Governance, Leadership and Decision-Making
North Lanarkshire Council · 24 November 2022
Back to Audit and Scrutiny Panel — 24 November 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: KA/ASP/Nov22 Date 24/11/22 Corporate risk update – Governance, leadership and decision- making From Ken Adamson, Head of Audit & Risk E-mail adamsonk@northlan.gov.uk Telephone 07939 280602 Executive Summary To support the Council in mitigating risks and uncertainty, the Council operates risk management arrangements which identify, evaluate, manage, and control a range of key corporate risks. All risks identified and agreed as meriting inclusion in the corporate risk register are subject to regular monitoring and review by relevant senior management and periodic review/consideration of individual risks by both the CMT and the Audit and Scrutiny Panel (ASP) in line with the Council’s Risk Management Strategy and their respective governance roles. In line with the previously approved timetable for reporting on corporate risks, this report focuses on the deep dive of the ‘Governance, leadership and decision-making’ corporate risk. The report provides an overview of the current risk environment together with an overview of existing controls and actions taken to date to mitigate against this risk, as well as further actions planned to continue to manage and update this risk. Members should note that following the most recent review of this risk, the residual risk score has increased from 12 to 16 largely attributable to the elections in May 2022 and subsequent political events which is assessed as having increased uncertainty in a number of areas. Recommendations The Panel is asked to consider the contents of the report and to: (1) note the updated deep-dive (at Appendix 1) which highlights that the residual risk score in relation to the ‘Governance, leadership and decision-making’ corporate risk has increased; (2) note the current and planned controls and actions relating to this corporate risk; (3) recognise the important role that Elected Members and Chief Officers have in relation to the ongoing management and mitigation of this risk. The Plan for North Lanarkshire Priority All priorities Ambition statement All ambition statements
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1. Background 1.1 CMT has previously approved the corporate risk register for 2022-23. 1.2 The definition of a corporate risk is ‘those risks which can impact the Council in achieving its priorities and stated objectives or are more strategic in nature and require corporate oversight. For example, such risks may have the potential to impact many Services, and/or can impact significantly on the Council in terms of financial costs and reputational damage. The Corporate Risk Register will reflect an amalgamated position of Service-level risks and may also include significant Service-level risks which have been escalated for attention at a strategic level.’ 1.3 Risks contained within the register are subject to ongoing monitoring and review throughout the year, with regular risk reporting to CMT and Audit & Scrutiny Panel both on the overall register, and with detail on individual risks being reported by relevant Risk Leads. 2. Report 2.1 The previous corporate risk register approved for 2022-23 contained 24 risks. Immediately following the local government elections in May 2022, it was recognised, that the resultant changes in the political landscape and governance arrangements within the council, were likely to have a bearing on a number of existing corporate risks. 2.2 It was agreed, therefore, that management review risk RIS0000256: Governance, Leadership & Decision Making at an early opportunity to reflect any resulting impacts on the nature and significance of this risk and how these issues are managed. 2.3 There have, of course, been a number of significant political developments since that earlier decision and these have now been reflected in the current risk assessment which is attached at Appendix 1. 2.4 The Deep Dive reflects upon the importance of sound and robust governance, leadership and effective decision-making to the ability of the Council to deliver against its ambitions. In particular, the document notes that operating within the context of a minority administration (irrespective of its political composition) presents significant additional risks and challenges to the good governance, leadership and decision- making of the Council. 2.5 Should relationships between officers and elected members, or within and/or between the political groups, break down then decision-making within the organisation may become increasingly difficult, inconsistent, impaired or even cease altogether. It is important therefore that officers maintain good working relationships with all political groups and that, where possible, consensus is sought about shared goals, ambitions and planned outcomes. 2.6 Should officers and the various political groups fail to work effectively together then it would become more difficult to achieve a cohesive policy framework or to achieve clear and consistent decision-making which ultimately could mean that the strategic direction of the Council may become less clear and/or service delivery could be confused and/or fragmented with potentially detrimental impacts on service users and local communities. Sound financial planning could also be detrimentally impacted in such circumstances. 2.7 Ensuring effective working relationships between the Chief Executive and Corporate Management Team and the political leadership of the administration (including the Council Leader and individual Conveners) and the leadership of the various political groups will be important in ensuring that the risk and challenges surrounding this corporate risk are effectively managed.
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2.8 It is considered that the Council has well-established and generally adequate and effective controls in place to deliver sound governance, leadership and decision- making. This has been confirmed by management’s own self-assessment, independent reviews by Internal Audit and generally positive comments from external agencies such as Audit Scotland. These arrangements are generally expected to significantly reduce but not eliminate the likelihood of the risk occurring. 2.9 However, it is recognised that there are a number of factors which are now present which create an increased potential for issues to occur arising from this risk. These include the presence of a significant number of new elected members following the Council elections in May 2022 and recent changes in the senior management team structure. The finely-balanced political composition of the Council and the associated recent changes in the political leadership of the Council when combined with the challenging environment (and the need to make contentious and/or difficult decisions) facing the Council are considered to increase the risk of inconsistency and/or uncertainty around decision-making and increased challenges in ensuring that future decisions and associated resources reflect agreed corporate priorities and ambitions. 2.10 Whilst current controls and planned actions seek to minimise the impact of these factors on the likelihood of issues arising, it is recognised that the political dimension within which part of the risk sits is not one that can or should be readily ‘controlled’ in a formal sense. The impact, if any, of recent political changes and changes to the composition and structure of the Corporate Management Team has also yet to be fully established. 2.11 While it is considered that the Council has well-established and generally adequate and effective controls in place to deliver sound governance, leadership and decision- making, these arrangements are not considered to significantly reduce the nature and scale of impacts if the risk materialises and it is considered that the potential remains for any such impacts to be significant. Consequently, overall, these issues have led to management increasing the residual risk score for this issue from 12 to 16. 3. Measures of success 3.1 CMT and ASP are content with, and have an appropriate understanding of, the key risks facing the Council and how these are being managed 3.2 The corporate risk management team will continue to report quarterly to CMT and the ASP providing an overview of key developments in risk management and updating on progress in respect of planned improvements to the Council’s risk management arrangements. 3.3 The adequacy and effectiveness of the Council’s risk management arrangements will be independently and regularly reviewed by Internal Audit, who will report directly on the results of that work to the ASP. 3.4 Effective risk management arrangements assist the Council in achieving planned outcomes and/or help the Council mitigate the impacts of adverse events. 4. Supporting documentation Appendix 1: Deep dive (October 2022) – Corporate Risk: Governance, leadership and decision-making Ken Adamson Head of Audit and Risk
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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 ☒ 5.2 Financial impact Does the report contain any financial impacts? Yes ☐ No ☒ 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ 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 ☒ 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ 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 ☒ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ 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? Included in the corporate risk register. Effective risk management arrangements including the identification, assessment, management and oversight of relevant risks will increase the likelihood of the Council achieving its ambitions and plans by more effectively mitigating potential threats to planned outcomes. It also contributes to effective management of risks relating to all service and operational areas.
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Appendix 1 Deep dive (October 2022) – Corporate Risk: Governance, leadership and decision-making Deep Dive Report RIS0000256 Risk Title Governance Leadership and Decision Making Owner Des Murray Risk Context To comply with CIPFA good governance principles for local government, the Council is required to ensure that its business is conducted in accordance with the law and proper standards, and that public money is safeguarded, properly accounted for, and used economically, efficiently, and effectively. A range of structures, processes, and codes must be in place that define roles and responsibilities and accountabilities and establish mechanisms to enable the council to pursue its vision effectively and ensure that the vision is underpinned with effective control and management of risk. The overall aim is to ensure: • There is sound, consistent, coherent and inclusive decision making; - Resources are aligned with agreed corporate policies and reflect agreed corporate priorities, ambitions and planned activities including approved programme of work workstreams. • The operation of the Council's governance arrangements respects the distinct roles and responsibilities of senior officers and elected members (including the roles of Council Leader and individual Conveners) • There is sound financial planning and clear accountability for the use of resources in achieving defined outcomes for service users and local communities. Good governance is also central to the Council meeting statutory best value obligations as effective governance and accountability arrangements, with openness and transparency in decision-making, schemes of delegation and effective reporting of performance are essential for taking informed decisions and ensuring effective scrutiny of performance and stewardship of resources. Effective governance and leadership are therefore key to setting the councils strategic direction, ensuring clarity in terms of roles and responsibilities, ensuring sound decision making in terms of the allocation of resources, and facilitating delivery of the shared ambition for North Lanarkshire. Clarity about governance arrangements, roles and responsibilities and good working relationships are central to the success of any organisation. And the Accounts Commission, amongst others, has repeatedly expressed the view that getting governance, leadership and decision-making right in councils has a significant bearing on how well they perform in achieving their objectives, delivering vital services for local people and communities and ensuring value for money. Trust, confidence and good conduct between elected members and senior officers are recognised as essential for building and maintaining good relationships, and supporting good leadership, management and performance. (Audit Scotland: How councils work: Roles and Working Relationships: are you getting it right, 2010). Elected Members have complex and demanding roles, representing constituents, providing direction, and scrutinising service performance. Council Officers give professional advice and are responsible for operational leadership and management of the organisation. In theory these roles and responsibilities are clear and distinct, but often they can become blurred and there are many complexities in the current local government environment which impact on this in practice and which need to be carefully managed. Working together effectively whilst respecting each other's distinct roles, Members and Officers should collectively lead and manage the Council to provide services that improve the lives of local people. It is important that elected members take cognisance of relevant local and national policies as well as relevant statutory considerations during decision making to ensure the robustness and sustainability of the Council's direction of travel, while officers should be aware of, and consider, the political environment in which the Council and elected members operate and which will rightly impact on decision making. The Council has agreed and laid out a clear long-term vision for North Lanarkshire in The Plan for North Lanarkshire and the associated annual Programmes of Work. This, together with the key risks facing the Council as outlined in the corporate risk register, highlights the significant and challenging agenda that the Council faces reinforcing the need for clarity in roles and responsibilities and effective working relationships between Last assessment undertaken 4 October 2022
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elected members and officers in order to deliver on the Council's challenging ambitions. The Chief Executive, acting as Head of Paid Service, and the Corporate Management Team are responsible for maintaining strategic oversight and direction of the council's Programme of Work and The Plan for North Lanarkshire as well as developing, monitoring and providing oversight of the activities and policies of the council. The effectiveness of the leadership role undertaken by the Council's senior management is vital if the Council is to deliver against its key objectives and corporate ambitions. The Council elections in May 2022 resulted in the Council initially having a new minority SNP administration. This altered in August when political leadership of the Council changed and reverted back to the position immediately prior to the elections in May with a minority Labour administration in place. The current finely-balanced political composition of the Council could mean that the Council may find it more difficult to make decisions and/or to deliver consistent decision-making. This may particularly affect challenging or contentious decisions relating to structures, policies and/or those impacting future service delivery, many more of which are likely to be required as a result of the significant financial challenges facing the Council. Responding consistently to the inevitable tensions that often arise between short-term issues and the Council's longer-term ambitions is also likely to become more difficult and/or more unpredictable. Operating within the context of a minority administration (irrespective of its political composition) also presents significant additional risks and challenges to the good governance, leadership and decision-making of the Council. Should relationships between officers and elected members, or within and/or between the political groups, break down then decision-making within the organisation may become increasingly difficult, inconsistent, impaired or even cease altogether. It is important therefore that officers maintain a good working relationship with all political groups and that, where possible, consensus is sought about shared goals, ambitions and planned outcomes. Should officers and the various political groups fail to work effectively together then it would become more difficult to achieve a cohesive policy framework or to achieve clear and consistent decision-making which ultimately could mean that the strategic direction of the Council may become less clear and/or service delivery could be confused and/or fragmented with potentially detrimental impacts on service users and local communities. Sound financial planning could also be detrimentally impacted in such circumstances. Ensuring effective working relationships between the Chief Executive and Corporate Management Team and the political leadership of the administration (including the Council Leader and individual Conveners) and the leadership of the various political groups will be important in ensuring that the risk and challenges surrounding this corporate risk are effectively managed. Risk Description There is a risk that the council's governance arrangements will be impaired and/or unable to deliver on the shared ambition set out in The Plan for North Lanarkshire and associated Programme of Work and/or deliver best value services and/or financial sustainability while effectively fulfilling its governance and public accountability duties. Due To • Failure to establish sound governance arrangements and/or to monitor and periodically review their effectiveness; • Failure to provide adequate organisational leadership and strategic direction and/or effective communication and understanding of the same; • Lack of openness and transparency in decision-making / inadequate and/or failure to comply with Scheme of Delegation • Lack of clarity over the respective roles and responsibilities of elected members and officers and/or failure to comply with the Chief Officers Code of Conduct and/or the Code of Conduct for Elected Members; • Lack of trust and/or confidence leading to poor working relationships between elected members, officers and key partners; • Potential for increased uncertainty and/or consistency in decision-making particularly around difficult and/or contentious decisions as a result of the political balance of the Council which has resulted in a minority administration; Organisation Structure North Lanarkshire Corporate
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• Inadequate focus on strategic plans and ambitions as a result of a disproportionate focus on/consideration of decisions with short term impacts; • Poor quality of committee reports with no or inadequate information/evidence to support and inform effective decision-making processes; • Insufficient or inconsistent levels of understanding around the role of elected members re- governance, challenge and scrutiny roles; • Failure of the Chief Executive and the Corporate Management Team to effectively discharge their roles re-providing strategic leadership and oversight of performance; • Inadequate senior officer engagement with the administration in early stages of key proposals; • Inadequate cross party working where appropriate and/or desirable; Impact • Inability to progress key strategic priorities and ambitions; • Council being unable to effect the changes needed to meet current and future challenges; • Inability of senior management and elected members to agree on strategic direction and detailed requirements/decisions necessary to deliver The Plan; • Time lost in re-planning and re-submission of amended plans and obtaining buy-in; • Time of elected members and senior management diverted to resolving more minor issues rather than focus on meeting the needs of the community; - Decision making processes are ineffective and/or could grind to a halt and/or be impeded; • Impacts on service delivery and/or poor responsiveness to the needs of our communities; • Significant reputational impact; • Senior officer resource diverted to resolving minor issues raised by elected members; • Inability to effectively achieve and demonstrate best value; • Decisions taken without appropriate levels of understanding/authority/budget/legality; • Fraud/misappropriation of assets; • Failure to manage conflicts of interest; • Poor morale; • Poor mobilisation of resources to effect change; • Inefficiency, duplication of effort; • External intervention/criticism and associated reputational damage. Corporate Priorities • Improve economic opportunities and outcomes • Support all children and young people to realise their full potential • Improve North Lanarkshire’s resource base • Enhance participation, capacity, and empowerment across our communities • • Improve the health and wellbeing of our communities Inherent Assessment ASM0003112 Likelihood - 5 Impact - 5 High - 25
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Controls and Actions Owner Status Due Date CON0000737 - Development and approval of The Plan for North Lanarkshire Des Murray Implemented CON0000738 - At its meeting on 9 June 2022, the Council approved a new Scheme of Administration (Committee structure) which reflected the newly created organisational structure. Archie Aitken Implemented CON0000739 - Five complementary frameworks in place to support The Plan for North Lanarkshire and Programme of Work: - Strategic Policy Framework - Strategic Performance framework including Public performance reporting - Strategic Self-evaluation framework - Strategic Governance framework - Project Management Model Katrina Hassell Enhancing ACT0000716 - CON0000739 - Update on the review and refresh of each of the supporting frameworks (policy, performance, governance, self-evaluation) is part of the Programme of Work for 2022/23 This aims to ensure each element in each framework is up to date, on a timetable for review at an appropriate interval, and reported to the relevant committee. Susan Lawrie Raised 31 March 2023 ACT0000738 - CON0000739 - Update on the review and refresh for each of the supporting frameworks (as part of the Programme of Work for 2021/22) includes use of the corporate project management model to ensure a consistent, corporate approach to managing projects and programmes of work. Susan Lawrie Raised 28 October 2022 CON0000743 - Code of Conduct for Elected Members. Archie Aitken Implemented ACT0000717 - CON0000743 - Review of Governance & Induction processes. This will encompass all internal governance arrangements and associated risks, statutory requirements, training needs (including lessons learned based on engagement with current Elected Members), and ICT requirements so that an appropriate framework is in place for the new Council. Archie Aitken Complete CON0000744 - Code of Conduct for Chief Officers Des Murray Implemented CON0000745 - Code of Conduct for Employees supported by appropriate training programmes (highlighted in letter of employment, induction and disseminated via Intranet.) Fiona Whittaker Implemented CON0000746 - Schemes of Delegation and Administration Andrew Rose Implemented CON0000747 - Financial Regulations and financial procedures Elaine Kemp Implemented CON0000748 - Standing Orders amendments now means that Members have earlier sight of key committee reports ensuring longer oversight. Archie Aitken Implemented CON0000749 - Regular engagement between the Chief Executive and Members/political groups. Register maintained of Members requests for Officer attendance at political group meetings. Des Murray Enhancing ACT0000489 - CON0000749 - Engagement with Political Group Business Managers 1/4ly to encourage discussions around training and engagement to be included on business meeting agendas. Pauline McCafferty Underway 28 October 2022 CON0000750 - Monitoring Officer Role provides oversight of conduct and enables management intervention when required. Archie Aitken Implemented
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CON0000751 - Whistleblowing Policy Archie Aitken Implemented CON0000752 - Corporate Risk Management arrangements Ken Adamson Implemented CON0000754 - Reporting - Officers skilled in producing a consistent quality level of reporting. Reporting template and guidance updated and implemented. Susan Lawrie Implemented ACT0000490 - CON0000754 - Review of committee report template and associated guidance, adherence and quality of reporting will drive improvements in decision making process. Susan Lawrie Complete ACT0000491 - CON0000754 - Skills development for officers in writing reports to improve quality, consistency and clarity of information being put in front of members, on which they are required to make decisions. E-learning module developed and now on LearnNL Pauline McCafferty Complete CON0000756 - Council staff resources, skills and numbers, aligned with the Plan Fiona Whittaker Implemented ACT0000492 - CON0000756 - Full delivery of the commitments set out in the Workforce for the Future paper Fiona Whittaker Complete CON0001042 - Elected Member training programme via LearnNL (Elected Members Toolkit) Fiona Whittaker Implemented ACT0000487 - CON0001042 - Development of Elected Member training programme via LearnNL (Elected Members Toolkit) and linked to the Improvement Service - approval being sought at Council on 19th December with a launch thereafter. Pilots will involve Elected Members. Fiona Whittaker Complete ACT0000488 - CON0001042 - Consider what core Good Governance training for Members looks like, that should be included within the training programme, and seek Audit & Scrutiny Panel endorsement/championing of the same as a means of continuous improvement in governance and decision making across the organisation. ASP have endorsed. Content will require to be considered. Action owner changed. Archie Aitken Complete CON0001456 - Annual review and update of the Programme of Work is undertaken to provide Members with a composite overview of progress to date, along with the future roadmap to ensure strategy remains connected to delivery and the Programme of Work enables the ongoing delivery of projects, activities, and services in support of The Plan for North Lanarkshire. Des Murray Implemented CON0001459 - Strategy & Performance Manager post oversees the four supporting frameworks and project management model into one strategic support for business strategy and governance. Regular reporting on the supporting frameworks to elected members. Katrina Hassell Implemented CON0001460 - Restructured Corporate Management Team to create a single integrated corporate forum including all Heads of Service, with revised Terms of Reference including strategic oversight of the Programme of Work and Delivering for Communities, and clear linkages to cascade and communicate with Service's Senior Management Teams and wider Operational Management Team (OMT) on a formal and regular basis. Key relevant areas of activity are: To develop, monitor and provide oversight of the activities and policies of the council. To maintain strategic oversight and direction of the council's Programme of work and The Plan for North Lanarkshire. To maintain strategic oversight of corporate governance arrangements. Des Murray Implemented
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CON0001512 - Annual Governance Statement produced each year, this is informed by (a) assurances provided by all Heads of Service to the Chief Executive that they have considered the corporate governance arrangements and the standard of internal financial controls in their area of responsibility and to the best of their knowledge, corporate governance arrangements and financial controls in their service have been, and are, working well and there are, in their opinion, no significant matters arising which would require to be raised specifically, and (b) an annual review for ensuring ongoing effectiveness of the council's governance arrangements. The Annual Governance Statement is signed off by the Chief Executive and the Leader. It is also included in the annual accounts in line with the Local Authority Accounting (Scotland) Regulations. Des Murray Implemented Residual Assessment ASM0003112 Likelihood - 4 Impact - 4 High - 16 Likelihood Reason It is considered that the Council has well-established and generally adequate and effective controls in place to deliver sound governance, leadership and decision- making. This has been confirmed by management's own self-assessment, independent reviews by Internal Audit and generally positive comments from external agencies such as Audit Scotland. These arrangements are generally expected to significantly reduce but not eliminate the likelihood of the risk occurring. However, it is recognised that there are a number of factors which are now present which create an increased potential for issues to occur arising from this risk. These include the presence of a significant number of new elected members following the Council elections in May 2022 and recent changes in the senior management team structure. The finely-balanced political composition of the Council and the associated recent changes in the political leadership of the Council when combined with the challenging environment (and the need to make contentious and/or difficult decisions) facing the Council are considered to increase the risk of inconsistency and/or uncertainty around decision-making and increased challenges in ensuring that future decisions and associated resources reflect agreed corporate priorities and ambitions. Whilst current controls and planned actions seek to minimise the impact of these factors on the likelihood of issues arising, it is recognised that the political dimension within which part of the risk sits is not one that can or should be readily 'controlled' in a formal sense. The impact, if any, of recent political changes and changes to the composition and structure of the Corporate Management Team has yet to be fully established. Impact Reason While it is considered that the Council has well-established and generally adequate and effective controls in place to deliver sound governance, leadership and decision- making, these arrangements are not considered to significantly reduce the nature and scale of impacts if the risk materialises and it is considered that the potential remains for any such impacts to be significant.