To consider the internal audit work undertaken and the assurance given on the adequacy of internal controls operating in the systems audited.  

15.1          The report of the Chief Audit Executive (Director: Corporate Resources), circulated at Pages No. 136-175, provided an overview of the internal audit work completed during the period.  Members were asked to consider the work undertaken and the assurance given on the adequacy of the internal controls operating in the systems audited.

15.2          Members were advised that audits had been carried out in relation to the Community Infrastructure Levy (CIL), Homelessness Prevention Grant Scheme; Gifts and Hospitality; Payroll; and the Biodiversity Net Gain Grant.  Overall, from the individual opinions given, the conclusion was positive and, for the most part, there were no significant areas of concern with the exception of one limited opinion in relation to the CIL governance arrangements.  This was a longstanding issue reflected in the Annual Governance Statement as a significant governance issue but progress was being made at the time of the audit with a Memorandum of Understanding due to be taken back to the Executive Committee.  Appendix 2 to the report detailed the 30 audit recommendations that had been followed-up during the period and it was noted that the majority had been implemented or partially implemented.  Members were informed that all audit recommendations were followed-up by internal audit and feasible timescales were agreed with management for implementation; if these were not met, they were reviewed and brought back to the Committee and the relevant manager could be called in if Members were unsatisfied with progress.

15.3           A Member sought clarification as to whether the work done in relation to CIL was about the effectiveness of CIL arrangements or compliance and the Director: Corporate Resources explained that the audit had found that what was in the system in terms of the CIL collected was accurate, the issue was around establishing a governance programme for how money was allocated and spent.  A Member noted that almost £3m CIL had been collected in the reported period but expenditure for the same period was £157,959 with the majority spent on administration so he raised concern regarding the amount which had actually been distributed.  In response, the CIL Manager explained that CIL receipts were split into three pots: administration, which could be up to 5%; neighbourhood CIL which was essentially the money collected for the Parish Councils – if the area had an adopted Neighbourhood Development Plan (NDP) it would receive 25% dropping to 15% where no NDP was in place; and the third pot was the remainder which was the pot the audit was raising concerns about.  He clarified that, up to 10 July 2023, Tewkesbury Borough Council had distributed £1,347,000 to two neighbouring Parish Councils and expenditure for that had been £157,959.  There was an expectation that the Parish Council would report what had been spent at the end of the monitoring year (1 April-31 March).  In terms of the third pot, which could be 70-80% depending on the Parish Council element, the aspiration had been for the three Joint Core Strategy authorities to pool the infrastructure fund with more narrow rules for how it could be spent.  Tewkesbury Borough Council’s CIL income was far greater than either of the other authorities - on 10 July 2023, Cheltenham Borough Council had almost £2.5m, Gloucester City Council had almost £1m whereas Tewkesbury Borough Council had £7.5m.  The process for agreeing how much each authority should contribute was critical and the latest update he could give was that the Director of Cheltenham Borough Council, who was leading the work, was being assisted by One Legal to establish Terms of Reference for a Working Group.  The Member expressed the view that there seemed to be a lot of reputational risk around CIL and he asked whether that was being managed in an appropriate way.  There were complexities as it was not the Council’s money and he questioned who was checking the Parish Councils were spending the money.  He raised concern that there was a lack of efficiency in the process as it appeared nobody knew what to spend the money on.  The CIL Manager advised that training had been carried out with Parish Councils on at least two occasions, with support from the Council’s Communities team and Gloucestershire Rural Community Council (GRCC), where Officers had assisted with how to identify schemes, particularly for Parish Councils without an NDP – those with NDPs tended to have a plan and places like Gotherington knew exactly what they wanted to spend CIL on next.  The CIL regulations provided the Council a monitoring and enforcement role and there was a requirement to distribute the money in the way he had explained with legislation setting out that must be done twice a year in April and October, the Parish Councils then had five years within which to spend each payment received.  The Council had the job of policing that which was why, in addition to asking for reports ad helping Parish Councils to prepare their own reports - Parish Funding Statements which had to be published once a year on the website – the Council identified exactly when funding would be received and how long it would take.  Unlike Section 106 contributions which were for a specific purpose, there was no time period for CIL following which the money would be returned to the developer – if any money came back from the Parish Council it went back into the pot.  The detail the district authorities and Parish Councils were required to provide were more detailed than many other financial reports and the legislation was prescriptive about what CIL could be spent on.  The Council provided advice in relation to that, and was able to obtain legal advice on behalf of Parish Councils as well.

15.4           A Member noted that the CIL training for Members had been postponed from July and the CIL Manager provided assurance that Members would be kept informed of what was happening and could find out whether CIL had contributed to any development in their Wards.  He pointed out that the CIL did not have to be spent in the area it was raised, nor did it have to be spent within Tewkesbury Borough as cross-boundary projects were provided for in the regulations.  Another Member indicated that she had recently read that developers did not want to pay CIL anymore as it was seen as a tax they had to pay upfront which they did not get back if it was not spent so she asked whether CIL was likely to continue.  The CIL Manager indicated that the future of CIL was almost assured - the government had consulted on a new national infrastructure levy earlier this year which was essentially CIL, albeit with the intention that it would be set at a national level based on the value of the sales of a development as opposed to being calculated on gross internal floor area of a development as it was currently.  The issue with getting rid of CIL would be that money for building infrastructure to accommodate and facilitate development would need to be found upfront.

15.5           It was

RESOLVED          That the internal audit monitoring report be NOTED.