No apologies for absence were received.

Members were invited to declare any relevant interests.

Walter Leschenko, Independent Co-opted Member asked it be noted that he would be leaving the Meeting for Item No.15.

To confirm the Open and Exempt Minutes of the Meeting held on 5 July 2023.

The Open and Exempt Minutes of the Meeting held on 5 July 2023 were agreed as a correct record.

Actions from the last Meeting.

Members were referred to the Action Sheet, pages 15 to 18 of the Supplementary Agenda refer.

Members noted that the actions from previous meetings were confirmed as completed or in hand as follows:

An update to Action No. 18 was provided to Members and a copy of this is attached at Appendix A to the Minutes.

Matthew Waller, Internal Audit Manager, Assurance Lincolnshire advised Members that in relation to Action No. 10, he expected that the dates for completion relating to all of the outstanding recommendations would be raised at the Senior Leadership Team Meeting in October for a resolution, following which the updated information would be reported to November’s Committee Meeting

In relation to Action No. 45(c) a query was made whether a review on the progress would be undertaken and if this would be included in the next quarterly update.  The Internal Audit Manager advised Members that actions raised from audits were tracked and any overdue actions from the S106 Agreement Audit would be reported to Committee in the usual manner.

The Chief Finance Officer, PSPS Limited advised Members that she would send an email communication updating on Action Nos 45(a) and 45(b) outstanding from the Meeting held on 1 February 2023 by the end of the week.

Councillor Ros Jackson, Chairman of the Audit and Governance Committee provided Members with an update as follows:

Public Sector Audit Appointments (PSAA) had a useful website with details of the Consultation on the proposed 2023/24 Scale of Audit Fees.  The consultation was due to close on 10 October 2023.  Following which, the new fees would be set from 1 December 2023.

The Chairman advised Members that negotiation with the external auditors had taken place with a proposed increase of 151%, resulting in a cost to ELDC of £139, 067.  A Member strongly considered it was important to monitor the performance of the external auditors and highlighted the importance of being allocated an experienced auditor to attend meetings rather than a graduate.  It was further considered that that a penalty should be added to the contract for non-performance as in previous contracts there was no recourse for this.

Further to a webinar attended by the Chairman, Members were advised that high bids following the procurement exercise were due to a number of factors, including fewer auditors than in the past, problems in the private sector, high profile corporate failures and new audit requirements imposed by government including value for money arrangements.

Members were further advised that the government was working to reduce the current audit backlog and this could impact on the audit scale fee.  The PSAA was asking the Department for Levelling Up, Housing and Communities (DLUHC) for additional money due to the large increase in fees.

The Chairman advised Members that she and Councillor Jill Makinson-Sanders (Vice-Chairman) had attended an informal session with the Chairmen and Vice-Chairmen from Boston Borough Council and South Holland District Council to discuss collaboration and the work of the three committees across the Partnership and the difference in each Council’s Constitution.  A discussion had also taken place with regards to the review of the effectiveness of Audit and Governance Committee.

The Vice-Chairman added that there would be opportunities for training sessions to be shared across the three councils.

The Chairman stated that if any Members wished to put their observations forward, she would liaise with the Section 151 Officer for feedback to be put into a response to the PSAA consultation.

To receive a report from the Interim Treasury and Investments Manager.

The Chief Finance Officer, PSPS Limited presented Members with the Quarter 1 Treasury Management Update 2023/24, pages 1-26 of the Agenda refer, attached at Appendix A.

Members were informed that the purpose of the report was to provide the Committee with an update on Treasury Management Performance and activity to ensure best practice was maintained.

Key information was highlighted as follows:

·       The Council’s 2023/24 net budget for investment income was £3.071m. At the end of June 2023 investment income earned was estimated to be approximately £1.062m, which was £298k above the profiled budget on a straight-line basis.  This figure is still an estimate as the actual returns on all property funds to June 2023 are not likely to be known until late September 2023, Paragraph 2.4 of the Agenda refers.

·       The average level of funds available for investment purposes during the first quarter of the financial year was £74.3m excluding property fund investments, Paragraph 2.5 of the Agenda refers.

·       Property fund investments were estimated to have achieved an average net rate of 4.14%, Paragraph 2.7 of the Agenda refers.

·       The outturn for investment income for 2023/24 was forecast to be £4.492m which would be £1.421m above budget.  This would be monitored on a monthly basis to reflect changing market conditions, Paragraph 2.9 of the Agenda refers.

·       Further to the Economic Update (Commentary by Link Group), pages 11 to 12 of the Agenda refer, the Monetary Policy Committee had met and the bank interest rate was to remain at 5.25%.

Members were invited to put their comments and questions forward.

A Member referred to a recent training session held for Members that included treasury management and stated that the Council appeared to adopt a safe and prudent approach towards this.  A query was raised whether there was anything on the investment horizon that may be of concern to the Council.  The Chief Finance Officer responded that she was not aware of anything and assured Members that investments were under constant review with the Link Group.  Changes to investments that fell outside of the Council’s approved Treasury Strategy would require Full Council to approve a change in the Strategy.

A Member referred to the General Fund Capital Expenditure 2023/24 Table, page 25 of the Agenda refers.  Particular reference was made to the large increases to the budgets in relation to Disabled Facilities Grants, Environmental Services Vehicle Requirements and Climate Change Projects.  The Chief Finance Officer explained that the increase for the Climate Change Projects was approved after the budget was set, therefore it was a timing matter.  With regards to the other two items highlighted, this would be investigated and reported back to Committee.

The Vice-Chairman highlighted the 3G Football Pitch Project and queried whether it would be possible to get more details on the schemes so Members were better informed.  The Chief Finance Officer explained that the General Fund Capital Expenditure was to identify how the capital programme impacted on the Council’s investments available and was reported as part of the  ...  view the full minutes text for item 25.

To receive a report from the Group Manager, Insights and Transformation.

Suzanne Rolfe, Group Manager – Insights and Transformation presented Members with the Q1 Risk Management Report which set out the Q1 position for risk management as at 30 June 2023.  A copy of the Q1Strategic Risk Register was attached at Appendix A to the report, pages 33 to 40 of the Agenda refer.

Members were advised that a Risk Management Policy had been drafted for the Partnership.  This would be reviewed by Senior Leadership Team and Portfolio Holders in the first instance.  It would then come to Audit & Governance Committee for comment prior to Executive Board and then to Council for approval.  The aim was to bring this to the November meeting of Committee with Quarter 2 reporting.

It was highlighted that two new risks had been identified across the Partnership relating to the implementation of the Environment Act and the introduction of Extended Producer Responsibility.  These replaced the risk shown in the last report for Quarter 4 in July 2023 which had incorrect wording and had now been corrected and split into two risks, as set out in Appendix A.

Members were advised that items identified at Audit and Governance Committee and Overview Committee were being reviewed for reporting in Quarter 2, Paragraphs 2.3 and 2.4 of the Agenda refer and that a Partnership risk register was also currently in development.

Members were invited to put their comments and questions forward.

A Member queried what the route was if Members were aware of any risks not being addressed.  The Group Manager – Insights and Transformation advised the Member to contact her in the first instance.

Further to a query raised, the Group Manager – Insights and Transformation confirmed that she hoped to bring the revised risk management policy to the November Meeting.

A Member referred to CORP002 ‘Uncertainty of future Linchshore flood defence scheme’, page 33 of the Agenda refers.  It was highlighted that the impact consequences and wording seemed to evolve around the impact on economic growth, whilst there were other impacts to consider of equal importance, for example the threat to infrastructure, local services and housing and it was queried whether this was mentioned elsewhere.

The Chairman referred to Risk No. 19 ‘Implementation of the Environment Act’ and Risk No. 20 ‘Introduction of Extended Producer Responsibility (EPR)’, page 37 of the Agenda refers.  It was highlighted that the government had made recent announcements that the EPR would be delayed by a year and other factors would affect the Environment Act that would create uncertainty and queried whether this would impact the way that the risk register was mitigated.  The Group Manager – Insights and Transformation responded that the uncertainty was already quite high, therefore covered in the mitigation and advised Members that officers were involved in monitoring this and had responded to relevant consultations, however the risk register was currently being reviewed for Q2 which would take into account any further uncertainties since 30 June 2023.

A Member referred to CORP003 ‘Business continuity and recovery in the  ...  view the full minutes text for item 26.

To receive a presentation from the Head of Procurement & Contracts.

Martin Gibbs, Head of Procurement and Contracts delivered a presentation regarding the proposed Procurement Strategy for East Lindsey 2023 to 2026.

Members were advised that the draft strategy had been taken to all three councils across the Partnership and through the relevant scrutiny committees at each council with positive feedback and some suggested minor amendments made to the strategy document.

A copy of the presentation is attached at Appendix B to the Minutes.

Members were invited to put their comments and questions forward.

A Member asked for clarification whether the Council had previously had a procurement strategy in place.  The Head of Procurement and Contracts advised that the Council had previously had a joint procurement strategy with Lincolnshire County Council.

A Member highlighted declarations of interest for those involved with contracts and the need for transparency and openness in the decision-making process.  The Head of Procurement and Contracts concurred with this and advised as part of the process, if any person had a connection with a supplier they would be immediately be removed from the process.  The Monitoring Officer clarified that to give Members further assurance with regards to declarations of interest, this was covered under the Contract Procedure Rules in the Council’s Constitution and the Officer Code of Conduct.

A Member referred to the reference to local suppliers and savings across the Partnership and queried whether there were any quantifiable amounts, either as a percentage or as a figure where savings could be made.  The Head of Procurement and Contracts advised Members that a target was being worked on that would come through as part of the transformation plan purely on contract savings, for example an award was about to be made for a contract on a joint procurement process for mobile phones, looking at a saving circa £250k.

It was further queried as the procurement process was being scrutinised across the three councils whether there was any differential between it or whether the councils were in agreement in terms of how procurement was viewed across the Partnership.  The Head of Procurement and Contracts advised Members that all three councils had had the same ethos and approach to the strategy and considered that it had been well received, with all three documents being the same with the exception of each council’s corporate priorities.

A Member queried whether the team was adequately resourced to monitor the large number of contracts involved.

The Head of Procurement and Contracts advised Members that he had a team of seven and believed that the resource in place could effectively manage and monitor the contracts.  Members were advised that there were financial thresholds within the contract procedure rules, so anything above £40k was where procurement would definitely get involved as this would involve a request for a quotation or an invitation to tender.  It was highlighted that it was important to establish a relationship with the client officers at the councils early in the process so the procurement team could advise accordingly to get the  ...  view the full minutes text for item 27.

To receive an update from the Head of Procurement & Contracts.

Martin Gibbs, Head of Procurement and Contracts referred Members to a copy of the Exemptions Register, pages 57 to 60 of the Agenda refer.

Members were invited to put their comments and questions forward.

A Member thanked the Head of Procurement and Contracts for providing the information and stated that he would not like to see the list get too long.

Members were advised that since April 2023, the Council had signed off five exemptions.  The exemption process had been followed each time and the form initially reviewed by the Head of Procurement and Contracts or the Procurement Team.  It was then sent to the Section 151 Officer, the Chief Executive, the Portfolio Holder for Finance and the Portfolio Holder for the relevant service area for approval.

The Head of Procurement and Contracts provided further information for two areas highlighted as follows:

Regulatory (Building Control) – Interim Building Control Surveyors to cover vacancies in the ELDC Building Control Team, page 58 of the Agenda refers.

The Head of Procurement and Contracts advised Members that the Council had lost two members of the team in quick succession, and whilst going out to recruitment needed someone in to fill the post and noting that it was a post that was hard to recruit to.  Initially the Council went through a direct award framework which was a procurement compliant route with a company to get a building control surveyor in post.  However, this was unsuccessful in sourcing a suitable person into the role.  This contract terminated without any payment being made, and a number of other agencies were market tested and two people were resourced from G2 Recruitment and British Resourcing Group.  If a procurement process had been undertaken to get someone into the post there would have been a four to six-month gap with no surveyors in place which would have caused a real issue.

Growth – Interim Delivery Consultant to deliver Levelling Up Funding (LUF) Projects (x two entries), page 59 of the Agenda refer.

The Head of Procurement and Contracts advised Members that there had been a large delay in getting the funding in and then a further 9 to 10-month delay for work to start on the projects.  There was no resource in-house to do this amongst all the other projects that were ongoing.  Market testing was undertaken and an interview process, whereby an appointment was made employed on a consultant basis to ‘hit the ground running’.

A Member thanked the Head of Procurement and Contracts for the detail provided stating that it was interesting to see the history of the situation and whether any lessons could be learned.

A Member referred to the internal control and monitoring and queried where the information was held and if it was separate for each council or on one database.  The Head of Procurement and Contracts advised Members that the exemptions register was a separate spreadsheet and due to the very small numbers was not on a database.  All exemptions are added  ...  view the full minutes text for item 28.

To receive a report from the Internal Audit Manager, Assurance Lincolnshire.

Matthew Waller, Internal Audit Manager, Assurance Lincolnshire presented the Internal Audit Report - Lessons learnt concerning the creation of and early operation of Invest East Lindsey, pages 61 to 96 of the Agenda refers and Members were asked to consider the report and associated action plan.

Members were advised that the Council asked Assurance Lincolnshire to review the set up and governance arrangements for Invest East Lindsey Limited.  They approached the review with a strong emphasis on governance, including effective decision-making process and set up of the company.  The outcome of this audit was designed to improve the Council’s governance arrangements going forward.

The completion of this audit had been significantly delayed due to factors within the Audit team, meaning some of the findings were out of date and recommended actions were already completed.  They were kept in for transparency and management comments had been added in green boxes to show progress and clarify the current position where relevant.  Due to the delay, interim findings were provided to the Council, enabling work to start on those areas of focus.

Rebecca James, Scrutiny and Policy Officer advised Members that following the interim feedback already received, fifteen of the actions had been completed and the outstanding items were due to be completed by December 2023.

Appendix A summarised the findings within the Executive Summary Section, pages 68 to 79 of the Agenda refer.  These were also summarised into an action plan which can be found at Appendix B, pages 19 to 28 of the Supplementary Agenda refer.  It was noted by the audit team that due to the interim feedback given during the review and the delay in reporting the final audit outcomes, some of the recommendations had already been actioned.  This was highlighted throughout the report in the ‘management comments,’ which were all contained within green text boxes to make them easy to find.

The Internal Audit Manager drew Members’ attention to Paragraph 1.6, page 69 of the Agenda refers as a key statement.

The Internal Audit Manager stated that he was happy to share some examples from the action plan where the detail was to address the issues that had been raised.

The Chairman invited Councillor Richard Fry, Portfolio Holder for Finance and Chairman of the Invest East Lindsey Supervisory Board to address the Committee.

Councillor Fry thanked the Internal Audit Manager for the very valuable report and stated that from his perspective and the positions he held that he accepted the conclusions that had been drawn and was happy for the suggested improvements to be adopted and would commit to the process going forward.

Following which, Members were invited to put their comments and questions forward.

A Member queried why a Director’s Handbook had not been completed during the four years the company had been trading, Paragraph 1.22 of the report refers.  In response, the Scrutiny and Policy Officer advised Members that directors received training and copies of all of the relevant company documents and the business plans, however  ...  view the full minutes text for item 29.

To receive a report from the Assistant Director, Governance and Monitoring Officer.

John Medler, Assistant Director, Governance and Monitoring Officer presented Members with a report to consider the appointment of Members to the Constitution Working Party, pages 87 to 100 of the Agenda refer.  The working party supported the Audit and Governance Committee to undertake its Terms of Reference (ToRs) with regards to monitoring and reviewing the operation of the Council’s Constitution to ensure that the aims and principles were given full effect, taking account of advice from the Monitoring Officer.

Members noted that the three Members appointed to the working party prior to the district elections in May 2023 were Councillors Ros Jackson, Jill Makinson-Sanders and Will Grover.  All three Members were re-appointed to the Audit and Governance Committee post the district elections, following which it was proposed and seconded that Councillors Ros Jackson, Jill Makinson-Sanders and Will Grover remain appointed to the working party.

In response to questions Members were informed that the ToRs of the Working Party allowed three members.

Following a discussion, the Monitoring Officer advised that if any Member of the Council wished to input or raise constitutional matters they were welcome to do so.  It was further clarified that the membership had to be from the three main political groups.  Although there was no specific requirement for this, it had been previous practice for the Chairman and Vice-Chairman to be appointed to the working party.

A Member queried whether the ToRs could be changed to allow for four members.  The Monitoring Officer responded that Members’ thoughts on any changes should be presented to the Constitution Working Group.

Upon being put to the vote, it was

RESOLVED:

That Councillors Ros Jackson, Jill Makinson-Sanders and Will Grover be appointed to the Constitution Working Group.

To consider the Audit & Governance Committee Work Programme 2023/24.

Members were presented with the Audit & Governance Committee Work Programme 2023/24, pages 101 to 104 of the Agenda refer.

A Member queried whether the Review of the Effectiveness of the Audit and Governance Committee would be presented to Committee before the Annual Audit and Governance Committee Report 2022/23.  The Chairman explained that this was not possible due to timings but confirmed that this would be added as a training element to the work programme.

The Chairman highlighted the following to be added to the work programme:

·       An annual update on Invest East Lindsey.

·       The Section 106 Audit Review (November 2023 or January 2024)

Following which it was,

RESOLVED:

That the Work Programme 2023/24 be noted.

The programmed date for the next Meeting of this Committee will be Wednesday 22 November 2023.

The date of the next Meeting was confirmed as Wednesday 22 November 2023.

N.B.  Walter Leschenko, Independent Co-Opted Member left the Meeting at 12.16pm.

That under Section 100 (a)(4) of the Local Government Act 1972, the press and public be excluded from the meeting for the following item on the grounds that, if they were present, there could be disclosed to them exempt information as defined at paragraphs 1 and 2, Part 1 of Schedule 12A to the Act (as amended).

RESOLVED:

That under Section 100 (a)(4) of the Local Government Act 1972, the press and public be excluded from the meeting for the following item on the grounds that, if they were present, there could be disclosed to them exempt information as defined at paragraphs 1 and 2, Part 1 of Schedule 12A to the Act (as amended).

To receive a report from the Assistant Director, Governance and Monitoring Officer.

An exempt report was submitted by the Monitoring Officer which enabled Members to consider the recruitment and appointment of Co-opted Independent Members to the Audit and Governance Committee, pages 105 to 104 of the Agenda refer.

RESOLVED:

That the Recommendations contained within the exempt minute be agreed.