To consider a report and presentation on the findings of the Northamptonshire County Council Best Value Inspection, a comparison of the financial and governance positions of Central Bedfordshire Council and Northamptonshire County Council and proposed changes to Central Bedfordshire Council’s existing processes.

The Committee considered a report which discussed the findings of the Northamptonshire County Council (NCC) Best Value Inspection and compared the financial and governance position of Central Bedfordshire Council (CBC).  Arising from the outcomes of the Best Value Inspection the report also set out management actions (in the form of recommendations) for implementation to Central Bedfordshire Council’s existing processes.

Accompanying the report at Appendix A was a slide pack entitled ‘Lessons Learned from the Northamptonshire Best Value Inspection Report’.  The Director of Resources worked through the presentation and expanded on the content where necessary.

Points and comments included:

·         The Chairman referred to the comment in the presentation on the failure to allow Scrutiny at NCC to consider budgetary proposals earlier in their development (in the autumn).  He also drew attention to the comment that CBC also needed to consider this issue as its own current budget timetable was tight and Scrutiny only had a relatively short period to consider proposals.  The Director of Resources explained that it was not suggested that a full draft budget would be submitted for consideration but 5-6 items would be highlighted for Scrutiny to consider at an earlier stage (i.e. October-December).

·         The Director of Resources commented that two KPMG ISA 260 reports stating an adverse opinion on value for money matters were reported to NCC’s Audit Committee without comment and Members were ignored when seeking information.  However, the Director also commented that he was unsure how far KPMG had sought to emphasise the financial situation at NCC and he stressed that external auditors needed to adopt a more rigorous approach in the future.

·         The extent of CBC’s involvement with LGSS, being limited to legal services, was noted.  It was also noted that the Director of Resources role was as a non-executive director who sat on the Board.

·         The former Deputy Director of Legal Services and Monitoring Officer at CBC, had resigned and an executive director was being recruited.  An interim internal appointment had been made.

·         The Director of Resources referred to the level of debt owed to the LGSS Law by NCC and that Council’s control mechanism.  He explained how there would be no lasting impact on cash flow.  With regard to reputation he commented that further mergers could be difficult.

·         The Director of Resources referred to the Best Value Inspection report which stated that it was difficult to see what additional saving had arisen at NCC as a result of the structural grouping and what would have occurred by normal management action.  Further, much of the reported saving was routine service reductions.  At CBC LGSS Law had initially delivered savings but in 2017/18 the outcome had been mixed.  CBC was currently experiencing a large overspend on legal services.  The volume of work had increased partly as the result of directing work through LGSS, rather than other third parties as would have occurred in the past so there were no hidden charges, but mainly because of an increase in the volume of cases from Children’s Services.

·         Some Members raised the possibility of a review of the role of LGSS in CBC.  In response to comments the Director of Resources stated that CBC had not purchased an asset value as such and there was no likelihood of LGSS becoming insolvent.  All the shareholders had confirmed their commitment.  Whilst some personnel had left interim staff could be depended on to continue to provide the service.  The Director stressed that the recent departure of a senior LGSS officer (CBC’s former Deputy Director of Legal Services/Monitoring Officer) and the financial situation at NCC were not linked

·         A Member expressed his appreciation of the Director’s efforts but reiterated his view that a report should be submitted as quickly as possible.  In response the Director stated that he was willing to provide a general update for Members though he would be unable to comment on some issues because of the current legal situation.   The Chairman welcomed this offer and requested that non-financial issues such as reputation be included in the update.

·         A Member raised the issue of any monies owed by NCC to LGSS Law and asked if the company had been possibly rendered unsustainable as a result.  In response the Director stated that whilst NCC owed money there was no reason to think any debts would remain unpaid or that the company was insolvent.  The Director stated that, whilst it was not possible to guarantee that a similar situation would not happen at CBC, the working relationship between Members, officers and the Council’s external auditors was different from that at NCC.  Nonetheless, he stressed the continued need to be attentive and diligent when considering financial and governance issues.  The Chairman expressed his appreciation of the Director’s efforts and initiative in bringing forward this report.

·         A Member queried if CBC was assisting NCC.  The Director advised that NCC was receiving help and support from the Local Government Association.  He stated that he had not been approached to provide assistance and he was not aware that any other officer in CBC had either.

·         The Director confirmed that the Best Value Inspection Report had concluded that internal management action at NCC could have achieved the savings rather than through the use of LGSS.  He added that in the first year of CBC’s use of LGSS Law savings had been made.  However, this had not continued into the second year because LGSS had been asked to carry out a greater workload.

·         In the context of financial stability the meeting considered a comparison of the Council Tax income at NCC and CBC since 2013/14.  In response to a query by the Chairman regarding CBC choosing not to maximise its Council Tax income over a number of years the Director explained that this was a political decision.  The meeting was reminded that CBC had received some compensation for not raising its Council Tax in the form of a Council Tax Freeze Grant from 2013/14 to 2015/16.

NOTED

1          the findings of the Northamptonshire County Council Best Value Inspection;

2          the comparison of the financial and governance position of Central Bedfordshire Council with Northamptonshire County Council;

3          the recommendations to be implemented by management to Central Bedfordshire Council’s existing processes as a result of the recommendations outlined in the Best Value Inspection of Northamptonshire County Council.

RESOLVED

that the Director of Resources submit an update to the next meeting of the Audit Committee on the role of LGSS Law Ltd at Central Bedfordshire Council.