Document Pack (Bookmarked with Agenda) Audit Committee - 19 February 2025
West Dunbartonshire Council · 19 February 2025
Back to Audit Committee — 19 February 2025 and its agenda
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Agenda Audit Committee Date: Wednesday, 19 February 2025 Time: 10:00 Venue: Council Chambers, Clydebank Town Hall, 5 Hall Street, Clydebank G81 1UB Contact: Lynn Straker, Committee Officer lynn.straker@west-dunbarton.gov.uk committee.admin@west-dunbarton.gov.uk Dear Member Please attend a meeting of the Audit Committee as detailed above. The business is shown on the attached agenda. Yours faithfully PETER HESSETT Chief Executive Page 1
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Distribution: Councillor Gordon Scanlan (Chair) Provost Karen Murray Conaghan (Vice Chair) Councillor Ian Dickson Councillor Fiona Hennebry Councillor Martin Rooney Councillor Clare Steel Councillor Sophie Traynor All other Councillors for information Chief Executive Chief Officers Date of issue: 6 February 2025 Page 2
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AUDIT COMMITTEE WEDNESDAY, 19 FEBRUARY 2025 AGENDA 1 APOLOGIES 2 DECLARATIONS OF INTEREST Members are invited to declare if they have an interest in any of the items of business on this agenda and the reasons for such declarations. 3 MINUTES OF PREVIOUS MEETING Submit for approval, as a correct record, the Minutes of Meeting of the Audit Committee held on 4 December 2024. 4 OPEN FORUM The Committee is asked to note that no open forum questions have been submitted by members of the public. 5 INTERNAL AUDIT PLAN 2024/25 – PROGRESS TO 9 - 25 31 DECEMBER 2024 Submit report by Chief Officer – Resources advising of progress to 31 December 2024 against the Internal Audit Plan for 2024/25. 6 STRATEGIC RISKS 2022-2027 27 - 48 Submit report by Chief Officer – People & Technology providing an update on the strategic risks for 2022-2027. 7 TREASURY MANAGEMENT MID-YEAR REPORT 2024/2025 49 - 63 Submit report by Chief Officer – Resources providing Members with the opportunity to further scrutinise the Prudential Indicators on treasury management to 30 September 2024. ________________________________________________________________________ Page 3 5 - 7
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AUDIT COMMITTEE At a Meeting of the Audit Committee held in the Civic Space, 16 Church Street, Dumbarton on Wednesday, 4 December 2024 at 2.00 p.m. Present: Provost Karen Murray Conaghan and Councillors Ian Dickson, Fiona Hennebry, Martin Rooney, Gordon Scanlan, Claire Steel and Sophie Traynor. Attending: Peter Hessett, Chief Executive; Laurence Slavin, Chief Officer – Resources; Amanda Graham, Chief Officer – Citizen, Culture and Facilities; Andi Priestman, Shared Service Manager – Audit and Fraud and Lynn Straker, Committee Officer. Apologies: Apologies for absence were intimated on behalf of Victoria Rogers, Chief Officer – People and Technology and Julie Slavin, Chief Finance Officer – Health and Social Care Partnership (HSCP) and Gail Macfarlane, Chief Officer – Roads and Neighbourhood. Councillor Gordon Scanlan in the Chair DECLARATIONS OF INTEREST It was noted that there were no declarations of interest in any of the items of business on the agenda. MINUTES OF PREVIOUS MEETING The Minutes of Meeting of the Audit Committee held on 4 September 2024 were submitted and approved as a correct record. OPEN FORUM The Committee noted that no open forum questions had been submitted by members of the public. 2024/25 INTERNAL AUDIT ANNUAL STRATEGY AND PLAN A report was submitted by the Chief Officer – Resources advising of the planned programme of work for the Internal Audit Section for the year 2024/25. Item 3 Page 5
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After discussion and having heard the Shared Service Manager – Audit and Fraud in further explanation, the Committee agreed to approve the 2024/25 Audit Plan. INTERNAL AUDIT PLAN 2023/24 – PROGRESS TO 6 NOVEMBER 2024 A report was submitted by Chief Officer – Resources advising Members of progress to 6 November 2024, against the Internal Audit Plan for 2023/24. The report also advises Members of recently issued Internal Audit reports and action plans and of the status of implementation progress relating to action plans from previously issued Internal Audit reports. After discussion and having heard the Shared Service Manager – Audit and Fraud; the Chief Officer – Resources and the Chief Officer – Citizen, Culture and Facilities in further explanation and in answer to Members’ questions, the Committee agreed to note the contents of this report. NATIONAL FRAUD INITIATIVE 2022/23 EXERCISE A report was submitted by Chief Officer – Resources informing Members of the Audit Scotland Report “National Fraud Initiative 2022/23” published in August 2024 and to provide an overview of the key messages and recommendations raised in the report and how these issues are being addressed by the Council. After discussion and having heard the Shared Service Manager – Audit and Fraud and the Chief Officer – Resources in further explanation and in answer to Members’ questions, the Committee agreed to note the contents of this report and agreed that a further update report is submitted to the September 2025 Audit Committee outlining the Council’s progress with the 2024-2025 exercise. PUBLIC INTEREST DISCLOSURES AND OTHER INTERNAL AUDIT INVESTIGATIONS 27 JANUARY TO 31 OCTOBER 2024 A report was submitted by Chief Officer – Resources advising of the outcome of investigations into allegations and disclosures in line with public interest disclosure and business irregularities policies, received by Internal Audit between 27 January and 31 October 2024. After discussion and having heard the Service Manager – Audit and Fraud and the Chief Officer – Resources in further explanation and in answer to Members’ questions, the Committee agreed to note the content of this report. 2023/24 TREASURY MANAGEMENT ANNUAL REPORT A report was submitted by Chief Officer – Resources advising of the operation of the treasury function and its activities in 2023/24 and requesting that the Audit Page 6
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Committee remits the report to the full Council for their approval. After discussion and having heard the Chief Officer – Resources in further explanation, the Committee agreed:- (1) to note the contents of the 2023/24 Annual Treasury Management Report; and (2) to remit the 2023/24 Annual Treasury Management Report to full Council for approval. Note: Provost Karen Murray Conaghan left the meeting during consideration of this item. SCOTTISH PUBLIC SERVICES OMBUDSMAN COMPLAINTS REPORT 2023-24 A report was submitted by Chief Officer – Citizen, Culture and Facilities presenting the Scottish Public Services Ombudsman (SPSO) report on Complaints Handling by West Dunbartonshire Council for the year 1 April 2023 – 31 March 2024. After discussion and having heard the Chief Officer – Citizen, Culture and Facilities in further explanation and in answer to Members’ questions, the Committee agreed to note the contents of the report and the ongoing commitment at a service and strategic level to monitor complaints and ensure compliance with Scottish Public Services Ombudsman (SPSO) timelines. The meeting closed at 3.00 p.m. Page 7
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WEST DUNBARTONSHIRE COUNCIL Report by Chief Officer – Resources Audit Committee: 19 February 2025 Subject: Internal Audit Plan 2024/25 – Progress to 31 December 2024 1. Purpose 1.1 The purpose of this report is to advise Members of progress to 31 December 2024 against the Internal Audit Plan for 2024/25. 1.2 The report also advises Members of: recently issued Internal Audit reports and action plans the status of implementation progress relating to action plans from previously issued Internal Audit reports. 2. Recommendations 2.1 It is recommended that Members note the contents of this report. 3. Background 3.1 The annual audit plan for 2024/25 was approved by the Audit Committee on 4 December 2024. This report provides information on the progress in implementing the plan. 3.2 When audit reports are issued by Internal Audit, an action plan is agreed with management in relation to issues highlighted by the audit report. Progress on implementing the actions is monitored by Internal Audit on a monthly basis and reported to the Audit Committee. 4. Main Issues 4.1. The annual audit plan sets out the audit coverage for the year utilising available staff resources to enable the Shared Service Manager – Audit & Fraud to provide the annual internal audit opinion regarding the adequacy and effectiveness of internal control within the Council. 4.2 In accordance with the risk-based audit methodology, for each audit, one of four audit opinions is expressed: Strong In our opinion there is a sound system of internal controls designed to ensure that the organisation is able to achieve its objectives. Satisfactory In our opinion isolated areas of control weakness were identified which, whilst not systemic, put some organisation objectives at risk. Item 5 Page 9
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Requires Improvement In our opinion systemic and/or material control weaknesses were identified such that some organisation objectives are put at significant risk. Unsatisfactory In our opinion the control environment was considered inadequate to ensure that the organisation is able to achieve its objectives. 4.3 Detailed findings and recommendations reported to management are graded using the following criteria: Red In our opinion the control environment is insufficient to address the risk and this could impact the Council as a whole. Corrective action must be taken and should start immediately. Overseen to completion by Corporate Management Team. Amber In our opinion there are areas of control weakness which we consider to be individually significant but which are unlikely to affect the Council as a whole. Corrective action must be taken (some exceptions may be agreed with Internal Audit) within reasonable timeframe. Overseen to completion by Chief Officer/Head of Service. Green In our opinion the risk area is well controlled or our audit highlighted areas for minor control improvement and/or areas of minor control weakness. Process improvements/efficiencies may be actioned at management discretion in consultation with Internal Audit. Managed by service owner. Not reported in Audit Committee papers. 4.4 There were no reviews finalised since the December 2024 Audit Committee. 4.5 In relation to audit work for the Integration Joint Board, work is underway for the 2024/25 audit plan with regular reporting to the Integration Joint Board Audit & Performance Committee. 4.6 In relation to the Valuation Joint Board, audit planning is underway. 4.7 In relation to the Leisure Trust, audit planning has not yet started. 4.8 Internal Audit Action Plans In relation to audit action plans, these are monitored by Internal Audit on a monthly basis. The status report at 31 December 2024 is provided at Appendix 2. Ongoing Corporate Fraud Team Work 4.9 The Corporate Fraud team’s day to day work continues to focus on referrals relating to council tax reduction/single person discounts, joint working with DWP in relation to housing benefit and council tax reduction, referrals relating to housing tenancies and investigating relevant national fraud initiative matches. 4.10 The Internal Audit Team and the Corporate Fraud Team continue to work together as appropriate in order to ensure a joined-up approach to fraud investigation and detection for example in relation to whistleblowing enquiries. Page 10
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National Fraud Initiative 4.11 The National Fraud Initiative is a series of biennial exercises run by the Cabinet Office and Audit Scotland to identify or prevent fraud and error by matching electronic data held by public bodies. Participating bodies are required to investigate data discrepancies within a set timescale and report back on any savings. 4.12 In relation to the 2024 exercise, a number of matches have been received in relation to a number of datasets including Housing Benefit, Council Tax Reduction, Payroll and Blue Badges and progress is as follows: Matches Received Number Investigated No Issue Fraud (1) Error (2) Value of Fraud/Error 1400 142 62 1 79 £346.55 (1) Fraud relates to CTR case where income was not declared. Recovery is in progress. (2) Errors relate to blue badges which had not been cancelled on the system. Benchmarking 4.13 In accordance with the Council’s Strategic Improvement Framework, the Council’s Internal Audit service continues to be part of a benchmarking group which involves seven other Councils. 4.14 Meetings will continue to take place during 2025 to review performance and identify other areas for sharing of best practice. 5. People Implications 5.1 There are no people implications. 6. Financial and Procurement Implications 6.1 The Corporate Fraud Team activity can result in actual recoveries, charges and re-billings. The total amount of actual recoveries, charges and re-billings identified since 1 April 2024 is £108,989. 6.2 There are no procurement implications arising from this report. 7. Risk Analysis 7.1 There is a risk that failure to deliver the Internal Audit Plan would result in an inability to provide a reasonable level of assurance over the Council’s system of internal financial control to those charged with governance. The main basis for providing assurance is coverage of the planned risk-based audits. Every endeavour is made to ensure that no material slippage occurs in risk-based audits by concentrating resources on these audits. Page 11
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8. Equalities Impact Assessment (EIA) 8.1 There are no direct equalities impacts arising from the report however where an agreed action results in a change in process this will be considered for equalities impact by the relevant service. 9. Consultation 9.1 This report has been subject to consultation with appropriate Chief Officers. 10. Strategic Assessment 10.1 This report relates to strong corporate governance. .................................... Laurence Slavin Chief Officer - Resources Date: 23 January 2025 Person to Contact: Andi Priestman, Shared Service Manager – Audit & Fraud E-mail: andi.priestman@west-dunbarton.gov.uk Appendices: 2024/25 Annual Audit Plan – Progress to 31 December 2024 (Appendix 1) Status of Internal Audit Action Plans at 31 December 2024 (Appendix 2) Internal Audit Reports - Copies available on request Wards Affected: All wards Page 12
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2024-2025 Internal Audit Annual Audit Plan – Progress to 31 December 2024 Appendix 1 Audit/Status Not Started Planning Fieldwork Fieldwork Complete Draft Report Final Report Date Reported to Audit Committee Risk-Based Reviews Void Management Housing Repairs and Maintenance Budgetary Control Participatory Budgeting Corporate Procurement Regularity Audits Payroll High Earners – Quarterly Review 2024-25 quarterly exercise is underway. Residential Care Homes – Overtime Not started Other Work Integration Joint Board – Internal Audit Service The fieldwork for the 2024/25 audit plan is underway. Valuation Joint Board – Internal Audit Service The planning for the 2024/25 audit is underway. Leisure Trust – Internal Audit Service The planning for the 2024/25 audit has not yet started. National Fraud Initiative Matches for the 2024 Exercise have now been received and investigations are underway. Completion of 23/24 Audit Plan Audits Completed: Debt Recovery; UK Shared Prosperity Fund; Commercial Waste Income Billing and Collection. Page 13
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REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLANS AT 31 DECEMBER 2024 Summary: Section 1 Summary of Management Actions due for completion by 31/12/2024 There were no actions due for completion by 31 December 2024. There were two actions with a “to be advised” date which have been reported and two actions with a completion date not yet due which have been reported as completed by management. The status of all four actions has been updated as closed at Section 3. Section 2 Summary of Current Management Actions Plans at 31/12/2024 At 31 December 2024 there were no audit reports delayed due to management not finalising the action plan within agreed timescales. Section 3 Current Management Actions at 31/12/2024 At 31 December 2024 there were 10 current audit action points. Section 4 Analysis of Missed Deadlines At 31 December 2024 there were 5 audit action points where the original agreed deadline has been missed. Section 5 Summary of Action Plan Points by Audit Year Item 5 Appendix 2 Page 15
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2 REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS SUMMARY OF ACTION PLANS DUE FOR COMPLETION BY 31.12.2024 SECTION 1 Strategic Area No. of Actions Due No. of Actions Completed Deadline missed Revised Date set* Deadline missed Revised Date to be set* Total * These actions are included in the Analysis of Missed Deadlines – Section 4 Page 16
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3 REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS SUMMARY OF CURRENT ACTION PLANS AT 31.12.2024 SECTION 2 CURRENT ACTIONS BY STRATEGIC AREA Roads and Neighbourhood Due for completion March 2025 4 Total Actions 4 HSCP - Health and Community Care Due for completion June 2025 1 Total Actions 1 Education Learning and Attainment Due for completion March 2025 3 Total Actions 3 Regulatory & Regeneration Completion Date to be advised 1 Total Actions 1 Resources Due for completion December 2025 1 Total Actions 1 Total current actions: 10 Page 17
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4 Status Key On track Complete Overdue – update required Missed original due date REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS CURRENT ACTION PLANS AT 31.12.2024 SECTION 3 Current Internal Audit Action Plans Supplier Management (Report Issued March 2023) Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/158 HSCP Formal Contract and Supplier Management (Amber) Development of a Contracts Register to be stored centrally and controlled by the CCQ Team. By the due date it will have been developed to include a risk register in RAG format to cover contract start date, end date, extension date, CI scores, spend status, Quality monitoring information. Risk register will also be used to programme in more to review services well ahead of contract end date. 31-Dec-2023 30-Jun-2025 HSCP Head of Strategy and Transformation Chief Officer HSCP Board Fleet Management (Report Issued May 2023) Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/176 Adequacy of Strategic Planning in relation to Fleet Management (Amber) An asset management plan for vehicle fleet will be developed based on the current budget for the vehicle replacement programme. The first plan will focus on priority vehicles which require to be replaced and then a rolling programme will be implemented. 31-May-2024 31-Mar-2025 Chief Officer Roads and Neighbourhood Chief Officer Roads and Neighbourhood IAAP/178 Lack of Review and Update of Fortress System (Amber) An initial exercise will be undertaken to review and update the driver information held on Fortress through consultations. Half yearly review on an ongoing basis. Review of keys and allocation of a key to a specific vehicle will be implemented as part of the initial exercise. 31-Dec-2023 31-Mar-2025 Chief Officer Roads and Neighbourhood Chief Officer Roads and Neighbourhood Page 18
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5 Status Key On track Complete Overdue – update required Missed original due date REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS CURRENT ACTION PLANS AT 31.12.2024 SECTION 3 Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/179 Lack of measuring of individual vehicle efficiency/Co2 emissions (Amber) Management will further consider reporting of Co2 emissions as part of the net zero strategy and transition to electric vehicles. In relation to vehicle efficiency, as fuel efficiency is affected by individual driver style, management will consider whether driver information scores could be collated and provided to management to prioritise or target individual training. 31-Oct-2024 31-Mar-2025 Chief Officer Roads and Neighbourhood Chief Officer Roads and Neighbourhood IAAP/180 Single Person Dependency – Transport Administration (Amber) Roles and responsibilities will be clarified and agreed for what is considered to be a service task and what is considered to be a Corporate Admin Support task. Relevant action to document procedures will then be taken. The service will consider developing the skills base of other officers within the wider service and undertake discussion with CAS management to ensure sufficient cross-training of required skills set within the wider CAS team. 01-Apr-2024 31-Mar-2025 Chief Officer Roads and Neighbourhood Chief Officer Roads and Neighbourhood Facilities Management – Cleaning Stock Control (Report Issued January 2024) Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/222 Lack of Information on Flammable/Hazardous Products (Amber) Management will ensure an action plan is developed to include guidance for storing, handling and recording / registering flammable/hazardous cleaning products at premises and ensure compliance checks are carried out. 30-Sep-2024 28-Feb-2025 Facilities Officer and Compliance Team Leader Chief Officer, Citizen, Culture and Facilities Page 19
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6 Status Key On track Complete Overdue – update required Missed original due date REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS CURRENT ACTION PLANS AT 31.12.2024 SECTION 3 CSA Education Procedures (Report Issued May 2024) Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/231 Adequacy of School Fund Procedures A review of the procedures will be undertaken and updated to reflect up to date practice and provide sufficient guidance to staff involved in maintaining and managing school funds. A copy of the updated school fund procedures will be disseminated to Heads of establishments. 31-Mar-2025 31-Mar-2025 Senior Education Officer Chief Officer – Education, Learning and Attainment IAAP/232 School Fund Procedures Not Being Followed Management will identify the tasks and processes within the current procedures which are still applicable and remind establishments that procedures should be followed until updated procedures are available. 31-Mar-2025 31-Mar-2025 Senior Education Officer Chief Officer – Education, Learning and Attainment IAAP/233 Adherence to Finance Procedures - Teacher Absence Cover Management will ensure that all schools are using the cover spreadsheet as supplied by Finance in order to manage and monitor their school budgets. Arrange for additional/refresher training to Head Teachers and support staff in the correct application of coding of absence cover where required. Remind Head Teachers of the requirements of carrying out appropriate checks prior to the approval of timesheets on the Teacher Booker System. Consider running and reviewing reports from the Teacher Booker system to ensure schools are correctly coding absence cover at least on a sample basis. 31-Mar-2025 31-Mar-2025 Senior Education Officer Chief Officer – Education, Learning and Attainment Page 20
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7 Status Key On track Complete Overdue – update required Missed original due date REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS CURRENT ACTION PLANS AT 31.12.2024 SECTION 3 Corporate Procurement below £10k (Report Issued June 2024) Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/235 Procurement Awareness Training Chief Officer, Regulatory & Regeneration is hoping to recruit to the vacant Procurement Manager post by early June 2024. The incoming Procurement Manager will be provided with the opportunity to agree the revised training and guidance. 31-Aug-2024 To be advised Chief Officer, Regulatory & Regeneration Chief Officer, Regulatory & Regeneration UK Shared Prosperity Fund Assurance Review (Report Issued June 2024) Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/237 Inadequate policies and procedures to support closure of the fund Management are in regular discussions with Government officials about continuity of UKSP Funds. Should these discussions prove to be unsuccessful and there is no further funding from this source, WDC has a full set of HR policies relating to staff terms and conditions and processes for dealing with the loss of funding. We will begin to implement the appropriate course of action three months in advance of the fund closing. As an update, the funding has been extended into Year 4 (25/26) and a report will be presented to IRED Committee in February 2025 on further year funding. 31-Dec-2024 31-Dec-2025 Chief Officer Roads & Neighbourhood/ Chief Officer, Resources Chief Executive IAAP/238 Shared Prosperity Fund Data Protection Issue Management will ensure all staff involved in submission and approval of creditor payments to be advised that client names must not be submitted as a reference on payment requests, advising further that initials/reference –numbers may be used as an alternative. 31-May-2024 To be advised Working4u Manager Chief Officer – Roads and Neighbourhood IAAP/239 Financial Monitoring Review Procedures Management will ensure, there is a formalised report introduced detailing the 20% of transactions reviewed on a quarterly basis by the Finance Officer. 31-Aug-2024 To be advised Working4u Manager Chief Officer – Roads and Neighbourhood Page 21
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8 Status Key On track Complete Overdue – update required Missed original due date REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS CURRENT ACTION PLANS AT 31.12.2024 SECTION 3 Commercial Waste (Report Issued September 2024) Code Agreed Action Status Original Due Date Due Date Assigned To Managed By IAAP/244 Lack of Budget Oversight – Commercial Waste Income (Amber) Clear process is to be developed between Finance and Waste Services management for a more robust financial control of the budget to determine the budgeted income target in advance of Council approval at the March budget setting, Waste Service management is to be consulted, before being finalised and the effective monitoring of the approved budget. 31-Mar-2025 31-Mar-2025 Greenspace and Waste Manager Chief Officer – Roads and Neighbourhood Page 22
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Status Key 9 On track Complete Overdue – update required Missed original due date –new date set REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS ANALYSIS OF MISSED DEADLINES AT 31.12.2024 SECTION 4 Report Agreed Action Original Due Date Revised Date Management Comments Supplier Management (March 2023) HSCP Formal Contract and Supplier Management (Amber) Development of a Contracts Register to be stored centrally and controlled by the CCQ Team. By the due date it will have been developed to include a risk register in RAG format to cover contract start date, end date, extension date, CI scores, spend status, Quality monitoring information. Risk register will also be used to programme in more to review services well ahead of contract end date. 31-Dec-2023 30-Sep-2024 30-Jun-2025 This works remains a key workstream for the HSCP however, a number of challenges and additional pressures on capacity have prevented the completion of this audit action by the due date. It is anticipated that the team will have concluded these other priority workstreams to allow them to complete this work by June 2025. Fleet Management (May 2023) Adequacy of Strategic Planning in relation to Fleet Management (Amber) An asset management plan for vehicle fleet will be developed based on the current budget for the vehicle replacement programme. The first plan will focus on priority vehicles which require to be replaced and then a rolling programme will be implemented. 1-Apr-2024 31-Mar-2025 This action is dependent on completion of the action plan to clarify and agree roles and responsibilities for what is considered to be a service task and what is considered to be a Corporate Admin Support task. Relevant action will then be taken. Fleet Management (May 2023) Single Person Dependency – Transport Administration (Amber) Roles and responsibilities will be clarified and agreed for what is considered to be a service task and what is considered to be a Corporate Admin Support task. Relevant action to document procedures will then be taken. The service will consider developing the skills base of other officers within the wider service and undertake discussion with CAS management to ensure sufficient cross-training of required skills set within the wider CAS team. 01-Apr-2024 31-Mar-2025 The service will consider developing the skills base of other officers within the wider service and undertake discussion with CAS management to ensure sufficient cross-training of required skills set within the wider CAS team. Page 23
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10 Status Key On track Complete Overdue – update required Missed original due date REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLAN POINTS CURRENT ACTION PLANS AT 31.12.2024 SECTION 4 Report Agreed Action Original Due Date Revised Date Management Comments Corporate Procurement Below £10k (Report Issued June 2024) Procurement Awareness Training Chief Officer, Regulatory & Regeneration is hoping to recruit to the vacant Procurement Manager post by early June 2024. The incoming Procurement Manager will be provided with the opportunity to agree the revised training and guidance. 31-Aug-2024 To be advised The new Procurement Manager joined the Council on 16 September and will progress the action to agree revised training and guidance. Fleet Management (Report Issued May 20 23) Lack of measuring of individual vehicle efficiency/Co2 emissions (Amber) Management will further consider reporting of Co2 emissions as part of the net zero strategy and transition to electric vehicles. In relation to vehicle efficiency, as fuel efficiency is affected by individual driver style, management will consider whether driver information scores could be collated and provided to management to prioritise or target individual training. 31-Oct-2024 31-Mar-2025 The action completion date has been extended. Page 24
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11 REPORT TO AUDIT COMMITTEE ON STATUS OF INTERNAL AUDIT ACTION PLANS SUMMARY OF ACTIONS BY AUDIT YEAR SECTION 5 Status at 31 December 2024 Current actions by GradeAudit Year No of Agreed Actions No of actions complete Red Amber Green* 2020/2021 25 25 0 0 0 2021/2022 51 50 0 0 1 2022/2023 51 44 0 4 3 2023/2024 62 44 0 6 12 Total 189 163 0 10 16 * Green actions are within the Council’s risk appetite and are therefore not included in Audit Committee reports. Page 25
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WEST DUNBARTONSHIRE COUNCIL Report by Chief Officer – People & Technology Audit Committee: 19 February 2025 ___________________________________________________________________ Subject: Strategic Risks 2022-2027 1. Purpose 1.1 To provide an update on the strategic risks for 2022-27. 2. Recommendations 2.1 It is recommended that the Committee note: The strategic risks as detailed at Appendix 1. 3. Background 3.1 The Council’s 2022 – 2027 strategic risks were agreed by the Corporate Services and Audit Committees in November 2022. The appended risks have been reviewed with re-assessment undertaken before being reported to this committee. This report is submitted as agreed to Audit Committee on a bi- annual basis. 4. Main Issues Strategic Risk 4.1 In line with the Council’s Risk Management Framework, a re-assessment of the Strategic Risks has taken place as detailed within Appendix 1. Each risk is managed through internal controls, linked actions and associated milestones with the objective being to reduce or stabilise the level of risk through completion of linked actions over a period and/or ensure mitigation factors are adequate should the risks actually materialise. 4.2 Table 1 represents a risk dashboard that includes information on the original, current and target rating for each strategic risk, as well as an assessment of the current risk status. Each strategic risk is identified and supported by more detailed information available on a “drill-down” basis in Appendix 1. Seven strategic risks, associated actions and milestones are met and are progressing as expected whilst getting closer to reaching their assigned targets. SR001, SR007, SR008, and SR011 are currently off target, which is explained in further detail below. Item 6 Page 27
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Table 1 Key Strategic Risk Information Strategic Risk Original Risk October 2022 Current Risk December 2024 Target Risk March 2027 Risk Status Rationale SR 001 Significant financial funding reductions/limitations from Scottish Government SR 002 Challenges in implementing broad- ranging school improvement to raise attainment and achievement SR 003 Maintaining Council Assets that are fit for purpose SR 004 Keeping abreast of developments in the innovative use of Information Technologies SR 005 Engaging positively with Residents, Communities & Partnerships SR 006 Challenges in protecting the Health and Safety of Employees and Others SR 007 Complexities in ensuring an appropriately resourced and resilient workforce Page 28
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SR 008 Threat of Cyber Attack SR 009 Challenges in delivering effective services in relation to Roads & Neighbourhoods SR 010 Failure to maintain Housing Stock SR 011 Inability to reduce carbon footprint in line with targets Risk Methodology and Reporting 4.3 Each strategic risk is populated in Pentana in terms of the following template: Risk title and code; Description; Ownership; Potential effect; Measures of impact; Risk factors; Internal controls; Risk opportunity; and Linked actions. 4.4 Each risk has been scored using a “4 x 4” matrix for likelihood and impact in relation to: Current risk (with review dates set at pre-determined intervals); and Target risk (i.e. 31 March 2027 - the duration of the Strategic Plan). The risk descriptors used in the “4 x 4” matrix are as follows: Page 29
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Likelihood Score Descriptor 1 Unlikely 2 Likely 3 Very likely 4 Certain Impact Score Descriptor 1 Minor 2 Moderate 3 Significant 4 Critical 4.5 For ownership, each strategic risk is “Managed By” a Chief Officer and “Assigned To” a Senior Officer. Strategic risks are also reported on a bi- annual basis to the Performance & Monitoring Review Group. Service Risk 4.6 Following the methodology in 4.3 to 4.4 above, each service has owned operational risk registers in Pentana (the Council’s performance system) which were reviewed as part of the 2024/25 service planning process. 4.7 Significant financial funding reductions/limitations from Scottish Government While there has been a cash increase in funding in 2025/26 this was fundamentally due to sizable increases in revenue being raised through taxation as part of the Autum 2024 UK Budget statement. This is not expected to be a recurring situation and therefore the Council will continue to be faced with significant real term funding reductions from the Scottish Government settlement. This coincides with a period where costs are continuing to rise in relation to social care, significant inflationary increases and continuing pay award pressures. Whilst there are ongoing discussions between the Scottish Government and Local Government aiming to reduce the ring fencing of funding, the reality is that material elements of funding remain ring fenced which significantly restricts how the Council can most effectively use the funds made available to it. Page 30
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4.8 Threat of Cyber Attack This risk will always be high as the threat and likelihood of a Cyber Attack remains. The UK public sector is still experiencing elevated levels of targeted Cyber-attacks. As this risk continues to be high the emphasis remains on proactive measures to protect the confidentiality, integrity and availability of our data, critical infrastructure, and overall business operations. Key risks and continual threats include: Demand for emerging technologies such as Aritificial Intelligence solutions present new challenges for the council to implement and secure. Risk to Backup technology and corruption of council data. Ransomware attacks – surged in recent years, potential for significant financial loss and operational disruption. Advanced Persistent Threats (APT’s) – sophisticated stealthy attacks conducted by well-resourced groups, targets include critical infrastructure, government bodies and large corporations. User awareness – Phishing attempts on the rise with more sophisticated techniques being deployed including voice and text phishing. Targeted threats tailored to specific areas of the Council are being observed. Third Party Risks – The Council often relies on third party vendors and suppliers, increasing the risk of cyber-attacks through the supply chain. Mitigations: Investment in our perimeter and internal firewall technology with enhanced threat prevention capabilities. Investment in data backup technology including cloud and offsite Cyber resilience. Continual improvement of our vulnerability/patch management systems and processes. Continual promotion of Cyber awareness through simulated phishing campaigns supported by our online security training and awareness platform. Engagement with ICT Security Partners to highlight and advise on specific areas of risk. The use of machine learning tools to baseline “normal” on our systems and highlight any deviation from this which could indicate potential compromise. Improving Email security with enhanced Phishing/Spam identification. Improved and more secure remote access solution now implemented. Implementing stricter access controls with zero trust technology and policies. Continual assessment of our Cyber Security posture. Risk Assessments such as Incident Response Readiness review, Security Gap Analysis, DPIA and regular audits. Page 31
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Creation of dedicated Cyber Security team and providing industry standard training. Robust Business Continuity and Disaster Recovery plans with a new backup policy in development. Progress continues to take place to improve our security posture in line with the national Public Sector Action plan (PSAP) and Public Sector Network (PSN) compliance. Vigilance of the National Cyber Security Centre (NCSC) Cyber Security guidance continues to remain in place. The cyber security landscape continues to evolve rapidly requiring ICT to adopt proactive measures to protect our assets and maintain business continuity. By understanding the current threat landscape, complying with relevant regulations and guidelines, managing third party risks, and establishing robust incident response and business continuity plans the Council is reducing our exposure to cyber security risks and building a resilient cyber security posture. 4.9 Complexities in ensuring an appropriately resourced and resilient workforce The risk rating remains scored at a 6. The difficult funding position means an impact on an appropriately resourced and resilient workforce is expected however the severity of this remains unclear. Services are reviewing structures and service delivery models in light of the council's financial challenges. The Workforce Planning Strategy is in place for 2022-2027. Additionally, the People First Strategy covers the same period and consolidates several areas: well-being, employee engagement, workforce planning, learning and development and digital. A robust package of wellbeing resources continues to be available, the council is recognised as a leading employer in terms of adapting flexible working practices, attendance levels are closely monitored, with personal stress and minor ailment absences currently prevalent. Digital Skills approach has been refreshed with a matrix cascade planned across the organisation to support 365 Share point rollout utilising digital leads and champions. To further support this the digital team have completed a programme over the last year focusing on digital skills, improving the use of data and maximising 365 tools. The council wide rollout to SharePoint continues with employees being supported on the opportunities this software can provide. 4.10 Inability to reduce carbon footprint in line with targets The risk of non-delivery of carbon emissions targets remains as moderate. Progress is being made through the delivery of the Climate Change Action Plan; however, pace of delivery has been, and will continue to be, impeded due to lack of internal resource and additional funding to deliver. Page 32
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5. People Implications 5.1 There are no people implications associated with this report, other than in relation to the mitigation of risk. 6. Financial and Procurement Implications 6.1 There are no financial and/or procurement implications directly associated with this report however there are in relation to any expenditure linked to mitigation. 7. Risk Analysis 7.1 Failure to ensure robust risk management is likely to result in the Council being criticised by External Auditors for not having an integrated approach to embedding risk management within the authority with the result that a “no scrutiny required” status would not be achieved. 7.2 Progressing with a robust risk management approach will demonstrate that the Council is taking ownership of risk management and ensuring effective measures are in place. The ability to demonstrate risk ownership should benefit the Council in terms of: Understanding risk and its potential impact on the Council’s priorities and objectives; Reducing insurance premiums going forward by recognising that a mature approach to risk management will contribute to a reduction in the number and value of claims across a range of insurance classifications; Contributing towards incident prevention based upon post-incident investigation; Meeting statutory/regulatory requirements; and Ensuring better partnership working with external and internal partners. 8. Equalities Impact Assessment (EIA) 8.1 EIA 548 notes the positive impacts of an approach to risk that integrates considerations on equalities, human rights health and social and economic impacts that is aligned with the content of the new Strategic Plan. 9. Consultation 9.1 The strategic risks have been discussed with the Chief Officers and senior management. The reports to committee are available to the Trades Union and consultation undertaken as required. 9.2 The strategic risks have been cross checked with WD HSCP. This ensures that issues affecting HSCP are reflected within the wider council strategic risk report. Page 33
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10. Strategic Assessment 10.1 At its meeting on 26 October 2022, the Council agreed that its five main strategic priorities for 2022 - 2027 are as follows: Our Communities - Resilient and Thriving Our Environment - A Greener Future Our Economy - Strong and Flourishing Our Council - Inclusive & Adaptable 10.2 The strategic risks have been identified to complement and underpin all strategic priorities. Name: Victoria Rogers Designation: Chief Officer People & Technology Date: 3rd February 2025 Person to Contact: Harry McGhie, Risk & Health and Safety Officer Harry.McGhie@west-dunbarton.gov.uk Appendices: Appendix 1: Detailed Strategic Risk List Background Papers: West Dunbartonshire Council Strategic Plan 2022-2027 Risk Management Framework EIA screening Page 34
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Strategic Risk Report Generated on: 03 February 2025 SR 01 Significant financial funding reductions / limitations from Scottish Government It is expected that the Council will continue to be faced with significant real term funding reductions from the Scottish Government settlement. This is based on local government settlements in recent years and an ongoing narrative about limited funds available to support public services. This coincides with a period where costs and demographic pressures are continuing to rise in relation to social care, significant inflationary increases, the impact of increases in the bank interest rate on the cost of borrowing and pay award pressures linked to inflation. Whilst there are ongoing discussions between the Scottish Government and Local Government on reducing the ring fencing of funding is the reality is that material elements of funding remains ring fenced which significantly restricts how the Council can most effectively use the funds made available to it. Current Risk Matrix Last Review Date Current Rating Target Risk Matrix Target Date Target Rating Assigned To 12-Dec- 2024 16 31-Mar-2027 4 Laurence Slavin Potential Effect Shortfall in finances resulting in the Council being unable to provide all services as intended and needing to identify further cuts to services to deliver a balanced budget. This extends to those services delegated by the Council to the Health and Social Care (HSCP) Board. Measures of Impact - Reduction in government grant - Demographic change (population decline/growth, aging population) - Cost reduction required including reducing level and/or quality of service provision - Increased Debt (collection of Council Tax, HRA rents, etc) -Depletion of reserves Risk Factors - Insufficient funding from Scottish Government to retain essential services and to fully fund policy commitments. - Lack of time to plan for changes in the level of grant funding due to single year settlements and late settlement information from Scottish Government - General inflationary factors - Bank of England Base Rate increases - Significant additional cost pressures, driven by demographic profile. - Insufficient capital receipts to cover loan repayments (creating a revenue pressure) Internal Controls - Long Term Financial Strategy - Regular Financial Updates to Council - Monitor and maintain General Services and Housing Revenue Account prudential targets - Reporting and monitoring of Treasury Management Strategy - Budgetary control process - Regular budgetary control and savings monitoring reports provided to CMT and Council / committees - Active engagement with HSCP Chief Officer on financial performance and budget planning - Vacancy Control measures - Rigorous debt collection processes - Annual Internal Audit Plan - Work of External Auditors (external control) - Annual Governance Statement Latest Note Assumptions on future Scottish Government funding and other material budget assumptions are updated regularly and reported to Council periodically throughout the year. It is expected that future Scottish Government funding will be insufficient to pay for current levels of service delivery. Furthermore, it is expected that future local government settlements will be a real terms reduction in local government funding, including those services delegated to the HSCP Board. Risk Opportunity -Significant council projects focusing on long term economic development in the West Dunbartonshire area to grow the local economy and generate revenue - Annual exercise to identify efficiencies - Projects to implement new ways of working (e.g. digitisation, automation, asset management) Item 6 Appendix 1 Page 35
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Linked Actions Code & Title Progress Status Assigned To RES/24-25/001 Review ways of decreasing corporate debt through continued improvements to debt collection processes in relation to sundry, NDR, Council Tax and rent Ryan Chalmers RES/24-25/002 Review ways to improve rent collection rates in conjunction with Housing and W4U Ryan Chalmers SR 02 Challenges in implementing broad-ranging school improvement to raise attainment and achievement This risk concerns delivering excellence and equity for children and young people. National and local indicators have been set to monitor progress with outcomes relating to attainment and achievement with a key focus on making progress to narrow the poverty related attainment gap. Scottish Equity funding devolved to local authorities aims to deliver on priorities between 2023-26. This funding will end in 2026. Current Risk Matrix Last Review Date Current Rating Target Risk Matrix Target Date Target Rating Assigned To 17-Dec- 2024 4 31-Mar-2027 2 Julie McGrogan Potential Effect Improved outcomes for young people would not be attained and achieved. The Council would fail to meet the needs of individual learners particularly those children and young people most disadvantaged by poverty. Risk of reputational damage to the service and the wider Council if outcomes and targets not as education as a statutory service is subject to close scrutiny of local authority performance with outcomes for children and young people by the local community and by the national agencies. Measures of Impact Stretch Aims and Targets for attainment and achievement 3-18 et to be achieved by 2026. The Stretch Aims are scrutinised annually by Scottish Government and Education Scotland. West Dunbartonshire Performance Targets for attainment and narrowing the poverty related attainment gap in Early Years, Broad General Education and Senior Phase West Dunbartonshire Improvement Board Quality Indicator Evaluations National Qualifications Attainment and Achievement Results Broad General Education Achievement of Level Results West Dunbartonshire Scottish National Standardised Assessment Data Positive Destination Data West Partnership Attainment , Equity and Destination Performance Measures Her Majesty’s Inspectors of Education inspection reports Stakeholder Feedback Risk Factors Reduced funding 2022 -2026; no confirmation of future funding from 2026: This Strategic Priority has been supported by Scottish Government Attainment Challenge Funding since 2015 and since 2022 Strategic Equity Funding. Also, schools in West Dunbartonshire have received Pupil Equity Funding since 2016. The national funding streams are committed to until 2026 – there is uncertainty as to future funding provision. From 2022 – 2026 the Strategic Equity Fund is being tapered with annual reductions in the funding the local authority receives. This will reduce resources available to deliver work streams related to SEF. Internal Controls -Strategy for Excellence and Equity 2023 – 2026 ( developed to embed improvements achieved and support an exit strategy from Strategic Equity Funding by 2026). -Project management by Senior Education Officer -Education Improvement Board chaired by Chief Education Officer -Scrutiny by Scottish Government and Education Scotland (progress reports produced and submitted) -WDC Improvement Framework -Termly progress reports submitted as part of Educational Service committee reports -Relevant Continuous Professional Development programme to support education staff -Meetings between WDC and Education Scotland/Her Majesty's Inspectors of Education -BGE Attainment and Performance Data -Literacy, Numeracy and HWB Steering Group -National Improvement Framework (NIF) -Education Recovery Plan Latest Note An improvement action plan has been implemented in all schools and ELC since August 2024 focusing on school attainment / equity performance and focused improvement actions implemented to build on our improving performance. Page 36
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Risk Opportunity Improved attainment - improved attendance - reduced exclusions - reduced violent incidents - reduction requirement for targeted support over time - reduction requirement for specialist placements over time - improved learning & community engagement - children/pupils at risk identified earlier and more effectively - more empowered community providing self-sustaining peer support - increase in the percentage and range of positive destinations over time - increased access to digital learning resources Linked Actions Code & Title Progress Status Assigned To ELA/23-24/003 Narrow the attainment gap between the most and least disadvantaged children and young people Julie McGrogan ELA/23-24/004 Improve skills and sustained, positive school leaver destinations for all young people Andrew Brown ELA/23-24/005 Improve attainment, particularly in literacy and numeracy Julie McGrogan SR 03 Maintaining Council Assets that are fit for purpose The risk that the Council's assets and facilities are not fully fit for purpose with consequent adverse impact on our ability to deliver efficient and effective services. Assets included in this assessment are; the Council’s property portfolio. Current Risk Matrix Last Review Date Current Rating Target Risk Matrix Target Date Target Rating Assigned To 04-Dec- 2024 2 31-Mar-2027 2 Michelle Lynn Potential Effect - Assets are not utilised in the most effective and efficient manner - Service cannot be properly delivered to the satisfaction of service users - Service users require to seek alternative service provision -Increase in reactive maintenance costs/ demand/ volume -Council assets in poor conditions -Council assets fail to meet relevant standards which are reported to either Scottish Government and/or Care Inspectorate. Measures of Impact - Condition surveys - Suitability surveys - Customer perceptions of service delivery - Investment levels in upkeep and improvement of asset base and facilities -Asset user satisfaction - Operating costs and savings Risk Factors - Adequacy of funding available to improve asset base - Adequacy of staff resources allocated to the area of asset management - Council buildings/assets deemed to be unfit for existing purpose - Economic conditions may reduce level of potential capital receipts from surplus property sales - Increase public liability claims Internal Controls - Corporate Asset Framework - Learning Estate Strategy 2020-2030 - Property Asset Plan 2023-2028 - Property and Land Disposal Strategy - Capital project meetings are carried out regularly in addition to project specific meetings and Building Services/Asset Management monthly meetings - Capital Programme - Strategic Asset Management Group - Learning Estate Project Board - Detailed asset database that shows relevant information on a property by property basis in relation to operational, non-operational - Sustainability Policy Latest Note The risk score continues to remain low due to the ongoing capital programme of works. Risk Opportunity -Enhance reputation of Council by being able to improve Council assets. -Estate, assets and service delivery (e.g. new school buildings, operational building upgrades, office and depot rationalisation projects) - Enhance employee "feel good" factor by providing modern office accommodation equipped with up to date IT facilities -Improved satisfaction from public building users Page 37
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- Secure external funding for development of assets (e.g. EC, lottery, Historic and Environment Scotland) - Prioritised Building Upgrade Plan Linked Actions Code & Title Progress Status Assigned To RES/24-25/016 Develop and implement plans and support services to achieve the asset related options agreed by Council Michelle Lynn RES/24-25/012 Progress the disposal of key strategic sites Michelle Lynn SR 004 Keeping abreast of developments in the innovative use of Information Technologies Failure to keep pace with changing technology environment Current Risk Matrix Last Review Date Current Rating Target Risk Matrix Target Date Target Rating Assigned To 03-Dec- 2024 2 31-Mar-2027 2 James Gallacher; Patricia Kerr; Dorothy Nicolson Potential Effect A lack of consistent, sufficiently robust service planning in respect of ICT arrangements is likely to result in the Council being ill prepared to meet future demands in key service areas and lacking the capacity to respond effectively to changing need such as increased requirement for remote working as identified during covid pandemic. Measures of Impact • Close relationship and working practices with council Asset Management Service regarding property rationalisation. • Implementation of mobile and flexible working, enabling a downsizing of required office accommodation as people to work more efficiently and to adopt a more flexible policy towards office accommodation and desk provision. • Number of systems that have supplier maintenance contracts. – annual process. • Invocation of Service Business Continuity Plans and ICT Disaster Recovery plan • Degree of compliance with security controls to prevent data loss through poor o/s patching, cyber-attack, firewall configurations, switch replacements/upgrades etc • Fit for purpose primary and secondary data centres • Modern Wi-Fi technology in all council locations. • Broadband speed in the Council area - WDC has 2nd highest broadband speeds in Scotland. Investigating funding options for fibre network. • Number of ICT Service Desk incidents resolved within half day - exceeded the target and higher target set. • Extent of functionality development in key Council systems (i.e., lack of development beyond base system leading to ineffective management information) – several channel shift projects delivered, and more are in progress. PSN/Risk/challenging. Support service areas. • Fit for purpose Council website, delivering information and services to a significant percentage of the Council's customers. • Provide efficient desktop services supporting laptops, Chromebooks, PCs, Thin client terminals to meet changing workforce flexibility and property rationalisation requirements. 5-year Device replacement programme in place. Risk Factors • Insufficient resourcing of ICT developments so that benefits and opportunities identified are not realised • Lack of network security controls implemented. I. e Lack of intrusion detections alerts • failure to respond to audit / PSN test findings and recommendations, • insufficient resources allocated to security tasks. However, Service redesign and ICT resources aligned to security tasks and improved monitoring processes and tools as well as additional tools purchased to help support remote working environment all help to mitigate this risk. • Insufficient Service Business Continuity Plans and/or Disaster Recovery Capability. • Lack of project and programme change management arrangements. • Poor quality of mobile communication provision. • Lack of uptake on channel shift. Internal Controls - Ongoing Capital programme established for technology refresh projects - Information & Communication Technology (ICT) Policies such as ICT Security Framework - Governance structures such as ICT Steering Board, Education ICT Steering Board, Digital Transformation Board in place to support governance, integrated planning and decision making in relation to ICT -Use of both internal IT resources from across the Council and skilled specialist consultants in key areas Page 38
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- Fit for purpose primary and secondary data centres Latest Note Dec 24 The Council continues to embrace innovative and new technology and has implemented several improvement projects with a focus on delivering an improved and secure digital workplace experience, delivering fit for future infrastructure and exploring opportunities with new tech such as Artificial Intelligence. There continues to be investment in cloud services with MS SharePoint and One Drive is live for pilot service areas. Planning of Phase 2 of the project is in progress and SharePoint will be available to remaining council services from Q1 2025 onwards. In addition, the Council is currently piloting a new Artificial Intelligence note taking solution with the aim to deploy across council services early in 2025. Legacy technology has been replaced with improved and consistent access to the latest office 365 desktop applications for users, in addition we released a new list of Microsoft Power apps to council employees. Laptop devices are now secured and controlled via the Microsoft cloud and a project to redesign the process to updates devices with windows updates and security patching is progressing well and will reduce disruption to employees. ICT in conjunction with NHS are progressing cross-organisation projects with access to WDC Wi-Fi now available in 3 NHS buildings. NHS employees are now accessing NHS Wi-Fi in Church Street with file access also now available. Investment in the latest firewall technology has taken place and this project will not only improve internal and external security but will also increase data capacity throughput at our data center to allow improved data performance. This new technology will ensure our security posture is strengthened and bandwidth capacity is increased at all council sites. The council is also currently researching options to increase our internet line speed and ensure cloud readiness for future projects. Risk Opportunity -365. Provide Council employees with secure access to email and supporting systems from anywhere. -Opportunity to redesign infrastructure and introduce new tools and security measures to support hybrid working environments. – - Annual network penetration tests and for PSN compliance audit - Annual External Audit on ICT Controls - Continued investment in ICT infrastructure and its focus on network security and resilience. - Provide appropriate technology for employees, pupils, and service users as well as for ICT support teams - Rationalise IT systems - Increased use of mobile devices e.g., laptop/tablet devices and Chromebooks - Review of device strategy and efficient/effective approach. - Provide self-service style systems to employees and citizens Linked Actions Code & Title Progress Status Assigned To P&T/24-25/ICT/03 Enable an improved digital workplace experience for council employees James Gallacher P&T/24-25/ICT/04 Review and implement MS SharePoint and One Drive James Gallacher P&T/24-25/ICT/05 Coordinate ICT device replacement programme. James Gallacher SR 05 Engaging positively with Residents, Communities & Partnerships The risk that the Council fails to adequately engage, establish and maintain positive relationships with local residents and communities in addition to partnership bodies. Current Risk Matrix Last Review Date Current Rating Target Risk Matrix Target Date Target Rating Assigned To 06-Dec- 2024 3 31-Mar-2027 2 Colin Smith; Elaine Troup Potential Effect Potential for tensions to develop with residents and local community groups Reputational damage to council services Degradation of trust in service provision A failure of strong partnerships could impact on the Councils obligations under Community Empowerment Act Page 39
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Measures of Impact Successful delivery of Local Outcome Improvement Plan (LOIP) and supporting plans positive partnership inspections Informed and engaged residents participating in consultation activity Telephone survey monthly, quarterly and annual measures Increased social media engagement and reach Risk Factors Inability to deliver improved outcomes which require strong partnership activity Council's reputation is adversely affected through a failed partnership arrangement Lack of appropriate staff development / skills may be lacking to support new model of service delivery Team restructure, post reductions and team overall budget savings challenges the viability of the team to deliver against strategic plan and community needs. Inequity of engagement across the partnership on key local issues Council seen as unresponsive to community if feedback from engagement not acted upon Apathy within communities leads to little or no engagement Some community groups feel their voices are not being heard Internal Controls Robust partnership arrangements through community planning partnership Align the Council's strategic plan with the Local Outcome Improvement Plan (LOIP) Ensure that partners have signed up to deliver on the outcomes and targets set in the LOIP Develop data sharing protocols with partner agencies Participate in reform agenda as it impacts on Council area Ensure robust mechanisms for public feedback (Embedding the Strategic Engagement Framework) Annual budget consultation events Citizens Panel Open Forum questions at Council meetings Latest Note This risk level has been reviewed and remains unchanged. Across the organisation service areas continue to improve methods of engaging with residents, communities and partners. Risk Opportunity Position West Dunbartonshire as a modernising Council Residents are more comfortable with the digital platform as a result of the enforced cessation of face to face services - this presents an opportunity to modernise communication Community Empowerment Act Participation requests Asset transfer Linked Actions Code & Title Progress Status Assigned To CCF/24-25/C&D/05 Explore telephony self-serve options Stephen Daly CCF/24-25/COM/02 Develop a communication plan to support budget savings initiatives Lauren Crooks CCF/24-25/C&D/03 Review accessibility of the website and intranet. Jonathan Muir CCF/24-25/COM/01 Develop Strategic Communications Strategy Lauren Crooks SR 06 Challenges in protecting the Health and Safety of Employees and Others Failure to meet the Council’s duty to protect the health, safety and welfare of its employees and other people who might be affected by its business Current Risk Matrix Last Review Date Current Rating Target Risk Matrix Target Date Target Rating Assigned To 03-Dec- 2024 4 31-Mar-2027 4 Alison McBride Potential Effect Poor health and safety culture within the organisation leading to; Risk of an employee, service user, pupil (young person) or member of the public being seriously / fatally injured by fault of the Council; reputational risk regarding negative publicity; financial risk in terms of claims management compensation to the injured party; increase in insurance premiums; risk of prosecution by the HSE resulting in a fine and/or a Council Employee being subject to criminal charges, poor employee morale, high staff turnover leading to diminished service delivery. Measures of Impact Resources associated with in-house/HSE investigation. Incident statistics. Service delivery impact in terms of injury-related absence and potentially enforced cessation of work activities. Impact of injury on employees/members of the public, legal proceedings, financial penalties, potential reputational damage and risk of criminal charges. Hazard reporting. Actions at health and safety committees. Implementation of Corporate health and safety plan. Risk Factors Lack of resources, inadequate Safety Management Standards and H&S strategy. Poor health and safety Page 40
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culture. Under reporting of incidents. Blame culture. Poor communication between management and employees. Competent advice. Internal Controls •Competent health and safety advice readily available from the Corporate H&S team. •Corporate health and safety plan developed and monitored via Pentana. •Robust health and safety management system, FIGTREE. • Council has in place a robust H&S policy, Safety Management Standards and Fire Risk Management Strategy that includes service specific health and safety plans, duties and responsibilities for Chief Officers, managers and employees. • Adequate H&S resources in place to that will allow statutory obligations in terms of the Health and Safety at Work etc. Act and supporting legislation. • Embedded H&S culture that discusses H&S issues at senior level and cascades throughout the organisation through the health and safety committee system. • Monthly reports to PMRG on organisational safety performance and issues. •Chief Officers attend service H&S committees on a quarterly basis. • Workplace inspection and audit programme. • Service risk profiling. • H&S training needs analysis for every employee group. • The Council has in place a Trade Union Health and Safety Partnership Agreement. • Council promotes health and safety training for TUs to diploma level. • Hazard reporting module via FIGTREE. • Health & safety e-learning package. • Risk assessment working groups for service areas and review process. Latest Note Corporate H&S are actively reviewing and optimising key service areas, including Safety Management Standards and training. Figtree is now hosted by Figtree’s own server platform replacing WDC’s ICT servers and there has been a marked improvement in turnaround times for enhancements to the system. Work is also being carried out to refine and simplify the health surveillance process in collaboration with OH and line managers. The ongoing management of H & S within the Council includes facilitating management workplace inspections as well as conducting noise monitoring, auditing, scaffold inspections and presenting training. Furthermore, fire safety management remains a priority across the authority, with the fire risk assessment programme, fire safety training and support given by Corporate H&S to services to ensure compliance with regulatory requirements. A significant amount of work has been undertaken to ensure WDC is compliant to the change in legislation relating to the investigation of fire alarm actuations. Corporate H&S are working with RPO’s across the Council as well as providing training on the subject both in person and via the e- learn platform. Risk Opportunity Demonstrate to committees, elected members, Trade Unions, employees, the community and other external partner’s evidence of robust H&S culture. Good knowledge and awareness of health and safety throughout all services. Positive relationship with Corporate health & safety team and all services. Reduced incidents, costs and absence rates. Linked Actions Code & Title Progress Status Assigned To P&T/24-25/P&C/02 Continue to embed sound H&S practice Harry McGhie SR 07 Complexities in ensuring an appropriately resourced and resilient workforce Failure to ensure that there is an appropriately resourced and resilient workforce in place to meet future organisational needs, in effectively executing the Council’s 2022-27 Strategic Plan. Current Risk Matrix Last Review Date Current Rating Target Risk Matrix Target Date Target Rating Assigned To 13-Dec- 2024 6 31-Mar-2027 2 Alison McBride Potential Effect Inability to deliver services effectively Reduced level of service HSCP - workforce capacity, recruitment and retention challenges; appropriate training for roles Lack of improvement or increase in staff absences Page 41
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Council underachieves as an organisation Low staff morale Employee conflict Increased turnover Inability to attract/recruit Measures of Impact - Access to and participation of employees in learning and development activities - Absence rate and trends - Employee turnover - Grievance, discipline and other monitoring information - Employee voice and associated actions - Reports from external scrutiny bodies and award bodies - Benchmarking with appropriate comparators Risk Factors - Inability to attract/recruit - Lack of appropriate development - inadequate skills -risk to new models of service delivery - Lack of resource/capability to deliver - Workforce unable to adapt to change Internal Controls - HR processes designed to meet service delivery needs - Develop new structures to reflect strategic priorities and aligned to Standard Operation Model (SOM) - Align workforce plan to the Council's strategic planning processes (i.e. have the right people available at the right time with the right skills to fulfil properly all of the Council's strategic priorities) - Periodic review of pay arrangements in accordance with EHRC guidance (currently every 3 years) - Incorporation of succession planning into workforce planning framework - Identify training programmes to upskill staff - Effective use of SWITCH to support alternative careers - Flexible HR policies, in particular People First covering workforce planning, learning & development (including elearning), digital/continuous improvement, employee wellbeing & engagement. - Effective use of Occupational Health Service - Robust Be the Best Conversations process - Effective leadership and management behaviours, practice and programmes Latest Note Workforce Planning Strategy in place for 2022-2027. People First Strategy is in place covering 2022-2027 and this is a consolidation of a number of areas: well- being, employee engagement, workforce planning, learning and development and digital. WDC are recognised as leading in terms of adapting flexible working practices. A robust package of wellbeing resources continue to be available, absence levels are closely monitored, with personal stress and minor, ailments absences prevalent. Trickle user numbers continue to rise and the tool is used as an additional route to ensure wider spread of workforce communications alongside an opportunity for employees to share thoughts and ideas. In addition, the tool is used regularly to gauge employee engagement levels. Digital Skills approach has been refreshed with a matrix cascade planned across the organisation to support 365 Share point rollout utilising digital leads and champions. To further support this the digital team have completed a programme over the last year focusing on digital skills, improving the use of data and maximising 365 tools. The council wide rollout to SharePoint continues with employees being supported on the opportunities this software can provide. Services are currently working on structures and service delivery whilst considering the difficult financial funding position and the impact of this will be closely supported and monitored. There have been reductions across the people support functions and this has increased the challenges in supporting services. HSCP have noted a dissatisfaction due to an increased workload related to this. Risk Opportunity - Identify previously unknown skills and talents in the workforce - Realise the potential of staff Linked Actions Code & Title Progress Status Assigned To P&T/24-25/P&C/04 Maintain and monitor employee wellbeing, engagement and workforce planning Leeanne Galasso; Louise Hastings; Lisa MacGregor P&T/24-25/P&C/03 Implement improvements in recruitment life cycle processes Lisa MacGregor P&T/24-25/P&C/05 Review and enhance employee skills and learning programme Lisa MacGregor SR 08 Threat of Cyber-attack Data, systems and/or infrastructure are impacted as result of security attacks which are increasing in number at a time when this threat is already placing Page 42
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demands on resources to deliver increased levels of security controls. Current Risk Matrix Last Review Date Current Rating Target Risk Matrix Target Date Target Rating Assigned To 03-Dec- 2024 9 31-Mar-2027 4 Andrew Cameron; James Gallacher Potential Effect • Remote working could be impacted for Council employees and partners HSCP, VJB and WDL by loss of internet services. • Disruption to services impacting service delivery to citizens • Employee and Citizen data loss with the potential for misuse such as identity fraud • Misinformation being delivered to the public via WDC communication channels • Potential for significant fines currently under the Data Protection Act and from May 2018 under the provisions of the General Data Protection Regulations • Reputational damage • Redirection of resources to deal with the impact of an attack and away from BAU work • Potential for significant fines currently under the Data Protection Act and from May 2018 under the provisions of the General Data Protection Regulations • Reputational damage • Inability to provide a secure information management network for Council and partners including HSCP, VJB and WDL. Measures of Impact • Obligation to secure Cabinet Office PSN compliance certification. • Obligation to comply with DWP MOU • Monitor remote access usage to capacity plan • Recorded attempts from unauthorised sources to breach council cyber defences • Recorded cyber related incidents in the Cyber incident log • Quantity of breaches/incidents reported to the Information Commissioners Office • Fines levied for breaches Risk Factors • Potential for attacks out of normal working hours /days • Inappropriate Cyber defences at the perimeter of the council network and NHS interconnect network • Inappropriate delivery of security patches to desktop, network switches and server estates • Compliance with security standards such as PSN, PCI, Public Sector Action Plan on Cyber resilience for Scotland • Continually changing threat landscape • Maintaining relevant skill sets among employee group / cost of securing expert resources • Increased targeted attacks and risks due to Remote working. •Remote access technology may not remain fit for purpose in a Smart working environment Internal Controls Robust backup strategy in place on premise and cloud backup for 365 with immutable capability. • Service Continuity Plans • ICT Disaster Recovery Plan • Continually review and update internal policies on patching and system hardening to ensure we keep abreast of emerging threats and trends • Annual PSN compliance audit including a comprehensive IT Health Check • Governance structure in place, ICT Steering Board consisting of senior management and relevant stakeholders meeting bi-monthly or as required in response to incidents/events • Programme of Internal and External ICT audits • Information Security/Data Protection forum. Project specific forums • Multiple layers of Cyber defences • Network Segregation • Rolling programme of security awareness sessions • Interagency and cross Council working groups and sharing. • National Digital Office / Scottish Government Public Sector Security programme and guidance • Continually review technologies in line with new working practices to ensure security and assurance is integral. • Monthly device and server patching regime. Latest Note Dec 24 Cyber strategy, policies and technologies are continually being improved, reviewed and monitored, ICT continues to follow NCSC guidance where applicable. Cyber Security team focus has been on promoting employee awareness to cyber risk from both a professional and personal perspective, this work has resulted in 82% of employees in our recent survey indicating their Cyber awareness has improved. Page 43
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Development of a dedicated security intranet page to provide guidance and advise to employees is being finalised and will go live December 24. Progress continues to improve our Microsoft 365 security and email posture in addition to a review and update of our Disaster Recover, Cyber Incident Response and Business Continuity plans. Incident response readiness, security gap analysis and M365 security review has been completed by our 3rd party security partner. Results are currently being reviewed with the aim to agree an improvement action plan. Our annual Network Penetration testing is underway with the aim to renew our Public Sector Network certificate early in 2025. Enhanced online email security training is in progress with continuous phishing campaigns to raise employee awareness. There is a continual review of the process to apply security updates, patches, and software deployments. Recent improvements has redesigned the update process to devices. Geo-blocking to GB and Ireland remains in place. Risk Opportunity • Increase Cyber resilience and awareness for employees, members and citizens, this can be done through existing training and awareness platform • Contribute to Scottish Government Public Sector Action Plan on Cyber resilience for Scotland and potential to become involved in a national/shared security operations centre • Upskill employees to address current and emerging threats • Increased employee awareness across Council and partners HSCP, VJB and WDL. Linked Actions Code & Title Progress Status Assigned To P&T/24-25/ICT/01 Further secure the Council’s Technology Infrastructure James Gallacher SR 09 Challenges in delivering effective services in relation to Roads & Neighbourhoods The risk that the Council’s fails to deliver on the three service areas within Roads & Neighbourhood: Roads & Transportation, Waste & Greenspace and Capital Projects & Fleet. These areas provide services across a range of areas including managing and maintaining roads, footpaths and associated infrastructure, managing flood risk, winter gritting, grounds maintenance, street cleaning, burial and cremation, outdoor facilities, waste and recycling, vehicle fleet management and management, Compliance, consultancy services and delivery of capital projects Failing to ensure these services are not fully fit for purpose could result in adverse consequences in relation to delivering efficient and effective services. Current Risk Matrix Last Review Date Current Rating Target Risk Matrix Target Date Target Rating Assigned To 13-Dec- 2024 4 31-Mar-2027 2 Gail Macfarlane Potential Effect - Assets are not utilised in the most effective and efficient manner - Service cannot be properly delivered to the satisfaction of service users - Service users seek alternative service provision -Increase in reactive maintenance costs/ demand/ volume -Council assets in poor conditions -Council assets fail to meet relevant standards - Council projects are not delivered on time or on budget -Failure to comply with Transport (Scotland) Act 2019 -Failure to comply with Waste (Scotland) Regulations 2012 - Assets not fit for future and investment not sufficient to fulfil capital investment needs. Failure to comply with Good Operator License requirements. Increased reliance on hire vehicles should fleet investment not be adequate. Measures of Impact - Condition surveys - Defect inspection and management - Suitability surveys - Road Condition SPI -Customer perceptions of service delivery -Legionella and asbestos inspections, Page 44
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- Investment levels in upkeep and improvement of asset base and facilities -Asset user satisfaction -Operating costs and savings -Housing adaptations not undertaken timeously -Local Government Benchmarking Framework (LGBF) -Association for Public Service Excellence (APSE) -Waste Managers Network Group Risk Factors -Adequacy of funding available to improve asset base - Adequacy of funding to maintain asset base ie roads at a steady state - Adequacy of staff resources allocated to the area - Council assets deemed to be unfit for existing purpose - Economic conditions may reduce level of potential capital receipts -Over one third of the road network is in need of repair and the current long term capital funding only sustains a steady state condition of the road network - Increased public liability claims due to poor condition of roads network - Increase public liability claims due to poor condition of footpaths and roads which are not part of our adopted network. -buildings such as schools closed for safety if legionella etc present -Poor customer engagement for recycling, deposit return scheme, refuse transfer station -Financial challenges - Budget Sensitivity Analysis (fuel costs, waste refuse disposal tonnage costs, bitumen availability and costs) Internal Controls -Strategic Asset Management Group - Corporate Asset Management Strategy (scheduled refresh in 2nd half of 2021/22 year) - Learning Estate Strategy - Capital Investment Team - Capital project meetings are carried out monthly in addition to project specific meetings. - Capital plan - Roads and Lighting Asset Implementation Plan - Fleet Asset Implementation - Open Space Asset Implementation Plan - Sustainability Policy -User feedback – complaints data, Citizens’ Panel and monthly telephone survey -Fit for future service reviews -Deposit Return Scheme -Climate Change Strategy -Community Empowerment Strategy -Food Growing Strategy and Allotments -Equality Outcomes Latest Note Service continues to provide full service, monitoring in place to ensure any adverse issues are highlighted and appropriate actions taken. No change to Risk Matrix. Risk Opportunity -Enhance reputation of Council -Ensure services are fit for the future and are compliant with legislation changes -Estate, assets and service delivery (e.g. office and depot rationalisation projects, roads upgrade programme, vehicle replacement programme, greenspace upgrade projects) - Secure external funding for development of assets (e.g. EC, lottery, Historic and Environment Scotland) - The continued implementation of the energy efficient street lighting project will both improve the asset and reduce costs significantly through reduced maintenance, energy consumption and carbon output. - The effect of these energy efficiencies has demonstrated that significant savings and environmental benefit can be achieved through the utilisation of developing technology. Linked Actions Code & Title Progress Status Assigned To R&N/24-25/CI/02 Develop Strategy for transition to electric fleet Neil Fazackerley R&N/24-25/GS/04 Develop Ash die back action plan Ian Bain SR 10 Failure to maintain Housing Stock The risk that Council’s Housing Stock are not fully fit for purpose with consequent adverse impact on our ability to deliver efficient and effective housing for Council tenants. Current Risk Matrix Last Review Date Current Rating Target Risk Matrix Target Date Target Rating Assigned To Page 45
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25-Nov- 2024 4 31-Mar-2027 4 Alan Young Potential Effect - Housing stock is not utilised in the most effective and efficient manner - Service cannot be properly delivered to the satisfaction of service users -Increase in reactive maintenance costs/ demand/ volume -Housing stock in poor condition -Housing stock fail to meet relevant standards - Non-compliance with Scottish Housing Quality Standard Measures of Impact - Condition surveys - Suitability surveys - Customer perceptions of service delivery - Investment levels in upkeep and improvement of housing stock -User satisfaction -Operating costs and savings - Local Government Benchmarking Framework (LGBF) Risk Factors - Adequacy of funding available to improve housing stock - Adequacy of staff resources allocated to the management of housing stock - Housing stock deemed to be unfit for existing purpose -Increasing issues relating to supply of labour and materials, due to increased energy, transport and raw material costs, impacted on supply chains, and third parties and our ability to carry out works within budget and on time. Internal Controls - Housing Capital Investment Programme (refreshed and delivered annually) - Housing Capital Improvements - WDC Local Housing Strategy 2021-25 - The Housing Capital Investment Team - The Planned Maintenance Section - Housing Asset Management Strategy - Detailed asset database that shows relevant information on a property by property basis in relation to HRA properties. - More Homes Better Home Project Board. - Telephone Survey feedback - Fit for future reviews -Other benchmarking/ feedback - Climate Change Strategy Latest Note No change to risk score, programme for investment and upgrades to council housing continues into 24-25 and a further five year programme to 28-29. Risk Opportunity -Enhance reputation of Council by being able to improve Council housing stock -Estate, assets and service delivery (housing investment programme ) -Improved satisfaction from tenants - The effect of these energy efficiencies has demonstrated that significant savings and environmental benefit can be achieved through the utilisation of developing technology. -Improvement of SHQS & EESSH compliance performance and points, and reduced SHQS abeyance numbers through the strategic planning and management of housing assets. - Increase in environmental improvements including bin stores - Increase in internal (e.g kitchens, bathrooms, showers, special needs adaptations, central heating, smoke detectors, windows and doors) and external updates (e.g new roof coverings, external insulated render and tenement structural refurbishments) - Increase in number of New Build Homes as part of the Strategic Housing Investment Programme (SHIP) -Achieve energy efficiency standard for social housing Linked Actions Code & Title Progress Status Assigned To H&E/24-25/HDH/04 Deliver new Housing Asset Management Strategy John Kerr H&E/24-25/HAI/01 Ensure the Council’s Housing stock maintains compliance with the Scottish Housing Quality Standard and reduce the number of properties held in abeyance. Alan Young H&E/24-25/HAI/02 Ensure the Council’s Housing stock progresses towards the achievement of the energy efficiency standard for social housing. Alan Young SR 11 Inability to reduce carbon footprint in line with The risk that the Council will be unable to achieve net zero emissions by 2045, both in relation to mitigating carbon emissions and adapting to the Page 46
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targets impacts of climate change. Net zero refers to achieving an overall balance between emissions produced and emissions taken out of the atmosphere. This target has been developed in a way that mirrors the emission reduction trajectory set by the Scottish Government in light of the Climate Emergency. Current Risk Matrix Last Review Date Current Rating Target Risk Matrix Target Date Target Rating Assigned To 11-Dec- 2024 6 31-Mar-2027 2 Gillian McNamara; Elaine Troup Potential Effect . Failure to meet mandatory national and international policy drivers Failure to meet duties placed on Council by The Climate Change (Scotland) Act 2009 . Failure to meet duties placed on Council by The Climate Change (Emissions Reduction Targets) (Scotland) Act 2019 . Failure to meet duties placed on the Council by The Heat Networks (Scotland) Act 2021 and Local Heat and Energy Efficiency Strategies (Scotland) Order 2022. . Failure to meet the provisions set out in Waste (Scotland) Regulations 2012 which help Scotland move toward the objectives and targets set out in the Scotland’s Zero Waste Plan to help transition toward a circular economy. . Reputational damage. . Financial burden of responding to adverse events such as extreme weather (including, but not limited to, flooding, heat waves, wind driven storm events, etc.) resulting in action. Impacts to Council operations and supply chains as a result of adverse climate/extreme weather events. This also impacts residents, local businesses and wider infrastructure across West Dunbartonshire. . Financial burden on WDC from increasing energy prices in light of current energy and economic crises’. Energy Efficiency works on our own estate must increase to counteract these impacts. Measures of Impact . Improving organisational resilience against the impacts of climate change. . Improving local biodiversity through planting of native trees and bulbs in WDC . WDC Waste Services Citizens Panel Survey regarding attitudes towards recycling improving . The extension of the Queens Quay District Heating Network to NHS Golden Jubilee Hospital, Social Housing, NHS Health Centre, Council buildings and further connections as per scope. . Inspiring change through including climate change learning in staff induction, training, team meetings, etc. . Uptake in e-learning modules on climate change. . Uptake in staff carrying out Sustainable Procurement assessments for tenders. . Ensuring climate change and sustainability metrics are included in tenders for suppliers/contractors/etc. (such as carbon reduction measures) so they are being measured for accountability for the impacts they have on the environment . Management of service areas setting climate change targets for their operations and staff. . The uptake of Green Champion roles, which help normalise Climate Change and Sustainability, practices across the Council. Uptake in sustainable travel such as walking cycling and public transport Risk Factors . Funding availability – delivery of actions to mitigate will require resources, capital works and investment by the Council- e.g enhanced energy measures, and heating and renewables projects in both domestic and non-domestic building assets . Budget stress – notably due to energy and economic crisis, meaning it’s more difficult for Council to set aside budget to deliver on Climate Change and Net Zero projects and actions. . Funding approach – a combination of internal and external funding sources will be need to delivery climate action at scale. Short term funding mechanisms such as annual payback of Council expenditure presents difficulties for delivering long-term projects. Climate Change investments also need to take account of whole-life costs including reduced maintenance costs and avoided Adaptation costs. . Internal capacity – limited staff time and availability, largely due to reduced Council budgets, further impacted by Covid19. . Communication – both internally (to avoid ‘silo’ working) and externally (engaging with the public and keeping abreast of local/national/international changes to policy). . Economics – some technologies, materials and skills are still very expensive so innovation must progress to enhance the viability of climate actions within the context of the Council’s budget constraints. . Strategy and planning – all existing and future Council plans should place responding to the climate emergency at their core and ensure integration with other Council services. . Legislation & Regulatory – the ability to implement some climate actions is constrained at the local level by minimum standards and other restrictions set through legislation and national policy, for example in relation to building regulations, planning and procurement. . Public attitudes and behaviours - Changing behaviour of residents, businesses and stakeholders positively and proactively, especially where there are cost implications to the delivery of climate actions. Internal Controls . Climate Change Strategy 2021-2026 Page 47
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. Action Plan 2021-2026 . Climate Change Action Group (CCAG) . Pentana Risk Management System – devolved responsibilities of climate change actions/milestones/KPI’s to service areas. . Scottish Government – Mandatory annual Climate Change Duties Reporting . Queens Quay District Heating Network . Strategic Environment Assessment (SEA) . Air quality monitoring . Converting some Council pool fleet to Electric Vehicles (EVs). . Climate Ready Clyde (CRC) – a cross-sector initiative funded by fifteen member organisations and supported by the SG. Delivery of a Locale Heat & Energy Efficiency Strategy (LHEES) and delivery plan by December 2023 – which sets out the Council’s area-based approach to reducing emissions of heating and energy efficiency improvements to ALL assets across WD. This includes private housing, businesses, etc. which are not owned/operated by WDC. . Waste infrastructure and greatly improving approach to how Council and residents reduce, reuse and recycle waste. Notably, taking a Circular Economy approach to waste services and implementing appropriate infrastructure and contracts to do so. Latest Note The risk remains moderate, and will be reviewed when Scottish Government publish new interim net zero targets. The risk level is the same as last time Risk Opportunity .Our local environment is protected, enhanced and valued resulting in: - Our public spaces are attractive and welcoming - Our residents feels pride in their local neighbourhood - The percentage of household waste sent for reuse, recycling and composting has increased resulting in reduction in the percentage that was being landfilled. - The percentage of council land which promotes diversity of habitat and species has increased .Our resources are used in an environmentally sustainable way - Increase in the percentage of businesses taking action to reduce their carbon impact - Reduction in CO2 emissions under the Council’s influence - Reduction in West Dunbartonshire Area-Wide emissions as per requirements of the climate change (Scotland) act - Residents actively involved in tackling climate change and protecting the environment - The economy and infrastructure become more low carbon and environmentally-friendly . Our neighbourhoods are sustainable and attractive - Increased investment in our housing stock including improving energy efficiency - Housing developments are meeting the needs of our changing population - The quality of neighbourhoods has improved - Our roads and transport network are maintained and they promote safe travel routes Linked Actions Code & Title Progress Status Assigned To R&R/24-25/009 Co-ordinate, monitor and report the progress of the Council’s Climate Change Action Plan for 2024/25 Elaine Troup R&R/24-25/010 Develop Local Heat and Energy Efficiency Strategy and Delivery Plan Elaine Troup Risk Status Alert High Risk Warning OK Unknown Page 48
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West Dunbartonshire Council Report by the Chief Officer - Resources Audit Committee: 19 February 2025 Subject: Treasury Management Mid-Year Report 2024/2025 1. Purpose 1.1 Following approval at Council on 18 December 2024, the purpose of this report is to provide Members with the opportunity to further scrutinise the Prudential Indicators on treasury management to 30 September 2024. 2. Recommendations 2.1 Members are requested to consider the report and note that on the 18 December 2024 Council: (a) Noted the treasury management stewardship information within the appended report; (b) Approved the 2024/25 revised estimates of treasury and prudential indicators as advised within the appended report (Tables A, B, C, D, E, F, H, L and N); and (c) Noted that the appended report will be referred to the Audit Committee for further scrutiny. 3. Background 3.1 In accordance with the Treasury Policy governing the Council’s treasury management activities during 2024/25, the Chief Officer - Resources is required to provide a mid year Report to Members regarding the Treasury function. 3.2 The mid year report covers the period 1 April 2024 to 30 September 2024 and details the current position (where appropriate) and revises the 2024/25 estimates where required. 3.3 The Audit Committee is responsible for ensuring effective scrutiny of the treasury management strategy and policies and the report will be reported to a future meeting of that Committee for further scrutiny. Item 7 Page 49
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4. Main Issues Treasury Management Stewardship Report 4.1 A copy of the report is attached as Appendix 1. 4.2 The report provides details of key changes to the Council’s capital activity (the prudential indicators), the economic outlook, the actual and proposed treasury management activity (borrowing and investment) and the risk approach to treasury management (the treasury management indicators). 4.3 The external debt figures included within Table C includes both short term and long-term debt. 5. Option Appraisal 5.1 No option appraisal was required for this report. 6. People Implications 6.1 There are no personnel issues. 7. Financial and Procurement Implications 7.1 There are no direct financial or procurement implications arising from this report. 8. Risk Analysis 8.1 Although the appended report provides a mid year position in relation to treasury management there are three main risks associated with the formulation of prudential indicators and the treasury management strategy as detailed in Appendix 1. These risks are noted below; however the Council has robust monitoring processes in place and provides regular reports to Council and ensures further scrutiny by elected Members at the Audit Committee: (a) Capital receipts which affect the capital financing and borrowing requirement may not materialise and if this occurs then additional borrowing will be required in order to fund the financing requirement; (b) The risk of Counterparties default (i.e. loss of principal sum invested) must also be taken into account; however the Council has robust controls included within its treasury management and investment strategies that will assist in mitigating this risk; and (c) Capital inflation may increase capital expenditure levels, which in turn may affect the capital financing and borrowing requirement Page 50
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leading to an increase in borrowing, assuming no additional capital receipts are available. 9. Equalities Impact Assessment 9.1 No equalities impact assessment was required in relation to this report. 10. Environmental Sustainability 10.1 No assessment of environmental sustainability was required in relation to this report. 11. Consultation 11.1 The views of Legal Services have been requested on this report and have advised there are neither any issues nor concerns. 12. Strategic Assessment 12.1 Proper budgetary control and sound financial practice are cornerstones of good governance and support Council and officers to pursue the 5 strategic priorities of the Council’s Strategic Plan. 12.2 Treasury management contributes to the Financial Strategy via the interdependency that exists between pro-active treasury management and the formulation of long-term financial plans. _______________________ Laurence Slavin Chief Officer – Resources Date: 23 January 2025 Person to Contact: Karen Shannon, Finance Business Partner Council Offices, Church Street, Dumbarton Email: Karen.Shannon@west-dunbarton.gov.uk Appendix: Appendix 1: Treasury Management Stewardship Mid- Year Monitoring Report 2024/25 Treasury Management and Prudential Indicators 1 April 2024 to 30 September 2024 Background Papers: 1. Loans register and portfolio; 2. Debt rescheduling schedules; and Page 51
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3. Prudential Indicators 2023/24 to 2032/33 and Treasury Management Strategy 2023/24 to 2032/33 (Council 27 March 2024) Wards Affected: No wards directly affected. Page 52
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Item 7 Appendix 1 Mid-Year Monitoring Report 2024/25 Treasury Management and Prudential Indicators: 1 April 2024 to 30 September 2024 1. Introduction 1.1 The Council’s treasury management activities are regulated by a variety of professional codes and statutes and guidance: The Local Government in Scotland Act 2003 (the Act), which provides the powers to borrow and invest as well as providing controls and limits on this activity; The Act permits the Scottish Ministers to set limits either on the Council or nationally on all local authorities restricting the amount of borrowing which may be undertaken (although no restrictions have been made as yet during 2024/25). Statutory Instrument (SSI) 29 2004, requires the Council to undertake any borrowing activity with regard to the CIPFA Prudential Code for Capital Finance in Local Authorities, and therefore to operate the overall treasury function with regard to the CIPFA Code of Practice for Treasury Management in the Public Services; and the treasury activity with regard to the CIPFA Code of Practice for Treasury Management in Local Authorities. Statutory Instrument (SSI) 123 2016, set out statutory arrangements for local authority borrowing and lending and the requirement to maintain a loans fund and replace the statutory arrangements set out in Schedule 3 of the Local Government (Scotland) Act 1975 (Schedule 3). 1.2 The regulatory framework of treasury management requires that the Council receive a mid-year treasury review, in addition to the forward looking annual treasury strategy and backward looking annual treasury report. This report meets that requirement and also incorporates the needs of the Prudential Code to ensure adequate monitoring of the capital expenditure plans and the Council’s prudential indicators. The Treasury Strategy and Prudential Indicators were previously reported to Council on 27 March 2024. The current position is shown (where appropriate) and revisions to the 2024/25 estimate are provided where required. 1.3 In December 2021, the Chartered Institute of Public Finance and Accountancy, (CIPFA), issued revised Prudential and Treasury Management Codes. These require all local authorities to prepare a Capital Strategy which is to provide the following: - a high-level overview of how capital expenditure, capital financing and treasury management activity contribute to the provision of services; an overview of how the associated risk is managed; and the implications for future financial sustainability The Council’s Capital Strategy was reported to and agreed by Council on 6th March 2024. Page 53
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Appendix 1 1.4 This report sets out: Key changes to the Council’s capital activity (the prudential indicators); An economic update for the first part of the 2024/25 financial year; The actual and proposed treasury management activity (borrowing and investment); and The risk approach to treasury management (the treasury management indicators). 2. Key Prudential Indicators 2.1 This part of the report is structured to update: The Council’s capital expenditure plans and how these plans are being financed; The impact of the changes in the capital expenditure plans on the PIs and the underlying need to borrow; Compliance with the limits in place for borrowing activity; and Policy on the statutory repayment of loans fund advances 2.2 Capital Expenditure – Table A shows the current position and revised estimates for capital expenditure for 2024/25 only. Table A: £000 2024/25 Original Estimate Current Position 2024/25 Projected Outturn* General Services 76,757 16,439 63,013 HRA 73,385 22,787 63,995 Capital Expenditure 150,142 39,226 127,008 Financed by: Capital receipts 0 0 0 Capital grants 41,085 42,100 83,489 Revenue / other 250 250 250 Net financing need for the year 108,807 (3,124) 43,269 * it should be noted that the Projected Outturn figures include additional slippage from 2022/23 that were not known at the time of the Original Estimate 2.2.1 The movement in the level of anticipated capital expenditure is mainly due to the inclusion of additional slippage following the year end; a reduction in anticipated capital receipts; an increase in spend related to external funding offset by slippage levels identified to date. The anticipated spends and resources are regularly reported to Members through budgetary control reports. 2.3 Impact of changes in Capital Expenditure Plans – Table B shows the CFR, which is the underlying external need to borrow for a capital purpose while Table C shows the expected debt position over the period. Page 54
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Appendix 1 Table B: 2024/25 £000 Original Estimate 2024/25 Projected Outturn Opening CFR (1 April 2024) 891,537 794,231 New Borrowing 99,415 29,216 LTL repayment in year 0 (1,414) Closing CFR (31 March 2025) 990,952 822,033 movement in CFR 99,415 27,802 Net financing need for the year (Table A) 108,807 43,269 Loan repayments in year - excluding LTL (PPP) (9,392) (14,053) New Borrowing - Movement in CFR (from previous year) 99,415 29,216 Table C: £000 2024/25 Original Estimate Current Position 2024/25 Projected Outturn External Debt Estimated/Actual Debt at 1 April 2024 768,637 724,570 727,829 Maturing Debt (268,988) (141,500) (314,677) Movement in Borrowing New Borrowing - Maturing Debt 268,988 141,500 314,677 Borrowing adjustment in relation to over borrowing at year end 0 0 0 New Borrowing – CFR (Table B) 99,415 7,103 29,216 Debt at 31 March (1) 868,052 731,673 757,045 Long Term Liabilities (LTL) at 1 April 89,815 87,449 87,449 LTL repayment in year (Table B) 0 (589) (1,414) LTL at 31 March (2) 89,815 86,860 86,035 Actual Debt at 31 March (1) + (2) 957,867 818,533 843,080 CFR from Table B 990,952 n/a 822,033 Under/(Over) Borrowing 33,085 n/a (21,047) 2.3.1 The external debt figures included within Table C now includes both short term and long term debt. This is due to the current strategy of using short term borrowing to fund long term capital investment enabling the Council to take advantage of lower interest rates. The reduction in the estimated external debt for 2024/25 is due to a reduction in the net capital financing need for the year. 2.3.2 The CFR is calculated on a year-end position based on the Council’s balance sheet and therefore the current position is not shown. The CFR has reduced from the original estimate due to the forecast level of capital expenditure in 2024/25 being less than budgeted. The Chief Officer - Resources can report that the Council is currently on target to meet the 2024/25 revised estimates for both indicators. Page 55
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Appendix 1 2.3.3 Table C highlights that the borrowing of the Council is forecasting a minimal over-borrowed position against the CFR at 31 March 2025. 2.4 Compliance with the limits in place for borrowing activity – A key control over the treasury activity is a prudential indicator to ensure that over the medium term, gross borrowing will only be for a capital purpose. Gross external borrowing should not, except in the short term, exceed the total of CFR in the preceding year plus the estimates of any additional CFR for 2024/25 and next two financial years. This allows some flexibility for limited early borrowing for future years. The Council has approved a policy for borrowing in advance of need which will be adhered to if this proves prudent. The revised indicator is detailed in Table D and is illustrated by comparing the estimated gross debt as at 31 March 2024 with the CFR as at 31 March 2025. The Chief Officer - Resources reports that no difficulties are envisaged for the current year in complying with this prudential indicator. Table D: £000 2024/25 Original Estimate 2024/25 Projected Outturn CFR at 31 March 2024 Estimate/Actual (From Table B above) 891,537 794,231 Estimated movement in CFR 2024/25 (From Table B above) 99,415 27,802 2025/26 94,129 100,177 2026/27 49,419 49,419 Anticipated CFR at 31 March 2025 1,134,500 971,629 Gross Debt at 31 March 2023 (From Table C above) 957,867 818,533 2.4.1 The Operational Boundary is detailed in Table E below and is the limit beyond which external debt is not normally expected to exceed. In most cases, this would be a similar figure to the CFR, but may be lower or higher depending on the levels of actual debt. Table E: £000 2024/25 Original Estimate Current Position 2024/25 Projected Outturn External Debt 945,852 818,533 900,386 2.4.2 A further prudential indicator controls the overall level of borrowing. This is the Authorised Limit which is detailed in Table F and represents the limit beyond which borrowing is prohibited, and needs to be set and revised by Members. It reflects the level of borrowing which, while not desired, could be afforded in the short term, but is not sustainable in the longer term. It is the expected maximum borrowing need with some headroom for unexpected movements. This is the statutory limit determined under section 3 (1) of the Local Government Act 2003. Page 56
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Appendix 1 Table F: £000 2024/25 Original Estimate Current Position 2024/25 Projected Outturn External Debt 1,031,839 818,533 982,239 3. Economic Outlook 3.1 UK * Following the 30 October Budget, the outcome of the US Presidential election on 6 November, and the 25bps Bank Rate cut undertaken by the Monetary Policy Committee (MPC) on 7 November, we have significantly revised our central forecasts for the first time since May. In summary, our Bank Rate forecast is now 50bps – 75bps higher than was previously the case, whilst our PWLB forecasts have been materially lifted to not only reflect our increased concerns around the future path of inflation, but also the increased level of government borrowing over the term of the current Parliament. If we reflect on the 30 October Budget, our central case is that those policy announcements will be inflationary, at least in the near-term. The Office for Budgetary Responsibility and the Bank of England concur with that view. The latter have the CPI measure of inflation hitting 2.5% y/y by the end of 2024 and staying sticky until at least 2026. The Bank forecasts CPI to be 2.7% y/y (Q4 2025) and 2.2% (Q4 2026) before dropping back in 2027 to 1.8% y/y. The anticipated major investment in the public sector, according to the Bank, is expected to lift UK real GDP to 1.7% in 2025 before growth moderates in 2026 and 2027. The debate around whether the Government’s policies lead to a material uptick in growth primarily focus on the logistics of fast-tracking planning permissions, identifying sufficient skilled labour to undertake a resurgence in building, and an increase in the employee participation rate within the economy. There are inherent risks to all the above. The worst-case scenario would see systemic blockages of planning permissions and the inability to identify and resource the additional workforce required to deliver large-scale IT, housing and infrastructure projects. This would lead to upside risks to inflation, an increased prospect of further government borrowing & tax rises, and a tepid GDP performance. Our central view is that monetary policy is sufficiently tight at present to cater for some further moderate loosening, the extent of which, however, will continue to be data dependent. We forecast the next reduction in Bank Rate to be made in February and for a pattern to evolve whereby rate cuts are made quarterly and in keeping with the release of the Bank’s Quarterly Monetary Policy Reports (February, May, August and November). Any movement below a 4% Bank Rate will, nonetheless, be very much dependent on inflation data in the second half of 2025. The fact that the November MPC rate cut decision saw a split vote of 8-1 confirms that there are already some concerns around inflation’s stickiness, and with recent public sector wage increases beginning to funnel their way into headline Page 57
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Appendix 1 average earnings data, the market will be looking very closely at those releases. Regarding our PWLB forecast, the short to medium part of the curve is forecast to remain elevated over the course of the next year, and the degree to which rates moderate will be tied to the arguments for further Bank Rate loosening or otherwise. The longer part of the curve will also be impacted by inflation factors, but there is also the additional concern that with other major developed economies such as the US and France looking to run large budget deficits there could be a glut of government debt issuance that investors will only agree to digest if the interest rates paid provide sufficient reward for that scenario. 3.2 Scotland** The Scottish Government’s budget next year is set to increase by £1.3 billion from the latest position for 2023-24. This is a rise of 2.6 per cent in cash terms or a 0.9 per cent rise after accounting for inflation. Most of this increase in funding comes from income tax. A combination of the Scottish Government’s policy choices, high inflation, fixed tax thresholds in cash terms and higher earnings growth in Scotland have all contributed to a sharp increase in income tax funding. However, the ongoing consequences of Scottish Government changes to social security and the linking of payment rates to inflation have increased spending commitments. Other Scottish Government policies such as the Council Tax freeze and increasing public sector pay have further added to the Scottish Government’s spending commitments. Capital spending is set to fall by 4 per cent in real terms between 2023-24 and 2024-25. Economic growth will remain fragile in the near term with living standards set to see the largest fall on record between 2021-22 and 2023-24 and not return to their 2021-22 level until 2026-27. The Scottish Government has introduced a new 45 per cent income tax band starting at £75,000 and also increased the top rate of income tax by 1 percentage point. These policies affect the top 5 per cent of taxpayers in Scotland. After taking account of behavioural changes, these policies will raise an extra £82 million in 2024-25. Scottish Government changes to income tax policy since 2017 mean someone in Scotland earning £100,000 will now pay £3,346 more in income tax than they would in the rest of the UK People with earnings over £28,850 in Scotland, slightly above median earnings, pay more income tax than they would in the UK. The latest policy decisions widen the gap further for those earning over £75,000 (the top 5 per cent of taxpayers). The increase in the projected income tax net position in 2024-25 of £712 million is mostly driven by data in 2021-22 to 2023-24. Page 58
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Appendix 1 Social security spending is forecast to increase from £5.3 bn in 2023-24 to £8.0 bn in 2028-29. By 2028-29, we expect the Scottish Government to spend £1.5 bn more on social security than BGA funding received from the UK Government. We forecast living standards to remain broadly flat in 2024-25 as inflation will largely offset growth in nominal household disposable income. Higher interest rates will continue to reduce disposable income over the next year. *** In part, this is because the widespread use of fixed-rate mortgages means that the recent rises in interest rates are passing through to mortgage costs with a longer lag than in the past. The Scottish Government has announced a new income tax rate of 45 per cent for those earning above £75,000 and increased the top rate of income tax by 1 percentage point. These changes are estimated to raise a total of £82 million in 2024-25. Our estimates of how much additional revenue will be raised include an adjustment for an assumed behavioural response. Without this response revenues would be £118 million higher. Although there is uncertainty around the scale of a behavioural response, the size of the estimated response is small in relation to how much income tax revenue is raised overall and any error in our estimate of the behavioural response would have a smaller effect on the Scottish budget than, for example, an error in our earnings forecast 3.3 International update * There is also the additional concern that with other major developed economies such as the US and France looking to run large budget deficits there could be a glut of government debt issuance that investors will only agree to digest if the interest rates paid provide sufficient reward for that scenario. Donald Trump’s victory paves the way for the introduction/extension of tariffs that could prove inflationary whilst the same could be said of further tax cuts and an expansion of the current US budget deficit. Invariably the direction of US Treasury yields in reaction to his core policies will, in all probability, impact UK gilt yields. So, there are domestic and international factors that could impact PWLB rates whilst, as a general comment, geo-political risks abound in Europe, the Middle East and Asia. * Link Group Interest Rate Forecast 11 November 2024 ** Scottish Fiscal Commission Report 19 December 2023 & revised version April 2024 & Report of 27 August 2024 *** Bank of England (2023) Monetary Policy Report – November 2023 3.4 Based upon the above information, the Council’s treasury advisor, Link Group, has provided the following interest rate forecast as at November 2024. With no changes made after this date, it sets out a view that short, medium and long-dated interest rates will fall back over the next year or two, although there are upside risks in respect of inflation and a continuing tight labour market, as well as the size of gilt issuance. Page 59
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Appendix 1 Table G: - Source: Link Group 3.5 Downside risks to current forecasts for UK gilt yields and PWLB rates currently include: Labour and supply shortages prove more enduring and disruptive and will depress economic activity (accepting that in the near-term this is also an upside risk to inflation and, thus, rising gilt yields). The Bank of England acts too quickly, or too far, over the next two years to raise Bank Rate and causes UK economic growth, and increases in inflation, to be weaker than we currently anticipate. UK / EU trade arrangements – if there was a major impact on trade flows and financial services due to complications or lack of co-operation in sorting out significant remaining issues. Geopolitical risks, for example in Ukraine/Russia, China/Taiwan/US, Iran, North Korea and Middle Eastern countries, which could lead to increasing safe-haven flows. 3.6 Upside risks to current forecasts for UK gilt yields and PWLB rates are as The Bank of England is too slow in its pace and strength of increases in Bank Rate and, therefore, allows inflationary pressures to build up too strongly and for a longer period within the UK economy, which then necessitates an even more rapid series of increases in Bank Rate faster than we currently expect. The Government acts too quickly to cut taxes and/or increases expenditure in the light of the cost-of-living squeeze. The pound weakens because of the UK’s growing borrowing requirement resulting in investors pricing in a risk premium for holding UK sovereign debt. Longer term US treasury yields continue to rise strongly and pull gilt yields up even higher than currently forecast. 4. Treasury Management Activity 4.1 This part of the report is structured to update: The Council’s expected borrowing need and details of under/(over) borrowing; Page 60
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Appendix 1 Debt rescheduling and new borrowing; Debt charges; and Investments 4.2 The Expected Borrowing Need – This was set out in Table C (above) and demonstrates that at 31 August 2024 the Council is currently projecting and over-borrowed position. It should be noted that due to current economic climate the borrowing rates are significantly different than this time last year, with long term borrowing rates for periods greater than 25 years currently between 5.30% and 5.55%, depending on length of term for borrowing (as at 27 November 2024). This introduces an element of interest rate risk, as longer term borrowing rates may rise further; however, this position is being carefully monitored. 4.3 Debt rescheduling and new borrowing – The Council has not undertaken any debt rescheduling during the part of 2024/25 (to 31 September 2024). In the year to date naturally maturing debt of £141.500m has been repaid which has been mainly funded by loans from other local authorities. 4.4 Debt Charges – The revised estimate for debt charges for both the General Fund and the HRA is shown in Table H. Table H: £000 2024/25 Original Estimate Current Position 2024/25 Revised Estimate Borrowing 22,092 10,993 21,985 Other Long Term Liabilities 21,985 10,237 20,474 Total 44,077 21,230 42,459 4.5 Investments – The objectives of the Council’s investment strategy are to ensure the re-payment of the principal and interest of its investments on time with the level of investment return being a secondary objective. Following on from the economic background above, the current investment climate has one over-riding risk consideration which is the risk of default. 4.5.1 The Council held £28.000m of cash investments at 30 September 2024, and the constituent parts of the investment position are detailed in Table I: Table I: £000 Country < 1 Year 1 – 2 Years 2 – 3 Years Banks UK 8,000 Nil Nil Money Market Fund UK 20,000 Nil Nil Local Authorities UK 0 Nil Nil Total UK 28,000 Nil Nil 4.5.2 Table J details the revised budget position for investment income. The original estimate has increased by £0.168m due to ongoing interest rates changes. Page 61
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Appendix 1 Table J: £000 2024/25 Original Estimate Current Position 2024/25 Revised Estimate Investment Income 530 349 698 4.5.3 A regulatory development to address risk is the consideration and approval of benchmarks relating to investment security, liquidity and the level of return. Benchmarks are currently widely used to assess the level of return and investment performance, however the application of security and liquidity benchmarks are more subjective in nature. Security - The Council’s maximum security risk benchmark for the current portfolio in relation to investment periods of up to one year (when compared to historic default tables) was set at 0.00% and the Chief Officer - Resources can report that there have been no defaults of principal sums invested in the year to date. Creditworthiness - Significant levels of downgrades to Short- and Long- Term credit ratings have not materialised since the crisis in March 2020. Liquidity – The Chief Officer - Resources can report that liquidity arrangements were adequate during the year to date and that the liquidity facilities and benchmarks set by the Council as noted below were maintained: o Bank overdraft - £1.000m; and o Liquid short term deposits of at least £5.000m available on an overnight basis. Return on Investments – The Chief Officer - Resources can report that the investment return to date average 4.73%. Table K illustrates how this average return compares with the local benchmarks. Table K: Benchmark Benchmark Return Average Return Compound 12 month SONIA* 5.28% 4.73% Council’s Instant Access Account 5.10% 4.73% * SONIA is Sterling Overnight Index Average and has replaced LIBOR & LIBID 5 Key Treasury Management Indicators 5.1 This part of the report is structured to update: Actual and estimates of the ratio of financing costs to net revenue stream; Upper limits on interest rate exposure: The maturity structure of borrowing; and Total principal sums invested. 5.2 Actual and estimates of the ratio of financing costs to net revenue stream – This indicator (as shown below in Table L) identifies the trend in the cost of capital against the net revenue stream. Page 62
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Appendix 1 Table L: 2024/25 Original Estimate 2024/25 Revised Estimate General Fund 24.60% 14.44% HRA 42.68% 55.34% 5.3 Upper Limits on Fixed and Variable Rate Exposure – These indicators identify a maximum limit for fixed and variable interest rates based upon the debt position and were set at 100% and 50% respectively for 2024/25. The Chief Officer – Resources reports that the Council operates within these limits. 5.4 Maturity Structures Of Borrowing – These maximum limits are set to reduce the Council’s exposure to large fixed rate loans (those instruments which carry a fixed interest rate for the duration of the instrument) which are due to naturally mature in any given period as detailed in Table M and show that the Council operates within limits set. Table M: Maturity Structure of Fixed Interest Rate Borrowing 2024/25 Original Limits Current Position Under 12 months 50% 37% 12 months to 2 years 50% 7% 2 years to 5 years 50% 23% 5 years to 10 years 50% 2% 10 years to 20 years 50% 2% 20 years to 30 years 50% 4% 30 years to 40 years 50% 2% 40 years to 50 years 100% 18% 50 years to 60 years 100% 4% 60 years to 70 years 100% 0% 5.5 Total Principal Funds Invested – These limits are set to reduce the need to temporarily borrow to cover any unexpected expenditure, and show limits to be placed on investments with final maturities beyond each year-end. The Council currently invests sums for periods greater than 365 days in Clydebank Property Company and hub West Scotland as detailed in Table N. Table N: 2024/25 Original Estimate Current Position 2024/25 Revised Estimate Principal sums invested > 365 days (maximum limit £5m) £0.483m £0.483m £0.483m Page 63