Members received the report of the Chief Executive and the Chief Operating Officer of Rother DC Housing Company Ltd (RDCHC) which provided a progress update on the governance arrangements of RDCHC, as well as the Council’s arrangements for the governance of RDCHC.  The update followed a commissioned review of RDCHC’s governance, resourcing and operating structures completed by Counties and Capital Consulting (C&CC).

A summary of C&CC’s report and recommendations were attached at Appendix A to the report.  The scope of the review focused primarily on measures RDCHC could take to improve its governance arrangements and ensure it continued to achieve its objectives effectively.  The report also highlighted the type of governance arrangements it should expect from its Shareholders, to demonstrate openness and transparency to the Council as sole Shareholder.  The report was split into two sections, as follows:

Section 1: RDCHC Recommendations and Updates – a summary of the recommendations were detailed in Appendix B to the report.  In July 2022, the Audit and Standards Committee (A&SC) received a report on the key issues and risks associated with governance that needed to be tackled to fulfil the ambitions of RDCHC’s Board.  The report highlighted progress made and measures required which included improvement of skills and resource within the company; company business plan including periodical performance review; a robust Service Level Agreement (SLA) to define the scope of roles undertaken by Council officers on behalf of RDCHC; and dialogue with the Shareholder’s Internal Audit service.

Section 2: Shareholder Representative’s View – the RDCHC Board must demonstrate independence in its decision making and discharging responsibilities under the Company Act 2006.  Without robust governance arrangements, the RDCHC Board could be subject to informal influence from Council officers.  A flow-chart of the governance arrangements was detailed within the report.  The A&SC would continue to receive periodic updates from the Shareholder Representative on the governance arrangements and any significant associated changes.  Performance reports would be presented to the Overview and Scrutiny Committee (OSC).  A Shareholder Representative Oversight Group (SROG) had been established, with membership of Chief Executive, Director – Place and Climate Change, Senior Housing Manager, Chief Finance Officer and Corporate Programme and Projects Officer; a draft copy of the Terms of Reference was attached at Appendix C to the report.

RDCHC would be completing several next steps with the aim of refining existing governance arrangements to complement actions being taken by the Shareholder Representative.  These were: appointment of Council officers to the RDCHC Board; establish monthly SROG meetings with Council officers; consider draft SLA; engage with Shareholder’s internal audit service; finalise recruitment packs and advertise for non-executive directors; review and complete business plan by early 2023 for Shareholder approval.

As a shareholder, it was a priority for the Council to ensure that it monitored the financial performance of RDCHC and ensured its investments were protected and the risks of financial losses minimised.  It was noted that external legal advice had been obtained by both RDCHC and the Council regarding terms of their respective roles and functions.

During the discussion, the following was noted:

•           RDCHC must have independence and would be appointing its own staff to the Board in the future;

•           the Blackfriars project consisted of two projects: the Spine Road which was Rother District Council’s (RDC) and the Housing project which was RDCHC’s;

•           the only funding received by RDCHC was from RDC. RDC would not lend until it was satisfied that its funding was not at risk and that the project would be delivered;

•           it was the Shareholder’s responsibility to decide on the strategy, but the Board’s responsibility to decide on how that strategy should be delivered;

•           the risks were enormous to RDC and meetings between officers of RDC and RDCHC took place monthly.  The frequency of meetings had been agreed with the Board and would be reviewed when necessary;

•           the OSC would monitor performance by way of an annual report from RDCHC, but the Committee could add updates more frequently to their Work Programme if desired; and

•           the role of the A&SC was to monitor governance and assurance with a limited involvement of the Council’s Internal Audit, in terms of reassurance of RDCHC’s governance relationship with RDC.

RESOLVED: That the proposal to refine the governance arrangements of Rother DC Housing Company Ltd and the arrangements of the local authority’s governance of its wholly owned company be noted.

(Councillor Langland declared a Personal Interest in this matter as Company Executive Director for Rother DC Housing Company Ltd and in accordance with the Members’ Code of Conduct remained in the meeting during the consideration thereof).

(Councillor Thomas declared a Personal Interest in this matter as Chair and Company Executive Director for Rother DC Housing Company Ltd and in accordance with the Members’ Code of Conduct remained in the meeting during the consideration thereof).