Apologies for absence were received from Councillor Stef Bristow and Councillor Danny Brookes.

It was noted that in accordance with Regulation 13 of the Local Government (Committees and Political Groups) Regulations 1990, notice had been given that Councillor Robert Watson had been appointed to the Committee in place of Councillor Edward Mossop for this Meeting only.

At this point in the meeting, Members were invited to declare any relevant interests.

There were no disclosures of interest received.

To confirm the Open and Exempt Minutes of the Meeting held on 27 September 2023.

The Open and Exempt Minutes of the Meeting held on 27 September 2023 were agreed as a correct record.

To confirm the Open and Exempt Actions from the last Meeting.

Members were referred to the Action Sheet, pages 31 to 36 of the Agenda refer.

Members noted that the actions from previous meetings were confirmed as completed or in hand as follows:

An update on the only outstanding Action No. 33 was provided to Members with a report expected at the next meeting of the Audit and Governance Committee on the 24^th January 2024.

A Member queried whether there was a timeline for when the Independent Member of this committee would be reimbursed. In response, the Assistant Director Governance and Monitoring Officer advised that the Independent Renumeration Panel was to examine and make a recommendation regarding allowances for co-opted members to the Full Council by March 2024.

A Member further enquired whether this delay was having any effect on the recruitment of an Independent member. In response, the Chairman confirmed this was for future discussion.

No further comments or questions were received.

Councillor Ros Jackson, Chairman of the Audit and Governance Committee provided Members with an update as follows:

The working group have agreed a new deadline for the recruitment of the Independent Member by extending the recruitment period for a further three weeks.

Members were invited to put their comments and questions forward.

A Member queried what interest the advert had received. The Chairman advised that personnel matters could be responded to outside of the meeting.

No further questions or comments were received.

To receive a report from the Internal Audit Manager, Assurance Lincolnshire.

Internal Audit Manager, Matthew Waller presented the Internal Audit Progress Report November 2023 to members summarising East Lindsey District Council’s responsibilities to undertake effective internal audit, pages 37 to 100 of the Agenda refer.

The report was issued in a new format and provided the Audit and Governance Committee with an overview of progress including any outstanding actions to provide a robust picture of the work carried out by Internal Audit.

Members were invited to put their comments and questions forward.

·         A Member referred to the Performance Dashboard, and queried if the percentages given reflected that performance was on track, page 41 of the Agenda refers. In response, the Internal Audit Manager explained that previous year audits had run into the next year, for 2023-24 the Council was late getting started but were back on track to deliver Quarter 3 and 4. There was an element of reliance on managers, however the Council was well resourced and working with managers to maintain good communications to get audits scheduled and completed as quickly as possible. The Internal Audit Manager confirmed that he was satisfied with current performance and will provide an annual opinion at the end of the year.

·         A Member sought clarification on why equalisation of pay was not included in the report as it was perceived as a big issue for audit to pick up on, especially when staff dissatisfaction has been voiced, page 54 of the Agenda refers. In response, the Internal Audit Manager advised that the Council always tried to cover all the risks and processes as much as possible during audit, elements not picked up on would be taken forward and addressed in future.

The Section 151 Officer wished to clarify that the pay matters raised in the Peer Review had been actioned and significant progress had been made. For instance, in relation to the high level of cyber risk that was identified, robust action was taken in October by ensuring the relevant training was completed by the cut-off date.

·         A Member acknowledged that there was a lot of work going on at pace which provided strong assurances, however concerns were highlighted in the report regarding payroll reconciliation. An update was requested on what progress was being made. In response, the Section 151 Officer confirmed that payroll audit was an area of concern and that she was following up with the team involved to ensure strong progress was made and that the appropriate measures were in place.

·         A Member expressed concerns that little appeared to be happening since the data was provided by PSPS in April 2022, page 65 of the Agenda refers. This was particularly in relation to S106 agreements, noting that the situation could be improved to ensure contributions from developers were captured for communities and not lost. It was further queried whether there was an issue with resourcing and PSPS in responding to audits not only in relation to S106’s but also in other areas, pages 66 and 67 of the Agenda refer.  ...  view the full minutes text for item 40.

To receive a report from the External Audit Manager, Mazars.

Mark Surridge was in attendance on behalf of Mazars LLP, External Auditors, to present the External Audit Progress Report November 2023, pages 101 to 122 of the Agenda refer. The report provided the Audit and Governance Committee with an update on progress made by Mazars LLP in delivering its responsibilities as East Lindsey District Council’s external auditors.

The representative of Mazars LLP advised the committee that the report covered three financial years audits and any other significant matters to date. The 2020/21 audit was concluded over the summer after receiving instructions from the National Audit Office, the 2021/22 audit was now very close to completion as the final set of group accounts was awaited before being able to proceed with 2022/23.

Members were invited to put their comments and questions forward.

• A Member queried whether it was normal for local authorities to be a couple of years behind in completing audits and whether this would change. In response, the External Auditor advised that defining normal was difficult and that whilst the 21/22 Accounts were technically complete, many local authorities were in a similar position especially after the effects of the pandemic. In 2022, there were issues around accounting for infrastructure assets and pension accounting which was not resolved until July. These issues were not unique, and a backlog was created for a vast number of local authorities across the country. The proposal was to work with a new external auditor for 23/24 with the aim to bring everything back on track for September 2024.

The Section 151 Officer alternatively advised that the situation was not normal and usually audits were signed off in a timely manner. However, the pandemic, changes to pensions accounting, asset valuation and infrastructure accounting has meant that authorities accounts have needed to stay open longer and restating them has caused more delay. Clarification on the catch-up process was also needed from the Financial Reporting Council who were currently examining the issues with government.

• A Member expressed dissatisfaction that the group accounts for Invest East Lindsey had not yet been provided, page 105 of the Agenda refers. In response, the External Auditor explained the challenges for the partnership and that it was not a simple process especially taking into consideration the challenges to find good accountants with the right competencies.

• A Member raised concern over how Invest East Lindsey affected overall opinion and requested an update on the Council’s going concern assessment. In response, the Section 151 Office reassured there were no concerns for the going concern assessment for ELDC, but it was acknowledged that the company must carry out its own assessment to satisfy Company Act requirements, this was also reiterated and supported by the representative from Mazars LLP.

• Referring to Section 3 of the report, a Member queried if there was anything the Council should take note of going forward, pages 113 to 120 of the Agenda refer. In response, the External Auditor suggested background reading on Number 8. Croydon Council Public Interest Report  ...  view the full minutes text for item 41.

To receive a report from the Interim Treasury and Investment Manager PSPS

The Interim Treasury and Investments Manager (PSPS), Sean Howsam presented Members with the Premature Repayment of PWLB Borrowing Report, pages 123 to 134 of the Agenda refer.  A copy of the Link Document for ELDC Premature Repayment of PWLB Borrowing was attached at Appendix A, pages 131 to 132 of the Agenda refer.

Members were advised that the Council borrowed £20m from the PWLB in 2018 following the Council’s decision to purchase additional property fund investments. Based on market rates on the 5 October 2023 the Council was eligible for a discount of £8.344m if it were to prematurely repay the £20m of loans. This was to require a payment of £11.656m to fully redeem the PWLB borrowing.

Following a review of the Council’s overall treasury position the Deputy Chief Executive (Corporate Development) & S151 Officer in consultation with the Portfolio Holder for Finance made a delegated decision to prematurely repay all the PWLB borrowing of £20m at a cost of £11.656m.

The net general fund impact of the decision was an overall revenue gain each year in the first 10 years ranging from £740k to £930k.

This report was being submitted to Executive Board as an Appendix to the Quarter 2 Monitoring Report on 13 December 2023 and was currently being submitted to Audit and Governance Committee as the body responsible for receiving all treasury management reports.

Members were invited to put their comments and questions forward.

• A Member commented that it was a good move to repay the loan early and queried if any problems were foreseen to obtain short term bank loans when there was a dip in cashflow. In response, the Interim Treasury and Investments Manager advised that due to the Council planning its investments and making sure it does not hold too much money in the short term, three loans totalling £10 million was borrowed from other Local Authorities. Since the report was written those loans have been repaid and if the Council require temporary borrowing again future it was not likely to present any issues.

• A Member expressed gratitude for the smart decision and timing that had enabled the Council to benefit from the premature repayment of the PWLB borrowing. In response, the Section 151 Officer advised that the window for redemption was very tight, giving thanks to the Interim Treasury and Investments Manager for closely monitoring the rates and working together to lock in the redemption.

The Chairman thanked both the Section 151 Officer and Interim Treasury and Investments Manager for their successful efforts.

No further comments or questions were received.

Following which it was,

RESOLVED:

That the Premature Repayment of PWLB Borrowing Report be noted.

To receive a report from the Interim Treasury & Investments Manager PSPSL.

Sean Howsam, Interim Treasury and Investment Manager proceeded to present Members with the Mid Term Treasury Management Report 2023/24 on the Council’s Treasury Management Strategy Statement and Annual Investment Strategy for the period ending 30 September 2023, pages 135 to 162 of the Agenda refer.

The Interim Treasury and Investment Manager detailed and highlighted pertinent information to Members from the Treasury Management Update at Appendix A, pages 141 to 159 of the Agenda refer, supported by the Capital Programme 2023/24 and Quarter 2 Forecast Outturn at Appendix A1, pages 160 to 162 of the Agenda refer.

Members were advised that the purpose of the report was to provide members with an update on Treasury Management performance and activity for the first six months of the financial year to ensure best practice was maintained.

Members were invited to put their comments and questions forward.

• A Member requested insight on how the viability and financial status of banks was assessed to protect investments. In response, the Interim Treasury and Investment Manager advised that the institutions the Council can invest in was detailed in the Annual Treasury Strategy. ELDC utilise the services of Link Group which were external treasury advisors who produce counterparty matrices to assess information and ratings to make recommendations for where to invest and for what duration. They had also introduced overlay measures to look at and monitor the cost of insuring against financial institutions defaulting on their debts. This also influenced the maximum duration they would recommend investing for or if the Council should make no further investments.

• A Member queried if Invest East Lindsey had repaid their housing development loans. In response, the Section 151 Officer advised that repayment was phased in accordance with the disposal of properties. Work was underway and the loans were expected to be repaid when the disposals were complete. There were no current concerns, although sufficient time was needed for disposal to occur.

• A member enquired what was the Council’s risk appetite and who made the decision to change that, page 159 of the Agenda refers. In response, the Section 151 Officer advised that the risk appetite was set out in regulation and principles were used known as security, liquidity and yield (SLY). Security of the assets was the most important factor, followed by liquidity to enable short notice cash availability and yield was the overriding criteria. In addition, the Council consider counterparties to determine where to invest and for how long, this control framework is approved every year through the Treasury Management Strategy and further overlay strategies were used to make recommendations to protect where the Council’s money is invested. The Section 151 Officer was ultimately responsible for agreeing where the Council’s overall risk resides.

• The Chairman requested clarification on the relationship between the redemption of the M&G Investments UK Property Fund and the financial position of the property investments, page 156 of the Agenda refers. In response, the Interim Treasury and Investment Manager explained that in relation to the original  ...  view the full minutes text for item 43.

To receive a report from the Group Manager, Insights and Transformation.

Suzanne Rolfe, Group Manager (Insights and Transformation) presented Members with the Risk Management Report, pages 163 to 210 of the Agenda refer.  A copy of the Draft Risk Management Framework was attached at Appendix A, pages 171 to 188 of the Agenda refer and Q2 Strategic Risks was attached at Appendix B, pages 189 to 210 of the Agenda refer.

Members were advised that paragraph 1.4 in the covering report sets out items that were previously raised by the committee and these had been addressed in the Risk Framework or in the body of the report. The full Risk Register now includes target risk score and future actions. The Risk Management Framework was based on good practice and had incorporated elements from across the partnership to ensure consistency. The report was being taken forward to the Executive Board and then for Council approval.

Members were invited to put their comments and questions forward.

• A Member made comment that the newly incorporated heat map would benefit from being placed at the front of the report so that Committee Members can identify red and amber areas to examine more quickly, page 207 of the Agenda refers.

• A Member referred to the review of risk mitigation which showed that risks tend to be general and high level rather than specific, and requested assurance that measures will be incorporated in the mitigations of the new risk framework which may benefit from more specific information such as target dates.  In response, Group Manager (Insights and Transformation) provided assurance that work was underway, a thorough review of Quarter 2 had been performed and a planned audit of strategic risks was to follow. The framework provided a better opportunity to demonstrate what good mitigation looks like and target dates were to be included where possible to be effective. Overall good progress has been made and there was more work in progress.

• Referring to Risk 19 ‘Identification and Suitability of future Depot Accommodation’ and noting the report was still in development, a Member commented that it would be beneficial to look into the inclusion of a significant waste reduction communication campaign, page 195 of the Agenda refers.

• A Member reiterated concerns on flooding and emphasised that the risk to the coastal defences needs to be fully appreciated by the Council. Stating that Environment Agency work had lost momentum and the reliance on beach nourishment was not sustainable. This had also led to stagnation of the coastal economy and deprivation due to loss of facilities and new residential developments being hindered by regulations. The Member concluded this was a significant risk that should not be underestimated.  In response, Group Manager (Insights and Transformation) confirmed these concerns were noted and would be relayed to the lead officers.

No further comments or questions were received.

Following which it was,

RESOLVED:

That the Risk Management Q2 - 2023/24 Reportbe noted.

To receive a report from the Information and Data Protection Manager.

The Chairman welcomed Group Information Manager and Data Protection Officer, Richard Steele to provide the Information Governance Annual Update, pages 211 to 218 of the Agenda refer.

The report provided Members of the Audit and Governance Committee with an overview of activity in relation to information governance, including data protection for the Authority and highlighted any changes or risks for the forthcoming year.

Members were advised that the report was written to cover the period between October 2022 to October 2023.  The first area of focus was access to information and transparency, which includes the Freedom of Information (FOI) Act and Environmental Information Regulations (EIR) and noted that signoff was imminent to replace the Council’s FOI Policy.

Key information was highlighted to Members as follows:

·       It was highlighted that the Council was consistently exceeding 95% compliance rate when responding to FOI and EIR which exceeds the Information Commissioner’s Office (ICO) target for good performance.

·       FOI and EIR had seen a 10% increase in the number of requests based on the previous year which is consistent with other Council’s in the partnership.

·       693 Freedom of Information requests met the requirements to be considered and outlined in the report.

·       In most instances, the use of exemptions was to protect personal data.

·       Low number of internal reviews whereby FOI’s have been challenged demonstrated the quality of the response provided. Out of 633, only 5 were internally reviewed including one that was referred to the ICO which was not upheld.

·       Data Protection Act 2018 was due for replacement by the Data Protection and Digital Information Bill in 2024 which would impact on requirements to update the Council’s Policy.

·       Assurance was given that 53 incidents reported across the organisation including subprocesses compared to the number of transactions the Council undertakes including PSPS was a very small.

·       There were only 13 Subject Access Requests (SAR) in the 12-month period.

·       Significant work in the Information Governance team was underway to facilitate data reuse and sharing with third parties such as the Police, Home Office and HMICFRS.

The Group Information Manager and Data Protection Officer concluded that the report provided assurance that the Council demonstrated good governance in respect of information management and compliance with legislation.

Members were invited to put their comments and questions forward.

·       A Member queried how the 10% increase in the number of requests compared to other councils. In response the Group Information Manager and Data Protection Officer, advised that in terms of the Councils in the South and East Lincolnshire Partnership, East Lindsey had seen the greatest increase. The total requests were 733, South Holland has had a 9% increase and Boston a similar amount. The figures were thought to be representative of wider local authorities as a sector. 

·       A Member queried if the response time was fulfilled for the 13 Subject Access Requests received. The Group Information Manager and Data Protection Officer responded that this information would be obtained and provided back to the committee.

·       A Member sought clarification on what checks  ...  view the full minutes text for item 45.

To receive a report from the Assistant Director Regulatory and Senior Responsible Officer (SRO) for RIPA.

The Chairman welcomed Christian Allen, Assistant Director - Regulatory  to provide an update on Regulation of Investigatory Powers Act (RIPA) 2000, pages 219 to 226 of the Agenda refer.

Members were advised that the purpose of this report was to provide Audit and Governance Committee with an update on the Councils activities in respect of the Regulation of Investigatory Powers Act (RIPA) 2000 during the last 12 months, to ensure arrangements remain up to date, and to provide assurance that the Council's legal obligations were effectively managed.

The report also sought to update members on anticipated changes necessary to ELDC Policy and Procedures to reflect current guidance issued by the Home Office and the Investigatory Powers Commissioners Office (IPCO), which was the regulatory body that oversees compliance with RIPA by public bodies.

The Assistant Director – Regulatory advised members that ELDC were due a RIPA Audit in 2024, however this was deferred after briefing IPCO on the formation of the partnership and the intention to harmonise RIPA arrangements across all three councils. 

Members were invited to put their comments and questions forward.

·         A Member queried if work was performed outside of the partnership, with external authorities and across borders. In response, the Assistant Director - Regulatory explained that work was carried out with partner agencies particularly the police and that the responsibilities for RIPA reside with each sovereign council. ELDC did not work with other councils outside borders, however common working arrangements and policy would allow work across borders within the partnership.

·         A Member further queried who the policy was targeting. In response, the Assistant Director – Regulatory advised that the policy framework governed the way the Council undertakes certain aspects of enforcement. It was exceptionally rare that as a local authority, powers such as covert directed surveillance were used and that was the same across the country.

·         The Chairman sought clarification on what was the key differences between ELDC’s and South Holland’s approaches. The Assistant Director – Regulatory advised there were no key differences as the approach was highly regulated and frequently audited by the IPCO to protect people’s human rights. It was reemphasised that the power was rarely used by district councils because of the nature of enforcement that was carried out.

·         A Member noted the there had been no RIPA relevant activity in the last twelve months and requested clarification on the level of activity.  In response, Assistant Director – Regulatory advised RIPA was infrequently used as it was extremely difficult to demonstrate that covert directed surveillance was proportionate when considering legislation. The Police would have more cause to use RIPA than a local authority.

·         A Member acknowledged that the level of demand was low and queried whether the Council dealt with RIPA regulations in the most cost-effective way. In response, Assistant Director – Regulatory advised that councils are obliged to comply with the regulations and undertake the processes involved. Working across the partnership to unite working arrangements was seen as a positive and best use of  ...  view the full minutes text for item 46.

To receive a report from the Assistant Director, Governance and Monitoring Officer.

The Assistant Director Governance & Monitoring Officer, John Medler presented Members with the Audit and Governance Committee Annual Report 2022/23, pages 227 to 238 of the Agenda refer.

The report provided Members with an overview of the activity of the Audit and Governance Committee during the municipal year 2022/23.

Members were referred to Appendix A, pages 231 to 238 of the Agenda refer.

Assistant Director Governance & Monitoring Officer advised Members that it was best practice for the Audit and Governance Committee to report its previous year’s work to full Council and a revision was made across the partnership in the style and detail of the report to become more effective in future year reporting.

Members were invited to put their comments and questions forward.

·         A Member stated their appreciation for the clear and concise report and commented that an ongoing review of performance should be measured against the Committee’s terms of reference.  It was also queried why work on Invest East Lindsey was not mentioned in the report. In response, Assistant Director Governance & Monitoring Officer advised that Invest East Lindsey would be included next year’s report as the information was retrospective of the previous financial year. 

·         A Member made further request for inclusion of training needs and training assessment in next year’s report. Assistant Director Governance & Monitoring Officer confirmed that discussions had taken place to examine self-assessment of the committee as part of best practice and was to be included in the schedule later this financial year. 

No further comments or questions were received.

Following which it was,

RESOLVED:

That the Audit and Governance Committee's Annual Report 2022/23 be approved and presented to Full Council on 13th December 2023.

To receive a report from the Assistant Director, Governance and Monitoring Officer.

The Assistant Director Governance & Monitoring Officer outlined a report on the recent work undertaken by the Constitution Working Party. Advising that the constitution working group had examined the matters raised by Members and reviewed outcomes. The main outcome was the recommendation that Area Forums were removed from the Constitution as they had not taken place for many years. The power to convene an informal meeting would still be available to Parish Council Clerks and Councillors in liaison with Ward Members who could attend. The view taken by the working group was to remove the legacy of Area Forums from the Constitution.

Members were invited to put their comments and questions forward.

A Member expressed concerns that there was still a need for strong links between District and Parish Councils and commented on the wide variation in attendance of Ward Members at Parish Council meetings. It was expressed that communications should not be weakened by the removal of Area Forums and Ward Members were to be encouraged to attend meetings.

The Chairman clarified that a formalised agreement for Area Forums was effectively abolished a number of years ago, however the power to convene meetings as and when was still being retained. The Chairman supported that communication was vital and new ways could be put forward to satisfy the issues.

No further comments or questions were received.

Following which it was,

RESOLVED:

That the Constitution Working Party Report be noted and a recommendation be made to Council that the Constitution be amended to remove references to Area Forums.

To consider the Audit & Governance Committee Work Programme 2023/24.

Members were presented with the Audit & Governance Committee Work Programme 2023/24, pages 243 to 246 of the Agenda refer.

The Assistant Director Governance & Monitoring Officer advised Members that the Information Governance Audit Report was to be removed from the schedule for January 2024 as the report was provided at today’s meeting.

No further comments or questions were received.

Following which it was,

RESOLVED:

That the Work Programme 2023/24 be noted.

The programmed date for the next Meeting of this Committee was noted as 24 January 2024.