At the direction of the Chairman, the Committee considered Item 8: Dementia Support Services prior to considering Item 7: Pathway for Care, to support considerations around ease of process and support for Item 8. Minutes are recorded in agenda order for ease of reference.
The Committee received a verbal update on the Council’s investment in the Pathway for Care company from the Chief Executive. The Committee was informed that the performance of the company since its last consideration by the Executive had been in line with expectations and that there were a number of positive prospects for the company. Negotiations regarding a potential major contract were indicated to be proceeding, and it was noted that another progress report would be provided in the spring of 2018.
It was noted that 26 questions had been submitted as part of the Advance Questions process. These questions and the responses provided to them were considered by the Committee.
The Committee discussed the update, advance questions and general considerations regarding the Pathway for Care company. Questions and comments were made regarding:
• KPIs (Advance Question 1). It was clarified that the KPIs regarding Pathway for Care cash flow and capital were considered by the Executive Health and Wellbeing Sub-Committee as part of the performance reports provided. The KPIs were indicated to be reviewed on a monthly basis and considered with reference to RAG grading.
• Council expenditure on the Pathway for Care company. A Member requested that information on the balance of the loan facility for Pathway and any other monies provided to Pathway by the Council be included in the Quarterly Performance Reports. The Committee was informed that the requested information could be provided.
• Clarification of the extent of drawn down from the loan facility. The Committee was informed that the draw-down from the loan facility by Pathway for Care to date was not exceeding £850k, and that at no point had the previous limits of the loan facility been breached other than to provide emergency funding. It was clarified that whilst Pathway for Care may have received money from the loan facility totalling more than the limit, elements of this had been counterbalanced by money received by the Council from Pathway, and that the net use of the facility had therefore not breached the specified limits.
• Availability of commercially sensitive information. It was clarified that some information regarding the company’s operations was confidential to the company rather than the Council, and that consideration by the Council in private would not therefore be sufficient to permit full consideration of all company information directly.
• Liability in the event of financial failure. It was clarified that Councillors bore no personal liability on behalf of the company resulting from their role as Councillors, and that the company would be responsible for any necessary payment of debts according to established seniority.
• Future funding of the company. The Committee was informed that the company directors did not anticipate needing to request any additional expansion to the loan facility. It was identified that if the company were to require additional funding and were not able to obtain it from current shareholders, it would need to either acquire additional funding from outside sources, or to cease trading.
• Independent scrutiny of company finances (Advance Question 6). The conditions under which the company would receive independent scrutiny by auditors of its finances were clarified.
• The Council’s Investment Strategy. The Committee was informed that the Council was developing a general investment strategy, coinciding with the review of its five year plan. It was considered that the Investment Strategy was likely to include a portfolio of investments with different risk profiles, including both investments similar to the Pathway for Care company and in lower risk areas. The Committee was informed that Member guidance would form a key part of this process.
• Subsidiary Companies. It was clarified that Pathway for Care did not have any subsidiary companies, although the minority shareholder was noted to have its own subsidiaries.
• Duty to the public. The Committee emphasised the importance of due diligence when utilising public money. It also drew attention to the financial pressures facing the Council and the intention to maintain services for those within the borough.
• Ownership of related intellectual property. A Member raised a query regarding the ownership of the intellectual property around the technology used by the company. It was noted that this did not sit with Pathway.
• Governance of current negotiations. It was confirmed that the Council’s approval for the final contract and associated structure of the company following completion of the current major contract negotiations would be considered by the Executive Health and Wellbeing Sub-Committee, which would make a recommendation to the Executive.
• Future governance arrangements. The Committee undertook significant discussion regarding governance arrangements for political oversight of Council investments in companies, how these might best serve the interests of the borough and what form these might take in future. Officers advised the Committee that commercial activities by local authorities were a relatively recent development and that there was yet to be an established standard governance practice around them. The Committee recognised that political oversight should be focused on risk associated with investments rather than operational matters. The current governance arrangements were noted to be scheduled for review as part of a broader review of Council governance, with consideration to best serving the interests of the borough, Council and related parties.
A number of suggestions for potential governance arrangements were made by Members of the Committee, including the potential consideration of group leader or other member involvement, and any appropriate inclusion in the Overview and Scrutiny Committee work-plan. The Committee was advised that all potential governance arrangements around commercial activities would be considered as part of the governance review, and that Members would be advised as to any recommendations.
RESOLVED that:
(i) The update on the Council’s investment in the Pathway for Care company be noted;
(ii) The advance questions and responses be noted;
(iii) The comments of the Committee be noted;
|