Meeting Details

RESOLVED that: the minutes of the meeting held on 16 December 2025 be confirmed as an accurate record.

The Committee considered a report which summarised the performance of Internal Audit and which detailed the audits undertaken between 1 April and 30 November 2025.

Hayley McGrath, Corporate Governance Manager, attended the meeting to present the report and assist the Committee with its enquiries. The mid-year audit report was before the Committee which set out the audit performance, and which demonstrated that there had been an effective internal audit service for the first half of the financial year. Of the thirteen audits completed, 4 had achieved a substantial assurance rating, and 6 of the remaining audits had achieved a reasonable rating, with 3 audits receiving a limited assurance rating. Of these 3 audits, 2 related to IT, and the third was related to markets. Of the recommendations made in respect of the limited assurance audits, 5 had been ‘priority 1’, which was the highest level recommendation. The report before the Committee set out details of all the recommendations which had been made, together with the scope of the audits and the areas which had been considered. The recommendations in relation to the 2 IT audits had been redacted from the report as they related to cyber security and it was not appropriate for this information to be in the public domain. The Committee, had however, recently received a briefing in relation to these 2 audits.

The audit report demonstrated that an effective internal audit service had been provided in the first half of the financial year, and more audits would be reported in the second half of the year.

In relation to the issues which had been raised by the IT audits, a Committee member recognised the need to protect the public service network as well as the Council’s core data, however, he questioned how this could be achieved for Councillors in a way which still allowed them to carry out their role. The Corporate Governance Manager advised the Committee that changes had recently been implemented which affected how Councillors were able to use the Council’s IT systems, and it would take some time for those changes to bed in. Concerns had been raised relating to the impact of the changes on Councillors, and as a result of this the IT team had been very pro-active in offering assistance, including sessions with individual Councillors to provide advice and guidance.

Councillor Pearson, Portfolio Holder for Economic Growth and Transformation, attended the meeting, and, with the permission of the Chair, addressed the Committee.  He fully appreciated some of the underlying concerns which had been expressed by Councillors. It was fair to say that the Interim Head of Digital of the Council had identified areas which required improvement in terms of cyber security, and it had been necessary to work at pace to ensure that the Council was as secure as possible and had met the necessary standards. All staff had been made aware of the need to be secure in the way they used IT, and had undergone relevant training. The Portfolio Holder for Economic Growth and Transformation believed that the best way for Councillors to be secure was to use a Council-issued device, which could be locked or wiped remotely if necessary. It was appreciated that some Councillors were reluctant to use a Council device, and the IT team was currently trying to source a smaller device which would be easier to carry, and which could function in a similar way to a tablet. Concerns had been raised in relation to sharing information with residents or organisations, but the Committee was reminded that there was nothing to prevent Councillors downloading or circulating information which was in the public domain. Restrictions did, however, apply to data which was not in the public domain.  Councillors needed to ensure that they were supporting the need to robustly protect the Council’s systems and individual’s data, and all Councillors had a responsibility in this regard. The IT team had provided the means for Councillors to request individual support, to enable undertaking their elected role in a safe manner.

Discussing the issue, a Committee member considered that further work should be undertaken to determine the individual needs of Councillors when using the IT systems. The majority of Councillors simply needed an easy way to access a calendar and their emails, and there was no need to provide access to areas of the Council’s system which could constitute a security risk. Anecdotally, Councillors had indicated that difficulties they had experienced with the Council system had caused them to utilise their personal email addresses more frequently, and many were unhappy with the idea of carrying an additional laptop with them. It was suggested that it was appropriate to have additional security requirements when sensitive data was being accessed, however, further analysis of the needs of Councillors was required before shaping a system around these needs.

The Portfolio Holder for Economic Growth and Transformation understood the points which had been raised, and advised the Committee that a small working group had been established to consider the issues, and ensure that the views of Councillors were taken into account wherever possible. The work of the IT Team would continue at pace to ensure that the Council was brought up to the necessary standards, in common with other, neighbouring authorities.

In response to questioning from the Committee, Claire Lavery, Director of Audit, TIAA, attended the meeting and assured the Committee that the Council had made significant progress in a short amount of time, and it was the nature of the organisation to learn from audit findings in a bid for continuous improvement. Cyber threats were becoming more prevalent, and although extra security measures could be seen to be annoying, they were necessary to protect Councillors and members of the public.

The Portfolio Holder for Economic Growth and Transformation reminded the Committee that it was possible to print out any documents which had been published on the Council’s website if this was desired, and any printing from a Council device was also permitted.

RESOLVED that:

-         The Internal audit activity for the period 1 April – 30 November 2025 had been reviewed, and that;

-         No further review was required by the Committee in respect of any of the audits contained within the report.

The Committee considered a report which asked that it note the Treasury Management Q3 Review 2025-2026.

Wayne Layton, Financial Planning and Budget Specialist, attended the meeting remotely to present the report and assist the Committee with its enquiries. The Committee heard that the report considered the Prudential Indicators which had been put in place alongside the Treasury Management Strategy (TMS) for the preceding year. There had been no breach of these Indicators, and accordingly the Council was in line with the TMS which had been approved in February 2025.

RESOLVED that: The Treasury Management Quarter 3 review 2025/26 be noted.

The Committee considered a report which requested that it consider the Treasury Management Strategy (TMS) for 2026/2027, which would be considered as part of the Council's overall budget in February 2026. 

Wayne Layton, Financial Planning and Budget Specialist attended the meeting remotely to present the report and assist the Committee with its enquiries. The Committee heard that the TMS set out how Council borrowing and investment would be carried out, and it formed a key part of the budget. The figures contained within the TMS would be subject to change following any amendment to the Council’s capital programme.

The TMS considered borrowing strategy, ensuring that all the Council’s borrowing was affordable, sustainable and prudent, including where the Council would borrow from, together with the amount of borrowing. Advice would be sought from MUFG Corporate Markets, the Council’s external treasury advisors, in relation to investments which were in line with the Council’s risk appetite together with prudential indicators.

In the TMS which was before the Committee, table 3 looked at what the Capital Financing Requirement (CFR) was, and how this would be funded. The Committee was advised that a figure in this table contained a mistake in the level of external borrowing which had been reported. These errors would be corrected when the TMS was presented to Full Council.

The Committee heard that the Council’s borrowing requirement, (CFR), would stand at external borrowing of £387.2m by the end of 2030 if the capital programme which this figure was based on was approved in February, and if the capital programme was actually delivered during this period. Any borrowing which was taken out had to conform to the CIPFA Prudential Code, and the S151 Officer was responsible for ensuring this was adhered to.

The Committee was advised that the approval of the TMS was a decision which would be taken by Full Council and not the Committee, and the Committee was simply asked to consider the TMS.

In response to a request from the Committee, the Financial Planning and Budget Specialist clarified that table 3 in the report would be deleted and replaced prior to its presentation to Full Council, as it contained an anomaly caused by mixing up accounting principles relating to the Housing Revenue Account (HRA) and the General Fund (GF). A Committee member requested that consideration be given to providing some clarification on the meaning of the terminology used when the report was finally presented, for the benefit of Councillors and members of the public.

A Committee member believed that a key role of the Committee was to consider the risk profile of the Council in the light of the rate of proposed borrowing before the budget was approved by Cabinet. He was unable to locate information supporting the affordability of the proposed borrowing in the report before the Committee, and was very concerned by the apparent continuing rising of HRA debt, how would this ever be repaid? What evidence was there that the proposed level of borrowing was affordable?

By way of response, Financial Planning and Budget Specialist, explained that the TMS, the Capital Strategy, the Capital Programme and the revenue budget had a symbiotic relationship, with the revenue implications of capital expenditure accounted for in the revenue budget. Full Council would approve the Capital Programme and the level of the budget.

Concerns remained among some members of the Committee around the high level of borrowing which was being proposed, and it was suggested that this was possibly not fully appreciated by those making decisions on capital budgets. The limits on borrowing which were meant to be in place were set at such a high level that they provided no proper control, which was especially concerning when no audited accounts were available and concerns remained about whether the level of proposed debt was sustainable.

The Financial Planning and Budget Specialist confirmed to the Committee that the operational boundary was the result of a calculation which had been performed by the Council’s treasury management consultants, and what Full Council would be asked to approve was what was in the budget and Capital Programme and how this was to be funded. The Committee was assured that borrowing up to the operational boundary of £330m would not be possible without first seeking the permission of Full Council and demonstrating that the suggested borrowing complied with the Prudential Code. Borrowing could only be taken out to fund capital expenditure, and spending money on capital was a decision for Full Council and would therefore be approved by all Members. The Committee was reminded that it was not being asked to agree the TMS but simply consider it.

Returning to the issue of borrowing, a Committee member remained convinced that borrowing levels were too high, and this needed to be re-thought by Cabinet before the budget was approved. It was suggested that the report be noted, with the Committee expressing its concern that the numbers it contained had fundamentally changed.

In discussion, some members of the Committee remained concerned at the error contained in table 3 of the report, and the Committee wished to formally note that the report which had been presented to it was different to the one which would be presented to Cabinet. Debate continued about the role of the Committee in considering the TMS. The Financial Planning and Budget Specialist advised the Committee not to dwell on the numbers which were contained in the report as theoretically these could be changed by Cabinet at short notice if capital expenditure was changed. Although the TMS was before the Committee, the capital programme had yet to be approved, and the Committee was assured that correct figures would be placed before Full Council.

Councillor Sunnucks, who is named in these minutes at his request, wished it to be formally noted that he did not support the report which had been presented to the Committee, and in his view the report should be reconsidered before it was presented to Cabinet.

RESOLVED that:

• The Committee note that the Treasury Management Strategy 2026/27 which it had considered contained a table with incorrect figures in it, and that:
• The Treasury Management Strategy 2026/207 had been considered.

The Committee had been due to receive a verbal update from the Council's external auditor, KPMG, however, no one from KPMG had been available to attend the meeting. The Chair noted that the Committee had attended a briefing with KPMG the previous day and provided an overview of this briefing. The Committee heard that the 2025/26 accounts would remain heavily disclaimed, however, there was good engagement with Council officers and good progress was being made. There was assurance in some areas of income and expenditure, and pensions would be fully audited, but the Turnstone development remained challenging. Staff churn had impacted some of the carry-forward knowledge which had impacted some areas of work. The Housing Revenue Account (HRA) would not be a complete audit due to some outstanding valuation queries, however, KMPG was comfortable with the principal and position of the HRA, and considered that Savills, the Council’s HRA advisors, had done a good job.

The Committee sought to understand the reasons behind the high levels of staff turnover and the apparent difficulty in recruiting and retaining qualified staff. Lindsay Barker, Deputy Chief Executive, attended the meeting and advised the Committee that difficulty with recruitment in this area was not an issue that just affected the Council, and that the recruitment of qualified finance staff was a highly competitive market, with senior staff especially difficult to recruit. The Council would continue to seek staff with the right level of skill and experience and had also opened dialogue with neighbouring authorities to in the run up to local government reorganisation (LGR) in a bid to introduce some stability to the finance team.

A Committee member who had been present at the briefing with KMPG made the point that it had been stated at this briefing that Colchester did appear to have a higher turnover of staff in the finance team that other comparable local authorities. In respect of the Turnstone development, he expressed surprise that this work had not been concluded as he considered that the position was simple and the development could be represented as a debt and an asset which both sat on the Council’s balance sheet, with the only area of debate being the ratio between these figures.

The Committee noted that the deadline for submitting the accounts was 27 February, and only a single meeting of the Committee was scheduled to take place before this date. A member of the Committee considered that in the past it had been rushed into approving the accounts, and in this case it appeared that significant balance sheet adjustments in respect of pensions and the Turnstone development were likely, and it was important that the Committee understood this. In respect of the HRA, although it had been confirmed by KPMG that the accounting approach adopted by the Council was technically allowed, he retained concerns as to whether the HRA accounts showed a true and fair view, and these accounts had not been subject to audit. Concern was raised that when a full audit was carried out on the HRA account, issues would be discovered. He requested that the accounts be provided to the Committee with as much notice as possible, and that a briefing be held as far as possible before the meeting at which the Committee was asked to approve them.

A member of the Committee who had attended the briefing with KPMG considered that he had taken significant confidence from the auditors at this briefing. Savills were industry experts in dealing with HRA Business Plans, and the HRA was being run in accordance with their advice. He noted that the auditors were experienced professionals who had indicated that they believed that there were no significant issues, had confidence in the Council’s Officers and expected to find good practice during their audit.

RESOLVED that: the update be noted.

The Committee considered a report which set out its work programme for the current municipal year.

Matthew Evans, Democratic Services Officer, attended the meeting to present the report and assist the Committee with tis enquiries. The attention of the Committee was drawn to the changes to the work programme which were detailed in the report before it.

RESOLVED that: the contents of the work programme be noted.