Agenda and minutes

RESOLVED that the Minutes of the meeting held on 4 July 2012 are correctly recorded and that they be signed by the Chairman.

(1)       The Corporate Director of Finance and Procurement invited approval of two minor amendments to the Protocol. The first of these was the addition of a final sentence to paragraph 7 (d) to read: “Where a company adopts its own policies, assurance must be provided that adequate policies and procedures are in place, with particular reference to anti-fraud and corruption.”

(2)       The second change proposed by the Corporate Director of Finance was the insertion of a new paragraph 7 (e) to read: “that appropriate due diligence has been completed which must include an evaluation of the background, experience and reputation of the company and/or the proposed and existing directors.”

(3)       RESOLVED that the Governance and Audit Committee be recommended to approve the proposed amendments to the Protocol set out in paragraphs (1) and (2) above.  

(1)       The Corporate Director of Finance and Procurement reported on the County Council’s dormant companies. He explained that “Produced In Kent” was very likely to take the decision not to dissolve the domain name “kentishfare.co.uk” but to transfer ownership of that name to itself.

(2)       RESOLVED that the report be noted for assurance, including the progress in dissolving the County Council’s dormant companies.

(1)       The Corporate Director of Finance and Procurement presented the latest available Statutory Accounts for those companies in which KCC had an interest. 

(2)       The Interim head of Internal Audit explained that an accountant had been employed to produce 2011/12 accounts for Kent Cultural Trading Ltd.   She would ascertain whether accounts for this company had been produced for 2010/11 when it had been largely dormant.

(3)       The Sub-Group agreed to meet again in February 2013 in order to review the 2011/12 accounts of all those companies where only the 2010/11 accounts were currently available and that it would thereafter meet in February each year in order to consider the final Statutory Accounts.

(4)       RESOLVED that in respect of those companies in which the County Council has an interest:-

(a)       the latest available Statutory Accounts be noted for assurance;

(b)       a further meeting of the Sub-Group be held in February 2013 to review the 2011/12l Statutory Accounts for those companies where only the 2010/11 accounts are currently available; and

(c)        the Sub-Group will consider the final Statutory Accounts for those companies in February each year.

(1)       Mr B J Sweetland, Cabinet Member for Environment, Highways and Waste explained that Commercial Services was a non-budget funded division of the County Council which funded itself from income generated by its own activities. It had made a net return to the County Council of £7m for the year 2011/12.

(2)       Mr Sweetland had taken over responsibility for Commercial Services in May 2011 and had asked the Corporate Director to commission a review.  This review had been undertaken by BDO and Eversheds and had identified areas for improvement in terms of transparency, particularly in respect of its ability to demonstrate the arms-length nature of the business.

(3)       The Corporate Director, Environment and Enterprise said that following an individual assessment of Commercial Services’ 26 business units, it had been decided to reconfigure them into 5 client-facing divisions.  A Board had been established by the County Council in December 2011, consisting of Cabinet Members (Mr Gough, Mr Simmonds and Mr Sweetland) and senior officers.

(4)       The Managing Director, Commercial Services informed the Panel that each member of staff in Commercial Services contributed on average £8,000 and an overall reduction in Council Tax per household equating to @  £22 per person per year.  84% of its turnover was from clients outside County Council controlled budgets.  It was now appropriate to develop a simpler and more effective structure away from KCC. The staff were fully engaged and supportive, and discussions with the Trade Unions had been constructive.

(5)       The Managing Director, Commercial Services then explained that the proposal was to simplify the current operating model from managing under five limited companies to two specific company structures.  One would be a “Teckal”-compliant company, trading exclusively with the County Council. The other would enable Commercial Services to trade with the wider public and private sector under the auspices of Section 95 of the Local Government Act 2003.   The client-facing divisions would continue as before, covering the areas of Education, Energy, Care, Employment and Direct Services.

(6)       The Managing Director, Commercial Services replied to Members’ questions by saying that it would be inappropriate to bring EduKent under the Commercial Services umbrella as it was a customer-led company which did not operate in order to make money.  Commercial Services, in contrast, was a customer-focussed operation.  The only “Teckal” businesses operating would be those that could demonstrate value for money.  In future, all monies would be accounted for in a single set of figures. The two companies would therefore account for the entire Commercial Services turnover.

(7)       Mr Sweetland said that the new structure would enable Commercial Services to demonstrate that it was not being cross-subsidised by the County Council.  This question had previously been blurred in the public mind.  He added that although there were two companies which had consistently raised doubts about Commercial Services’ method of operation, there were more than 60 others which had been helped by its work.  It was not only necessary to comply with all rules,  ...  view the full minutes text for item 12.