Agenda item

The report of the Interim Assistant Chief Executive, Finance, Traded and Resources presents Grant Thornton’s Interim Auditor’s Annual Report on Leeds City Council for 2023/24.

The Interim Assistant Chief Executive, Finance, Traded and Resources presented the Grant Thornton Interim Auditor’s Annual Report on Leeds City Council for 2023-24.

The Grant Thornton team highlighted the following points from the report:

• This report investigated the value for money arrangements. It is the interim report as they are continuing the accounts audit.
• The auditors assess against 3 criteria which are financial sustainability, governance and improving economy, efficiency, and effectiveness.
• It was acknowledged that the Council is facing financial challenges along with the whole of the local government sector. They had found two significant weaknesses, these were down to the financial pressures that the Council is facing and the potential impact they may have on delivering services. The auditors were aware that the Council was taking actions to mitigate impact on services and arrangements are in place and that it is being taken seriously. However, their concerns were in the effectiveness of those actions and arrangements. It was noted that the Council had put arrangements in place since March 2024, but this audit was reporting on what had been in place prior to that date.
• It was noted that the Council did have an increasing budget gap going forward and there are some significant overspending areas in social care. This was being highlighted as a weakness as it would be a challenge to set an effective budget for 2026-27.
• In relation to governance, concerns were raised on the impact of rising demand on services and how the Council is reporting on that and the actions to address any issues.
• In relation to improving economy, efficiency and effectiveness, improvement recommendations had been made and details of those are provided in the report.
• It was noted that the external auditors do have statutory powers, but at this point they were not proposing to use them.
• It was acknowledged that Management had responded to the recommendations made by the auditors by providing answers to questions posed, along with briefing Members and involving group leaders.

Responding to a question the Committee were informed that pressures were being seen at other Councils, but Leeds were taking actions to address the financial pressures. However, it was the speed and pace of those actions that will assist improvement. Another area highlighted was the use of Reserves, as when used it was difficult to rebuild them. However, there were no immediate concerns in relation to the sufficiency of the level of reserves, but the Council had to take effective action.

The Interim Chief Executive, Finance, Traded and Resources informed the Committee that a lot of work had been done with Grant Thornton and recognised the issues raised by Grant Thornton. However, The Council’s Medium-Term Financial Strategy was in place and was over 5 years allowing the Council to know what it needs to focus on and what is required. It was recognised that there are pressures in Children and Families Directorate and Adult Social Care coming through and this had been built into the Medium- Term Financial Strategy for 2025-26 to reflect the demand in services and the price increases. The Council had looked at areas where control could be taken and looked at provision within the city and how that provision can be delivered to meet the needs of the people. The Council is currently focussing on bring provision back into the city for Children’s care and there had been a lot of work around reunification, foster carers and kinship care. However, it was acknowledged that there was a need for provision in relation to small group living and this work would not happen quickly. This was the reason why there were overspends in services as the work had taken longer than the Council would have wanted, but it was dealing with the most vulnerable in society.

The Council had built in specific reserves around the strategic contingency reserve and the social care reserve to allow time and these were planned reserves to use for a specific purpose. It was acknowledged that the position was worrying, and this was not just for Leeds but nationally. However, Leeds was doing all that they can to manage and control the situation and could give assurance around the use of reserves. It was recognised that the Council was heading towards a hard year, but Team Leeds was onboard to address savings and manage the budget.

The Committee recognised the financial pressures on the Council and the demand for care provision, not only for the Council but across the country. There were concerns and there was a need to keep focussed.

RESOLVED – To receive the Annual Auditor’s Report presented by Grant Thornton and to note the recommendations which have been made.