Agenda and draft minutes

Corporate Governance & Audit Committee
Thursday 23 January 2020 9.30 am

Venue: Committee Room 2, East Pallant House. View directions

Contact: Democratic Services on 01243 534685  Email:  democraticservices@chichester.gov.uk

Items
No. Item

279.

Chairman's Announcements

Any apologies for absence that have been received will be noted at this point.

 

Minutes:

One apology for absence had been received namely from Mr Johnson.

 

Dr O’Kelly, the Chairman of the Corporate Governance and Audit Committee (CGAC), had no announcements to make.

280.

Approval of Minutes pdf icon PDF 118 KB

The committee is requested to approve the minutes of its ordinary meeting on 24 October 2020 (copy to follow).

 

Minutes:

The CGAC received the minutes of its meeting on Thursday 24 October 2019, which had been circulated in the agenda supplement.

 

There were no proposed changes to the minutes.

 

Decision

 

The CGAC voted unanimously on a show of hands to approve the aforesaid minutes without making any amendments.

 

RESOLVED

 

That the minutes of the meeting of the Corporate Governance and Audit Committee held on Thursday 24 October 2019 be approved and signed as a correct record.

 

Pursuant to the aforesaid resolution Dr O’Kelly duly signed and dated the minutes.

281.

Urgent items

The chairman will announce any urgent items that due to special circumstances are to be dealt with under the Late Items agenda item.

Minutes:

There were no late items for urgent consideration at this meeting.

282.

Declarations of Interest

These are to be made by members of the Corporate Governance and Audit Committee or other Chichester District Council members present in respect of matters on the agenda for this meeting.

 

Minutes:

There were no declarations of interests made at this meeting by either CGAC members or other Chichester District Council members present as observers.

283.

Public Question Time

The procedure for submitting public questions in writing by no later than noon 2 working days before the meetingis available here or from the Democratic Services Officer (whose contact details appear on the front page of this agenda).

Minutes:

There had been no public questions submitted for this meeting.

284.

Draft Treasury Management, Investment and Capital Strategies 2020-21 pdf icon PDF 80 KB

 

1.1.       That the Committee considers the Treasury Management Policy Statement, the Treasury Management Strategy Statement, the Investment Strategy and relevant Indicators for 2020-21.

1.2.       That the Committee considers the Council’s Capital Strategy for 2020-21 -2024-25.

1.3.       That the documents in 2.1 and 2.2 are recommended to Cabinet and Council for approval

 

Additional documents:

Minutes:

The CGAC received and considered the agenda report and its five appendices.

 

This item was presented by Mr M Catlow (Group Accountant).

 

Mrs H Belenger (Divisional Manager Financial Services) and Mr J Ward (Director of Corporate Services) were also in attendance.

 

Mr Catlow explained that each year the draft Treasury Management and Investment Strategy for 2020-2021 and the Capital Strategy 2020-2021 to 2024-2025 were first considered by the CGAC prior to the Cabinet and then approval by the Council in readiness for the new financial year.

 

In summarising the report and its appendices Mr Catlow covered the following matters:

 

·         The summary of key changes between 2019-2020 and 2020-2021 in appendix 1.

 

·         The risk appetite statement in the draft Treasury Management and Investment Strategy 2020-2021 in appendix 2. Risk management was the starting point for and the driver of the Treasury Management Strategy (TMS). Chichester District Council (CDC) was debt-free and security of investments was the highest priority. Although CDC was fundamentally risk averse, a modest degree of risk was acceptable.

 

·         The management of investments within the stated risk parameters set out in the approved investment counterparties table 4 on page 15 in appendix 2.

 

·         The option of and approach to borrowing to finance new capital expenditure over the medium term if deemed prudent and also for short-term day to day cash flow management (pages 21 to 22 in appendix 2).

 

·         The Capital Strategy 2020-2021 to 2024-2025 in appendix 3, which was regularly monitored for affordability and could be resourced without the need for external finance and borrowing (table 2 on page 39).

 

Members’ questions and comments on points of detail were answered by Mr Catlow, Mrs Belenger and Mr Ward.

 

The range of matters covered included the following:

 

The Assessment of, Approach to and Adoption of Ethical, Social and Governance (ESG) Factors and Principles when Making Investment Decisions

 

(a)  References were made to ESG in sections 5.2 and 9 of the report. There was a consensus in favour of incorporating into the TMS in future as a standard paragraph a short statement about ESG. This is set out below.

 

(b)  Some members argued for more to be done to pursue ethical etc factors in making investment decisions eg taking account of pressing environmental issues.

 

(c)  Notwithstanding the increasing emphasis given to ESG considerations, local authorities faced constraints in making investments decisions which those in the private sector did not and there was a clear obligation to prioritise security. Having said that, security and ethical, environmental considerations ought not to be viewed as being in fundamental conflict with one another or as mutually exclusive criteria.      

 

During the discussion of this item Mr Catlow circulated to members a sheet of paper with a draft ESG statement which officers proposed should be routinely included in all future versions of the TMS. Members considered it. The statement (which was used by other councils) was as follows:

 

‘Ethical Investments

 

Statutory guidance issued by CIPFA and MHCLG makes it clear that all treasury investments must adopt  ...  view the full minutes text for item 284.

285.

Internal Audit - Audit Plan Progress pdf icon PDF 87 KB

The committee is requested to consider and note the audit plan progress report.

Additional documents:

Minutes:

The CGAC received and considered the agenda report and its appendix of the audits completed since the previous meeting.

 

This item was presented by Mr S James (Internal Audit and Corporate Investigations Manager).

 

Mr T Radcliffe (Human Resources Manager) was also in attendance.

 

Mr James summarised the report as follows:

 

·         The need to remove four audits from the 2019-2020 audit plan due to a variety of reasons as set out in para 2.2 and those items would be included in the 2020-2021 audit plan.

 

·         The figures in para 2.4 should in fact read as 24 not 25 full audits and 35 not 36 reviews.

 

·         The report addressed (a) four completed reports: (i) housing benefit overpayment recovery, (ii) HR recruitment and selection, (iii) treasury management and (iv) asset management; (b) three follow-ups: (i) trade waste, (ii) gifts, hospitality and car loans and (iii) GDPR; (c) one position statement: building control.

 

·         The recruitment and selection HR audit was the only one of the four which included an overall assurance rating level of limited assurance having identified two high risk exceptions: (a) completion of checklist, take-up of references, qualification checking and (b) checking of criminal convictions and handling/retention of DBS certificates; and one low risk exception: ensuring that version control dates were applied to guidance documents.

 

Accordingly Mr Radcliffe was present to answer members’ questions.  

 

Mr Radcliffe confirmed that the issues pertaining to the high risk exceptions in (a) and (b) above were being addressed. As stated in the agreed actions, the HR team had been instructed about the matters. Adherence to these requirements would be monitored, as would implementation of reforms to procedures and processes to comply with the relevant practice guidance on DBS retention and ensure that duly appointed applicants provided evidence of their stated qualifications. Where such qualifications were not proved this might be a potential misconduct issue to address. With reference to objective 4 on page 70, he explained the timescales for sending contracts to successful applicants, which followed a prompt verbal offer of employment to the successful applicant. The HR team was sufficiently resourced and able to respond efficiently to the inevitable fluctuations in the recruitment process.  

 

·         The housing benefit overpayment recovery audit had two medium risk exceptions with a reasonable assurance rating.

 

Members had no questions.

 

·         The treasury management audit gave rise to no issues and had an assurance rating.

 

Members had no questions.

 

·         The asset management audit gave rise to no issues and had an assurance rating.

 

Members had no questions.

 

·         The follow-up audit reports in respect of (i) trade waste and (ii) gifts and hospitality declared that all outstanding issues had been addressed. That was mainly the case with the GDPR follow-up audit; a review of CDC’s data protection policy was underway.

 

Members had no questions.

 

·         The building control audit was the subject of a position statement in view of the ongoing work being undertaken by the Divisional Manager and Finance as stated in para 3.3 on page 78.  ...  view the full minutes text for item 285.

286.

Corporate Debt Recovery Policy pdf icon PDF 312 KB

1.1.That the Committee considers the new Corporate Debt Recovery Policy and recommends it to Cabinet for approval.

 

1.2.That the Committee notes the Council’s response to the recommendations from the Money Advice Service.

 

Additional documents:

Minutes:

The CGAC received and considered the agenda report, its appendix with the draft Corporate Debt Recovery Policy and the first of the two background papers which had also been included within the agenda papers.

 

This item was presented by Mrs H Belenger (Divisional Manger Financial Services).

 

Mrs Belenger summarised the report with reference in particular to sections 3 (Background) and 5 (Proposal) and 9 (Community Impact and Corporate Risks). The objective was to create a new income collection and debt management policy which was comprehensive, co-ordinated, consistent, clear and considerate especially for vulnerable people who might need additional assistance in addressing their financial affairs. The new policy adopted an overarching generic approach, taking into account different legislative requirements for the various Chichester District Council services, introducing interest payments for late payments, embracing a fair debt collection approach, establishing write-off arrangements and a new regular reporting requirement to senior leadership officers. The Money Advice Service and its ‘Stop the Knock’ campaign had made six recommendations and CDC’s positive response was set out in para 5.7 of the report. Although the draft policy stated on page 86 that it would be effective from 1 March 2020, this would in fact be later in order to take account of the meetings cycle for the Cabinet and the Council.           

 

Members welcomed and commended the ambit and approach of the new draft policy. They wished to be kept abreast of write-offs, trends and how the new enforcement arrangements were working. They endorsed the extra support for vulnerable people facing indebtedness. A hope was expressed that due account should be taken when implementing this new policy of the impact of the roll-out of Universal Credit or, for example, the exit from the EU on those who were more vulnerable in Chichester District. 

 

Mrs Belenger confirmed that members would be given periodically details (in a data protection compliant manner) of the write-offs, the level and scale involved and who was making the write-off decision. In addition officers would look at and inform members about trends in indebtedness and the kinds of national and individual factors which might affect those trends. 

 

Decision

 

The CGAC voted unanimously to make the resolution and recommendation set out below.

 

RESOLVED

 

That (a) the new Corporate Debt Recovery Policy and (b) Chichester District Council’s response to the recommendations from the Money Advice Service be noted.

 

 

 

RECOMMENDATION

 

That the new Corporate Debt Recovery Policy be approved by the Cabinet.

287.

Motions Procedure pdf icon PDF 62 KB

1.1.    That the Constitution be amended to replace the current Motions guidance with the revised Motions Procedure as set out in the Appendix to this report.

 

1.2.    That the time permitted at Full Council for “Questions to the Executive” be reduced from 45 to 30 minutes.

Additional documents:

Minutes:

The CGAC received and considered the agenda report and its appendix.

 

Dr O’Kelly explained that rather than discuss the report at this meeting the item should be adjourned. This would enable to enable a member task and finish group (TFG) to consider and analyse the report’s good ideas and proposals but also other options before the matter was brought back to the CGAC in due course prior to approval by the Council. She suggested that the TFG should comprise five Chichester District Council (CDC) members, not all of whom would belong to the CGAC. She encouraged expressions of interest from CGAC members to sit on the TFG but emphasised that the invitation would be extended to all CDC members. She and Mr N Bennett (Monitoring Officer and Divisional Manager for Legal and Democratic Services) would determine the membership.

 

The CGAC supported Dr O’Kelly’s proposal.

 

Decision

 

The CGAC voted unanimously to make the resolution set out below.

 

RESOLVED

 

That a task and finish group consisting of five Chichester District Council members be established to consider the proposals in the agenda papers and other options and report its findings and conclusions to a subsequent meeting of the Corporate Governance and Audit Committee. 

            

[Note After the end of this meeting the following six members were noted as having expressed their interest in participating in the TFG: Mr J Brown, Mr A Dignum, Dr K O’Kelly, Mr S Oakley (present as an observer during this meeting), Mr D Palmer and Mr P Wilding]    

288.

Budget Review Task and Finish Group Feedback

A member of the Task and Finish Group and Mrs Belenger will provide an oral report on the outcomes from this review.

Minutes:

The CGAC received the following oral report from Mrs H Belenger (Divisional Manager Financial Services).

 

The TFG met on 17 January 2020 to understand the main variances on the budget which would be proposed to the Cabinet in February 2020 and the Council in March 2020 for council tax setting. The proposed budget took into account the high level assumptions made in Chichester District Council’s (CDC) Financial Strategy five-year model and built on those forecasts.

 

Officers set out for the TFG the main projected variances for the 2020-2021 budget spending plans working from the approved base budget of 2019-2020. The variances and their impact were set out with detailed explanations eg inflationary increases for pay, prices and pensions which affected all service areas. Officers also gave detailed explanations of changes in individual service areas eg in housing to take account of the expected impact on service demand as result  of the loss of West Sussex County Council funding in Chichester District or such as Chichester Contract Services and trade waste income targets with a drive to increase income generation opportunities.

 

So whilst the government’s provisional financial settlement received was broadly in line with expectations, the detailed estimates showed a budget surplus for the coming financial year of £484,000, although this was subject to receiving the final settlement from the government. The surplus was down from the forecast in the Financial Strategy which was a surplus of £759,000, which was mainly due to a lower estimate on retained business rates. Thus the five-year model had a forecast of £3.659m and the proposed budget was now £3.421m, a difference of £238,000.

 

CDC had a statutory obligation to produce a balanced budget, which had been achieved for the proposed budget for 2020-2021 as an estimated surplus of £484,000 and it sought to adhere to the financial principles contained in CDC’s financial strategy. However, it should be noted that the five-year model showed a deficit for the two years thereafter due to the expected changes due to the government’s Fair Funding Review, so any use of the £484,000 should only be for one-off rather than ongoing expenditure.

 

Mr Dignum said that he chaired the TFG and it had been a very valuable meeting. Mrs Belenger and Mr D Cooper (Group Accountant) had very helpfully taken members through the variances and gave them a clear view of the trajectory. 

 

The CGAC had no questions for Mrs Belenger and it noted the oral report without making a formal resolution to that effect.

289.

Exclusion of the Press and Public

There are no restricted items for consideration.

Minutes:

There were no exempt agenda items listed for this meeting and no resolution was made to exclude the press and the public from any part of this meeting.

290.

Late items

The committee will consider any late items as follows:

a)          Items added to the agenda papers and made available for public inspection

b)          Items that the chairman has agreed should be taken as a matter of urgency by reason of special circumstances to be reported at the meeting

Minutes:

As stated during agenda item 1 (minute 279) there were no late items for urgent consideration at this meeting.