Issue - meetings

Company Governance

Meeting: 21/07/2022 - Council (Item 7)

Company Governance EXE22-048

Additional documents:

Minutes:

The Members of the Council were presented with the recommendations of the Executive which sought to modernise the Council’s governance arrangements with respect to its oversight of its wholly or part owned companies.  The recommendations had been drawn up following a review of the governance of the Council’s subsidiary companies as part of the medium term financial resilience assessment produced by the professional services firm EY.

The proposed arrangements, based on guidance prepared by the Chartered Institute of Public Finance and Accountancy(CIPFA), would improve openness and transparency, address conflict issues by removing Councillors from company boards, and formalise provision of Council services to group companies.  The Leader would be appointed as the Council’s Shareholder Representative, and a Shareholder Advisory Group (SAG) with the Leader of the Council and members of the Executive would be established.  There would be a key role for the Chairman of the Overview and Scrutiny Committee, who would be invited to attend meetings of the SAG.

The Council debated the proposals at length, with concern expressed over the democratic deficit that would result and suggestions that cross party representation should be included.  Councillor Brown moved and Councillor Dorsett seconded an amendment which would see a new (ii) added to the recommendations as follows:

“(ii)    openness and transparency are vital to this council and to ensure it is upheld in all matters related to our arms length companies.

          The creation of the Shareholder Advisory Group be politically proportional, to ensure that its companies act in the interests of the Council as shareholder and contribute to the Councils objectives.”

Before the matter was debated, the Director of Legal and Democratic Services advised that the amendment would have significant implications on the wider proposals, including the Terms of Reference of the SAG and the role of the Overview and Scrutiny Committee.  It was made clear that, should the Council support the amendment, further work would need to be undertaken to redraft the proposals before being brought back to the Council.

The Leader of the Council responded by making clear that the proposals were based on the Council’s Strong Leader arrangements and the Executive structure, with the scrutiny function provided through the Overview and Scrutiny Committee.  It was reiterated that the model was based on best practice issued by CIPFA and that the amendment would require significant changes to the proposed governance model.

Following the debate on the amendment, the Mayor advised that, in accordance with Standing Order 10.8, a vote would be held and the names of Members voting for and against the amendment recorded.

In favour:                                Councillors A Azad, J Brown, K Davis, S Dorsett, G Elson, C Kemp, M I Raja and M Whitehand.

Total in favour:                       8

Against:                                  Councillors H Akberali, T Aziz, A-M Barker, A Caulfield, G Cosnahan, W Forster, P Graves, I Johnson, D Jordan, A Kirby, R Leach, L Lyons, L Morales, J Morley, S Oades, D Roberts and J Sanderson and T Spencer.

Total against:                         18  ...  view the full minutes text for item 7


Meeting: 14/07/2022 - Executive (Item 7)

7 Company Governance EXE22-048 pdf icon PDF 395 KB

Reporting Person – Joanne McIntosh

Additional documents:

Minutes:

The Leader of the Council, Councillor Barker, introduced a report which recommended to Council proposals to modernise the Council’s governance arrangements with respect to its oversight of its wholly or part owned companies.  It was explained that Officers had undertaken a review of the governance of the Council’s subsidiary companies as part of the medium term financial resilience assessment produced by the professional services firm EY.  The Leader advised that the proposed arrangements sought to improve openness and transparency, address conflict issues by removing Councillors from company boards, and formalise provision of Council services to group companies.  The Executive noted that the proposals included the appointment of the Leader as the Council’s Shareholder Representative, and the creation of a Shareholder Advisory Group (SAG) to which the Leader of the Council and members of the Executive would be appointed.

The Overview and Scrutiny Committee had pre-scrutinised the report at its meeting on 11 July 2022 and had expressed concern over the proposed membership of the SAG.  The Leader advised that the proposals followed best practice and mirrored the Council’s governance arrangements of a Strong Leader and Executive model.  It was noted that the Chair of the Overview and Scrutiny Committee would be invited to attend SAG meetings.  The new structure would also allow the Chair of the Overview and Scrutiny Committee to call matters to be considered by the Committee.  Reserved matter decisions, such as adoption of business plans, would continue to be determined by Full Council.

Following a question regarding the financial implications of the proposals, the Executive was informed that the additional posts would cost around £100k - £150k and would be funded in the short term through the Fit for the Future programme budget.

The Executive welcomed the report, noting that the proposals were in line with CIPFA best practice.  A review of the new arrangements was considered to be useful to see how it was operating, subject to Council agreeing the proposals on 21 July 2022.

REcommended to Council

That  (i)    the Leader of the Council be appointed as the Council’s Shareholder Representative;

          (ii)   the creation of a Shareholder Advisory Group be approved, as detailed in the report, to ensure that its companies act in the interests of the Council as shareholder and contribute to the Council’s objectives;

          (iii)  the Terms of Reference of the Shareholder Advisory Group, as set out at Appendix 2 to the report, be approved;

          (iv)  Directors to the Group Companies, as outlined in Appendix 3 to the report, be appointed;

          (v)   the Shareholder Liaison Service be established to lead on managing contractual arrangements with the companies and in holding of the companies to account;

          (vi)  the establishment of Head of Shareholder Liaison Service at Grade W8 and Project Officer on Grade W5 be approved;

          (vii) delegated authority be given to the Director of Legal and Democratic Services to approve final terms and enter any Service Level Agreements where corporate functions provide support services to group companies;

       (viii)  delegated authority be given  ...  view the full minutes text for item 7