Agenda item

1.1          M Edwards, Audit Wales gave a brief overview on the report which set out the high-level findings and costs associated with the work undertaken at Newport City Council since 2021. Housing Benefits and reporting back to Department of Work and Pensions (DWP) were the main focus within the report.

1.2          Page 39 of the pack gave a brief overview of findings in relation to various returns each year. Housing Benefits work was on hold, but Audit Wales were looking to progress the work in July.

1.3          Small amounts were also to flagged up, in relation to teacher’s pensions, in 2021/22 there was a small adjustment of £11 that Audit Wales was required to provide evidence for.  Any errors down to the penny were recorded as requested by the grant paying bodies, such as the Teacher’s Pension Agency. 

1.4          Page 40 referred to the breakdown of costs by grant/returns to the Council which was consistently above average.  Newport City Council therefore needed to resolve the issues being reported back. A flavour of this was referred to on page 41 under the recommendations relating to the Housing Benefit Subsidy return.

1.5          Finally, the DWP required Audit Wales to follow up this line of work, which increased the work they undertook as well as officers of the Council. There was therefore a real incentive for the Council to address these issues.

Comments of Committee Members:

1.6          Dr Barry referred to the unnecessary expenditure and asked what was being done, in relation to the supervision of staff as Newport City Council was above average in relation to the errors.  M Edwards, Audit Wales did advise that Newport City Council was not alone in this and that other councils were also affected.

1.7          The Head of Finance advised that this was raised with the relevant managers and Team Leader.  It was explained that it was due to a culmination of hundreds of transactions. The Head of Finance went into great detail to explain to the Committee that the amounts of money paid to claimants was in the millions and the amounts linked to the errors were minor in this context, however, even a £5 error needed to be reported.  Self-testing had been carried out by the Team Leader, when working with Auditors, based on their samples and in turn Audit Wales then carried out a check on the self-test, to make sure this has been done properly.  There were also some rules applied by DWP that changed but this was not necessarily reflected in the audit samples Staff also followed DWP rules and therefore the Head of Finance believed that not all of the errors were actually against the DWP rules. The Head of Finance was wanted to assure the Committee that he was satisfied that training knowledge and experience was acceptable, a change was therefore needed in the approach to identifying the errors.  It was hoped that there would be a more robust approach to challenging potential non-issues raised in the future.

1.8          Dr Barry asked if the Head of Finance could provide a brief overview to the Committee of the new approach.  The Head of Finance provided an example where the DWP issued an instruction, which could be seen as an error and was therefore recorded as an error for the purposes of Audit Wales.  These are therefore not challenged during the audit and are concluded as being errors but retrospectively the Housing Benefits team did not think that they were errors as they arose from changes to procedures.

1.9          Mr Reed referred to the costs of certification, which was consistently above the average and sought clarification on what the definition of average was in the context of the fees involved.

1.10       M Edwards, Audit Wales considered the purpose of the statement was to contextualise the level of the fee, which for Newport City Council was higher than other Local Authorities and confirmed that this was not related to demographics or areas of deprivation.

1.11       Mr Reed asked whether other Local Authorities (LA) experienced the similar number of claims.

1.12       M Edwards, Audit Wales advised that the number of claims varied and that Audit Wales was required to follow certain procedures to report back to the DWP.  There may be councils that outsourced housing property services, which was why there might be differences in some cases.

1.13       The Head of Finance agreed with M Edwards, Audit Wales that the size of an LA’s relative spend on Housing Benefit had an impact.  Newport, like many cities, had experienced growth in homelessness and Housing Benefit claimants which had created an increase in workload since 2021. There had also been a lot of changes in terms of data required before a decision on a claim could be made which added further pressure on resource.

1.14       Councillor Horton asked M Edwards, Audit Wales what was Newport City Council doing differently to other LAs or why the Council was being treated differently, if we were using the same process.  

1.15       M Edwards, Audit Wales advised that Newport City Council was not being treated differently but this area of work was technical in nature.  Auditors and officers tended to disagree with the calculations.  DWP required Audit Wales to report back to them, and if there was a disagreement then a conclusion would be drawn, which would either favour Audit Wales or the Council.

1.16       Councillor M Howells referred to the recommendations and was concerned that this had been happening for a number of years and that the Head of Finance had not provided the Committee with adequate assurances around how this would be addressed.

1.17       The Head of Finance explained that the process included a serious of conversations with officers and auditors.  In hindsight the benefits officers felt that conversations needed to be more challenging on points where they could demonstrate following the procedures as they were at the time of the decision. The Head of Finance wanted this to be discussed as part of the process rather than automatically agreeing that it was an error.  Therefore, the number of errors in future would be reduced by way of explaining to DWP and Audit Wales how the determination was not a deviation from the guidance at the time of the contended discrepancy.

1.18       Mr Reed agreed with the Head of Finance’s explanation and considered that interpretation should be included in the report, be subject to clarification and challenged as there would be differences.  This should therefore be revisited in future reports to assess progress made on this dialogue.

1.19       The Chair asked what the average fee was in Wales and if Newport could improve this issue, would the fees be reduced.  M Edwards, Audit Wales did not have the All-Wales average to hand but would circulate the information to the Committee in due course.

1.20       The Chair reiterated the comments of the Committee regarding concerns that these were ongoing issues.  The Chair was not satisfied with the response shared and recommended that a comprehensive report be provided to the Committee in the future, setting out the errors, the quantum of the errors in terms of money, and action as to what was being done. This could be considered by Governance and Audit Committee or Scrutiny as appropriate but would also provide a platform if we need to challenge this with Audit Wales to make improvements too.

Recommendation:

1.21       That the Governance and Audit Committee noted the contents of the report.

1.22       That a further comprehensive report from the Head of Finance is presented to the Committee setting out detail of the Housing Benefit errors identified and the actions to address the current position.