Agenda and minutes

There were none. 

To approve the record of the meeting held on 30 July 2018.

The record of the meeting of the Committee held on 30 July 2018 was agreed

and signed by the Chairman as correct. 

The Chairman will announce any late items which do not appear on the main agenda but which he/she has agreed should be considered by reason of special circumstances to be specified in the report.

There were none.

Members are invited to disclose any Disclosable Pecuniary Interests or Other Significant Interests in accordance with the Member Code of Conduct.  Guidance on this is set out in agenda item 4.

Disclosable pecuniary interests

There were none.

Other significant interests (OSIs)

There were none.

Other interests

Councillor Gulvin disclosed that he was a Governor of Oaklands Primary School which was mentioned in agenda item no. 5 (Audit and Counter Fraud Update 1 April 2018 – 31 August 2018.)

This report provides Members with an update on the work, outputs and performance of the Audit & Counter Fraud Team for the period 1 April 2018 to 31 August 2018. 

Discussion:

Members considered a report which provided an update on the work, outputs and performance of the Audit and Counter Fraud Team for the period 1 April to 31 August 2018.

The following issues were discussed:

Circulation of audit reports to Members – it was suggested that full audit reports also be circulated to the Chairman of the Audit Committee, the relevant Portfolio Holder and the opposition spokesperson on the Committee.

Ethics review – regarding the area of improvement identified relating to the review and circulation of policies to ensure staff had read and understood appropriate policies, it was suggested that this needed to be better embedded into the employee induction scheme.

With regard to the recommendation relating to gifts and hospitality, a Member suggested that in the interests of transparency and also to achieve consistency with the requirements for Members to disclose gifts and hospitality, senior officers should also be required to publicly disclose and publish gifts and hospitality. It was further suggested that the level for this should be set at the threshold for senior officer remuneration disclosure. It was further suggested that a more consistent approach to the registering of gifts and hospitality across the Council should be sought. Officers advised that the recommendations in the audit report were designed to address the inconsistencies referred to. The Chief Legal Officer undertook to report back on this issue and would also look at the approach adopted by other councils as well as the issue of Council employees appointed to serve as Directors. In relation to the latter issue, a Member suggested Council owned companies should be prohibited from offering hospitality to council employees.

Medway Commercial Group (MCG) - a Member expressed concern that the provision of governor services by Medway Commercial Group was now being delivered by Kent County Council. Therefore effectively a company controlled by the Council had decided to cease providing a council service without any apparent democratic process or oversight. It was queried what had happened to the staff who had TUPE’d over from the Council to MCG. Another concern was that MCG could possibly decide to stop providing the other 5 council services it had been commissioned to deliver, none of which were statutory and the ability of the Council to prevent this happening was queried. The Chief Legal Officer advised that the Council had established MCG as a fully commercial operation with a degree of commercial freedom to make decisions about services that did not apply in the case of Medway Norse or the Medway Development Company. Scrutiny of MCG took place via Overview and Scrutiny and performance reports were considered by Cabinet. In response a Member noted that there had been no reference to this service no longer being delivered in any reports so no pre-decision scrutiny had been possible. The situation regarding staffing was not known. Further information was requested on the MCG decision making process and whether any discussions about this decision had taken place with the Council and whether  ...  view the full minutes text for item 374.

This report presents the annual review of the Council’s Risk Management Strategy.

Discussion:

Members considered a report which presented the annual review of the Council’s Risk Management Strategy.

The Head of Finance Strategy detailed the changes to the strategy as the tracked changes referred to were not visible in the published report.

In response to a question, the Head of Finance Strategy advised that the Council’s approach to risk management was broadly in line with best practice. The risk register was now clearer in specifying inherent and residual risks and planned actions to bring them down to target levels.

Some Members queried why there had been no work on risks relating to Brexit and queried whether the decision to monitor relevant risks was influenced in any way and also asked where the risk management framework was agreed.  The Head of Finance Strategy assured Members no pressure was exerted on officers to include or exclude risks. The Corporate Risk Register was considered by Overview and Scrutiny before approval by Cabinet. It included risks which could prevent the delivery of the Council’s strategic objectives. Although Brexit was not a specific risk external advice where appropriate was taken on risks which Brexit could impact on.

A Member suggested that the risk register of organisations the Council contracted with should also be part of the information used by the Council when linking risk management to the “Golden Thread”.

Decision: 

The Committee agreed to note the Risk Management Strategy as setting out

the Council’s approach to risk management.

This report provides details of the mid-year review of the Treasury Management Strategy 2018/19.

Discussion:

Members considered a report regarding the mid-year review of the Treasury Management Strategy 2018/19.

The Head of Financial Strategy reported that, since the report had been published, the Council had taken out a 10 year loan totalling £5m with the Public Works Loan Board and also a £10m loan over 2.5 years with Barking and Dagenham London Borough Council. This was a start of a process to smooth out the maturity profile of its long term debts.

Members were also advised that the Cabinet, at its meeting held on 25 September 2018, had congratulated treasury management staff on their performance including, in particular, their success in achieving a significantly higher weighted average rate of return on the Council’s investment portfolio in comparison to other local authorities and had asked that these comments be referred to the Audit Committee.

A Member queried whether the Council would now not be lending money to other Councils. The Head of Finance Strategy advised that the Treasury Management Strategy still provided for this but the priority was to achieve the highest returns possible and, at present, that was not with local authorities.

The Chief Legal Officer commented that the Council had recently invested in a £6.4m distribution network which would yield approximately £200,000 pa income for the Council. A Member asked for clarity with regard to commercial investments whether there were any areas the Council would not invest in order to prevent a conflict with the organisation’s priorities or policies. The Chief Legal Officer advised that there were criteria for investments and a commercial strategy had recently been drafted with the initial aim of investments which would yield around 6% pa. This included the possibility of residential investments but this needed further work. He was happy to look at developing a policy on avoiding conflicts of interest regarding commercial investments.

A Member expressed concern about councils speculating on the housing market given the financial crash 10 years ago which followed speculation on housing and which led to several councils suffering a financial loss. The housing market produced big returns but that was because the risks were higher. The recent warning from the Governor of the Bank of England that withdrawal from the European Union could lead to a 30% fall in house prices should be seen as a real concern and the Council should be cautious about future speculation in the housing market. Medway Development Company (MDC) also exposed the Council to this risk on another front. In response the Chief Legal Officer advised that the MDC business case had been developed with the help of external advisors and factored in what would happen if the market dropped. For each scheme the financial viability of the project was tested at 4 different stages. In addition investments were typically over a 5-10 year period.

Other Members commented that, compared to the 2008 financial crash, the Council was investing in physical assets that could be understood. Also if the Council’s cash remained in bank accounts  ...  view the full minutes text for item 376.

This report advises Members about the nature of concerns raised, between September 2017 and September 2018, under the Council’s Whistleblowing, Anti- Bribery and Anti-Money Laundering Policies.

Discussion:

Members considered a report which set out the nature of concerns raised, between September 2017 and September 2018, under the Council’s Whistleblowing, Anti-Bribery and Anti-Money Laundering Policies.

In response to a query, the Monitoring Officer advised that the Anti-Bribery Policy would also apply to Members and it was agreed this could be covered in the Member induction programme following the next elections.

With regard to the first whistleblowing concern reported in paragraph 3.1, officers advised that the investigation had not revealed any criminal offences.

A Member suggested that future reports should include concerns raised under the whistleblowing, anti-bribery and anti-money laundering policies applicable to Medway Norse, Medway Commercial Group and Medway Development Company. The Monitoring Officer undertook to pursue that suggestion.

Decision: 

The Committee agreed to note the report.