Highland Council Minute - 10 March 2011 (Special Meeting)

Agenda

Minutes of Special Meeting of the Highland Council held in the Council Chamber, Council Headquarters, Glenurquhart Road, Inverness on Thursday, 10 March 2011 at 2.15pm.

1. Calling of the Roll and Apologies for Absence

Present:

Mr G Farlow, Ms L Munro, Mr R Rowantree, Mr D Mackay, Mr J Rosie, Mr B Fernie, Mr G Smith, Mrs D Mackay, Mr J McGillivray, Mrs I Campbell, Mr R Greene, Dr A Sinclair, Mrs J Urquhart, Mr M Finlayson, Ms M Smith, Mrs C Wilson, Mr R Durham, Mr A Rhind, Mr P Cairns, Mrs A MacLean, Mrs M Paterson, Dr D Alston, Mr B Barclay, Mr C Fraser, Mrs I McCallum, Mr H Fraser, Mr J Laing, Mr D Millar, Mr I Renwick, Mrs H Carmichael, Mrs M Davidson, Mr D Hendry, Mr H Wood, Mr A Graham, Mr D Kerr, Mrs B McAllister, Mr J Finnie, Mr F Parr, Mr I Brown, Mr J Gray, Mr K MacLeod, Mr R Balfour, Mr J Ford, Mr L Fraser, Mrs L MacDonald, Mr A S Park, Mr J Holden, Mr R Pedersen, Mr T Prag, Mr F D S Black, Mr D Fallows, Mr G Rimell, Dr M Foxley, Mr B Gormley

In Attendance:

Chief Executive
Assistant Chief Executive
Head of Internal Audit and Risk Management

Mr A S Park in the Chair

Apologies for absence were intimated on behalf of Lady M Thurso, Mr D Bremner, Mr R Coghill, Mr D Flear, Mr W MacKay, Mr I Ross, Mr M Rattray, Mr A Torrance, Mr D Chisholm, Mr B Clark, Mr A Henderson, Mr E Hunter, Mr A Christie, Mrs P Munro, Miss J Campbell, Mr P Corbett, Mr N Donald, Mr D Henderson, Mrs G Sinclair, Mr B Wynd, Mr G Marsden, Mr J Crawford, Ms J Douglas, Mr D Cameron and Mr B J Murphy.

2. Declarations of Interest

The Council NOTED the following declarations of interest –

Item 3 – Caithness Heat and Power – Mr G Smith, Mrs J Urquhart, Mr J Laing and Mr J Gray (Non Financial).

3. Caithness Heat and Power – Public Interest Report

Declarations of Interest:

Mr G Smith declared a non financial interest in this item on the grounds of being the Council Member mentioned within the Controller of Audit’s report but, having applied the test outlined in Paragraphs 5.2 and 5.3 of the Councillors’ Code of Conduct, concluded that his interest did not preclude his involvement in the discussion.

Mrs J Urquhart, Mr J Laing and Mr J Gray declared non financial interests in this item on the grounds of being Directors of Caithness Heat and Power but, having applied the test outlined in Paragraphs 5.2 and 5.3 of the Councillors’ Code of Conduct, concluded that their interests did not preclude their involvement in the discussion.

There had been circulated Joint Report No. HC-94-10 dated 3 March 2011 by the Assistant Chief Executive and the Head of Internal Audit and Risk Management which referred to the Controller of Audit’s latest statutory report of 9 February 2011 to the Accounts Commission in respect of the Caithness Heat and Power project and to the Accounts Commission’s response to that report. The report also detailed the actions taken by the Council to improve its governance arrangements following the Head of Internal Audit and Risk Management’s report of January 2010.

During a summary of the report, it was confirmed that the Controller of Audit’s report had been issued to the Chief Executive on 9 February 2011 together with a letter from the Accounts Commission which outlined the required process under Section 102 of the Local Government (Scotland) Act 1973 and the steps which would be taken for consideration of the report. Members had been issued with a copy of the report on 10 February 2011 and copies had been made available for public inspection. It had also been intimated at that time that the Accounts Commission’s response would be reported to the next scheduled meeting of the Council on 3 March 2011. However, the Accounts Commission had subsequently indicated that their findings would not be available until 28 February 2011 and, as the statutory process required meetings to consider findings to be to be advertised at least 7 days in advance, a Special Meeting of the Council had therefore required to be arranged.

In terms of the findings, it was advised that the Accounts Commission had referred to the following only in broad terms – the corporate failure to establish effective governance arrangements over the project, a lack of appropriate risk management and the ineffective monitoring of progress and failure to ensure that appropriate control mechanisms were in place to manage potential risks.

With regard to the specific roles and responsibilities, the Commission’s findings had been limited to the following – the former Chief Executive had been made aware of concerns but had not taken sufficient action to ensure that these were effectively addressed and the Director of Finance should have pursued more vigorously the concerns he had raised with the former Chief Executive.

In terms of the statutory process, it was emphasised that the Accounts Commission had had the option of making recommendations to the Council but had elected not to do so and it therefore appeared that they were satisfied with the action which had been taken and which continued to be taken in regard to the necessary improvement actions. In this respect, it was confirmed that a follow up review of all agreed actions was to be undertaken and a further report submitted to the Council in due course.

In relation to the wider context, and specifically references which had been made in Audit Scotland’s recent Best Value 2 report which had recognised the improvements which the Council had made over the past 18 months and the ongoing action in sharing lessons learned from the Caithness Heat and Power project with all Heads of Service and Managers across the Council, it had been acknowledged by Audit Scotland that there was now strong political leadership within the Council with an Administration which worked consistently and effectively and a strong Opposition which contributed to a clear and consistent strategic direction. It had also been noted that the Council had strong managerial leadership and the Chief Executive promoted a positive and inclusive management approach by setting out clear accountabilities and responsibilities and there had been a strengthening of corporate working following the changed political and managerial arrangements. Overall, it had been considered that the Council was demonstrating that it was improving and was well placed to deliver future improvement.

During discussion, Members made reference to the criticism of the role of the Director of Finance within the Controller of Audit’s report which it was felt was particularly unfair in view of the fact that the Director had made representations, both verbally and in writing, at the time in relation to his concerns about the governance of the project. In this regard, it was stressed that the current environment was very different to the environment which had appertained then and it was agreed that it should be a matter of public record that the Director of Finance had always provided considered and sound advice to the Members of the Council and it was disappointing that he had been singled out for criticism on this issue in the Controller of Audit’s report.

Members also raised the following issues:-

there was a need to take this matter very seriously in view of the large sums of money which were involved;
there was also a need to recognise the amount of information which had come into the Council at the time as a result of the change from a wood chip scheme to gasification;
it was important to consider that reminders had been issued to ensure that the project complied with all legal, financial and contractual requirements and, in this respect, six fundamental issues had been highlighted as requiring action;
in terms of the changes within the Council, there was now a very robust structure in place with an Administration which provided leadership and a very effective Opposition who undertook constructive scrutiny regarding actions and reports and it was therefore inconceivable that a similar situation could arise in the current environment;
the Council had learnt lessons about governance and future projects would now be tracked carefully by both Members and Officers;
there needed to be an acknowledgement of the amount of time which had been spent by Officers within the Council, specifically within Internal Audit, on the project over the last few years and the impact of this on planned audit work;
there was a need for all Members of the Council (not just the Opposition Members) to take collective responsibility and to scrutinise and ask questions about future proposals and projects to ensure that a similar situation did not happen again;
there had been clear references within the Controller of Audit’s report to failed governance, serious and wide ranging deficiencies, senior individuals’ involvement and the lack of clear direction for the project and, in terms of the expectations of the public, there was a need for a clear message to come from the Members of the Council who had held senior positions at that time;
there was a need to provide thanks to the Officers within the Council who had ensured that there had been no detriment to Council tenants;
whilst this was one of the most damaging reports which had ever been presented to the Council, the recent Best Value 2 audit report had acknowledged that there was now a strong political leadership within the Council with an Administration which worked consistently and effectively and a strong Opposition which contributed to a clear and consistent strategic direction;
most of the 39 actions which had been listed had already been undertaken and the remainder needed to be followed up in an open and honest manner;
Members of the Council needed to be clear about the value of the Statutory Officers and to respect their roles and move forward on that basis;
in terms of the consideration of future projects, there was a need for the Council to ensure that it did not become ‘risk averse’ but followed the path of ‘risk awareness with correct governance’;
there was a need to recognise that the policy within the Council was framed by the Elected Members who then directed Officers in the implementation of that policy; and
there was a need to consider the quality of the reports which were provided for Members at the time in order to assess where any further improvement was now required in terms of the provision of information.

In response, the Budget Leader referred to issues which had been highlighted in the Best Value 1 report, such as need at that time for Elected Members to have assumed a greater role in the strategic leadership of the Council and the recognition that the former Chief Executive had been a strong figure who had kept firm control of the Council which had meant that across a range of areas a significant focus of knowledge of information had rested with one individual, and acknowledged that there had been too much deference and very little challenge within the previous Council. As such, Members and Officers should perhaps have pursued perceived weaknesses in governance albeit that it was recognised that this would have been very difficult within the environment which prevailed at the time. However, lessons had been learned and the current environment was now very different although it was recognised that this was an ongoing process.

The Leader of the Administration acknowledged that Members of the previous Council had to take responsibility for the actions and decisions taken by them at that time. He also acknowledged that all Members should perhaps have been more actively involved with this project at the time.

At this point, it was also suggested that it should be formally recorded that the Council understood and supported the important role of the Statutory Officers.

Decision

The Council:-

(i)   NOTED the Controller of Audit’s report of 9 February 2011 on the Caithness
      Heat and Power project prepared under Section 102 of the Local Government
      (Scotland) Act 1973;

(ii) NOTED the Accounts Commission’s response to the Controller of Audit’s
report;

(iii) AGREED that the actions taken by the Council were sufficient to address the
       specific issues raised with regard to the project and were sufficient to ensure
       that no similar failings occurred within future projects. This agreement would be
       confirmed to Audit Scotland and the Accounts Commission;

(iv) AGREED that Audit Scotland and the Accounts Commission would be kept fully
informed of the progress of the project;

(v)   AGREED that the Head of Internal Audit and Risk Management would
       undertake a follow up review in order to ensure that all actions had been
       implemented and were now effective and that the report would be presented
       to the Council; and

(vi) AGREED that it should be formally recorded that the Council understood and
supported the important role of the Statutory Officers.

4. Member Attendance at Meetings

The Council AGREED to consider this additional agenda item at the meeting.

Members were advised that the Local Government (Scotland) Act 1973 required that if a Member of a Local Authority failed, throughout a period of 6 consecutive months, to attend any meeting of the Authority, they would, unless the failure was due to some reason approved by the Authority, cease to be a Member of that Authority.

Lady Marion Thurso had, because of family illness, been unable to attend meetings since 28 September 2010 and as this might continue beyond the 6 months stipulated in the Act, the Council was required to approve her absence to enable her to continue as a Member of the Authority.

It was noted that agreement had been reached with other Members of the Council to carry out Lady Thurso’s role in Ward Business and as a Member of the Housing and Social Work and Education, Culture and Sport Committees and the Caithness, Sutherland and Easter Ross Planning Applications Committee during the period of her absence.

Decision

The Council AGREED Lady Marion Thurso’s absence as a result of family illness on the basis that the position would be reviewed following a further 3 month period.

The meeting ended at 3.10pm.