Agenda item

The report advises the Overview and Scrutiny Committee (OSC) of the work of the NEGC Joint Scrutiny Panel, to formally invite the Community Leadership OSC to note that that the Joint Scrutiny Panel was being dissolved and to consider the recommendations of the Joint Scrutiny Panel in respect of governance of future Council controlled companies.

It was reported to Members that the Resources and Services Overview and Scrutiny Committee and the Community Leadership Overview and Scrutiny Committee, at their respective meetings held on 29 July 2019 (Minute 15 referred) and 5 August 2019 had both approved that a joint scrutiny panel be established in order to scrutinise the work of the North Essex Garden Communities Limited (NEGC) and, in particular, its interim business plan and future business plans.

The membership of the Joint Scrutiny Panel had been delegated to the Chairmen of the two Overview and Scrutiny Committees to determine, subject to ratification by those two Overview and Scrutiny Committees. The following Members had been appointed to the Joint Scrutiny Panel:

Councillor M Stephenson (Chairman)

Councillor Bush

Councillor Griffiths

Councillor Steady

Councillor Turner

The Resource and Services Overview and Scrutiny Committee (OSC) had endorsed the above membership at its meeting on 14 October 2019 (Minute 28 referred).  The Community Leadership OSC had also endorsed that Membership on 7 October 2019.

The Joint Scrutiny Panel had met three times as follows:

16 October 2019

12 February 2020

17 September 2020

The Committee heard that the Joint Scrutiny Panel had looked at the various responsibilities of the Council as community leader, shareholder of NEGC Ltd and having a Director of the Board of that Company.  The inherent conflicts and the management of those conflict points were also mentioned.

The absolute importance of Part 1 of the Local Plan in the critical path for Garden Communities and NEGC Ltd (and any future delivery vehicle for the Communities) was referenced at the meetings.  NEGC Ltd had been commissioned by the partner Councils (Braintree, Colchester, Essex and Tendring) to undertake work for those partner Councils to secure approval of Part 1 of their Local Plans.

While the process of adoption of the Local Plan was underway, the NEGC Ltd had developed interim business plans only.   The Interim Business Plans for NEGC Ltd from 2018/19 and 2019/20 had been submitted to the Panel for its consideration.

It was reported to the Committee that the work of the Council’s Monitoring Officer and Section 151 Officer with their colleagues in the other partner Councils in respect of protecting the interests of this Council in relation to NEGC Ltd and the governance arrangements had been reflected upon.

The Panel had also looked briefly at possible future delivery vehicles for the Garden Communities.

Members were informed that across all meetings of the Joint Scrutiny Panel there was reference to best practice models for governance arrangements for Council controlled companies such as NEGC Ltd.  In part that discussion was about what might be appropriate for the future development of governance around NEGC Ltd, but, also around future companies that the Council may have established or participated in where the Company was a Council controlled company.

At the Joint Scrutiny panel’s last meeting, it noted the decision of the North Essex Garden Communities Ltd Board on 6th July 2020 to take all the necessary steps to wind up its three Local Delivery Vehicles.  The three Councils concerned had also all approved that NEGC Ltd itself cease trading on 31 August 2020 and that the necessary winding up procedures for it be undertaken, subject to the Leader of the Council, in consultation with the Section 151 Officer and the Monitoring Officer, being satisfied around the final accounting processes.

The Committee was informed that the panel had been advised that NEGC Ltd had been solvent and that, after settling any outstanding liabilities, the remaining assets of the company would be apportioned to the shareholders entirely as it should have been. 

On the basis that the NEGC Ltd was being wound up the Joint Scrutiny Panel had concluded its work based on the approved scope and terms of reference for the Panel.

Following discussions it was moved by Councillor xxxxxxxx, seconded by Councillor xxxxx and RESOLVED that the Committee:

1.    notes that the winding up of NEGC Ltd means that the rationale for establishing the Joint Scrutiny Panel, and the approved scope of the Panel, has also ended and requests that Cabinet notes that this Committee and the Community Leadership Overview and Scrutiny Committee will formally note that the Panel is being dissolved.

2.    That this Committee notes the following recommendations from the Joint Scrutiny Panel and  formally submits (a), (b) and (d) below to the Cabinet for its consideration:

(a)       To record and applaud the hard work of officers in respect of the development of the Tendring-Colchester Borders Garden Community that resulted in the proposals for the Garden Community being accepted by the Local Plan Inspector in his enquiry into the draft Local Plan.

(b)       To note that there is important work being undertaken on various work streams to secure an exemplar development through the Tendring-Colchester Borders Garden Community.

(c)       To establish a further Joint Scrutiny Panel at an appropriate time in the future to monitor, examine and review arrangements for delivery of the Tendring-Colchester Borders Garden Community (and particularly the commitments and financial expose of the Council to any external body established by the Council to lead on the development of that Garden Community).

(d)       To endorse the principle that where the Council establishes a company limited by shares (on its own or with other bodies) that it also establishes a Shareholder Group (either solely or with the other public bodies where the company established jointly) and that this be established in the constitution where appropriate and that, the terms of reference similar to those set out at Appendix A to this report should form the terms of reference for that Shareholder Group, adjusted as necessary to the particular circumstances, business of the Company and consideration of such matters as:

(i)        How any co-opted members are used and how they are defined in the terms of reference;

(ii)       The Chairman of the relevant overview and scrutiny committee and the Chairman of the Audit Committee being appointed to the Shareholder Group as non-voting members; and

(iii)      Ensuring that any “invitations to attend” issued to councillors or officers etc. must be provided to such persons at least five working days in advance of the meeting.

3.    recommends to Cabinet that further work be undertaken by a small group made up of representatives from Cabinet, the Chairmen of the two Overview and Scrutiny Committees and the Chairman of the Audit Committee, together with the Monitoring Officer and the Section 151 Officer to look into the concerns raised in a joined up approach prior to further recommendations being submitted to the Cabinet.