Management Group Meeting 10.00am, Friday 22 November …...Pera Business Park, Melton Mowbray AGENDA 1. Apologies 2. Declarations of Interest 3. Minutes of meeting held on 6th September

Management Group Meeting

10.00am, Friday 22nd November 2019

Pera Business Park, Melton Mowbray

AGENDA

1. Apologies

2. Declarations of Interest

3. Minutes of meeting held on 6th September 2019 *

4. Matters Arising

5. Political Advice and Leadership *(Cllr Martin Hill)

6. Budgets and Financial Control *(Cllr David Mellen)

7. Budget 2020 Options *

8. Performance Management *(Cllr David Bill)

9. Corporate Governance *(Cllr Jonathan Morgan)

10. Conduct and Standards *(Cllr Alan Rhodes)

11. Executive Board (6th December 2019)* Papers attached

Item 3

EAST MIDLANDS COUNCILS MANAGEMENT GROUP MEETING MINUTES OF THE MEETING HELD ON 6TH SEPTEMBER 2019

Present: Cllr David Mellen – Nottingham City Council Cllr Martin Hill - Lincolnshire County Council Cllr David Bill – Hinckley & Bosworth Borough Council Cllr Jonathan Morgan – Charnwood Borough Council Cllr Alan Rhodes – Nottinghamshire County Council Stuart Young - East Midlands Councils Lisa Hopkins – East Midlands Councils

Apologies: Cllr Roger Blaney – Newark & Sherwood District Council Cllr Jason Zadrozny – Ashfield District Council

ACTION 1. Apologies

1.1 Apologies were received from Cllr Roger Blaney & Cllr Jason Zadrozny.

2. Declarations of Interest

2.1 Cllr Martin Hill declared an interest in land on the edge of Melton Mowbray – this is a standing Declaration of Interest held on file since September 2015.

3. Minutes of the meeting held on 24th May 2019

3.1 These were confirmed as a true and accurate record.

4. Matters Arising

4.1 These are all covered in the agenda.

5. Political Advice and Leadership

5.1 Cllr Martin Hill introduced this report and Members considered the implications for EMC of the following issues:

1

Item 3

ACTION

5.2

5.3

5.4

5.5

5.6

5.7

5.8

5.9

5.10

5.11

5.12

Midlands Engine It was noted there is a new programme director at Midlands Engine and the partnership is undertaking a strategy refresh.

Brexit Authorities have been given extra funding to prepare for Brexit and each council is requested to identify a Brexit Lead Officer.

Port authorities have been allocated additional funding. Contingency plans are in place for East Midlands Airport in relation to traffic management.

Local Authorities are encouraging local communities to sign-up to the EU Settlement Scheme and will continue to look at local particiipation rates.

HS2 A review of HS2 (the Oakervee Review) has been announced.

Cllr David Mellen expressed concerns and implications for the East Midlands in relation to this review. East Midlands Councils will be submitting a response to the Oakervee review.

Members stressed the need to engage with Leeds and Newcastle (HS2 East Line) as they are also key members to work with. It was reported that the Northern Powerhouse do have a ‘plan B’ should HS2 be scrapped.

Stuart Young highlighted the key risks for East Midlands Councils should HS2 be scrapped – it is part of our work programme and have led on this since 2010. There are also clear financial implications given HS2 programme budgets.

Spending Round This has been announced this week.

Framework for devolution is still awaited. Also, the LEP overlap is still to be resolved.

Public Investment The levels of public investment in the East Midlands remains low. Stuart Young presented the latest PESA figures and the implications for the region.

Cllr David Bill enquired around the Midlands Connect priorities and how they

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Item 3

ACTION 5.13

5.14

5.15

align to the priorities of the East Midlands.

Stuart Young confirmed that the A5, A46, Midlands Rail Hub and access around the airport are all schemes which need to be promoted. Stuart Young to prepare a paper for Executive Board outlining all schemes.

Resolution

Members of the Management Group: Noted the Board membership for 2019-20 and considered the issues

highlighted in this report.

SY

6. Budget and Financial Control

6.1

6.2

6.3

6.4

6.5

6.6

6.7

6.8

Stuart Young introduced this report and informed members finance pressures haven’t changed since the last meeting. A surplus of £19,900 is still forecast. This is largely due savings in staffing costs and Northamptonshire CC paying their subscription.

External grant funding has been secured and Stuart is confident that the trading income will be met.

However, there are concerns over the 2020/21 budget due to the impact of HS2, Midlands Connect and the political situation. However, there is confidence that the Home Office grant will continue.

Strategic transport monies are being held for next year.

Stuart highlighted member subscriptions which have been frozen for the last 7 years and also the charging base which has been frozen for the last 5 years. Members asked officers to develop options for a potential 2, 3 or 5% increase. Members preferred smaller increases as part of an annual inflationary uplift in subscriptions.

A report to be prepared for the next Management Group for various options for increase in fees and subscriptions.

Stuart Young confirmed that all liabilities are fully covered.

Cllr Martin Hill enquired on the member development deficit as this is a persistent ‘hit’. Stuart confirmed that the member take up on events is

SY

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Item 3

ACTION

6.9

6.10

disappointing, however the office training numbers are good.

Cllr Jonathan Morgan suggested online training and if this could be offered out more?

Resolution

Members of the Management Group: Noted the actual financial position for the period to late August 2019

and the associated forecast outturn to 31st March 2020.

SY

7. Performance Management

7.1

7.2

7.3

Stuart Young introduced this report. He informed members that the APPG meetings were positive, however the member development KPI is an area of concern.

Cllr Martin Hill felt that the website stats are not a perfect measure of engagement and different social media platforms could be explored.

Resolution

Members of the Management Group: Considered the progress in meeting the agreed key performance indicators

for 2019/20. Considered any areas of risk to the achievement of these KPIs.

8. Corporate Governance

8.1

8.2

8.3

8.4

Stuart Young introduced this report.

New Member Leads were discussed and agreed as follows:

Cllr Jonathan Morgan – Corporate Governance Cllr Alan Rhodes – Conduct and Standards Cllr David Bill – Performance Management

Stuart Young reported on the Risk Register. Changes in Northamptonshire will be a risk in 2021/22.

A substantive report to be prepared for the next meeting to also include

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Item 3

ACTION

8.5

8.6

8.7

national political changes.

Organisational resilience needs to be reviewed and this is an issue that internal audit will be asked to consider.

External audit is almost complete, however a number of issues remain outstanding, e.g. confirmation of level of cash reserves and until these are resolved the external auditor will not be in a position to sign-off the accounts.

Resolution Members of the Management Group: Noted the internal audit overall opinion and arrangements for an external

audit review. Noted the summary position on organisation risk. Considered arrangements and supporting material for Executive Director’s

annual appraisal.

SY

9. Conduct and Standards

9.1

9.2

Stuart Young introduced this report and confirmed there have been no standards complaints submitted or corporate governance issues highlighted.

Resolution Members of the Management Group noted the contents of the report.

10. Executive Board

10.1 Members agreed the agenda for the EMC Executive Board: Board updates Government Spending Round Public Investment in the East Midlands SY

11. Any Other Business

11.1 None.

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Item 5

Management Group

22nd November 2019

Lead Member Report

Cllr Martin Hill OBE

Political Advice and Leadership

Summary

The following report provides a summary of developments that relate to wide political developments and local government in the East Midlands.

Recommendation

Members of Management Group are invited to consider the issues highlighted in this report.

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Item 5

1. Introduction

1.1 The following report provides a summary of significant developments that relate to local government and wider governance in the East Midlands.

2. Midlands Engine

2.1 Local Government Secretary Rt. Hon Robert Jenrick MP was confirmed as the new Ministerial Champion for the Midlands Engine.

2.2 The Government is currently developing a refreshed Midlands Engine strategy. Whilst the strategy will be a Government document, the Communities Secretary, as Midlands Engine Champion, is committed to working closely on developing the strategy with regional partners to enable a clear focus on the right areas and the delivery of the strategy.

2.3 The scope and focus of the Midlands Engine going forward may be dependent, ultimately, on the election of a new Government although plans continue to deliver some of its major initiatives, Regional China Summit.

2.4 Midlands Connect has secured its core funding for a further year until March 2021 with DfT rolling forward its funding commitment.

3. Brexit

3.1 In the run-up the 31st October 2019, Councils were requested by MHCLG to appoint a ‘Brexit lead’ to work with central government in order to ramp up Brexit preparations and ensure councils (and national Government) were fully prepared to leave the European Union by the end of October 2019.

3.2 As is evident, Brexit did not happen as anticipated on 31st October 2019 with the Prime Minister formally accepting the EU's offer of a Brexit extension until 31st January 2020. With a General Election called soon thereafter, ‘Operation Yellowhammer’ and weekly Brexit reporting has been stood down.

3.3 While we have stood down the ‘formality’ of weekly reporting, in the run-up to the General Election we are maintaining weekly engagement with MHCLG on Brexit matters. As part of this, if there are issues that councils would like to raise, then EMC will continue to follow these up with MHCLG colleagues.

3.4 It is anticipated that arrangements will be stood back up again the week following the General Election and EMC is planning to increase its activity in line with MHCLG ‘battle-rhythm’ (their words).

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Item 5

4. HS2

4.1 There has been considerable uncertainty in relation to HS2 – exacerbated by significant increases in (re-profiled) cost. The initial budget for the high speed rail line was £57bn, new estimates put this figure closer to £100bn.

4.2 The Prime Minister directed that a review into HS2 be undertaken. Rail expert Doug Oakervee (previous HS2 Chairman) was asked to chair the review with the apparent brief being to look for waste or cost re-profiling rather than to lead to cancelling the scheme.

4.3 Leaked documents suggest that the draft recommends that HS2 should be built with only relatively minor alterations but that the project is ‘not affordable’ within the £56bn budget set in the 2015 spending review, and warns the new £88bn estimate is likely to be revised upwards again. The likely outcome of the review is borne out by criticisms by Lord Berkeley, the deputy-chair of the review panel and a vocal critic of HS2, who said about the review, "I cannot support its conclusions or recommendations.”

4.4 The full report, however, will not be published until after the election.

5. Devolution

5.1 The Prime Minister has pledged more devolution to councils and communities with a commitment to give communities a greater say on transport, housing, public services and infrastructure.

5.2 The promised devolution framework has still not been published. This has been postponed due to the general election.

5.3 There have been a number or recent statements regarding the future of the two-tier system, although this has been tempered by other comments that refer to there not being ‘a one size fits all model [that] doesn’t have to mean abolishing the current two-tier government system as not in the spirit of devolution’. Alongside this, there is continued emphasis on the preference for unitary authorities ‘in order to make efficiencies and decisions on a more strategic and larger scale canvas but that there is no intention to impose from above’.

5.4 These statements illustrate the lack of clarity although do suggest that devolution and local government reorganisation will be issues that gain prominence after the election.

6. Recommendation

6.1 Members of Management Group are invited to consider the issues highlighted in this report.

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Item 5

Cllr Martin Hill OBE Chairman East Midlands Councils

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Item 6

Management Group 22nd November 2019

Lead Member Report

Audit and Finance Control

Budget Monitoring Report Period - April 2019 to October 2019

Summary This report presents the accounts for the period April 2019 to October 2019. This is the third set of management accounts presented to Management Group for the financial year 2019/20 continuing the format showing the main budget heads, specifically: Core Services, Contracts and Grants, Consultancy, Member Learning and Development, Fee Paying Events and Services. Recommendation Members of the Management Group are invited to: Note the actual financial position for the period to the end of October 2019 and

the associated forecast outturn to 31st March 2020. Agree the proposal to invest £500,000 of current reserves in a fixed term interest

bearing account or bond.

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Item 6

1. Key Points 1.1 The budget set for 2019/20 originally showed a surplus of £6,400. Since then

£4,000 net savings emanating from a staff vacancy have been found and Northamptonshire County Council have agreed to renew their subscriptions of £9,500, which means the end of year forecasted surplus has increased to £19,900.

1.2 The longer term viability remains vulnerable as much of the grant and contracted income is only secured on a short term basis. During the course of the year, these reports will include updates on the budget position for next financial year (2020/21). The latest update is included in paragraph 9, below.

1.3 This report, and appendices, highlights the current financial position for each of the cost centres, together with an end of year forecast. Actuals to the end of October include only ‘banked’ or ‘committed’ savings and/or additional income invoiced at this time. Work continues in identifying and achieving further savings. Any concerns during the year are raised with staff and, if necessary, at Management Group meetings. This practice enables Management Group to monitor the progress made to achieve the surplus and make timely contingency arrangements if necessary.

2. Financial Report Period Ending October 2019 2.1 The financial statement, attached as Appendices 6 (a-f), details the summary

financial position for the period up to the end of October 2019; in total and for each of the cost centres. It also provides a forecast for the outturn as at 31st March 2020.

2.2 The staffing budgets are allocated to each cost centre on the basis of the

estimated time spent by staff on each activity. 2.3 Corporate staff, those not working on specific grant funded projects, and

other corporate costs are allocated on an agreed percentage basis across all of the 5 key areas of work. The corporate staff costs have been assimilated into the staffing costs for each cost centre together with the other corporate costs (rent, service level agreements, etc.) and are shown as overhead costs across all cost centres.

3. Staffing 3.1 The staffing budget stands at £691,600 and includes the 2% pay award plus

any associated incremental payments which have been paid from April 2019.

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Item 6

3.2 Three members of staff are employed on fixed term contracts, which are dependent on the continuance of specific grants and contracts.

4. Income 4.1 Income to East Midlands Councils is split between:

Membership Subscriptions. Grants and Contracts, of which there are six: Migration Grant, Vulnerable

Persons’ Resettlement Grant, Unaccompanied Asylum Seeking Children’s (UASC) Grant, English as a Secondary or Other Language (ESOL) Grant, which are all funded by the Home Office in the form of grants; Midlands Connect and HS2, both of which are secured through contracts.

Earned Income, which consists of a mix of consultancy work, services, events and courses provided to member authorities.

Seconded staff to local authorities, of which there is now only one. Sponsorship, which has hitherto been generated to cover event costs.

4.2 Membership Subscriptions budget includes South Holland District Council who

have continued in membership. It also includes Northamptonshire County Council who remain as a member authority and have renewed their subscription.

4.3 Grant levels are at a similar level to last year and these are secured by

contracts / agreements. 5. Direct Costs 5.1 Direct costs relate to, and are charged directly to, cost centres from source,

they include: room hire, catering, professional fees, travel costs/mileage and event publicity costs.

6. Corporate Costs 6.1 These costs include premises rent; computer and office equipment; service

level agreements; external / pension valuation costs; publicity / website costs; telephone, stationery, printing and materials. The cost of these are initially charged in full to the Core Funds cost centre and then apportioned across all cost centres as overhead costs, though the largest proportion is retained within core services.

6.2 The allocation of corporate costs charged as overheads to cost centres totals

£77,200 which is £1,200 less than last year and is due to savings made following negotiations for a new photocopying contract.

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Item 6

7. Rechargeable Items 7.1 In addition to all costs and income associated with the five cost centres, there

are currently a number of projects that have either started, or are in the process of being set up, where EMC acts as a conduit to disperse the funding provided to be spent in pursuance of the specified activity on behalf of other organisations. The financing and spending for these activities are not shown in the attached appendices.

7.2 The current rechargeable projects are: East Midlands Franchise; Strategic

Transport Policy; UASC Regional Fund; and, previous years’ grant for English as a Secondary or Other Language (ESOL).

7.3 The current position for each of these is shown below:

a) East Midlands Franchise £ Balance b/fwd from 2018/19 14,176 Invoice raised to date ____ 0

14,176 Payments made in 2019/20 10,391 Balance currently held 3,785

b) Strategic Transport Policy £ Balance b/fwd from 2018/19 65,000 Invoices raised in 2019/20 0

65,000 Payments made to date 0 Balance currently held 65,000

c) ESOL (2016/17 to 2018/19) £

Balance b/fwd from 2018/19 69,250 Payments made to date 0 Balance currently held 69,250_

d) UASC Regional Fund £

Balance b/fwd from 2018/19 30,570 Payments made to date 0 Balance currently held 30,570_

7.4 The funding from these projects, currently £168,605, is held by Nottingham

City Council in the same way as all EMC funding is managed and interest earned on the sums held is credited to EMC at the end of the financial year.

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Item 6

8. Reserves and Liabilities 8.1 At the beginning of the financial year 2019/2020 the level of ‘usable reserves’

was £573,400*, which is allocated to fund various purposes as listed below: £260,000 to an earmarked reserve for staffing liabilities (except pension

liabilities). £60,000 to an earmarked reserve for renewals. £145,000 to an earmarked reserve for the LCC Pension Sub-fund liability; £108,400 to an unallocated reserve to manage unforeseen financial

events.

8.2 The figures shown above include the previous year’s opening balance plus last year’s surplus, net of last financial year’s contribution of £40,000 towards the LCC Pensions Sub-Fund liability.

8.3 All these reserves are invested on EMC’s behalf by our accountable body in

accordance with their investment policies which means that any interest being earned by our reserves is allocated back to EMC at the end of the financial year. £500,000 of this is invested in a six month fixed term deposit earning 0.9% interest (endorsed by Management Group at their May 2019 meeting) which matures on 27th November 2019. Remaining reserves earn around 0.3% annually and are easily accessible.

8.4 The investment of £500,000 has been made in a number of short fixed term

investments because it was felt that, with the uncertainties around Brexit, we should not be locked into a longer term investment if there is likely to be a hike in interest rates shortly after making the investment. Each time the investment has been due to mature, Brexit has been extended! A proposal to re-invest this sum beyond 27th November will be presented at the Management Group meeting.

8.5 EMC made a commitment to reduce the pension deficit which remained with

Leicestershire County Council (this covers the pension costs of existing EMC retirees), following the transfer of accountable body to Nottingham City and, based on the actuarial valuation carried out in Autumn 2016, the remaining deficit will be financed from the earmarked reserve with payments scheduled, as agreed by Management Group, over the next few years. A payment of £40,000 was made during October 2019 and which was the last of the current three-year agreement. A further actuarial valuation is due sometime during this Autumn, after which a payment strategy effective from 2020/2021 can be determined.

*This figure has reduced by £8,400 since the September meeting report and reflects the net effect of a bad debts provision being included in the final accounts offset by a late bank interest payment to EMC.

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Item 6

9. Update on 2020-21 Budget Position 9.1 Management Group directed that officers develop options for an increase in

subscriptions and wider fees and charges. These proposals are detailed in Item 7 on agenda papers.

10. Summary 10.1 Members are advised that in securing the anticipated budget out-turn, the

following financial risks are identified as the most significant to EMC and will require active management:

a) The Earned Income budget (£308,500) includes all forms of income

except Subscriptions, Grants and Contracts, Secondments and Sponsorship and is derived essentially from courses, events and consultancy opportunities created by EMC staff. It is therefore vulnerable to the demands and capacity of the sector. The budget has been constant for a number of years and remains at a level set when EMC was a larger organisation. Achieving actual income to the level of the budget has always proved difficult, and so achieving the budget will again be challenging.

b) Sponsorship Income (Budget £10,000) includes funding provided by outside organisations towards the cost of events and courses or expenditure directly paid by an outside organisation. This budget has been reduced from previous years’ as, in the three years since the budget was first set, it has been difficult to achieve the target.

c) Expenditure budgets (totalling £956,150) are monitored closely. Staffing costs (Budget £691,600), which account for more than 70% of the total expenditure, are set and manageable which just leaves £264,550 as Other Expenditure and though some of this is variable, variances are picked up quickly.

d) Grants and Contracts (Budget £335,750) are secure for the current year

but there is no written certainty at this time for any grant beyond March 2020.

11. Recommendation Members of the Management Group are invited to: 11.1 Note the actual financial position for the period to the end of October 2019

and the associated forecast outturn to 31st March 2020.

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Item 6

11.2 Agree the proposal to invest £500,000 of current reserves in a fixed term interest bearing account or bond, effective from the 27th November which is the date of maturity of the current investment.

Steve Charlesworth East Midlands Councils

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Item 6, Appendix (a)

Summary Position to the end October 2019: All profile budgets are calculated towards the end of October, Subscriptions which are invoiced during May to July for the full financial year and Grants which are paid quarterly and are therefore profiled until the end of September. Staffing costs are below budget. This is due to a Migration post which was vacant until June 2019. The £4,000 saving covers the whole period of the vacancy. Northamptonshire County Council have agreed to pay their subscriptions for 2019/20 which has allowed us to cancel a bad debt provision within Direct Costs which now shows a positive variance of £9,500.

EMC

Approved Budget 2019/20

Profiled Budget 2019/20

Actual to Oct 2019

Forecast to March 2020 Variance

£ £ £ £ £ Income Subscriptions 270,900 270,900 270,900 270,900 0 Grants – Migration related 226,450 113,225 113,574

226,450 0

Contracts – MC / HS2 109,300 54,650 53,752

109,300 0 Earned Income 308,500 167,458 178,783

308,500 0

Secondments 37,400 37,400 37,400

37,400 0 Sponsorship 10,000 5,833 2,417 10,000 0 Total 962,550 649,466 656,826 962,550 0 Expenditure Staffing 691,600 403,433 398,136 687,600 -4,000 Members Allowances 24,500 14,292 12,125 24,500 0 Premises- 22,000 12,833 12,833 22,000 0 Service Level Agreements 18,500 10,792 10,792 18,500 0 Other Direct Costs 199,550 116,404 110,138 190,050 -9,500

Total 956,150 557,754 544,025 942,650 13,500 Surplus/-Deficit 6,400 91,712 112,801 19,900 13,500

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Item 6, Appendix (b)

Position to the end of October 2019: Subscriptions income budget now includes South Holland District Council following their decision to remain as members for the current year. Northamptonshire CC have agreed to pay their subscriptions this year, which was included in the original budget, together with a debt provision included in the Direct Costs budget, which offset the income due, therefore there is a saving of £9,500 under Other Direct Costs which relates to this bad debt provision. Bank Interest is paid to EMC, for the full year, at the end of the financial year. The £1,980 represents an underpayment of interest paid for the financial year 2018/19. Service Level Agreements, Premises costs, Members Allowances and Direct Costs remain in line with the budget.

Corporate and Core Services



Actual to Oct 2019


£ £ £ £ £ Income Subscriptions 270,900 270,900 270,900 270,900 0 Interest 3,000 1,750 1,980

3,000 0

Sponsorship 2,000 1,167 328 2,000 0 Total 275,900 273,817 273,208 275,900 0 Expenditure Staffing 199,400 116,317 116,965 199,400 0 Members Allowances 24,500 14,292 12,125 24,500 0 Premises 22,000 12,833 12,833 22,000 0 Service Level Agreements 18,500 10,792 10,792 18,500 0 Other Direct Costs 64,000 37,333 37,099 54,500 -9,500 Overhead Costs 24,850 14,496 14,496 24,850 0 Recharged to Cost Centres -77,200 -45,033 -45,033

-77,200

Total 276,050 161,029 159,277 266,550 -9,500

Surplus/-Deficit -150 112,788 113,931 -9,350 -9,500

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Item 6, Appendix (c)

Position to the end of October 2019: Expenditure items are all in line with anticipated spend levels. Invoices for all the Grants are paid quarterly in arrears each year. The first two quarters have been claimed, some of which have been paid. Staffing costs are lower than budget, which is due to the Migration related post which was vacant between April and June 2019.

Contracts & Grants



Actual to Oct 2019


£ £ £ £ £ Income Grants –Migration related 226,450 113,225 113,574 226,450 0 Contracts – {MC / HS2} 109,300 54,650 53,752 109,300 0 Sponsorship

2,000

1,167

569

2,000

0

Total 337,750 169,042 167,895 337,750 0 Expenditure Staffing 267,200 155,867 153,650 263,200 4,000 Direct costs 48,000 28,000 22,282 48,000 0 Overhead costs 18,900 11,025 11,025 18,900 0

Total 334,100 194,892 186,957 330,100 4,000 Surplus/-Deficit 3,650 -25,850 -19,062 7,650 4,000

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Item 6, Appendix (d)

Position to the end of October 2019: Income for this cost centre has not met budget levels in previous years but this year the total income received is already greater than the full year budget. This is because the District and Unitary elections took place this year and new Councillors required additional training. Paradoxically, Direct Costs are also higher than full yearbudget. Member Development is an area that requires re-positioning and should be dealt with when the EMC review takes place later in the financial year.

Member Development



Actual to Oct 2019


£ £ £ £ £ Income Development 16,100 9,392 21,361 16,100 0 Sponsorship 3,000 1,750 410

3,000 0

Total 19,100 11,142 21,771 19,100 0 Expenditure Staffing 39,300 22,925 23,255 39,300 0 Direct costs 6,000 3,500 9,672 6,000 0 Overhead costs 3,850 2,246 2,246 3,850 0

Total 49,150 28,671 35,173 49,150 0

Surplus/-Deficit -30,050 -17,529 -13,403 -30,050 -0

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Item 6, Appendix (e)

Position to the end of October 2019: Secondment invoice for the full year costs was raised in July. Earned Income includes some work carried out and invoiced up to the end of September. The budget profile represents 6 months income accordingly.

Consultancy



Actual to Oct 2019


£ £ £ £ £

Income Earned Income 150,000 75,000 73,238 150,000 0 Secondments 37,400 37,400 37,400 37,400 0 Sponsorship 0 0 0 0

Total 187,400

112,400 110,638 187,400 0

Expenditure Staffing 142,600 83,183 77,709 142,600 0 Direct costs 18,000 10,500 10,446 18,000 0 Overhead costs 15,750 9,188 9,188 15,750 0

Total 176,350 102,871 97,343 176,350 0 Surplus/-Deficit 11,050 9,529 13,295 11,050 0

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Item 6, Appendix (f)

Position to the end of October 2019: Expenditure is generally within the profile and budgetary expectations. Income has exceeded budget expectations for the last two years for this cost centre and that trend appears to be continuing. It includes some income for services which are paid for at the start of the financial year together with income raised during the year.

Fee Paying Events/Services



Actual to Oct 2019


£ £ £ £ £ Income Earned Income

139,400 81,317 82,205 139,400 0

Sponsorship 3,000 1,750 1,110 3,000 0 Total 142,400 83,067 83,315 142,400 0 Expenditure Staffing 43,100 25,142 26,557 43,100 0

Direct costs 63,550 37,071 30,639 63,550 0 Overhead costs 13,850 8,079 8,079 13,850 0

Total 120,500 70,292 65,275 120,500 0 Surplus/-Deficit 21,900 12,775 18,040 21,900 0

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Item 7


Budget Considerations 2020/21 Onwards

EMC Subscriptions, Fees and Charges

Summary To support the development of EMC’s budget for 2020/21 onwards, Management Group requested that options are presented to inform consideration of whether to increase the levels of EMC membership subscriptions and its fees and charges. Recommendations Members of the Management Group are invited to: Consider options for increasing subscriptions and/or fees and charges. Recommend to the Executive Board the future level of EMC subscriptions and

fees and charges, and when any such changes should be implemented.

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Item 7

1. Update on 2020-21 Budget Position 1.1 When the budget was agreed in March 2019, the forward plan showed a

potential deficit for 2020-21 of between £25,350 and £73,050 which was derived from three sources: loss of subscriptions as a result of the re-organisation of Northamptonshire local authorities; loss of Home Office Migration related grants; and, loss of contracts for work carried out on Midlands Connect and HS2; and depended on different assumptions being made for each.

1.2 Since then, Local Government re-organisation of Northamptonshire has been

postponed and is now anticipated to take effect from April 2021 which means that, for 2020-21, the worse projected loss is reduced by £33,000 to £40,000 - this based on the assumption that Home Office grants and other contracts are all lost. However, should these grants and contracts continue at their current levels during 2020-21 the budget for that year will be balanced.

1.3 The pressure that results from this organisational reliance upon external

grant has put into focus the structure of EMC’s wider income base; with approximately one-third coming from each of its income heads; subscriptions, external grants, and fees and charges.

2. External Grants/Programme Funding 2.1 EMC has been moderately successful in securing external grant/programme

funding. This income has predominantly come from national Government (e.g. Home Office asylum and refugee funding) or from sub-national partnerships, albeit themselves reliant upon national Government funding (e.g. Midlands Connect).

2.2 This type of funding supports organisational programme ‘reach’ and directly

funds a number of posts with a modest contribution to corporate running costs. There are limited sources of funding and the delivery capacity of EMC must be factored into decisions of whether to apply for additional sources of grant. However, EMC is looking to increase its activity in this regard, for example, through securing approximately £140,000 p.a. from 2020/21 (subject to DfT confirmation) for proposed rail franchise management activity. Detail on this proposal is included with the Corporate Governance report (Item 9).

3. Member Subscriptions 3.1 Member subscriptions have been frozen since 2010, except for a one-off

increase implemented 2013/14, after which subscriptions returned to their exiting 2010 levels.

24

Item 7

3.2 The freezing of subscriptions rates has reflected the austerity of the sector

and helped to consolidate membership. However, inflationary costs over a 9 year period and the erosion of the real value of EMC’s subscription base are obvious pressures that develop over this time. For example, staffing costs are increasing by 2% p.a. and are expected to at least continue to do so for 2020/21 onwards.

3.3 Management Group directed that options be developed in consideration of

increasing the level of subscriptions. The framework for the proposed options are: a) Either a 2%, 3% or 5% increase in level of subscriptions, thereby

mirroring the prevailing rate of inflation and the range of council tax increases implemented by most Local Authorities.

b) Preference for a smaller increase (2-5%) but any agreed uplift is included within subscription base with an annual increase becoming the norm.

c) Modelling an increase on the current structure of EMC’s subscription base with consideration of at least one alternative subscription mode, e.g. one based on population banding.

3.4 The default option would be no change. This would not address concerns of

EMC’s declining subscription base but would not directly risk the setting and achievement of a balanced budget for 2020/21 although the wider issue of increasing income would need to be revisited in the run-up to 2021/22.

a) Current Subscription Model

3.5 The following details the uplift in income of a 2%, 3%, 5% increase in

subscriptions based on EMC’s current subscription model, i.e. upper-tier councils charged one flat-rate, district councils another.

3.6 Detail of proposed uplift in subscription rates is included in Appendix 7(a) but

in summary the effect of the new subscription rates would be:

Upper-Tier Councils District Councils Total Subscription

Base* Current Level £9,500 £4,995 £270,315 + 2% 9,690 £5,095 £275,725 + 3% 9,785 £5,145 £278,430 + 5% 9,975 £5,245 £283,840 *rounded to the nearest £ and only includes the 46 local authorities in membership of EMC (9 upper-tiers, 36 districts and 1 NPA – it does not include any associate membership). 3.7 The additional income brought in would be:

2% - £5,410 3% - £8,115 5% - £13,525

25

Item 7

b) Regional Comparisons 3.8 There are a number of different subscriptions models operated by regional

local government organisations. These range from a ‘flat-fee, single-rate’ model, to ones based on local population levels, to a mix of population and employee based subscription models.

3.9 The East of England LGA (similar in size and structure of EMC) follow a similar

model to EMC with subscription rates for district councils £8,875, unitary councils £24,291 and county councils £30,411.

3.10 The more common model is a subscription rate based on the population base

of each local authority, often also dependent upon which tier of local government. A number of comparators are included in Appendix 7(b). EMC has only ever adopted a subscription model based on a single rate for either district or upper-tier councils.

c) Population Banding

3.11 Other regional organisations similar to EMC in terms of roles and

responsibilities, e.g. South-West Councils, operate a subscription model based on population bands of councils.

3.12 For completeness, this is included as an option for consideration. South West

Councils have a subscription base of £273,207 and have 5 different bands based on population size for upper-tier councils: £7,000 (Pop 179,000 or under) £7,800 (Pop 180,000 - 249,000) £9,400 (Pop 250,000 – 349,000) £12,900 (Pop 350,000 – 499,000) £15,300 (Pop 500,000+)

3.13 And 5 bands for district councils

£5,000 (Pop 59,000 or under) £5,400 (Pop 60,000 - 79,000) £7,200 (Pop 80,000 – 99,000) £6,300 (Pop 100,000 – 129,000) £6,700 (Pop 130,000+)

3.14 For illustrative purposes, if councils in the East Midlands are similarly banded

in terms of their population, with a variable 2% (for district councils) and 3% (for upper-tier councils) subscription increase applied, then this option would provide for a £7,200 uplift in the subscription base.

26

Item 7

3.15 If Members are minded to consider this model, further work will be required to be undertaken to fully explore the range of different subscription rates per type of council and against different population bands. However, members are advised that the population banding model has a number of notable weaknesses that include; its complexity and the need for regular monitoring and adjustment, the population base between councils within a similar tier of government is not a reliable proxy for ‘ability to pay’, and the level of service provision and wider support is unlikely to vary in any significant way between different sized district councils, or between different sized upper-tier councils.

d) Summary

3.16 It is an opportune time to consider options for increasing the level of

subscriptions. This will alleviate the pressure upon EMC’s base and enable some changes to be implemented in advance of 2021/22 where the income challenges may well increase.

3.17 Members are reminded that even with an increase of subscriptions of

between 2-5% (£5,400 - £13,500), the increase in income that this brings will be out-stripped by the likely 2% pay award and general inflation pressures of 3% (approximately £21,700). It does, however, reduce the pace at which the gap may widen, reduce the pressure on the earned income budget (often the ‘balancer’) and coupled with wider income and expenditure measures, will support the setting of achievable, balanced budgets.

e) Risks

3.18 Members are advised that increasing the level of subscriptions may lead to

opposition from some member councils and may be a focal point of challenges to membership. These risks will need to be mitigated against if Members propose any increase in subscriptions.

3.19 With plans to replace 8 Local Authorities in Northamptonshire with 2 unitary

authorities, and the potential for wider local government reorganisation in the future resulting in a fewer number of councils, albeit those being new unitaries, Members may which to consider adopting a subscriptions model flexible enough to maintain EMC income through any future local authority re-organisations.

4. Fees and Charges 4.1 Raising revenue from fees and charges is an important element in the

financing of EMC.

27

Item 7

4.2 All paid events are run on the basis of cost recovery plus a minimum (gross) profit of £500 for a full day and £250 for a half day. Any exception to the ‘rate card’ must be approved by Management Team prior to the event being run and/or service being provided.

4.3 The levels of fees and charges has been frozen for the past 5 years.

Service Members Associate Members

Non-Members

Day Rate (unless otherwise stated) Free Events (non-attendance) ½ day £50

Full day £100 £60 £120

½ day £75 Full day £125

Paid Events – ½ day £95 £115 £150 Paid Events – full day £175 £210 £250 Training provided to authorities (in-house)

£750 per day £500 per ½ day

£900 £600

CPD £575 £690 £1725 Consultancy - general £500 £600 £650 Interim - general £375 for district

£400 for county, unitary £450 £480

Interim - specialist £475 for district £500 for county, unitary

£570 £600

£650

Associate consultants, external trainers provided to local authorities for in-house events

Charged as above or at associate consultant’s rate plus 10%, whichever is higher

Assessment centres – 1 day plus interview day

£2,500 £3,500 £4,950

4.4 Alongside this, there are programmes and service offers that sit outside this

‘rate card’, for example:

a) Low Cost CPD for Environmental Health Officers – 5 Plus 1 The cost to sign up to this programme is £575 + VAT. This enables each council to send 18 delegates across the 6 events (3 per event – 18 places in total).

b) The costs for non-members of EMC: £575 + VAT per participating organisation per year - for 6 seminar places in total pa £1150 + VAT per participating organisation per year for 12 seminar places in total pa £1725 + VAT per participating organisation per year for 18 seminar places in total pa

c) Regionally procured services include an EMC management fee (often

10%) whereby the savings are passed onto councils that sign-up, e.g. e.g. HR benchmarking systems. These are individually negotiated and so vary depending on each service provided.

28

Item 7

4.5 Detail of any uplift in fees and charges is included in Appendix 7(a) but in summary the effect of an increase in fees and charges for all products, events and support would be: 2% - £6,110 3% - £9,165 5% - £15,275

4.6 Comparing EMC to other regions, there is some similarity to the services that

are provided free as part of membership subscription. However, where subscription costs are higher, additional services are provided within that subscription fee, e.g. in the North West the coaching/mentoring pool is included along with Member Charter support and accreditation and facilitation of Chief Executive appraisals.

4.7 In terms of the charge for consultancy support, EMC’s day rate is £500. Regions that charge a higher day rate (£650-£850) are those working on the borders of London where regional pay levels are higher. While increasing the consultancy rate could help to increase income, there is a significant risk that councils and other customers will go direct to independent consultants for this support, who tend to charge £375 to £500 within this region.

4.8 The charge to attend a training event at EMC was doubled in 2012/13 to £175 per day and has been held since then. This rate represents a cost-effective rate when compared to private sector and London-based training provision, but not when compared to the charges by other regional employers, who tend to offer more opportunities for free or cheaper training than EMC offers. The risk of EMC increasing its charges further to attend training is likely to lead councils to arrange their own training provision either in-house or in conjunction with other councils or attend training from other providers.

5. Proposed Way Forward 5.1 Members are advised to consider an increase in subscriptions, within the

framework proposed in Section 3 of this report. 5.2 Members are cautioned against increasing fees and charges at this time. This

is suggested in order to: a) Avoid a more significant increase in the costs of membership (with costs

increasing for fees and charges, alongside membership subscriptions). b) Avoid disproportionately penalising the more ‘active’ councils in

membership that make greater use of EMC services. c) Allow rebalancing. The principal purpose of the subscriptions is to

support the provision of EMC core services. Previously, we’ve increased fees and charges to ‘subsidise’ the core offer and to offset the freeze in subscriptions.

29

Item 7

5.3 If Members endorse any proposal to increase subscriptions and/or fees and charges, consideration should be given to whether these changes are implemented in 2020/21 or in later years.

6. Recommendations

Members of the Management Group are invited to: 6.1 Consider options for increasing subscriptions and/or fees and charges. 6.2 Recommend to the Executive Board the future level of EMC subscriptions and

fees and charges, and when any such changes should be implemented.

Stuart Young Executive Director East Midlands Councils

30


ACTUAL ACTUAL BUDGET 2% 3% 5%2018/19 APR - OCT 2019/20 INCREASE INCREASE INCREASE

SERVICE 2019/20£ £ £ £ £ £

INCOMECore ServicesSubscriptions 1 264,000 270,900 270,900 276,318 279,027 284,445

MembersMmber Development Events 2 11,771 21,361 16,100 16,422 16,583 16,905

ConsultancyHR Consultancy 111,825 67,567 120,000 122,400 123,600 126,000Learning and Development 9,300 10,824 30,000 30,600 30,900 31,500

3 121,125 78,391 150,000 153,000 154,500 157,500

Fees and ServicesWARP 27,311 14,784 12,000 12,240 12,360 12,600EM Jobs 7,681 2,911 11,000 11,220 11,330 11,550Coaching Network 12,007 6,270 18,900 19,278 19,467 19,845Env Health 5 Pack 26,300 23,975 29,100 29,682 29,973 30,555Low Cost Planners 17,060 18,400 21,000 21,420 21,630 22,050Housing CPD Programme 0 0 9,700 9,894 9,991 10,185HR Learning and Development 83,964 16,975 37,700 38,454 38,831 39,585

4 174,323 83,315 139,400 142,188 143,582 146,370

Total Sum (1,2,3,4) 571,219 453,967 576,400 587,928 593,692 605,220

Uplift from Budget 11,528 17,292 28,820

Uplift in Subscriptions Only 5,418 8,127 13,545

31


Region

Type Categories £

Confidential advice

HR advice/ help desk

CllR Charter

CEx Appraisal

Networks/ regional conf/ events

Coaching / mentoring pool

Districts 4900 Y Y N N Y N

Counties & Unitaries 9500 Y Y N N Y N

Region A

Type Categories £

Confidential advice


CllR Charter

CEx Appraisal



District upto 2k empeeup to 140k popln

3-6k Y Y Y Y Y Y

Met/U/CC *

Small Met/Uup to 8k empee100-200k popln

13-19k Y Y Y Y Y Y

larger Met / Uup to 12k empee200-400k popln

19-29k Y Y Y Y Y Y

Core cities & CC> 12k empee>400k popln

40k Y Y Y Y Y Y

Region B

Type Categories £

Confidential advice


CllR Charter

CEx Appraisal



District £3790 to £6680 Y Y N N Y/N N

Unitary £8330 to £14580County £7900 to £26570 Y Y Y Y Y Y

Region C

Type Categories £

Confidential advice


CllR Charter

CEx Appraisal



District <59k popln £5,00060-79k popln £5,400 Information on services tbc80-99k popln £7,200100-120k popln £6,300>130k popln £6,700

Unitary & County >179k popln £7,000180-249k popln £7,800250-349k popln £9,400350-499k popln £12,900>500k popln £15,300

REO Subscription models

Employers Organisation OnlyAnnual Sub (£k) Services incl in membership sub

Notes

Annual Sub (£k) Services incl in membership sub

Notes

Annual Sub (£k)

Notes

Subscriptions currently being reviewed, having been frozen for >10years. Grouped into 'bands' dual characteristics of population and empee nos

Services incl in membership subEmployers Organisation Only

East Midlands Councils

Member Charter, CEX Appraisal and Coaching/Mentoring pool are provided but charged for

Wider Policy and Employers Organisation Annual Sub (£k) Services incl in membership sub

Notes

Subs increased annually as per inflation. Unitaries: free training for <5 employees; Counties: free training for <10 employees & member allowance review every 4 years.

32

Item 8


Performance Management

Key Performance Indicators 2019-20 against Business Plan

Summary This report updates Members of the Management Group on performance management of EMC against its agreed Business Plan 2019/20. Recommendations Members of the Management Group are invited to: Consider progress in meeting the agreed key performance indicators for 2019/20. Consider any areas of risk to the achievement of these KPIs.

33

Item 8

1. Introduction 1.1 The Management Group, as agreed in its terms of reference, has

responsibility for performance management specifically, ‘to ensure that non-financial performance is properly monitored and to review EMC progress in delivering its annual key performance indicators and report appropriately to the Executive Board’.

1.2 The Business Plan is a formal statement of EMC’s objectives for 2019/20.

The Business Plan was developed in consultation with Members, and agreed by Executive Board at its meeting in May 2019.

1.3 This report details progress in meeting the objectives of the KPIs for the

2019/20 business plan and reflect the continued 4 pillar approach of EMC. Members previously agreed that budget/finance performance be removed from KPIs as subject to separate finance and audit arrangements within Management Group.

2. Summary of Performance against Business Plan 2.1 The KPIs reflect the focus of the Business Plan. Performance is measured

against the following KPIs (for Q1-Q3, 2019/20). a) KPI 1 - Pillar 1: All-Member Organisation 2.2 To maintain attendance levels at formal meetings of East Midlands Councils

and associated Boards. On Target

2.3 To maintain levels of council membership of EMC (46 councils, as at 1st April 2019). On Target

2.4 To undertake an annual satisfaction survey of member councils (both

councillors and chief executives) on the provision of direct support services and ‘strategic added value’.

On Target

2.5 Provide direct membership benefits to councils through maintaining the number of councillors participating in the EMC development, skills and briefing programme (baseline 2018/19; 241 councillor places). Achieved The Local Elections held in May 2019 and the summer ‘downtime’ affected

the figures for Q1/Q2 2019/20. However, since this time there has been significant demand for EMC to provide ‘in-house’ councillor development

34

Item 8

programmes, and alongside a region-wide scrutiny summit. These events have led to driving an upturn in performance over the past 2-3 months.

2.6 Provide direct membership benefits through the provision of high quality and relevant councillor development, skills and briefing programmes. At least 75% of all course feedback is rated as ‘effective/good’ or ‘highly effective/very good’. On Target

2.7 Provide direct membership benefits to councils through maintaining the

number of officers participating in EMC supported continuous professional development [baseline 2018/19; 1823 officer places]. On Target The numbers attending the 2 main CPD programmes have been slightly

down in the first 2 quarters (although broadly comparable to last year, 898 against 854 this year). One event was rescheduled (to Q4) to avoid the clash with the Local Elections held in May 2019.

b) KPI 2 - Pillar 2: Policy Development 2.8 Establish an effective relationship and joint approach between councillors and

MPs through: Holding at least 3 joint events and/or summits. The agreement of joint priorities as the basis for collective work. On Target

2.9 Develop a portfolio of agreed policy positions on issues as identified in the

Business Plan, e.g. UASC care leaver costs review, Economic Growth and Infrastructure.

On Target 2.10 To make demonstrable progress in delivering on core EMC policy priority

areas: On Target

c) KPI 3 - Pillar 3: Collective Work and Lobbying 2.11 Working with LEPs and local councils to:

Secure the implementation of the 6 agreed infrastructure priorities for 2019/20.

Develop a shared long-term approach through ‘Midlands Connect’. Make progress in the development and delivery of Midlands Engine

proposals. On Target

35

Item 8

2.12 Provide strategic political and organisational leadership for the delivery of HS2 through support for: The EM HS2 Strategic Board and associated groups; and The HS2 East Partnership

On Target 2.13 Secure Parliamentary debate on securing additional investment into the East

Midlands. On Target Proposals to hold a Parliamentary debate were stymied in Q3 due to a

lack of Parliamentary time and then the calling of a General Election. Any debate is now unlikely before late Q4.

2.14 Leadership and support in the development of Strategic Alliance proposals.

On Target d) KPI 4 - Pillar 4: Improve Communication 2.15 To provide EMC Councillors with a weekly policy brief and monitor feedback

on a 3 monthly basis. On Target

2.16 To provide monthly MP and MEP policy briefs and monitor feedback on a 3 monthly basis. On Target

2.17 To improve the effectiveness of the EMC website as measured by: 10% increase in website ‘hits’ 10% increase in pages per visit 10% increase in time on site 10% reduction in the bounce rate Not on Target

2.18 To increase by 25% the number of followers of EMC Twitter account [baseline 31st March 2019; 798 followers].

On Target

e) KPI 5 - People Management 2.19 Maintain staff sickness rate at less than 6 days per full time equivalent (local

government average 10.5 days) [2018/19 EMC sickness rate; 1.2 days with long-term sick, 1.2 without long-term sick].

On Target

36

Item 8

2.20 Wherever possible, to meet all staff learning and development needs, as identified by annual Staff Development Interviews (SDIs).

On Target f) KPI 7 - Membership Service Standards 2.21 To respond and fully answer 95% of advice requests from member councils

within 2 working days. On Target 3. Recommendations

Members of the Management Group are invited to: 3.1 Consider progress in meeting the agreed key performance indicators for

2019/20. 3.2 Consider any areas of risk to the achievement of these KPIs.

Cllr David Bill MBE Leader - Liberal Democrats Group Lead Member – Performance Management

37

Item 8, Appendix (a) Proposed Key Organisational Performance Indicators (2019/2020)

1. Pillar 1: All-Member Organisation

Key Performance Indicators 2019/2020

Percentage Attendance

a) Maintain attendance at formal

meetings of East Midlands Councils and its Boards

2014/15 – 2017/18 2018/19 2019/20 Cumulative

Progress

East Midlands Councils 56% 50% 64%

EMC Boards 65% 65% 69%

This is broken down into the following Boards

Percentage Attendance 2014/15 – 2017/18 2018/19 2019/20

Executive Board 71% 86% 74%

Management Group 75% 57% 76%

Regional Employers’ Board 55% 65% 67%

Regional Migration Board 61% 60% 72%

HS2 Executive Board 63% 57% 60%

Transport for the East Midlands - - 63%

Progress in Achieving Objective

Activity successfully completed

Activity on target for completion Activity not on target for completion Activity subject to review

38


c) To maintain levels of council

membership of EMC (46 councils, as at 1st April 2019).

South Holland District Council are on notice to leave membership wef from 31st March 2020.

d) To undertake an annual

satisfaction survey of member councils on the provision of direct support services.

To be undertaken by end Q4

e) Provide direct membership benefits to councils through maintaining the number of councillors participating in the development, skills and briefing programmes.

Baseline 2018/19

Quarter 1

Quarter 2 Cumulative

Quarter 3 (up until 31.10.19)

Quarter 4

241

125

279

343

f) Provide direct membership benefits through the provision of high quality and relevant councillor development, skills and briefing programmes. At least 75% of all course feedback is rated as ‘effective/good’ or ‘highly effective/very good’.

97%

90%

94%

96%




39


g) Provide direct membership

benefits to councils through maintaining the number of officers participating in EMC supported continuous professional development.

Baseline 2018/2019

Quarter 1


Quarter 3 (up until 31.10.19)

Quarter 4

1823

314

644

854




40


2. Pillar 2: Policy Development


Progress - Financial Year 2019/20

Progress

a) Establish an effective relationship and joint approach between councillors, MPs, MEPs and other partners, through: Holding at least 3 joint events

and/or summits. The agreement of joint priorities as

the basis for collective work.

The EM APPG met in July 2019 on HS2. The co-chairs confirmed work programme for 2019-20 with focus upon: HS2 East Midlands Rail Franchise Inclusive Economic Growth and Health Midlands Engine and Regional Investment The APPG scheduled for end-Oct was cancelled due to impending General Election announcement. The co-chairs remain confident that 2 further meetings are possible during Jan-March 2020.




41


b) Develop a portfolio of agreed policy

positions on issues as identified in the Business Plan including: Complete review of UASC care

leaver costs to inform UASC NTS work.

Lead member networks for children’s services to meet on a quarterly basis.

Progress delivery of 6 Joint TfEM/Midlands Connect Strategic Priorities

Completed review of UASC Care Costs to inform Home Office review and an increase in funding.

Children’s Service Lead Members continue to meet and supported by EMC.

Progress achieved against each infrastructure priority is regularly reported to Executive Board and EMC.

Regional summit of modern slavery planned for January/February 2020 (postponed due to General Election).




42


c) To make demonstrable progress in

delivering on core EMC policy priority areas: Migration Health Housing and Planning

Migration To meet VPRS resettlement ‘pledge numbers’ by March 2020. To support effective transition of new asylum dispersal

arrangements. Health Meetings held with Directors of Public Health and PHE, and the

development of follow-up proposals to support collective leadership, e.g. wellbeing opportunities ref Midlands Engine.

APPG meeting on Health and Work to be jointly supported by EMC and PHE East Midlands.

Housing and Planning Delivery of a Housing CPD programme. Planning and Housing Summit. There is a potential to run this

summit in Q4 although this depends on clarity of national government policy direction being set.




43


3. Pillar 3: Collective Work and Lobbying



Progress

a) Working with LEPs and local councils to: Secure the implementation of the 6

agreed infrastructure priorities. Develop a shared long term approach

through ‘Midlands Connect’. Make progress in the development

and delivery of Midlands Engine proposals.

Progress achieved against each infrastructure priority is regularly reported to Executive Board and EMC.

Contribute to the delivery of the Midlands Engine strategy refresh and provide advisory support to the region’s ME Executive Board Members.

b) Provide strategic political leadership for the implementation of HS2 through support for: The EM HS2 Strategic Board and

associated groups; and The HS2 East Partnership

Support new chairing and working arrangements for HS2 Executive Board.

HS2 East continues to raise the political profile of the Eastern leg of HS2 across the Midlands, Yorkshire, the North East and Scotland. Further information is available here.

EMC engaged with, and informed, the recent Oakervee Review into HS2.

c) Secure Parliamentary debate on securing additional investment into the East Midlands.

Originally anticipated that this would be held in Q3 but was not possible due to a lack of Parliamentary time in the run-up to the announcement of the General Election. It is now not possible until late Q4 at the earliest.

d) Leadership and support in the development of Strategic Alliance proposals.

On-going support in the development of final report and recommendations.




44

http://www.hs2east.co.uk/


4. Pillar 4: Improve Communication Key Performance Indicators 2019/2020 Progress - Financial Year 2019/20

Progress

a) To provide EMC Councillors with a weekly policy brief and monitor feedback on a 3 month basis.

Monitoring to be undertaken in Q4 as part of annual satisfaction survey.

b) To provide monthly MP and MEP policy brief and monitor feedback on a 3 month basis.

Provided in conjunction with East Midlands Chambers of Commerce.

c) To improve the effectiveness of the EMC website as measured by (from 2017/18 levels): 10% increase in website ‘hits’. 10% increase in pages per visit 10% increase in average time on site 10% reduction in the bounce rate

Baseline 2018/2019

Quarter 1


Quarter 3 (Up until 31.10.19)

Quarter 4

43,379 2.04

1min 29 secs 37.02%

11,992 2.05

1min, 24 secs 35.70%

23,895 2.10

1min, 23 secs 36.20%

28,128 2.06

1min, 23 secs 37.55%




45


d) To increase by 25% the number of

followers of EMC Twitter account [Baseline 798 on 31st March 2019; target for 2019/20, 998 followers].

864 followers as at 31st October 2019




46


5. People Management



Progress

a) Maintain staff sickness rate at less

that 6 days per full time equivalent (10.5 days local government average; EMC baseline [2018/19]; 1.22 days with L/T sick, 1.22 days without LT sick).

Q1

Q2

Cumulative

Q3 (up until 31.10.19)

Q4

With L/T* Sick 0.20 1.76 1.85 Without L/T* Sick 0.20 0.30 0.39

* L/T = long term.

b) Wherever possible, to meet all staff

learning and development needs, as identified by annual Staff Development Interviews (SDIs).

All staff development interviews to be completed by the end of October 2019.




47


6. Membership Service Standards



Progress

a) To respond and fully answer 95% of advice requests from member councils within 2 working days.

15 requests received up until 31st October 2019. 3 not responded to within 2 working days – 80%




48

Item 9


Corporate Governance

Summary The following report provides detail on matters of corporate governance, specifically: a) Risk management and risk register. b) Statutory external audit report. c) East Midlands Railway’s Franchise - collaboration agreement between EMC and DfT. Recommendations Members of the Management Group are invited to: Consider the key strategic risks for East Midlands Councils, the key controls in place and

any proposed action to be taken. Note the proposal for the 2019-20 Internal Audit Review. Consider and endorse the 2018/19 financial statement provided by external audit. Consider and endorse the proposed management arrangements for the East Midlands

Railway Franchise and the collaboration agreement that underpins this.

49

Item 9

1. Management of Risk – EMC Risk Register 1.1 EMC’s risk register reports against each of the key risks identified by EMC and, for

each risk, includes information such as potential impact, key controls and suggested response to mitigate each risk.

1.2 Included as part of the risk register is the 'owner' of each risk identifying

responsibility for actions relating to that risk. 1.3 Against each risk identified, specific and detailed action plans may be developed, as

appropriate, to inform further work. 1.4 An updated risk register, reviewed by officers, is attached as Appendix 9(a) to this

report. 1.5 All risks identified are significant and require an organisational response. The risks

identified within the red section of the ‘risk grid’ are those identified as being critical to the organisation.

1.6 By identifying the likelihood of those risks occurring, it does not mean that the risk

will necessarily occur, rather that the risk requires specific focus and action to mitigate against its occurrence, and without this action, then in all likelihood, it will occur and this will be of significant impact to EMC.

1.7 The risk register has been considered by staff and subsequently agreed by EMC

Management Team. Members are advised that staff are regularly consulted on risks and associated controls in relation to their areas of work. This is through both formal and informal 1:1s, in additional to full team meetings.

1.8 Since risk management was last considered by Management Group in September

2019, Members are advised that there have been no material changes to the consideration and management of risk. However, given current proposals for Local Government reorganisation, Strategic Alliance and wider partnership management concerns, the following are highlighted for specific consideration: South Holland District Council remains on notice to leave EMC membership (wef

31st March 2020). Local Government reorganisation in Northamptonshire Current discussion on a Strategic Alliance between upper-tier councils and the

potential for local government re-organisation. The risks include alignment with EMC roles and responsibilities, and resources.

The financial implications are broader than subscriptions, as other income generation opportunities may also be adversely affected, e.g. consultancy, in-

50

Item 9

house development and member development, fees/charges; and many of these would come into play during a fairly long run-up period to transition.

2. Internal Audit 2.1 Included within our Accountable Body SLA with Nottingham City Council are

provisions for undertaking an internal audit. 2.2 EMC remains in discussion with NCC Audit to confirm the scope of the 2019-20

internal audit review. In light of the on-going management of risk in relation to organisational and financial resilience, and to align with a wider review of EMC roles and responsibilities, EMC officers have proposed that the internal audit review focuses on ‘organisational resilience’.

2.3 It is not anticipated that the internal audit will commence before January 2020. 3. Certification Office – Audited Financial Statement (2018/19) 3.1 Members are reminded of the statutory requirement for external audit and the

production of a set of accounts to comply with the requirements of the ‘Certification Office for Trade Unions & Employers’ Associations’ as part of EMC’s role as an Employers Organisation.

3.2 The audit work has been completed and has been formally signed off by the external

auditor. For member consideration, the financial statement for 2018/19 and the Independent Auditors’ Report are attached as Appendix 9(b). Together with the AR27 (statutory requirement of the Certification Office), these documents are also available on EMC’s website (here).

3.3 The auditor’s opinion is that the statements give a true and fair view of the matters to which they relate.

3.4 Attention is drawn in the Auditor’s Report (pg.22) that the auditor is not able to verify the EMC cash balances because these are held within the local authority’s bank account and not held separately. This is a comment the auditor has made each year since the Accountable Body role transferred to Nottingham City Council. Although this is drawn to the attention of EMC and the Certification Officer, the audit “opinion is not qualified in this respect.”

3.5 The presentation of the accounts shows, once again, the liabilities emanating from pension funds being included in the overall picture of the accounts, this is because there is a contingent liability to EMC in the future. That figure is based on a valuation of the pension position calculated on a generic life expectancy beyond retirement,

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Item 9

the only guarantee is that this figure will be wrong! In the past there has been a distinction between actual operational finance figures and the pension figures. This distinction has now become somewhat blurred and whilst it is acknowledged that pensions should be included there is some disagreement with how this should be shown, the result is the statements show an operating loss for the year of £174,000, which is made up as follows: Pension contribution to the Leicestershire County Council pension sub-fund of

£40,000. Pension costs £179,000. EMC operating surplus £45,000. To assist members, a reconciliation note is provided within the statement of accounts for each of the main statements.

3.6 The actual operating surplus of £45,000 is more than forecast in the regular reports

to Management Group, and is due to income derived from consultancy and fees exceeded budget. The £40,000 pension sub-fund contributions have been met from reserves and agreed by Management Group. The £179,000 pension costs do not impact on the EMC cash reserves. In the financial year 2019/20 the only anticipated commitment from reserves is a payment of £40,000 to the Leicestershire County Council pension sub-fund – an amount agreed by Management Group following the actuarial valuation in late autumn 2016.

3.7 The EMC total pension liability has increased from £2.684m at the end of 2017/18 to £2.789million at the end of 2018/19. This may be in part due to the full year effect of a small increase in the number of staff employed by EMC, but this figure, by its very nature, will remain turbulent. See 3.8 below

3.8 The pension deficit estimates since 2012/13 are as follows: 2012/13 £1.606million 2013/14 £2.392million 2014/15 £2.682million 2015/16 £1.844million 2016/17 £2.873million 2017/18 £2.684million 2018/19 £2,789million

3.9 The short term debtors (page 17) at the end of March 2019 is £137,000. Of this, £48,000 relates to grant income due for the final quarter of the financial year (these have subsequently been paid). At the end of March the overdue accounts total was £26,090 (including VAT), all of which related to services provided to member authorities and included in that figure were the outstanding subscriptions of £11,400 in respect of Northamptonshire County Council.

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3.10 For information - overdue debtors as of end October 2019 stands at £14,948, excluding VAT, is overdue (including £9,500 for Northamptonshire County Council net of VAT) and all invoices which are 3 or more months overdue relate to member authorities and these are being followed up robustly.

3.11 In accordance with EMC’s statutory responsibilities, the final audit certificate (AR27)

has been submitted to the ‘Certification Office for Trade Unions & Employers’ Associations’.

4. East Midlands Railway Franchise 4.1 EMC, through TfEM, is working with DfT to put in place arrangements and a

collaboration agreement that provide local input into the management of the East Midlands Railway franchise. This is a positive development for the region and an approach previously endorsed by both the TfEM and EMC Executive Boards.

4.2 Ministers have agreed the principles of the collaboration, and tacked DfT officials

with finalising a draft agreement for Ministerial sign-off. Although work is progressing well, formal sign-off will now not happen until after the General Election. However, the agreement is considered by DfT officials to be low risk and so preparatory work is being undertaken to ensure arrangements are in place immediately after the General Election to allow formal sign-off and recruitment to 2 new posts to be jointly funded between TfEM and DfT.

4.3 The detail of the proposed arrangements for this management role of the East

Midlands Railways franchise is attached as Appendix 9(c). 4.4 There is limited financial liability for EMC and partners transport authorities, and the

proposed agreement is underpinned by a 12 month notice period for both EMC/TfEM and DfT.

4.5 Members are invited to consider these developments and the need for EMC to work

with our accountable body (Nottingham City Council) to provide for formal legal sign-off of the collaboration agreement.

5. Recommendations

Members of Management Group are invited to: 5.1 Consider the key strategic risks for East Midlands Councils, the key controls in place

and any proposed action to be taken. 5.2 Note the proposal for the 2019-20 internal review.

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5.3 Consider and endorse the 2018/19 financial statement provided by external audit. 5.4 Consider and endorse the proposed management arrangements for the East

Midlands Railway Franchise and the collaboration agreement that underpins this. Cllr Jonathan Morgan Vice-Chair East Midlands Councils

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Risk Register

East Midlands Councils

Date Prepared: November 2019

Prepared by: EMC Management Team

Risk

Impa

ct

likel

ihoo

d Key Controls in Place Further Action To Be Taken Risk Owner

1. Loss of Authorities in Membership South Holland District Council on-notice

A 2 Communicating the benefits of EMC membership. Understanding local pressures; both service delivery and financial.

Follow-up discussion with South Holland District, building on previous discussions with Chief Executive.

Political engagement with South Holland District Council.

Management Group Executive Director

2. Lack of engagement from Members

B 2 Member engagement is part of the KPIs reported on a quarterly basis to Management Group. Group Leaders are informed of non-attendance.

Group Leaders’ review Group nominations to Boards.

EMC secretariat reminds Members of meetings and reports attendance to Group Leaders (both pre and post-meeting).

Group Leaders Management Group

3. Lack of engagement from Staff

B 3 Regular team meeting and 1 to 1s; staff appraisals.

Full knowledge of income and expenditure profiles; and engagement in developing and rolling-out the work programme.

Management Team

4. Insufficient capacity and resilience (including staff and financial) to deliver work programme.

B 2 Annual KPIs to monitor progress in the delivery of the business plan.

Annual staff appraisals and regular business plan planning meetings.

Revised approach to delivery of work programme.

3 month review against business plan and budget

Management Group Management Team

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5. Inability to secure consultancy and other earned income to balance budget

A 2

Agreed rates and charges schedule in place for 2019/20.

Monthly financial reporting and oversight. Proposed 2019/20 income target consistent

with that delivered for 2018/19.

All opportunities will continue to be explored including ‘Non-local government’ markets.

Targeted promotion of EMC service offer.

Management Team

6. Inability to secure grant funding to balance budget. Uncertainty remains in relation to 2020/21 HS2 and Midlands Connect grant funding.

A 2

100% of grant confirmed for 2019/20 budget. New sources of income actively explored. External grant now represents 34% of EMC’s

total income, thereby balancing EMC sources of income although exposing organisation to vulnerability if grant reduced (potentially for reasons outside of EMC’s control).

All opportunities will continue to be explored, including Midlands Engine and HS2.

Regular programme management and oversight to meet requirements and demonstrate value-added.

Management Team

7. Loss of Strategic Migration Grants from Home Office

B 3 Regular meetings with Home Office, at both Ministerial and senior officer level.

Delivery of programme milestones and wider commitments, as per Grant Agreement.

Importance of asylum and refugee resettlement emphasised by additional national programmes, i.e. VPRS, UASC.

Home Office confirmed ‘Enabling’, SVPRS and UASC grants confirmed for 2019/20.

Ongoing risks to be managed for 2019/20 including outcome of Home Office review and future of VPRS post-March 2021.

Ongoing dialogue with Home Office. Demonstrate value-added of partnership

(supported by grant), including performance management of programme delivery.

Specific focus on widening dispersal.

Management Team

8. Emerging Partnerships and local government reorganisation

B 2

Local government reorganisation in Northamptonshire.

Advisory support and engagement with local authorities in the development of ‘Strategic Alliance’ and Metro Strategy proposals to support complementarity with EMC activity, e.g. TfEM.

To maintain neutral position and not to take any partisan line in relation to local government re-organisation discussions.

Consideration of developments by EMC Management Group and Executive Board for political guidance.

Management Group Management Team

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KEY

SEVEREA 1,5,6

SIGNIFI-CANT

B 3, 7 2,4,8

MODERATEC

MINORD

4 3 2 1

VERYUNLIKELY

NOT VERY

LIKELY

QUITE LIKELY

VERY LIKELY

Likelihood

Some Extra Risk Management Action

No Extra Risk Management Action

Impa

ct

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111


East Midlands Railway Franchise Collaboration agreement between TfEM and the DfT

Briefing Note for EMC Management Group

1. Background 1.1 TfEM brings together the nine Local Transport Authorities (LTAs) from across the East

Midlands under the auspices of East Midlands Councils to provide collective leadership on strategic transport issues. The TfEM Board comprises elected members nominated by each LTA.

1.2 TfEM is working with DfT on a Collaboration Agreement to provide local input into the

management of the East Midlands Railway franchise, based on the ‘Limited Management Role’ agreed by the TfEM Board on the 26th January 2018 and confirmed on the 5th June 2019.

1.3 Ministers have agreed the principles of the collaboration, and tasked DfT officials with

finalising a draft agreement for Ministerial sign off. Although work is progressing well, formal sign off now not happen until after the General Election. However, the agreement is considered by DfT officials to be low risk, as: The costs to Government of terminating recently let East Midlands Railway Franchise early

would be prohibitive (Labour’s policy it to re-nationalise each franchise only when it comes to an end); and

All major political parties are supportive of the principle of greater local involvement in the management of rail services.

1.4 Whilst the Collaboration Agreement will not deliver the same level of control enjoyed by

Transport for the North or the West Midlands Rail Executive, it does represent a significant improvement on previous arrangements for the East Midlands, and could provide a model for non-metropolitan areas elsewhere in the country in the context of the Williams Rail Review.

2. Purpose & Heads of Terms 2.1 The purpose of the Collaboration Agreement between DfT and TfEM is to support economic

growth and development by improving rail services for passengers and freight operators across the whole franchise geography through: The ability to develop incremental improvements to the franchise working directly with

DfT officials; The ability to discuss performance issues directly with DfT officials and to secure

resolution; Quarterly meetings with the DfT franchise management and LTA lead officers to oversee

the implementation of the Collaboration Agreement (the ‘Steering Group’) - with a reporting line into the TfEM Board; and

An annual meeting between the Chair of TfEM and the Secretary of State for Transport to review franchise performance and potential for further improvements;

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2.2 The Collaboration Agreement will last the length of the franchise (8 years + 2) - with a 12 month notice period on either side. It will be underpinned by the creation of two new posts jointly funded between TfEM and DfT: A ‘Head of Rail Improvement’ leading on senior stakeholder engagement on rail matters

and using highly developed influencing skills to effectively engage with the DfT and East Midlands Railway so that TfEM secures a better outcome for the region that might otherwise be the case.

A ‘Rail Monitoring & Performance Officer’ to gather, analyse, interpret and present the data from East Midlands Railway and others, to help make the case for improvement and/or investment. This role would also support the senior post in stakeholder engagement.

2.3 Although the focus of both posts will be the East Midlands Railway franchise, they will have

the ability to support TfEM and DfT input into other rail relevant franchises, the development of HS2 and rail issues generally.

2.4 Funding arrangements will be subject to separate agreements between East Midlands

Councils as the employer, DfT and the relevant contributing LTAs. The total cost of the delivering the Collaboration Agreement will be £220,000 pa, split 50/50 between the DfT and TfEM (the 9 LTAs plus a contribution in kind from EMC).

2.5 The Collaboration Agreement is not an exclusive arrangement. Individual member

organisations and partners are free to make direct representations to DfT or East Midlands Railway on any matter out-with the terms of the Collaboration Agreement.

3. Governance 3.1 The Governance of the Collaboration Agreement rests with the DfT (ultimately through the Secretary of State) and EMC’s TfEM Board and will be kept under review. 3.2 To provide advice to the TfEM Board, and to provide operational oversight and technical input

into the delivery of the Collaboration Agreement, a ‘Steering Group’ comprising senior officials from member organisations will be established.

3.3 As the East Midlands Railway Franchise extends beyond the TfEM geography, the membership

of the Steering Group will include representation from adjacent sub-national transport bodies and other relevant devolved bodies with responsibilities for rail franchise management.

4. Progress & Next Steps 4.1 We are working with Dft officials to complete the draft agreement for when the new

Government takes office – which will also need the agreement of Nottingham City as EMC’s accountable body.

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4.2 Realistically, Ministerial sign off is unlikely to take place until early in the new-year. However, provided we can secure a draft agreement with officials, it is proposed to advertise the 2 posts w/c 16th December 2019 with a closing date in mid-to late January 2020.

4.3 Because of the nature of the posts, EMC will be engaging with a specialist recruitment agency

as well as advertising on East Midlands Jobs. No appointments will be made until the Collaboration Agreement is formally signed off.

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Item 10


Conduct and Standards

Summary The following report provides an update on the oversight and operation of the Members’ and Officers’ Codes of Conduct. Recommendation Members of the Management Group are invited to note this report.

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1. Member Lead 1.1 Cllr Alan Rhodes is the nominated lead member on behalf of the Management

Group for conduct and standards.

2. Declarations of Interest 2.1 All EMC Members that are required to complete and submit an annual

declaration of interest have done so. There are 2 outstanding returns – and those Members have been requested to complete these as a matter of urgency.

2.2 Similarly, all EMC staff members are required to do so and this is reviewed on at least an annual basis.

3. Other Matters 3.1 No standards complaints have been submitted to the Monitoring Officer. 3.2 No corporate governance issues that relate to whistle blowing and complaints

handling have been highlighted. 3.3 No other issues that relate to conduct and standards have been highlighted to

EMC secretariat. 4. Recommendations 4.1 Members of the Management Group are invited to note the contents of this

report.

Cllr Alan Rhodes Labour Group Leader East Midlands Councils

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Documents

Management Group Meeting 10.00am, Friday 22 November …...Pera Business Park, Melton Mowbray AGENDA 1. Apologies 2. Declarations of Interest 3. Minutes of meeting held on 6th September