Auditors warn of 'significant weaknesses' in Hastings Borough Council's finances

On Thursday (January 12), the council’s audit committee discussed the latest annual report from external auditor Grant Thornton, which covered the 2020/21 financial year.

In such reports, external auditors evaluate whether councils had put in place proper arrangements to “secure economy, efficiency and effectiveness in its use of resources” and make recommendations to improve where necessary.

While Grant Thornton did not issue any statutory recommendations, which would indicate it had the highest level of concern, the auditor did issue two key recommendations highlighting areas of “significant weakness”.

The first was around the council’s financial planning, with the auditor raising concerns about “significant unidentified savings/funding gaps” in the authority’s Medium Term Financial Strategy (MTFS).

Speaking at the meeting, Grant Thornton director Darren Wells talked about the level of reserves is low and there is a risk of general fund reserves falling below the minimum level. He said this coupled with the absence of savings plans over the medium term was an ‘unsustainable position for the council to continue to adopt’.

To address this concern, Grant Thornton recommended that the council should draw up savings plans, which both plug the funding gaps and ‘build in headroom’ for the future.

For its part, the council says these savings have now been identified as part of the 2023/24 budget-setting process.

The council also drew attention to its work to address housing issues, which have proven to be one of the greatest draws on its finances. This is particularly from the cost of emergency accommodation in homelessness cases.

The second key recommendation was around the council’s internal audit programme, which Grant Thornton considered to be ‘light’, both in the number planned and the number delivered in-year. The auditor recommended that the council step up its internal audit programme in future years to address this issue.

The council agreed with this assessment, but attributed the shortfall in internal audit work to pressures resulting from the Covid pandemic in 2020/21.

Council leader Paul Barnett said they had kept the people of Hastings and the town’s economy as ‘safe as possible during that time’, which meant people had to reorganise their work programmes and reprioritise the things the council was doing.