The Council’s Corporate Risk Register monitored those risks that may prevent the Council from achieving its Corporate Plan or delivering services to its communities and service users in Newport. At the end of quarter three, October to December, there were 14 risks recorded in the Corporate Risk Register that were considered to have a significant impact on the achievement of the Council’s objectives and legal obligations. Overall, there were seven severe risks (risk scores 15 to 25); seven Major risks (risk scores seven to 14); that were outlined in the report.
In comparison to the quarter two Corporate Risk Register, there were no new and/or escalated risks, and no risks were closed. One risk had decreased its risk score: with 13 risks remaining the same. No risks were escalated or de-escalated in quarter three. As set out in the Council’s Risk Management Policy, Cabinet reviewed the Corporate Risk Register on a quarterly basis ensuring procedures were in place to monitor the management of significant risks. The Register was likely to change following the approval of the new Corporate Plan and priorities for its service delivery. The Policy and Partnership Manager highlighted that in quarter three they reassessed the risk plan and way they viewed it was slightly different based on feedback from this committee. Additionally, service areas were asked to consider the external impacts of the Council’s Medium Term Financial Plan (MTFP) alongside the increased demand of pressures on the services risk and the cost-of-living increase which impacted on businesses, residents and everyone else. Risk Assessments were reviewed by the senior management team and target risk scores were adjusted to reflect the challenging position. The Council was tolerating more risks due to the current situation. The senior management team continued to closely monitor and reassess regularly these risks and monitored the actions being taken.
Committee Member Comments:
§ Dr N Barry thanked the Policy and Partnership Manager for the clear introduction and paper. Dr Barry realised that this was a retrospective report but was aware it was approaching the next financial year and asked if the corporate plan by ready by 1 April. The Performance and Programme Manager advised that the corporate plan was approved in November 2022 and was available online.
§ Councillor Cocks referred to page 46 of the report pack and the budget, where it referred to contract inflation, what level of risk was involved in this, what was fixed and could contractors raise their prices in relation to inflation. The Head of Finance advised that the risk as of Quarter 3 was because of uncertainty of what those cost increases would be and challenges that would create on a balanced budget.
Councillor Cocks asked was it due to existing contracts. The Head of Finance advised that it was, energy in particular was highest, the general comments applied to capital projects as well as revenue due to the uncertainty of inflation. The general risk around setting the budget in an unknown environment and 60% of the costs were from the last quarter of the financial year.
§ The Chair asked for clarification on a backward look report from October to December, and how could the budget be taking into consideration for February/March. The Performance and Programme Manager asked all of the risk owners and heads of service to reassess their risks and at that point of time they would be going through their budgets and could get a handle on what their future budgets would be. There were some knowns and unknowns, this was why there may be an increase in the target risk score. This was an ongoing process and risk scores were being constantly reviewed the role of the executive board was to challenge if this was a fair reflection of the risk.
§ Councillor Cocks referred to Page 65 of the report relating to schools and the only risk that could be found was cost pressures in schools that were not met due to increased budget deficit. The criteria for assessing the risk included failure to deliver strategic objectives. As a governor, Councillor Cocks had seen cutbacks in teaching and school resources and wondered why this did not feature in the report. The Strategic Director, Transformation and Corporate, advised as the committee’s role was to give assurance that the appropriate processes were in place. If the committee felt that there were some issues missing in service areas, this could be fed back to the service area for review. With this in mind, this would be added to the recommendations log for the Chief Education Officer to provide a response.
§ Councillor Jordan referred to page 27, new risks since Quarter 2 and page 34 of the report pack gave a breakdown of new risks but it did not advise what the new risks were. The Performance and Programme Manager would provide the information to the committee as also requested by the Chair. A lot of the risks were at service level risk and were not significant enough to be raised in the corporate risk register. The Strategic Director, Transformation and Corporate explained that the Governance and Audit Committee looked at the corporate risk register signed off by Cabinet. The other figures were service plan updates that went through Performance and Scrutiny Committees.
§ D Reed referred to page 65 of the report pack and asked what happened if schools could not set appropriate budgets. The Head of Finance advised that all budgets were based on assumptions and therefore officers tried to get as much certainty they we could, if these assumptions were incorrect there was an in-year budget challenge to manage. There was always a possibility that some of the assumptions may not be correct and secondly schools would have to deliver those efficiency savings. Until governing bodies had met and agreed their budget, then we would not be sure if this was something they were able to do. Schools were however on the corporate risk register and on the radar and to that extent, the process was working.
§ The Chair asked, if a school was to go into a negative situation, how long did the school have to put it right. Did the Council have a policy in place to allow it to be in a negative situation for two to three years with a provision that they must get back to a balanced budget. This this could lead to a lot of schools in negative situation in the next 6-9 months. The Head of Finance advised that it was on the list because it was working well. There was a protocol and framework for schools getting licenced deficits. School reserves had increased over the last two to three years and they would fully expect to see those reserves fully utilised. The key was to understand if it was a one off or could the base budget not be sorted. The next step was close working with schools to see what the issue was and working together to try to resolve this. Schools were the biggest budget area within every council and there were challenges ahead, but the process was working fine.
§ D Reed referred to the schedule on page 44, which was really helpful and could see where the risk was going and what was expected.
The Governance and Audit Committee considered the contents of the report and assessed the risk management arrangements for the Authority, providing any additional commentary and/or recommendations to Cabinet, this included the comments discussed in relation to Education to be fed back to Cabinet.