Arm's Length External Organisations- Governance and Risk Management- Oversight and Assurance Report 2022-23 (Programme of Work 75.1 - part 2)
North Lanarkshire Council · 8 September 2022
Back to Audit and Scrutiny Panel — 8 September 2022 and its agenda
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North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☒ Yes ☐ No Ref KH/JL Date 08/09/22 Arm’s Length External Organisations: Governance and Risk Management: Oversight and Assurance Report 2022/23 (Programme of Work 75.1 – part 2) From Katrina Hassell, Head of Business and Digital E-mail hassellK@northlan.gov.uk Telephone 07903 096121 Executive Summary The council delivers a number of frontline and business-focused services through arm’s length external organisations (ALEOs) which have been developed over the past 20 years to provide services in new ways that are innovative, responsive or more commercially driven. The council must have confidence in the quality of service delivery and obtain assurances, through robust monitoring, scrutiny and oversight, that the public purse continues to secure best value and the externalised delivery arrangements are not exposing the council to potential operational, financial or reputational risks. This report provides an overview of the ALEO landscape and the performance and financial monitoring safeguards that are in place to provide such assurance. The report confirms that ALEO Boards and Management Committees continue to demonstrate effective stewardship with robust governance, financial governance and risk management arrangements in place. In recent years the number of council owned ALEOs has reduced following service review activity, or external factors, which highlighted that service provision via the externalised delivery vehicles no longer represented best value for the council. As such, the council has taken separate decisions to either in-source service delivery or cease provision, with the assets and responsibilities of the individual companies transferred accordingly and the companies formally wound-up and struck-off with all due diligence considerations adhered to. This report provides an update on the status of current dissolution activity providing an assurance to members that council decisions are being effectively and timeously implemented. Recommendations The Audit and Scrutiny Panel is requested to: 1) Note the nature and range of services provided by arm’s length bodies and the governance and stewardship arrangements in place to ensure effective, efficient and responsive service delivery; 2) Scrutinise the performance monitoring and oversight arrangements in place and confirm that these are suitably robust and provide appropriate opportunity for the council to obtain the necessary assurances that service delivery reflects Best Value; and 3) Endorse current activity to wind-up the business and affairs of a small number of existing ALEOs where the council has previously agreed to in-source or cease service delivery.
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1. Background 1.1. North Lanarkshire Council delivers a number of its customer-facing services via Arm’s Length External Organisations (ALEOs) and strategic partnerships. These outsourced arrangements have been established over previous years to provide an alternative, and in many cases more innovative method of service provision, or to ensure a commercially driven focus in delivery of the council’s business functions. 1.2. The ALEOs are separate legal entities in their own right, with their own governance and financial management obligations, however, the council remains accountable for service delivery, whether performed in-house or through alternate, arm’s length arrangements. As such it is imperative that the council regularly reviews and scrutinises the individual ALEOs’ operational and financial performance to ensure robust stewardship and quality of service delivery, whilst also minimising financial, service delivery and reputational risks to the council. 1.3. This report provides members with an overview of the council’s ALEO landscape and the reporting arrangements in place, along with assurance in relation to governance and risk management arrangements in the individual companies. As previously requested by members of the Audit and Scrutiny Panel in March 2022, the report also includes an update on progress in the dissolution and striking-off of those companies where the council has previously taken the decision to insource or cease service delivery. 2. Report 2.1. Although the council has reduced the number of ALEOs in recent years, the authority continues to have significant interest in a number of separate companies and statutory bodies and must therefore ensure that services are being delivered as per the council’s expectations, to a high standard and in line with the contractual arrangements and The Plan for North Lanarkshire. Table 2.1 below summarises service delivery by ALEOs, or through the joint venture partnership agreements in place with Amey and Mears. ALEOs – where the company(ies) are wholly owned by the council through 100% shareholding • Employability services including training, and support for people who are furthest from the labour market Routes to Work Limited (Ltd) • Commercial property letting • General lease advice to the council including management of the retained commercial properties North Lanarkshire Properties LLP and North Lanarkshire Property (Investments) Ltd • Economic regeneration and infrastructure investment Fusion Assets Ltd The Plan for North Lanarkshire Priority Improve North Lanarkshire's resource base Ambition statement (25) Ensure intelligent use of data and information to support fully evidence based decision making and future planning
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ALEOs – where the company(ies) are wholly owned by the council through 100% shareholding • Deposit banking savings facility (to 30 September 2022) North Lanarkshire Municipal Bank Ltd Joint Venture Companies – formal partnership arrangements where the council has 33% shareholding and the parent company holds the remaining 66% • Housing repairs • Corporate properties’ repairs and maintenance Mears Scotland Limited Liability Partnership (LLP) • Roads and streetlighting repairs • Winter maintenance Amey Public Services LLP Table 2.1 2.2. Appendix 1 provides further information on each of the above including: • A summary of each company’s objectives and incorporation status; • Board or Management Committee composition; and, • The service committee responsible for monitoring and scrutiny. Council Scrutiny and Performance Reporting 2.3. The council has robust performance monitoring and management arrangements in place which have been developed and strengthened in recent years through a range of measures including the ALEO Review Programme, to ensure that the council’s externalised service delivery arrangements continued to demonstrate Best Value; and, the Strategic Performance Monitoring Framework which sees individual ALEOs’ operational and financial performance reported to the relevant service committee every six months. In addition, Audit and Scrutiny Panel members consider this composite assurance and oversight report every six months, providing members with the opportunity to review ALEO governance, financial governance, risk management or any other matters where there may be the potential for operational, financial or reputational risks to the council. 2.4. Further liaison and monitoring arrangements are described at Appendix 2. This ongoing dialogue between and the council and the ALEOs, further enhanced through the appointment of elected members and senior officers to serve as Directors on the individual Boards or Management Committees, creates the platform for collaborative working opportunities and ensures that the ALEOs’ business objectives are aligned to support delivery of The Plan for North Lanarkshire. Regular engagement also provides early indication of any potential service delivery constraints and provides an opportunity to highlight successes or service innovation, and promote collaborative working, Statutory Bodies 2.5. The statutory bodies, Strathclyde Partnership for Transport (including the Strathclyde Concessionary Travel Scheme) Lanarkshire Valuation Joint Board and the Health and Social Care Partnership all receive revenue funding from the council to provide services in North Lanarkshire and the council must assure itself that these are being delivered to a high standard and support our strategic direction. The level of performance monitoring and oversight, however, must take cognisance of wider scrutiny that is already in place through legislation and public accountability, and also the likely level of potential risk to the council. To this end, Strathclyde Partnership for Transport (including Concessionary Travel) and Lanarkshire Valuation Joint Board
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are both subject to annual reporting to the Environment and Place and Policy and Strategy Committees respectively. 2.6. The Health and Social Care Partnership is governed through the Integration Joint Board as per the Public Bodies (Joint Working)(Scotland) Act 2014, and a separate Performance, Finance and Audit Committee provides oversight of operational and financial performance including risk management. Governance Oversight and Assurance Update 2.7. The individual ALEOs and Strategic Partnerships have predominantly returned to business as usual with hybrid working arrangements in place. The companies are organising induction training, and site or office visits as appropriate, for the new members appointed to Board and Management Committees. Appendix 3 provides updates for each of the ALEOs confirming that Boards and Management Committees are meeting regularly; summarising the impact and recovery from Covid-19; and, identifying the top five risks for each entity. Audit and Scrutiny Panel members can take assurance that effective governance arrangements and robust financial stewardship are in place within each company. Financial Governance 2.8. The council has a duty under its “Following the Public Pound” obligations to ensure that the ALEOs are financially sound. The Council’s Section 95 Officer is responsible for maintaining appropriate and proportionate processes and procedures for scrutinising ALEOs’ financial performance. The individual contractual arrangements, between the council and each company specify the financial information which each ALEO must submit to the council and this enables Financial Solutions to assess and report on any potential financial risk likely to arise as a result of the council using the ALEO to deliver services. Paragraphs 2.9 and 2.10 describe, by exception, financial matters that require close monitoring by the individual ALEOs’ Board of Directors or Management Committees, along with robust, separate oversight by Financial Solutions. North Lanarkshire Properties LLP (NLP) 2.9. North Lanarkshire Properties (NLP), although still continuing to experience a reduction in rental income as a result of the pandemic, has not experienced any additional adverse impact on collections due to the outbreak of the Omicron variant, the ending of the furlough scheme or withdrawal of other business support. The company is proactive in its approach and continues to assess the forecast impact on rent collection levels and long-term debt recovery. The council has provided NLP with a letter of comfort to support NLP’s financial sustainability, however NLP will utilise accumulated reserves to sustain financial operations whilst continuing to progress their recovery plan and investment strategy towards longer term financial security. Routes to Work Ltd 2.10. The Board of Directors considered an update on the charity’s Risk Register at the meeting held on 23 June 2022 and identified four new or heightened risks which will require ongoing monitoring by Board members and Financial Solutions. The risks are linked to: • uncertainty of future funding commitments beyond 31 March 2023 to enable the charity to continue to operate at its current scale and capacity levels; • Sustaining reserves at the levels previously approved by the Board;
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• Failure to secure a significant portion of funding from the UK Shared Prosperity Fund; and, • Unsuccessful transition to new organisational management and delivery structure from 1st October 2022. The charity has identified control measures for each of these and they will be monitored by the Governance Sub Group and Board of Directors. In-sourcing Update 2.11. At the Audit and Scrutiny Panel meeting in March this year, members noted a series of separate decisions taken by the council in recent years to insource, or cease delivery, of a number of functions that had previously been provided through the arm’s length bodies summarised below. Services /Functions ALEO / Delivery Vehicle Status Cultural, leisure and related services. Culture and Leisure North Lanarkshire Limited. Services insourced and delivered via Active and Creative Communities from 1 April 2021. Functions inherited from the former Cumbernauld Development Corporation in 1996 to redevelop Cumbernauld town centre through support for business and enterprise growth and promotion. Campsies Centre (Cumbernauld) Ltd Company formally dissolved and struck-off from 21 June 2022. Deposit banking savings facility. North Lanarkshire Municipal Bank Ltd Work underway to close the Bank from 30 September 2022 and thereafter wind-up and dissolve the company as per the council decision on 27 October 2021. 2.12. Members requested that an update on the status of each dissolution programme should be provided at this meeting and the following additional information may be helpful. Culture and Leisure North Lanarkshire Ltd 2.12.1. Following service insourcing from 1 April 2021, the focus of activity shifted to concentrate on winding-up the business and affairs of the predecessor providers Culture and Leisure North Lanarkshire (CLNL) Ltd and North Lanarkshire Leisure (NLL) Ltd1. CLNL Ltd and NLL Ltd’s statutory accounts for 2021/22 have been prepared and an independent examination, reflecting the significantly reduced number of transactions 1 Following the earlier decision by the council in September 2018 to integrate sports, leisure, recreational activities and facilities within a single entity, with CultureNL Ltd retained as the single provider, and subsequently renamed Culture and Leisure North Lanarkshire Limited to reflect responsibility for the wider provision of services, the council as sole shareholder of North Lanarkshire Leisure Limited is also required to wind-up the company and apply for dissolution and strike-off via Companies House.
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within each company, is due to take place in the late summer. CLNL Ltd is waiting on confirmation of the de-registration of VAT and once this is confirmed, and the due diligence work relating to the insurance claims (referenced below) is completed, the striking -off process can begin. Further legal due diligence work required to be undertaken in respect of a small number of insurance claims that remained outstanding. Dialogue with the legal representatives acting on behalf of CLNL and NLL Ltd’s insurers is now at an advanced stage and it is anticipated that the matter will be resolved in early course. In the meantime, the council has taken steps to assist in making the dissolution and striking-off more straightforward and expedite the processes as timeously as possible by passing and filing special resolutions to reduce and limit the directorships on each company to a smaller number of representatives. Campsies Centre (Cumbernauld) Limited 2.12.2. The transfer of net assets, liabilities and undertaking transferred to the council from Campsies Centre (Cumbernauld) Ltd on 30 June 2021 and formal dissolution and striking-off from the Register of Companies was confirmed by letter from Companies House with effect from 21 June 2022 as noted above. North Lanarkshire Municipal Bank (NLMB) Limited 2.12.3. Following the decision by NLMB’s Board of Directors, and subsequent ratification by the Policy and Strategy Committee on 27 October 2021, to cease provision of a municipal banking facility due to the substantial levels of investment that would be required to ensure full compliance with significantly heightened anti-money laundering and anti-financial crime safeguards introduced in recent years, work to close the Bank with effect from 30 September 2022 is well underway. A Project Working Group comprising representatives from Legal and Democratic Solutions, Financial Solutions and Corporate Communications is in place to manage the closure and external specialist advice is being provided by a legal firm with previous experience in advising another local authority on closing its municipal bank. Correspondence has been issued to all active account holders, where contact details are available, advising them on the process to close their accounts and highlighting the availability of alternative banking services in the local areas. Frequently Asked Questions and regular updates are posted on the council’s website as part of a wider Communications Plan which includes; follow-up letters to customers who have yet to close their accounts; posters displayed in local offices, social media messaging; and news releases published via national and local media outlets. Key risks and challenges, including making contact with as many customers as possible; data protection safeguards; and ensuring that robust asset transfer arrangements are in place to adequately safeguard any monies to be held in trust for customers where it has not been possible to close their accounts by the 30 September 2022, have been identified. These are managed through the Project Working Group with reporting via the Corporate Management Team.
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3. Measures of success 3.1. The following measures of success are summarised for Panel members’ consideration: 3.1.1. Arm’s length service delivery providers continue to deliver high quality public services that achieve Best Value for the council. 3.1.2. Effective and timely monitoring and reporting to relevant Service Committees and this Panel provide assurance to the council that adequate governance, financial and risk management procedures are operating effectively in each of the ALEOs. 3.1.3. Panel members have adequate assurance that the council is fulfilling its ‘Following the Public Pound’ obligations and the externalised service delivery mechanisms are delivering services as per the council’s requirements and expectations with minimal risk to the council, or effectively managing risks where such are unavoidable. 3.1.4. Appropriate, timely and robust project management arrangements are in place to support the winding-up and subsequent dissolution of those ALEOs and outside bodies where the council has taken the decision to in-source or cease service delivery. 4. Supporting documentation 4.1. Appendix 1 - Summary of in-scope ALEOs and Joint Venture Partnerships 4.2. Appendix 2 - Approved ALEO Liaison and Monitoring Arrangements 4.3. Appendix 3 - ALEOs’ Governance, Risk Management and Business Continuity Summaries Katrina Hassell Head of Business and Digital
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5. Impacts 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality-and-fairer- scotland-duty-impact-assessments Yes ☐ No ☐ 5.2 Financial impact Does the report contain any financial impacts? Yes ☒ No ☐ If Yes, have all relevant financial impacts have been discussed and agreed with Financial Solutions? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? Financial governance matters within individual ALEOs which require close monitoring by the respective Boards or Management Committees, along with further monitoring and oversight by Financial Solutions are highlighted, by exception, at paragraphs 2.8 to 2.10. 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts have been discussed and agreed with People and Organisational Development? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☒ If Yes, have all relevant legal impacts have been discussed and agreed with Legal and Democratic Solutions? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☐ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☐
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5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Where the impact identifies a requirement for technology, has an assessment been carried out (or scheduled) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☐ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.9 Risk impact Is there a risk impact? Yes ☒ No ☐ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? Individual ALEOs are responsible for maintaining their own risk management and business continuity arrangements and ensuring these are regularly monitored with effective controls and actions in place, plus mitigations to reduce the likelihood or impact if a risk materialises. The information provided at Appendix 3 identifies the top risks for each company and confirms that risk management and reporting arrangements are in place. Separately, the council’s Business and Digital division has identified within its Service Risk Register the potential for service delivery, financial, operational and performance risks, or reputational damage to the council, if an externalised delivery vehicle fails to provide services and operate to the standards expected and required by the council. Controls and actions designed to minimise the potential risks associated with service delivery via an arm’s length body are in place and include the monitoring and oversight arrangements described in Appendix 2.
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Appendix 1 Summary of in-scope ALEOs and Strategic Partnerships WHOLLY OWNED ALEOs OBJECTIVES / SERVICES DELIVERED STATUS BOARD OF DIRECTORS COMPOSITION SERVICE COMMITTEE Routes to Work (RtW) Ltd Relief of poverty through supporting individuals to secure and sustain employment Advance education and training, particularly where this will lead to paid employment. Incorporated as a limited company with charitable status. Council is sole shareholder (100%). Maximum of up to 10 directors of whom: • Up to 2 are Category A Directors (1 elected member & 1 chief officer) appointed by NLC; • Up to 8 are Category B Directors representative of local community or possessing key skills/experience Enterprise, Growth and Fair Work Committee Fusion Assets Ltd Physical regeneration and infrastructure projects, focusing in remediation of vacant & derelict land where there is little speculative development by the private sector and/or market failure. Incorporated as a limited company. Council is sole shareholder (100%). Maximum of up to 8 directors of whom: • Up to 5 are Partner Directors (3 elected members & 2 chief officers) appointed by NLC; • Up to 3 are Co-opted Directors possessing key skills/experience Enterprise, Growth and Fair Work Committee North Lanarkshire Properties LLP Management, marketing and leasing of commercial property portfolio that transferred from NLC in 2013. Provision of general lease advice to NLC and management of NLC’s retained commercial properties (Legacy Estate). Incorporated as a limited liability partnership with 2 members: NLC owns a 99.999% shareholding and NL Property Investments Ltd holds a 0.001% shareholding. Maximum of 6 Management Committee members: • 5 representatives are appointed by NLC (4 elected members and 1 chief officer); • 1 representative is appointed by NL Property Investments Ltd Finance and Resources Committee NL Property Investments Ltd To facilitate and support North Lanarkshire Properties LLP Incorporated as a limited company. Council is sole shareholder (100%). Maximum of 6 directors appointed by NLC (5 elected members & 1 chief officer being the same individuals as those referenced above) Finance and Resources Committee (Limited separate reporting requirement since business is transacted through the LLP above.) North Lanarkshire Municipal Bank Limited Provision of deposit savings account facility for individuals and organisations Incorporated as a limited company and defined as a “municipal bank” under Section 103 of the Banking Act 1987. All serving elected members of NLC are shareholders, with an individual share of £0.05. Maximum of 7 directors (all elected members) appointed by NLC Policy and Strategy Committee approved Bank’s closure and dissolution of the company on 27 October 2021.
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STRATEGIC PARTNERSHIP VEHICLES OBJECTIVES / SERVICES DELIVERED STATUS MANAGEMENT COMMITTEE COMPOSITION SERVICE COMMITTEE Amey Public Services LLP Provision of roads, street lighting and winter services contract Incorporated as a limited liability partnership with Amey LG Ltd holding a 67% shareholding and NLC holding a 33% shareholding • 5 representatives with 3 appointed by Amey LG Ltd and 2 appointed by NLC (1 elected member and 1 chief officer) Environment and Place Committee MEARS Scotland LLP Provision of housing and corporate property repairs Incorporated as a limited liability partnership with MEARS plc holding a 67% shareholding and NLC holding a 33% shareholding • 5 representatives with 3 appointed by MEARS plc and 2 appointed by NLC (1 elected member and 1 chief officer) Housing Committee
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Appendix 2 NORTH LANARKSHIRE COUNCIL: APPROVED ALEO LIAISON AND MONITORING ARRANGEMENTS Although the ALEOs are separate bodies in their own right, responsible for service delivery and governance, the council remains publicly accountable and has a duty to ensure that these organisations are providing high quality, value for money services that meet service users and customers’ requirements and achieve best value for the council. The council fulfils its monitoring and assurance obligations through a series of contractual, governance and public reporting mechanisms as described. 1. Formal Service Level Agreements (SLAs) or Partnership Agreements between the council and the individual company. These contractual agreements set out the services to be provided, performance standards, monitoring obligations and the levels of funding, management fees or rates where these are provided by the council. 2. A nominated Client Officer is identified by the relevant service to ensure that service delivery adheres to the contractual conditions referenced above, meets the council’s requirements and expectations, and aligns with our strategic direction and The Plan for North Lanarkshire. 3. As per the council’s Strategic Performance Framework, Heads of Service within the relevant client service, submit a six-monthly performance report to the respective service committee. These reports also provide information from the Head of Financial Solutions on the company’s compliance with financial monitoring arrangements and financial performance including: • income and expenditure and comparison with budgeted forecast; • balance sheet at reporting period end; and, • projected cash flow - providing an assurance that the company can meet its liabilities and trading commitments. 4. The council appoints elected members and/or senior officers to serve on the relevant Boards of Directors or Management Committees providing a further opportunity for oversight and strategic alignment and ensuring that the council’s interests are reflected in company objectives and business planning. 5. Nominated Link Officers and Accountants from Business and Digital Solutions and Financial Solutions respectively attend Board and Management Committee meetings and ensure that governance, financial governance, risk management and business continuity arrangements are in place and that the company is complying with its monitoring obligations. 6. All ALEOs complete the annual Assurance Certificate and Checklist, with the findings incorporated in the council’s annual governance statement published in the annual accounts. 7. The council is also required by the Code of Practice on Local Authority Accounting to disclose its interest in companies where it has a controlling influence or has the potential to exert ‘control or influence’ through levels of funding or representation on the Board, when preparing its annual statutory accounts. 8. The Audit and Scrutiny Panel considers a six-monthly governance and assurance report from the Head of Business and Digital. This composite report provides information submitted by each ALEO on governance arrangements; significant developments; risk management (including identification of the top five risks within the company) and assurances in relation to business continuity. The report also includes information from the Head of Financial Solutions highlighting any financial risks within an individual ALEO that have been identified by Financial Solutions through their financial monitoring. This information describes any potential impact or risks to the council including the potential impact on service delivery and/or trading operations.
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Appendix 3 ALEOS’ GOVERNANCE, RISK MANAGEMENT AND BUSINESS CONTINUITY SUMMARIES Fusion Assets Ltd Governance - Board of Directors meeting scheduled for 16 May 2022 was rescheduled pending appointment of council representatives and was subsequently held on 8 August 2022 with the AGM scheduled for 7 November 2022. Summary of Impact of Covid-19 on Business and Recovery To Date – Fusion Assets continues to operate in a “business as usual” manner from its new office in the Muirfield Centre, Cumbernauld, on the basis of a hybrid working arrangement with staff spending on average three days a week in the office. Overall, the industrial market continues to show high levels of demand, both from inward investors and local companies, with very limited stock of buildings available. Following the expected completion and sale in November 2022 of Plot A2 at Newhouse where a new facility is being built for Co-op, Fusion Assets intend to start construction of its next development project on the adjacent plot of land. Proposals are also being taken forward to establish a joint venture company at Eurocentral and secure development finance for a 42,000 sqft multi-let industrial scheme. Elsewhere the company continues to look to identify development opportunities and market sectors that will contribute to the delivery of the Council’s Economic Recovery Plan. Risk Management – Fusion Assets operates the Figtree Risk Management system that has been adopted by the council with risks reviewed and updated on a regular basis. An additional staff resource means that Fusion Assets is less vulnerable to the loss of key personnel, although the company remains very small in terms of personnel and headcount. Overall programme delivery associated with annual funding awards remains a key risk area due to a number of external factors including negotiations on site acquisitions with third parties, works contract delays associated with obtaining statutory consents and co-ordination with utility companies. Top 5 Risks Programme delivery Contracts and procurement risks Property acquisition Accessing adequate financial resources Grant availability Business Continuity – There have been no business continuity issues over the last six months with no illnesses or long-term absenteeism. With the recruitment of a Development Manager, the company now has an additional senior staff resource to deputise for the Managing Director when required. The company has successfully migrated its filing system over to Teams in line with the council’s new corporate arrangements for data management, although there remain some slight issues with formatting and Business and Digital Solutions are providing assistance. Service Developments / Highlights – • Director Induction Packs have been prepared which include copies of the current Business Plan and Corporate Governance Manual. Site visits will be organised in due course. • Planned updating of Fusion’s Company Business Plan for 2022- 2024 will follow on from consideration of a new Environmental, Social and Governance (ESG) Policy and Action Plan at the August Board meeting. A new scheme of delegation is also scheduled to be considered by the Board at the August meeting.
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North Lanarkshire Properties (NLP) LLP and North Lanarkshire Property (Investments) Ltd Governance - Following the scheduled Management Committee and Board meetings in February this year, and a special meeting in April to consider a specific property matter where a timeous decision was required, NLP’s next meeting will be on 1 September 2022 with indicative dates in place for the remainder of this year and next year. Summary of Impact of Covid-19 on Business and Recovery To Date – Hybrid working was introduced in April 2022 and NLP employees are office based for a minimum of two days each week. The hybrid model works well for NLP as there is a natural requirement for a combination of office and on site delivery associated with the majority of the roles. Continuity of service was able to be maintained throughout Covid as a consequence of the business’s ability to deal with transactions digitally and adopt new processes to complete contractual requirements where necessary. NLP continues to align with the overall North Lanarkshire Council business model. Future investment is being considered in the forthcoming year for the outsourcing of the Uniform database maintenance to the software designer IDOX which will alleviate the need for downtime and business critical bottlenecks that can be associated with fault rectification. This will support the finance team and technical team in maintaining continuity in support of the rent roll, new lease transactions and terminations and allay associated reputational damage associated with system downtime. Risk Management – NLP Management Committee considers an update report on the company’s Risk Register at each meeting providing members with the opportunity to review where the proximity or potential impact of any previously identified risks has heightened or been further mitigated in any way and to consider emerging new risks. Individual risks are organised under five strategic risk categories noted below. Top 5 Risks IT Systems and Software: Failure of main reporting and management systems resulting in failure to collect rental income Business continuity management: Staff resource capacity and loss of staff Planning and Resources (Financial): Reduction in income due to pandemic and/or cost of living crisis Planning and Resources (Strategic Change): Failure to align new strategies to change in market conditions Planning and Resources (Financial): Inability to service facility agreement Business Continuity – NLP’s operations have been robust throughout the pandemic and post pandemic period and business aligns well with the hybrid working regime put in place. Some challenges have been experienced where the company is reliant on external partner organisations who provide repairs services and monitoring and testing functions across the property portfolio. Issues are communicated via internal and external working groups and managed accordingly where service is disrupted. NLP continue to support and manage the asset management function for NLC and NHS Lanarkshire via the service level agreement vehicle. Most issues are resolved via one on one meetings or enquiries that are allocated across the Estates Team. Regular meetings are held between NLP, NHS and the company’s appointed facilities management partner where issues are addressed as part of 360° action and feedback. Utility suppliers have caused some delay in project completion and re-letting of a small number of properties where NLP is not in control of timescale for new supplies and metering installations. This is not something that can be controlled, however NLC Energy Assets are engaging on NLP’s behalf as and when required to help resolve issues. Service Developments / Highlights – • NLP’s existing Five Year Business Plan is under review and update with draft proposal being prepared for 2023. • Recruitment underway for two additional surveyors to backfill vacant posts.
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Routes to Work (RtW) Ltd Governance - Board meetings took place on 15 March and 23 June 2022 as scheduled with further quarterly meetings scheduled for the remainder of this year including the Annual General Meeting on 22 September 2022. The Finance Sub Group meets monthly and the separate Governance and HR Sub-Groups continue to meet quarterly with special meetings convened as required. (For example two special meetings of the HR Sub Group were held over the summer to consider and subsequently recommend that fixed-term contracts of employment for staff due to leave RtW on 30 June this year should be extended to 30 September 2022 to support the wider management and staffing review/restructure exercise. A small number of points of detail arising from this review were also the subject of separate consideration and finalisation by the HR Sub Group at a further special meeting in advance of engagement and dialogue via the Employee Forum and a full staff briefing event held on 19th July 2022. Summary of Impact of Covid-19 on Business and Recovery To Date – RtW staff returned to hybrid working (2 days in the office / 3 days at home for FTEs and pro rata for part time staff) from Monday 7th February 2022, following a short period of full homeworking due to the Omicron variant and pressure on NHS Services. This was reviewed at the end of February and from 21st March 2022, RtW increased the days in the office to a 3:2 ratio (3 days in the office and 2 days at home). This was reviewed again in April and restrictions were further relaxed enabling RtW to return to client facing activity. From 19 April 2022, client appointments in the offices were reintroduced and RtW made preparations to resume community based appointments with clients. This planned return to ‘business as usual’ was successful and at the beginning of June RtW moved to a 4:1 office / home working pattern (for FTEs and pro rata for part time staff). RtW have recently reviewed the impact of these hybrid working arrangements and the potential to implement a more permanent hybrid working model, consulting widely with staff, clients and partners. The findings were discussed by the Board with the outcome of the service delivery model review and a blended model of delivery, along with some specific recommendations for particular service user cohorts, being identified as the most preferred model. The recommended actions arising from this exercise will be carried out from October 2022 onwards. Risk Management – The Risk Register is reviewed quarterly by Senior Management Team and discussed at the Governance Sub Group quarterly meeting. A Risk Management update report is submitted at each Board meeting. This identifies any new risks and outlines where the impact of a potential risk is considered to have heightened in terms of severity or proximity. The Risk Management report also confirms where the impact of a potential risk is considered to have become less of a threat, including the point at which the risk is deemed to be sufficiently manageable or insignificant and may be removed from the Risk Register. Risks are assessed using a Red, Amber and Green (RAG) methodology. The Risk Register had a full review in April 2022 in line with the new operational year, the top 5 risks were identified as the following: Top 5 Risks Under- performance on key contracts Failure to secure funding via UK Shared Prosperity Fund Failure to deliver on new Community Regeneration Fund Project Unsuccessful transition to new delivery model Breach of information security Business Continuity - • Business Continuity Policy and a Business Continuity Plan in place. • Interim Working from Home Policy introduced in 2021 is due to be replaced with Hybrid Working Policy as described above.
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• Staff shortages, as a result of staff leaving RtW due to the prevalence of short term, temporary contracts linked to funding commitments and an inability to backfill, due to the current labour market and the short contract length, continue to present the greatest business continuity challenges. • A recent rise in sickness levels, potentially as a result of increased numbers in offices and general closer mixing of people both at work and in leisure, is being closely monitored. While figures remain generally within the target overall 97% attendance rate, the trajectory is worsening and RtW will conduct a deep dive if this continues to identify any additional measures required beyond the charity’s usual absence management processes. Service Developments / Highlights – • Business Plan annual review completed in March this year to identify objectives for inclusion in the 2022/23 annual operational plan. The Operational Plan, as approved by the Board in June this year consists of 8 Action Areas with 49 Tasks and Activities supported and demonstrated through 145 progress indicators. The Plan will be reviewed quarterly through the Governance Sub-Group with update reports provided at each Board meeting. • In line with RtW’s Strategic Business Plan objectives, a revised core management and staffing structure was approved by the Board at its meeting in June. The revised structure reflects current operational commitments; increasing corporate governance commitments and obligations; growth and development ambitions; Knowledge Transfer Partnership (KTP) workplans; and considers current and future management and leadership capacity and work distribution issues to ensure, as far as possible, that RtW is future-proofed for the remaining period of the business plan. The structure anticipates that revenues will continue to remain at recently increased levels, significantly reducing the necessity to employ staff on fixed-term contracts through the creation of 15.1 Full Time Equivalent new permanent posts, taking the permanent headcount to 71.3 FTEs. An external and internal recruitment campaign will commence in early August with the aim of having staff in place by 30 September to coincide with the revised end date of the majority of fixed term contracts currently in place. • RtW has recently secured a place on the Scotland Excel Framework for delivery of commissioned services under the No One Left Behind umbrella across Scotland. The framework covers all 32 local authority areas and provides a directory of approved providers which individual Local Authorities can choose to call-off service provision from using a mini- competition process. RtW has been successful in gaining a place on the 12 Glasgow City Region authorities’ frameworks, plus other geographically linked authorities and anticipates taking this forward as part of the charity’s growth and development ambitions. • 20,000 service user celebration event held on 17 June 2022 and attended by elected members, partners, service users, employer, colleges and training providers. Amey Public Services (APS) LLP Governance - Management Committee met on 24 June 2022 with further quarterly meetings scheduled for the 9 September and 9 December 2022. APS Senior Management Team meets with senior managers from Environmental Assets on a monthly basis at the Roads, Street Lighting and Winter Service Client Liaison meetings. The standing agenda includes: Contract Performance Management (including review of Performance Indicators); Financial Management; Health and Safety; Operational Service Delivery; Winter Services; and any issues escalated from other sector meetings between the council and APS. APS continues to work closely with the council at all levels to maintain consistency of service delivery and flag / discuss / resolve issues at the most appropriate level. Any matters which are not resolved are escalated to management as appropriate. Summary of Impact of Covid-19 on Business and Recovery To Date – APS continues to deliver services on a ‘business as usual’ basis and in line with Scottish Government and Amey’s own Covid work restrictions and safeguards. The company has recently removed some restrictions and is moving towards to a “Living with Covid strategy”, however, Amey remains
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vigilant to the impact that Covid could have on working practices and operational delivery and good practices remain in place. Hybrid working is available for office-based staff as appropriate, and the council liaison meetings referenced above continue to be undertaken via TEAMS. APS continues to monitor Covid sickness absences, and these have been relatively small in number with little to no impact on service delivery. This is due to the positive behaviours of employees both in the work and non-work environment and continual monitoring of individuals’ wellbeing. Risk Management – Although the APS Contract has not been impacted by any significant issues to date, the conflict in Ukraine, hyperinflation and the lag from exiting Covid is monitored constantly to keep all parties aware at an early stage of any impacts which could affect the contract stability. There have been no changes to existing risks on the APS Contract since the previous report and risk management is discussed at appropriate forums with the council and at Management Committee meetings. Top 4 Risks Insufficient revenue and capital budgets from the council to maintain APS resource levels, productivity and utilisation Continued pressures from labour market (e.g. house builders, competitors) attracting operational staff away from APS with higher wages Need for increased levels of third-party work to offset any NLC budget constraints Hyperinflation and changes in law have seen a wholesale increase on material costs. These increases have not been fully covered off by the contract indexation Business Continuity - There have not been any impacts on service delivery or business continuity over the last six months from Covid. APS continues to keep its Business Continuity Plan and other risk assessments under review on an ongoing basis to reflect current guidance both from Scottish Government and Amey Group and HSEQ team. Service Developments / Highlights – • APS and the council are working in partnership to submit a tender for the Department for Transport and ADEPT Live Labs2 initiative which aims to support the creation / maintenance of Net Zero highways and local roads. The programme targets innovation in working towards carbon Net Zero and improving environmental impacts. A series of joint “Net Carbon Zero” workshops have been held to present and identify the key issues in zero carbon that should be addressed through the bid along with a process to enable identification of solutions. Mears (Scotland) LLP Governance - Mears Management Committee meeting scheduled for 31 May 2022 was postponed pending the appointment of council representatives. The operational and financial performance for Quarterly Monitoring Periods 1 and 2 (1 January to 30 June) were subsequently considered at the meeting on 23 August 2023. Mears engages with the Client Monitoring Officer from Housing Property and Projects through the quarterly governance meetings along with wider engagement and collaborative working through: • 4 Weekly Liaison Meetings with the council’s Repairs and Maintenance Manager; • SIP (Service Improvement Groups); • Finance Liaison Meetings (Monthly); and, • Customer Success Improvement Group.
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Summary of Impact of Covid-19 on Business and Recovery To Date – Mears’s operating model has returned to ‘business as usual’ and the company continues to work in partnership with the council to deliver all services within the Contract. All staff have now returned to the office on a full-time basis. All digital infrastructure and technology remains in place however, to ensure that in the event of an emergency, all staff have the correct kit and security protocols to allow a swift and seamless transition to home working. Health and Safety remains centric to Mears’s operating model and as such, the decision was taken to continue to work to the approved Covid risk assessments and procedures to ensure a safe working environment for our staff and to protect the wellbeing of tenants and residents in the local communities. Risk Management – Risks are monitored with controls in place to reduce the likelihood of occurrence and mitigate the potential impact. Top 5 Risks Potential Health and Safety breaches through failing to adhere to additional Covid practices Resource Supply (Attracting and retaining qualified employees); Supply and pricing of materials; and sub-contractors. Partnership finance following cessation of the defined service agreement and impacted by: Continued Covid safety operating; change in sales mix from higher margin larger capital works to lower margin repeat work; and supply and pricing of materials. GDPR- Failure to comply with Data Protection requirements in line with regulations updated in May 2018. Requirement to ensure that Mears’s T&Cs and pay rates remain competitive /comparable to the labour market. Business Continuity – Business Community Plan updated in March 2022 to reflect Mears’s newly implemented structure, and key personnel to engage with depending on nature of the event or incident. Mears are able to respond quickly to any incident which limits access to office space as demonstrated by adapting to home working during the pandemic. All systems are accessible remotely and data protected through our remote desktop Virtual Private Networks. Service Developments / Highlights – • Mears has been selected as the delivery partner on behalf of North Lanarkshire Council to refurbish tower blocks that had been earmarked for demolition, to provide homes for Ukrainian refugees. Mears are now on site to refurbish 200 homes within Birkshaw and High Coats Towers. • Mears are working alongside the council’s Business and Digital division on the development and implementation of the new job scheduling and planning tool, Microsoft Field Services, which is due to be rolled out in August 2022.