Agenda item

To enable the Cabinet to consider the recommendations made by the Resources and Services Overview & Scrutiny Committee, the Community Leadership Overview & Scrutiny Committee and the Audit Committee following those Committees’ scrutiny of NEGC Ltd and the future governance arrangements for any Council controlled companies.

RESOLVED that the recommendations of the Overview and Scrutiny Committees and the Audit Committee be noted and the comments of the Corporate Finance & Governance Portfolio Holder, in response thereto, be endorsed.

Cabinet was aware that, at the meeting of the Resources and Services Overview and Scrutiny Committee held on 16 November 2020, that Committee had considered the Joint Scrutiny Panel’s final report following its activities of the former NEGC Ltd and the related subject of the governance mechanisms of future Council controlled companies.

After deliberation the Committee had recommended to Cabinet that:

(1)    To note that the winding up of NEGC Ltd meant that the rationale for establishing the Joint Scrutiny Panel, and the approved scope of the Panel, had also ended and that this Committee and the Community Leadership Overview and Scrutiny Committee would formally note that the Panel was being dissolved.

(2)    That this Committee having received the following recommendations from the Joint Scrutiny Panel and 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, 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.

Cabinet was also aware that the Audit Committee, at its meeting held on 25 February 2021, had considered the above recommendations of the Resources and Services Overview & Scrutiny Committee insofar as they related to the Audit Committee (i.e. those paragraphs highlighted in bold above).

Having expressed its concern and determination that the independence of the Audit Committee should be maintained the Audit Committee had:-

“RESOLVED that the Audit Committee -

(a)    notes the contents of the report and the suggestion from the Resources and Services Overview and Scrutiny Committee that, in principle, a Shareholder Group should be formed where the Council establishes a company;

(b)    whilst supporting the principle of the Shareholder Group, does not agree, that the terms of reference of that Group should be established at this stage; and therefore

(c)    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.”

Cabinet was further aware that the Community Leadership Overview & Scrutiny Committee, at its meeting held on 1 March 2021, had also considered the final report of the Joint Scrutiny Panel  and the above recommendations of the Resources and Services Overview & Scrutiny Committee and it was:-

“RESOLVED -  

1.      Notes that the Joint Scrutiny Panel has been dissolved following the decision for NEGC Ltd to cease trading (and for it to be wound up) as the rationale for establishing the Panel (and the approved scope of the Panel), has ended and that Cabinet be requested to note the same.

2.      Notes the following recommendations from the Joint Scrutiny Panel and  formally submits (a), (b), (d) and (e) 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/joins 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 a recommendation be submitted to Council to include this in the Constitution for when the Council does establish/join such a company.

(e)    That the broad approach to the terms of reference of any such Shareholder Group, as submitted to the Joint Scrutiny Panel based on the good practice identified by Lawyers in Local Government, be referred to 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 prior to further a further recommendation being submitted to the Cabinet.”

The Cabinet had before it the following response thereto which had been submitted by the Portfolio Holder for Corporate Finance and Governance:-

“I thank the Overview and Scrutiny Committees and Audit Committee for their review of governance arrangements for local authority companies. A small group being set up, with those representatives identified in the recommendations, is a sensible approach to undertake a joined up consideration of the detail and implications, before any potential Shareholder Group terms of reference are proposed. Any consequential changes to the Constitution can be included through the annual review led by the Portfolio Holder for Corporate Finance and Governance, together with the Monitoring Officer, with the necessary reports following.”

Having considered the recommendations submitted by the Overview & Scrutiny Committees and the Audit Committee together with the Portfolio Holder for Corporate Finance and Governance’s response thereto:

It was moved by Councillor Stock OBE, seconded by Councillor G V Guglielmi and:-

RESOLVED that the recommendations of the Overview and Scrutiny Committees and the Audit Committee be noted and the comments of the Corporate Finance & Governance Portfolio Holder, in response thereto, be endorsed.