that the words ‘at Council meetings’ be removed as the Constitution could be suspended at Committee meetings too. Councillors Stoddart and James accepted the change. The vote on the Substantive Motion, undertaken by way of a roll-call, was carried. The votes were recorded as follows: For the Motion: Councillors Steve Alderman, Michael James, Michael Stoddart, Aled Thomas, Jacob Williams, Nicola Gwynn; and Dr Norma Barry, John Evans and Martin Veale [9] There were no votes against or abstentions. RESOLVED (a) That the assurance provided in response to the concerns raised by the Chair of the Governance and Audit Committee in respect of the resolutions and outcomes of the Council meeting on 7 March 2024 in respect of the Pembrokeshire County Council Budget 2024-25 and Medium Term Financial Plan (MTFP) 2024-25 to 2027-28 be noted. (b) That a recommendation be made to the Constitutional Review Committee that a review of the budget setting procedures is undertaken which should conclude in time to either confirm the current procedures or recommend amendment of the current procedures. (c) That the Constitutional Review Committee be asked to review the means by which the Constitution can be suspended.
Decision as recorded
RESOLVED (a) That the concerns raised by Councillor Murphy and the assurance provided in response to those concerns be noted. (b) That it be noted that there were no procedural failures in the Council’s 2024-25 budget setting process. [Councillors Aled Thomas and Michael Stoddart wished that their vote against the above Decision be recorded.]
The Committee considered a joint report by the Chief Executive, Director of Resources and Head of Law and Governance on assurances in relation to concerns raised by Councillor Huw Murphy in respect of the budget setting process for the Council’s 2024-25 budget. The Chief Executive presented the detailed report stating that Councillor Huw Murphy had raised a number of concerns to the Chair of the Governance and Audit Committee regarding the Council’s budget setting process and the Budget set by Council on the 7 March 2024 and the Chair of the Committee had requested the Chief Executive to review those concerns. It was noted that the concerns had been brought to the attention of Audit Wales and that the Financial Audit Director, Mr Anthony Veale was in attendance for this item of business. The Chief Executive advised that the report provided assurance that there were no procedural failings in the Budget setting process and the specific concerns highlighted by Councillor Murphy were detailed in Appendix 1. In summary, he stated that the substantive concerns were firstly, that the legal budget setting concerns were not adhered to; secondly, that the alternative budget proposed may not have been presented in sufficient time for Officers to analyse and assess the impacts on service delivery and whether it could be deemed a balanced budget; and, thirdly, whether the level of reserves proposed were appropriate. In responding to the points raised, the Chief Executive referred to the legal duty to set a balanced budget under Section 30 (6) of the Local Government Finance Act 1992 and Section 16 of the Constitution. In January and February, he pointed out that it had become apparent that Members may well not agree one of the budget proposals being put forward by Cabinet and concerns were being raised that no alternative proposals were being promoted. On the 1 February 2024, he advised that the Section 151 Officer and the Monitoring Officer had written to Members to remind them of their legal duty and giving an extension to the deadline for submitting an alternative budget to 14 February so Members were aware of Cabinet’s proposals to Council and advising that no alternative budget would be accepted after that date. However, no alternative budget came forward. Legal advice was then sought from Counsel on 28 February to explore options and that advice stated that in exceptional circumstances, Council could suspend its budget setting procedures, Section 16.3.5 of the Constitution, in order to consider and set an alternative budget; and a follow up email was sent to all Members on 1 March to make that clear. The advice was set out in Appendix 2. The Chief Executive stated that Councillor Paul Miller had sought to move the suspension of Section 16.3.5 in order to present an alternative budget and Council overwhelmingly supported the suspension and Council had the opportunity to debate and vote on any proposed alternative budgets. On that basis, the Chief Executive stated that the procedures advised by the Statutory Officers were legal and appropriate in order to allow Council to set a balanced budget by the 11 March. With regard to the second question, the Chief Executive advised that the alternative budget put forward involved some quite small changes to the overall budget and amounted to approximately 1% of the revenue budget. He advised that Officers had costed up the alternative budget on the 6 March following the request by Councillor Miller received on the 5 March. On that basis, he advised that he was confident there was sufficient time for Officers to properly judge the alternative budget and for the S151 Officer to form a conclusion and accurate opinion on the robustness and balanced nature of the budget as detailed in the report. On the third question, the Chief Executive advised that the matter had been dealt with in the previous item and was detailed in the report. In summary, he stated that he believed the report gave sufficient assurance to the Committee on the concerns raised and that there was no evidence of procedural failings in the budget setting process and that he considered there was substantial evidence that the procedures had been adhered to. The Chair then invited Councillor Huw Murphy to speak on the report. Councillor Murphy stated that he had made his views on the dissatisfaction of the budget setting process this year. He queried how much the Counsel’s advice had been. He also questioned why, if it was known in January and February that the proposals would fail, Cabinet continued to pursue recommendations of 16, 19 and 21% until the 6 March causing undue concern for residents. Councillor Murphy expressed his continued concern over leisure service cuts and revenue income pointing out that Cabinet on the 12 February agreed an increase in leisure service fees by 4% above inflation and questioned the ability to achieve those savings without being provided with the figures. Councillor Murphy made reference to the Minutes of the Cabinet meeting of the 12 February 2024 being published incorrectly in terms of the level of Council Tax for the Medium Term Financial Plan 2024-2028 for nine days and he considered that due process had not been complied with in terms of resetting the call-in period for the republished Minutes. In response, the Chief Executive replied that Cabinet had not made a decision on that particular sub-recommendation and the level of 16.3% had been a subsequent error; and once the error had been brought to the Officer’s attention the Notice of the Decision had been corrected and republished. As Cabinet was making a recommendation to Council rather than a decision he did not consider there was any purpose to reset the call-in period. Councillor Murphy accepted the explanation that it was an unfortunate error. The Committee debated the contents of the report and the key points were highlighted as follows: Councillor Michael Stoddart stated that he had been uncomfortable with the way the budget process had been handled and considered he had been intimidated into supporting a 16% Council Tax increase. He pointed out that the Medium Term Financial Plan for forthcoming years was not part of this year’s budget. In terms of the Constitution, he stated that it was a legal document that Council is bound to follow and not treated lightly. Councillor Stoddart stated that the legal opinion should be made available. He then referred to the email Members received on the 1 February explaining the restrictions on changing the budget and that he did not support what Cabinet had done when they knew their budget would not be supported. Councillor Aled Thomas stated that whilst there had been no illegalities, he expressed concern over the way the budget had been set with many seminars held on the various options and then at the last minute an alternative budget was proposed using £1.5m of reserves and £1m of efficiency improvements. He considered Members had been misled by Cabinet and/or Officers as the advice had been that using reserves was not possible. He further stated that he hoped the review undertaken would provide more clarity going forward. On the point of Members being misled, the Head of Law and Governance responded that if there was any suggestion of this it was unintentional and that the advice given had been on the law and the confines of the Constitution at that point. When it had become apparent that the rules could be suspended, she advised that all Members were notified. In regard to the request for sight of the Counsel’s opinion, the Chief Executive advised that the advice was oral and had been sought to clarify a number of points relating to the budget setting rules which he had outlined to Members. Following a request of Council Stoddart, the Head of Law and Governance undertook to provide a copy of the Notes of the meeting with Counsel to all Members of the Committee. Councillor Jacob Williams pointed out that the second email had been predicated on the possibility of the Administration’s budget being voted down and Council being in limbo as a consequence and that this had not been the case. The meeting was advised that Councillor Paul Miller wished to address the Committee. The Chair advised that he was not in support of the request on the basis that Councillor Miller had not given prior notice of his wishes; but if it was the wish of the Committee to do so he stated he would be happy to invite Councillor Miller to address the meeting. Councillor Jacob Williams Moved that Councillor Paul Miller be invited to address the Committee; Seconded by Councillor Nicola Gwynn. The vote, undertaken by way of a show of hands, was carried. Councillor Miller addressed the meeting to explain the role he played in the budget and to respond to points made. He stated that in terms of the budget setting process there were difficult and competing priorities to consider each year; that budget discussions were always extensive and this year they were particularly challenging in terms of the level of proposed Council Tax increase. He referred to the political make-up of the Council being finely balanced but refuted it was a given that the Council Tax proposals would fail as this was not proven. With regard to leisure services, he pointed out that the financial performance was already ahead of anticipated performance. In response to comments made on Members being intimidated around the budget vote, Councillor Miller pointed out that all Members were consulted on the budget proposals. He stated that in his view the rules were followed in terms of suspending the Constitution and disputed the point made that they were ‘trashed’ and he stated that he would support a review of this in the future. In summary, he stated that the rules were followed absolutely and they allowed the Council to set a robust and balanced budget as required. Councillor Jacob Williams questioned what had been achieved by the discussion given that two Members had voted against allowing Councillor Miller to address the meeting and enable proper scrutiny. Those Members provided their reasons for not supporting the address from Councillor Miller on the basis that the proper procedures were not followed. Mr Martin Veale considered that there had been a healthy discussion on the matter and pointed out that the position faced by the Authority in its budget setting process was probably the same for others. He queried whether Audit Wales could do a piece of work on how the rules worked in other Welsh Authorities to identify any best practice. In response, the Auditor confirmed that correspondence had been received from Councillor Huw Murphy and was being given due consideration. He stated that Audit Wales would be interested in how the reviews now planned would develop and that they would keep a watching brief on developments. Moved by Councillor Steve Alderman; Seconded by Mr Martin Veale The vote, undertaken by way of a show of hands, was carried. RESOLVED (a) That the concerns raised by Councillor Murphy and the assurance provided in response to those concerns be noted. (b) That it be noted that there were no procedural failures in the Council’s 2024-25 budget setting process. [Councillors Aled Thomas and Michael Stoddart wished that their vote against the above Decision be recorded.]
The Committee agreed to vary the order of business as follows to allow Mr Anthony Veale of Audit Wales to leave the meeting early for another appointment he had to attend.
Decision as recorded
RESOLVED That the response to Audit Wales, as set out in the report, be approved
The Director of Resources introduced his report advising that in accordance with the requirements set out in the International Standards on Auditing, Audit Wales was required to conduct an annual financial audit on a number of the governance areas that impact on their audit of the Authority’s financial statements. The Committee was asked to consider the detailed response appended to the report and determine if any amendments were required. No comments were raised on the report. Moved by Councillor Michael Stoddart; Seconded by Dr Norma Barry The vote, undertaken by way of a show of hands, was carried. RESOLVED That the response to Audit Wales, as set out in the report, be approved
Decision as recorded
RESOLVED (a) That the Statement of Accounts for 2022-23 and the Tenby & Lower Fishguard Harbour’s Authority Annual Return for 2022-23 be approved; and the Audit Wales Audit of Accounts Report and Audit Opinion (ISA 260) be noted. (b) That the Vice Chair of the Governance and Audit Committee apprises Council, at its meeting on 9 May 2024 that no concerns were raised by the Governance and Audit Committee.
The Director of Resources introduced his report on the Statement of Accounts for the period 2022-23 which also included the Tenby and Lower Fishguard Harbours’ Authority accounts which had been published on 21 December 2023 and stated that it was aimed to have them audited and approved by Council on 9 May 2024. He explained that the deadlines required for the auditing of the accounts had been extended and, due to the issues highlighted in the report, the Authority had been unable to comply with the 31 December 2023 deadline. The Committee was advised that this impacted upon Audit Wales’s ability to commence and complete the 2022-23 audits in line with previous timetables, notification being received that the audit of Pembrokeshire’s accounts would commence in December 2023. The Director advised that the Accounts and Audit (Wales) Regulations 2014 included a provision 10 (4) whereby if the Responsible Financial Officer does not certify the draft accounts or the accounts are not published by the aforementioned deadlines, there is a requirement to publish a statement setting out the reasons for non-compliance. In accordance with these requirements, he advised appropriate notices had been published on the Council’s website. The Director advised that the Statement of Accounts for 2022-23 and the Tenby and Lower Fishguard Harbours’ Authority Annual return for 2022-23 had been completed and Audit Wales had issued their Audit of Accounts Report and Audit Opinion which was set out in Appendix C to the report. The Director further advised that there was an anomaly in the Constitution in respect of the Statement of Accounts with the Council and the Governance and Audit Committee both having the authority to approve the Statement of Accounts and he pointed out that this would be rectified for future years. In response to a query from Mr Martin Veale on whether the Director was confident that the delays that occurred in signing off the 2022-23 Accounts would not be repeated, the Director stated that he had held a number of meetings with Audit Wales to address the issues and a lessons learned session had been held. He gave an assurance that the matter was being addressed and changes were being made but pointed out that it would be challenging as there were less staff involved in the process. The Chair sought clarification of the counter measures put in place to deal with Council Tax and Rent arrears and improved collection rates. The Director responded that there had been positive moves in 2023-24 to recover Council Tax debts which should see a decrease in arrears. In terms of rent arrears, he advised that this had been challenging with figures increasing and stated that additional Officers had been recruited to speak to tenants to ensure they were claiming benefits and payment plans had been put in place to address the arrears which should see a reduction in arrears in future years. Dr Norma Barry queried how confident the Director was that the cost of additional staff would be covered by the increased income. In response, the Director stated that the additional posts were part of an invest to save initiative and the posts would be monitored to ensure they were cost effective and their costs were recovered. The Chair invited Mr Anthony Veale, Audit Wales to present his Audit of Accounts report (ISA 260). Mr Veale stated that Audit Wales intended to issue an unqualified audit opinion on the Accounts. He then drew the Committee’s attention to the main issues as set out in pages 4-5 of his report. Mr Veale stated that the Director and his Team had agreed the report and he pointed out that the confirmed level of materiality used was £5.4m as the level of tolerance allowed. He stated that there were two outstanding issues at the time of drafting the report but confirmed that those issues had now been completed and as such there were no implications or consequences that needed to be brought to the Committee’s attention. Mr Veale stated that Audit Wales would need a letter of representation following Full Council to confirm aspects of the audit work. In terms of the Audit Opinion, he advised that there were no uncorrected misstatements and that although there were a number of amendments none of them impacted on the General Reserves Fund. He referred to the delays in the audit process due to not receiving working papers but pointed out that the themes were similar to the previous year and that Audit Wales would be engaging further with Officers on the process for next year. In summary, Mr Veale stated that there were a number of recommendations in Appendix 4 of his report around the accounts, working papers and some missing documents and that the recommendations had been agreed by the Management Team. The Committee debated the contents of the report and the key points were highlighted as follows: With reference to the recommendations made by Audit Wales, Mr Martin Veale queried what assurances the Committee would have that those issues were being actioned; whether an Action Plan was being developed to avoid a repeat of last year; and suggested that the Committee received regular updates. In response, the Director stated that all recommendations would be added to the Action Plan going forward and discussed at the lessons learnt session. The Chair supported the point made by Mr Veale. He then made reference to the quality of the working papers and agreed that there needed to be a request formulated to fix the issues raised. He also referred to the known issues regarding staff and the need to find a solution, possibly by thinking outside the box, to ensure papers were prepared by the due time. In response, the Director advised that a checking mechanism had been introduced for working papers whereby every paper was double or triple checked, including external queries. He further stated that a lot of work had been done on VAT claims; procurement card training had been undertaken; and purchase cards had been removed from non-compliant card holders. For clarification, he stated that in terms of the Pay Policy, there was a misstatement which had been a typographical error in the Pay Policy. Mr Anthony Veale confirmed that the adjustment had been a classification movement from one budget head to another. The Chair referred to the issue of completeness of exit packages and suggested this be added to the action plan. Clarification was sought by the Chair in the errors in the costs of contractors as set out in page 164 where over £2m adjustments had been made for contract labour. The Chair queried how many full-time posts this amount would equate to. In response the Director advised that he would look into this calculation. Moved by Mr Martin Veale; Seconded by Councillor Michael James The vote, undertaken by way of a show of hands, was carried. RESOLVED (a) That the Statement of Accounts for 2022-23 and the Tenby & Lower Fishguard Harbour’s Authority Annual Return for 2022-23 be approved; and the Audit Wales Audit of Accounts Report and Audit Opinion (ISA 260) be noted. (b) That the Vice Chair of the Governance and Audit Committee apprises Council, at its meeting on 9 May 2024 that no concerns were raised by the Governance and Audit Committee.
Decision as recorded
RESOLVED That the report of the Head of Internal Audit Opinion & Report for 2023-24 be noted.
The Audit, Risk and Counter Fraud Manager presented his annual report on his audit opinion, a summary of the work that supports the opinion and a statement of conformance with the Public Sector Audit Standards and the results of the Quality Assurance and Improvement Programme. He stated that his overall opinion was that the Authority has a reasonable framework of governance, internal control, risk and financial managements in place. He explained that Internal Audit worked on a sample basis of testing transactions and that a new internal audit system had enabled an increase in the amount of fieldwork able to be undertaken to provide a better assurance of every audit undertaken. The Audit, Risk and Counter Fraud Manager advised that it was a requirement for him to undertake a self-assessment against the standards that the Authority needed to conform to and that he was satisfied that there was evidence of compliance with those standards and that the quality assurance improvement programme was in operation to drive continuing improvement in the service. In considering the report, the following key points were made: Mr Martin Veale welcomed the quality of the reports and considered that 73 audits completed in the year was very positive and he queried when the remaining seven would be completed and reported. The Audit, Risk and Counter Fraud Manager responded that the reports were already in draft and would be rolled forward so that the Committee could have oversight of the assurance rating given. Dr Norma Barry also praised the excellent report. She expressed concern that there were 66 recommendations that were either very high or high risk with moderate assurances and she stated that efforts should be focussed on areas where the Authority was spending the most money such as building safety, children’s safeguarding contract management and social services as those were the areas of risk where the Authority could lose the most money. In response, the Audit, Risk and Counter Fraud Manager stated a number of areas have been included within the 2024-25 plan and are to be reviewed quarterly, with the findings being reported to the Committee within the Internal Audit update report. The Chair drew attention to the 21 assurance ratings of moderate which related to headquarter type functions which he considered required more focus to improve their ratings. Moved by Councillor Steve Alderman; Seconded by Dr Norma Barry The vote, undertaken by way of a show of hands, was carried. RESOLVED That the report of the Head of Internal Audit Opinion & Report for 2023-24 be noted.
Decision as recorded
RESOLVED That the approach to audit planning and delivery as outlined in the report be supported; and the Internal Audit Work Plan for Quarter 1 for 2024-25 be approved.
The Audit, Risk and Counter Fraud Manager presented the Strategic Internal Audit Plan for 2024-25 which outlined the role of Internal Audit and the approach to audit planning. He stated that the concerns previously raised by Members on the percentage of moderate and unreasonable reports was picked up when undertaking horizon scanning and confirmed that it was vital to remain flexible and responsive to risks. The Audit, Risk and Counter Fraud Manager reported that he had met with the Chief Executive and Directors to review the risks on the Internal Audit Plan to determine the risks going forward for the Authority. He advised that it was a requirement of the Public Sector Internal Audit Standards to develop a risk based Audit Plan and determine the priorities for Internal Audit. He pointed out that the resources within the Team afforded him around a 1000 days to deliver audit reviews and that the Plan was an ambitious one which he considered necessary in an ever changing Local Authority environment to ensure sufficient controls were in place. It was noted that quarterly reports would be brought to the Committee on audit work as part of the rolling Internal Audit programme. The Committee debated the contents of the report and the key points were highlighted as follows: Mr Martin Veale praised the report and sought clarification on the number of risks that had not made the long list and how they would be monitored. In response the Audit, Risk and Counter Fraud Manager confirmed that 20 reviews were omitted from the ‘long list’ due to time constraints but stated that they would remain on the horizon scanning and pointed out that reviews would change depending on the seriousness of their risk. It was noted that the document remained live and would be adjusted accordingly and would be submitted to the Committee for review. The Chair pointed out that there were a number of audits on the long list and three areas that he considered needed to be brought back to the Committee, namely the budget savings for 2024 -25 and beyond; asset management and asset valuations and the Property Service Review. He requested that a progress report on those three areas be brought to the next Committee. The Audit, Risk and Counter Fraud Manager confirmed that he would send an email to Members updating them on progress and any issues raised. Moved by Dr Norma Barry; Seconded by Councillor Steve Alderman The vote, undertaken by way of a roll call, was carried. The votes were recorded as follows: For the Motion: Councillors Steve Alderman, Michael James, Michael Stoddart, Aled Thomas, Jacob Williams, Joshua Beynon; and Dr Norma Barry, John Evans and Martin Veale [9] There were no votes against or abstentions. RESOLVED That the approach to audit planning and delivery as outlined in the report be supported; and the Internal Audit Work Plan for Quarter 1 for 2024-25 be approved.
Decision as recorded
RESOLVED That the updated Local Code of Governance be endorsed prior to it being presented to Cabinet for approval.
The Director of Resources presented his report advising that the Authority was required to develop and maintain an up to date Local Code of Governance which referred to the governance structure in place. He advised that the Code was last approved in June 2017 by Cabinet; and the Code had recently been reviewed by the Senior Leadership Team. The Director explained that as part of the annual review of the Governance Process, an independent assessment of the compliance with the Code would be undertaken by the Audit Risk and Information Service and this would rely on work undertaken in year by Internal Audit, Audit Wales and other regulatory bodies. The extended Leadership Team would be required to complete a self-assessment of the governance arrangements within their areas of responsibility, he added. The Director advised that those assessments, along with the Head of Internal Audit Annual Assurance Statement would inform the Annual Governance Statement and any areas that required further improvement would be considered for inclusion as a significant governance issue or a priority for improvement. It was noted that the Code would be considered by Cabinet at its next meeting and any comments made by the Committee would be reported orally to Cabinet. The Committee debated the contents of the report and the key points were highlighted as follows: In welcoming the high standard of the document, Dr Norma Barry suggested a minor amendment in relation to E7 by requesting that role of the political Leader be specified therein. The Director responded to confirm that could be added. Mr Martin Veale queried what the changes were in the document since being updated; and in response the Director responded that the Core and Sub-Principles were essentially the same and that the changes were identified in the third column of the table on ‘What support is in place to support this?’ to provide more detail. The Chair referred to the Members Guide to Key Personnel that he had received which he found to be very helpful and requested that copies be provided to the other Lay Members. This was agreed. Moved by Councillor Steve Alderman; Seconded by Councillor Michael James The vote, undertaken by way of a roll call, was carried. The votes were recorded as follows: For the Motion: Councillors Steve Alderman, Michael James, Michael Stoddart, Aled Thomas, Jacob Williams, Joshua Beynon; and Dr Norma Barry, John Evans and Martin Veale [9] There were no votes against or abstentions. RESOLVED That the updated Local Code of Governance be endorsed prior to it being presented to Cabinet for approval.
Decision as recorded
RESOLVED That the update provided on Business Risk Management and the contents of the Corporate Risk Register be noted.
The Audit, Risk and Counter Fraud Manager presented his report on the Council’s risk management position for Quarter 1 as at the end of December 2023. He advised that the Corporate Risk Register was a live document subject to review by the Senior Leadership Team and a quarterly review by the Corporate Risk Management Group, this Committee and Cabinet; with current and emerging risks kept under constant consideration. It was noted that the Corporate Risk Management Group had met on 25 March 2024 to consider the Register and review the risk control measures and target completion dates. The Audit, Risk and Counter Fraud Manager advised that a number of new risks had been raised for consideration and he had been tasked with bringing further information on those by the end of June to report to the Group’s July meeting. The Committee debated the contents of the report and the key points were highlighted as follows: Mr Martin Veale welcomed the format of the report which was an easy to read paper and he referred to three key risks which were rated as the highest category (16) in the matrix and questioned what mitigation was in place to manage those issues. In response, the Audit, Risk and Counter Fraud Manager stated that the issues regarding children’s services were here and now and Members were familiar with the financial risks facing the Authority. In terms of mitigation, he stated that there was an array of performance indicators available and that the Corporate Risk Register, performance indicators and financial monitoring report was considered monthly by the Senior Leadership Team to give an understanding of the corporate story and whether risk controls were working and if they were not then what remedial action could be put in place to address them, and he stated that those reports would be presented to Cabinet more regularly to give an oversight of the corporate risks. Councillor Steve Alderman requested an update on the Council housing decarbonisation programme, performance of voids and the issue of phosphates on the new building programme. The Head of Housing responded by outlining the modest achievements that had been made in the decarbonisation programme via testing properties that have had a full retrofit to see how the measures have worked. She advised that as part of the Welsh Quality Housing Standards 2023 a whole stock assessment would need to be undertaken by the end of the year together with an Affordable Warmth Plan. Discussions were taking place with a number of companies to undertake that significant amount of work she added. The Head of Housing further stated that Officers were also estimating and integrating that work into the Housing Revenue Account Business Plan to demonstrate whether the Authority could afford this and how the Authority planned to put it into the 30 year plan. She stated that this work had started based on the estimate of £20,000 per property. The plan had been submitted to Welsh Government but no response had been received to date. She pointed out that the Authority would have to plan how this decarbonisation work fitted with the new housing development programme and pointed out that this would be tested and adjusted year on year. In terms of voids, the Head of Housing advised that there were a number of long term voids which had not progressed as quickly as she would have liked and that a recruitment exercise was underway to get more staff in place to address the issue. It was noted that good progress had been made in surveying those properties and schedules of work were in place to make progress. She advised that a performance management element was being reintroduced to ensure visibility in terms of managing those voids. Finally, in terms of phosphates, the Head of Housing advised that the Authority was fortunate that its housing development programmes were not being impacted by phosphates; however, there was one development in the social housing grant programme which was impacted but there was confidence that the issue will be overcome. Councillor Michael James queried the position regarding school delegated budgets and the associated risks. In response, the Director of Resources stated that schools were autonomous bodies and pointed out that over the years reserve balances in schools had been dropping and in future years may show a negative balance where the Authority may be required to prop up those schools. He further stated that there were powers available for him, in consultation with the Director for Education, to put in place measures to assist schools in the short term; but in the long run, he stated that the Authority did not have the staff to run school budgets and there would need to be cuts in schools to ensure they have a balanced budget as the Authority could not afford to fund school deficits. In terms of monitoring this issue, the Director confirmed that a Review Officer had been appointed to assist schools with their Medium Term Financial Planning and they would identify areas of risk for schools and assist with solutions. In terms of the risk and impact of coastal erosion under consideration queried by Councillor Michael James, the Audit, Risk and Counter Fraud Manager explained that work would be undertaken with the Head of Infrastructure and Environmental Services to look at this, including looking at work being done by other bodies so that the Authority could replicate or put in place a joined-up approach to help mitigate the risk. The Chair offered the view that decarbonisation and coastal erosion projects and costs should be a matter for Welsh Government rather than placing pressure on the finances of struggling local Authorities. No referrals were made to Overview and Scrutiny Committees. Moved by Councillor Michael James; Seconded by Dr Norma Barry The vote, undertaken by way of a show of hands, was carried. RESOLVED That the update provided on Business Risk Management and the contents of the Corporate Risk Register be noted.
Decision as recorded
RESOLVED That the process and timescale for compilation and approval of the Annual Governance Statement 2023-24 be approved; and the timescale for compilation and approval of the Statement of Accounts 2023-24 be noted.
The Audit, Risk and Counter Fraud Manager presented the report advising that the Annual Governance Statement must be prepared and made available in line with the publication of the draft Statement of Accounts by 30 June 2024. He advised that the annual process and timescales for compiling the Annual Governance Statement was set out in Appendix A to the report. Although the deadline was later than that for the Statement of Accounts, he confirmed that this later deadline had been agreed by Audit Wales and that he would be submitting the Statement to the July meeting of the Committee. The Audit, Risk and Counter Fraud Manager stated that the draft Statement of Accounts for 2023-24 would be subject to public inspection and external audit before being presented to the Governance and Audit Committee for consideration and approval in the October meeting (unless referred to full Council) subject to Audit Wales being able to complete their audit in that timescale. Moved by Councillor Joshua Beynon; Seconded by Mr Martin Veale The vote, undertaken by way of a roll call, was carried. The votes were recorded as follows: For the Motion: Councillors Steve Alderman, Michael James, Michael Stoddart, Aled Thomas, Jacob Williams, Joshua Beynon; and Dr Norma Barry, John Evans and Martin Veale [9] There were no votes against or abstentions. RESOLVED That the process and timescale for compilation and approval of the Annual Governance Statement 2023-24 be approved; and the timescale for compilation and approval of the Statement of Accounts 2023-24 be noted.
Decision as recorded
RESOLVED That the public be excluded from the meeting for consideration of Appendix 2 in accordance with Section 100A(4) of the Local Government Act 1972 as it involves the likely disclosure of exempt information as defined in Paragraphs 16 of Part 4 of Schedule 12A to the Act. The webcast was then paused and the Committee considered the exempt document and asked points of clarification on the status of the document. The Committee then resumed in open session and the webcast was restarted. The Motion to adjourn the debate was put to the vote by way of a roll call and carried. The votes were recorded as follows: For the Motion: Councillors Steve Alderman, Michael James, Michael Stoddart, Aled Thomas, Jacob Williams, Joshua Beynon; and Dr Norma Barry, John Evans and Martin Veale [9] There were no votes against or abstentions. RESOLVED That the debate be adjourned to an extraordinary meeting of the Governance and Audit Committee to take place following a seminar for all Members of this Committee to review and consider the historical background and circumstances of the Commercial Property Grants Scheme in Pembroke and Pembroke Dock.
The Head of Law and Governance presented her report outlining the recommendations made by Council on 7 March 2024 which had been referred to the Committee for consideration in respect of the allegations of fraud surrounding the Commercial Properties Grant Scheme. The Chair advised that in order for the Committee to make an informed decision on this matter he proposed that for the benefit of those Members who were not on the Authority in 2013-14 when the Committee first considered the matter, that the history of what happened be shared with all Members so they are fully aware of the position in 2013-14 compared to where the Authority is today with a completely different organisation. The Chair Moved that the debate be adjourned to an Extraordinary Meeting of the Governance and Audit Committee to take place following a seminar for all Members of the Committee to review and consider the historical background and circumstances of the Grants Scheme in Pembroke and Pembroke Dock; Seconded by Councillor Michael Stoddart. It was noted that the 8 May 2024 had been identified as a potential date for the meeting and seminar to be held. The meeting then considered excluding the public from the meeting to consider the exempt Appendix 2 relating to the legal opinion on the matter. It was Moved by Councillor Michael Stoddart that the public be excluded from the meeting; Seconded by Councillor Joshua Beynon The vote, undertaken by way of a roll call, was carried. The votes were recorded as follows: For the Motion: Councillors Steve Alderman, Michael James, Michael Stoddart, Joshua Beynon; and Dr Norma Barry, John Evans and Martin Veale [7] Against the Motion: Councillors Aled Thomas and Jacob Williams [2] There were no abstentions. RESOLVED That the public be excluded from the meeting for consideration of Appendix 2 in accordance with Section 100A(4) of the Local Government Act 1972 as it involves the likely disclosure of exempt information as defined in Paragraphs 16 of Part 4 of Schedule 12A to the Act. The webcast was then paused and the Committee considered the exempt document and asked points of clarification on the status of the document. The Committee then resumed in open session and the webcast was restarted. The Motion to adjourn the debate was put to the vote by way of a roll call and carried. The votes were recorded as follows: For the Motion: Councillors Steve Alderman, Michael James, Michael Stoddart, Aled Thomas, Jacob Williams, Joshua Beynon; and Dr Norma Barry, John Evans and Martin Veale [9] There were no votes against or abstentions. RESOLVED That the debate be adjourned to an extraordinary meeting of the Governance and Audit Committee to take place following a seminar for all Members of this Committee to review and consider the historical background and circumstances of the Commercial Property Grants Scheme in Pembroke and Pembroke Dock.
Decision as recorded
RESOLVED That the report of Audit Wales and the organisational response form, attached as Appendix A to the report, be noted.
Rachel Harries, Senior Performance Auditor at Audit Wales, presented the findings of the review that Audit Wales had undertaken on the Authority’s use of performance information. She advised that Audit Wales had reviewed the work of all 22 Welsh Councils and a national summary report would be published later in the year. In terms of the report before the Committee, Ms Harries advised that it was a local report which had been agreed by the Council and that the Council had been asked to complete an organisational response to the recommendations. The responses were considered appropriate and the timescales and responsibilities were set out in the report, she added. She pointed out that the report covered a very specific scope and related to a specific point in time but gave assurance of the Authority’s willingness to address the recommendations. Ms Harries highlighted the key point in the report which stated that performance information provided to senior leaders did not generally enable them to understand the perspective of service users and the outcomes of the Council’s activities. This restricted their ability to understand the impact of the Council’s activities. She advised that the recommendations for Pembrokeshire were similar to other Authorities. The Chair then invited Dan Shaw, Corporate Planning Manager,to report on what the Authority had been doing to address the recommendations. The Corporate Planning Manager advised that work had been undertaken on reviewing performance indicators by looking at a sample of them; and it was accepted that the Authority needed to keep an eye on this area which was being done by developing a number of new indicators with clearer definitions for the Corporate Scorecard to achieve better data quality and splitting the data into day to day and organisational indicator streams. The Committee debated the contents of the report and the key points were highlighted as follows: Noting that completion of the recommendations was required by May 2024, the Chair requested that a progress report be presented to the next meeting on how the recommendations have been implemented. In response, the Corporate Planning Manager stated that quarterly monitoring reports would be submitted to Cabinet on performance, finance and risk information and these would also be presented to the Committee. Dr Norma Barry welcomed a follow up report to the next meeting given that it was an important piece of work. She pointed out that it was difficult to judge whether the actions proposed met the concerns of Audit Wales and welcomed a robust debate at the next meeting. Moved by Mr Martin Veale; Seconded by Councillor Steve Alderman The vote, undertaken by way of a show of hands, was carried. RESOLVED That the report of Audit Wales and the organisational response form, attached as Appendix A to the report, be noted.
Decision as recorded
RESOLVED That the national report of Audit Wales be noted; and a more detailed response to its recommendations be considered at a future meeting.
[During consideration of this item, Councillor Michael Stoddart declared a personal interest by virtue of his wife owning a flat above a shop.] Ms Alison Lewis, Performance Audit Lead for Pembrokeshire introduced the national report which looked at issues across Wales and was not specific to Pembrokeshire. The review was undertaken between January and August 2023 and it was noted that Pembrokeshire was not one of the eight local authorities that took part in the detailed fieldwork for this study. Ms Lewis advised that the report made five recommendations, three of which were for Councils to action and two of which were for Welsh Government, as detailed in the report. Ms Lewis advised that the overall conclusion Audit Wales formed on the report was that despite notable amounts of brownfield developments being delivered by Councils, regeneration could be increased significantly with a more systematic interventionist and collaborative approach. By drawing on successful approaches elsewhere and more focused planning, Audit Wales found that Councils could be better equipped to overcome significant barriers. The Corporate Planning Managerthen reported on what the Authority intended to do in response. He stated that the report was one of interest to the Authority and thought needed to be given to how the Authority will consider the recommendations in the context of brownfield sites and under-used sites. He stated that the report required further consideration by Officers in Planning, Housing and Regeneration; and then a further report would be brought back to the Committee. The Chair referred to the importance of working in collaboration with neighbouring Authorities to make the most of resources and avoid duplication. Moved by Councillor Steve Alderman; Seconded by Dr Norma Barry The vote, undertaken by way of a show of hands, was carried. RESOLVED That the national report of Audit Wales be noted; and a more detailed response to its recommendations be considered at a future meeting.
Decision as recorded
RESOLVED (a) That dates of the Governance and Audit Committee meetings up until the end of 2024 be noted. (b) That the forward work programme for the remainder of the 2024 calendar year be approved.
The Audit, Risk and Counter Fraud Manager presented his report on the calendar of future meetings and the Committee’s Forward Work Programme which outlined the reports that would be brought to future ordinary meetings. Moved by Councillor Michael James; Seconded by Councillor Steve Alderman The vote, undertaken by way of a roll call, was carried. The votes were recorded as follows: For the Motion: Councillors Steve Alderman, Michael James, Michael Stoddart, Aled Thomas; and Dr Norma Barry, John Evans and Martin Veale [7] There were no votes against or abstentions. RESOLVED (a) That dates of the Governance and Audit Committee meetings up until the end of 2024 be noted. (b) That the forward work programme for the remainder of the 2024 calendar year be approved.
Decision as recorded
RESOLVED That the updated Financial Procedure Rules, which will be reported to the next available Council meeting for noting, be approved.
The Director of Resources introduced his report which outlined recent amendments to the Financial Procedure Rules for the Committee’s consideration. The Committee noted that all amendments had been discussed and agreed with the Senior Leadership Team and the proposed changes to the authorisation limits had received approval from the Leader, where appropriate. The Committee debated the contents of the report and the key points were highlighted as follows: The Committee noted that the changes to thresholds for the Individual Cabinet Member delegations was a matter for the Leader to authorise. Mr Martin Veale queried whether there had been a sense check with other Authorities in terms of authorisations for Budget Transfers/Virements (Section 3.4). In response, the Director stated that no comparison had been done but pointed out that the figures had been at those thresholds for years and that was the purpose of the increase. He stated that the sums were not big in comparison to the net expenditure budget and confirmed that there were not many big movements other than social care. Mr Veale pointed out that it would be useful to know how the Authority compared with others in this regard. The Chair considered that the increased thresholds were too high given the financial constraints the Authority found itself in. Councillor Aled Thomas agreed with the Chair’s view in terms of the uplift to the Chief Executive and Directors but considered the Cabinet Member threshold was acceptable given that the decision could be called-in for scrutiny. He then sought clarification on the rationale for the new thresholds. In response, the Director explained that the Director delegation levels were low in terms of applying for grant funding and they would only cover one member of staff which gave little autonomy to a Director to move staff around; hence the Chief Executive and Director threshold was also increased. The Chair enquired whether Audit Wales would do a piece of work on comparing levels of sign-off. Ms Alison Lewis advised that it was a matter for the Council to determine but suggested the Welsh Local Government Association might be able to assist. In regard to the change at 4.4.6 (Use of, Recording and Disposal of Assets), the Chair queried why the wording had been changed to weaken the provision on achieving a decent return. The Director explained that originally it related to all income producing properties and the change was made because it might be difficult to sell some properties with a premium or overage clause applied; and that the removal of the last part of the sentence allowed for a capital receipt to be put into the general fund. In regard to 3.4.2, capital budget cannot be transferred to a revenue budget, Councillor Aled Thomas sought clarification on this point. The Director confirmed that this was the case. The Cabinet Member for Corporate Finance referred to the discussion on virements (3.4) and explained that the key point of the Budget was to know where the money was being spent based on the best estimates of the individual Directorate and Council spend and virements were tracked. He explained that virements were appropriate for moving spending within a Directorate provided they did not exceed the overall budget. He further pointed out that these virements would be referred up and reported back to Cabinet; and any sign of inappropriate use, he gave assurance that the rules could be changed. The Chair drew attention to 4.9.6 (commercial activity) and suggested that the Chief Executive should be involved in the process. Finally, the Chair expressed the view that there was little merit in bringing the Cabinet threshold changes if they had already been signed off by the Leader. Moved by Councillor Steve Alderman; Seconded by Councillor Joshua Beynon The vote, undertaken by way of a roll call, was carried. The votes were recorded as follows: For the Motion: Councillors Steve Alderman, Michael Stoddart, Aled Thomas and Joshua Beynon [4] Against the Motion: John Evans [1] There were no abstentions. RESOLVED That the updated Financial Procedure Rules, which will be reported to the next available Council meeting for noting, be approved.
Councillors must say when they have a personal link to something being discussed, such as a job, a property or a family member. A prejudicial interest is one strong enough that the councillor usually leaves the room and takes no part.
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