Issue - meetings

To consider findings of a review of the Council’s commercial activities and a recommendation for the adoption of a good practice Framework and Checklist to guide future working and ensure lessons from past practice are learnt.

RESOLVED that:

(i)            The findings of the Commercial Governance Review Member Task Group be noted.

(ii)          Subject to (iii) and (iv) below, the Commercial Governance Framework be adopted and implemented.

(iii)         The Overview and Scrutiny Committee’s request (from its meeting on 14 February 2019) for the Commercial Governance Framework to be incorporated into the Constitution be supported and that this be built into a report to the next meeting of the Executive (18 April 2019) providing full governance arrangements for the dissolution of existing Sub Committees and the establishment of a Commercial Ventures Sub Committee. 

(iv)         Once established, the Commercial Ventures Sub Committee, be tasked with considering the suggestions from the Internal Audit Report, set out in Appendix F of the report presented, when implementing the Commercial Governance Framework.

Councillor M.A. Brunt, Leader of the Council, invited the Executive to consider a report setting out the findings of the Commercial Governance Review Member Task Group. Councillor Ellacott, Chair of the Task Group, was invited to introduce the report and to outline the approach and key aspects of the review.

The Executive was informed that the review had sought to be forward facing and had identified lessons learned for the future. It was noted that the Task Group had undertaken a thorough review of previous commercial activities, including consultation with relevant Members and Officers, with additional advice from an independent consultant. It was identified that all Members had been updated during the course of the review, and thanks were offered to all those who had contributed to the process.

The Executive was asked to note that:

-       The scope of the review was to consider the governance arrangements in relation to all commercial activities that the Council had been involved in, including Pathway for Care; RBBC Limited; Greensand Holdings Limited; Horley Business Park Development LLP.

-       The Task Group’s methodology had sought an evidence led approach to its work and a series of key questions and lines of enquiry had been used to inform the review.

-       The Task Group had undertaken a documentary review of Council/Committee reports and minutes while additional evidence was gathered from the Council’s Chief Executive, Section 151 Officer, and the former Leader of the Council.

-       Nine meetings / evidence gathering sessions took place between September 2018 and January 2019.

It was highlighted that the outcome of these meeting had informed the design of the proposed commercial governance framework, set out at Appendix D to the report presented, which the Task Group had recommended form the basis for future consideration of potential commercial activities. It was noted the framework comprised a checklist of issues and “golden rules” to be applied whenever the Council proposed to set up a commercial venture. 

The Executive was informed that the draft commercial governance framework had been considered by the Overview and Scrutiny Committee in February 2019. RSM, the Council’s Internal Auditors, had also offered suggestions on the framework. The Executive was asked to note that comments from the Overview and Scrutiny Committee and the report from the Internal Auditors had been appended to the report presented.  

In response to questions, it was highlighted that the framework proposed establishment of a Commercial Ventures Sub Committee.  It was noted that this would introduce a streamlined approach to the Council’s company governance. The importance of supporting effective scrutiny of commercial activities was also highlighted.       

The Leader of the Council thanked the Members of the Task Group and supporting Members and Officers for their work in conducting the review.

RESOLVED that:

(i)            The findings of the Commercial Governance Review Member Task Group be noted.

(ii)          Subject to (iii) and (iv) below, the Commercial Governance Framework be adopted and implemented.

(iii)         The Overview and Scrutiny Committee’s request (from its meeting on 14  ...  view the full minutes text for item 112

To consider the report on the Commercial Governance Review, as conducted by the Commercial Governance Review Member Task Group, to be considered by the Executive on 18 March 2019, and to make any comments for consideration by the Executive.

To consider any Advance Questions submitted.

The Committee considered the report on the Commercial Governance review, as conducted by the Commercial Governance Review Member Task Group, to be considered by the Executive on 18 March 2019.

Councillor Ellacott, chair of the task group, introduced the report and outlined the approach and key aspects of the review. It was noted that the review had sought to be forward facing and to identify lessons learned for the future. It was identified that the task group had undertaken a thorough review of previous commercial activities, including consultation with relevant Members and officers, and with advice from an independent consultant. It was identified that all Members had been updated during the course of the review, and thanks were offered to all those who had contributed to the process.

Attention was drawn to the proposed commercial governance framework, which the task group had recommended form the basis for future consideration of potential commercial activities, and questions and comments from the Committee were invited.

There were a number of questions and comments relating to the following topics:

·         Internal Audit review of the draft Framework. It was confirmed that the internal audit review of the draft Framework was in progress and was expected to be completed in time for any information arising to be considered by the Executive on 18 March.

·         Live risks. It was confirmed that the panel was satisfied that appropriate actions were in place in response to any ongoing risks for existing commercial ventures identified as part of the review process.

·         Pathway for Care business case. It was identified that the finding that the business case for the Pathway for Care company initially established was considered to have been insufficient to persuade a commercial bank to lend funds was made on the basis that the business case would have been expected to provide additional detail in order to do so. It was identified that the requirement for sufficient detail in this area formed part of the proposed future rules for establishment of commercial ventures.

·         Due diligence. It was confirmed that the previous commercial activities of all key parties involved with the Path had been considered as part of the due diligence process, and that the panel had considered this information as part of their review.

·         Non-Executive Directors. It was confirmed that the panel supported the use of non-executive directors to Council commercial ventures, and that the framework identified that this should be considered in future on a comply-or-explain basis. It was recommended that the wording in the framework on this topic, particularly point 6.(viii) should be clarified to make clear that appointment of non-executive directors should be considered as part of the establishment of commercial ventures, as part of the associated Executive report, rather than at a later date.

·         Governance and the role of the Overview & Scrutiny Committee. A number of comments were made regarding the role of the Committee in future governance, and associated matters. Attention was drawn to the importance of ensuring that meetings providing important  ...  view the full minutes text for item 58