PoW-075.1 - Arm's Length External Organisations- Governance and Risk Management Oversight and Assurance Report 2022-23
North Lanarkshire Council · 16 February 2023
Back to Audit and Scrutiny Panel — 16 February 2023 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 16/02/23 PoW:075.1 - Arm’s Length External Organisations: Governance and Risk Management Oversight and Assurance Report 2022/23 From Chief Officer (Business and Digital) E-mail Hassellk@northlan.gov.uk Telephone 07903 096 121 Executive Summary Critical frontline services, including road and street lighting repairs; repairs to council homes and properties; employability support and training, especially for those furthest from the labour market; and business support, through commercial property letting and major industrial investments, are delivered on behalf of the council by arm’s length bodies and partnership agreements that have developed over a significant number of years. Given the importance of these services and the levels of investment, it is imperative that the council has robust oversight of governance, financial stewardship and management arrangements within each of these companies and can assure itself that they are all delivering services on the council’s behalf that meet contractual requirements, satisfy the council and customers’ needs and expectations and are delivered to a high standard. Consideration of this report by the Audit and Scrutiny Panel is a key element in the council’s Strategic Performance Framework. It provides the mechanism for elected members to scrutinise ALEOs’ effectiveness, value for money, governance and risk management arrangements in line with the Panel’s approved Terms of Reference. This composite report provides the six monthly overview of ALEOs’ governance, financial governance, risk management and service delivery arrangements. Importantly it highlights, through the inclusion of individual updates on each company, how they are being impacted by and responding to the cost of living crisis, inflationary pressures and labour shortages. Recommendations The Audit and Scrutiny Panel is request to: 1) Acknowledge that ALEO governance, performance reporting and financial monitoring arrangements are progressing satisfactorily; 2) Confirm that the performance monitoring and oversight arrangements are suitably robust and provide assurance that service delivery reflects Best Value; 3) Agree that a full report on Routes to Work’s performance, as at year end 2021/22 and year to date in 2022/23, should be submitted to the Enterprise and Fair Work Committee at its meeting on 11 May 2023; 4) Endorse the potential for liaison and engagement between the council and ALEOs to explore where current labour shortages and opportunities for
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1. Background 1.1. North Lanarkshire Council has traditionally developed a number of innovative service delivery arrangements through the establishment of Arm’s Length External Organisations – delivering services in ways that are more responsive or commercially focused and creating opportunities to generate additional resources or income. 1.2. The number of Arm’s Length External Organisations (ALEOs) has reduced in recent years following service review activity and/or changes in the external operating environment which identified that the outsourced delivery method no longer represented best value for the council. Despite these reductions, however, significant responsibility for frontline service delivery continues to be channelled through council ALEOs, joint ventures and statutory partnerships. As such, the council has a statutory responsibility and is required under our ‘Following the Public Pound’ obligations to ensure that the organisations delivering services on our behalf have robust governance and accountability arrangements in place, are financially sound and that services meet the council’s requirements and specification and are delivered to a high standard. 1.3. This composite report provides assurances into the ALEOs’ governance, financial governance and risk management arrangements. Oversight and scrutiny by this Panel is an integral element of the council’s wider approach to monitoring the ALEOs’ performance; outcomes; financial stewardship and compliance with the individual contractual agreements in place between the council and each company. 2. Report Types of Organisation/Joint Venture/Partnership 2.1. The portfolio of council business and statutory functions delivered by ALEOs, joint ventures and strategic partnerships is varied and the well-established service delivery arrangements reflect partnership working and contractual agreements that have built up over the past 20+ years. The individual legal entities include limited companies and partnerships, such as Routes to Work Ltd, where the council is sole shareholder; joint venture companies where the council has a 33.33% shareholding in each company; and statutory public bodies. employment and training may be developed as part of the Workforce for the Future Strategy The Plan for North Lanarkshire Priority Improve North Lanarkshire's resource base Ambition statement (21) Continue to identify and access opportunities to leverage additional resources to support our ambitions (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 Established • Routes to Work Limited (Ltd) Employability services, including training and support programmes delivered on behalf of the Scottish and UK Governments, often targeting people who are furthest from the labour market or are looking to upskill or return to work after a period of unemployment or redundancy. 2002 • North Lanarkshire Properties LLP and North Lanarkshire Property (Investments) Ltd Responsible for marketing, leasing and managing the council’s commercial properties. NLP also manages the remaining balance of the council’s investment property - the “legacy estate” and provides general advice on wider lease transactions, including managing lease arrangements where the council occupies externally owned properties. 2012 • Fusion Assets Ltd Economic regeneration and infrastructure investment, particularly in areas where there is little speculative development. Fusion Assets works in partnership with the council to secure Scottish Government Vacant and Derelict Land Funding and Regeneration Capital Grant Funding and regularly maximises the potential and value of this through innovative private sector funding agreements. 2006 Joint Venture Companies – formal partnership arrangements where the council has 33.33% shareholding, and the parent company holds the remaining 66.66% • MEARS Scotland Limited Liability Partnership (LLP) Housing repairs. Corporate properties’ repairs and maintenance. 2010 • Amey Public Services LLP Roads and streetlighting repairs. Winter maintenance including gritting and snow clearing. 2010 2.2. The council appoints elected members and Chief Officers to serve as directors or representatives on the Boards or Management Committees of each of the above. These appointments, which are subject to council approval, help to ensure robust governance and oversight and promote opportunities for collaboration and partnership working between the council and individual companies. Elected members and Chief Officers bring personal skills, knowledge and experience, adding value to the organisation’s decision making and ensuring that the individual companies’ business objectives are aligned with The Plan for North Lanarkshire and are consistent with the council’s overall aims and duties. Elected members are also able to draw on their constituency knowledge and experience to ensure that services reflect local needs and priorities. Statutory Bodies 2.3. In addition to the above, the council also appoints elected members to serve on the Boards of the following statutory public bodies:
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2.3.1. Health and Social Care North Lanarkshire; 2.3.2. Lanarkshire Valuation Joint Board; and 2.3.3. Strathclyde Partnership for Transport and Strathclyde Concessionary Travel Scheme. 2.4. These have been established through separate pieces of legislation to deliver services across a wider geographical area or in ways that increase joint working by combining previously discrete responsibilities. Ongoing ALEO Winding-up and Strike-Off Activity 2.5. As reported previously to Panel members in September 2022, the council is in the process of winding-up the affairs of Culture and Leisure North Lanarkshire Ltd (and North Lanarkshire Leisure Ltd) and North Lanarkshire Municipal Bank Limited prior to dissolution and application for formal and strike-off. Culture and Leisure North Lanarkshire (NL) Limited 2.6. The cultural and leisure services previously provided by Cultural and Leisure NL (CLNL) Ltd have been in-sourced since April 2021 based on the findings and recommendations from a series of reviews between 2017 and 2020 which concluded that in-sourcing presented the greatest opportunity for alignment with the council’s ambitions and The Plan for North Lanarkshire. Due diligence activity, including approval and filing of the financial accounts and annual report for 2021/22 with Companies House is continuing, as described more fully at paragraphs 2.16 to 2.18, and the intention is that dissolution and application for strike-off will be completed within this calendar year. North Lanarkshire Municipal Bank Limited 2.7. The council decision to close North Lanarkshire Municipal Bank Ltd was based on significantly heightened anti-money laundering and anti-financial crime safeguards introduced in recent years and the substantial levels of investment that would be required to ensure full compliance, alongside the council’s own review which had previously identified a declining customer base and limited opportunities to introduce more modern, digital banking services. As such the Bank ceased to provide accounts for new customers from October 2021 and closed to existing customers on 30 September 2022. The focus now is on: 2.7.1. Continuing to publicise, via various communication methods, that remaining account holders who had not come forward to close their accounts before the Bank’s closure can submit closure requests via the council’s First Stop Shops, whilst the council is simultaneously safeguarding these monies by holding the remaining funds on behalf of the NLMB customers; and, 2.7.2. Progressing with all banking and statutory requirements in advance of company dissolution and application for strike-off. 2.8. Appendix 1 provides a summary of the council’s ALEO landscape including details of council appointments and service committee reporting, described more fully below. Monitoring, Oversight and Performance Reporting 2.9. The council’s monitoring and oversight arrangements are well-established with performance, including financial performance, reported to the relevant service
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committee every six months and a nominated Client Officer in place to ensure that service delivery is responsive, effective and to a high standard and that the council’s expectations are being met. 2.10. The council is also required by the Code of Practice on Local Authority Accounting to disclose its interest when preparing our annual statutory accounts in companies where the council has a controlling influence or has the potential to exert ‘control or influence’ through levels of funding or representation on the Board. 2.11. The diagram below illustrates the inter-connected monitoring arrangements in place. 2.12. The level and frequency of performance reporting is proportionate based on the scale of activity and potential level of risk for the council. As such, annual oversight reports on the statutory public bodies, Strathclyde Partnership for Transport (including Strathclyde Concessionary Travel Scheme) and Lanarkshire Valuation Joint Board, are submitted to the Environment and Climate Change and Regulatory Committees respectively given that these bodies are already subject to separate legislation, scrutiny and public accountability in their own right. 2.13. Health and Social Care North Lanarkshire’s Integrated Joint Board (IJB) has its own monitoring and oversight arrangements in place through its Performance, Audit and Finance Committee (click on link). 2.14. ALEO reporting is included in the Strategic Performance Framework reported separately to the Panel on this agenda. Financial Governance 2.15. The council has a duty under it’s “Following the Public Pound” obligations to ensure that the external organisations delivering services on its behalf are financially sound. The Chief Officer of Financial Solutions, as 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 specify the financial information which each ALEO must submit to the
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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. The following paragraphs highlight, 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. Culture and Leisure NL (CLNL) Ltd 2.16. Following service insourcing from 1 April 2021, the focus of activity shifted to winding- up the business and affairs of the predecessor providers Culture and Leisure North Lanarkshire (CLNL) Ltd and North Lanarkshire Leisure (NLL) Ltd. 2.17. The statutory accounts for 2021/22 for CLNL, NLL and both Trading Community Interest Companies were approved by the Board in December 2022 and submitted to OSCR and Companies House. 2.18. CLNL Ltd has now received confirmation from HMRC that the VAT de-registration is complete. The final requirement is to agree with all parties the treatment of a small number of insurance claims that remain outstanding, and this is being prioritised to enable the dissolution and striking-off process to be completed for CLNL and NLL. North Lanarkshire Properties LLP (NLP) 2.19. North Lanarkshire Properties (NLP) are affected by supply chain labour shortages and inflationary pressures which have impacted the property and construction industry in the last six months. There is a potential risk that these delays will impact on the timescales relating to re-letting properties. 2.20. NLP are further monitoring the impact of the cost of living crisis and current inflation rates (in particular energy costs) in the current market. Any impact is reported to the Management Committee together with corresponding management action. 2.21. In light of the cost of living crisis the company’s lender has agreed to extend the Covenant ratio rates, per the Facilities Agreement, to 31 October 2023 to ensure covenant compliance reporting. 2.22. NLP are currently reviewing the company’s 5 year Investment Plan. As a business NLP are having to align the medium to long term investment plan with market conditions and where possible this will continue to be funded by long term rent reviews. 2.23. A project team has been established to support the company in securing refinancing of the remaining outstanding loan balance (approximately £33m) from 1 November 2023. A procurement exercise to obtain professional advice and support on general and specific matters and considerations in relation to the Company’s future borrowing requirements was undertaken, with Azets Holding Limited successfully appointed. Amey Public Services LLP 2.24. The sale of the Amey Group has now been concluded. The company has been acquired by One Equity Partners and Buckthorn Partners. Following a review of the potential risks associated with sale, the council has concluded that there are no material risks to the council or the council’s shareholding in the joint venture company, Amey Public Services LLP.
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Routes to Work Limited 2.25. An in-year risk associated with an unexpected vacancy in position of Interim Finance Manager position led to some delays in information being prepared timeously, however, this issue has now been resolved through the appointment of a new interim Finance Manager in December 2022. 2.26. The council’s Financial Solutions team have previously highlighted high levels of unrestricted reserves held by Routes to Work. However, several contingent liabilities are being held against these reserves reducing this value to a potential target of £25k. The impact of liabilities materialising will need to be monitored throughout the year by Routes to Work to ensure the reserves position does not outturn as a negative balance and Financial Solutions will maintain separate oversight seeking clarification from the charity on any potential areas of concern. ALEO Oversight and Assurance Update 2.27. Service delivery and business operations have now largely returned to pre-pandemic models across all ALEOs. While the majority of companies have introduced hybrid operating models where appropriate, with a balance of home working and office, depot or on-site attendance, MEARS Scotland LLP has fully returned all employees. MEARS retains capacity and the technological infrastructure, however, to reinstate hybrid working or emergency responses should a critical situation materialise. 2.28. Council appointments to the outside bodies’ Boards and Management Committees following recent retirals through Delivering for Communities, the elections in May 2022 and the more recent deletion of the former Head of Environmental Assets’ post are now implemented and induction training sessions and briefings have been provided to the new appointees. 2.29. Individual updates on the wholly owned ALEOs and joint venture companies that are within the scope of this Panel are provided at Appendix 2. These describe in detail governance, risk management and business continuity arrangements within each company. The updates also summarise activity by the individual companies to return to ‘business as usual’, however this is within a significantly changed and extremely fluid operating environment that sees labour shortages and ongoing supply chain issues, further compounded more recently through inflationary pressures, continuing high fuel and energy costs and the cost of living crisis. The updates describe how these issues are impacting on company business and trading and also highlight revisions to existing working practices, including increased support for employees who are experiencing cost of living hardships, to mitigate the impact of external challenges and resource pressures. 2.30. From the ALEO summaries attached at Appendix 2 it is clear that labour shortages are continuing to impact not just the individual companies themselves, as described by Routes to Work, MEARS and Amey, but also within the sub-contractor and supply chain sectors as described by North Lanarkshire Properties. To this end, an opportunity exists to ensure that the council, through its Workforce for the Future Strategy, Routes to Work and the Built Environment Skills Academy, is liaising with the ALEOs and joint venture companies to identify labour and skills shortages and examine where potential training, apprenticeship and employment pathways can be further developed. 2.31. Performance monitoring and oversight by service committees following changes to the Council’s Scheme of Administration is largely now all in place and reflected in the
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Strategic Performance Framework’s reporting schedule. It should be noted, however, that Routes to Work’s 2021/22 year-end performance reporting, alongside year-to- date reporting in 2022/23 remains outstanding. This is due to revisions to the Scheme of Administration coinciding with full implementation of the Delivering for Communities restructure from 1 April 2022 and the transfer of responsibility for employability services. A full report on Routes to Work’s performance, including financial performance, in 2021/22 plus a year-to-date report on performance in this financial year will be submitted to the Enterprise and Fair Work Committee at its meeting on 11 May 2023. 3. Measures of success 3.1. The following measures of success are highlighted 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. Robust due diligence and legislative compliance continue to be prioritised in the winding-up and subsequent applications for strike-off in respect of Culture and Leisure NL Ltd and North Lanarkshire Municipal Bank Ltd. 4. Supporting documentation 4.1 Appendix 1: Summary of in-scope ALEOs and Strategic Partnerships 4.2 Appendix 2: ALEOs’ Governance, Service Delivery, Risk and Business Continuity Oversight Summaries Katrina Hassell Chief Officer (Business and Digital)
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5. Impacts ( http://connect/report-template-guidance ) 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 Finance? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact Financial management within the ALEOs is reported to the service committees, as outlined in Appendix 1, every six months with the exception of the statutory public bodies which are subject to separate reporting within in their own right and described at paragraphs 2.12 and 2.13. In addition, the contractual arrangements in place between each entity and the council require the individual companies to submit monthly management accounts and additional information such as Business Plans and annual accounts to the council’s Section 95 Officer. This information enables Financial Solutions to assess and report any financial risk likely to arise as a result of the council using the ALEO to deliver these services. Financial governance, including any potential risks are reported to this Panel by exception allowing members to identify any additional controls which require to be implemented in addition to continued financial monitoring by the individual ALEOs and Financial Solutions. 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 Resources? 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? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? Proposed revisions to company Articles of Association, Partnership Agreements or Service Level Agreements are reviewed by the Chief Officer (Legal and Democratic) during the initial consideration and drafting stages with final proposals subject to council approval through the relevant Service Committee and full Council where required.
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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 ☒ 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 significant technology change, has an assessment been carried out (or is scheduled to be carried out) 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 identifying and managing risks and reporting these to their Boards and Management Committees. In addition the council has identified the risks associated with service delivery via an external body and these are captured and monitored through Business and Digital’s Service Risk Register. 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex- Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ If Yes, please provide a brief summary of the provision which has been made to ensure there has been appropriate consideration of the particular needs of the Armed Forces community to make sure that they do not face disadvantage compared to other citizens in the provision of public services.
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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 AND REPORTING 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 and Fair Work Committee. Previously reported Operational and Financial Performance as at year-end 31/03/21 and in the period 1 April to 30 June 2022 (Q1) plus proposed revisions to Articles of Association to former Enterprise and Growth Committee on 4/11/22. NLC representatives appointed to serve on the RtW Board: Provost Cllr K Duffy and Chief Officer (People Resources) Fusion Assets Ltd Physical regeneration and infrastructure projects, focusing in remediation of vacant and 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 and Fair Work Committee Previously reported operational performance to 30/9/22 plus service highlights in 2021/22 (Q3 and Q4) and 2022/23 (Q1 and Q2) along with financial performance in the period 1/4/21 to 30/6/22 and financial standing as at 30/06/22 on 18 November 2022. NLC representatives appointed to serve on the Fusion Board: Councillors B McCulloch; F McKay; and R Sullivan, plus Chief Officer (Financial Solutions) and Chief Officer (Place) 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 Previously reported operational performance from 13/01/22 to 27/07/22, including service delivery highlights, plus 2022/23 financial performance from 01/04/22 to 22/07/22 on 30 November 2022. 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.)
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WHOLLY OWNED ALEOs OBJECTIVES / SERVICES DELIVERED STATUS BOARD OF DIRECTORS COMPOSITION SERVICE COMMITTEE AND REPORTING NLC representatives appointed to serve on the NLP Board and Management Committee: Councillors B Baudo; P Di Mascio; Provost K Duffy; T Fisher; S Watson, and Chief Officer (Housing Property Services) 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 Climate Change Committee Operational performance for the period October 2021 to September 2022 and financial performance to 31/07/22 reported on 9 November 2022. NLC representatives appointed to serve on the Amey Management Committee: Councillor M McPake and Chief Officer (Community Operations) 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 2022/23 operational performance year to date and financial performance as at 31 March 2022. NLC representatives appointed to serve on the MEARS Management Committee: Councillor M Coyle and Chief Officer (Housing Management) STATUTORY PARTNERSHIPS OBJECTIVES / SERVICES DELIVERED STATUS BOARD OF DIRECTORS COMPOSITION SERVICE COMMITTEE Lanarkshire Valuation Joint Board The Assessor and Electoral Registration Officer is responsible for preparation and maintenance of the: • Register of Electors which is published at least annually; • Valuation List - listing all heritable properties within Lanarkshire for Council Tax purposes; and, • Valuation Roll - public document containing an entry for all non-domestic properties in Lanarkshire except those Established by the Valuation Joint Boards (Scotland) Order 1995 to allow for the valuation functions of North and South Lanarkshire Councils to be discharged jointly following local government reorganisation in 1996. • 16 members: 8 from North Lanarkshire Council and 8 from South Lanarkshire Council. Regulatory Committee 2020/21 Annual Oversight Report reported to Finance and Resources Committee on 10 March 2022.
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STATUTORY PARTNERSHIPS OBJECTIVES / SERVICES DELIVERED STATUS BOARD OF DIRECTORS COMPOSITION SERVICE COMMITTEE specifically excluded by law and includes the Rateable Value. • The Board also acts as a Joint Committee responsible for the electoral registration duties of both authorities. NLC representatives appointed to serve on the LVJB Board of Directors: Councillors B Burgess; L Jarvie; T Johnston; F MacGregor; A McVey; J Reddin; B Shields; A Thomas. Substitutes: Cllr N Shevlin and any SNP Member Strathclyde Partnership for Transport (SPT) SPT has a statutory duty to develop a transport strategy for its region taking account of: • Demographics and meeting the needs of all inhabited places; • Enhancing social and economic well-being; and • Promoting public safety and sustainable development. SPT subsidises socially necessary bus services, operates bus stations and the Glasgow subway. SPT maintains bus shelters and administers ticketing including the ZoneCard. Established under the Transport (Scotland) Act 2005 • 20 elected members representing the 12 local authorities in the West of Scotland and up to 9 appointed members. Environment and Climate Change Committee 2020/21 Annual Oversight Report reported to the former Environment and Transportation Committee on 10 November 2021. NLC representatives appointed to serve on the SPT Board of Directors: Councillors G Currie; M McPake; A Smith. Substitutes: Cllrs H Loughran and J Keltie Strathclyde Concessionary Travel Scheme Joint Committee Administers concessionary travel for the over 60s and disabled people (and in certain cases, concessionary travel for companions). • The Transport Act 1985 allows transport authorities to make concessionary transport schemes. • Strathclyde Concessionary Travel Scheme Committee was set up in 1999 to determine concessionary fares and criteria applicable for concessionary travel on subway, rail services and • One member (and one substitute member) from each of the 12 constituent councils with the SPT area plus the Chair of SPT. Environment and Climate Change Committee 2020/21 Annual Oversight Report reported to the former Environment and Transportation Committee on 10 November 2021.
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STATUTORY PARTNERSHIPS OBJECTIVES / SERVICES DELIVERED STATUS BOARD OF DIRECTORS COMPOSITION SERVICE COMMITTEE on ferry services within the Strathclyde scheme area. NLC representatives appointed to serve on the SPT Concessionary Travel Scheme: Councillor W Goldie North Lanarkshire Health and Social Care Integration Joint Board Responsible for planning and delivering all community based adult health and social care services across North Lanarkshire. For example: • Health visiting and district nursing • Community addiction services • Mental Health and Learning Disability services • Adult Social Work Services • Adult protection • Home Support Services • Community paediatrics and children’s health services The functions delegated by North Lanarkshire Council (NLC) and NHS Lanarkshire (NHSL) are detailed in an Integration Scheme which must be approved by Scottish Ministers. Established under the Public Bodies (Joint Working) (Scotland) Act 2014 and designed to improve adult health and care services through better integration and more joined-up support and care, particularly for people with complex or multiple long term conditions. • 8 voting members – 4 elected members and 4 non-executive directors appointed by NHS Lanarkshire. • Senior officers attend in a non-voting capacity along with representatives for staff, the third sector, service users and carers. Adult Care and Social Work Committee Adult Social Care Performance Report Q 1 – 2022/23 reported on 15 November 2022 NLC representatives appointed to serve on the Health & Social Care IJB: Councillors G Brennan; B Burgess; P Kelly; A Khan
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Appendix 2 ALEOs Governance, Service Delivery, Risk and Business Continuity Oversight Summaries Routes to Work Ltd Governance Board of Directors meets quarterly with dates scheduled to December 2023. The AGM was held on 9 November 2022. Separate Finance, Governance and HR Sub Groups are in place with authority to progress business as delegated to them by the Board or to consider matters in advance of submitting findings or recommendations to the Board. The Sub Groups meet quarterly mid-way between each Board cycle. The council appointed Councillor Duffy to serve on the Board with effect from 6 October 2022 and an introductory meeting has taken place providing an overview on the work of the company; current strategic direction and priorities; and high-level governance arrangements. Further induction training is planned for early 2023. Summary of Recent and Planned Service Delivery 2022/23 Staffing – Business as Usual and Hybrid Working Following the re-opening of Routes to Work offices in the early Spring 2022 with hybrid working arrangements in place, Routes to Work are currently trialling a Hybrid Working Policy which provides the facility for staff to work up to 40% of their weekly working hours flexibly (managed over a 4-week reporting period and in line with existing flexi-time arrangements). This allows staff to schedule their caseloads and manage and balance their office-based and outreach days with the opportunity to work from home. Introduced in November 2022, following Board approval in August, the Hybrid Working Policy is being trialled for one year. Staffing – 2022 Pay Award In July 2022 Routes to Work awarded a pay increase of 3% plus £300 to staff and backdated this to 1 April. Thereafter, and reflecting the enhanced pay offer made to local authority colleagues and the significant cost of living pressures being felt by all staff, a further 2022 pay award of 2.7% (based on 2021 salary scales), plus a further £300 per head (pro-rata and calculated on the number of weekly hours worked) was approved by the Board in December 2022. This results in an overall 2022 pay award of 5.7% plus £600 per head (pro-rata). Establishment As described in the previous Panel report in September 2022, Routes to Work’s management restructure to meet current operational commitments and future-proof the charity for the remaining period of the business plan is now complete. The restructure included the creation of a Strategic Growth Manager post, funded by company reserves, to grow the company’s reach and geographical footprint with the successful candidate commencing employment on 24th October. Funding for the Airdrie Central Community Engagement Project has been extended to 31st March 2023, allowing Routes to Work to extend fixed-term contracts of employment for 7 staff to continue delivery of this highly successful project. Routes to Work’s 2022/23 headcount, now stands at 86.1 Full Time Equivalent (FTE) posts. (Permanent posts – 74.6 FTE / Fixed-term posts – 11.5 FTE.) Risk Management Routes to Work’s Risk Register is reviewed quarterly by the Senior Management Team and discussed at the Governance Sub-Group. A Risk Management update report is discussed 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
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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 October 2022 with further review in January 2023. Top 5 Risks Under- performance on key contracts Failure to gain funding from UK Shared Prosperity Fund Information security breach Lack of long-term funding beyond 2022/23 Failure to deliver excellent quality of service standards to clients Business Continuity Routes to Work experienced some business continuity issues during the autumn 2022 caused by an unexpected temporary vacancy in the role of Interim Finance Manager/Company Secretary. This impacted on the charity’s financial reporting timetable. A new interim appointment was made with effect from 12th December 2022 and this will enable the Finance Sub Group to review December 2022’s management accounts at its February meeting. Routes to Work has also experienced some low-level staff shortages, caused largely by the current labour market and a rise in sickness absence levels. A deep dive was conducted into the causes and contributory factors to the increased sickness absence rate with a detailed report presented to the HR sub-group at the meeting on 8 November 2022 with mitigating actions identified and agreed. Service Developments / Highlights Cost of Living Response Routes to Work staff have been fully involved in the Cost of Living events across the area organised by the council and partnership agencies. This has been extensive, identifying the benefits of work, and fair work, as route out of poverty and aligned to the ‘Increase Income Through Employment’ driver in the ‘Towards a Fairer North Lanarkshire Tackling Poverty Strategy.’ Service Developments/Extensions Routes to Work has now been included on the council’s new four-year Flexible Framework for services linked to the Scottish Attainment Challenge and Pupil Equity Fund, ‘Delivering the Young Workforce’ (Lot 10) following a successful bid by the charity. Fusion Assets Ltd Governance The Fusion Assets’ Board of Directors meets quarterly with meeting dates scheduled to November 2023. The AGM was held on 24 November 2022. Board meetings continue to be held on a virtual basis via Teams, but it is expected that they will return to physical meetings during 2023. Following the local government elections in May 2022, three new elected members were appointed to the Board of Fusion Assets by the council. Copies of Fusion Assets’ Corporate Governance Manual were circulated to the new councillors, along with an Induction Pack and offer to undertake site visits. At the council meeting on 15 December 2022, Councillor McCulloch was appointed to the Board in place of Councillor Crichton. The Chief Officer of Place has provided background information on the company to Councillor McCulloch and Fusion Assets will provide induction information and training, as well as a tour of the Fusion Assets’ sites. Articles of Association Currently, as per the existing Fusion Assets’ Articles of Association, only Partner
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Directors (i.e. council appointees) can be included in constituting the quorum of 4 directors to permit Board meetings to take place. This requirement, which is not reflected in other wholly owned ALEOs, has on occasion led to meetings not always being quorate. As a result, the Board is currently looking to amend the Company Articles of Association to allow the three Co-Opted (private sector) Board members to be included within the quorum provisions. In addition to strengthening governance arrangements, further revisions are being drafted including the potential for directors to appoint an alternate director if they are unable to attend a Board meeting and formal provision for meetings, or participation by an individual, to be virtual. Legal and Democratic Solutions are liaising with Fusion Assets’ solicitors in ensuring that the proposed revisions are likely to be acceptable to the council - safeguarding our interests and the effectiveness and probity of the company overall. North Lanarkshire Council, as the sole member of Fusion Assets is required to approve any changes to the company’s Memorandum and Articles of Association and as such it is anticipated that the proposed revisions will be submitted to the Enterprise and Fair Work Committee at its meeting on 11 May 2023 for consideration. Summary of Recent and Planned Service Delivery 2022/23 Business as Usual and Hybrid Working 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 now spending on average three – four days a week in the office. Service Developments Planned developments for 2023 include the creation of a new joint venture company at Eurocentral to construct a speculative multi-let industrial scheme at Condor Park and the construction of a new industrial building at Link Park, Newhouse directly by Fusion Assets. Construction costs continue to rise (in part impacted now by rising energy /production costs) coupled with higher borrowing costs which means that viable speculative development continues to be challenging, however, with an overall lack of supply across North Lanarkshire for modern building premises, demand remains consistently high. This is encouraging and provides a degree of optimism and as such, interest from potential occupiers is being recorded. Risk Management Overall, the main corporate and project risks to the company remain the same as previously reported in September 2022. In the short term, the overall programme delivery associated with annual grant funding awards remains a key risk area due to external factors including negotiations on site acquisitions with third parties and delays associated with obtaining statutory consents. However progress is being made with some key milestones achieved. Longer term, in the current market accessing adequate financial resources to scale up the company’s activities remains a challenge due to increased borrowing costs from private lenders and ongoing resource pressures within the public sector. Corporate Risk Reports, based on the Figtree management system used by the council, are presented to the Board on a regular basis. Outwith this, where any issues arise, the Board takes suitable action to address these issues. Top 5 Risks Programme delivery Property acquisition Contracts and procurement risks Accessing adequate financial resources Grant availability Business Continuity There have been no business continuity issues over the past six months. The appointment of the Development Manager, who is able to substitute for the Managing Director as and when required, has reduced the potential risks or continuity concerns arising through loss of personnel and/or capacity issues.
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Service Developments / Highlights Business Plan 2023 to 2025 Work on updating Fusion Assets’ Business Plan for 2023 – 2025 is underway and will incorporate recent governance changes, including the new scheme of delegation and adoption of a new Environmental, Social and Governance (ESG) Policy and Action Plan for the company. North Lanarkshire Properties (NLP) LLP and NL Property Investments Ltd Governance North Lanarkshire Properties LLP and NL Property Investments Ltd’s business are transacted at the same meetings which have now been held in-person since August 2022. Both companies’ AGMs were held on 30 September 2022 with a Management Committee and Board meeting thereafter on 17 November 2022. In line with the council’s calendar of meetings, provisional dates have been scheduled to March 2027. The senior officer position on both the Management Committee and the Board of Directors is now held by the Chief Officer (Housing Property Services) and Councillor Watson replaced Councillor Lennon in October 2022. Copies of the induction pack presented in August 2022 have been shared with the new representatives and briefings provided by the Strategic Asset Manager. Site visits will also be organised for the early spring to provide representatives with an overview of the range of properties held in NLP’s portfolio. Summary of Recent and Planned Service Delivery 2022/23 Business as Usual and Hybrid Working Hybrid working, introduced in April 2022, is continuing with NLP’s employees adopting to work for a minimum of 2 office days each week. The hybrid model works well for the organisation 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. Property Maintenance Management NLP continues to align with the council’s business model and shared ambitions. NLP has commenced 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. Labour Shortages, Inflation and Cost Pressures Supply chain and labour shortage issues have been felt throughout the property and construction industry in the last 6 months. Lead in times and completion dates for repairs and projects are areas where the business has experienced some delays. This can have a compounded effect on timescales relating to re-letting properties. Inflation has and will continue to have an effect on budgets. The Investment Plan is currently being reviewed in order to address best value. As a business NLP must align its medium to long term Investment Plan with market conditions and where possible this will continue to be funded by long term rent reviews. Risk Management The Management Committee considers a Risk Update report at each meeting identifying the key risks facing the organisation and the actions and controls in place to mitigate the likelihood of risks materialising or their potential impact.
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Top 5 Risks IT Systems and Software Failure - leading to loss of the main reporting and management systems resulting in failure to collect rent. Business Continuity Management - staff resource levels and potential loss of staff. Planning and Resources Financial – Reduction in income due to pandemic and/or cost of living crisis. Strategic change – failure to align new strategies to change in market conditions. Financial - Inability to make loan repayments and/or change in bank covenant. Business Continuity NLP and company operations have been robust throughout the pandemic and post pandemic period and the company’s business operations align well with the hybrid working regime put in place. Some challenges have been experienced where NLP is reliant on external partner organisations who provide repairs services and monitoring and testing functions across our 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 the council and NHS Lanarkshire via the Service Level Agreement vehicle. Most issues are resolved via one-to-one meetings or enquiries that are allocated across the Estates team. Regular meetings are held between NLP, NHS Lanarkshire and NLP’s appointed facilities management partner where issues are addressed as part of 360° action and feedback. Service by utility suppliers continues to impinge on project completion and re-letting of a small number of vacant properties, however the council’s Energy Assets Team are engaged on NLP’s behalf as and when required to help resolve issues. Service Developments / Highlights – Business Plan and Investment Plan Updates Both the Business Plan 2019 to 2023 and the company’s 5-year Investment Plan are currently under review with draft proposals being prepared for the 1st quarter in 2023. Loan Facility Agreement Refinancing North Lanarkshire Properties LLP funded its acquisition of the council’s commercial properties in October 2013 by entering into a contract with the company’s current lending provider for a £45m loan facility to finance the property transfer. The Loan Agreement was agreed for an initial 10-year period and is subject to an 80% guarantee being provided by the council. The Loan Agreement is due to terminate on 31 October 2023 and as such the company is now looking to refinance its remaining borrowing requirements. NLP has procured expert financial advice to provide specialist advice and guidance in the loan refinancing and negotiations, with the ultimate objective of enabling NLP to secure the most advantageous loan facility agreement terms and rates for the company. Amey Public Services (APS) LLP Governance Quarterly Management Committee meetings have occurred as scheduled during the reporting period and have returned to ‘in person’ meetings. Future dates for the remainder of this year have been agreed. As previously reported, the Chief Officer (Community Operations) was appointed to the Management Committee in June 2022 and in October 2022 the council appointed Councillor McPake to replace Councillor Masterton. Parent Company Sale At the end of December 2022, Buckthorn Partners and One Equity Partners acquired Amey from the existing parent company, Ferrovial. (Referenced in the Financial Assurance section of this report at paragraph 2.24.) This sale has no impact on the Limited Liability Partnership with North
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Lanarkshire Council (Amey Public Services LLP) and the Management Committee was informed on progress throughout the sale process. Council Engagement and Performance Monitoring The Senior Management Teams from Amey and the council’s Roads and Land Maintenance division meet on a monthly basis at the Roads, Street Lighting and Winter Services monthly meetings. The standing agenda includes: Contract Performance Management (including review of Performance Indicators); Financial Management; Health and Safety; Operational Service Delivery; Winter; and any issues escalated from other meetings or engagement between the council and APS. In addition, there have been regular meetings between APS and the council to discuss governance and progress with the various capital schemes being delivered by APS and highlighted in the section below. Regular dialogue is in place between Amey and the council’s Financial Solutions team, however, the schedule of joint meetings that took place prior to the pandemic has not yet been reinstated due in part to restructure within the council and the appointment of a new Finance Manager within Amey. Summary of Recent and Planned Service Delivery 2022/23 Business as Usual and Hybrid Working Amey continued to deliver both core services as per the Roads, Street Lighting and Winter Services Contract and capital schemes throughout the reporting period. Amey operational staff (frontline, supervisors and managers) continued to work from the depots to ensure safe delivery of site operations. Some office-based staff continued to work on a hybrid basis depending on personal requirements, circumstances and preferences. Staffing Over the reporting period Amey experienced some capacity pressures on its staff resources, partly as a result of the resurgence of the housing sector and partly due to the shortage of Class 1 and Class 2 goods vehicle drivers. As a result, Amey struggled to retain front-line staff due to the demand for their skills and the higher pay being offered across both these sectors. The company sought to replace these experienced resources from the available labour market and were partially successful through employing apprentices and less experienced/trained staff. This reduction in resources had an impact on delivery and productivity during the working week requiring Amey to extend to weekend working, with the additional associated overtime costs to ensure delivery of schemes for the council. Cost of Living Response Inflation and Cost Pressures The hyperinflation seen on construction materials (e.g. steel columns, road salt, road surfacing material, LED lanterns), fuel price increases and cessation of the use of red diesel has had a significant impact on the costs for APS to deliver operations for the council. This is partly dealt with by indexation/inflation indices, but these do not cover the full costs of the price increases. Discussions are ongoing with council officers in respect of individual material cost increases. Support for Employees Amey’s Employee Assistance Programme provides free and anonymous support and advice to employees across a number of areas including: financial information; family issues; legal information; medical and health information; addiction issues; relationship advice; childcare support; domestic abuse; housing concerns; and tax information; etc. This service predates the current cost of living crisis and is available to employees, their partners and dependents.
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Risk Management There is no substantial variation in Amey’s top five risks to those reported in September 2022. The Partnership Risk Register is reviewed as required at the monthly Roads, Street Lighting and Winter Services contract monitoring meetings. If there is a need for an issue/risk to be escalated to the Management Committee then this is included in the Committee Papers and discussed at the quarterly Management Committee meetings. During this current period fortnightly client meetings on winter treatments are held to ensure timely closeout and address any live issues presented in the period for redress and action, whilst assisting in positive cashflow and reducing the risk of legacy issues amassing at the end of the winter treatment period. Top 5 Risks Insufficient Revenue and Capital budgets from the council to maintain APS resource levels, productivity and utilisation. Continuing labour market pressures and competition (e.g. house builders, competitors and haulage/delivery market) attracting operational staff away from APS with higher wages. In addition, difficulty attracting new entrants to a predominantly manual labour career. Requirement to try and develop additional workstreams (either from within the council or externally) to offset any council budget constraints/reductions. Impact of hyper-inflation and changes in law which have resulted in significant increases in materials costs (e.g. steel prices, road materials prices, fuel costs, red diesel usage changes), which have not been fully reflect in contact indexation criteria. Business Continuity – While there are no significant business continuity concerns at the current time, Amey continues to monitor the conflict in Ukraine, hyperinflation and any residual after-affects from COVID (including the current winter flu virus) on an ongoing basis. Any impacts are reported at the monthly Roads, Street Lighting and Winter Services contract monitoring meetings. More generally, Amey continues to keep its Business Continuity Plan and other risk assessments under review on an ongoing basis to reflect current external and internal risks facing the Partnership. Service Developments / Highlights – ADEPT Live Labs 2 Working in partnership, Amey and the council successfully submitted the ADEPT Net Zero proposal in early October 2022 and this is now one of 10 UK wide projects shortlisted to the next round and competing for a share of the £30m funding available. The ADEPT initiative focuses on ‘Net Carbon Zero’ in the construction and maintenance of highways and local roads, as well as improving environmental impacts. Council and Amey representatives presented to the ADEPT ‘Dragons’ Den’ in November 2023 and are currently awaiting formal notification of the outcome of the application with the successful proposals due to be announced within the next three months. Capital Projects Capital schemes completed during the reporting period include: • A71 Horsley Brae junction improvement works on behalf of North and South Lanarkshire Councils and SPT. These works included construction of a sheet piled wall, road widening for a right turn filter lane at new signalised junction and realignment of Brownlee Road. • Installation of approximately 36,000 LED street lighting lanterns across residential roads and remote footpaths, alongside the installation of approximately 4,000 LED lanterns (as part of an anticipated wider programme of around 9,000 lanterns) installed across the council’s main roads. • Construction of high access kerbs to assist access to buses at approximately 35 bus laybys in Motherwell. • Footpath widening, lighting and traffic island installation works at Lancaster Avenue, Chapelhall and other traffic calming works in Chapelhall.
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• Junction improvement to Pather Drive, Wishaw. Other works ongoing at the end of the reporting period include the widening and lighting of the footway between Newhouse and Salsburgh. MEARS (Scotland) LLP Governance The Management Committee meets quarterly with the next meeting scheduled for 28 February 2023 where the remaining schedule of dates for this year will be agreed. The Chief Officer (Housing Management) continues to represent the council on the Management Committee and Cllr Coyle was appointed in June 2022. Dr Graham Paterson was appointed as Managing Directors of MEARS Scotland LLP in July 2022 and now represents MEARS on the Management Committee. Briefings and company information have been provided to the new representatives. Council Engagement and Performance Monitoring MEARS engages with the Client Monitoring Officer from Housing Property Services through four- weekly liaison meetings in addition to quarterly governance meetings focusing on Service Improvement and Customer Success Improvements. Monthly liaison meetings are also held between MEARS’s finance team and Financial Solutions. Business as Usual and Hybrid Working MEARS staff have all returned to the office on a full-time basis. All digital infrastructure remains in place ensuring that all staff have the correct kit and security protocols in place to allow a quick transition to home working should an emergency situation arise. MEARS contingency arrangements were recently tested due to a network outage in December and the transition was seamless. MEARS operating model has returned to ‘business as usual,’ continuing to work in partnership with North Lanarkshire Council to deliver all services within the contract. Cost of Living Response MEARS acknowledges the cost-of-living crisis and the difficulty that employees may experience, and the company is actively implementing initiatives to support its employees at this time. In Quarter 4 of 2022 MEARS rolled out an Energy Saving e-learning module to educate employees on energy saving tips within their own households. MEARS have also implemented an employee hardship fund which anyone who is in financial difficulty can apply to. These initiatives are actively promoted through the internal ‘MEARS Rewards’ platform and local communication strategy across the workforce and within the depot and office. Inflation and Cost Pressures MEARS are also committed to being a Scottish Living Wage employer with all employees being paid fairly in line with the scheme rules. In Quarter 1 of 2023 all employees on more recent MEARS terms and conditions will receive a flat rate pay increase of £2000 per annum. Due to the timing of the COSLA pay award negotiations, the funding award for employees who are on local authority terms and conditions will apply retrospectively.
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Health and Safety remains centric to MEARS’s operating model and the company has confirmed that it will continue to work to the approved Risk and Method Statements and procedures to ensure a safe working environment for company staff and to protect the wellbeing of tenants. Digital Field Services In September 2022 MEARS, in partnership with the council’s Business and Digital division, successfully implemented Microsoft Field Services. This provides fully integrated digital procedures for recording repairs, prioritising and allocating these and allowing the operatives to input, via hand held devices, when a repair is completed and can be closed out. The operatives also receive regular updates on the status and any additional information relating to jobs that remain outstanding. The Field Services system, which is hosted via Microsoft Dynamics, can be interrogated to provide business critical intelligence and data including for example, specific information relating to the frequency and types of repairs; geographical areas; property types; and time taken to complete repairs. This management information and trend analysis supports more informed management decision making on workloads, prioritisation and helps to identify future safety checks and maintenance requirements including cyclical maintenance. Risk Management MEARS Management Committee monitor, review and manage risks on a quarterly basis and a range of specific controls are in place for each of the risks identified below. Top 5 Risks Health and Safety breaches, particularly around additional Covid-19 safeguards. Consequences of Risk Management Failure: • Financial penalties - HSE fine; • Reputational damage; • Employee disengagement/ concern around Mears values as an employer. Resource Supply: • Labour – attraction and retention of suitably qualified labour; • Material – Market pressures on price; • Subcontractors . Partnership Finance: • Final contract year; • Demobilisation; • Council award of Enterprise Contract. Failure to comply with Data Protection legislation. Consequences of Risk Management Failure: • Fines up to 4% of Group Turnover; • Potential for criminal action; • Reputational damage / loss of confidence in the sector. Failure to provide market competitive /comparable T&Cs and pay rates. Consequences of Risk Management Failure: • Poor staff retention • Negative impact on service and failure to meet demand due to vacant posts • Not perceived as a company of choice by applicants. Business Continuity The Business Continuity Plan was updated in December 2022 to reflect MEARS’s newly implemented restructure and revisions to the key personnel who should be engaged/notified depending on the nature of event or incident. All systems are accessible remotely and data protected through MEARS’s remote desktop Virtual Private Network. Service Developments / Highlights Partnership Agreement The partnership between the council and MEARS originated in 2010 when Morrison Facilities Services Ltd successfully bid to become the council’s strategic partner to deliver housing and corporate property repairs over a ten year period. The contract commenced on 21 January 2011. Mears PLC subsequently bought Morrison Facilities Services Ltd from Anglian Water as a going concern, and subsequently own the 67% shareholding in the MEARS Scotland LLP strategic partnership and the inherent North Lanarkshire service contract. North Lanarkshire Council owns the remaining 33% of Mears Scotland LLP.
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Housing repairs, corporate property maintenance and capital investment proposals are all currently in-scope for delivery through the new North Lanarkshire Council Enterprise Project. To ensure continuity of service and enable anticipated inclusion of housing and corporate property maintenance within the North Lanarkshire Council Enterprise Project, the Housing and Regeneration Committee at its meeting on 20 May 2020 agreed that provision should made for up to three annual extensions to the strategic partnership with MEARS, taking the overall partnership duration potentially up to January 2024. Annual contract extensions, based on evidence of satisfactory performance, service delivery and overall contract compliance have continued to be awarded by the council during the intervening period with the most recent, third year and final year extension, covering the period 22 January 2023 to 21 January 2024, approved by the Housing and Regeneration Committee on 16 February 2022. Business Plan 2023/24 MEARS’s Business Plan will be reviewed and updated to reflect that the partnership has now entered the final year of the contract extension described above. It is anticipated that during 2023 the focus will shift from larger Capital works to increased routine work. Apprenticeship Programme Despite now being in the final year of the original Partnership Agreement, MEARS continues to invest in the apprenticeship programme with an intake of 20 new apprenticeship posts in 2023 and the offer of retention for all time-served apprentices.