Agenda item

On 6 August 2019 the Cabinet considered a report which outlined Medway Commercial Group (MCG) Limited’s achievements and performance over the past eight months, and its plans for changes to governance, future growth and development. Members have asked for this report to be discussed by this Committee.

Discussion:                 

Members considered a report submitted to the Cabinet on 6 August 2019 which outlined Medway Commercial Group (MCG) Limited’s achievements and performance over the past eight months, and its plans for changes to governance, future growth and development.

The Assistant Director – Transformation advised that the Leader of the Council had requested a review of the company and its trading. The findings of the review had led to proposed changes within the governance and board structure of the company and it was proposed that two non-executive directors should be appointed whose role would be to provide challenge, support any business development opportunities whilst acting in the interests of the shareholder, Medway Council. In addition, the Assistant Director Transformation was to be designated as client representative to improve the two way communication between the MCG Board and the Council.

The Assistant Director added that as the police were investigating allegations of potential fraud at MCG, then it might not be possible to answer some questions from Members so as not to impede the enquiries. The Chief Legal Officer added that further information would be given to Members once it was possible to do so and where the release of information would not prejudice proceedings. 

Some Members commented that what had emerged was unacceptable and had severely embarrassed the Council and led to concerns amongst the public about how public money was being spent.

Members discussed the following issues:

·         CCTV – a Member commented on public concerns about more than half of the cameras not working. He also asked which other councils were still using MCG for its CCTV service and whose responsibility it was to replace a camera when it was faulty. The Interim Chief Executive of MCG advised that the Council managed 390 cameras, 85 were for community safety purposes and 100 in car parks. While it would always be the case that one or two would not be working, MCG dealt with any faults reported as a priority. Swale and Maidstone Borough Councils had both given notice to leave the partnership but Gravesham Borough Council was happy with the service it received.

·         Governance – a Member commented that MCG had never been properly scrutinised by the Council and having Members on the Board was not appropriate as the Executive was effectively holding itself to account. Another Member added that the 6 monthly progress report on MCG to Cabinet did not allow for proper scrutiny as it was not possible to judge how successful MCG had been in meeting its objectives and performance information was insufficient. A briefing note was requested on the frequency of Member representation on the boards of other LATCOs, as well as how many Boards were chaired by a Member. The Chief Legal Officer commented that the membership of the Board was a matter for Cabinet and how MCG was scrutinised was ultimately a Member decision but how this could be improved would be looked at. The Council had decided to improve the levels of information about MCG that the Cabinet received so that it was easier to see whether the targets set by the Council had been met.

·         School Trading Services – noting Governor Services was no longer provide by MCG, a Member commented that when this contract ended MCG should not be eligible to bid. Which of the 13 school catering contracts mentioned in the report which had been re-let were  academies was queried as, if they were local authority schools, then this called into question the need for MCG to be involved. The Assistant Director – Transformation confirmed that some of these schools were academies. The future of governor services would be addressed as part of the new business plan for MCG. A Member asked if the business plan could come to the Committee for pre-decision scrutiny.   

·         Risks and reputational damage – a Member considered the risk implications in the Cabinet report were inadequately described given the potential for significant reputational damage as a result of the police investigations into alleged fraud. Whether there were any disciplinary proceedings with respect to current or former MCG staff was queried. Regarding the latter, the Assistant Director – Transformation advised she was unable to comment on any employee relations issues. She added that the current MCG team had worked hard to preserve the reputation of MCG but was unable to comment on whether the conclusions of the police investigation would cause any further reputational damage.  A Member commented he had been re-assured by the work of the new MCG team but the changes mentioned should have been introduced earlier.  The Assistant Director – Transformation stated she would take on board the points about the risk section of the report not being strong enough. The MCG Board was positive about the reputation of the company and its ability to provide services.

A Member commented that a failure in the telecare service would affect vulnerable people and therefore presented a further risk of reputational damage.  The Assistant Director – Transformation replied that she was confident the Board was reviewing this service, and others, on a regular basis. The Interim Chief Executive added that he had reviewed the Telecare service and was confident it was an excellent and growing service.

Members asked for clarification on the numbers of staff employed by MCG, whether there were now any difficulties in recruiting staff and also in relation to the management charges totalling £811,000 charged to MCG by the Council. The Committee was advised that MCG staff provided the 4 core services plus a round the clock CCTV monitoring service. Staff numbers had reduced in the last few months as MCG had re-prioritised its activities. The management charges represented MCG’s contribution to the corporate overheads of those Council services which had been transferred to MCG. 

Decision:

The Committee agreed to:

a)     note the report, and;

b)     request a briefing note on the membership of other Local Authority Trading Companies, in particular the extent to which elected members were appointed to the Board and how common it was for a member to chair the Board.