Chair to report.

The Corporate and Community Services Officer outlined the virtual meeting procedure and etiquette guidelines to the Committee and attendees and confirmed that all expected attendees were present.

No apologies were received.

To approve as a correct record the minutes of the meeting held on 9th June 2020 with the amendment to minute 80 as follows:

“requirement for the IT business manager to attend the September 2020 meeting of Governance to provide an update report on item CS17 01 Network Security from the audit recommendation tracker”.

RESOLVED that the minutes of the meeting held on 9th June 2020 (circulated previously) be approved as a correct record.

a)    Order of agenda

The Committee agreed to consider item 15 (Update on Business Continuity) of the agenda prior to item 7 (Half Yearly Report of the Chair of the Governance Committee).

(Please complete the form provided at the meeting or telephone Corporate and Community Services to prepare a form for your signature before the meeting. Interests must be re-declared when the item is called, and Councillors must leave the room if necessary.)

There were no declarations of interest announced.

Report by Emergency Planning Officer (attached).

The Committee considered the report by the Graduate Emergency Planning Officer regarding Business Continuity (circulated previously).

The Public Protection Manager and Graduate Emergency Planning Officer advised the Committee that:

The Committee were advised that:

·         the Cabinet Office had produced guidance in line with ISO 22301:2019 Security and resilience – Business Continuity Management Systems.  The proposal to refresh the current plans was deemed good-practice under this guidance.

·         Success would be measured against the reduction in impact or improvement of the Authority’s response when disruptions occur.

·         The Graduate Emergency Planning Officer would be studying for a Business Continuity Diploma from November 2020.

In response to questions from the Committee, the Graduate Emergency Planning Officer advised that:

·         Under the Civil Contingency Act 2004, Local Authorities had a duty to offer guidance and support to businesses and organisations in the area.  North Devon Council would look to continue this work should any further localised flooding occur.

·         She was not aware of any plans by the Government to change the parameters within which the Council would work in future.

·         The Council was looking at its own internal ability to respond to disruptions, with normal services being defined at a pre-determined level.

In response to a question from the Committee, the Head of Place advised the Committee that there were three major changes within Planning proposed within the White Paper which was currently out for consultation. The range of permitted dwellings had changed, along with the ability to now build at 3.5m above the ridgeline of a terrace or semi-detached dwelling under permitted development rules.  The Government consultation was due to end on 1^st October 2020, with a further consultation due to end on 31^st October 2020 which would provide a more detailed plan of the changes to the system.  A briefing regarding these changes would be presented to the Joint Local Plan Working Group on 22^nd September 2020.

The Business Information Systems Manager provided the Committee with an update in terms of the ICT systems in place. She provide an infographic (circulated separately) showing an overview of the network.  She advised the Committee that:

·         There was a layered defence approach in protecting the network.

·         A major risk was the possibility of cyber-attack. This was a tier one attack and as such the avoidance of this was a very high priority.  Principles employed to avoid this cover hardware, software and cloud provision. Firewalls and Anti-virus and malware software were being used. Network traffic was monitored in real-time.  Software and servers were updated monthly.

·         Procedures were in place which enable hardware (such as ipads) to be wiped remotely if required.

·         There were restrictions to access to the system, networks connections and online usage, to reduce the possibility of external access to the system via hack or virus.

The Chair thanked the Business Information System Manager for the work done by herself and her team in setting up the access for remote users in such a short period of time.

In response to questions  ...  view the full minutes text for item 87.

Report by the Chair (attached).

The Committee considered the Half Yearly Report of the Chairman of the Governance Committee (circulated previously).

RESOLVED  that the report be noted and proceed to Council for consideration.

Report by the Senior Solicitor and Monitoring Officer (attached).

The Committee considered the Annual Governance Statement (circulated previously).

The Senior Solicitor and Monitoring Officer advised the Committee that:

• The purpose of the Annual Governance Statement was to provide assurance that the Council had conducted its business in accordance with the law and proper standards, and that public money was safeguarded. The Statement helped to provide confidence in the governance framework by recognising, recording and publishing the Council’s governance arrangements.

·         The Annual Governance Statement set out the seven core principles in the governance framework, and the arrangements which were in place to meet the core principles.

·         Reference was made to the revised Corporate Plan, with its four objectives, and the Delivery Plan setting out specific actions.

·         In Part five, there was a review of effectiveness, covering Internal Audit and External Audit, the Local Government Ombudsman, the Peer Review, the Senior Management Team, Health and Safety and Information Management and Security. 

• As to issues of concern, one significant issue and two ‘other areas’ had been identified, with no additional risk areas being identified by either External or Internal Audit.

RESOLVED  that the report be noted and proceed to Council for consideration.

Report by the Senior Solicitor and Monitoring Officer (attached).

The Committee considered the Report: Recommendations to Update the Member Code of Conduct (circulated previously).

The Senior Solicitor and Monitoring Officer advised the Committee that:

• The Committee on Standards in Public Life (CSPL) had issued a letter to Local Authorities in July 2020 entitled “Local Government Ethical Standards” seeking to follow up recommendations made in the Committee’s report on ethical standards published in January 2019. In the report of 2019, the Committee had identified a number of recommendations of best practice, and in particular 15 specific recommendations, which local authorities were expected to implement.

• Although delayed by Covid-19, the purpose of the letter was to indicate that the Committee would be seeking feedback in the autumn as to each authority’s progress in implementing the recommendations.

• Whilst NDC did meet the recommendations of best practice in certain respects, such as in defining harassment and bullying within the Member’s Code of Conduct, other recommendations were more concerned with the processes involved in dealing with standards complaints. An up-dated process document, highlighting and incorporating many of those recommendations, would be brought to a future Governance Committee meeting.

• In the meantime, Recommendation two of the CSPL’s report could have been implemented by two minor additions to the existing Members’ Code of Conduct, as set out in Appendix 2 to the report.

RESOLVED that the Recommendations to Update the Member Code of Conduct report be noted and proceed to Council for consideration.

Draft report by the Head of Resources (attached).

The Committee considered a report by the Head of Resources (circulated previously) regarding the Statement of Accounts for 2019/20.

The Head of Resources highlighted the following points for the Committee:

·         (Draft) Statement of Accounts for year ended 31st March 2020 (signed 22nd July).

·         Normally the final date for publishing audited accounts was 31st July – this year due to Covid-19 this had been extended to 30th November 2020

·         The External Audit of the accounts (by Grant Thornton) had started on 8th September 2020 with a couple of ‘interim’ audit weeks having taken place in August 2020.

·         Audit Findings Report would be presented to the Governance Committee on 5^th October 2020, with the Accounts formally signed off at Full Council on 7th October 2020.

·         The narrative report sets out the challenges faced and how the Authority aimed to meet those challenges (Medium Term Financial Strategy MTFS) and reviewed the last financial year 2019-20.

·         Quarter 3 position reported at December 2019 forecasted a small net surplus of £6,000.

Favourable variances seen in last quarter since last reported position; most notably additional income through the collection fund, additional investment interest, lower borrowing costs and additional savings achieved throughout our staffing establishment achieved a net budget surplus of £241,000.  The main variances were detailed on the report.

·         It was proposed to allocate the balances into earmarked reserves as followed:

o   (£9,689) Museum Development – For the Museum garden path

o   (£17,144) Office Technology – ICT spend committed to but not paid in 19/20

o   (£46,000) Leisure Centre replacement – Works at Seven Brethren

o   (£18,000) Building Control Partnership reserve – 50% of surplus to protect against loss of income in 20/21

o   (£10,000) Harbour Repairs – Fender repairs

o   (£13,522) Lynton Agency – 19/20 works not completed due to COVID-19

o   (£100,000) Repairs fund – Additional contribution for planned maintenance

o   (£26,260) Legal Services – External Legal Fees

·         Level of Reserves held at 31 March 2020; General Fund of £1.161m 9.3% of net budget) and Earmarked Reserves of £5.395m

·         MTFS 2020-2024 would need to be refreshed and presented to Strategy and Resources in October/November 2020.

·         The original MTFS forecasted cumulative budget gap for 2020-21 to 2023-24 was £0m for 2020-21, £1.781m for 2021-22, £2.110m for 2022-23 and £2.678m for 2023-24.

·         Key Performance Indicators as reported in Quarter 4 Performance and Financial Management report that were presented to Strategy and Resources on 3rd August 2020.

·         The ‘Comprehensive Income and Expenditure Statement’ included a number of “non-cash” accounting entries that were subsequently reversed out so that they did not result in no impact the council tax payer.  End result was zero change in the general fund cash position of the Authority.

·         As per the Movement in Reserves Statement there were £9.7m in usable reserves, £28.9m in unusable reserves = Total net worth of £38.6m on the balance sheet. This was an increase of £11m on the prior year which the Head of Resources outlined the main movements to the Committee.

·         Pension fund net liability  ...  view the full minutes text for item 91.

Report by Customer and Corporate Services Manager (attached).

The Committee considered a report by the Customer and Corporate Communications Manager (circulated previously) in relation to Compensation Payments Made Under Delegated Powers.

The Chief Executive advised the Committee of the following in relation to the report:

·         There had been three compensation payments made over the six month period from January to June 2020 as covered by the report.

·         A total of £3,926 had been paid out:

o   £36 refund for a garden waste permit after multiple collections were missed.

o   £12 refund of a bulky waste collection which did not take place

o   £3,874 after the Local Government and Social Care Ombudsman found fault in the Council’s consideration of a planning issue.

The Head of Place advised the Committee that he took sole responsibility for the planning issue which lead to the compensation payment.  He had intervened in the issue with the two parties involved but once arriving at an agreed solution with all parties this had not been followed up.  The payment was made to the complainant so he could undertake works to the property to reduce the impact from the neighbouring development.

RESOLVED that the Compensation Payments Made under Delegated Powers report be noted.

Report by Devon Audit Partnership (attached).

The Committee considered a report by Devon Audit Partnership regarding the Internal Audit progress report for 2020/21 (circulated previously).

The Committee was advised of the following in relation to the Internal Audit Progress Report 2020/21:

·         The Head of Internal Audit’s opinion was of “Substantial Assurance” on the adequacy and effectiveness of the internal control framework

·         Covid-19 had impacted the way the Internal Audit work had been done. It was looking to perform the vast majority of the work remotely.

The Head of Devon Audit Partnership (DAP) advised that there had been changes to staffing at DAP with a new Manager starting in October.

RESOLVED that the Internal Audit Progress report be noted.

Report by Grant Thornton (attached).

The Committee considered a report by Grant Thornton entitled Informing the Audit Risk Assessment 2019-2020 (circulated previously).

The External Auditor (PB) confirmed:

·         The report set out the questions asked of the Authority. It was a standard suite of questions covering law, fraud, accounting estimates.

·         Historically the Auditors had contacted the Head of Resources as Section 151 officer and the Chair of the Governance Committee.  For this report the Senior Management and the Committee Members were to be consulted.

In response to questions from the Committee, the Head of Resources advised that the process of awarding business grants and assistance throughout the pandemic had enabled the Authority to update its Non Domestic (Business) Rates (NDR) records as there had been controls in place which identified those applicants on the NDR system prior to allowing an application to be submitted.  Further financial assistance through the discretionary scheme had also identified smaller businesses who had not advised the Authority of changes in their trade such as changes of address or new business.  The Authority also subscribed to ‘RV Finder’ which identified new business locations  and changes to current business premises via aerial mapping of the area.  Any anomolies were then investigated further and the Valuation Office informed where needed. 

RESOLVED that the Informing the Audit Risk Assessment 2019-2020 Report be noted.

Report by Grant Thornton (attached).

The Committee considered a report by Grant Thornton regarding the External Audit Progress report and Sector Update (circulated previously).

The External Auditor (PB) confirmed:

·         The report detailed the progress as at August 2020.  Many post-Covid audits were taking place remotely.

·         It was recognised that the Accounts for this Authority had been ready ahead of the pre-arranged deadline.  The extension to the end of November 2020 was for the completion of the Audit works.

·         The Value for Money (VFM) conclusion focused on the risk for the health of North Devon with specific mention on how 2019-20 had delivered and the challenges faced in 2020-21 and beyond (with the loss of income due to Covid-19).

The External Auditor explained that the report contained articles in relation to the “In-depth insight into the impact of Covid-19 on Financial Reporting in the Local Government”, “Future Procurement and Market Supply Review - Public Sector Audit Appointments (PSAA)” and “CIPFA Financial Scrutiny Practice Guide”. 

In response to a question from the Committee, the External Auditor (PB) confirmed that the Redmond Review findings had now been published

RESOLVED that the External Audit Progress Report and Sector Update be noted.

Head of Resources to report.

The Head of Resources provide the Committee with an update on the Business Grant Schemes.

In relation to the Small Business Grant and Retail, Hospitality and Leisure Grant Scheme, the Head of Resources advised that:

·         the schemes were announced on 11 March 2020 by the Chancellor in his Budget speech.  On 17 March 2020 the scheme was expanded on in the Chancellor’s announcement.  Detailed guidance was issued by MHCLG (Central Government) on 24 March, with the hope that payments would start to be made by early April. This guidance had changed a few times by the following week. On 25 March 2020, Civica the Software Company used by the Council, announced work on their grant module and associated form.  The Council’s Communications team planned and updated messages on Website for businesses and automatic phone messages with updated information throughout.

·         1 April 2020 £51million funding was paid to NDC. This was the largest allocation and number of eligible businesses in Devon, including the unitary Councils.

·         6 April 2020 the online form was transferred to NDC for testing and that went ‘Live’ on 9 April 2020. This was only two weeks after guidance received by MHCLG.

·         The NDC online form automatically integrated to the back office system, therefore applicants could only apply if ‘identified as eligible’ as it checked the back office system. A number of cross checks were carried out, including bank details that enabled an interface with an automatic payment system which allowed daily payment runs in the early days.  A much quicker end-to-end process for the business applying.

·         Even though the Authority may have been few days after some Councils with the form going live, assurance was gained which confirmed there was a competent online integrated process that carried out substantial checks (which a manual form would not have performed) and mitigated and reduced the risk of any fraudulent applications being paid.   Many Revenues and Benefits staff worked all Easter Weekend including the bank holidays plus the following weekend to deal with the initial surge of applications.

·         On 9 April 2020 the first payments were made (same day as go-live)

·         By 17 April 2020 almost 30% had been paid out (£12million in the first week)

·         By 30 April 2020 (three weeks from go-live) 65% had been paid out (£29million) to 2500 businesses.

·         As of 8^th September, £43million had been paid to 3775 businesses (96% of those eligible). 163 eligible businesses did not apply even though the Council tried numerous times to write, contact, persuade etc.   Grants had been awarded to 3775 of the 3802 applications so far.

·         Monthly assurance returns were made to MHCLG, outlining that risk assessments had been carried out.  In relation to the 3775 payments;

o   Four payments were identified where bank/Local Authority identified an error in the payment and/or account details (value £40,000); all four payments have been returned to the Council and no grants had been identified as fraudulent transactions.

o   Three grant payments were identified as non-compliant  ...  view the full minutes text for item 96.

Report by the Chief Executive (attached).

The Committee considered the Audit Recommendation Tracker report by the Chief Executive in respect of actions taken to address internal and external audit recommendations (circulated previously).

The Committee noted the following updates:

·         Table A detailed the ten live recommendations.

·         Table B confirmed that two recommendations had been completed since the last meeting of the Committee.

·         Table C detailed one recommendation for which a time extension was being requested.

·         It was noted that Recommendation 17 SRR 08 required an extension to allow for delays in the implementation of the automated process due to the pandemic.  Progress had reached 85% and could confidently be completed by the extension date requested.

·         Table D confirmed there were no outstanding Audit Recommendations.

RESOLVED that:

(a)          the actions completed since the 9th June 2020 Committee meeting be noted;

(b)          a time extension be granted for the recommendation as listed in table C; and

(c)          the Audit Recommendation Tracker be noted.

The Committee considered the work programme for 2020/21 (circulated previously).

RESOLVED that Work Programme 2020/21 be noted.