Agenda and minutes

To receive any apologies for absence and notification of any substitute Members in accordance with the Constitution.

Committee Members: Councillors R. Feeney (substituted for by Councillor C. Whinney), Councillor C. Neame (substituted for by Councillor D. Allcard).

Councillor. S. Parnall (without a substitute)

Others:                  

Councillor. M. Brunt (Leader)

 To elect a Chair for this Committee for the Municipal Year 2019/20.

To elect a Chair for this Committee for the Municipal Year 2019-20.

RESOLVED that Councillor N. Harrison be elected Chair of the Committee for the Municipal Year 2019-20.

Chair’s Introduction

The Chair welcomed new Members to the Committee and thanked Members for attending overview and scrutiny training earlier in the week.

He set out four key things that were expected as Overview and Scrutiny Committee Members.

These were:

·       to be a constructive critical friend to the Executive – observing the progress it is making and commenting on it;

·       to amplify the views and concerns of the public – of our residents;

·       to be independent and to present the Committee’s own views and opinions to the Executive; and

·       overriding all this, aiming to improve public services and the service given to residents.

The Chair identified that many of the reports to Committee finished with “noting” items. If the Committee and its Members have views then they should convert these items into recommendations or observations they want to give to either Officers or to the Executive. If a recommendation would be appropriate, then Members should ask for that accordingly.

To elect a Vice-Chair for this Committee for the Municipal Year 2019/20.

To elect a Vice-Chair for this Committee for the Municipal Year 2019-20

RESOLVED that Councillor S. Parnall be elected as Vice-Chair of the Committee for the Municipal Year 2019-20.

To approve the Minutes of the previous meeting held on 10 April 2019.

To confirm as a correct record the Minutes of the previous meeting                    

The response to a Member question (asked at the April meeting of the Committee) to the Council’s External Auditors Deloitte regarding work on bank balances and trading companies was sent in an email to Committee Members.    

RESOLVED that the Minutes of the meeting on 10 April 2019 be approved as a correct record.

To receive any Declarations of Interest (including the existence and nature of any Party Whip).

No declarations of interest were made.

To note the Annual Internal Audit Report & Opinion 2018/19 and provide any observations to the Leader of Council and the Chief Executive.

The Committee considered the Annual Internal Audit Report and Opinion for the 2018-19 Municipal Year.

The Council’s Head of Internal Audit is required to provide an annual opinion on the overall adequacy and effectiveness of the organisation’s risk management, control and governance processes. This was introduced by the Executive Member for Corporate Direction and Governance, Councillor V. Lewanski. He explained that his new portfolio covered performance planning and would look at how the Council’s performance indicators linked in to its Corporate Plan. Future work included focus on organisational development.

For the 12 months ending 31 March 2019, the Head of Internal Audit’s opinion for Reigate and Banstead Borough Council was that:

The organisation has an adequate and effective framework for risk management, governance and internal control. However, our work has identified further enhancements to the framework of risk management, governance and internal control to ensure that it remains adequate and effective.

A representative from the Internal Auditors (RSM) was present to answer questions.

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

·       Procurement and contracts – It was noted that the Council only received ‘partial assurance’ for its procurement and contracts work. More detailed information was requested on the extent of the problem that had been identified first in 2017 and what work was being carried out to make changes. RSM identified that the full detail was in reports provided to officers as part of the Internal Audit Service Reviews in 2018/19. Detailed findings were available to Members via the eMembers website (under Performance Information > Internal Audit Reports > Internal Audit Service Reviews). An independent review of the processes around procurement and the application of the rules was currently being scoped and costed. This was close to being completed and would result in a full work plan. Members would be provided with an update on progress to date outside of the meeting. It was confirmed that the audit included all procurement that the Council undertakes.

·       Assurance levels – It was identified that the assurance levels set out in Appendix B of the report: Summary of Internal Audit Work completed 2018/2019 ranged from: No assurance, Partial assurance, Reasonable assurance and Substantial assurance. These were the four standard levels of opinion that RSM used within all internal audit reports. RSM confirmed that there were no ‘No Assurance’ opinions in 2018/2019 and explained that the opinion grading was designed to give an overall sense of compliance in different services. This fed into the overall annual opinion which was consistent with previous years and with similar organisations.

It was identified that an ‘Advisory’ assurance was one-off advice used when officers had asked Internal Auditors to look at an area of work, measure it against best practice and offer guidance on areas to improve.  For example, it had looked at the Council’s Commercial Governance review and provided additional comments to give further reassurance before going to the Executive.

·       Grants Funding – it was noted that the audit  ...  view the full minutes text for item 6.

To consider the provisional 2018/19 outturn report for Revenue, Capital and Treasury Management, to be reported to the Executive on 20 June 2019.

To consider any Advance Questions submitted.

The Committee considered the provisional 2018/19 outturn report for Revenue, Capital and Treasury Management, to be reported to the Executive on 20 June 2019.

Councillor T Schofield, Executive Member for Finance, gave an overview of how the Council performed in the 2018/19 financial year (subject to final figures approved by the Council’s External Auditors).

The capital programme progressed well in 2018/19 with a lower underspend than recent years of £3.29m or 8% compared to original forecasts. 

As reported during the year, significant progress has been delivered across a number of major projects which support the Council’s objectives, including Marketfield Way. The Council has also invested in additional commercial properties to support our ambition to achieve sustainable new income sources as well as maintaining our operational assets including play areas and car parks.

Revenue Budget Outturn 2018/19

For the Revenue budget the outcome this year has been a favourable variance of £1.62m or 9%. Income receipts were particularly buoyant:

·       recyclate prices were higher than expected and membership of the Garden Waste scheme continued to increase (£0.58m favourable).

·       Investment in our property portfolio resulted in new income streams (£0.18m favourable).

·       Planning fee income was higher than originally forecast (£0.26m favourable).

Borrowing costs were lower compared to the plan as the calls for property investments were lower than the forecasts when the treasury budget was prepared (£0.29m favourable) and there were budget savings due to staff vacancies as new management structures were implemented (£0.26m favourable). The main cost pressures during the year related to the continued requirement to buy in external legal services (£0.16m adverse) and slightly lower than expected benefit subsidy from Government (£0.12m adverse).

The report also confirmed the outturn position for the Headroom Contingency Budget after taking into account the one-off charge to the accounts that has been necessary to resolve long-standing bank reconciliation balances (£0.476m). This matter had been discussed at previous meetings of the Committee and of the Executive. The details relating to this charge would be reported when the statement of accounts for the year is presented to Executive in July following completion of the audit.

In view of the net £1.6m positive variance it is recommended that some of this resource be used to set up two new earmarked reserves which were:

1.     £0.5m to help fund new posts that are being established across the council during 2019/20 to support delivery of corporate priorities.

2.     £0.25m to be overseen by the new Commercial Ventures Sub-Committee and used to fund Feasibility Studies for new commercial initiatives to help ensure that business cases are robust.

Treasury Management Outturn 2018/19

The Treasury Management Strategy outturn report confirmed the Council has complied with Treasury policies previously approved by Council for 2018/19 and complied with the CIFPA Code of Practice on Treasury Management for local authorities.

In summary, despite continued financial challenges faced by local government (and at a time when many authorities were making damaging cuts and selling assets), the Council remained confident it would continue to run an ambitious  ...  view the full minutes text for item 7.

To consider the key service performance indicators for the fourth quarter of 2018/19.

The Committee considered the Quarterly Performance Report for quarter 4 of the year 2018/19.

The report was introduced by the Executive Member for Corporate Direction and Governance, Councillor V. Lewanski. He outlined the Council’s performance from January to March 2019.

Section 1 looked at Key Performance Indicators (KPIs). Of the 15 KPIs reported in this quarter, 9 were on target or within agreed tolerance. Five KPIs were contextual homelessness targets introduced to reflect changes required by the Homelessness Reduction Act (2017). As the impact of the legislation is uncertain, no target was set in 2018/19.

KPI 3 – relating to the government’s target to build a set number of affordable homes completed – was reported as off target at the end of quarter four. The target was 100 and the actual number built was 68. It was identified that achieving this target was largely outside the control of the Council as it was significantly dependent on private developers in a few large sites.

Section 2 on risk management identified no new strategic risks in quarter 4.

Section 3 covered Internal Audits completed in quarter 4 on: GDPR Governance, Governance Arrangements for Property Investment Company, Commercial Governance Framework and Grants Funding.

The Committee considered and discussed the report. There were a number of questions and comments, relating to the following topics:

Section 1 - Key Performance Indicators (KPIs)

·    Affordable housing – A number of Members questioned the reasons for the affordable housing target (KPI3) as the Council had limited control over this target which is set in policy. Members felt that this was an arbitrary target as the Council does not have legal powers to force a developer to build affordable housing so in practice there could be zero affordable homes built in one year. It was noted that the Council is committed to increasing the number of affordable homes going forward.

The target of 100 is set in the Council’s Core Strategy which is agreed by the independent Planning Inspectorate. Members expressed a desire to assess this target’s applicability.

It was noted that this topic was discussed at a recent Corporate Plan workshop on the Council’s housing strategy. Members recognised that it could not only rely on private sector developers to build affordable housing. If it wanted to deliver the level of affordable housing it wanted, then working with partners such as Raven Housing Trust would be a way forward.

Members observed that if developers say they cannot afford to build a higher number of affordable homes through their cost and expenses appraisals, the Council should intervene. It should be more critical about developers’ written plans or have an overage (a future payment made to the seller of the land, by the buyer of the land) written into plans. If developers made more money on the sales, then the Council should receive a proportion of this to use to build affordable housing.

The Council regards its aims of delivering affordable homes in this context through shared equity and help to  ...  view the full minutes text for item 8.

To confirm the Work Programme for the Overview and Scrutiny Committee for 2019/20.

Members considered the Overview and Scrutiny Committee Work Programme which would be a standing item on future agendas to help with forward business.

It was noted that a report on service and financial planning would come to the next Committee meeting (11 July 2019) as an item on the latest Medium Term Financial Plan (2020/21 to 2024/25) and Budget Forecast for 2020/21.

The Leader, Councillor M. Brunt, would come to the Committee to give an update twice a year.

It was identified that in the updated organisational structure, three Executive Members had responsibility one of three areas of Council business: Organisation, People and Place. Therefore, each group of portfolio holders would be invited annually to meetings to present updates on each of their strands of business.

Other future Agenda items would include the developing housing strategy and any commercial revenue and benefits work.

It was requested that the planned updated plan on carbon management (discussed at Full Council on 7 February 2019 – Item 75 – Climate Change) come to the Overview and Scrutiny Committee for discussion before going to full Council.

Members thanked Councillor N. Harrison for standing as new Chair of the Committee.

To consider any items arising from the Executive which might be subject to the ‘call-in’ procedure in accordance with the provisions of the Overview and Scrutiny Procedure Rules set out in the Constitution.

It was reported that there were no items arising from the Executive that might be subject to the ‘call-in’ procedure in accordance with the provisions of the Overview and Scrutiny Committee Procedure Rules.

To consider any item(s) which, in the opinion of the Chairman, should be considered as a matter of urgency - Local Government Act 1972, Section 100B(4)(b).

(NOTE: Under the Committee and Sub-Committee Procedure Rules set out in the Constitution, items of urgent business must be submitted in writing but may be supplemented by an oral report.)

There were no items of urgent business.