Agenda item

Purpose of the report: For the Council Overview Board to call the Shareholder Board to account for decisions it has taken in relation to any company for which the Council is a shareholder and for any returns it is making.

Declarations of interests:

Colin Kemp declared that he was a member of the Cabinet at Woking Borough Council and was therefore involved in decisions relating to Bandstand Square Developments Ltd, one of the companies overseen by the Shareholder Board.  He remained in the room but took no part in the discussion on that part of the report.

Witnesses:

David Hodge, Leader of the Council

Peter Martin, Deputy Leader of the Council

Julie Fisher, Deputy Chief Executive

Susan Smyth, Strategic Finance Manager

Key points raised during the discussion:

1     It was noted that it was the role of the Investment Advisory Board to make recommendations about whether or not to invest in opportunities which arose, whereas the Shareholder Board took a strategic view of the investments and reviewed the financial performance of the companies in which the Council owned shares.  Both Boards were effectively sub-groups of the Cabinet, and final investment decisions were taken by Cabinet.  The directors of individual companies decided on the support they required, including finance officer support.

2     The Council Overview Board’s role was to scrutinise the Cabinet decisions and the work of the Shareholder Board, but it was not able to directly scrutinise the performance of individual arm’s-length companies in which the Council was a shareholder.  This was an issue which the Board would discuss further as part of the review of the ‘scrutiny in a new environment’ item at its next meeting.

3     It was felt that the presentation of the financial information in Annex C could be improved, including the addition of a column showing the return on the investment/capital.

4     In relation to Surrey Choices, it was reported that the Shareholder Board had deferred its scheduled review of the company’s business plan review at its last meeting following the resignation of the Managing Director.  No decision had therefore been taken in relation to the provision of additional funding for Surrey Choices.  The Leader of the Council reported that the reasons for creating the company were sound, and that the organisation had delivered better services for residents.  It was commented that the company summary on page 48 of the report didn’t list loans provided by the Council, and it was agreed that this would be addressed in future reports.  The Board also commented that the assertion that the company was providing services at a lower cost than the previous arrangements needed to be verified.

5     A question was asked about why Halsey Garton Property Ltd invested in property outside Surrey, and it was noted that a key objective was to achieve a broad spread of investment types to optimise returns and resilience, and that could not be achieved by only investing within the County.

Bob Gardner left the meeting at 11.25am and returned at 11.27am.

6     It was noted that there was a need to review the business strategy of Babcock 4S Ltd as a result of academisation.  Further details were requested about the company’s unrealised pension liability loss, and it was agreed that an explanatory note would be circulated to Board members.

7     It was reported that 50% of the Council’s investment in Future Gov was in the form of a loan and 50% was share capital.  The company had been successful in marketing its software outside the UK, notably in Australia, but had not had the domestic success it had expected.  It was therefore refocusing its activity more on the consultancy side.

Colin Kemp left the meeting at 11.35am and returned at 11.38am.

Resolved:

(a)   That the issue of ensuring effective scrutiny of arm’s-length companies be addressed by the Council Overview Board as part of the review of ‘scrutiny in a new environment’ in July 2016.

(b)   That further scrutiny in relation to Surrey Choices be scheduled once the Shareholder Board had completed the review of its business plan.

Action by: Ross Pike

RECOMMENDED (to Cabinet):

(a)   That that the future presentation of financial information to the Council Overview Board should be improved, including the addition of a column showing the return on the investment/capital for each company.

.

Actions/further information to be provided:

Further details to be provided about the unrealised pension liability loss incurred by Babcock 4S.

Action by: Susan Smyth

Board Next Steps:

Scrutiny of arm’s-length companies to be addressed by the Council Overview Board as part of the review of ‘scrutiny in a new environment’ in July 2016, and further scrutiny in relation to Surrey Choices be scheduled once the Shareholder Board had completed the review of the business plan.