Combined Document Pack (AEJC 040924)
North Ayrshire Council · 4 September 2024
Back to Ayrshire Economic Joint Committee — 4 September 2024 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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County Buildings Wellington Square AYR KA7 1DR Tel No: 01292 612724 28 August 2024 To: Members of the Ayrshire Economic Joint Committee Dear Member AYRSHIRE ECONOMIC JOINT COMMITTEE You are requested to participate in the above Panel to be held on Wednesday, 4 September 2024 at 2p.m. for the purpose of considering the undernoted business. This meeting will be held on a hybrid basis in the Prestwick Committee Room, County Buildings, Ayr and by Microsoft Teams. Yours sincerely CATRIONA CAVES Chief Governance Officer B U S I N E S S 1. Appointment of Chair The Joint Committee is requested to note the appointment of Councillor Martin Dowey (South Ayrshire Council) as Chair of the Ayrshire Economic Joint Committee (AEJC) for the period from September 2024 to 31 August 2025 and to ratify the appointment of Councillor Martin Dowey as Chair of the Ayrshire Economic Partnership Board (AEPB) for the period from September 2024 to 31 August 2025. 2. Declarations of Interest Members are requested to give notice of any declaration of interest in respect of the items of business on the agenda. 3. Minutes of Previous Meeting held on 20 May 2024 (copy enclosed) 4. AGD Internal Audit Annual Report 2023/24 – Submit report by the Chief Auditor (East Ayrshire Council) (copy enclosed) 5. AGD Internal Audit Annual Plan 2024/25 – Submit report by the Chief Auditor (East Ayrshire Council) (copy enclosed) 6. Ayrshire Growth Deal (AGD) – Economic Modelling Update – Submit report by the Head of Economic Growth (East Ayrshire Council) (copy enclosed) 1
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7. Ayrshire Growth Deal (AGD) – Programme Risk Register Update – June 2024 – Submit report by the Head of Economic Growth (East Ayrshire Council) (copy enclosed) 8. AOCB 9. Exclusion of the Public – Paras 9 & 10 Resolve in terms of Section 50(A)4 of the Local Government (Scotland) Act 1973, to exclude from the Meeting the press and the public for the following item of business on the grounds indicated in terms of Paragraphs 9 & 10 of Part 1 of Schedule 7A of the Act. Non Disclosure of Information In terms of Standing Order 19 (Disclosure of Information), the information contained within the following report is confidential information within the meaning of Section 50A of the 1973 Act and shall not be disclosed to any person by any Member or Officer. 10. Exempt Item Ayrshire Growth Deal – Programme Update Submit report by the Head of Economic Growth (East Ayrshire Council) on the above (copy sent under separate cover). For more information on any of the items on this agenda, please contact Committee Services at 01292 612724, Wellington Square, Ayr or e-mail: arlene.steven@south-ayrshire.gov.uk www.south-ayrshire.gov.uk 2
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Ayrshire Economic Joint Committee 20 May 2024 At a Meeting of the Ayrshire Economic Joint Committee at 2.00 p.m. involving participation by remote electronic means. Present Councillors Marie Burns and Anthony Gurney (North Ayrshire Council); Stephen Canning (Substitute), Iain Linton and Maureen McKay (East Ayrshire Council); and Martin Dowey, William Grant and Bob Pollock (South Ayrshire Council). In Attendance R. McCutcheon and L. Kirk (North Ayrshire Council); J. McLachlan, D. McDowall, G. Saunders, J. King and A. Muir (East Ayrshire Council); M. Newall and G. Hunter (South Ayrshire Council); P. Zealey (Skills Development Scotland); C. Stewart and S. Wilson (North Ayrshire Council). Apologies Councillor Douglas Reid, E. Fraser and D. Watt (East Ayrshire Council); C. Hatton (North Ayrshire Council); L. Reid (South Ayrshire Council); A. Cox (Ayrshire College) and J. Martin (Scottish Enterprise). Chair Councillor Marie Burns in the Chair. 1. Declarations of Interest There were no declarations of interest by Members in terms of Standing Order 11 and Section 5 of the Code of Conduct for Councillors 2. Minutes The Minutes of (a) Ordinary meetings of the Joint Committee held on 20 November 2023 and 19 February 2024; and (b) Special meetings of the Joint Committee held on 18 September 2023 and 15 January 2024 were confirmed and the Minutes signed in accordance with Paragraph 7 (1) of Schedule 7 of the Local Government (Scotland) Act 1973. 3. Ayrshire Growth Deal (AGD) – Programme Risk Register Update (March 2024) Submitted report by the Head of Economic Growth (East Ayrshire Council) providing an update on the AGD Programme Risk Register. The updated Programme Risk Register (Risks and Mitigations) was set out at Appendix 1 to the report. The Joint Committee agreed to (a) note the content of the report; and (b) approve the updated Programme Risk Register dated March 2024, as set out at Appendix 1 to the report. Agenda Item 3 3
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4. Ayrshire Growth Deal – Communications Protocol Update (March 2024) Submitted report by the Head of Economic Growth (East Ayrshire Council) on the advising of the updating of the AGD Communications Protocol. The updated Communications Protocol March 2024 was set out at Appendix 1 to the report. The Joint Committee agreed to (a) note the content of the report; and (b) approve the updated Communications Protocol March 2024, as set out at Appendix 1 to the report. 5. Ayrshire Manufacturing Investment Corridor Project and Ayrshire Engineering Park Submitted report by the Head of Economic Growth (East Ayrshire Council) providing an update on the Ayrshire Manufacturing Investment Corridor (AMIC) and Ayrshire Engineering Park (AEP) projects, following confirmation from both Scottish and UK Governments that the change request (proposing the co-location of both projects at Moorfield and the renaming of the site as the Ayrshire Innovation Park) has been approved. Members asked questions and were provided with further information in relation to:- • the ongoing discussions with Transport Scotland, including anticipated costs, in relation to potential upgrade and improvement works to the Bellfield Interchange, Kilmarnock, taking cognisance of concerns discussed at the meeting in relation to road safety and traffic queuing on the slip road on to it and the consequential impact on the A77 trunk Road. The Joint Committee agreed to (a) approve the change request relating to the preferred relocation of AMIC to Moorfield, alongside the Ayrshire Engineering Park, (b) note that this change had now been approved in principle by both Governments, subject to a number of clarifications which would be provided as part of the development of Outline Business Cases, (c) note that the co-located development would be known as the Ayrshire Innovation Park (AIP), (d) that revised Outline Business Cases would be prepared for submission to both Governments by no later than May 2024, (e) note that a joint Full Business Case for Infrastructure Works would be prepared for submission, to allow works to commence by January 2025, (f) note that a further two Full Business Cases for AMIC (Centre of Excellence/Food Grade Units and Large Advanced Manufacturing Unit) would be submitted, allowing construction works to take place during 2026/27, (g) note that a further two Full Business Cases for AEP (Small Terraced Engineering Units and Large Engineering Units) would be submitted, allowing construction works to take place during 2026/27, and (h) otherwise, to note the contents of the report. 6. Exclusion of the Public – Para 9 The Joint Committee resolved in terms of Section 50(A)4 of the Local Government (Scotland) Act 1973, to exclude from the Meeting the press and the public for the following item of business on the grounds indicated in terms of Paragraph 9 of Part 1 of Schedule 7A of the Act. 4
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7. Exempt Item: Ayrshire Growth Deal Commercial Build A Update Submitted report by the Chief Executive (South Ayrshire Council) on the above. Following consideration, the Joint Committee agreed to endorse the recommendations in the report. The meeting ended at 2.20 p.m. 5
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AYRSHIRE ECONOMIC JOINT COMMITTEE MEETING – 4 SEPTEMBER 2024 REPORT BY CHIEF AUDITOR, EAST AYRSHIRE COUNCIL SUBJECT: AGD INTERNAL AUDIT ANNUAL REPORT 2023/24 PURPOSE OF REPORT 1. The purpose of this report is provide for noting an annual report on internal audit activity in line with obligations laid out in the Ayrshire Growth Deal (AGD) Governance Document (Appendix 1). Specifically this report provides: • a summary of AGD internal audit work both prior to and since inception; and • an annual internal audit opinion for the AGD. RECOMMENDATIONS 2. The Joint Committee is asked to: (i) Consider and endorse the Internal Audit Annual Report 2023/24; and (ii) Note that this report will be submitted to both UK and Scottish Governments upon completion (i.e. after AEJC consideration) in line with section 2.20 of the Governance Document. BACKGROUND CONSIDERATION BY THE PARTNERSHIP BOARD 3. This report was considered by the Ayrshire Economic Partnership Board on 23 August 2024. REQUIREMENT TO HAVE AN INTERNAL AUDIT FUNCTION 4. The Local Authority Accounts (Scotland) Regulations 2014 require local authorities to operate a professional and objective internal auditing service; in practice this means that the internal audit function is operationally independent; free from limitations on the scope of its work and that the Chief Auditor reports independently with no undue influence. The internal audit service must be provided in accordance with recognised standards and practices which are currently those set out in the Public Sector Internal Audit Standards (PSIAS). It is the responsibility of each authority to ensure compliance with the PSIAS. Agnda Item 4 6
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CONTROL ENVIRONMENT WITHIN COUNCILS 5. It is primarily the responsibility of management to establish an appropriate and sound system of internal controls, and to monitor the continuing effectiveness of that system. 6. Internal Audit reports are presented to senior management and include recommendations that, when implemented, will further improve the control environment. TRUST IN INTERNAL AUDIT – EXTERNAL AUDIT REVIEW 7. Internal Audit is subject to annual review by the Councils’ external auditors with the outcome of these reviews included in each Council’s Annual Audit Report. The most recent reports are for 2022/23 with no significant issues arising providing assurance for those placing confidence in the work of Internal Audit. All three Annual Audit Reports are available on the Audit Scotland website. MAIN REPORT INTERNAL AUDIT WORK PRIOR TO AND SINCE INCEPTION 8. Thirteen assignments have been carried out across the three Ayrshire Councils for the AGD. The scope and outcomes of these exercises are summarised at Appendix 2. Outcomes reported to date range from one limited assurance outcome, through to reasonable assurance and up to sound in most areas. It is noted that the one limited assurance assignment in 2022/23 was accompanied by immediate management action with the eight recommendations tested in 2023/24 and found to be sufficiently implemented which provides assurance to the wider stakeholders. 9. In 2021/22 we noted a potential risk from staff turnover and long term sick absence within the Programme Management Office (PMO); management at that time moved quickly to put interim cover arrangements in place and recognised the longer term risk by progressing a review of the PMO structure. During 2022/23 the senior post was filled on a permanent basis and the second tier post filled during 2023/24 in addition to the clerical post. The Accountable Body’s Chief Financial Officer continues to oversee resilience aligned with the progress of the projects. 10. Our work continues to be informed by the Audit Scotland publication Scotland’s City Region & Growth Deals (January 2020) and the follow-up published in June 2023, recognising AGD internal audit good practice, which was considered by the AEPB and AEJC on 7 August 2023. That follow-up report also reinforced that the 2023 AEJC agreement to review the AGD risk register quarterly is good practice. AGD ANNUAL INTERNAL AUDIT OPINION 2023/24 11. Work carried out in 2023/24 is sufficient to allow the Chief Auditor to produce an Annual Internal Audit Opinion for the year to 31 March 2024. The most that Internal Audit will provide in the annual opinion is reasonable assurance based on the risk based plan and a rolling programme of work. This is similar to the 7
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scope of external audit work in the context of a Council’s financial statements which aims to give reasonable assurance on the statements. 12. Our overall opinion, based on the work presented in Appendix 2 is that reasonable assurance can continue to be placed upon the adequacy and effectiveness of the AGD’s framework of governance, risk management and control in the year to 31 March 2024. The Chief Auditor continues to be satisfied that a robust approach is taken by the three internal audit teams with recommendations being adopted by management supporting the assurance framework within which the AGD operates. AUTHORITY WIDE ANNUAL INTERNAL AUDIT OPINIONS 2023/24 13. AGD operations are managed through the control environments of the three Ayrshire Councils. The Chief Auditors in all three Councils have issued annual authority wide opinions of reasonable assurance providing wider assurance to the AGD stakeholders. IMPLICATIONS 14. Eight implications have been considered in the preparation of this report. Implications Yes No Paragraph number in report 1. Policy/Strategic Planning No 2.Governance No 3. Human Resources No 4. Equality and Fairer Scotland Duty No 5. Financial No 6. Risk Yes Para 15 7. Community Wealth Building No 8. Net Zero No RISK IMPLICATIONS (INTERNAL AUDIT RESOURCES) 15. Each year there is the ongoing risk of significant unplanned work emerging in each Council, planned resources for AGD work not being available and work not being carried out to an acceptable standard which would compromise the ability to complete sufficient work to produce an Annual Internal Audit Opinion for the AGD; local mitigations should offset the potential impact of these risks. APPENDICES 16. The annual report is supported by two appendices: • Appendix 1: AGD Governance Document (Internal Audit Extract) • Appendix 2: AGD Internal Audit Assignments Eilidh Mackay Chief Auditor, East Ayrshire Council 21 August 2024 8
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BACKGROUND PAPERS 1. Public Sector Internal Audit Standards (PSIAS) (3rd edition March 2017) 2. Chartered Institute of Public Finance and Accountancy (CIPFA) Local Government Application Note for the United Kingdom Public Sector Internal Audit Standards (2nd edition February 2019) 3. Chartered Institute of Public Finance & Accountancy (CIPFA), CIPFA Statement on the Role of the Head of Internal Audit in Public Service Organisations (2nd edition April 2019) 4. Audit Scotland, Scotland’s City Region & Growth Deals (January 2020) 5. Audit Scotland, Scotland’s City Region & Growth Deals Follow-Up (August 2023) 6. AGD Governance Document V15 Deal Documents - All Documents (south-ayrshire.gov.uk) Person to Contact: Eilidh Mackay, Chief Auditor, East Ayrshire Council Email: eilidh.mackay@east-ayrshire.gov.uk Implementation Officers: Paul Davies, Audit Manager, East Ayrshire Council Email: paul.davies@east-ayrshire.gov.uk John McCallum, Senior Manager (Audit, Fraud, Safety & Risk), North Ayrshire Council Email: johnmccallum@north-ayrshire.gov.uk Cecilia McGhee, Chief Internal Auditor, South Ayrshire Council Email: Cecilia.McGhee2@south-ayrshire.gov.uk 9
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Appendix 1 AGD GOVERNANCE DOCUMENT V15 (INTERNAL AUDIT EXTRACT) 2.16 The Accountable Body’s Chief Auditor will be appointed as Chief Auditor for the AGD to coordinate Internal Audit activity. 2.17 Each partner will be responsible for allocating Internal Audit resources as required for local AGD activities. The Accountable Body’s Internal Audit section will reserve the right to review programme and project activities as required and request information from all partners regarding these activities. 2.18 Each year a consolidated Internal Audit Plan will be presented to the AEJC and AREP having been prepared following: • consultation with relevant senior officers of the AGD PMO; • consideration of the risks affecting the AGD at programme and project level; • consideration of both internal and external factors affecting the AGD; • consideration of previous internal and external audit findings; • consideration of all of these elements which will inform Public Sector Internal Audit Standards (PSIAS) based risk assessments carried out locally by the Accountable Body and Partner Authorities; and • any relevant items subsequently included in local Internal Audit plans approved by each partner’s audit committee in line with PSIAS obligations will be reflected in the consolidated AGD Internal Audit Plan. 2.19 All AGD Internal Audit work will be carried out in line with the PSIAS with individual Internal Audit assignment reports presented to the AEJC and AREP for noting. 2.20 The relevant annual Internal Audit Report will be submitted to both UK and Scottish Governments upon completion. The AEJC and AREP will be advised of the overall outcomes from Internal Audit work in an annual Internal Audit Report the timing of which is anticipated to align with the annual accounts timetable and will be reported to the AEJC and AREP for noting in line with PSIAS requirements. The Annual Internal Audit Report will include a summary of AGD internal audit work in year by all partners, an annual opinion for the AGD and for further assurance will also include the authority–wide Annual Internal Audit opinions prepared by each partner. 2.21 Actions arising from Internal Audits will be followed up by the relevant Internal Audit team in line with established arrangements in that authority and these follow-up reports will be presented to the AEJC and AREP for noting. 2.22 Further audit, advisory consultancy or investigative work may be requested by the AEJC and AREP. 2.23 The Accountable Body’s Chief Auditor will liaise with partner Chief Auditors through established arrangements. 10
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Appendix 2 AGD INTERNAL AUDIT ASSIGNMENTS PRIOR TO AND SINCE INCEPTION Year Council Type of Audit Work Scope Outcome Link to “Audit Room” on AGD Portal (members only) Up to and including 2020/21 East Ayrshire Council Advisory Both prior to the AGD being signed off on 20 November 2020 and since advice has been provided on governance arrangements. Advisory Not applicable 2021/22 East Ayrshire Council Advisory & Assurance The aims and objectives were to inform the lead client, the Chief Financial Officer and Head of Finance & ICT, on how well systems and processes within the Programme Management Office (PMO) which are designed to keep the Ayrshire Growth Deal (AGD) on track, are working in practice; and to advise on any scope for improvement in systems and compliance verification processes which are identified by our assurance work. This included advising on the update of the AGD Governance Document V15. Our overall assessment of controls concluded that there was sound assurance in most areas - key controls exist and are applied consistently and effectively in most areas. Non- compliance has only been identified in low risk or medium risk areas. 21-22 EAC Internal Audit Report - Advisory & Assurance.pdf 11
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2021/22 North Ayrshire Council Governance The scope of this audit was limited to North Ayrshire Council’s role in the projects. It focused on the governance structures across the Council’s participation in the deal rather than individual projects. The main objectives of the audit were to ensure that: · governance structures and roles and responsibilities of officers and elected members within North Ayrshire Council, in relation to the Ayrshire Growth Deal are clearly defined and communicated in order to enable good governance and strong accountability · North Ayrshire Council has adequate risk management arrangements in place in relation to the Ayrshire Growth Deal · suitable arrangements are in place to monitor the progress of the Ayrshire Growth Deal programmes within North Ayrshire, including appropriate reporting and scrutiny arrangements · there are adequate arrangements in place to ensure that North Ayrshire Council is fulfilling the requirements of the Project Management Office and external funding providers. Overall, reasonable assurance was obtained with regard to the governance arrangements for the Ayrshire Growth Deal within North Ayrshire Council. Overall good governance arrangements are in place, but some of the projects are still at an early stage of development and therefore it has not been appropriate to fully develop the governance arrangements yet. 21-22 NAC Internal Audit Report - AGD Governance.pdf 2021/22 South Ayrshire Council Governance The aim of the assignment was to obtain assurance that there are adequate governance arrangements in place for Reasonable assurance was obtained that 21-22 SAC Internal Audit Report - AGD Governance.pdf 12
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South Ayrshire Council Ayrshire Growth Deal (AGD) portfolio of projects. there are adequate internal governance arrangements in place for South Ayrshire Council’s portfolio of AGD projects. 2022/23 East Ayrshire Council Assurance Testing of AGD Grant Claims. The aim of this assignment was to provide assurance to the EAC Chief Financial Officer and Head of Finance & ICT that the AGD Quarter 4 2021/22 Grant Claim Forms had been completed accurately and in line with the requirements of the UK and Scottish Governments and AGD procedures, prior to the deadline for their sign-off on 22 April 2022. Our work was carried out in “real-time” and the Chief Financial Officer was immediately advised of the assurance which could be placed on processes prior to the sign-off and submission of the claim. The value of the Grant Claim was £0.335m (Community Wealth Building - £154,408, Working for a Healthy Economy - £180,748).Assurance was also sought for the residual element of the Quarter 4 2021/22 Grant Claim, which was claimed for in July 2022 along with the Quarter 1 2022/23 Grant Claim. This review was retrospective due to the low value of the claim (£0.010m). Sound assurance. We found that both elements of the Quarter 4 Grant Claim had been completed accurately, were fully signed by appropriate officers and were in line with the requirements of the UK and Scottish Governments and AGD procedures. We also identified areas for consideration for continuous improvement. 22-23 – EAC AGD Grant Claims 13
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Follow-up Advisory Follow-Up of 2021/22 Findings Advisory work included: • Governance Document revision • Risk Register • Benefits Realisation Plan • Support to Audit Scotland follow- up exercise (see paragraph 8) • Attendance at AEPB and AEJC meetings to inform our work All actions fully implemented. 22-23 – EAC AGD Advisory & Assurance – Follow Up 2022/23 North Ayrshire Council Assurance Contingency budget in place and the aim would be to reserve this for any claims audits in year. No work required Not applicable 2022/23 South Ayrshire Council Assurance Follow-up Testing of internal governance arrangements. Follow-Up of 2021/22 Findings. Limited assurance with immediate action taken by senior management. All actions sufficiently implemented. Confidential. 22-23 - SAC - AGD Governance Arrangements - Follow-Up.pdf 2023/24 East Ayrshire Council Advisory Work included support to Audit Scotland national review, advice on Programme Risk Register, Senior Auditor embedded in AGD PMO as critical friend. Advisory Not applicable 14
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2023/24 North Ayrshire Council Assurance The audit was structured as 3 mini- audits covering each of the revenue projects, reflecting the different stages each project had reached and the different natures of the projects. The main objectives of the audit were to: • Ensure that controls within the management of the Community Wealth Building project are suitable and operating effectively. • Ensure that controls to manage the contract for the delivery of Working for a Healthy Economy are suitable and operating effectively. • Provide audit advice regarding the proposals for the Ayrshire Skills Investment Fund, including an employer grants scheme. Substantial assurance 2024-PA-024 AGD Revenue Projects (Final -amended).pdf 2023/24 South Ayrshire Council Follow-up Follow-Up of 2022/23 Findings. All actions sufficiently implemented Confidential 15
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AYRSHIRE ECONOMIC JOINT COMMITTEE MEETING – 4 SEPTEMBER 2024 REPORT BY CHIEF AUDITOR, EAST AYRSHIRE COUNCIL SUBJECT: AGD INTERNAL AUDIT PLAN 2024/25 PURPOSE OF REPORT 1. The purpose of this report is provide for noting an annual consolidated internal audit plan in line with obligations laid out in the Ayrshire Growth Deal (AGD) Governance Document (Appendix 1). RECOMMENDATIONS 2. The Joint Committee is asked to: (i) Consider and endorse the Internal Audit Annual Plan 2024/25. BACKGROUND CONSIDERATION BY THE PARTNERSHIP BOARD 3. This report was considered by the Ayrshire Economic Partnership Board on 23 August 2024. REQUIREMENT TO HAVE AN INTERNAL AUDIT FUNCTION 4. The Local Authority Accounts (Scotland) Regulations 2014 require local authorities to operate a professional and objective internal auditing service; in practice this means that the internal audit function is operationally independent; free from limitations on the scope of its work and that the Chief Auditor reports independently with no undue influence. The internal audit service must be provided in accordance with recognised standards and practices which are currently those set out in the Public Sector Internal Audit Standards (PSIAS). It is the responsibility of each authority to ensure compliance with the PSIAS. CONTROL ENVIRONMENT WITHIN COUNCILS 5. It is primarily the responsibility of management to establish an appropriate and sound system of internal controls, and to monitor the continuing effectiveness of that system. 6. Internal Audit reports are presented to senior management and include recommendations that, when implemented, will further improve the control environment. Agenda Item 5 16
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MAIN REPORT INTERNAL AUDIT PLANNING 7. From 2021/22 each Council, in line with PSIAS requirements, carries out a risk assessment and decides how many days are to be allocated to the AGD in year. These days are approved as part of each Council’s Annual Internal Audit Plan by the relevant audit committee in line with the PSIAS. The approved days are consolidated and brought to the AEPB and AEJC. The Plans are informed by the Audit Scotland publications listed in Background Papers. The 2024/25 Plan is attached at Appendix 2. REPORTING ARRANGEMENTS FOR INDIVIDUAL INTERNAL AUDIT ASSIGNMENTS 8. On 13 September 2021 the AEJC agreed that outcomes from individual internal audit assignments will be shared with the established readership in the Council which carried out the work, the East Ayrshire Council Chief Auditor and members of the AEJC and other relevant forums in line with any revisions to governance arrangements agreed by the AEJC. Through the PMO, assignment reports are placed within an “audit room” on the AGD portal. A summary of this work is included in the AGD Internal Audit Annual Report for consideration by the AEPB and AEJC. IMPLICATIONS 9. Eight implications have been considered in the preparation of this report. Implications Yes No Paragraph number in report 1. Policy/Strategic Planning No 2.Governance No 3. Human Resources No 4. Equality and Fairer Scotland Duty No 5. Financial No 6. Risk Yes Para 10 7. Community Wealth Building No 8. Net Zero No RISK IMPLICATIONS (INTERNAL AUDIT RESOURCES) 10. Each year there is the ongoing risk of significant unplanned work emerging in each Council, planned resources for AGD work not being available and work not being carried out to an acceptable standard which would compromise the ability to complete sufficient work to produce an Annual Internal Audit Opinion for the AGD; local mitigations should offset the potential impact of these risks. APPENDICES 11. The report is supported by two appendices: • Appendix 1: AGD Governance Document (Internal Audit Extract) 17
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• Appendix 2: AGD Consolidated Internal Audit Annual Plan 2024/25 Eilidh Mackay Chief Auditor, East Ayrshire Council 21 August 2024 BACKGROUND PAPERS 1. Public Sector Internal Audit Standards (PSIAS) (3rd edition March 2017) 2. Chartered Institute of Public Finance and Accountancy (CIPFA) Local Government Application Note for the United Kingdom Public Sector Internal Audit Standards (2nd edition February 2019) 3. Chartered Institute of Public Finance & Accountancy (CIPFA), CIPFA Statement on the Role of the Head of Internal Audit in Public Service Organisations (2nd edition April 2019) 4. Audit Scotland, Scotland’s City Region & Growth Deals (January 2020) 5. Audit Scotland, Scotland’s City Region & Growth Deals Follow-Up (August 2023) 6. AGD Governance Document V15 Deal Documents - All Documents (south-ayrshire.gov.uk) Person to Contact: Eilidh Mackay, Chief Auditor, East Ayrshire Council Email: eilidh.mackay@east-ayrshire.gov.uk Implementation Officers: Paul Davies, Audit Manager, East Ayrshire Council Email: paul.davies@east-ayrshire.gov.uk John McCallum, Senior Manager (Audit, Fraud, Safety & Risk), North Ayrshire Council Email: johnmccallum@north-ayrshire.gov.uk Cecilia McGhee, Chief Internal Auditor, South Ayrshire Council Email: Cecilia.McGhee2@south-ayrshire.gov.uk 18
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Appendix 1 AGD GOVERNANCE DOCUMENT V15 (INTERNAL AUDIT EXTRACT) 2.16 The Accountable Body’s Chief Auditor will be appointed as Chief Auditor for the AGD to coordinate Internal Audit activity. 2.17 Each partner will be responsible for allocating Internal Audit resources as required for local AGD activities. The Accountable Body’s Internal Audit section will reserve the right to review programme and project activities as required and request information from all partners regarding these activities. 2.18 Each year a consolidated Internal Audit Plan will be presented to the AEJC and AREP having been prepared following: • consultation with relevant senior officers of the AGD PMO; • consideration of the risks affecting the AGD at programme and project level; • consideration of both internal and external factors affecting the AGD; • consideration of previous internal and external audit findings; • consideration of all of these elements which will inform Public Sector Internal Audit Standards (PSIAS) based risk assessments carried out locally by the Accountable Body and Partner Authorities; and • any relevant items subsequently included in local Internal Audit plans approved by each partner’s audit committee in line with PSIAS obligations will be reflected in the consolidated AGD Internal Audit Plan. 2.19 All AGD Internal Audit work will be carried out in line with the PSIAS with individual Internal Audit assignment reports presented to the AEJC and AREP for noting. 2.20 The relevant annual Internal Audit Report will be submitted to both UK and Scottish Governments upon completion. The AEJC and AREP will be advised of the overall outcomes from Internal Audit work in an annual Internal Audit Report the timing of which is anticipated to align with the annual accounts timetable and will be reported to the AEJC and AREP for noting in line with PSIAS requirements. The Annual Internal Audit Report will include a summary of AGD internal audit work in year by all partners, an annual opinion for the AGD and for further assurance will also include the authority–wide Annual Internal Audit opinions prepared by each partner. 2.21 Actions arising from Internal Audits will be followed up by the relevant Internal Audit team in line with established arrangements in that authority and these follow-up reports will be presented to the AEJC and AREP for noting. 2.22 Further audit, advisory consultancy or investigative work may be requested by the AEJC and AREP. 2.23 The Accountable Body’s Chief Auditor will liaise with partner Chief Auditors through established arrangements. 19
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Appendix 2 AGD CONSOLIDATED INTERNAL AUDIT ANNUAL PLAN 2024/25 Council Internal Audit plans agreed in line with PSIAS Anticipated Assignments Indicative Days East Ayrshire 18 April 2024 AGD Advisory as required based on risk assessment. Anticipated to include: • Chief Auditor support to Joint Committee • Audit Manager & Senior Auditor “critical friend” support to PMO • Support to scheduled review of Governance Document V15 15* North Ayrshire 21 March 2024 As required based on operational risk. 20 South Ayrshire 20 March 2024 Ayrshire Growth Deal - Follow Up of actions from 2023/24 Assignment (if required). Review of contract management within the AGD programme. 20 Total days 55 *estimated potential allocation within a wider Small Advisory contingency of 40 days agreed by committee. 20
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Agenda Item 6 AYRSHIRE ECONOMIC JOINT COMMITTEE MEETING – 4 SEPTEMBER 2024 REPORT BY HEAD OF ECONOMIC GROWTH EAST AYRSHIRE COUNCIL SUBJECT: AYRSHIRE GROWTH DEAL – AGD ECONOMIC MODELLING UPDATE PURPOSE OF REPORT 1. To advise the Economic Joint Committee Members on an update on the AGD Economic Modelling used by the PMO and the accessing an enhanced service from the Glasgow Intelligence Unit. RECOMMENDATIONS 2. It is recommended that members agree the content of the report : (i) Note the development of a Service Level Agreement with the Glasgow City Region Intelligence Hub (GCRIH) for an enhanced economic model to support the development and monitoring of projects for the AGD; and (ii) Approve ‘in principle’ support to the PMO to complete negotiation for a SLA, subject to legal and procurement advice being met. BACKGROUND 3. The PMO as a core function as set out by the AGD Governance are required to host an economic model. Since 2019 the PMO have operated an AGD economic modelling tool that has helped inform a number of projects in the development of their business cases e.g. economic case. This is a simple model that is more effective where projects seek to develop new builds where the proposed land use will relate to one of the categories captured by the Use Class Orders. 4. Overtime the robustness of the model has been questioned and in response the PMO sought external body to review the model. This has been supported by the feedback received from the Governments when commenting upon the economic cases of business cases. In early 2024 the Glasgow City Region Intelligence Hub (GCRIH) were contacted to review the AGD economic model. They were approached on the grounds that they provide economic modelling advice to the Glasgow City Region Deal and beyond, and have supported the development of business cases and funding bids which have been accepted by the Governments. 21
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5. Their findings recommended that a number of significant changes would be needed to be undertaken in order for the model to be sufficiently robust and meaningful. In addition they highlighted the limitations of the model. Ultimately it was recognised that the best way forward would be to work with the Glasgow Intelligence Hub in aligning the AGD economic model with that used by the Glasgow City Region. In addition, ensure the updating of the AGD model, although hosted by the PMO, is shared and accessible to Partners in Ayrshire. MAIN REPORT THE OFFER – DRAFT SERVICE LEVEL AGREEMENT 6. The PMO has negotiated a Service Level Agreement (SLA) with the GCRIH that will overhaul the AGD economic model and align it with that used for the Glasgow City Region and other initiatives undertaken by the City Region. 7. The draft SLA has been developed with the support of EAC legal team and will be shared with the procurement team to ensure compliance with relevant requirements. Both teams will continue to be engaged in the completion of the SLA and its delivery. 8. In addition the SLA will also include the following conditions: • Maintenance undertaken by the Hub so ensuring all relevant underlying data is updated. This predominately includes national data from Government sources. • Programme of updates to be undertaken of all AGD projects information used to inform business cases. This will not replace existing modelling tools used for business cases already approved or are at an extensive stage of development, but provide a consistent tool in which to capture potential economic outputs and outcomes at a Programme level. • Training for the PMO and key AGD teams across Ayrshire so that the operation, maintenance and outputs of the model are understood and be effectively applied to AGD projects and other initiatives where the model can be used. • Initially a 3 year agreement with an opportunity to terminate or continue on a rolling year contract. 9. The cost of the SLA has been agreed at £25k for the updating the model and development of a revised version aligned with that used by the Hub for the Glasgow City Region. In addition there will be a £3k commitment per year for the lifetime of the contract to cover continued maintenance of the model. For over three years the total costs would be £34k which split between the three Ayrshire Councils would equate to £11.3k, with the first year of the agreement requiring a contribution of £9.3k from each authority. Subsequent years would be £1k per Authority per year. 22
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BENEFITS 10. The benefits of using the Hubs model has already been demonstrated through the development of the business cases for the AGD AMIC and Moorfield projects, where EAC officers worked closely with the Hub’s team. The details generated have resulted in a robust economic case that is currently being considered by the Governments. 11. Other benefits the new model will provide include: • A Programme level economic model that could be applied to all AGD projects, and hence provide an updated and robust evidence base on the potential economic benefits from the Programme. • The potential to consider unique environmental and social impacts, due to the ongoing development of the Hub’s model, which is seeking to investigate effective ways of capturing the economic consequences upon environmental and social issues. An approach which the AGD, if aligned, could learn from and incorporate moving forward. • A tool that can be applied beyond AGD projects but also for other initiatives where a business case aligned to the HM Treasury Green Book is required e.g. LUF, and potential new regional/local economic development Government sponsored initiatives. • Provide a tool that can support for the implementation of relevant actions of the Ayrshire Regional Economic Strategy, by providing economic evidence at a local and regional level. • An opportunity to build resilience in the PMO and AGD teams on knowledge, experience and skills in economic modelling. In time this will lead to the AGD model being supported solely by Ayrshire staff, which could result in the reduction of costs and dependencies on external consultants. IMPLICATIONS 12. Eight implications have been considered in the preparation of this report. Implications Yes No Paragraph number in report 1. Policy/Strategic Planning Yes Para 13-14 2.Governance/Legal Yes Para 16 3. Human Resources Yes Para 18 4. Equality and Fairer Scotland Duty Yes Para 19 5. Financial Yes Para 15 6. Risk Yes Para 19 7. Community Wealth Building No 8. Net Zero No 23
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ALIGNMENT WITH SUSTAINABLE, INCLUSIVE GROWTH AMBITIONS 13. Inclusion is a key driver for the AGD. Deal business cases for projects demonstrate how they will reduce inequalities and tackle the inclusion challenges specific to Ayrshire. 14. Ensuring a robust economic modeling tool is available for the AGD is a key requirement of the PMO’s function in supporting the delivery of sustainable development and inclusive economic growth across Ayrshire and in line with the Deal objectives. FINANCIAL IMPLICATIONS 15. The principal financial implications relate to costs associated with appointing the GCRIH to deliver the SLA. It is recognised that there will be initial costs but as set out in the above report the benefits derived from the investment outweigh these costs. LEGAL IMPLICATIONS 16. The legal implications arising from this report are covered through the Agreement between the three Ayrshire’s Councils and the recently revised Governance Document which was approved at the Joint Committee meeting on 8 December 2023. RISK IMPLICATIONS 17. The management of Risks will be undertaken through the managing and monitoring of the SLA and will be led by the PMO, with updates on progression provided to Senior Responsibility Officers for each Ayrshire Council. HUMAN RESOURCES IMPLICATIONS 18. There are no immediate human resource implications arising from this report. All named key AGD projects are resourced to develop and deliver the AGD programme. EQUALITY IMPACT ASSESSMENT 19. There is no direct equalities impact relating to this report. Inclusion is a key driver for the AGD. Project leads will be required to complete an Equality Impact Assessment for their project and append to the associated business case. Project leads have received Equality Impact Assessment training organised by the Scottish Government. Project Leads are being encouraged by the PMO to link up as soon as possible with their Equalities Officer within their authority who will be able to assist with this matter. APPENDICES 24
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None Background Papers: Heads of Terms, signed by both the UK and Scottish Governments and Ayrshire’s Councils on 8 March 2019 Deal Document, signed by both the UK and Scottish Governments and Ayrshire’s Councils on 19 November 2020 Members requiring further information should contact: Graham Saunders, Ayrshire Growth Deal – Strategic Manager Graham.saunders@east-ayrshire.gov.uk Implementation Officer: Graham Saunders, Ayrshire Growth Deal – Strategic Manager Graham.saunders@east-ayrshire.gov.uk 25
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Agenda Item 7 AYRSHIRE ECONOMIC JOINT COMMITTEE MEETING – 4 SEPTEMBER 2024 REPORT BY HEAD OF ECONOMIC GROWTH EAST AYRSHIRE COUNCIL SUBJECT: AYRSHIRE GROWTH DEAL – PROGRAMME RISK REGISTER UPDATE – JUNE 2024 PURPOSE OF REPORT 1. To advise the Ayrshire Economic Joint Committee (AEJC) members on the update for the AGD Programme Risk Register. RECOMMENDATIONS 2. It is recommended that members agree the content of the report: (i) Note the proposed adaptation of presentation style to meet Scottish Government quarterly reporting templates; and (ii) Approve the updated Programme Risk Register dated June 2024. BACKGROUND 3. The AGD Programme Risk Register is a key tool in which to monitor and evaluate potential risks associated with the development and delivery of the programme. The AEJC (dated 26 June 2023) approved the quarterly review and reporting of the AGD Programme Risk Register as a separate item on future AEPB and AEJC meetings. 4. It should be noted that the top scoring programme and project risks are reported to the Chief Executives Group, Steering Group, AEPB and AEJC on a regular basis via the sharing of the AGD Programme’s Monthly Reports. MAIN REPORT 5. The PMO regularly reviews the Programme Risk Register in line with the recommendations of the AEJC. This has included reviewing the nature of the risks, their RAG status/scoring, and the mitigation measures used to manage the potential risks identified. The review covers the majority of Q4 2022/23 from February to March 2024 and Q1 2024/25 (from April to June 2024) and reflects comments received from the AGD S95 Officer, the Steering Group and both Governments. 27
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6. The updated Programme Risk Register is set out in Appendix 1 attached to this report. The opportunity has also been taken to renumber the Risks following the review. There are no changes proposed to 11 of the current 19 risks on the Risk Register. 7. There have been changes proposed to 7 of the current risks and the introduction of a new risk as follows: Number Risk AGDRISK03 Introduction of a new Risk: • AGDRISK03 - Failure to drawdown full yearly allocated AGD funding as per Grant Offer Letter AGDRISK’s 04; 18 and 19 Amendment in the nature of the risks being monitored so they now consider: • AGDRISK04 - Failure to drawdown full AGD funding by 2030 as per Tripartite Agreement; • AGDRISK18 - Failure to ensure AGD projects working towards net zero ambitions as set by SG/UKG; and • AGDRISK19 - Potential impact of macro events on the wider economy and economic prosperity of Ayrshire. AGDRISK’s 04, 05, 07, 08, 14, 15 and 18 Increase in risk scoring, whether in likelihood and/or in impact: • AGDRISK04 - Failure to drawdown full AGD funding by 2030 as per Tripartite Agreement; • AGDRISK05 - Delays in development and approval of business cases; • AGDRISK07 - Failure to deliver community benefits from AGD; • AGDRISK08 - Failure to deliver individual projects within the AGD programme; • AGDRISK14 - Failure to attract commercial interest in AGD; • AGDRISK’s 01 and 02 Decrease in risk scoring, whether in likelihood and/or impact: • AGDRISK01 - Failure to achieve AGD programme objectives within agreed budget; and • AGDRISK02 – Failure to provide accurate projections for programme spend. From AGDRISK 04 onwards Renumber of risks categories to reflect new AGDRISK03 8. The following risks have currently been identified as being ‘red’ in RAG 28
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status: Number Risk Action AGDRISK04 (formerly AGDRISK03) Failure to drawdown full AGD funding by 2030 as per Tripartite Agreement Conclusions from the Programme Review will provide clarity on the delivery of Projects and the whole Programme. AGDRISK05 (formerly AGDRISK04) Delays in development and approval of business cases Conclusions from the Programme Review will provide clarity on the timelines and milestones for the development and approval of business cases. AGDRISK19 (formerly AGDRISK21) Potential impact of macro events on the wider economy and economic prosperity of Ayrshire Continued monitoring of external macro events and to plan where possible. 9. The updated mitigation measures associated with each risk are set out in Appendix 1. 10. Overall these changes have been undertaken in the context of the Programme Review and its emerging outcomes, which include the development of a more robust Programme that takes account of increased costs and the impact of this upon development and delivery of capital projects. There is a commitment to continue to review all Risk Registers including the Programme Risk Register to reflect changes in the Programme. It is therefore anticipated that further changes will be presented to future AEPBs. 11. Moving forward, the risks identified, especially those highlighted as ‘red’, are anticipated to start to be de-risked once the Programme Review has been agreed by the Government and key projects gain business case approval, thus allowing drawdown of funds from the Government and delivery on the ground. This includes projects for the Prestwick area that form the Aerospace and Space Programme of the Deal. 12. Changes in the programme risks and the application of mitigation measures are working their way into the draft Implementation Plan 2024/25 that includes an updated Financial Plan. This includes more realistic timelines being developed which seek to ensure the development of business cases and delivery by the end of the Programme. 13. The PMO are also reviewing the presentation of the Programme Risk Register so that it reflects more closely the Scottish Government’s quarterly template for reporting. The benefits of this are to ensure the transfer of information between formats and audiences are more efficient. This includes taking into account the differences between the AGD and Government’s 29
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RAG criteria. Note that the AGD RAG scoring will continue to be retained and used on a day to day basis. For example as illustrated below Source GREEN AMBER/GREEN AMBER/RED RED Scottish Government Guidance Successful delivery appears highly likely with regard to time, cost and quality and there are no major outstanding issues that at this stage appear to significantly threaten progress Successful delivery appears probable however attention will be needed in certain areas to ensure risks do not develop into major issues that will threaten delivery Successful delivery appears possible, but issues already exist that require serious attention. These appear resolvable at this stage, but further action is required Successful delivery is in serious doubt with major risks or issues apparent in a number of key areas. Urgent action is needed to ensure these are addressed Source GREEN AMBER RED Ayrshire Growth Deal RAG Guidance Note with an AGD risk register score of between 0-3 with an AGD risk register score of between 4-9 with an AGD risk register score of between 10-14 with an AGD risk register score of between 15-25 14. In conclusion the Programme Risk Register provides an assessment of the challenges the programme continues to face. As noted the PMO are working across the partnership to conclude the Programme Review with details of the outcome (e.g. Executive Summary and Implementation Plan 2024/25) scheduled to be presented to Board members at the next meeting (23 August 2024). Once agreed subsequently by the AEJC (scheduled for 4 September 2024) the Programme Review will provide a baseline in which to ensure the delivery of projects, which will help mitigate the current ‘red’ risks wherever possible. 30
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IMPLICATIONS 15. The implications arising from this report are: Implications Yes No Paragraph number in report 1. Policy/Strategic Planning Yes Para 16-17 2.Governance/Legal Yes Para 19 3. Human Resources Yes Para 20 4. Equality and Fairer Scotland Duty Yes Para 21 5. Financial Yes Para 20 6. Risk Yes Whole paper 7. Community Wealth Building No 8. Net Zero No ALIGNMENT WITH SUSTAINABLE, INCLUSIVE GROWTH AMBITIONS 16. Inclusion is a key driver for the AGD business cases for projects demonstrate how they will reduce inequalities and tackle the inclusion challenges specific to Ayrshire. 17. The Risk Register provides the framework for reviewing the challenges the AGD needs to address and sets out the mitigation measures to be undertaken that include meeting the headline Deal objective of delivering inclusive growth. FINANCIAL IMPLICATIONS 18. It is accepted by the Ayrshire Councils and the Government that risks should be managed and mitigated where necessary in order to support the effective delivery of projects and the programme. LEGAL IMPLICATIONS 19. The legal implications arising from this report are covered through the Agreement between the three Ayrshire’s Councils and the revised Governance Document which was approved at the Joint Committee meeting on 8 December 2022. HUMAN RESOURCES IMPLICATIONS 20. There are no immediate human resource implications arising from this report. However for the risk associated with lack of resources in PMO to be addressed there could be human resource implications. EQUALITY IMPACT ASSESSMENT 21. There is no direct equalities impact relating to this report. Inclusion is a key driver for the AGD. Project leads will be required to complete an Equality Impact Assessment for their project and append to the associated business 31
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case. Project leads have received Equality Impact Assessment training organised by the Scottish Government. Project Leads are being encouraged by the PMO to link up as soon as possible with their Equalities Officer within their authority who will be able to assist with this matter. APPENDICES Appendix 1: Updated Risk Register – March 2024 Background Papers: Heads of Terms, signed by both the UK and Scottish Governments and Ayrshire’s Councils on 8 March 2019 Deal Document, signed by both the UK and Scottish Governments and Ayrshire’s Councils on 19 November 2020 Members requiring further information should contact: Graham Saunders, Ayrshire Growth Deal – Strategic Manager Graham.saunders@east-ayrshire.gov.uk Implementation Officer: Graham Saunders, Ayrshire Growth Deal – Strategic Manager Graham.saunders@east-ayrshire.gov.uk 32
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Appendix 1: UPDATED VERSION AYRSHIRE GROWTH DEAL UPDATED PROGRAMME RISK REGISTER (RISKS AND MITIGATIONS) – JUNE 2024 Note: includes amendments to the Risk Register to reflect review. Source GREEN AMBER/GREEN AMBER/RED RED Scottish Government Guidance Successful delivery appears highly likely with regard to time, cost and quality and there are no major outstanding issues that at this stage appear to significantly threaten progress Successful delivery appears probable however attention will be needed in certain areas to ensure risks do not develop into major issues that will threaten delivery Successful delivery appears possible, but issues already exist that require serious attention. These appear resolvable at this stage, but further action is required Successful delivery is in serious doubt with major risks or issues apparent in a number of key areas. Urgent action is needed to ensure these are addressed Source GREEN AMBER RED Ayrshire Growth Deal RAG Guidance Note with an AGD risk register score of between 0-3 with an AGD risk register score of between 4-9 with an AGD risk register score of between 10-14 with an AGD risk register score of between 15-25 RISK (AGD RAG USED) Current Matrix and Score Proposed Matrix and Score Proposed Scottish Govt RAG Score MITIGATION AGDRISK01 Failure to achieve AGD programme objectives within agreed budget Scoring – 12 CHANGE to reflect Score 16 Score 12 AMBER/RED • The Regional Economic Joint Committee, Regional Economic Partnership, AGD Steering Group in place to monitor progress and to address any weaknesses or issues that could impact on overall delivery. • PMO ongoing monitoring and 33
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decrease in likelihood. evaluation of Deal and project objectives in order to address issues early. • Leading to potential to review of risks where evidence suggests insufficient funding to undertake and complete projects in line with expected outcomes. Internal governance include regular reviews undertaken by PMO with input from SROs, Project Leads and Chief Executives to ensure AGD programme objective are met. Where necessary reporting issues and potential solutions to the AEPB and AEJC e.g. Programme Review 23/24. AGDRISK02 Failure to provide accurate projections for programme spend Scoring – - 12 CHANGE – to reflect decrease in likelihood Score 16 Score 12 AMBER/RED • Issues will be escalated to CEOs, Regional Economic Partnership and Regional Economic Joint Committee as appropriate • Implementation Plan and Financial Plan updated annually with input from Project Leads, SROs and CEOs. Business Case process development supported and monitored on a monthly basis in order to achieve approval e.g. OBC and FBC, and then during delivery. PMO will regularly review, challenge and agree financial profiling/phasing with Project Leads, SROs and Finance Directors and ensure drawdown projections align with delivery timescales • OBCs/FBCs include an optimism bias 34
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factor as per Treasury Green Book and AGD Governance document • Inflationary factor addressed through project reviews e.g. re-scoping, phasing and reviewing costs and benefits AGDRISK03 (NEW) Failure to drawdown full yearly allocated AGD funding as per Grant Offer Letter Scoring – 9 NEW NEW Score 9 AMBER /GREEN • PMO regularly review, challenge and agree financial profiling/phasing with Project Leads, SROs and Finance Directors and ensure drawdown projections align with delivery timescales • Regular monitoring of project progress and projected drawdown of AGD allocated funds. Use of bi-annual returns (Feb return) informing the expected Grant Offer Letter • Monthly reporting to the Steering Group, SRO's AEPB/AEJC and the Government on in year drawdown profiles AGDRISK04 (formerly 3) Failure to drawdown full AGD funding by 2030 as per Tripartitie Agreement Scoring – - 20 CHANGE – to reflect increase in impact Score 16 Score 20 RED • PMO will regularly review, challenge and agree financial profiling/phasing with Project Leads, SROs and Finance Directors and ensure drawdown projections align with delivery timescales. This includes PMO working with Project Leads, SRO’s and S95’s to ensure projects can be realised and help with change processes where necessary; and undertaking effective communication with Governments to ensure projects Impact Likelihood 35
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can be realised • Annual review of Financial Plan and Implementation Plan undertaken. Noted that challenges continue to impact upon the development and delivery of the Aerospace and Space Programme. • Regular reporting to the Scottish Government in line with financial reporting requirements PMO support Project Leads achieve business case milestones in line with the current Implementation Plan, AGD Governance document and, Finance guidance • Pivot projects proactively where possible in line with need and opportunity, and in line with change management processes as defined by the AGD Governance • PMO manage internal procedures, financial controls and processes in place to mitigate this risk AGDRISK05 (formerly 4) Delays in development and approval of business cases Scoring – 20 CHANGE – to reflect increase in impact Score 16 Score 20 RED • Undertake focused engagement with SG and UKG in order to help ensure SBC, OBC and/or FBC comply with the Treasury Green Book and gain approval in line with AGD governance • PMO working closely with Project Leads and Policy Leads within UK and Scottish Governments to support business case development and approval to an agreed timeline. This 36
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includes exploring a streamlined change process (pre-FBC) particularly where budget constraints are sole driver of change. Note challenges continue to impact upon the development of business cases • Project Leads provided with Green Book business case training • Project Leads’ toolkit in place • Seek other partners to assist in developing business cases where capacity is low, skills align e.g. Ayrshire College and SE. AGDRISK06 (formerly 5) Failure to capture accurate baseline data Scoring – 9 NO CHANGE IN SCORING Score 9 Score 9 AMBER /GREEN • Project Leads required to establish appropriate economic, social and environmental baseline information in business cases • Establish and regularly review achievable outcomes, output and targets as part of the development and delivery of projects and realization of benefits in line with the Benefits Realisation Plan AGDRISK07 (formerly 6) Failure to deliver community benefits from AGD Scoring – 9 CHANGE – to reflect increase in likelihood Score 6 Score 9 AMBER /GREEN • PMO and procurement managers from the three Ayrshire Councils have developed a AGD Community Benefit Tracker, a single mechanism to monitor delivery of community benefits so that remedial action can be taken if required • Result from the AGD Community Benefits Tracker system will be 37
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analysed and reported to the Regional Economic Partnership and Regional Economic Joint • PMO working with Project Leads to develop consistent approach to embedding inclusive growth, equalities, clean growth, and community wealth building within business cases through the Annual Performance Report • Procurement working group has been established and operates in order to support delivery of community benefits which includes development of a Community Benefits Tracker and coordination of procurement approaches so they support the development and delivery of projects AGDRISK08 (formerly 7) Failure to deliver individual projects within the AGD programme Scoring – 12 CHANGE – to reflect increase in likelihood Score 8 PUT UP 1, STILL AMBER? Score 12 AMBER/RED • Regular dialogue/reporting around progress undertaken between PMO and Project Leads. Seek to identify issues early and raise with Senior Management and/or the Governments, AEPB and AEJC. Regular monitoring and reporting e.g. quarterly to the AEPB/AEJC, and monthly to AGD Steering Group and Project Boards. • Partners regularly review the AGD Benefits Realisation Plan every 12 months and report to the AEPB/AEJC. Current change management process incorporated in the AGD Governance 38
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document and regularly reviewed • Risk register in place for each project which is regularly reviewed via monthly reports, quarterly reports and when updating the Implementation Plan • Project risk registers included in business cases which are formally approved by government and AEJC • Management Information System in place and used to track progress of projects against key milestones, and reported via monthly and quarterly reports AGDRISK09 (formerly 8) Inadequate recognition of interdependencies and/or knock-on impacts between parts of the programme leading to issues with delivery and/or lost opportunities. Scoring – 9 NO CHANGE IN SCORING Score 9 Score 9 AMBER /GREEN • Programme meetings take place regularly between PMO, Project Leads and partners to ensure interdependencies are recognised and considered; and incorporated in approved business cases • PMO working closely with project leads to ensure interdependencies are fully articulated within the project business cases and for the programme as a whole. • All forms of interdependencies are monitored and managed to help enable the development and delivery of all Deal projects AGDRISK010 (formerly 9) Lack of resource within partner organisations to deliver projects in line with Score 9 Score 9 AMBER /GREEN • Formal approvals of Councils’ resources are now in place for AGD projects • Each Council has appointed staff 39
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AGD programme Scoring – 9 NO CHANGE IN SCORING and/or consultants to support project development and delivery • Each project currently has a Project Lead in place • Partners including SE are providing additional resource to relevant projects • Resources committed to the delivery of the programme, with further discussions underway to explore how to deliver the recently approved Regional Economic Strategy • Other funding streams is being explored to support ongoing revenue costs • Anticipated revenue streams will be subject to constant review through the monitoring procedures in place for AGD AGDRISK11 (formerly 10) Lack of resources in PMO Scoring – 9 NO CHANGE IN SCORING Score 9 Score 9 AMBER/ GREEN • A permanent PMO structure is in place with recruitment now completed. • The PMO is being supported by colleagues in each of the Councils in a number of work streams • PMO undertaking a review of capacity and skill sets in response to the changing requirements on staff that form the Office AGDRISK12 (formerly 11) Inadequate governance arrangements to support AGD delivery Score 6 Score 6 AMBER/ GREEN • In accordance with AGD governance, AEPB and AEJC has been formed and regular meetings are in place • Scottish Government’s financial reporting requirements have been 40
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Scoring - 6 NO CHANGE IN SCORING implemented in the AGD Governance document and Financial guidance • Partner agreement between EAC, as Accountable Body for the Deal, and North and South Ayrshire Councils has been drawn up and terms agreed • Partners working together with both Governments to keep under review the AGD Benefits Realisation Plan • Current change management process in place and subject to regular review with input from the Governments and Partners AGD is standing item on CEOs’ meeting agenda AGDRISK13 (formerly 12) Monitoring & Evaluation Framework is not sufficiently defined Score – 6 NO CHANGE IN SCORING Score 6 Score 6 AMBER/ GREEN PMO undertaking ongoing review of the overarching Monitoring and Evaluation Framework for the Deal. This will ensure acceptable M&E arrangements. AGDRISK14 (formerly 13) Failure to attract commercial interest in AGD Scoring – 12 CHANGE – to reflect increase in likelihood Score 8 Score 12 AMBER/RED • Following conclusion of the Programme Review commitment to develop with communications and economic development teams, a market campaign, subject to resources. This will form part of Communication Plan and will target potential investors Communications 41
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Action Plan continues to be developed and updated, including a pipeline of project specific communications plans. Current private sector investment is below expected target for the agreed AGD. • Regular briefings with a range of stakeholders • Wider Ayrshire Economic Strategy is now approved by the AEJC and will ensure wider growth ambitions for Ayrshire are achieved. This will help support attracting greater investment into Ayrshire. AGDRISK15 (formerly 14) Programme not communicated effectively to stakeholders outwith Governance structure Scoring 12 NO CHANGE IN SCORING Score 12 Score 12 AMBER/RED • Communications Action Plan completed and regularly updated, in conjunction with communication teams. This includes reporting on past and future communication activity. AGD website launched and to be reviewed in conjunction with communications teams, in order to increase traffic and sharing of AGD information • AGD social media channels to be reviewed in conjunction with communications teams, with greater linkages made to activity related to the AGD and its progress • Regular briefings with a range of stakeholders via AGD programme update to the AEPB and AEJC • Communications Protocol in place and 42
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reviewed and updated annually, with activity regularly identified and delivered with the support of communication teams. • Resource within AGD to market and promote project activities and overall programme AGDRISK16 (formerly 15) Supply phasing within overall programme Scoring – 12 NO CHANGE IN SCORING Score 12 Score 12 AMBER/RED • PMO help facilitate and update Procurement teams of the AGD programme and relevant projects in terms of timescale for development and delivery. This includes how to manage expected peaks in programme activity and need for contracts to be advertised and managed. • PMO working with procurement in supporting the sharing of market intelligence and the phasing of development activity, this includes ensuring procurement leads sign off when updating Implementation Plans. AGDRISK17 (formerly 19) Loss of IT systems Scoring – 8 NO CHANGE IN SCORING Score 8 Score 8 AMBER /GREEN • PMO hosted by EAC and as such supported by IT recovery protocols and security systems of EAC to limit risk and mitigation measures • Corporate IT recovery protocol and security systems limit the risk and mitigation measures • Contingency Plan in place via EAC for the PMO, by SAC for the portal, and for the AGD teams across the three councils, by their respective employer 43
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(e.g. EAC, SAC, NAC) AGDRISK18 (formerly 20) Failure to ensure AGD projects working towards net zero ambitions as set by SG/UKG Scoring – 8 NO CHANGE IN SCORING Score 8 Score 8 AMBER /GREEN • PMO and Project Leads working with Scottish Government to ensure the Deal is aligned with Scotland’s transition to net zero carbon emissions by 2045 • UK and Scottish Governments developed carbon management guidance for the AGD, as well as other City Region and Growth Deals in Scotland, which will allow the carbon emissions impact of the programme and projects to be assessed then minimised. • Consideration to be given to the recent Scottish Government announcement on annual and interim targets for cutting greenhouse gases and impact upon projects contributing to net zero (April 24). • A carbon management process appropriate for each project has been put in place to ensure any carbon emissions impact is minimised via business case process • PMO working with both Governments to identify funding opportunities to support decarbonisation • PMO is working with both Governments to agree an overarching Monitoring and Evaluation Framework for the Deal 44
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AGDRISK19 (formerly 21) Potential impact of macro events on the wider economy and econmic propserity of Ayrshire Scoring – 16 NO CHANGE IN SCORING Score 16 Score 16 RED • Regular engagement with Project Leads to highlight any risks well in advance, so that the PMO can raise with Government, AEPB and AEJC as appropriate • Regular review via monthly reports of outputs and timelines for business cases at every stage of development in the light of external events • Continued monitoring of external environment and government relations • Regional Economic Strategy approved in early 2023 and be supported by an emerging action plan • AEJC provide voice for Ayrshire to press the case for government intervention investment • Seek to align incentives and other forms of assistance to complement the AGD and stimulate greater economic activity • Current change management process in place but under review • Regional Skills Investment Plan developed, with a focus on its implementation via Ayrshire Skills Group • Robust data analysis shared amongst key partners and stakeholders to reach common understanding of local economic conditions, leading to early identification of real threats and 45
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opportunities - Supported by proposed appointment of Glasgow Intelligence Unit to revise AGD economic model. • PMO co-ordinate evidence across Deals and submitted collective case via the Implementation Plan update to both governments setting out impact of increased costs or reduced the scope/outputs and time delivery if costs not met 46