Agenda item

REPORT OF THE DEPUTY CHIEF EXECUTIVE

To consider the purpose of the Sub-Committee and its Terms of Reference.

RESOLVED:  That the content of the report be noted and taken into account when considering future reports to the Sub-Committee

REASON FOR DECISION:  To ensure that the sub-committee understands its role in taking forward commercial activities through trading companies.

The Deputy Chief Executive presented a report informing Members of the purpose of the Sub-Committee, specifically its role and function in the operation of the Council’s commercial activities operated via trading companies.  The following appendix was submitted with the report:

Appendix A - Extract from Council Constitution setting out Sub-Committee’s terms of reference.

The Deputy Chief Executive advised that the overall spirit of the Terms of Reference was that the Sub-Committee should consider as shareholder all those matters that related to the Council’s ownership or potential ownership in wholly or partly owned local authority companies.  Given that the Terms of Reference were based on examples found in other authorities, it would of course be necessary to keep these under review as the Council’s involvement in such companies developed.  In this regard, proposals will be put to the 10 April 2018 Council meeting as part of the Constitution Review report to amend the Terms of Reference so as to clarify the proactive approach of the Sub-Committee in considering matters relevant to local authority companies, prior to the establishment of the relevant company by Cabinet.

The Deputy Chief Executive explained that there were elements of the decision making around trading companies which were not the responsibility of the Sub-Committee.  The Cabinet’s terms of reference included the following, which was added in the 2017 Constitution Review:

“5.6.34     To agree to the establishment or wind up of a Council wholly or partly owned Local Authority Company, and to approve investment, loans, resource arrangements and asset transfers, act as corporate shareholder, save as otherwise delegated to the Cabinet Sub-Committee (Local Authority Trading Companies’ Shareholder), Executive Members or Officers under the Sub-Committee terms of reference.”

The Deputy Chief Executive stated that there would be many decisions that were the responsibility of the directors who would be appointed to manage the company.  The role of the Sub-Committee was to maintain an oversight on the company and to take ownership decisions, as defined within the memorandum and articles of association establishing the company.  Those areas of responsibility could, in theory, be different from company to company, but in practice were likely to be broadly similar.  Members would be fully aware of the need for a trading company to be ‘light on its feet’ and be able to make commercial decisions quickly (ie. ‘act commercially’), without local authority processes unnecessarily slowing down those decisions. Therefore, it was anticipated that the emphasis would be on delegating decisions to the directors wherever it was sensible to do so.

The Deputy Chief Executive reminded Members that the Sub-Committee’s decisions were subject to scrutiny, and that with a quorum of three Members, the Delegation arrangements included as part of Appendix A to the report provided emergency arrangements should a decision needed to be made in the event that it was not possible to convene a quorate Sub-Committee meeting within suitable timescales.

In response to a Member’s question, the Chief Executive confirmed that Careline was not included in the remit of the Sub-Committee, as it was currently a service provided by the Council.  However, if Careline showed an on-going net surplus, then there was the possibility for its governance arrangements to be reviewed, with the further possibility of it being added to the Sub-Committee’s remit in the future in the event that it was determined that the service should be delivered through a company structure.

RESOLVED:  That the content of the report be noted and taken into account when considering future reports to the Sub-Committee

REASON FOR DECISION:  To ensure that the sub-committee understands its role in taking forward commercial activities through trading companies.