The Chair invited David Wilkinson of Ernst & Young to introduce the report before giving Members the opportunity to comment and ask questions.

Asked why there was no report from officers Paul Evans explained that the report was independent of the Council.  He also confirmed that this was the first Committee at which the report had been considered as it was felt appropriate for the matter to be dealt with by General Purposes as the Council’s audit committee.  The Chair added that he had not wished it to appear that the Committee was steered by officers in any way.  Ged Curran explained that he was present in place of the Director of Corporate Services to avoid any suggestion of influencing Members.

Rob Hampson and Julian Stanford, who had conducted the review, were then introduced and gave details of their backgrounds in fraud investigation.  David Wilkinson gave an overview of the review and its findings, drawing attention to the fact that it had not identified any corruption, malpractice or unlawful expenditure but that there were a number of issues to be addressed and these were reflected in the recommendations.

The Chair then opened the meeting to questions.

Councillor Janice Howard asked why the review took so long to complete and was advised that the first six steps were largely finished by mid December.  The decision was then taken to conduct interviews which took place in January.  The interviewees were given an opportunity to comment and responses were received by 5 February.  The draft review was produced and a further right of reply given.  Responses to this were received by 24 February and the letter issued on 27 February.

Councillor Rod Scott asked whether Human Resources had not addressed this situation because of lack of resources, whether payment through service companies was lawful in terms of National Insurance and tax payments, whether the external auditors had a role in looking at such appointments and had the Audit Commission done so previously and whether disciplinary action would follow.

Ged Curran stated that the significant weakness identified by the review was the absence of a system to trigger action in respect of long term interim and consultant appointments.  Dean Shoesmith added that currently HR monitor interim and agency staff appointments.  He was happy to include consultants and to have a formal process to demonstrate a business case for a continued placement, as is the case for agency workers. He confirmed that HR would flag up any anomalies if aware of them whether or not there was a procedure in place.

Paul Evans advised that payment through service companies was the industry standard at one time; he did not consider them to be unlawful.

David Wilkinson said that EY’s approach was driven by key areas of risk and materiality; the appointment of contractors and interims was unlikely to fall within these areas.  He was not aware of any concerns being flagged up by the previous external auditor.

The Chair asked the Committee to consider at a later stage whether it wished to exclude the public from the meeting in order to discuss the reference to  disciplinary issues.

Councillor Gilli Lewis-Lavender asked about the status of the 2001 Code referred to in the review and queried the statement that the rates paid were comparable to the market rates.

Paul Evans advised that the 2001 Code was the one referred to in the whistleblowing report and was the Code in use at the time.  It was not a legal requirement but provided to assist managers in best practice.  The Council’s current Standing Orders gave a link to a revised protocol. 

David Wilkinson clarified that the market rates for interim appointments do not compare directly with the full time equivalent rates which were shown on page 10.

In response to a question from Councillor John Dehaney about whether the review should have gone further Rob Hampson advised that having reached the point where they had answers to the questions that needed to be answered further enquiries would have been disproportionate, unnecessarily intrusive and expensive.

Councillor David Williams posed questions about the auditor’s fee, the reasons given to justify the appointments and the extent of involvement by Members and the Chief Executive.  He specifically asked about the role of I2, initially appointed as a consultant in 2009 but acting in an interim capacity since 2011, and asked the Cabinet Member if he had questioned why this was continuing.

David Wilkinson advised that, subject to the approval of the Audit Commission, the fee for the review would be £34k.

Rob Hampson said that the reasons given for the continued appointments were not accepted as adequate evidence of achieving value for money and therefore had not been tested.

Paul Evans and Ged Curran explained that previously the Cabinet Member had responsibility for signing off a vacancy to appoint to an interim post, but this was an inefficient system.  This system would not have impacted on the current position.  Currently the sign off is done by a director in a different department.  There had not been a specific Member level decision to effect this change.  The Chair stated that such decisions to change processes should be reported to Cabinet.

Councillor Mark Allison clarified that one of the posts had been signed off by a Cabinet Member in the previous administration.  He did think sign off should be returned to Cabinet Members as it was inefficient and risked accusations of political patronage or impropriety.  The finance department had been a key driver in the improvements achieved by the Council and as Cabinet Member he saw his role as setting out the Council’s aims and objectives; not be involved in the terms and conditions of officer appointments.

Ged Curran said that he was aware of the status and length of time of the appointment of I1.  He was content with the situation because he knew of the difficulties of appointing to such posts and because of the contribution made by the postholder which has included structural changes which have improved service delivery.

Councillor Ian Munn questioned who had made the appointments and what process had been followed.

Rob Hampson responded that the Director of Corporate Services had interviewed for and appointed to the two posts.  David Wilkinson added that the payments agreed were comparable to the market rates for interim appointments.  He referred to the comment in the review that the appointment process gave rise to a lack of transparency and insufficient oversight.

Councillor Debbie Shears queried whether staff had been reassured  that it is still safe to make whistleblowing allegations and whether all departments were now looking at current consultants appointments together with HR.

Ged Curran advised that the Council has a highly developed system for whistleblowing and regular reports are considered by the Committee.  He agreed to look at ways to further promote and give reassurance about the scheme.  He also confirmed that a review of similar appointments is being conducted across the Council but advised that in some areas of work, including social services, finance and procurement, it was virtually impossible to recruit on a permanent basis.

With the agreement of the Chair Keir Greenaway, GMB Branch Secretary, addressed the Committee and referred to concerns raised by staffside with the Chief Executive in January 2013 about interim appointments and asked whether there would be an assessment of whether the Code of Conduct had been broken and whether the CE had any previous involvement in interim appointments in the directorate of Corporate Services.

Ged Curran confirmed that there would be an assessment and that he had counter signed a single price quotation.  Dean Shoesmith said that HR are looking into the concerns raised and are drawing together a register of consultant and interim appointments across the Council which will be reviewed.  Ged Curran reiterated that there would be some areas where transfer to the permanent workforce would not be an option and agreed that these issues should be reported to Members.  The introduction of a time trigger point to prompt action on interim appointments would also aid reporting to Members.

Councillor David Williams asked about Ernst&Young’s view that the appointments did not offer good value for money. Ged Curran responded that he understood Ernst&Young to be saying they were not in a position to make that judgement. He acknowledged that an interim appointment was more costly than a permanent postholder but felt that the achievements of I1 represented significant value to the Council.

The Committee noted the assurances given that there would be a review of whether the Code of Conduct had been breached

The Committee then considered each of the recommendations in turn.

Ged Curran confirmed that the review referred to in the first recommendation would be carried out and reported back to the Committee.  The single price quotation form would be applicable to all procurement purposes.

It was agreed to add to the second recommendation the inclusion of a mechanism to allow Members to monitor and be involved in the review.

The second and third recommendations were amended to include reference to consultants.

The Chair asked officers to include clear definitions of “interim” and “consultant” in the review to remove any possible ambivalence.

In respect of the fourth and fifth recommendations Dean Shoesmith clarified that HR could advise and ensure appointments are made on a proper contractual footing but did not have the resources to sit on all interview panels.

Councillor Rod Scott proposed additional recommendations to proceed immediately to recruit to the five posts concerned and any other interim appointments proposed or in place for more than six months and to cease payments through service companies.  These motions fell as they were not supported.

The Chair asked officers to include guidance from HMRC on payments through service companies in the review.

            RESOLVED: That the Committee agrees –

(1)  that the Council should review the use of single price quotation forms, particularly in respect of the justifications required to be documented and the approval process for their use, and report back to the Committee in June;

(2)  that officers should report all prospective interim and consultancy positions to HR and that HR should be responsible for maintaining a central database of all prospective and live roles filled by interim and consultancy appointments; and that a mechanism is built in to allow monitoring of this register at Member level;

(3)  that HR should challenge departments on their use of long term interim and consultancy appointments (over six months), the rates which are being paid and ensure that external recruitment is considered;

(4)  that HR should be involved in any recruitment process, including the recruitment of interim managers;

(5)  that Council should review its interview process and the policy on the number of interviewers required, including in relation to the appointment of interim managers;

(6)  that the Council should review its policy on declarations of interest to include personal friendships; and

(7)  that the Council should communicate to all Council officers any revisions it makes to its procurement policies.