Newham calls on CIPFA for financial health check
0London Borough of Newham’s newly-elected mayor has called in the Chartered Institute of Public Finance and Accountancy (CIPFA) to perform a health check on the authority’s finances.
Rokhsana Fiaz’s decision to call in CIPFA follows her election pledge to “clean up the council’s budget so that it is open and transparent”.
Fiaz was elected in May after deposing long-serving incumbent Sir Robin Wales as the Labour candidate following a campaign in which she was backed by left-wing campaign group Momentum.
Speaking this week, Fiaz said: “I want to be assured that we have a sound financial footing and my intended, detailed and costed plan to deliver my manifesto commitments for our residents takes into account the resources available.”
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According to the council, CIPFA will look at the assumptions underpinning the council budget, future budget pressures and how the council uses its assets.
The financial health check will also aim to identify how the council can incorporate best practice from other public sector bodies, develop options for alternative delivery models and income generation.
In addition, CIPFA will also look at ways the authority can include council members and residents in its financial decision-making process, a statement said.
Newham said that CIPFA’s work will not overlap with that carried out by the borough’s auditors.
“The auditors are mainly focussed on looking backwards and auditing the council’s statutory accounts. The CIPFA health check is about looking forward to ensure the approach to the budget is sound and takes into consideration all financial pressures and opportunities,” the council said.
Auditors Ernst & Young (EY) warned in April that the council was in danger of missing its deadline to publish audited financial statements due to a lack of capacity in its finance team.
An audit of the council’s 2016–17 accounts found a raft of errors in accounting, three of which, totalling £5.9m, have yet to be resolved.
In addition, the council has been the target of severe criticism from left-wing campaign groups for having the largest portfolio of “lender option borrower option” (LOBO) loans of any council.
In February last year, the council agreed a deal with Barclays to switch almost half of its LOBO loans into fixed rate loans.
Newham said the move would save £94m in interest payments, but was unable to confirm the rate agreed for the new loans.
In the council’s 2017–18 draft annual accounts, the fair value of the council’s LOBO portfolio was recorded as £685m — a little more than half of the £1.3bn recorded for 2015–16.
Meanwhile, Newham has announced that Mike O’Donnell, a former Camden Council finance chief, will become its interim director of finance.
Last week, CIPFA announced that O’Donnell was joining CIPFA as its associate director of local government.
Room151 understands O’Donnell will work one day a week in this role, and four days for Newham.
A statement from the council said: “Mike is not involved in CIPFA carrying out the health check or clienting the CIPFA work, this is being carried out the by council’s chief executive.
“Both Newham and CIPFA were aware of his appointments prior to him joining these two organisations.”
