cornwall housing board eeting...2014/11/24 · 1 of 2 cornwall housing board meeting meeting to be...

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CORNWALL HOUSING BOARD MEETING

Meeting to be held on Monday 24 November 2014 2N:03/2N:04, New County Hall, Treyew Road, Truro

Refreshments from 17:30 18:00 – Board Meeting

AGENDA

1. Welcome and Apologies 2. Declarations of Interest 3. Minutes of the meeting held on 29 September 2014 (attached) (18:00-18:05) 4. Questions received from Customers (18:05-18:10) 5. Verbal update from the Chair (18:10-18:20) 6. Feedback from Shareholder (18:20-18:30)

FOR DECISION

7. Governance Review – Nick Ball (attached) (18:30-19:30)

8. Financial Procedure Rules – Jeanette Beavors (attached) (19:30-19:35)

9. Update from the Finance and Performance Committee – Jeanette Beavors (19:35-19:40) (attached)

FOR INFORMATION

10. Update from Property Development Committee (attached) (19:40-19:45)

11. Feedback from Tenants’ Forum – Martin Emery (19:45-19:50)

12. Any Other Business (19:50-19:55)

13. Next Meeting: Monday 26 January 2015

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14. EXCLUSION OF THE PRESS AND PUBLIC (19:55-20:15)

The Board is asked to consider a resolution that the press and public be excluded from the meeting for the business specified in the following item on the grounds that there is likely to be a disclosure to the public of exempt information of the following description:- Category 3 - Information relating to the financial or business affairs of any particular person (including the authority holding that information):

• Asset Management System

• Confidential Minutes of the meeting held on 29 September 2014

Minutes Meeting Title: Board Meeting

Date: 29 September 2014

Time: 18:00

Location: 2N:03/2N:04, New County Hall, Treyew Road, Truro

Chaired by: Nick Ball

Attendees: Martin Emery Vice-Chair Ann Kerridge Board Member John Bailey Board Member Derris Watson Board Member Steve Chamberlain Board Member Mary May Board Member Tony Canton Board Member Shelley Thornton Board Member Malcolm Moyle Board Member John Harris Board Member Steve Knightley Board Member Hazel Tearne Board Member Joe Cooke Board Member Nathan Waller Board Member Jane Barlow Managing Director Adrian Pengelly Director of Assets Pete Jarman Director of Landlord Services Cathy Hadfield Director of Housing Options Jeanette Beavors Director of Finance Sophie Hosking Strategic Lead (Alternative Service Delivery), Cornwall Council Paul Masters Corporate Director for Communities and Organisational Development, Cornwall Council Michelle Pattison PA to the Managing Director Barbara Harris Tenant Representative Rita Taylor Tenant Scrutiny Panel Di Brittain Tenant Scrutiny Panel Steve Hunt Tenant Scrutiny Panel Kate Foster Tenants’ Forum

Apologies: Peter Ledson Board Member Emma Blatchford Head of Resources

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Minutes Action

1 Welcome

As Nick was not able to attend the last meeting, he welcomed Councillor Steve Knightley to the Board who had been appointed as a Council representative replacing Councillor Roy Taylor, as well as Councillor Malcolm Moyle following his recent illness. He also thanked Paul Masters and Sophie Hosking for attending.

2 Declarations of Interest

None.

3 Minutes of the meeting held on 28 July 2014 and Matters Arising

The above Minutes were agreed. Management Accounts – Nick confirmed that these were signed on 9 September 2014.

4 Question from Customer

Further to a recent Tenants’ Forum meeting and related to a previous question posed to the Board by Kate Foster in October 2013, Adrian Pengelly provided an update in relation to the upkeep of housing estates. Adrian advised that he had recently attended both tenants’ forum meetings where this was discussed and a debate was had in relation to issues around contracts for environmental works. Adrian confirmed that a piece of work was being undertaken within the Assets Directorate to consolidate contracts and specifications which was a significant piece of work. It was agreed at the forum meetings that some estate inspections would take place to inform this work. It was anticipated that a robust specification of works and a consolidated schedule would be achieved by the end of year. Any urgent issues would be addressed. The Board discussed Service Charges and Adrian also confirmed that there was an ongoing project looking at this which was also a comprehensive piece of work.

5 Verbal update from the Chair

Nick Ball advised that he had met with Michael Crich, Corporate Director of Economy, Enterprise and Environment, about the restructure of the Council’s group of companies, who outlined the process and his initial thoughts. Nick had spent some time with various colleagues to discuss the structure of the Board. Although he had intended to bring a comprehensive proposal to the Board, he would like to be in a

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Minutes Action position whereby the Council had clear sign-up to the proposals. The proposals were currently with the Legal Section. Nick was very pleased to be invited to the Tenants’ Forum Annual General Meeting and was very grateful for the fantastic work undertaken by the members and the positive relationship between the Board and the Forums.

6 Questions arising from Weekly Board Update issued by Managing Director

There were no questions for the Managing Director and all agreed that this briefing was useful and should continue.

7 Feedback from Shareholder

Nick thanked both Paul Masters and Sophie Hosking who were attending to provide updates in relation to budget issues and also the group structure proposals. Paul explained that the Council’s budget comprised half Council Tax income and half Government grants, and that Government grants were being cut substantially. This was the reason that the Council had to make cuts and it was anticipated that the Council needed to make a saving of £196M over the next 5 years. He advised that the Cabinet had put forward proposals which had been submitted to the Portfolio Advisory Committees. Following this, consultation events would be held, commencing tomorrow, and 19 such sessions had been organised across Cornwall. The Cabinet would then consider these views and would put together a budget by the beginning of November, followed by Full Council towards the end of November. Proposals may also involve negotiations and consultation with the unions. The Cabinet was also looking at areas where the Council could be more efficient which puts context on the reason for the review of the Council’s group of companies. Sophie explained that the Council owned a number of companies, which were set up as Teckal companies (Cornwall Housing, Newquay Airport, Cornwall Development Company and Cormac Solutions). These companies had all been set up so that they were controlled by the Council as if they were in-house services, the main exception being Cornwall Housing’s ALMO Board structure. The Council could also passport work to these companies. There was also the ability to set up trading companies which could bid for work, carry out trade and pass profit back to the Council. These companies presently had different Board and management structures and the Council could potentially have more such companies in the future because it was an ambition to trade more and look at different ways of delivering services. Michael Crich,

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Minutes Action Corporate Director of Economy, Enterprise and Environment had therefore been tasked with reviewing the structures of these companies to work in a more efficient way and to future-proof the Council. A £750k savings target was proposed in the draft 2015/16 budget, in terms of the group structure of companies. Michael would be writing to the Boards individually and Sophie was attending to provide an initial outline. Sophie explained that it was possible to have a different structure eg one management structure across a number of legal entities – Teckal and trading company. The Council would retain a separate legal entity around the ALMO. Sophie referred to the strict rules around the Housing Revenue Account and its funding. Legal and Finance advice was being sought and employment law also needed to be checked. Once this was received, Michael would put forward a proposal and would carry out a consultation exercise. The timetable was very tight if the Council wanted to meet the deadline of 1 April 2015. It was hoped that the proposal could be submitted to the Cabinet for a decision in January 2015. The Board discussed the implications of a new structure and, following a question, Sophie confirmed that there would be a Board to run the overarching company, but there would still be a Cornwall Housing Board. In response to a further question, Sophie advised that the driver for this review was not purely financial but also because the group of companies had been set up with different and complicated arrangements. As the Council was likely to want to set up more services this way, this review was also looking at the best way this would work in the future.

8 Scrutiny Panel Update Presentation

Nick welcomed Rita Taylor, Di Brittain and Steve Hunt to the meeting who were attending to provide an update on the work of the panel. Two recruitment sessions had been held for interested tenants and leaseholders. One leaseholder had been recruited , 3 tenants who were non-forum members and 1 forum member (John Unsworth, Litza Harford, Jan Raines and Pat Jago). The panel had previously asked for scrutiny topics from the forum, Board and other tenants and customers and had reviewed performance information, results from the STAR survey and recent complaints. The panel also received suggestions from tenants about what to scrutinise. Two scrutiny topics were selected: “Repair Policy – Does it meet the needs of vulnerable and disabled tenants? What IT systems/information/alert systems are in place for call handlers?” and “Out of Hours Service – Does it meet the needs of Cornwall Housing Customers?” It was hoped to finalise these projects by the end of the year.

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Minutes Action Nick thanked the Scrutiny Panel Members for attending and for the important work that they were carrying out.

9 Governance Review

Simba Muzarurwi entered the meeting. Nick Ball welcomed Simba Muzarurwi, Business Audit Manager, Cornwall Council, to the meeting. At the Board meeting of 28 July, it was agreed that the Council’s Internal Audit Section would be commissioned to undertake a review of good practice of Boards both of ALMOs and other organisations, and to provide some objective recommendations to support this review. Simba was attending to present this report. These findings and subsequent discussions at the Board would then be taken into account by the Chair and Managing Director when drafting proposals for the future Board structure, which would be brought to the October Board meeting. Simba explained the function of the Internal Audit Section. He advised that the principal objective was to provide assurance on the effectiveness of the board structure and to conclude on the appropriateness and adequacy of the current structure. This was achieved through benchmarking the Board structure against other organisations within the housing sector and best practice; assessing the effectiveness of the working arrangements of the board structure and its committees; ascertaining that there are appropriate arrangements for recruiting and appointing Board Members with suitable experience and skills to fulfil their role; and ensuring that overall there were effective arrangements for the Board to efficiently discharge its responsibilities. The review did not include concluding on whether or not the company was achieving its objectives. Simba emphasized that the purpose of the report was to provide the Board with an independent platform for an honest and transparent discussion around reforming the Board’s structure based on best practice within the housing industry and other sectors as appropriate. The report was purely an auditor opinion in order to provide the Board with all the information in order for it to make an informed decision. Some of the recommendations would require both tenant consultation and shareholder approval before proposing changes to the Articles of Association. The Board reviewed the findings and recommendations within the report. Nick thanked Simba for attending and advised that a management response would now be provided to the report which would be managed through the Audit Committee and be presented back to the Board.

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Minutes Action Simba Muzarurwi, Paul Masters and Sophie Hosking left the meeting.

10 Proposal for Berryfields Estate Pilot

Pete Jarman presented the submitted report which explained that as part of the Government’s Welfare Reform, Universal Credit (UC), which included the housing benefit element, would be paid directly to the claimant, and they would be responsible for paying their rent to their landlord. Universal Credit was due to be rolled out in Cornwall in April 2016 and it was anticipated that it would have a substantial detrimental effect on our income streams. The organisation could wait to see what the impact would be after roll-out and then put in place whatever time and resources dictated, or it could be pro-active and prepare. Senior officers of Cornwall Housing would like to be pro-active and prepare and we have spoken to many partner organisations about running an ‘Inclusion Pilot’ on one of our most deprived estates, Berryfields in Bodmin. The aim of the pilot was to determine what resources would be required to get tenants Universal Credit ready. It should provide the organisation with support need outputs that could be up-scaled across the stock, enabling us to build support capacity as appropriate. Additionally, and no less importantly, it would enable tenants to be equipped with the skills to ‘do UC for themselves’, ensuring rental income was maximised and support needs minimised wherever possible. Pete explained that the proposal was to run a comprehensive inclusion pilot on Berryfields estate in Bodmin. Berryfields was one of our most disadvantaged estates and was identified for the pilot due to it being compact with a high retention of Council-owned properties. The pilot would include intensive support for tenants and residents to get them UC ready. We would be asking willing volunteers who were on housing benefit to have that paid directly to themselves with them having the responsibility to pay rent to us. The principle of this had been agreed with Shared Services. The intensive support will be mainly around financial inclusion and financial literacy. It would also be highly centred around digital inclusion, as, in the future, nearly all UC claims would be made on-line. The pilot would also involve training opportunities and job-clubs. An important part of the pilot would also be about trialling ‘jam-jar’ accounts through Kernow Credit Union, with up to 50 such accounts being funded by ourselves. A detailed breakdown of the costs of the pilot was provided within the business case. It was proposed by Martin Emery, seconded by John Bailey and RESOLVED that the Board approve the business case to proceed with the Berryfields Inclusion Pilot.

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Minutes Action

11 Property Development Committee Update

Adrian advised that a discussion had taken place at this committee regarding a proposed amendment to the Scheme of Delegation to allow for new business cases to be approved by the Property Development Committee and Board rather than the Property Development Committee, Finance and Performance Committee and then the Board. It was agreed that this would be given further consideration when developing an urgency procedure in line with the audit recommendations considered earlier.

The following items were also considered by the Property Development Committee:

• Proval software – the committee noted the financial criteria/parameters being used to analyse development opportunities. The Development Manager informed the Committee of the work being carried out with Cornwall Housing and Cornwall Council Accountants to ensure that the financial viability model covers all requirements.

• HIP Four Year Programme – the committee noted the approved four year programme projections and reviewed the updated scheme list and delivery timeline. The Development Manager confirmed that the current start-on-site delivery target for 2014/15 was 93 properties – 45 on in-fill sites, 35 Section 106 acquisitions, 5 Mortgage Rescue and 8 Buy Back acquisitions.

• Development Programme Update – the committee reviewed individual elements of the programme including all firm business case proposals and all schemes currently under consideration.

• Gypsy and Traveller Update - It was confirmed the planning refusal of the site at South Trevido, Liskeard would be challenged with a view to formally appealing the decision. It was confirmed that the Homes and Communities Agency funding would now be used on two new build pitches at Boscarn and the rest of the £1.24m funding would be used on the refurbishment of the existing three Council-owned sites.

12 Update from Committees:

Finance and Performance – 26 August and 22 September 2014 The following items were considered:

• Accommodation Review – the committee considered the financial position and recommended to the Board that negotiations continued with the Council to pursue Bodmin as the headquarters for Cornwall Housing.

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Minutes Action • Berryfields Pilot Review – as detailed earlier in the meeting. • Management Accounts period 4 – the committee considered

the latest financial position and noted the current position of a forecast surplus of £388k which was £45k less than the revised budgeted surplus of £433k, and noted that this surplus was likely to be understated due to some incorrect assumptions around use of growth pots within the current budget and potential overstatement of the repairs projected overspend. Once this position had been reviewed, budgets reallocated and the remaining balance transferred to reserves, the surplus was likely to increase by £801k, which is £368k more than budget of £433k. Capital Programme was forecasting to outturn in line with budget. General Fund was forecasting to outturn with a £136k underspend, although some of this maybe clawed back by the Council to fund the projected overspend on retained GF budgets of £105k.

• Efficiency Savings Quarter 1 – the committee considered the report and were pleased to note that based on current performance levels the projected outturn position was £2,328k which was an increase of £221k when compared to the budget position of £2,107k, and noted that this position may be overstated by c. £100k due to duplication.

• Budget Setting Principles 2015/16 – F&P Committee considered the report and noted DLT’s decision to set stretching targets for the business to identify plans to deliver efficiency savings equating 15% of base expenditure budgets in order to align to CC CX requirement for the ASDs to ‘share the pain’ in terms of delivering savings. The committee also noted the budget setting timetable and the anticipated presentation of the draft budget to the committee and Board in January 2015.

• Insurance Report– the committee considered the report which demonstrated direction of travel in terms of costs of insurance premiums and claims history.

Customer Focus Committee – 9 September 2014 The following items were considered:

• ‘Tell us what you think’ and ‘Customer Promise’ Policies – Update provided. It was agreed that Appeals Panel Members would need input into the development of the new policy and a suggestion was also put forward as to whether Housing Options clients could also be involved with the Appeals Panel.

• Gold Standard – a dead line of 25 October 2014 had been given to apply for and achieve Bronze status. Members were informed that working towards the standard formed part of the framework for good practice and continuous

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Minutes Action improvement and it was intended to carry onto Silver status, once Bronze had been achieved.

• Gypsy and Traveller Update – the committee received an update on the South Treviddo planning application which had been refused, but it was likely that this decision would be appealed; and the HCA had agreed to switch funding to carry out improvements to existing Gypsy and Traveller sites.

Assets Management Committee – 1 September 2014 The following items were considered:

• Assets Management Software – it was noted that some procurement issues were still preventing the progression of the tender exercise but the Commissioning Manager was addressing the outstanding issues with Cornwall Council and BT Cornwall.

• Assets Directorate Performance – the committee received an update which included an update on the Capital Programme. Members noted that capital spend was in line with budget profiles for the year with increased levels of expenditure expected in the final six months of the year.

• Asset Management Strategy – the committee received an update. It was noted that the final draft was due to be presented at the next Committee Meeting and that consultation on the draft document was scheduled for the next three months.

• Response Repairs 2013/14 & Q1 2014/15 Performance – the committee received an update. The key performance information for 2013/14 was noted.

13 Feedback from Tenants’ Forum

Martin referred to the earlier discussion and advised that a Question and Answer session was held at both forums regarding the upkeep of estates; discussions had commenced regarding having one forum; and Rita Taylor had been appointed as Company Secretary.

14 Any Other Business

HQN Joint Board Event on 17 October – Nick Ball reminded all members about the above event.

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15 The Board resolved that the public be excluded from the meeting by virtue of Category 3 – Information relating to the financial or business affairs of any particular individual for the following item; and Category 1 – Information relating to the financial or business affairs of an individual:

• Independent Living Service Update - Pete Jarman • Confidential Minutes of the meeting held on 28 July 2014.

The meeting closed at 20:50

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Cornwall Housing Limited

Agenda No: 7

Report to: Board

Date: 24 November 2014

Title: Cornwall Housing Governance Review

Author: Nick Ball Role: Chair

Contact: 07794 337509

[email protected]

For Board reports

Committee: N/A

Date: N/A

Recommendations:

1 That the Board decide its preference for recommendation to the Shareholder between a Board of 10 consisting of 3 tenants, 3 independents and 3 Council representatives plus the Managing Director, or a Board of 13 consisting of 4 of each plus the MD;

2 That the draft revised Articles of Association are considered and approved, subject to any proposed changes;

3 That consultation with the Tenants’ Forum is carried out in January;

4 That the changes to the Articles are adopted at the AGM in January 2015, subject to Tenant Forum views.

1. Executive Summary:

The structure of the Board has been debated on a number of occasions to date, with mixed views. The Board’s governance arrangements were subject to review as part of a wider Arms Length Company’s audit and one recommendation was that the Board was too big and should be reduced in size. The Board, in considering its response to this recommendation, asked the Council’s Internal Audit Service to carry out a review of governance in similar organisations and to inform this report. That review was presented at the September meeting of the Board.

This report proposes a new structure for the Board, and that this be put in place by the time of the Annual General Meeting in January 2015,

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following consultation with the Tenants’ Forum, and subject to approval by the Shareholder.

2. Background and Cornwall Housing Objectives The current structure of the Board arose as a result of a number of principles, some of which may need to be re-examined. These principles are as follows: 1 That tenant involvement should be at the heart of the Board

structure, making the tenant voice a reality and not just a token. This principle is fundamental to the value system of Cornwall Housing and must be maintained.

2 That the tenant involvement should include equal numbers from each

of the preceding three districts covered by the predecessor organisations, Carrick Housing and the district councils. This principle is no longer needed – the excellent development work of the Tenants’ Forum has radically improved levels of trust and co-operation between tenants of different geographical areas, with the result that the arbitrary lines of geographical division no longer exist.

3 That the Board should have equal numbers of Directors that are

tenants, Councillors, and Independents. This principle is limiting, in that it has a natural impact of driving up the total number of people necessary for the Board. A better principle would be to establish a minimum representation of each category of Director.

4 That the Board should be a Non-Executive Board i.e. that none of the

Executive Directors should be members of the Board. This has had the effect of making Board meetings very large indeed; in addition to the 18 Board members, it is obviously necessary to have the Executive present at the meetings, hence making the number of individuals attending the meeting in the region of 25 people. Further it means the operation of the Board does not adhere to best practice, as described in research documents such as The Intelligent Board.

3. Decision and Supporting Information (Including Options):

Internal Audit review At the Board meeting of 28 July, it was agreed that the Council’s Internal Audit Section would be commissioned to undertake a review of good practice of Boards both of ALMOs and other organisations, and to provide some objective recommendations to support this review. The findings of the auditor’s review were presented to the Board at its meeting in September 2014 and are attached at Appendix A for information. There are 11 recommendations, the majority of which are to be incorporated into an action plan which will be presented to the Board at a future meeting. However for the purposes of this report, recommendations 1 and 2 are relevant and are as follows:

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Recommendation 1 – The CHL Board size should be reduced to a number that is consistent with the industry trends and best practice. Our view is that the Board size must not be more than 12 Members. Recommendation 2 – Consistent with the company’s Articles of Association and sector practice, the CHL Board should consider appointing the Managing Director to the Board. The Shareholder representative, Paul Masters, has given his views on the Council’s preference for the future make-up of the Board as follows: “It is our general view from the shareholder perspective that smaller boards are more effective and therefore we would suggest a board for Cornwall Housing of 3 NEDs, 3 tenants, 3 Council nominated seats and the MD as our preferred option. However we would also agree to a slightly larger board of 4 NEDs, 4 tenants, 4 Council seats and the MD” Whilst the Board can propose its own preferred structure, it is important to remember that the structure of the Board is a Shareholder decision and not a decision of the Board. The Chair has discussed with the Shareholder a different approach to the structure and make-up of the board which reflects more the findings of recent governance reviews of companies. However, the view of the Shareholder, based on legal opinion, is that changing the balance of membership, nor increasing the level of Executive representation on the Board beyond the MD would be acceptable. The final decision rests with the Shareholder, and it is essential that the Board now acts on the Shareholder’s clear request as it is important that the focus is on the future direction of the company and, in particular, ensuring that the new Group arrangements being proposed by the Council are given attention and proper consideration by the Board. Consultation with tenants Any changes to the Articles of Association (which a change to the structure of the Board would require) must be consulted on with the Tenants’ Forum. It is therefore intended that, as there are no meetings of the Forum in December, that consultation will take place at the January meetings of the Board. Amended Articles of Association The Council’s Legal Team has developed a draft revised Articles of Association which is attached at Appendix B. This document reflects the changes required to allow the structural changes, as well as introducing a maximum term of office for Board members which is normal practice in ALMO Boards. A written resolution from the Council is required to change the Articles. Process for change The current Articles require that 3 tenant representatives stand down at the next AGM, as do 2 independents. There are currently only 4 independents so it is proposed that one or two would then be re- elected to re-establish the required number of independent members. The Council

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will be asked to advise of the future 3 Council representatives. The process for selecting who would stand down will be determined by the Tenants’ Forum. It is proposed that the Board Away Day on 1 December 2014 is postponed until a date in February or March, at which point the new Board may meet to further consider the recommendations of the audit report, implications for the committee structure, as well as receiving a Board governance refresher training session, from an external agency such as Housing Quality Network. 4. Financial Implications and Budget:

The proposed changes will reduce the overall budget for expenses for Board Members. 5. Other Resourcing Implications:

a. Property – None.

b. HR/Staffing –None

c. Information Services – None

d. Procurement and Contracts – None

6. Legal Implications:

The Company’s Articles of Association will require amendment should the Board recommend changes. Under the Companies Act 2006 there is no longer a legal requirement to hold an AGM, although we can continue to hold AGMs if we choose to, or if our Articles state we must. Generally, not more than 15 months are allowed to elapse between 2 AGMs, unless there is specific reason and then as soon as is practicable thereafter. A 21-day written notice of the AGMs date is required to be given to the shareholders. As Board are aware, our Articles state that we should hold an AGM for retirement of Board Members, although there is no specific time requirement within the articles for the AGM. Although our last AGM was in September 2013, we should be able to hold the AGM in January 2015, as there is a specific reason for the delay. The need to change the articles, the need to obtain a recommendation by the Board and have a written resolution to change them by the Council subsequently results in delays which are clearly demonstrated within this report. 7. Equality Impact Assessment:

N/a

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8. Significant Risks:

Good Governance Cornwall Council imposition of a new Board structure should the Board fail to agree with this proposal. 9. Consultation carried out including staff, SMT, Directors,

specialist advice and the community:

Board Away Days Supporting Information

Appendices: Appendix A: Cornwall Council Internal Audit report on Cornwall Housing Governance and Good Practice Appendix B : Draft revised Articles of Association Background Papers: None Approval and Clearance of Report

Report cleared by: Jane Barlow Date: 14 November 2014

Cornwall Housing Limited Board Structure Review

Internal Audit Report

Report Date: 22 September 2014

Report Reference: 14-15Sect151-04

Report Status: Final

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CONTENT

1 Management Summary and Audit Opinion

2 Findings and Audit Recommendations

REPORT DISTRIBUTION:

Report to: (22 September 2014) Jane Barlow Managing Director, Cornwall Housing Limited

Nick Ball Chairman, Cornwall Housing Limited Board Cornwall Housing Limited Board

Internal Audit – Complaints and Comments Procedure.

If we fail to meet the standards of work that you expect please would you draw it to the attention of the Auditor. If this is not appropriate or you wish to take your complaint further please

complete the online feedback form In person by calling into our one stop shops and many of our

offices during working hours. By telephone: 0300 1234 100 By email: [email protected] By post:

Compliments, comments and complaints

Cornwall Council

New County Hall Treyew Road

Truro

TR1 3AY

At the end of the audit, we send out a customer feedback form with the copies of the final report. We are very grateful for the comments that we receive, either on this form or separately, as these can help us further improve our performance or the service.

If you would like this information in another format please contact:

Simba Muzarurwi, Business Audit Manager

Tel: 01872 323988

Email: [email protected]

http://www.cornwall.gov.uk/default.aspx?page=15900

mailto:[email protected]

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1 Management Summary and Audit Opinion

1.1 Introduction

Cornwall Council Internal Audit Service (IA) was commissioned by the Cornwall Housing Limited (CHL) Board to undertake a review of its structure. The purpose of the review was to assess the appropriateness of Board’s structure in effectively monitoring, challenging and providing direction and leadership to the company’s Senior Management Team as well as providing advice for improvements.

1.2 Objectives The principal objective of this audit was to provide assurance on the effectiveness of the CHL Board structure and conclude on the appropriateness and adequacy of the current structure. This was achieved through:

Benchmarking the CHL Board structure against other organisations within the housing sector and best practice;

Assessing the effectiveness of the working arrangements of the Board structure and its committees;

Ascertaining that there are appropriate arrangements for recruiting and appointing Board Members with suitable experience and skills to fulfil their role; and

Ensuring that overall there are effective arrangements for the Board to efficiently discharge its responsibilities.

1.3 Scope

The scope of this audit was limited to the review of the CHL Board structure as reflected within the objectives above and did not include concluding on whether or not the company is achieving its objectives. The methodology for the audit included reviewing key documents and discussions with the Managing Director and Chairman of the Board. This report has been prepared exclusively for the CHL Board and therefore must not be used for any other purposes. Please note that some of the recommendations require both Tenant consultation and Shareholder approval before proposing changes to the Articles of Association. In commissioning this review, the CHL Board has acknowledged

that there are potential areas of improvement and this report

focusses on identifying these as well as highlighting any perceived weaknesses associated with the current structure. Due to the

subjective nature of the audit, it is imperative for the Board to accept that our conclusions may be different from the views held by some of the Board Members. As such the purpose of this report

is to provide the Board with an independent platform for an honest and transparent discussion around reforming the Board’s structure

based on best practice within the housing industry and other sectors as appropriate.

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1.4 Audit Opinion

Our review concluded that currently there is limited assurance on the overall effectiveness and appropriateness of the structure of the CHL Board. In our view the structure must be reformed to enable the Board to effectively provide the leadership and direction required in determining the success of the organisation. This conclusion is reflected within our findings and recommendations detailed in Section 2 of this report.

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2 Detailed Findings and Recommendations

2.1 Size of CHL Board The size of the CHL Board and its composition is determined by the company’s Articles of Association and Article 13 requires the number of Board Members to be 18, comprising of six Tenant Board Members, six Council Board Members and six Independent Board Members. Currently there are two vacancies for Independent Board Members. A recent survey on Arms Lengths Management Organisations (ALMOs) governance trends by the National Association of ALMOs revealed that governance arrangements are clearly evolving and Boards are generally getting smaller. The size of ALMO Boards ranged from nine to 18 Board Members. Out of the 47 ALMOs surveyed only CHL and another had Boards made up of 18 Members which is clearly inconsistent with the sector practice. In our view the CHL Board is considered too big making it challenging for focused debating and effective decision making. Furthermore, a large Board has a costly administration burden and may also lead to member disengagement. In his report of ‘The Independent Governance Review of The Co-operative Group’ in May 2014 Lord Myners refers to an extensive research that suggested that when a Board becomes larger than 12, its effectiveness starts to diminish. More so, it is generally considered that a typical non-profit Board of Directors should comprise not less than 8-9 members and not more than 11-14 members. IA has been advised that both the CHL Board and Senior Management recognise this as a key governance issue and will use this report to inform the decision relating to the future size of the Board. Recommendation 1 – The CHL Board size should be reduced to a number that is consistent with the industry trends and best practice. Our view is that the Board size must not be more than 12 Members.

2.2 Board Membership The company’s Articles of Association require the Board to comprise equal numbers of Tenants, Council Members and Independents. This is largely consistent with the National Federation of ALMOs’ survey that established

that the majority of the Boards still comprise of equal numbers of Tenants, Council Representatives and Independents although there were some variations in terms of Boards make up. One of the key governance issues identified within the survey was that some Chief Executives are on ALMO Boards which is not the case with CHL. However, the CHL Articles of Association have a provision for the Managing Director to be appointed as an Independent Board Member. Internal Audit views this as one of the issues that require consideration by the CHL Board.

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Recommendation 2 – Consistent with the company’s Articles of

Association and sector practice, the CHL Board should consider appointing the Managing Director to the Board. 2.3 Appointment of CHL Board Members

Consistent with the Articles of Association, Tenant Board Members are appointed through an election. Currently, this is achieved by having a ballot involving the Tenants Forum composed of two committees made up of 27 members. It is acknowledged that there are known benefits associated with recruiting Board Members from the Tenants

Forum. However, IA’s view is that a process which does not include the entire tenant body may be inadequate in delivering a CHL Board that possess all the skills, experience and perspective that are critical to effective stewardship of the organisation and function effectively in dealing with the complex business challenges that CHL faces. Effective governance requires the Board of an organisation to collectively possess the mix of expertise, business knowledge and experience that are relevant to the organisation’s needs and the demands of its business

models. In light of this more ALMOs are moving towards competitive recruitment involving all tenants based on a set of threshold competencies. Although it is generally accepted that no single Board Member is likely to possess all the needed skills, a robust Tenant Board Member recruitment strategy is crucial in creating a balanced mix of non-executive expertise relevant to CHL’s context and strategic objectives. Although this may not be the case with CHL, there is always a risk of placing individuals who do not have the requisite skills and expertise into positions where their general lack of understanding prevents them from exercising the necessary oversight of the Executive when appointing Board Members from a small group. Widening the recruitment pool will help mitigate against this risk by ensuring that that the recruitment is based on an objective criteria through filling specific skills gaps. It is acknowledged that in changing the current appointment process, the benefits associated with this will be lost and there is a financial implication to engaging the wider tenant community. It is however, IA’s view that the

benefits provided by the recommended appointment process outweigh the costs. Recommendation 3 – Tenant Board Members should be appointed through a recruitment process based on objective criteria involving the entire tenant body in the same way the Independent Board Members are appointed. Recommendation 4 – Whilst acknowledging that there is a Council process for appointing Council Board Members, the CHL Board should engage with the Council to explore opportunities for developing a recruitment strategy that maximises the opportunity for appointing Council Board Members that have the requisite skills and experience.

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2.4 Role of the Board The Institute of Directors states that the key purpose of the board is to ensure the company’s prosperity by collectively directing the company’s

affairs while meeting the appropriate interests of its shareholders and relevant stakeholders. The UK Corporate Governance Code views the role of the board as follows;

o Providing entrepreneurial leadership; o Setting strategy; o Ensuring human and financial resources are available to achieve

objectives; o Reviewing management performance; o Setting the company’s values and standards; and o Ensuring that obligations to shareholders and other stakeholders

are understood and met. IA was advised that there are no formal Terms of Reference for the CHL Board as the Board works to the company’s Articles of Association. Our

view is that although the Articles of Association provide general administrative guidance on the working of the Board, this is insufficient to bring clarity to the role of the Board. Without a formally approved Terms of Reference, it is unclear how the CHL Board has set itself up to execute the role as expected by the UK Corporate Governance Code. It is our view that collectively the Board may not be clear in terms of its role and responsibilities thereby comprising the effectiveness of the Board. The Institute of Directors advises that within a company the Board is the principal agent of risk taking and enterprise and the principal maker of commercial and other judgements. A Terms of Reference will help the Board to align its role to best practice and set out the non-delegable responsibilities of the Board as well as providing clarity between management and Board roles. In the absence of these, it is inevitable that the Board may end up spending more time on operational issues at the expense of more significant strategic issues that compromise the attainment of organisational objectives. It is IA’s view that the work of the Board will be significantly enhanced if its role is clarified within a formal terms of Reference.

This will set out the non-delegable responsibilities of the Board and ensure more clarity on decisions reserved for the Board as

well as the nature and context of reports presented to the Board. Recommendation 5 –A formal Terms of Reference which clearly sets out the Board’s function, role and responsibilities should be prepared, approved and communicated. 2.5 Board Committees

An effective committee structure is key to the overall success of any Board so it is imperative that the committee structure is both appropriate and well resourced. We established that CHL has six committees of the

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Board. In comparison with other organisations in the sector and best practice CHL has too many committees. It is generally considered that a Board should have no more than three committees. With too many committees the Board may have delegated too many decisions to the committees resulting with the Board being less engaged with significant issues relating to business risk and financial management. Generally in instances where there are too many committees there is a serious concern that the Board can become a passive, rubber-stamping body, ratifying decisions of the committees and receiving management reports for noting without any decisions required. Apart from creating an administrative burden for management as well as the cost of resourcing too many committees, the current Board structure appears to have generated too many meetings creating an overload for some members, but at the same time disengaging others. The situation encourages the committees to get involved into operational issues blurring the organisational boundaries thereby compromising the effectiveness of the Board. Having reviewed the draft Terms of Reference for the committees, IA’s view is that there is some duplication in what the committees are responsible for resulting in some reports being presented to more than one committee. There are no barriers to reducing the number of committees as it is clear that some of the committees could easily be merged and one or two dissolved without impacting on the governance of the organisation. For committee structures to be effective there should be clear accountability to the Board. Whilst there are terms of reference for each committee the way the committees report to the Board is inconsistent. For some committees the responsibility for reporting the committee’s

activities rests with Chairman of the Committee yet for some committees this is done by management. Where management report back to the Board, accountability is lost and this weakens the scrutiny role of the Board.

Recommendation 6 – Considering both best practice and the size of the company, the number of Board Committees should be reduced to three. We suggest (a) Audit and Risk Committee, (b) Remuneration and Nominating Committee and (c) any other committee as agreed by the Board. Recommendation 7 - The relevant committee Chairman must report to the Board on the committee’s activities and matters within the scope of

the committee’s responsibilities. 2.6 Board Performance Evaluation

The Board is responsible for its own performance and effectiveness and a key component in building an effective board is the establishment of a process for annual self-evaluation of the board. Establishing an effective process for board evaluation can send a positive signal to the organisation

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that board members are committed to doing their best in the inteests of the company. Although a good recruitment process and an effective committee structure lay the foundation for improved board performance, the board as a whole needs to step back and review itself. This self-evaluation process which facilitates board members getting together to talk about individual and board concerns helps to maintain a high level of performance. It is acknowledged that this review is building on what the Board has already started in terms of its self-evaluation but there is need to ensure that this process is structured and includes reviewing effectiveness of individual board members, committees and the Board. This process helps to bring clarity to the roles of the board and board members as well as creating a platform for board member development. It also enhances performance at organisational, board and individual board member levels. Recommendation 8 – In line with best practice the CHL Board should, on an annual basis, undertake a formal self-evaluation of its performance as well as the performance of each Board Member. To maximise board member commitment, board members should actively participate in the assessment process rather than being passive recipients of someone else’s evaluation of their performance. 2.7 Board Skills Audit We have been advised that CHL does not have a full record of the skills of its board. Although there was an attempt to undertake a skills audit during the establishment of the company this had not been satisfactorily completed. A skills audit is an important process used to identify the skills gaps in the board whose outcome is a training needs analysis that identifies the focus for further development. Whilst applications and CVs are held for Independent Board members which record their qualifications and experience there is inadequate information relating to Tenant and Council Board Members. Without this audit, it may be difficult for the organisation to personalise personal development for its board members thereby compromising the effectiveness of the board. Recommendation 9 - A skills audit of the CHL Board should be undertaken to understand the skills required and the gaps the Board currently has which will result in the development of a comprehensive board development plan in line with CHL business model. 2.8 Diversity of the Board

Diversity in the board composition is an important driver of a board’s effectiveness, creating a breadth of perspective among board members and breaking down a tendency towards 'group think'. A recent research by Inside Housing revealed that housing association boards have shrunk by 10% since 2010/11 but diversity of these bodies has hardly shifted during

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this time. The survey established that the proportion of women on boards currently stand at 34%. In a separate survey by the Board Development Agency, involving 80 housing associations, 11% of board members were from black and minority ethnic background and 46% of the boards have no black and minority ethnic members as well as 36% of board members being women. In relation to the CHL, the proportion of women on its Board is 31% and there are no minority ethnic members. Whilst this is broadly expected

due to the outcome of the two surveys discussed above and the uniqueness of Cornwall there is need to ensure that board diversity is given prominence as a key component of good governance as it brings a mixture of skills, experience and perspectives. Recommendation 10 – The Board should have diversity as a key consideration in future appointments to reflect the make-up of its key stakeholders and communities the company serves. 2.8 Board Urgent Decision Making

Currently there is no formal process for handling matters that need urgent decision between meetings. Without this there is a risk that decisions could be delayed compromising the achievement of organisational objectives or management could be compelled to make urgent commercial decision without the delegated authority from the Board. Recommendation 11 – The CHL Board should establish a formal process for dealing with urgent matters between Board meetings. Conclusion An effective board is built upon an appropriate and effective nomination and recruitment process that is viewed as part of a broader effort to identify, involve and develop board leadership, existence of an effective committee structure and effective process for periodic evaluation of board performance. These processes and structures reinforce each other and lay the groundwork for board effectiveness. Over and above this the board should regularly ask itself whether or not it is in a position to provide effective board leadership to monitor and scrutinise management as well as providing strategic direction. Whilst it is acknowledged that this is a young organisation it is important that the board is structured in a way that enables it to ensure the company’s

prosperity by collectively directing the company’s affairs while meeting the appropriate interests of its shareholders and relevant stakeholder. 1.5 Limitations and Contact Details This review has been conducted in accordance with approved Auditing standards. The findings of the review are based upon the work carried out as detailed in section 1 of this report. The review and report in no way removes management’s responsibility for ensuring that the internal

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control and risk management arrangements are sufficient to protect the interests of the organisation. For more information about this report please contact: Karen Sims - Auditor (01872 323376) Simba Muzarurwi - Business Audit Manager (01872 323988) Finally, Internal Audit would like to acknowledge and thank the staff who contributed and helped with this audit. Steve England

Assistant Head of Finance (Audit, Risk Management and Insurance)

NO. 04662007

THE COMPANIES ACT 2006

___________________________________________

COMPANY LIMITED BY GUARANTEE

AND NOT HAVING A SHARE CAPITAL

___________________________________________

ARTICLES OF ASSOCIATION

OF

CORNWALL HOUSING LIMITED

NAME REGISTERED OFFICE AND DEFINITIONS AND INTERPRETATION

1. NAME

The name of the company is Cornwall Housing Limited (“the Company").

2. REGISTERED OFFICE

The Company’s registered office is to be located in England.

3. DEFINITIONS AND INTERPRETATION

In the Articles unless the context otherwise requires:

(1) "the Act" Means the Companies Act 2006 and any statutory modification or re-enactment thereof for the time being in force.

(2) "the Articles" Means these Articles of Association as originally adopted or as altered from time to time.

(3) "Board" Means the Board of Directors of the Company from time to time.

(4) "Board Members" Means the directors for the time being of the Company.

(5) “Capital Asset” Means an item of expenditure whose economic life extends beyond one accounting period of the Company and assists the Company in generating income.

(6) "Chairman" Means the Chairman of the Company appointed pursuant to Article 22(5)(a) or in his absence any vice or deputy chairman appointed pursuant to Article 22(5)(c).

(7) "Clear days" In relation to the period of a notice means that period excluding the day when the notice is given or deemed to be given and the day for which it is given or on which it is to take effect.

(8) “Council” Means Cornwall Council or any successor body thereto who shall be the sole member of the Company and which for practical purposes shall appoint a person to represent it from time to time in accordance with Article 24(2) and in respect of these Articles generally.

(9) "Council Board Member" Means a Board Member appointed by the Council pursuant to Article 14.

(10) “Directors” Means a Board Member of the Company and the term ‘Director’ means any one of those Board Members.

(11) "Executed" Means in relation to any contract, agreement or other document consent thereto and includes any mode of execution.

(12) "Independent Board Member"

Means a Board Member appointed pursuant to Article 16.

(13) "Local Authority Person" Means any person:

(i) who is a member of the Council; or

(ii) who is an officer of the Council (which for these purposes shall not include employees with non-managerial posts apart from housing employees).

(14) “Managing Director” Means the most senior person with responsibility for managing the affairs of the company.

(15) “Non Capital Asset” Means an item of expenditure incurred during a single accounting period and charged to the Company’s profit and loss account.

(15) “Order” shall mean the Local Authorities (Companies) Order 1995 as amended or re-enacted from time to time.

(17) "Office" Means the registered office of the Company.

(18) "The Seal" Means the common seal of the Company.

(19) “Secretary” Means the individual or body, if any, appointed as secretary to the Company.

(20) “Social Housing”

(21) "Tenant"

Means Social Housing as defined by the 2008 Act.

Means an individual who holds a secure tenancy or lease of a residential property from and occupies a property belonging to the Council or Company which is managed by the Company.

(22) "Tenant Board Member" Means a Board Member appointed pursuant to Article 15.

(23) “Tenant Compact” Means the agreements entered into by the Council, it’s tenants and the Tenant’s Forums setting out the Tenant involvement in the Company’s objects.

(24) "Tenant Forums " Means Carrick District Forum of Tenants and the East Cornwall Tenant’s Forum or any successor bodies thereto or such other body as the Board shall from time to time resolve to be representative of the Tenants.

(25) “Tenant Participation” Means any action allowed for in the Tenant Compact.

(26) "The United Kingdom" Means Great Britain and Northern Ireland.

(27)“the 1989 Act” Means the Local Government and Housing Act 1989 as amended or re-enacted from time to time.

(28) “the 2008 Act” Means the Housing and Regeneration Act 2008 as amended or re-enacted from time to time.

(29) Unless the context otherwise requires, words or expressions contained in these Articles bear the same meaning as in the Act but excluding any statutory modification thereof not in force when these regulations become binding on the Company.

(30) In these Articles words importing individuals shall, unless the context otherwise require, include corporations and words importing the singular number shall include the plural, and vice versa and words importing the masculine gender shall include the feminine gender.

(31) Unless the context otherwise requires all figures in the reserved matters in Article 7 shall be subject to review by reference to the Retail Prices Index (RPI) or any official index replacing it.

OBJECTS AND POWERS

4. OBJECTS

The objects of the Company shall be within the area of Cornwall to:

(1) promote Tenant Participation in housing and estate management and to

encourage tenant and community empowerment; (2) promote democratic, participatory and estate-based approaches to housing

management;

(3) provide, construct, manage, maintain, improve, demolish or convert the housing stock and other housing revenue account assets owned or managed by the Council or the Company from time to time together with any other amenities or facilities for the benefit of residents of such housing stock either exclusively or together with persons who are not residents of such housing stock;

(4) provide amenities and services of any description for residents of housing

stock owned or managed by the Council or the Company from time to time either exclusively or together with persons who are not residents of such housing stock;

(5) provide advice and assistance to all tenants, leaseholders, and licensees, of the Council and applicants for housing and applicants for housing advice in respect of local authority Council housing;

(6) carry out any activity which:

(1) is connected with or incidental to the provision of housing (within the meaning of Section 115 of the 1998 Act)

(2) contributes to the regeneration or development of Cornwall (within the meaning of Section 126 of the Housing Grants Construction and Regeneration Act 1996) including but not limited to:-

(a) securing that land and buildings are brought into effective use;

(b) contributing to or encouraging economic development;

(c) creating an attractive and safe environment;

(d) preventing crime or reducing the fear of crime;

(e) providing or improving housing or social and recreational facilities for the purpose of encouraging people to live or work in the said area or for the purpose of benefiting people who live there;

(f) providing employment for local people;

(g) providing or improving training, educational facilities or health services for local people;

(h) assisting local people to make use of opportunities for education, training or employment;

(i) meeting the special needs of local people which arise because of disability or because of their sex, racial group or any other protected characteristic under the Equality Act 2010 to which they belong.

(7) provide, construct, improve or manage Social Housing to be kept available for letting or hostels;

(8) provide, manage, maintain or improve accommodation required from time to time for the benefit of persons who require temporary accommodation;

(9) provide services of any description for the Council that support the other objects of the Company and are connected with and incidental to the provision of housing;

(10) assess applications by residents of housing stock owned or managed by the Council to exercise the right to buy under Part V of the Housing Act 1985;

(11) provide building services for local authorities, registered social landlords or other public sector companies subject to the prior written consent of the Council for individual or aggregated proposals with an equivalent value greater than one million (£100,000,000), subject to Article 7;

(12) enabling or assisting any residents of the housing stock owned or managed by either the Council or the Company to acquire, or to acquire and enter into, occupation of, housing stock;

(13) in respect of any other social landlord, do any of those things specified in this Article 4 as can be effectively combined with the Company’s core housing activities so as to improve the Company’s efficiency or so as to benefit the Council;

(14) reinvest any profits that may arise from carrying out its core housing activities back into those activities in accordance with the Tenants and Council’s priorities for the delivery of core housing services and the Company’s business plan;

(15) provide such services of any description in relation to any of the Council’s statutory duties regarding housing services as may from time to time be agreed by the Council and the Board.

5. POWERS

(1) Subject to Article 7 the Company shall have power to do any thing that a natural or corporate person can lawfully do which is necessary or expedient in furtherance of its objects;

(2) Subject to Article 7 and without limiting the powers described in Article 5 (1) the Company shall have power to:

(a) carry out works to land, buildings or other property;

(b) contract with the Council in furtherance of the objects of the Company;

(c) promote tenant participation in housing and estate management and to encourage tenant and community empowerment;

(d) subject to the prior written consent of the Council as set out in Article 7 and to such consents as may be required by law to borrow money, issue loan stock or raise money in such manner as the Company shall think fit and to secure the repayment of any money borrowed raised or owing by such security as the Company shall see fit (including by way of floating charge) upon the whole or any part of the Company’s property or assets (whether present or future) and also by giving similar security to secure and guarantee the performance by the Company of any obligation or liability it may undertake or which may become binding on it;

(e) insure and arrange insurance cover for the Company from and against all such risks as the Board may think fit and to pay any premium in respect of such insurance;

(f) insure and arrange insurance cover for and to indemnify its employees and voluntary workers and the Council from and against all such risks incurred in the proper performance of their duties as it shall consider appropriate and to pay any premium in relation to indemnity insurance in respect of liabilities of its Board Members or any of them which would otherwise attach to them in respect of any negligence, default, breach of duty or breach of trust of which they may be guilty in respect of the Company PROVIDED THAT such insurance shall not extend to any liability in respect of an act or omission which such Board Member or Board Members knew or ought reasonably to have known was a breach of duty or trust or which was committed by such Board Member or Board Members recklessly without due regard as to whether such act or omission might be a breach of duty or trust;

(g) invest any monies of the Company not immediately required for the furtherance of its objects as it determines and as permitted by law;

(h) subject to such consents as may be required by law and compliance with all formal guidance issued by the Company’s regulators (if any) to purchase or otherwise acquire or to encourage or promote and in any way support or aid the establishment and development of any subsidiary, or any other body established for the purposes of carrying on any trade or business either for the purpose of raising funds for the Company or for the furtherance of the objects of the Company;

(i) subject to the prior written consent of the Council as set out in Article 7, make donations, grants or loans or provide services or assistance to such persons and companies and on such terms as the Company shall think fit to further the objects of the Company;

PROVIDED THAT in case the Company shall take or hold any property which may be subject to any trusts, the Company shall only deal with or invest the same in such manner as allowed by law, having regard to such trusts.

6. APPLICATION OF INCOME AND PROPERTY

The income and property of the Company shall be applied solely towards the promotion of its objects as set forth in these Articles of Association and no portion thereof shall be paid or transferred, directly or indirectly, save as provided below by way of dividend, bonus or otherwise howsoever by way of profit, to the Council. The Company shall at all times comply with its obligations under Section 122 of the 2008 Act. No Board Member shall be appointed to any office of the Company paid by salary or fees or receive any remuneration or other benefit or money or money's worth from the Company PROVIDED THAT nothing herein shall prevent any payment in good faith by the Company:-

(1) Of reasonable and proper remuneration (including pensions, contributory pension payments, payment of premiums to pension policies and terminal grants and gratuities) to any officer or employee of the Company (not being a Board Member) in return for any services rendered to the Company;

(2) Of fees, remuneration or other benefit in money or money's worth to a company of which a Board Member may be a member holding not more than 2% of the share capital of that Company;

(3) To any Board Member of reasonable out-of pocket expenses and such other sums as may be determined by the Council PROVIDED THAT no sum shall be paid to a Board Member in excess of that which would be permitted to be paid to a Board Member pursuant to any guidance issued from time to time by Communities and Local Government or such other of Her Majesty's Government Departments relating to the payment of board members of Arms Length Management Organisations and PROVIDED FURTHER THAT no sum

shall be paid to a Board Member who is an elected member of the Council in excess of that permitted by the Order;

(4) Of reasonable and proper remuneration to the Council or employees thereof (not being Board Members) in return for any services rendered to the Company;

(5) Of reasonable and proper rent for premises demised or let by the Council to the Company;

(6) Of reasonable and proper interest on money lent by the Council to the Company;

PROVIDED FURTHER THAT nothing shall prevent the Company from managing a property in accordance with its objects (including the full range of activities it may undertake) notwithstanding the fact that the tenant, lessee or licensee (or prospective tenant, lessee or licensee) of such property may be a Board Member SUBJECT TO the proviso that any Board Member who is a beneficiary of the Company shall not be entitled to speak in any debate or cast his/her vote in respect of any matter relating solely to the property of which he is lessee, tenant or licensee and shall absent himself/herself from such proceedings but such Board Member shall be entitled to speak and vote in respect of matters which relate not only to such property but also to other properties managed or owned by the Company.

7. POWERS RESERVED TO THE COUNCIL

The following matters are reserved to the Council and at all times the Council and Board Members shall liaise and co-operate with each other in the furtherance of the objects of the Company, which the Company shall not engage in without the prior written consent of the Council:

(1) Acquisition and Disposal

a) Acquire an interest in whole or part of any existing company or set up

a new company. b) Acquire or dispose of a share or shares in any company.

(2) Entering into Contracts

(a) Enter into a contract or transaction except in the ordinary and proper course of Company’s business and/or incur any revenue expenditure on non-capital assets in excess of two million pounds sterling (£2,000,000) per project or contract except where that project or contract has been designated as a “reserved matter exempt” under the budget or where the expenditure relates to an asset detailed in paragraph 1 above.

(b) Enter into any formal joint venture or partnership or profit sharing agreement.

(c) Tender for contracts with a total contract value above one million

pound sterling (£1,000,000) or where the Board Members consider there is significant risk to the Council.

(3) Loans and Financing Arrangements

(a) Create any fixed or floating charge or other encumbrance of the whole or part of the Company, its property or assets.

(b) Other than from the Council borrow any sum whatsoever on the Company’s behalf.

(c) Make a loan or advance of any amount in excess of fifty thousand

pounds sterling (£50,000) (other than pursuant to the Company’s duties under the Homelessness Act 2002) to any person or organisation.

(d) Enter into any lease arrangement for a single item above five hundred

thousand pounds sterling (£500,000) other than with the Council.

(4) Litigation and Arbitration

(a) Initiate, discontinue or settle any actual or threatened litigation or arbitration or compromise agreements other than in respect of:

i) the recovery of debts in the ordinary course of business.

ii) initiating litigation or arbitration where the Board Members reasonably believe that the delay involved in acquiring the prior consent of the Council would be detrimental to the Company or any of its subsidiaries.

iii) an action in respect of which the Board Members have

received a written costs estimate from their legal advisors of less than fifty thousand pounds (£50,000).

iv) the discharge of the Company’s day to day housing litigation duties.

(5) Altering or ceasing business

Cease to carry on the business of the Company.

(6) Guarantees and Indemnities

Give any guarantee or indemnity whatsoever where the Council is named as the parent company or guarantor.

(7) Bank Accounts

Open or close any bank accounts.

(8) Appointment and Remuneration of Directors (a) Appoint a person to the office of Managing Director of the Company.

(b) Agree the remuneration package and terms of conditions of employment for the Managing Director and the Executive Directors who report directly to the Managing Director following consideration of the recommendations of the Company’s Remuneration Committee.

(c) Agree a remuneration package for any Director or any other person or

employee of the Company which is at or more than the salary of the Managing Director of the Company.

(d) Other than as provided for in Article 20 agree to pay any fees,

emoluments or other remuneration to the Board Members of the Company which shall be a decision of the Council which is reviewed on an annual basis taking into account the views of the Company.

(9) Branding/Intellectual Property

a) Engage in any activities or actions which would detract from or diminish any brand image agreed between the Council and the Company, to promote the image of the Company and its working relationship with the Council and the Council’s other delivery vehicles.

(b) Grant any licence of intellectual property other than in the ordinary course of the Company’s business.

(10) Corporate Matters

(a) Make changes to these employees of who are line managed by the

Managing Director of the Company or change the Board constitution. (b) Appoint or remove external auditor. (c) Change accounting reference date. (d) Allot or issue any shares. (e) Approve the financial regulations of the Company.

(f) Receive a sum which, if it were a local authority, would be a capital receipt.

LIMITED LIABILITY AND COUNCIL GUARANTEE

8. LIMITED LIABILITY

The liability of the Council is limited.

9. COUNCIL GUARANTEE

The Council as sole member undertakes to contribute to the assets of the Company, in the event of the same being wound up while it is a member of the Company, or within one year after its ceases to be a member of the Company, for payment of the debts and liabilities of the Company contracted before it ceased to be a member of the Company, and of the costs, charges and expenses of winding up, and for the adjustment of the rights of the contributories among themselves, such amount as may be required not exceeding one pound.

BOARD MEMBERS

10. POWERS OF THE BOARD

(1) Subject to the provisions of the Act, directions of the Council in general meeting and the Articles of Association, the business of the Company shall be managed by the Board who may exercise all the powers of the Company. No alteration of the Articles of Association or directions of the Council shall invalidate any prior act of the Board which would have been valid if that alteration had not been made. The powers given by this Article shall not be limited by any special power given to the Board by the Articles and a meeting of the Board at which a quorum is present may exercise all powers exercisable by the Board.

(2) The Board may, by power of attorney or otherwise, appoint any person to be the agent of the Company for such purposes and on such conditions as they determine, including authority for the agent to delegate all or any of his powers.

11. BORROWING POWERS

Subject to Article 7 the Board may exercise all the powers of the Company to borrow money without limit as to amount and upon such terms and in such manner as they think fit, and to grant any mortgage, charge or other security over its undertaking and property, or any part thereof, and to issue any debenture, whether outright or as security for any debt, liability or obligation of the Company or of any third party.

12. DELEGATION OF BOARD MEMBERS' POWERS

The Board may delegate any of their powers to any committee consisting of three or more Board Members together with such other persons as the Board sees fit (but so that Board Members shall constitute a majority). They may also delegate to the Chairman/or any vice or deputy Chairman or to any executive officer such of their powers as they consider desirable to be exercised by him. Any such delegation may be made subject to any conditions the Board may impose, and either collaterally with or to the exclusion of their own powers and may be revoked or altered. Subject to any such conditions, the proceedings of a committee with two or more members shall be governed by the Articles regulating the proceedings of the Board so far as they are capable of applying.

13. NUMBER OF BOARD MEMBERS

(1) The number of Board Members shall be nine, plus the Company’s Managing Director if so appointed under Article 16 (6).

(2) Three Board Members shall be Council Board Members.

(3) Three Board Members shall be Tenant Board Members.

(4) Three Board Members shall be Independent Board Members.

(5) No more than four Board Members shall be Tenants.

(6) No more than four Board Members shall be Local Authority Persons.

(7) In the event that the number of Board Members shall be less than the numbers specified in this Article 13 the remaining Board Members shall use reasonable endeavours to appoint further Board Members and may act notwithstanding this Article.

(8) The first Board Members shall be those persons named in the statement delivered pursuant to Section 10 of the Act who shall be deemed to have been appointed under the Articles. Future Board Members shall be appointed as provided in the Articles.

14. APPOINTMENT OF COUNCIL BOARD MEMBERS

(1) Subject to Article 13 the Council shall from time to time appoint three persons from the Cornwall Council Area as Council Board Members and shall have the power to remove from office any such Board Member.

(2) Appointment or removal pursuant to Article 14(1) shall be effected by an instrument in writing signed by the Council and shall take effect upon lodgement at the registered office of the Company or such date later than such lodgement as may be specified in the instrument.

(3) Notwithstanding any other provisions in these Articles the Council shall have power at any time by notice in writing to the Secretary to appoint and remove any Board Member.

15. RETIREMENT AND ELECTION OF TENANT BOARD MEMBERS

(1) Atevery annual general meeting one Tenant Board Member shall retire from office.

(2) The Tenant Board Member to retire at any such annual general meeting shall be the Tenant Board Member who has been longest in office since they last became Tenant Board Member, but as between persons who became Board Members on the same day those to retire shall be chosen by lot PROVIDED THAT where a Tenant Board Member is appointed as a consequence of the death or retirement (other than by operation of this sub-paragraph) of another Tenant Board Member (“the Predecessor”), the period of time for which the Tenant Board Member shall have held office shall, for the purposes only of this Article 15(2) be deemed to include the period since the last election or appointment of the Predecessor.

(3) Only Tenants shall be eligible to be appointed as Tenant Board Members but otherwise the mode and manner of such elections shall be as the Board may from time to time agree subject at all times to compliance with Article 13.

(4) The Secretary shall announce the results of the elections referred to in Article 15(3) at each relevant annual general meeting and the Tenants so elected shall be duly appointed as Tenant Board Members.

16. RETIREMENT AND ELECTION OF INDEPENDENT BOARD MEMBERS

(1) Independent Board Members shall retire from office as follows:

(a) at every annual general meeting, one Independent Board Member shall retire;

(2) The Independent Board Member to retire at each annual general meeting shall be the Independent Member who has been longest in office since they last became Independent Board Members but as between persons who became Board Members on the same day those to retire shall be chosen by lot PROVIDED THAT where an Independent Board Member is appointed as a consequence of the death or retirement (other than by operation of this sub-paragraph) of another Independent Board Member (“the Predecessor”), the period of time for which the Independent Board Member shall have held office shall, for the purposes only of this Article 16(2) be deemed to include the period since the last election or appointment of the Predecessor.

(3) If, at the meeting at which a Board Member retires in accordance with Article 16(1), there are no other candidates to fill the post the retiring Board Member shall, if willing to act, be deemed to have been re-appointed unless a resolution not to reappoint the Board Member is passed by the meeting.

(4) No person other than an Independent Board Member retiring by rotation shall be appointed as an Independent Board Member at any general meeting unless he is recommended by the Board.

(5) Subject to Articles 16(1) – (4) the Council may by Ordinary Resolution in

General Meeting appoint any eligible person who is willing to act as an Independent Board Member.

(6) The Board may recommend the Company’s Managing Director to be appointed as a Board Member for so long as he remains in office as such.

(7) Subject to Articles 13,16 and 18 the Company may by Ordinary Resolution in general meeting appoint any person who is willing to act as a Board Member to fill a vacancy.

(8) Subject to Articles 13, 16 and 18 the Board may appoint any person who is willing to act as an Independent Board Member to fill a vacancy until the next Annual General Meeting.

(9) Not less than seven nor more than twenty-eight clear days before the date appointed for holding a general meeting notice shall be given to the Council of any person (other than a Board Member retiring by rotation at the meeting) who is recommended by the Board for appointment or reappointment as an Independent Board Member at the meeting. The notice shall give the particulars of that person which would, if he were so appointed or re-appointed, be required to be included in the Company's register of Board Members.

17. TERM OF OFFICE

The term of office for any Board Member shall not exceed a maximum of seven (7) years from the date of appointment provided that this time limit shall not apply to the Managing Director where appointed under Article 16(6).

18. CASUAL VACANCIES

Subject to Article 13 the Board may appoint a person who is willing to act to be a Board Member to fill a vacancy. The Board may only fill vacancies occurring among Council Board Members where the Council shall have failed within four months of a written request by the Company to make the appropriate appointments pursuant to Article 14(1). The Board may only fill vacancies occurring among Tenant Board Members where the Tenant Forums shall have failed within three months of a written request by the Company to make a nomination to fill such vacancy. A Board Member appointed under this Article 17 shall hold office only until the next following annual

general meeting. If not re-appointed at such annual general meeting he shall vacate office at the conclusion thereof.

19. DISQUALIFICATION AND REMOVAL OF BOARD MEMBERS

A person shall be ineligible for appointment to the Board and if already appointed shall immediately cease to be a Board Member if the relevant individual:-

(1) ceases to be a Board Member by virtue of any provision of the Act or becomes prohibited by law from being a company director; or

(2) is or becomes a person disqualified from elected membership of a local authority; or

(3) becomes bankrupt or makes any arrangement or composition with his creditors generally; or

(4) is, or may be, suffering from mental disorder and either:-

(a) is admitted to hospital in pursuance of an application for admission for treatment under the Mental Health Act 1983 or, in Scotland, an application for admission under the Mental Health (Care & Treatment) (Scotland) Act 2003; or

(b) an order is made by a court having jurisdiction (whether in the United Kingdom or elsewhere) in matters concerning mental disorder for his/her detention or for the appointment of a receiver, curator bonis or other person to exercise powers with respect to his property or affairs; or

(5) resigns his office by notice to the Company; or

(6) is removed from office by a resolution (or written notice signed by) at least three quarters of all the other Board Members from time to time; or

(7) shall for more than four consecutive months have been absent without permission of the Board from meetings of the Board held during that period and the Board resolves that his office be vacated; or

(8) in any period of 12 months, he shall have been absent (without the permission of the Board Members) from at least 60% of the meetings of Board Members held during that period and the Board Members resolve that his office be vacated; or

(9) in the case of a Tenant Board Member he ceases to be a Tenant of the Council PROVIDED THAT this Article 18(9) shall not apply in respect of a Tenant Board Member temporarily ceasing to be a Tenant as a result of the demolition of or works carried out to that Tenant Board Member’s home; or

(10) is a Tenant Board Member and is (in the reasonable opinion of a majority of Board Members) in serious breach of their obligations as a Tenant; or

(11) is a Council Board Member and is or becomes a Tenant leading to a breach of the limit in Article 13(5); or

(12) is a Tenant Board Member and is or becomes a Local Authority Person leading to a breach of the limit in Article 13(6); or

(13) is an Independent Board Member and is or becomes a Tenant or a Local Authority Person; or

(14) is removed by resolution of the Council pursuant to Article 14.;or

(15) is or become an employee of the Company unless appointed pursuant to the Board’s recommendation under Article 16 (6).

20. ALTERNATE BOARD MEMBERS

No Board Member shall be entitled to appoint any person as an alternate Board Member.

21. BOARD MEMBERS' EXPENSES

The Board Members may be paid all travelling, hotel, and other expenses reasonably and properly incurred by them in connection with their attendance at meetings of the Board or committees of the Board or general meetings or otherwise in connection with the discharge of their duties and such other sums as may be determined by the Council PROVIDED THAT no sum shall be paid to a Board Member in excess of that which would be permitted to be paid to a Board Member pursuant to any guidance issued from time to time by Communities and Local Government or such other of Her Majesty's Government Departments relating to the payment of board members of Arms Length Management Organisations and PROVIDED FURTHER THAT no sum shall be paid to a Board Member who is an elected member of the Council in excess of that permitted by the Order.

22. BOARD MEMBERS' APPOINTMENTS AND INTERESTS

(1) A Board Member may not have any financial interest personally or as a member of a firm or as a director or senior employee (being an employee with managerial status) or in any contract or other transaction of the Company unless it is permitted by these Articles.

(2) Each Board Member shall ensure that the Secretary has at all times an up to date list of:-

(a) all bodies trading in which he or she has an interest as:

(a) a director or senior employee,

(b) a member of a firm,

(c) the owner or controller of more than 2% of the issued share capital in a company,

(d) all interests as an official or elected member of any statutory body;

(e) all interests as the occupier of any property owned or managed by the Company;

(f) any other significant or material interest.

DECISION MAKING.

23. PROCEEDINGS OF BOARD MEETINGS

(1) (a) Subject to any regulations established from time to time by the Company in general meeting and compliance with Section 10(1) of the Local Authorities (Companies) Order 1995 the Board may regulate their proceedings as they think fit and the quorum for the transaction of the business of the Board at the time when the meeting proceeds to business shall be five.

(b) 331/3 percent of the total number of Board Members (or such whole number of Board Members nearest to 331/3 percent) may call a meeting of the Board. It shall not be necessary to give notice of a meeting to a Board Member who is absent from the United Kingdom.

(c) If a quorum is not present within half an hour from the time appointed for a Board Meeting the Board Meeting shall, if requested by a majority of those Board Members present, be adjourned to the same day in the next week at the same time and place or to such other day and at such other time and place as the Board Members present may determine.

(d) If at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting then notwithstanding Article 22(1)(a) the Board Members present shall constitute a quorum.

(2) Questions arising at a Board Meeting shall be decided by a majority of votes and each Board Member present in person shall be entitled to one vote. In the case of an equality of votes, the Chairman shall have a second or casting vote.

(3) (a) Any Board Member having an interest in any arrangement between the Company and another person or body shall disclose that interest to the meeting before the matter is discussed by the Board or committee of the Board. Unless the interest is of the type specified in Articles 22(3)b or 22(3)c the Board Member concerned shall not remain present during the discussion of that item unless requested to do so by the remaining members of the Board

or committee of the Board. Unless permitted by Articles 22(3)b or 22(3)c the Board Member concerned may not vote on the matter in question, but no decision of the Board or any committee of the Board shall be invalidated by the subsequent discovery of an interest which should have been declared.

(b) Provided the interest has been properly disclosed pursuant to Article 22(3)(a) a Board Member may remain present during the discussion and may vote on the matter under discussion where the interest arises because:

(a) the Board Member is a Tenant so long as the matter in question affects all or a substantial group of Tenants; or

(b) the Board Member is a director or other officer of a company or body which is a parent, subsidiary or associate of the Company; or

(c) the Board Member is an official or elected member of any statutory body.

(c) A Board Member shall not be treated as having an interest:

(a) of which the Board Member has no knowledge and of which it is unreasonable to expect him to have knowledge;

(b) in the establishment of a policy in respect of Board Member expenses payable pursuant to Article 20.

(4) If a question arises at a meeting of the Board or of a committee of the Board as to the right of a Board Member to vote, the question may, before the conclusion of the meeting, be referred to the chairman of the meeting and his ruling in relation to any Board Member other than himself shall be final and conclusive.

(5) (a) At the first Board Meeting following each annual general meeting the Board Members shall appoint one of their number to be the Chairman to hold office until the next annual general meeting and may at any time remove him from that office.

(b) Unless he is unwilling to do so, the Board Member so appointed shall preside at every meeting of the Board at which he is present. But if there is no Board Member holding that office, or if the Board Member holding it is unwilling to preside or is not present within five minutes after the time appointed for the meeting, the Board Members present may appoint one of their number to be chairman of the meeting.

(c) The Board may appoint a vice or deputy chairman to act in the absence of the Chairman on such terms as the Board shall think fit provided that such vice or deputy chairman shall not be a member of the same group of Board Members as the Chairman.

(d) The Chairman or vice or deputy Chairman shall not be the Managing Director appointed under Article 16(6).

(e) No Chairman or vice or deputy Chairman shall hold office for a period which is longer than seven (7) years from the date of first election/ appointment in accordance with Article 5(a) and 5(c).

(6) All acts done by a meeting of the Board, or of a committee of the Board or by a person acting as a Board Member shall, notwithstanding that it be afterwards discovered that there was a defect in the appointment of any Board Member or that any of them were disqualified from holding office, or had vacated office, or were not entitled to vote, be as valid as if every such person had been duly appointed and was qualified and had continued to be a Board Member and had been entitled to vote.

(7) Any Board Member shall be able to participate in meetings of the Board Members by telephone or video conference provided that:

(i) A majority of directors have agreed to this at a previous Board meeting; and

(ii) he has given his intention to do so detailing the telephone number on which he can be reached and/or appropriate details of the video conference suite from which he will be taking part at the time of the meeting at least 48 hours before the meeting; and

(iii) the other Board Members have access to the appropriate equipment

but if after all reasonable efforts have been made it does not prove possible for the person to participate by telephone or video conference the meeting may still proceed with its business provided it is otherwise quorate.

(8) (a) In respect of any urgent business arising between Board meetings where these could not be:

(i) foreseen at the preceding Board meeting. (ii) are outside any general authority delegated to the

Chairman or vice or deputy chairman.

These shall, in the first instance, be discussed with the Chairman or in his absence the vice or deputy chairman and if the Chairman or the vice or deputy chairman, in his absence agrees, shall be referred to the vice or deputy chairman who will contact one other Board Member or in the case of the absence of the Chairman two other Board Members. In all cases any decisions will require a total of at least three Board Members to be consulted including where possible at least one of the Chairman and a vice or deputy chairman. [such Board Members, if possible, to include a representative from each group of Board Members]

(b) Any decisions taken on such matters must be reported to the Board at their next meeting and the decision formally ratified.

(c) Decisions taken outside of scheduled Board meetings will not deal with any deviation from policy decisions taken by the Board and Council and should not place any aspect of the Company or the Council at risk.

24. WRITTEN RESOLUTION

A resolution in writing signed by:

(1) three quarters of all the Board Members entitled to receive notice of a meeting of the Board or of a committee of the Board; and

(2) the Chairman of the Company or of the relevant committee; and

which satisfies the quorum requirements of Article 21(1)a or (d) shall be as valid and effectual as if it had been passed at a meeting of the Board or (as the case may be) a committee of the Board duly convened and held and may consist of several documents in the like form each signed by one or more Board Members.

MEMBERS

25. ADMISSION OF MEMBERS

(1) No person other than the Council shall be admitted to membership of the Company.

(2) The Council shall nominate a person to act as its representative in the manner provided in Section 323 of the Act. Such representative shall have the right on behalf of the Council to attend meetings of the Company, and generally exercise all rights of membership on behalf of the Council. The Council may from time to time revoke the nomination of such representative, and nominate another representative in his place. All such nominations and revocations shall be in writing.

(3) The rights of the Council shall be personal and shall not be transferable.

26. GENERAL MEETINGS AND RESOLUTIONS

(1) All general meetings other than annual general meetings shall be called extraordinary general meetings.

(2) The Board Members may call general meetings and, on the requisition of the Council pursuant to the provisions of the Act, shall forthwith proceed to convene an extraordinary general meeting for a date not later than eight weeks after receipt of the requisition. If there are not within the United Kingdom sufficient Board Members to call a general meeting, any Board Member or the Council may call a general meeting.

(3) (a) An Annual General Meeting and an Extraordinary General Meeting not called on the requisition of the Council pursuant to Article 25(2) shall be called by at least twenty-one clear days’ notice or by shorter notice if it is so agreed by the Council.

(b) The notice shall specify the time and place of the Meeting and, in the case of an Annual General Meeting, shall specify the Meeting as such.

(c) The notice shall be given to the Council and to the Board Members and auditors.

(4) The accidental omission to give notice of a meeting to, or the non-receipt of notice of a meeting by, any person entitled to receive notice shall not invalidate the proceedings at that meeting.

(5) No business shall be transacted at any general meeting unless a quorum is present. The presence of a duly authorised representative of the Council is necessary for a quorum.

(6) If the Council makes a decision which is required to be taken in a general meeting or by means of a written resolution, that decision shall be valid and effectual as if agreed by the Company in general meeting. Any decision taken by the Council pursuant to this Article 25(6) shall be recorded in writing and delivered by the Council to the Company for entry in the Company’s minute book.

An entry stating that a resolution has been carried or lost in the minutes of any meeting shall be conclusive evidence of the fact

ADMINISTRATIVE ARRANGEMENTS

27. SECRETARY

Subject to the provisions of the Act, the Secretary and any deputy or alternate Secretary shall be appointed by the Board for such term, at such remuneration and upon such conditions as they may think fit and any Secretary so appointed may be removed by them.

28. MINUTES

(1) The Board shall cause minutes to be made in books kept for the purpose:-

(a) of all appointments of officers made by the Board Members; and

(b) of all proceedings at meetings of the Company and of the Board, and of committees of the Board and of the Council in its capacity as the sole member of the Company, including the names of the Board Members present at each such meeting.

29. RECORDS ACCOUNTS AND RETURNS

(1) The Company shall comply with the provisions of the Act in respect of:-

(a) the keeping and auditing of accounting records;

(b) the provision of accounts and annual reports of the directors; and

(c) in making an annual return.

(2) The Company shall comply with the provisions of Section 128 of the 2008 Act.

30. THE SEAL

(1) If the Company has a seal it shall only be used with the specific or general authority of the Board or of a committee of the Board. The Board may determine who shall sign any instrument to which the seal is affixed and unless otherwise so determined it shall be signed by a Board Member and by the Secretary or a second Board Member.

(2) The Company may exercise the powers conferred by Section 49 of the Act with regard to having an official seal for use abroad, and such powers shall be vested in the Board Members.

31. NOTICES

(1) Any notice to be given to or by any person pursuant to the Articles shall be in writing except that a notice calling a meeting of the Board or of a committee of the Board need not be in writing.

(2) The Company may give any notice to the Council either personally or by sending it by post in a prepaid envelope addressed to the Council at its main office address which is notified by the Council to the Company from time to time or by leaving it at that address.

(3) The Council present by duly authorised representative at any meeting of the Company shall be deemed to have received notice of the meeting and, where requisite, of the purposes for which it was called.

(4) Proof that an envelope containing a notice was properly addressed, prepaid and posted shall be conclusive evidence that the notice was given. A notice shall be deemed to be given at the expiration of 48 hours after the envelope containing it was posted.

32. AMENDMENT OF ARTICLES

These Articles shall not be rescinded or amended without prior consultation with the Tenant Forums and any statutory approvals required from time to time.

33. EQUALITY AND DIVERSITY

The Company shall at all times take into consideration the principles of equality and diversity irrespective of age, gender, race, nationality, ethnic origin, religion, sexualorientation or disability. WINDING UP

If, upon the winding up or dissolution of the Company, there remains, after the satisfaction of all its debts and liabilities any property whatsoever, the same shall be paid or transferred to the Housing Revenue Account (as defined in the 1989 Act) and/ or the General Fund of the Council as appropriate.

35. INDEMNITY

(1) Every Board Member or other officer of the Company shall be indemnified out of the assets of the Company against all losses or liabilities which he may sustain or incur in or about the execution of the duties of his office or otherwise in relation thereto, including any liability incurred by him in defending any proceedings, whether civil or criminal, in which judgement is given in his favour or in which he is acquitted or in connection with any application under Section 115 of the Act in which relief is granted to him and no Board Member or other officer shall be liable for any loss, damage or misfortune which may happen to or be incurred by the Company in the execution of the duties of his office or in relation thereto PROVIDED THAT this Article shall only have effect in so far as its provisions are not avoided by Section 232 of the Act.

(2) The Board shall have power to purchase and maintain for any Board Member or officer of the Company insurance against any such liability as is referred to in Section 232(1) of the Act

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Financial Regulations &

Procedures

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FOREWORD To conduct its business effectively, the company must ensure that it has sound financial management systems in place and that they are strictly adhered to. Part of this essential control mechanism is the establishment of financial regulations and procedures that set out the financial policies of the company. Financial regulations and procedures make good business sense and demonstrate processes that show proper control over, and accountability for, the use of its resources. They help the company to transact its business safely and effectively, provide assurance for those who do business with the company or who are otherwise interested in the company and, critically, they provide protection to the board members and staff of the company. It is essential to our future that effective and formal control is exerted and demonstrated to ensure that:

- the best value for money is being obtained by the company; - purchases are made efficiently and in the company’s interest; and - legislation, including European and domestic procurement

legislation, codes of conduct and other regulatory requirements are fully complied with.

The company is responsible to its shareholders for the proper stewardship of its resources and for ensuring that they are used only for proper purposes. Good budgeting controls in compliance with these financial regulations are at the heart of this stewardship. As the Managing Director I am responsible to the board of directors and shareholders for leading the development and execution of the Company’s long term strategy with a view to creating shareholder value. It is also my responsibility to ensure the proper and efficient day to day running of the company including the use of its resources and compliance with these financial regulations and procedures are a key control to achieve that requirement. They have been endorsed by the Board of Directors and reflect national standards and good practice. It is therefore expected and required that all staff are mindful of and comply with these regulations and procedures in their daily conduct and bring to the attention of the appropriate manager any perceived non-compliance, on a confidential basis if necessary. Any departure may result in disciplinary proceedings.

Jane Barlow

17 November 2014

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CONTENTS TERMINOLOGY 4 FINANCIAL REGULATIONS AND PROCEDURE RULES 6 A General Provisions 1 Introduction 6

2 Status of Financial Regulations 6

B Corporate Governance

3 The Board of Directors 8

4 Corporate Structure 9

5 Director of Finance and others with Financial Responsibility 9

6 Risk Management 10

7 Whistleblowing 11

8 Code of Conduct 11

C Financial Management and Control

9 Financial Planning 13

10 Financial Control 14

11 Accounting Arrangements 15

12 Audit Requirements 17

13 Fraud and Corruption 18

14 Treasury Management 19

15 Income 20

16 Grants 22

17 Other Income-Generating Activity 22

18 Intellectual Property Rights and Patents 22

19 Non-Staff Expenditure 22

20 Staff 29

21 Assets 30

22 Funds Held on Trust 32

23 Other 32

Index 35

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TERMINOLOGY

AUDIT COMMITTEE The Audit Committee of the Company’s ultimate parent undertaking (Cornwall Council) which is an advisory body and reports to Members of the full Council of Cornwall Council on, inter alia, matters of risk management, control and governance, and on the economy, efficiency and effectiveness (or VFM) of the Company’s activities. The full responsibilities of the Audit Committee are set out in the Council’s Constitution. BOARD OF DIRECTORS The governing body of the Company, ultimately responsible for the management and administration of the Company’s revenue and property, and the conduct of its affairs. BUDGET HOLDER Any member of staff who has been assigned his or her own budget and is accountable to their line manager and or Head of Department/Section for it, in compliance with these financial regulations. COST CENTRE An area of Company activity that has its own budget comprising income and cost lines. DIRECTOR OF FINANCE The chief financial officer of the Company, responsible to the Board of Directors for the proper application of these financial regulations. The Director of Finance will also work closely with the Head of Finance of the Council. FUNDING BODIES Statutory authorities or other bodies that could provide funding to the Company.

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DIRECTORS OF DEPARTMENT The Director of a department of the Company who is responsible for the budget of his or her whole department, including any budgets with delegated budget holder responsibility within his or her department. The Director of Department is accountable to the Director of Finance for the proper application of these financial regulations within his or her department/Section. COMPANY SECRETARY The person responsible for ensuring compliance with the legal and procedural requirements relating to the affairs of the Company. The Company Secretary acts as the Company Secretary and Clerk to the Board of Directors. COMPANY SUBSIDIARY COMPANIES Any company controlled by the Company. MANAGING DIRECTOR The person with the ultimate executive responsibility for the management of the Company, holding the role of the designated Accountable Officer, with specific financial and managerial duties prescribed by the company Articles of Association and a duty to ensure that such funds and resources are properly, prudently and economically managed. VIREMENT The agreed transfer of money from one budget heading, to which it has been allocated, to another budget heading.

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FINANCIAL REGULATIONS AND PROCEDURE RULES

A GENERAL PROVISIONS 1 Introduction Cornwall Housing Limited is a company limited by guarantee without share capital and is incorporated under the Companies Act (registered number 4662007). It is a wholly owned business of Cornwall Council, its ultimate parent undertaking, and so effectively a subsidiary of the Council. In common with all incorporated bodies, at the hierarchical level it is governed by its Memorandum and Articles of Association which are the Company's internal rulebook and regulate the internal management of the Company, setting out how decisions are made and various other matters. It deals with matters such as the right of shareholders, the appointment and removal of directors, the conduct of the board and general meetings and communications by the Company. The Company must also comply with any overarching requirements of its parent undertaking (including its Audit Committee) and with the Companies Act of 2006. At the subordinate level of its governance arrangements the Company must have sound systems of financial and management control. The financial regulations and procedures therefore form part of this overall system of control and accountability. They provide clarity about the accountabilities of all employees of the Company including executive and non-executive board members. Directors of the Board, and others involved in the control and operation of the Company, should link the financial regulations with other documents which form part of the Company’s overall governance arrangements, e.g. Contract Procedure Rules, Schemes of Delegation, Anti-Fraud and Corruption, Anti-Money Laundering and Confidential Reporting (Whistle-blowing). 2 Status of Financial Regulations This document sets out the Company’s financial regulations and procedures. It translates into practical guidance the Company’s broad policies relating to financial control. The purpose of these financial regulations and procedures is to provide control over the totality of the Company’s resources and provide the Board of Directors and management with assurances that the resources are being properly applied for the achievement of the company’s business plan and objectives: Compliance with the financial regulations and procedures is compulsory

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for all staff of Cornwall Housing Limited. Any member of staff who fails to comply with the financial regulations and procedures may be subject to disciplinary action under the Company’s disciplinary regulations/procedures. It is the responsibility of departmental/section managers to ensure that their staff are aware of the existence and content of these financial regulations and procedures, the need to comply and, where necessary, the processes and routines that they should follow to achieve compliance. The Finance Director is responsible for maintaining a continuous review of these financial regulations and procedures.

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B CORPORATE GOVERNANCE 3 The Board of Directors The Board of Directors is responsible for the management and administration of the Company and is collectively responsible to the Company’s shareholders, its parent undertaking, for its long-term success and for its overall strategic direction, its values and its governance. It provides the leadership necessary for the Company to meet its business objectives whilst ensuring that a sound system of internal control and risk management is in place. The Board of Directors has specific responsibility for setting the strategic aims of the Company to accord with those of Cornwall Council, its parent undertaking, so that they are consistent with its requirements, plans and strategies. The Council sets overarching financial targets for each of its subsidiary companies which will be in line with the Council’s Medium Term Financial Strategy. The board will approve the detailed business plan to ensure that it delivers the financial targets that the Council has set. The Company will engage with the Council in the preparation of the Company’s business plan. In addition, the powers and duties of the Directors are determined by legislation and by the Company’s Articles of Association. Company law requires the directors to prepare financial statements for each financial year in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently; • make judgments and estimates that are reasonable and prudent; • state whether applicable UK Accounting Standards have been followed,

subject to any material departures disclosed and explained in the financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to:

• safeguard the assets of the Company; • to prevent and detect fraud and other irregularities; • ensure that the finances of the Company are managed in order to ensure

solvency and sustainability; • ensure the effective and efficient use of resources;

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• ensure that any grants received are used in accordance with the terms and conditions specified in the funding agreement;

• ensure that financial control systems are in place and are working effectively;

• approve the Company’s strategic plan; • approve the annual Revenue and Capital Budget and the annual financial

statements; and • recommend the appointment of the Company’s external auditors, to the

shareholder as a reserve matter within the Articles of Association. 4 Corporate Financial Structure The Board of Directors has ultimate responsibility for the Company’s finances, but by adopting these regulations and procedures has delegated and allocated specific powers and responsibilities as detailed below. 5 Director of Finance and others with Financial Responsibility The Director of Finance is the Company’s Chief Financial Officer with personal responsibility for the day-to-day administration including propriety and regularity in the use of the Company’s funds and a duty to ensure that such funds are properly, prudently and economically managed. He/she is responsible to the Managing Director and the Board of Directors for:

• preparing annual capital and revenue budgets and financial plans • preparing accounts, financial management information, monitoring and

control of expenditure against budgets • preparing the Company’s annual accounts and other financial statements

and accounts which the Company is required to submit to Companies House, HMRC, Cornwall Council (as shareholder and for the purposes of the consolidated accounts requirements) and other authorities

• ensuring that the Company maintains satisfactory financial systems • providing professional advice on all matters relating to financial policies

and procedures • maintaining day-to-day liaison with internal and external auditors in order

to achieve efficient financial processes. 5.1 Directors of department Directors of Department are accountable to the Managing Director and the Board of Directors for financial management of the areas or activities they control. They are advised by the Director of Finance in executing their financial duties. The Director of Finance will approve the financial systems operating within their departments, including the form in which accounts and financial records are kept. Directors of Department are responsible for establishing and maintaining clear lines of responsibility within their department for all financial matters. Where resources are devolved to budget holders, they are accountable to their Director of Department for their own budget. Directors of Department shall provide the Director of Finance with such

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information as may be required to enable: • compilation of the Company’s financial statements • implementation of financial planning • implementation of audit and financial reviews and projects • the provision of information to Cornwall Council as shareholder/parent

body. 5.2 All members of staff All members of staff should be aware and have a general responsibility for the security of the Company’s assets, for avoiding loss and misuse and for due economy in the use of resources. They should ensure that they are aware of the Company’s financial authority limits and the values of purchases for which quotations and tenders may be required, in accordance with European procurement rules, as applicable. They shall make available any relevant records or information to the Director of Finance or his or her authorised representative in connection with the implementation of the Company’s financial policies, these financial regulations and procedures and the system of financial control. They shall provide the Director of Finance with such financial and other information as he or she may deem necessary, from time to time, to carry out the requirements of the Board of Directors. They shall immediately notify the Director of Finance whenever any matter arises which involves, or is thought to involve, irregularities concerning, inter alia, cash or property of the Company. The Director of Finance shall take such steps as he or she considers necessary by way of investigation and report the outcome to the Managing Director. 6 Risk Management The Company acknowledges the risks inherent in its business, and is committed to managing those risks that pose a significant threat to the achievement of its business objectives and financial health. The following key principles outline the Company’s approach to risk management and internal control:

• The Board of Directors has responsibility for overseeing risk management within the Company as a whole

• An open and receptive approach to solving risk problems is adopted by the Board of Directors

• The Company will engage with the Audit Committee to enable the Committee to effectively and objectively monitor and challenge risk management arrangements and to report on risk management to the Board of Directors

• The Managing Director, Directors of Departments, and the senior managers of the Company, support, advise on and implement policies approved by the Board of Directors

• The Company makes conservative and prudent recognition and disclosure of the financial and non-financial implications of risks

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• The Company recognises that there are risks associated with not taking certain actions or maximising opportunities and encourages an open approach to the identification of such opportunities, their associated risks and the approach to the management of those risks

• Directors of Departments are responsible for encouraging good risk management practice within their departments and to maintain and regularly review risk management arrangements for their department

• Key risk indicators will be identified and monitored on a regular basis. 7 Whistleblowing The Public Interest Disclosure Act came into effect on 1 January 1999, amending the Employment Rights Act 1996. The amendments made by the Act give protection to individuals against dismissal or victimisation by their employer as a result of disclosing information which is considered to be in the public interest. The Company endorses the principles underpinning the Act. The Company’s public interest disclosure procedure follows the Act but extends to students and Directors, as well as to staff. Any person considering making a disclosure may wish to seek advice or guidance outside the Company. The organisation Public Concern at Work (PCaW) provides such advice on a strictly confidential basis (www.pcaw.co.uk). However, it may be appropriate in some circumstances for concerned staff to raise issues with their line manager or another senior manager. The Company will support the raising of concerns by any appropriate method. The full procedure for whistleblowing is set out in the Company’s whistleblowing policy. 8 Code of Conduct The Company is committed to the highest standards of openness, integrity and accountability. It seeks to conduct its affairs in a responsible manner, having regard to the principles established by the Board of Directors. The Company expects that staff act in accordance with these principles:

• integrity • openness • selflessness • objectivity • honesty • accountability • leadership

Staff are required to comply with the Company’s Employee Code of Conduct. 8.1 Conflicts of interest Members of the Board of Directors, senior management and those involved in the procurement of goods and services are required to disclose interests in the Company’s register of interests maintained by the Company Secretary. They will be responsible for ensuring that entries in the register relating to them are kept

http://www.pcaw.co.uk/

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up to date regularly and promptly. In particular, no person shall be involved in the commissioning or procurement of, or be a signatory to, a Company contract where he or she also has an interest in the activities of the other party. Advice should be sought from the Company Secretary where there is any doubt or where it is otherwise appropriate. 8.2 Receiving gifts or hospitality It is an offence for members of staff to improperly accept any gift or consideration as an inducement or reward for doing, or refraining from doing, anything in an official capacity or showing favour or disfavour to any person in an official capacity. Action will be taken where conduct has fallen below the required standard, including under the Bribery Act 2010 and the Company’s disciplinary procedures. The guiding principles to be followed by all members of staff must be:

• the conduct of individuals should not create suspicion of any conflict between their official duty and their private interest

• the actions of individuals acting in an official capacity should not give the impression (to any member of the public, to any organisation with whom they deal or to their colleagues or others associated with the Company) that they have been (or may have been) influenced by a benefit to show favour or disfavour to any person or organisation.

Thus, members of staff should not accept any gifts, rewards or hospitality (or have them given to members of their families) from any organisation or individual with whom they have contact in the course of their work. Any offer should be declined. I in any doubt, advice should be sought from the relevant Director of Department or the Company Secretary. For the protection of those involved, the Company Secretary will maintain a register of gifts and hospitality offered. Members of staff who are offered such gifts or hospitality are obliged to notify the Company Secretary promptly with details of that offered and confirmation that it has been declined.

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C FINANCIAL MANAGEMENT AND CONTROL 9 Financial Planning The Director of Finance is responsible for preparing annually a rolling financial plan, in line with its parent undertaking, for approval by the Board of Directors; this should be consistent with the strategic plan approved by the Board of Directors which in turn should reflect, to the extent necessary, the strategic plan of Cornwall Council. 9.1 Budget objectives The Board of Directors will, from time to time, set budget objectives for the Company aligned to the operational and strategic objectives of the Company. These will help the Director of Finance to prepare more detailed financial plans for the Company. 9.2 Budget preparation The Director of Finance is responsible for preparing each year an annual revenue budget and capital programme for consideration by the Board of Directors. The Director of Finance must ensure that detailed budgets are prepared in order to support the resource allocation process and that these are communicated to Directors of Departments as soon as possible following their approval by the Board of Directors. During the year, the Director of Finance is responsible for submitting revised budgets to the Board of Directors for approval. 9.3 Capital programme The capital programme includes all expenditure on land, buildings, equipment, furniture and associated costs above £10,000, whether or not they are funded from capital grants. Expenditure of this type can only be considered as part of the capital programme approved by the Board of Directors. The Director of Finance will establish protocols for the inclusion of capital projects in the capital programme for approval by the Board of Directors. These will set out the information that is required for each proposed project as well as the financial criteria and control mechanisms that they are required to meet. The Director of Finance will also establish procedures for the approval of variations, including the notification of large variations. The Director of Finance is responsible for providing regular statements concerning all capital expenditure to the Board of Directors. Following completion of a capital project, a post-project evaluation or final report should be submitted to the Board of Directors including actual expenditure against budget and reconciling funding arrangements where a material variance has occurred as well as other significant issues affecting completion of the project.

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9.4 Other major developments Any new aspect of business, or proposed establishment of a company or joint venture, which will require an investment in buildings, resources, staff time or external contract in line with the financial limits set within the Scheme of Delegation. The Director of Finance will establish protocols for these major developments to enable them to be considered for approval by the Board of Directors. These will set out the information that is required for each proposed development as well as the financial criteria and control mechanisms that they are required to meet. 10 Financial Control 10.1 Budgetary control The control of income and expenditure within an agreed budget is the responsibility of the Director of Department or designated budget holder, who must ensure that day-to-day monitoring is undertaken effectively. Budget holders are accountable to their line manager for operation in accordance with these financial regulations and procedures and within their budget. Significant departures from agreed budgetary targets must be reported immediately to the Director of Finance by the Director of Department concerned and, if necessary, corrective action taken as agreed or directed by the Director of Finance. 10.2 Financial information Budget holders are assisted in their duties by management information provided by the Director of Finance. The types of management information will vary according to the purposes for which it is required and the level of management requiring the information. This will be determined by the Director of Finance who will also provide information, as necessary, on the intervals at which management information will be made available. The Director of Finance is responsible for supplying budgetary reports on all aspects of the Company’s finances to the Board of Directors on a regular basis. The relevant extracts from the overall position are reported to each Director of Department so that they are aware of their own financial performance against budget. This does not detract from the responsibility of Directors of Department or other budget holders for the proper monitoring and management of their budgets. 10.3 Changes to the approved budget Changes proposed to the approved budget will be considered by the Director of Finance who will make proposals to the Board of Directors, unless they fall within the delegated approval arrangements, the levels of which will be reviewed and agreed from time to time by the Director of Finance in conjunction with the Board of Directors.

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10.4 Virement Where a budget holder is responsible for more than one budget, virement is permitted within the approval limits set out within the Scheme of Delegation. A Head of Department may approve virement between budgets (up to the levels set out within the Scheme of Delegation) held by him/her, except that no virement is allowed between non-pay and pay budgets without the prior written approval of the Directors Leadership Team (DLT). Virement between budgets held by different budget holders is permitted within Scheme of Delegation Limits, with the written approval of the Directors Leadership Team (DLT). 10.5 Treatment of year-end balances At the year end, budget holders will not normally have the authority to carry forward a balance on their budget to the following year unless the Director of Finance has approved a specific scheme for carrying forward all or part of unspent amounts as part of the annual budget-setting process. Specific capital budgets for projects in excess of one year may be carried forward with the approval of the Director of Finance. 10.6 Distribution of Profits Any surplus or deficit at the end of the financial year will be dealt with in accordance with the principles approved by the Council as owner of the company. In applying those principles regard will be had to the respective strategic and operational needs of the Council and the company, State Aid and other regulatory issues and such other matters as may be appropriate. 11 Accounting Arrangements 11.1 Financial year The Company’s financial year runs from 1 April until 31 March the following year in line with its parent undertaking, Cornwall Council. 11.2 Basis of accounting The consolidated financial statements are prepared on the historical cost basis of accounting and in accordance with applicable accounting standards. 11.3 Format of the financial statements The financial statements are prepared in accordance with best practice and in accordance with the provisions of the Companies Acts. 11.4 Accounting Systems It is essential that the Company has in place sound systems and procedures

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relating to the control of the company’s assets, including purchasing, costing and management information. They should contain controls to ensure that transactions are properly processed and errors detected promptly; the company shall use its parent undertaking’s Oracle ERP to fulfil this obligation.

11.5 Capitalisation and depreciation New land and buildings will be recorded in the balance sheet at actual build or acquisition cost, except where they are received as gifts, when they will be recorded at depreciated replacement value. Expenditure incurred on repair, refurbishment or extension of existing buildings will not be capitalised unless it can be demonstrated that the resultant value of the building, on the basis of depreciated replacement value, is greater than the current book value. Expenditure incurred on the acquisition of assets other than land and buildings will be recorded in the balance sheet where the acquisition cost per item or group of items is £10,000 or more. Capitalised assets will be depreciated on a straight line basis over their expected useful lives. Land will not be depreciated. Feasibility costs - In general, costs incurred at the feasibility stage of a project should always be treated as revenue and charged as an expense when they are incurred. This is due to the fact that feasibility studies tend to cover multiple options and the decision to proceed with a specific project or scheme has not normally been determined at that point in time. Feasibility costs can only be capitalised if they can be reliably measured and specifically identified as part of the expenditure incurred in bringing a particular asset into use, or for sale, and if they are incurred in the same year in which the preferred scheme goes ahead. If a scheme is subsequently aborted then these capitalised costs will need to be written back to revenue, provided that this happens in the same year, or the asset under construction will need to be impaired accordingly in order to write out these previously capitalised costs. 11.6 Accounting records The Director of Finance and Head of Resources are responsible for ensuring SLA arrangements are in place with the Head of Finance and the Head of Human Resources and Organisational Development at Cornwall Council to ensure the retention of financial documents including Payroll, National Insurance and associated personnel, pension and tax records .These should be kept in a form that is acceptable to the relevant authorities. The Company is required by law to retain prime documents for six years. These include:

• purchase orders • paid invoices • invoices raised

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• bank statements • copies of receipts • paid cheques • payroll records, including part-time lecturers’ contracts.

The Director of Finance will make appropriate arrangements for the retention of electronic financial records in accordance with the Company’s Records Retention Schedule.

Members of staff should ensure that retention arrangements comply with any specific requirements of funding organisations such as regional development agencies. Additionally, for auditing and other purposes, other financial documents should be retained for such periods as are stipulated by any funder, whether European or domestic or as may otherwise be required. 11.7 Public access – as applicable The Board of Directors is required to supply any person with a copy of the Company’s most recent financial statements within two months of a request. 11.8 Taxation The Director of Finance is responsible for ensuring robust Service Level Agreements are in place with the Head of Finance and Head of Human Resources and Organisational Development at Cornwall Council to ensure arrangements are in place for advising Directors of Department, in the light of guidance issued by the appropriate bodies and relevant legislation as it applies, on all value added or corporation taxation issues, to the Company. The Director of Finance / Head of Finance / Head of Human Resources and Organisational Development at Cornwall Council will therefore issue instructions to departments on compliance with statutory requirements including those concerning VAT, corporation tax and import duty. The Head of Human Resources and Organisational Development at Cornwall Council is responsible for advising Directors of Department, in the light of guidance issued by the appropriate bodies and relevant legislation as it applies, on all employment taxation issues, to the Company. The Director of Finance / Head of Human Resources and Organisational Development at Cornwall Council will therefore issue instructions to departments on compliance with statutory requirements including those concerning PAYE and national insurance. The Director of Finance is responsible for maintaining the Company’s VAT and corporation tax records, making all tax payments, receiving tax credits and submitting tax returns, other than those for employment taxes, by their due date as appropriate. The Head of Human Resources and Organisational Development at Cornwall Council is responsible for maintaining PAYE, national insurance and pension fund records and for submitting returns by their due date as appropriate.

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12 Audit Requirements 12.1 General External auditors, including those employed by Cornwall Council, and internal auditors shall have authority to:

• access Company premises at all times • access all assets, records, documents and correspondence relating to any

financial and other transactions of the Company • require and receive such explanations as are necessary concerning any

matter under examination • require any employee of the Company to account for cash, stores or any

other property under his or her control • access records belonging to third parties, such as contractors, when

required. The Director of Finance is responsible for drawing up a timetable for final accounts purposes and will advise staff and the external auditors accordingly. The Director of Finance will submit the financial statements to the Board of Directors for approval. 12.2 External audit The appointment of external auditors is a reserve matter for the council which will take place annually. It is the responsibility of the Board of Directors to make recommendations to the shareholder in relation to the appointment of the external auditors. The primary role of external audit is to report on the Company’s financial statements and to carry out such examination of the statements and underlying records and control systems as are necessary to reach their opinion on the statements. 12.3 Other auditors The Company may, from time to time, be subject to audit or investigation by external bodies such as H M Revenue and Customs. They have the same rights or greater of access as external and internal auditors. 13 Fraud and corruption It is the duty of all members of staff, management and the Board of Directors to notify the Company Secretary immediately whenever any matter arises which involves, or is thought to involve, irregularity, including fraud, corruption or any other impropriety. The Company Secretary shall immediately invoke the fraud response plan, which incorporates the following key elements:

• he or she will notify the Managing Director of the suspected irregularity

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and shall take such steps as he or she considers necessary by way of investigation and report

• the Managing Director shall inform the police if a criminal offence is suspected of having been committed

• any significant cases of fraud or irregularity shall be reported to the Board of Directors

• the Board of Directors shall commission such investigation as may be necessary of the suspected irregularity, by the internal audit service or others, as appropriate

• the internal auditors, or others commissioned to carry out an investigation, shall prepare a report for the Board of Directors on the suspected irregularity. Such report shall include advice on preventative measures.

If the suspected fraud is thought to involve the Company Secretary, the Director of Finance and/or the Managing Director, the member of staff shall notify the designated (or other appropriate) officer of the company’s parent undertaking of their concerns regarding irregularities. See also Section 6: Whistleblowing. 14 Treasury Management 14.1 Treasury management policy The Company must obtain approval from the shareholder representative prior to it loaning or advancing monies to any person (other than normal trade credit), borrowing any sum on the Company’s behalf or entering into any lease arrangement for a single item above the value stipulated in the Company’s Articles of Association. The Director of Finance is responsible for approving a treasury management policy setting out a strategy and policies for cash management, long-term investments and borrowings. This will require compliance with Prudential Borrowing/Parent Undertaking rules regarding approval for any secured or unsecured loans that go beyond the general consent levels set out in the financial memorandum. The Board of Directors has a responsibility to ensure implementation, monitoring and review of such policies. All executive decisions concerning borrowing, investment or financing (within policy parameters) shall be delegated to the Director of Finance and an appropriate reporting system set up and maintained. All borrowing shall be undertaken in the name of the Company and shall conform to any relevant Prudential Borrowing/Parent Undertaking requirements. The Director of Finance will report to the Board of Directors quarterly during the financial year on the activities of the treasury management operation and on the exercise of treasury management powers delegated to him or her. 14.2 Appointment of professional advisers The Board of Directors is responsible for the appointment of professional financial advisers (such as investment managers) on the recommendation of the Director of Finance. The appointment shall be for a specified period and subject to Procurement Policy and Procedures.

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14.3 Banking arrangements The Director of Finance must obtain the prior approval of the shareholder (the Council) before they can open or close a bank account for dealing with the Company’s funds. This approval should be sought from and may only be given by the shareholder representative of the Council. The shareholder representative will be responsible for consulting the Council’s Chief Financial Officer if required. All bank accounts shall be in the name of the Company. The Director of Finance is responsible, on behalf of the Board of Directors, for liaising with the Company’s bankers in relation to the Company’s bank accounts and the issue of cheques. All cheques shall be ordered on the authority of the Director of Finance, who shall make proper arrangements for their safe custody. All cheques drawn on behalf of the Company must be signed in the form approved by the Director of Finance. All automated transfers on behalf of the Company, such as BACS or CHAPS, must be authorised in the appropriate manner and on the basis approved by the Director of Finance. The Director of Finance is responsible for ensuring that all bank accounts are subject to regular reconciliation and that large or unusual items are investigated as appropriate. 14.4 Money Laundering The Director of Finance is the officer nominated to receive disclosures in respect of suspected money laundering transactions or activity within the Company. Money laundering is defined as:

• Concealing, disguising, converting or transferring criminal property or removing it from the UK

• Entering into or becoming concerned in an arrangement which you know or suspect facilitates the acquisition, retention , use or control of criminal property by or on behalf of another person

• Acquiring, using or possessing criminal property Money laundering legislation applies to ALL employees and further guidance may be found in the Company’s Anti-Money Laundering Policy or obtained from the Company Secretary or the Director of Finance. 15 Income 15.1 General The Director of Finance is responsible for ensuring that appropriate procedures are in operation to enable the Company to receive all income to which it is entitled. All receipt forms, invoices, tickets or other official documents in use and

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electronic collection systems must have the prior approval of the Director of Finance. All Directors of Department/Managers are responsible for the correct application of these procedures within their department. Levels of charges for services rendered, goods supplied and rents and lettings are determined by the Board of Directors following advice from the Director of Finance. The Director of Finance is responsible for the prompt collection, security and banking of all income received. The Director of Finance is responsible for ensuring that all claims for funds, including grants and contracts, are made by the due date. 15.2 Maximisation of income It is the responsibility of all staff to ensure that revenue to the Company is maximised by the efficient application of approved procedures for the identification, collection and banking of income. In particular, this requires the prompt notification of sums due to the Income Collection section of the Finance Department, so that collection can be initiated. 15.3 Receipt of cash, cheques and other negotiable instruments All monies received by any department/Section from whatever source must be recorded by the department/Section on a daily basis together with the form in which they were received, for example cash, cheques and other negotiable instruments. Amounts received must be banked and details sent promptly to the Cashiers section of the Finance Department. The custody and transit of all monies received must comply with the requirements of the Director of Finance and those of the Company’s insurers. All sums received must be paid in and accounted for in full, and must not be used to meet miscellaneous departmental expenses or be paid into the departmental petty cash float. Personal or other cheques must not be cashed out of money received on behalf of the Company. 15.4 Receipts by credit or debit card The Company may only receive payments by debit or credit card using procedures approved by the Director of Finance. 15.5 Internet receipts Any member of staff wishing to arrange for payment to be made to the Company by the internet should seek guidance from the Director of Finance at an early stage. 15.6 Collection of debts The Director of Finance should ensure procedures are designed so that:

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• debtors invoices are raised promptly on official invoices, in respect of all

income due to the Company • invoices are prepared with care, recorded in the ledger, show the correct

amount due and are credited to the appropriate income account • any credits granted are valid, properly authorised and completely

recorded • VAT is correctly charged where appropriate, and accounted for • monies received are posted to the correct debtors account • swift and effective action is taken in collecting overdue debts, in

accordance with the protocols noted in the financial procedures • outstanding debts are monitored and reports prepared for management.

Only the Director of Finance can implement credit arrangements and indicate the periods in which different types of invoice must be paid. Requests to write off debts must be referred in writing to the Director of Finance. Individual debts may be written off with the permission of the Director of Finance subject to an upper level currently set at £25,000 to be determined by the Board of Directors and reviewed from time to time. Individual debt write-offs above this limit must be referred to the Board of Directors for approval. 16 Grants 16.1 Grant and contract conditions

Many grant-awarding bodies and contracting organisations stipulate conditions under which their funding is given. In addition, there are often procedures to be followed regarding the submission of interim or final reports or the provision of other relevant information. Failure to respond to these conditions often means that the Company will suffer a significant financial penalty. It is the responsibility of the named supervisor or project manager to ensure that conditions of funding are met. Any loss to the Company resulting from a failure to meet conditions of funding is the responsibility of the Head of Department/Section, and will be charged against departmental funds. 17 Other Income-Generating Activity 17.1 Third Party Income Stream Activities Where the Company is acting as a supplier or consultant to third parties it is the responsibility of the Director of Department to ensure that the agreement does not expose the Company to any legal liabilities for which the Company is not covered. In any event all such contracts or agreements must be signed by the Company Secretary. 18 Intellectual Property Rights and Patents 18.1 General Certain activities undertaken within the Company including research and

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consultancy may give rise to ideas, designs and inventions which may be patentable. These are collectively known as intellectual property. 18.2 Intellectual property rights (IPR) In the event of the Company deciding to become involved in the commercial exploitation of inventions and research, the matter should then proceed in accordance with the intellectual property procedures issued by the Company and contained in the Company’s detailed financial procedures and IPR Policy 19 Non-staff Expenditure 19.1 General The Director of Finance is responsible for making payments to suppliers of goods and services to the Company. 19.2 Scheme of delegation/financial authorities The Director of Department is responsible for purchases within his or her department. Purchasing authority may be delegated to named individuals within the department. In exercising this delegated authority, budget holders are required to observe the Company’s procurement policies and financial procedures. The Director of Finance shall establish an Ordering and Payments Authorisation Scheme identifying employees authorised to act on the Company’s behalf in respect of payments, income collection and placing orders, including variations, and showing the limits of their authority. An Ordering and Payments Authorisation Scheme has been embedded in the Council’s Oracle ERP system which will be used by the Company. This means that employees generally do not need to identify specific individuals to authorise transactions, as the system will identify the appropriate person. Where transactions originate outside of Oracle, the authorisation scheme still applies, as all transactions will complete on the system. When an employee needs to raise transactions against a particular cost centre they should reference the dashboard report that has been prepared identifying employees and their authorisation responsibilities by cost centre and level of authority for approval. Under procedures agreed by the Director of Finance, central control shall be exercised over the creation of requisitioners and authorisers and their respective financial limits (for electronic systems). The Director of Finance must be notified immediately of any changes to the authorities to commit expenditure. Directors of Department and budget holders are not authorised to commit the Company to expenditure without first reserving sufficient funds from within their approved budget to meet the purchase cost. The member of staff (or budget holder) authorising the invoice for payment

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must be different from the member of staff responsible for signing the purchase order form. 19.3 Procurement policy The Company requires all budget holders, irrespective of the source of funds, to source supplies, equipment and services in accordance with value for money principles. Value for money does not mean the cheapest solution. It is the best combination of whole life costs (i.e. the cost of a product or service spread over its whole life) and quality to meet the budget holders requirement. It includes maintenance and running costs as well as the initial cost. In assessing value for money, budget holders should question whether the service or product being offered by a particular supplier satisfies both short and long-term interest of the Company and whether it is the best offer available. Where the requirement is for the delivery of goods or services over a period of time, budget holders should seek co-operation with suppliers, continuous improvements in value for money throughout the life of the contract. The Head of Procurement is responsible to the Company Secretary/Director of Finance for:

• ensuring that the Company’s purchasing policy is known and observed by all involved in purchasing for the Company

• advising and directing on matters of Company purchasing policy and best practice

• advising assisting and directing departments where required on specific departmental purchases

• developing appropriate standing supply arrangements on behalf of the Company to assist budget holders in meeting their value for money obligations

• vetting all orders above limits contained in the Procurement Procedures before they leave the Company

• the drafting and negotiation of all large-scale purchase contracts, as defined in the Procurement Procedures undertaken by the Company, in collaboration with the responsible department

• ensuring that the Company complies with EU regulations, as applicable, on public procurement.

Detailed advice on Procurement is available from Cornwall Council’s Procurement Service. This advice must be complied with unless there is an exceptional reason not to do so approved by both the Managing Director and the Director of Finance. Any such deviation from procurement advice must also be approved by Board. 19.4 Purchase orders The ordering of goods and services shall be in accordance with the Company’s detailed financial procedures. Official Company orders must be placed for the purchase of all goods or services, except those made using purchasing cards or petty cash. In exceptional

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circumstances, urgent orders may be given orally, but must be confirmed by an official purchase order endorsed ‘confirmation order only’ not later than the following working day. When transferring goods or services between departments, an interdepartmental transfer form must be used. It is the responsibility of the Director of Finance (through the Company’s Head of Procurement) to ensure that all purchase orders refer to the Company’s conditions of contract. 19.5 Purchasing cards The operation and control of the Company’s purchasing cards is the responsibility of the Director of Finance. Holders of purchasing cards must use them only for the purposes for which they have been issued and within the authorised purchase limits. Cards must not be loaned to another person, nor should they be used for personal or private purchases. Cardholders should obtain approval to purchase from the relevant budget holder and should ensure that there is sufficient budget available to meet the costs. The Director of Finance shall determine what information is required on purchases made with purchasing cards from cardholders and deadlines for receipt in the Finance Department to enable financial control to be maintained and cardholders must provide that information. Details of the operation of the scheme are available from Head of Finance Failure to comply with the purchase card scheme or the requirements of the Director of Finance may result in purchase cards being withdrawn or permissions restricted. 19.6 Contracts The Company must obtain shareholder/member approval prior to incurring any revenue expenditure on non-capital assets in excess of the amount stipulated in its articles of association; or tendering for contracts with a total contract value above the limit as stipulated in its Articles of Association. Capital contracts will be determined by the Board of Directors. Building contracts are administered by the Company’s Housing Assets Manager. Systems development contracts are administered by the Information Systems Manager and Head of Resources. Building proposals will normally be initiated by the Housing Assets Manager in respect of planned replacements, general improvement schemes, space planning or in response to requests from departments. Systems development proposals will normally be initiated by the Information Systems (IS) Manager and Head of Resources in respect of planned replacements, general improvement schemes or in response to requests from departments.

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Consultants may be appointed if the project is too large or too specialised for Assets or IS department resources. Appointments shall be subject to the Company’s procurement procedures. The cost of these consultants shall be included in the capital cost of the project. Proposals shall be presented in the form of a business case including costings prepared in conjunction with the Director of Finance, for approval by the Board of Directors. The achievement of value for money will be an objective in the letting of all contracts. Conditions of contract for the purchase of goods should be followed as described in the Company’s procurement policy. 19.7 EU regulations The rules relating to Local Authority Companies and the applicability of EU regulations is complex but as a general rule Teckal companies are contracting authorities in their own right and must therefore comply with the Public Contracts Regulations 2006 for all forms of procurement, purchase or hire (whether or not hire purchase) with a total value exceeding the financial thresholds in place at that time. Trading companies, i.e. those that are set up for commercial purposes and therefore not regarded as contracting authorities, are not required to comply with the Regulations. Where there is doubt, clarification must be sought from the Head of Procurement/Cornwall Council Legal Services. The Head of Procurement is responsible for ensuring the Company complies with its legal obligations concerning EU procurement rules, as applicable. The Head of Procurement will advise Directors of Department on the thresholds that are currently in operation. A breach of these EU regulations is actionable by a supplier or potential supplier. It is the responsibility of Directors of Department, as applicable, to ensure that their members of staff comply with EU procurement rules by notifying the Head of Procurement of any purchase that is likely to exceed the thresholds. This will need to be done well in advance in order to permit advertisements in the Official Journal of the European Union (OJEU). 19.8 Receipt of goods All goods and services shall be received at designated receipt and distribution points. They shall be checked for quantity and/or weight and inspected for quality and specification. A delivery note shall be obtained from the supplier at the time of delivery and signed by the person receiving the goods. If the goods and services are deemed to be unsatisfactory, the record shall be marked accordingly and the supplier immediately notified so that they can be collected for return as soon as possible. Where goods are short on delivery, the record should be marked accordingly and the supplier immediately notified. The finance department should be notified immediately of any dispute with the supplier.

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Where practical, all persons receiving goods and services on behalf of the Company must be independent of those who negotiated prices and terms and placed the official order. When goods are received, employees should review the amount received against the purchase order. When the order has been raised on Oracle, the goods received note should be entered into the system and matched to the purchase order. If a match is achieved, payment of the invoice will be made automatically. Where orders are raised on other systems, goods received notes should be matched and recorded in line with the requirements of that system. If the goods received note does not match the purchase order, payment will not be made automatically and managers will be expected to authorise payment of the invoice only after any discrepancies have been resolved and the amount of the appropriate payment determined. 19.9 Payment of invoices The procedures for making all payments shall be in a form specified by the Head of Finance Cornwall Council, and the Director of Finance is responsible for ensuring Cornwall Housing Limited procedures are aligned to these requirements. The Director of Finance is responsible for deciding the most appropriate method of payment for categories of invoice. Payments to UK suppliers will normally be made by BACS transfer each week. In exceptional circumstances the Director of Finance will prepare cheques manually for urgent payments. Directors of Department are responsible for ensuring that expenditure within their Directorates does not exceed budget available. Suppliers should be instructed by the budget holder to submit invoices for goods or services to the Company’s Accounts Payable section, who will log receipt and pass invoices to budget holders for checking and authorisation. Invoices must be passed to the Finance Department as soon as they have been certified to enable payment within agreed terms. Care must be taken by the budget holder to ensure that discounts receivable are obtained. Payments will only be made by BT Cornwall against invoices that have been certified for payment by the appropriate head of department or budget holder. Certification of an invoice or receipting of an electronic order will ensure that:

• the goods have been received, examined and approved with regard to quality and quantity, or that services rendered or work done is satisfactory where appropriate, it is matched to the order

• invoice details (quantity, price discount) are correct • the invoice is arithmetically correct • the invoice has not previously been passed for payment • where appropriate, an entry has been made on a stores record or

departmental inventory

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• an appropriate cost centre and account code are quoted; this must be one of the cost centre codes included in the budget holder’s areas of responsibility and the account code correspond with the types of goods or service described on the invoice.

19.10 Late payment rules The Late Payment of Debts (Interest) Act 1998 was introduced to give small businesses the right to charge interest on late payments from large organisations and public authorities. Key points are:

• small businesses can charge interest on overdue invoices • the rate of interest is currently 8% per annum above the official daily rate

of the Bank of England • the Act also applies to overseas organisations • the Company can be sued for non-payment.

In view of the penalties in this Act, all invoices must be passed to the Finance Department for payment as soon as they are received. 19.11 Travel, subsistence and other allowances All claims for payment of subsistence allowances, travel and incidental expenses must be in accordance with the Company’s Travel & Expenses policy as approved by the Board of Directors. 19.12 Staff expenses reimbursement The Company’s purchasing and payments procedures are in place to enable the majority of non-pay supplies to be procured through the accounts payable system without staff having to incur any personal expense. However, on occasion, staff may incur expenses, most often in relation to travel, and are entitled to reimbursement. All claims for payment shall be in accordance with the Company’s Travel & Expenses policy. 19.13 Giving hospitality Staff entertaining on the Company’s premises must use the Company’s catering facilities. Where guests are entertained outside the Company, reasons must be stated when submitting a claim for reimbursement. Names of staff and guests must be noted on the invoice supporting the claim, which should include the full details. Credit card receipts will not be accepted in support of a claim The limits concerning acceptable expenditure for entertaining guests are set out in the Company’s Travel and Expenses Policy. 19.14 Staff advances The Director of Finance and the relevant Director of Department may jointly approve cash advances for projects carried out away from the Company where

29

cash expenditure may be unavoidable. Other forms of payment will be expected to be used wherever possible, such as an official purchase order and subsequent payment or a Company purchasing card. Receipts or paid invoices must be retained for all sums expended in this way. Upon completion of the project to which the advance relates, within one month a final account must be prepared to demonstrate how the advance was disbursed and any unspent balance repaid. Under no circumstances will a second advance be approved when the final accounting for an earlier advance to a project or individual is outstanding. 19.15 Petty cash No member of staff nor any member of the Board of Directors shall be reimbursed for travel and subsistence etc from petty cash; all such claims for reimbursement will only be made through the payroll system (see 19 below). Where a single item claimed for reimbursement is for less than £50 it should be paid from the Cashiers Office. It must be supported by receipts. The Director of Finance shall make available to departments such imprests as he or she considers necessary for the disbursements of petty cash expenses. However, it is important for security purposes that petty cash imprest floats are kept to a minimum. Requisitions for reimbursements must be sent to the Director of Finance, together with appropriate receipts or vouchers, before the total amount held has been expended, in order to retain a working balance pending receipt of the amount claimed. The member of staff granted a float is personally responsible for its safe-keeping. The petty cash box must be kept locked in a secure place in compliance with the requirements of the Company’s insurers when not in use and will be subject to periodic checks by the head of department or another person nominated by him or her. At the end of the financial year a certificate of the balances held should be completed by the member of staff responsible for the float and counter-signed by the Head of Department. 20 Staff All Company staff will be appointed to the salary scales approved by the Board of Directors and in accordance with appropriate conditions of service. All letters of appointment including terms and conditions and remuneration must be issued by the direction of Human Resources. The Board of Directors will determine what other benefits if any, such as medical and life insurance, are to be available, the basis of their provision (contributory or not) and the staff to whom they are to be available. All claims for the payment of car allowances, subsistence allowances, travelling

30

and other incidental expenses will only be made through the Company’s payroll system. 20.1 Appointment of staff All contracts of service shall be concluded in accordance with the Company’s approved Human Resources policies and procedures. All offers of employment with the Company shall be made in writing by the Director of Human Resources and Organisational Development at Cornwall Council. Budget holders shall ensure that the Director of Human Resources and Organisational Development is provided promptly with all information they may require in connection with the appointment, resignation or dismissal of employees. 20.2 Salaries and wages The Director of Human Resources and Organisational Development at Cornwall Council is responsible for all payments of salaries and wages to all staff including payments for overtime or services rendered. All timesheets and other pay documents will be in a form prescribed or approved by the Director of Human Resources and Organisational Development at Cornwall Council. The Director of Human Resources and Organisational Development at Cornwall Council will be responsible for keeping the Director of Finance informed of all matters relating to personnel for management information purposes. In particular these include:

• appointments, resignations, dismissals, supervisions, secondments and transfers

• changes in remuneration other than normal increments and pay awards • pension scheme changes

The Director of Finance is responsible for payments to non-employees and for informing the appropriate authorities of such payments. All casual and part-time employees will be included on the payroll. The Director of Human Resources and Organisational Development shall be responsible for keeping all records relating to payroll including those of a statutory nature. The Director of Finance and the Head of Resources are responsible for ensuring that the Service Level Agreement reflects these requirements. All payments must be made in accordance with the Company’s detailed payroll procedures and comply with HMRC regulations. 20.3 Private consultancies and other paid work Unless otherwise stated in a member of staff’s contract:

• outside consultancies or other paid work may not be accepted without the consent of the Director of department (and in the case of the Director of the department, Managing Director)

• applications for permission to undertake work as a purely private activity

31

must be submitted to the Director of department or Managing Director, as appropriate, and include the following information:

the name of the member(s) of staff concerned a brief description of the work involved the proposed start date and duration of the work an undertaking that the work will not interfere with normal

Company duties of the member(s) of staff concerned. 20.4 Pension schemes

The Board of Directors is responsible for discharging the role of employer in relation to appropriate pension arrangements for employees. The Director of Human Resources and Organisational Development at Cornwall COuncil is responsible for day-to-day pension matters, including:

• preparing the annual return to various superannuation schemes • administering eligibility to pension arrangements and determining when

deductions should begin or cease for staff. 21 Assets 21.1 Land, buildings, fixed plant and machinery Shareholder/member approval must be obtained prior to the Company acquiring or disposing of an interest in whole or in part of any property, or acquiring or disposing of a fixed asset with a value as stipulated in the Company’s Articles of Association. 21.2 Fixed asset records The Director of Finance is responsible for maintaining the Company’s records of land, buildings, fixed plant and machinery. Directors of Department will provide the Director of Finance with any information he or she may need to maintain the register. 21.3 Inventories Directors of Department are responsible for maintaining inventories, in a form prescribed by the Director of Finance, for all plant, equipment, furniture and stores in their departments with a value per item or group of items in excess of £2,500. The inventory must include items donated or held on trust. Inventories must be checked at least annually as described in the Company’s detailed financial procedures. When transferring equipment, etc between departments, a transfer record must be kept and the inventories amended accordingly. 21.4 Stocks and stores

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Directors of Department are responsible for establishing adequate arrangements for the custody and control of stocks and stores within their departments. Directors of Department are responsible for ensuring that regular inspections and stock checks are carried out. Stocks and stores of a hazardous nature should be subject to appropriate security checks. Those Directors of Department whose stocks require valuation in the balance sheet must ensure that the stock-taking procedures in place have the approval of the Director of Finance. 21.5 Safeguarding assets Directors of Department are responsible for the care, custody and security of the buildings, stock, stores, computer equipment, furniture, cash, etc under their control. They should inform the Director of Finance in any case where security is thought to be defective or where it is considered that special security or insurance arrangements may be needed. Assets owned by the Company shall, so far as is practical, be effectively marked to identify them as Company property. 21.6 Personal use Assets owned or leased by the Company, including laptop computers, shall not be subject to personal use without proper authorisation. The Director of Department must ensure that all Company property is returned prior to staff leaving the Company’s employment and that appropriate action is taken to secure that happens. 21.7 Asset disposal Shareholder/member approval must be obtained prior to the Company disposing of an interest in whole or in part of any property, or disposing of a fixed asset up to the value stipulated in the Company’s Articles of Association.. Disposal of equipment and furniture, including surplus or obsolete stocks and stores, must only be disposed of at market value by way of Competitive Tender or by Public Auction. 21.8 All other assets Directors of Department are responsible for establishing adequate arrangements for the custody and control of all other assets owned by the Company, whether tangible or intangible, including electronic data. 22 Funds Held on Trust 22.1 Gifts, benefactions and donations The Director of Finance is responsible for maintaining financial records in respect

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of gifts, benefactions and donations made to the Company and initiating claims for recovery of tax where appropriate. 22.2 Funds administered on behalf of third parties Records of funds administered on behalf of third parties will be maintained according to those funders’ requirements. 22.3 Trust funds - as applicable The Director of Finance is responsible for maintaining a record of specific requirements for the use of funds, if any, for each trust fund. The Director of Finance is responsible for advising the Board of Directors on the control and investment of fund balances and for ensuring that all the Company’s trust funds are operated within any relevant legislation and the specific requirements for each trust. He/she will be responsible to the Board of Directors for investment of fund balances. 23 Other 23.1 Insurance The Director of Finance is responsible for the Company’s insurance arrangements, including the provision of advice on the types of cover available. As part of the overall risk management strategy, all risks will have been considered and those most effectively dealt with by insurance cover will have been identified. This is likely to include important potential liabilities and provide sufficient cover to meet any potential risk to all assets. This portfolio of insurances will be considered and approved by the Board of Directors on an annual basis. The Director of Finance is responsible for effecting insurance cover as determined by the Board of Directors. He or she is therefore responsible for obtaining quotes, negotiating claims and maintaining the necessary records. The Director of Finance will keep a register of all insurances held by the Company and the property and risks covered. He or she will also deal with the Company’s insurers and advisers about specific insurance problems. Directors of Department must ensure that the Company has sufficient insurance arrangements to meet the requirements of any agreements negotiated within their departments with external bodies. The Director of Finance’s advice should be sought to ensure that this is the case. Directors of Department must give prompt notification to the Director of Finance of any potential new risks and additional property and equipment that may require insurance and of any alterations affecting existing risks. Directors of Department must advise the Director of Finance immediately of any event that may give rise to an insurance claim. The Director of Finance will notify the Company’s insurers and, if appropriate, prepare a claim in conjunction

34

with the Head of department/Section for transmission to the insurers. The Housing Assets Manager is responsible for keeping suitable records of plant which is subject to inspection by an insurance company and for ensuring that inspection is carried out in the periods prescribed. Personal property kept by staff at the Company is not covered by the Company’s insurance policies. All staff shall be responsible for their own property and, as they consider appropriate, maintain personal insurance cover for such property. 23.2 Companies and joint ventures Shareholder/member representative approval is required should the Company wish to acquire an interest in whole or part of any existing company or set up a new company; or acquire or dispose of any shares in a company; or enter into any formal joint venture or partnership or profit sharing agreement. In certain circumstances it may be advantageous to the Company to establish a company or a joint venture to undertake services on its behalf. Any member of staff considering the use of a company or a joint venture must first seek the advice of the Director of Finance. The Board of Directors is responsible for approving the establishment of all companies or joint ventures and the procedure to be followed in order to do so subject to prior approval from the shareholder/member representative. It is the responsibility of the Board of Directors to establish the shareholding arrangements and appoint directors of companies wholly or partly owned by the Company in consultation with its parent undertaking. The directors of companies where the Company is the majority shareholder must submit an annual written report to the Director of Finance and Board of Directors; they will also submit business plans or budgets as requested to enable them to assess the risk to the Company. The Company’s internal and external auditors shall also be appointed to such companies unless they choose not to serve in that capacity. Where the Company is the majority shareholder in a company, that company’s financial year shall be consistent with that of the Company. 23.3 Security Keys to safes or other similar containers are to be carried on the person of those responsible at all times. The loss of such keys must be reported to the Director of Finance immediately. An officer shall be responsible for maintaining proper security and privacy of information held on the Company’s computer network. Appropriate levels of security will be provided, such as passwords for networked PCs together with restricted physical access for network servers. Information relating to individuals held on computer will be subject to the provisions of the Data Protection Act 1998. A data protection officer shall be nominated to ensure compliance with the

35

Act and the safety of documents. The Company Secretary is responsible for the safekeeping of official and legal documents relating to the Company. Signed copies of deeds, leases, agreements and contracts must, therefore, be forwarded to the Company Secretary. All such documents shall be held in an appropriately secure, fireproof location and copies held at a separate location. 23.4 Use of the Company’s seal Where a deed or document requires the Company’s seal, it must be sealed by the Company Secretary, in the presence of a member of the Board of Directors. The Company Secretary is responsible for submitting a report from time to time to meetings of the Board of Directors detailing the use of the Company’s seal. 23.5 Provision of indemnities Any member of staff asked to give an indemnity, for whatever purpose at whatever level must consult the Director of Finance before any such indemnity can be given and then only on the terms approved by the Director of Finance.

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INDEX

Page

Accounting Systems 15

Accounting Records and returns – retention 16

Appointment of bankers and other professional advisers 19

Appointment of staff 29

Banking arrangements 19

Budget preparation 13

Budgetary control 14

Business Plan/Budget 8

Capital programme 13

Companies 33

Company Seal 34

Conflict of interest 11

Contracts 25

Debts – collection 21

Debts – write-off 21

Disposal of assets 31

EU Regulations 26

Financial Year 15

Financial Statements – format 15

Fixed assets – records 30

Gifts and hospitality 12 & 32

Grants and contract conditions 22

Hospitality 28

Income from third parties 22

Income maximisation 20

37

Indemnities 34

Internet receipts 21

Inventories 31

Insurance arrangements 32

Joint Ventures 33

Land, Buildings, fixed Plant and Machinery 30

Late payment rules 27

Money Laundering 20

Payment of invoices 26

Pension schemes 30

Personal use of company property 31

Petty cash 28

Private consultancies & other paid work 30

Procurement policy 23

Profits/losses – treatment of year end balances 15

Public access 17

Purchase cards 24

Purchase orders 24

Receipts by credit or debit card 21

Receipt of cash, cheques & other negotiable instruments 21

Receipt of goods 26

Safeguarding asset s 31

Salaries and wages 29

Security 34

Staff advances 28

Staff expenses – reimbursement 28

Scheme of delegation/financial authorities for ordering and paying for

work, goods and services 23

38

Stocks and stores 31

Taxation 17

Travel, subsistence & other allowances 27

Treasury Management Policy 19

Treatment of year end balances 15

Trust funds 32

Virement 15

1


Agenda No: 8

Report to: Board


Title: Proposed CHL Financial Procedure Rules

Author: Jeanette Beavors Role: Director of Finance

Contact: 01872 224518

Recommendations:

1. Board are requested to adopt the attached Financial Procedure Rules.


This report will outline the current position in relation to the review and establishment of Financial Procedure Rules (FPRs) for Cornwall Housing. A full copy of the proposed financial procedure rules that are specific to Cornwall Housing Limited are attached at Appendix A. The report will therefore recommend that these Financial Procedure Rules are adopted for CHL, and request Finance Committee approval to submit these rules to Audit Committee for consideration prior to submitting to Board for approval. 2. Background and Cornwall Housing Objectives:

The new company, CHL, was set up on 1 April 2012 by amalgamating housing services previously provided by Cornwall Council and the previous ALMO Carrick Housing. As the formation of the company was bringing together services from different organisations, the rules and procedures that were previously adopted were different. The determination and adoption of the Financial Procedure Rules is a reserve matter identified within the Articles of Association and Cornwall Council initially indicated that the expectation was that the Company would develop their own FPRs. However that decision was reviewed and it was decided that the Council would develop the Financial Procedure Rules for the Company. However the development of the FPRs was delayed due to significant resources being redirected to the implementation of ERP and other business priorities, and therefore as an interim measure, the Council’s Financial Procedure Rules were formally adopted by Cornwall Housing Limited as approved at Board on 28 January 2013.

2

The model FPRs for the Cornwall Council Companies have now been produced by the Council, which have been reviewed and amended to reflect the Cornwall Housing Limited requirements. These were previously submitted for Board approval and a few amendments were requested. These amendments have now been incorporated and the full copy of the proposed Financial Procedure Rules is attached at Appendix A. 3. Decision and Supporting Information (Including Options):

Board are requested to consider the attached proposed Financial Procedure Rules and approve the adoption of the FPRs in line with Audit Committee recommendations. 4. Financial Implications and Budget:

There are no financial implications. 5. Other Resourcing Implications:

There are no resourcing implications 6. Legal Implications:

Adoption of the proposed FPRs will ensure that CHL is complying with correct procedures, thereby minimising the risks of any legal implications. 7. Equality Impact Assessment:

There are no equality impact assessment implications. 8. Significant Risks:

Adoption of the proposed FPRs will provide a transparent and robust framework for the company’s operations and decision making. By adopting these procedures we will ensure that CHL is not • acting in a way contrary to its agreed policies and/or stated objectives • failing to do what it is required in law or alternatively acting in a way

that is contrary to the law • wasting money and/or likely to waste money from the proposed course

of action 9. Consultation carried out including staff, SMT, Directors,

specialist advice and the community:

Consultation has been carried out with DLT and the Shareholder representative at the Council to develop these Financial Procedure Rules. The FPRs have been considered by the Council’s Internal Auditors. Consultation has been carried out with both Finance and Audit Committees. Approval and Clearance of Report

Report cleared by: Jeanette Beavors Date: 17 November 2014

1


Agenda No: 9

Report to: The Board


Title: Report of the Finance & Performance Committee

Author: Jeanette Beavors Role: Finance Director

Contact: 01872 224518

For Board reports only

Committee: Finance & Performance Committee


Recommendations to the Board:

1. To note the findings of the Finance and Performance Committee held on 17 November 2014

2. To approve the change of use for the painting earmarked reserves to responsive repairs in order to meet the current increased demand on the service

1. Agenda Items

The following items were discussed at the meetings:

• Berryfields Budget Update

• Quarterly Update Reports

• Arrears Monitor Quarter 2

• Management Accounts Period 6

• Efficiency Savings Quarter 2

• DLO Trading Accounts verbal update

• Service Plan Updates Quarter 2

• Star Chamber Proposals

2. Decisions of the Committee

2.1 Berryfields Budget Update – F&P considered the amendments to the budget requirements and approved an increase to the budget of £6k.

2

2.2 Quarterly update reports – F&P Committee considered the update reports for Performance and Risk, Safeguarding and Health and Safety.

2.3 Arrears Quarter 2 – F&P Committee considered the current position in relation to arrears and were pleased to note an increase in arrears of only £10k since the introduction of Welfare Reform in April 2013.

2.4 Management Accounts Period 6– F&P Committee were concerned to note the current position of a forecast surplus of only £284k which is £149k less than the budgeted surplus of £433k. The overspend on Assets of £324k was considered, and F&P noted that this was mainly due to damage caused by the particularly bad storms earlier in the year and an increase in the number of voids. The proposals to mitigate this position with a view to bringing the position back on target and in line with the budgeted position. F&P Committee recommend to Board the change of use for the painting earmarked reserve £371k to be transferred to the responsive repairs budget to offset the current projected overspend. The transfer of these funds will result in a reduction of properties on the painting programme in the current year. A copy of the full report is attached at Appendix A.

2.5 Efficiency Savings Quarter 2 – F&P Committee were pleased to note the current projected position of over delivery of £92k against the original programme of £2.1m.

2.6 DLO Trading Accounts (verbal update)– F&P Committee considered

the current position in relation to the production of DLO Trading Accounts and the current action plan for ensuring that robust and meaningful accounts are presented to the next F&P Committee.

2.7 Service Plan Updates – F&P Committee considered the reports and presentations by each of the Directors demonstrating current performance levels and areas for concerns for each Directorate. F&P stated that these updates were very useful and much more meaningful than the quarterly updates. It was agreed that Service Plan Updates will replace the detailed performance monitoring on a quarterly basis. The quarterly updates will be distributed to F&P members for information only with just a brief overview report highlighting the exceptions to be reported to the Committee meetings. Summary Reports at attached at Appendix B.

2.8 Star Chamber Proposals – F&P Committee considered the current position on the outcomes from Star Chamber, noting that the level of cashable efficiency savings were well below the target of £1m. F&P considered the additional actions proposed by DLT to meet the shortfall and ensure that the budget for 2015/16 is set at a minimum surplus of 1% of the management fee allocations. F&P requested that Directors submit their proposals on how the ‘no inflation on non pay budgets’ will be met.

Date: 18 November 2014.

APPENDIX A

Report to: Cornwall Housing Finance & Performance Committee


Title: Management Accounts: April 2014 to September 2014

Author: Name of Authors

Chris Salter/Kim Lewis

Role: Role of Authors

Lead Management Accountants

Contact: Telephone/email 01872 224778 / [email protected]

Recommendations:

1. The Finance & Performance Committee is asked to review and consider the contents of this report, to seek assurances on the financial position of the Company, and to make any appropriate recommendations to the Board.


This paper presents Cornwall Housing’s management accounts for the first six months of the financial year ending 31st March 2015 as summarised within Appendix A and B of this report.

This report considers the management accounts and any key financial risks to the business, which are described within individual Directorate service plans. The financial position of each Directorate is also summarised within Appendix C1 to C5 of this report.

The Profit & Loss account reports a loss for the year to date of £1,679k, which represents an adverse variance of £1,702k compared to the anticipated surplus of £23k for the period.

The current full year forecast is a surplus of £284k, representing an adverse variance of £149k when compared to the £433k surplus as originally budgeted for the full year.

Overall, the negative variance has increased from the last reported position by £104k, as detailed within paragraph 4.2 of this report.

2. Background and Cornwall Housing Objectives:

The production of management accounts underpin and support the delivery of all of Cornwall Housing’s objectives.

3. Decision and Supporting Information (Including Options):

The Finance & Performance Committee is asked to review the current financial position of the Company.

mailto:[email protected]

4. Financial Implications and Budget: This paper presents Cornwall Housing's management accounts, for the period 1st April to 30th September 2014, and the report includes the following appendices:

• Subjective Summary (Appendix A) • Objective Summary (Appendix B) • Directorate Summaries (Appendix C1-C5) • Movement in Budget (Appendix D) • Capital Statements (Appendix E, F) • Movement in Reserves (Appendix G)

4.1 Analysis of the management accounts

The accounts presented within this report have been produced to reflect operating activity within the first six months of the year. The YTD spending is much higher than anticipated due to high levels of repairs and lower Capital income received. The Council’s newly developed intercompany codes are still creating a mismatch of budgets to costs within the recharges and other expenditure areas. However, a piece of work is currently being undertaken to resolve this issue and it is anticipated that budgets will be properly aligned by the next reporting period. The salary forecast was understated by £200k in the July’s accounts as it was incorrectly assumed that there would be savings within the pay and reward pot (£400k). This position was incorrect as any surplus funds that were not required in the current year should have been transferred to earmarked reserves to fund future year’s pay requirements. The pay allocation has now been applied to the Directorates and a £200k surplus has been placed back into earmarked reserves in line with the original intentions. It is also worth noting that the redundancy costs relating to the Supporting People contract have, as yet, not impacted upon the accounts, and so the £200k set aside in reserves has still to be utilised. This movement in reserves will however, be reflected in the next management accounts.

4.2 Summary Position

The profit and loss account is summarised by both subjective headings (employees, premises etc) at Appendix A and by objective headings (directorates) at Appendix B. This report will focus on the summary analysis provided at Appendix B which is a summary of all activities within the Company, analysed by Directorate, and now forecasts a reduced surplus of £284k for the year ending March 2015.

4.2 Key movements

The summary management accounts are presented within Appendix B and provide a detailed analysis of expenditure and income on an objective basis. This summary demonstrates that there is a projected full year surplus of £284k, a decrease of £149k compared to the budgeted surplus of £433k, and

a movement of £104k since the last set of management accounts were produced as described below:

The key movements are summarised below :

Net movement since July 104 The key reason for the overall adverse position as at the end of September is in relation to Reactive Repairs which is currently demonstrating a projected overspend of £650k which remains in line with the position reported within the last set of management accounts. A summary is detailed below but, as mentioned earlier within this report, further information is now available within the Assets service plan. The main reason for the net movement since the last reported position is in relation to the Pay and Reward budget provision. Unfortunately the previous position incorrectly assumed that the budget not utilised in year would result in a saving, whereas in reality any surplus funds were to be transferred to reserves. This has now been actioned and has resulted in a negative impact of £200k on the reported surplus. This has been partly offset by the removal of duplication on staff costs that should have been funded by the SIP fund £70k. There has also been some movement of budgets, primarily in relation to the allocation of the Pay and Reward and SIP pots moving to increase directorates pay budgets, and the reallocation of funds within Assets. Further details of all budget movements are provided at Appendix D.

MovementJuly outturn 45IncomeAssets 43Finance 31Resources ( 14)Landlord Services ( 4)Housing Options ( 5)Managing Director 0

51ExpenditureAssets ( 228)Finance ( 240)Resources ( 20)Landlord Services ( 111)Housing Options ( 48)Managing Director 34

( 612)Earmarked reserves 665

Latest outturn 149

5. Emerging Issues

The key issues that have arisen since our last report are summarised below and further work will be ongoing over the coming months to determine the financial impact of these emerging issues.

5.1 Reactive Repairs The year to date Reactive Repairs overspend has worsened from the “true” variance last reported (£198k), and now stands at £399k as set out below: Headline variance 1,090,000 Capital recodes (to be actioned) 310,000 Internal income (to be actioned) 230,000 "True" variance 550,000

Extraordinary expenditure Storm damage remediation 91,000

High value non-capital void works 60,000

151,000

"True" variance less extraordinary expenditure 399,000 Although the adverse variance has increased, Assets are maintaining a projected year end outturn of £650k, as there is confidence within the Assets Directorate that this is an achievable outturn position. Senior management will continue to monitor the costs of reactive repairs and voids during the remaining months of this year. Further details of the plans will be available within the Assets Service plan.

5.2 Capital Programme

There have been some movements on the Capital programme since the last

reported position with the Development Programme now forecasting an underspend of £901k compared to budget, and the Improvements Programme forecasting increased spend of £259k since the last reported position.

The Development forecast has dropped by £901k since the last report, which is mainly due to the delay in the construction at Glebelands, which has slipped by approximately two months. Property improvements continue to progress well and the forecast for the year reflects works ordered in 13/14 but not completed, and this has resulted in a £1m overspend, £850k of which is spending with contractors. However it should be noted that as these works were slippage from last year, the funds are still available for drawdown so the overspend will be fully funded through capital resources. The current capital position is summarised within Appendices E and F.

5.3 General Fund The General Fund consists of both Housing Options and Gypsy and Travellers

sites. Both of these areas contain both budgets retained by the Council and budgets delegated to CHL. Both areas of the budget are managed by CHL.

The overall net position of the Housing Options CHL budget is a net surplus of

£126k which is mainly due to lower employee costs than anticipated (£77k surplus), caused by high turnover of staff, and also general underspends across Supplies and Services (£37k). A further £26k surplus within supplies and services relates to the pay & reward pot, which we intend to transfer back to Reserves as it will not be utilised this year.

However, as mentioned in the last report, the Council have been reviewing the income side of the General Fund (retained budgets) and they have now identified a shortfall of approximately £250k which is mainly due to a change in the way the Bad debt provision is calculated but also includes a projected overspend on PSL properties. The Council have been in discussions with our Management Team and has requested that the Company develop an action plan to mitigate this overspend. This will potentially have an impact on the General Fund budget and the current reported surplus. Further details will be contained within the Housing Options Service Plan update. Gypsy & Traveller sites are currently underspent by £14k, but this assumes that the Company will receive the £61k funding from the Council. However, there is a significant risk that the Council may retain this sum, which will create pressures on the CHL budget.

6. Other Significant Risks:

Other areas that still need careful monitoring are detailed below:

Budget Pressure / Risk

Impact Comments

Supporting People Funding

Budget cuts implemented by Council, will cause the majority of the service to cease. Low take up of the payable element of service will also have an impact.

Contract finished at beginning of October, and this equates to funding loss of £370k. A programme of redundancies has now been agreed and staff informed. The cost of the redundancies of £107k can be met from reserves.

ILS Charging Services

Low take up of the service will affect the ability to fund the service.

At present the take up is slightly lower than budgeted and Landlord Services are monitoring this closely, and also reviewing other opportunities in relation to chargeable services

Delivery of Efficiency Savings

Current base budget assumes that Revenue efficiency savings of £1.452m, and Capital £375k will be delivered in 2014/15. Under performance will result in a reduction in surplus / deficit

Quarterly monitoring process developed to ensure that proactive action taken to address any areas of underperformance. Workshops have also been organised to assist the business with the process. Efficiency targets have also now been included

for the year. on the Budget Monitor meeting agenda to ensure that this remains high profile, and that prompt recovery action can be implemented where issues are arising. Although current indications suggest that the Company is on track to deliver to target, gathering relevant evidence remains an issue with the business.

Demand on General Fund Services

Budget cuts on General Fund results in management fee allocations being insufficient to fund service.

A shortfall of funds for the bad debt provision (£250K) as identified by the Council, will have serious budget implications both this year and next.

Contact Centre

Costs of internalising the contact centre outweigh budget provision particularly in relation to General Fund Services.

This continues to be a risk area with budgetary pressures to fund this function. The position is currently being reviewed and improvements implemented which should result in a significant reduction on the implications on General Fund budgets

Welfare Reform Financial implications of Welfare Reform may exceed current budget provision resulting in a reduction to the management fee.

In depth monthly and quarterly monitoring is in place to assess the position, and to facilitate prompt proactive action to address any emerging issues. Current position indicates performance is within budget provision (£464k). Finance is working with Landlord Services to develop a strategy to ensure arrears continue to be contained.

New HMS System

Any delays to the implementation of the system will impact on the business’ ability to be more efficient and produce reliable management information.

Installation date is currently June 2015.

Capital Development

Inability to utilise all funding will impact on targets to achieve required new builds.

Whilst there has been a positive start to the year, the target remains challenging.

Gypsy & Travellers HCA Capital funded Programme

Inability to achieve planning consent to build new sites could mean loss of funding from HCA.

HCA have approved the use of existing funding to cover the improvement costs of current sites and 2 new plots subject to a financial proposal being submitted which demonstrates completion of works by the end of the financial year. This will mitigate the need for a loan from the Council and its associated costs. The Company is still awaiting the cost of the total scheme, but are proceeding with the assumption that there is no need to borrow any funds.

Voids Volatility in this area continues to be an issue for the Assets team to manage and presents a risk to remaining within budget.

Action plan is in place to tackle multiple refusals and low demand in certain areas. Also monitoring is in place to reduce the downtime of a property. This continues to be an area of concern, particularly as the new allocations policy may result in

increased re-let times. Pay and Reward payments

Failure to deliver outturn in line with the budgeted surplus could result in the company being unable to award increments and the reward payments for 2014/15

DLT to determine action plans to recover the current overspend position and ensure the company outturns in line with budget

Internal Works Programme on Repairs

There is a risk over overspending budgets.

Further work is required in this area to align the workforce to the available resources. The Finance team are still working with Assets Managers to develop fit for purpose DLO Trading Accounts, budget monitoring statements and forecasting tools.

7. Impact on Reserves

There is potentially an adverse impact upon reserves as the projected outturn will be £104k less than previously reported. A projected year–end outturn position in respect of reserves in summarised within Appendix G.

8. Other Resourcing Implications: There are no other resourcing implications arising from this paper. 9. Legal Implications:

There are no legal implications arising from this paper.

10. Equality Impact Assessment: There is no equality impact arising directly from this paper as no action is

proposed.

11. Finance Action Plan The following action plan is now in place to mitigate the issues raised within the report: Action Progress Budget Managers Meeting A framework is now in place to embed this

process within the Company culture.

Efficiency Savings Workshops have been organised to enable budget holders to discuss any queries they have in recording their efficiencies.

Budget Management reports A new budgetary model has been designed and will be shared with the business for their feedback.

Management accounts production

The process has been reviewed and a revised timetable created to enable a more streamlined approach to the production of the accounts.

Trading accounts production Finance continues to work with the business to develop the integrity of the data with a view to

being able to produce robust DLO trading accounts.

Finance Restructure Still awaiting the Head of Finance post to be filled, but currently have an interim in place and a manager to provide financial support for projects.

Year end Accounts Now completed and a satisfactory audit report received. A review of the audit recommendations has been undertaken and appropriate actions undertaken to improve the process next year.

Project appraisal A robust mechanism is now in place which ensures that the financial implications of all new initiatives are properly understood.

Invoice processes A full review of the Company’s invoicing and payments procedures is currently underway.

12. Consultation

Consultation is carried out with Budget holders, Managers and Directors, Directorate management accounts have been discussed with budget holders.

13. Board committee: (For Board reports)

This is a Finance & Performance Committee paper. Supporting Information Appendices:

• Appendix A - Subjective Summary • Appendix B - Objective Summary • Appendix C1- C5 Directorate Summaries • Appendix D - Budget Movements • Appendix E - F Capital Statement • Appendix G - Movement in Reserves

Background Papers: None Approved By: Jeanette Beavors Director of Finance Date: 31 October 2014

Appendix D

P & L ACCOUNT Budget

approved

@Board Jan 14

Reserves

utilised

Updated

budgets

approved

by Board

General

Reserves

approved

by Board

Updated

budgets

approved

by Board

Budget

realignme

nts in

Assets Jul

New

budgets

to be

approved

by Board

budget

v'ments

sept 14

Updated

budgets

to be

approved

Management Fees

Revenue Management Fee (16,783) (16,783) 95 (16,688) (16,688) (16,688)

Capital Management Fee: 0

Property Improvements (12,432) (12,432) (12,432) (12,432) (12,432)

Development (4,630) (4,630) (4,630) (4,630) (4,630)

General Fund Management Fee (2,815) (2,815) (2,815) (2,815) (2,815)

General Fund Retained Budgets 0 0 0

Total Management Fees (36,660) (36,660) 95 (36,565) 0 (36,565) 0 (36,565)

Other Income (1,866) (1,866) (1,866) (120) (1,986) (1,986)

Total Income (38,526) (38,526) 95 (38,431) (120) (38,551) 0 (38,551)

Property Repairs

Responsive 901 901 901 1,449 2,350 30 2,380

Planned 1,226 379 1,605 1,605 172 1,777 81 1,858

Capital Improvements 9,406 9,406 9,406 (269) 9,137 (106) 9,031

Total Property Repairs 11,533 379 11,912 11,912 1,352 13,264 5 13,269

Other Capital

Development 4,730 4,730 4,730 (100) 4,630 4,630

Total Property Repairs

Cost of Materials 2,245 2,245 2,245 2,245 2,245

Pay Costs 14,020 14,020 14,020 (37) 13,983 92 14,075

Premises Costs 849 849 849 104 953 144 1,097

Transport Costs 772 772 772 (355) 417 106 523

Supplies and Services 2,907 290 3,197 27 3,224 (1,208) 2,016 (202) 1,814

Third Party Payments 8 8 8 8 8

Tenant Allowances 163 163 163 163 163

Internal Recharges 11 11 11 11 11

Depreciation & Impairment losses 173 173 173 173 173

Recharges 560 560 560 364 924 (145) 779

Total Expenditure 37,971 290 38,640 27 38,667 120 38,787 0 38,787

Net Budget (555) 669 114 122 236 0 236 0 236

Contribution from Earmarked Reserves

Painting Reserve (379) (379) (379) (379) (379)

Welfare Reform Reserve (290) (290) (290) (290) (290)

Net Surplus (Red) / Deficit (Black) (555) 0 (555) (433) (433) (433)

Budget movements since April 14

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Accounts - additional appendices C & G.xlsx

2014/15 Budget: Impact on Reserves Appendix G

As at Mar 14

Revised estimate

approved by Board

July 14

Latest projection

as at End of Sept

14

£'000 £'000 £'000

Balance b/fwd (ex-Carrick) 3,589

Pension deficit (1,649)

Net reserves as at 2012/13 1,940

Forecast contribution to reserves as at 31/3/13 1,015

Balance b/fwd from 13/14 2,955 3,178 3,178

Budgeted contribution to reserves during 2014/15 450 433 433

Budgeted contribution to reserves @31.3.15 3,405 3,611 3,611

P14 AdjustmentsContribution from Reserves re ILS redundancies (200)

Increase/Decrease surplus in year (27)

Current surplus(+)/deficit(-) (149)

C/Fwd 3,178 3,611 3462

NOTE Revised

£'000

Reserves

Of which ear marked for new initiatives 2,545 2,856 2,856

Retained as General Reserves 633 755 606

3,178 3,611 3,462

Breakdown of new initiatives

new build and new initiatives 2,369 2,724 2,724

Welfare reform 100 100 100

New initiatives General Fund 76 32 32

2,545 2,856 2,856

Contribution to Specific Reserves

Pay and Reward Reserve - from Chief Executive 174 174 558

Pay and Reward Reserve - from Housing Options 30 30 56

‘Invest to Save’ Programme (SIP) 221 221 221

‘Invest to Save’ Programme (SIP) - Housing Options 220 220 236

Welfare Reform Reserve 290 0 240

Painting Program Slippage 379 0

1,314 645 1,311

C/Fwd 3,178

Per Accounts 4,492

F:\shared\Carrick Housing\Financial Services\_Accounts\Management Accounts\Accounts\2014-09 Sep 2014 Accounts\Board Report\Finance Committee Sept 14 P6 Accounts -

additional appendices C & G.xlsx

SUMMARY Appendix A

Six Months ending 30 September 2014 Indicative End of Year Forecast

Actual Budget Variance Forecast Budget Movement

£'000 £'000 £'000 £'000 £'000 £'000

Income

Capital Fee - Property Improvments 5,584 6,216 632 Adverse 13,691 12,432 (1,259) Favourable

Capital Fee - Development 487 2,315 1,828 Adverse 3,729 4,630 901 Adverse

Capital Fee - Projects 111 - (111) Favourable 390 - (390) Favourable

Capital Grants - - - - - - Favourable

Revenue Management Fee 8,338 8,344 6 Adverse 16,677 16,688 11 Adverse

General Fund Management Fee 1,411 1,407 (4) Favourable 2,815 2,815 -

Recharges 40 69 29 Adverse 151 138 (13) Favourable

Customer and Client Receipts 185 287 102 Adverse 509 574 65 Adverse

Financing and Investment Income 6 21 15 Adverse 21 41 20 Adverse

Government Grants 434 437 3 Adverse 529 875 346 Adverse

Other Grants and Reimbursements 56 179 123 Adverse 415 358 (57) Favourable

Total Income 16,651 19,275 2,624 Adverse 38,926 38,551 (375) Favourable

Expenditure

Property RepairsReactive 2,280 1,190 1,090 Adverse 3,030 2,380 650 Adverse

Planned 507 739 (232) Favourable 1,828 1,858 (30) Favourable

Capital 4,679 4,702 (23) Favourable 9,990 9,031 959 Adverse

Development Fee 487 2,315 (1,828) Favourable 3,729 4,630 (901) Favourable

Expenditure

Employee Costs 6,700 6,984 (284) Favourable 13,300 14,075 (775) Favourable

Capital IT projects 111 - 111 Adverse 390 - 390 Adverse

Internal Recharges - 6 (6) Favourable 1 11 (10) Favourable

Premises Costs 609 555 54 Adverse 1,225 1,097 128 Adverse

Transport Costs 483 208 275 Adverse 830 523 307 Adverse

Supplies & Services 1,989 1,991 (2) Favourable 3,645 4,059 (414) Favourable

HRA Specific Works - - - - - - Adverse

Third Party Payments 9 4 5 Adverse 8 8 -

Tenants Payments 106 82 24 Adverse 163 163 -

Depreciation and Impairment Losses 88 87 1 Adverse 176 173 3 Adverse

Recharges 282 389 (107) Favourable 331 779 (448) Favourable

18,330 19,252 (922) Favourable 38,646 38,787 (141) Favourable

Net Expenditure 1,679 (23) 1,702 Adverse (280) 236 (516) Favourable

Contributions from earmarked reserves (painting/Welfare) -669 -669 - Contributions to earmarked reserves (pay award/honorarium) 425 - 425 Adverse

Contributions to earmarked reserves (Welfare Reform) 240 - 240 Adverse

(284) (433) 149 Adverse

-

SEPTEMBER BUDGET MONITOR

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OBJECTIVE SUMMARY Appendix B



£'000 £'000 £'000 £'000 £'000 £'000

Income



Capital Fee - Projects 111 - (111) Favourable 390 - (390) Favourable

Capital Grants 100 (100) Favourable



Other IncomeManaging Director Department 16 24 8 Adverse 49 49 - Assets 58 190 132 Adverse 236 379 143 Adverse

Housing Options 47 118 71 Adverse 249 236 (13) Favourable

Landlord Services 580 640 60 Adverse 956 1,281 325 Adverse

Resources 14 - (14) Favourable 14 - (14) Favourable

Finance 6 21 15 Adverse 21 41 20 Adverse


Expenditure

Capital Spend - Property Improvments 5,636 5,244 392 Adverse 13,317 12,058 1,259 Adverse

Capital Spend - Development 487 2,315 (1,828) Favourable 3,729 4,630 (901) Favourable

Capital Spend - Projects 111 - 111 Adverse 390 - 390 Adverse

Other ExpenditureManaging Director Department 299 592 (293) Favourable 602 995 (393) Favourable

Assets 7,224 6,409 815 Adverse 11,707 11,424 283 Adverse

Housing Options 1,240 1,439 (199) Favourable 2,718 2,880 (162) Favourable

Landlord Services 1,612 1,691 (79) Favourable 3,071 3,408 (337) Favourable

Resources 1,102 821 281 Adverse 1,768 1,775 (7) Favourable

Finance 619 741 (122) Favourable 1,344 1,617 (273) Favourable

Total Expenditure 18,330 19,252 (922) Favourable 38,646 38,787 (141) Favourable

Net Surplus 1,679 (23) 1,702 Adverse (280) 236 (516) Favourable

Contributions from earmarked reserves (painting/Welfare) -669 -669 -

Contributions to earmarked reserves (pay award/honorarium/sip) 425 0 425 Adverse

Contributions to earmarked reserves (Welfare Reform) 240 0 240 Adverse

(284) (433) 149 Adverse


MANAGING DIRECTOR DEPARTMENT Appendix C-1



£'000 £'000 £'000 £'000 £'000 £'000

Income

Recharges 16 24 8 Adverse 49 49 -

Total Income 16 24 8 Adverse 49 49 -

Expenditure

Employee Costs 269 499 (230) Favourable 544 915 (371) Favourable

Internal Recharges - - - - - -

Premises Costs - - - - - -

Transport Costs 6 - 6 Adverse 13 - 13 Adverse

Supplies & Services 14 79 (65) Favourable 17 52 (35) Favourable

HRA Specific Works - - - - - -

Third Party Payments - - - - - -

Transfer Payments - - - - - -

Depreciation and Impairment Losses - - - - - -

Recharges 10 14 (4) Favourable 28 28 -

299 592 (293) Favourable 602 995 (393) Favourable

-

Net Expenditure 283 568 (285) Favourable 553 946 (393) Favourable

Contribution to Reserves

Pay award 201 - 201

Honorarium 183 0 183

937 946 (9)


ASSETS Appendix C-2



£'000 £'000 £'000 £'000 £'000 £'000

Income


Capital Grants - - - - - - Favourable



Other Grants and Reimbursements 41 114 73 Adverse 285 228 (57) Favourable


Expenditure

Externally Contracted Property Repairs

Reactive 2,280 1,190 1,090 Adverse 3,030 2,380 650 Adverse

Planned 507 739 (232) Favourable 1,828 1,858 (30) Favourable

Capital 4,679 4,702 (23) Favourable 9,990 9,031 959 Adverse

-

Development Fee 487 2,315 (1,828) Favourable 3,729 4,630 (901) Favourable

Employee Costs 3,248 3,149 99 Adverse 6,311 6,375 (64) Favourable

Materials 1,271 1,123 148 Adverse 2,275 2,245 30 Adverse

Internal Recharges - - - -

Premises Costs 382 338 44 Adverse 748 663 85 Adverse





13,347 13,968 (621) Favourable 28,753 28,112 641 Adverse

Net Expenditure 7,218 5,247 1,971 Adverse 10,997 10,671 326 Adverse

Internally Completed Repairs

Reactive (650) (1,382) 732 Adverse (2,764) (2,764) -

Planned (153) - (153) Favourable - - -

Capital (952) (1,514) 562 Adverse (3,327) (3,027) (300) Favourable

(1,755) (2,896) 1,141 Adverse (6,091) (5,791) (300) Favourable

Net Spend inc Internal Recharges 7,202 5,247 - - 10,997 10,671 - Adverse

Total Capital Property Repairs

Internally Completed 955 1,515 (560) Favourable 3,327 3,027 300 Adverse

Externally Contracted 4,681 3,729 952 Adverse 9,990 9,031 959 Adverse

5,636 5,244 392 Adverse 13,317 12,058 1,259 Adverse


LANDLORD SERVICES Appendix C-3



£'000 £'000 £'000 £'000 £'000 £'000

Income

General Fund Management Fee 85 85 - 171 171 -

Customer and Client Receipts 154 211 57 Adverse 444 423 (21) Favourable

Financing and Investment Income - - - - - -

Government Grants 426 429 3 Adverse 512 858 346 Adverse

Total Income 665 725 60 Adverse 1,127 1,452 325 Adverse

Expenditure


Internal Recharges - 6 (6) Favourable 1 11 (10) Favourable

Premises Costs 185 199 (14) Favourable 448 397 51 Adverse

Transport Costs 41 43 (2) Favourable 102 87 15 Adverse



Third Party Payments 2 2 - 3 3 -

Tenants Payments 106 82 24 Adverse 163 163 -

Depreciation and Impairment Losses 48 48 - 97 97 -



- -

Net Expenditure 947 966 (19) Favourable 1,944 1,956 (12) Favourable


FINANCE & RESOURCES Appendix C-4



£'000 £'000 £'000 £'000 £'000 £'000

Income


Capital Income - IT Projects 111 - (111) Favourable 390 - (390) Favourable

Recharges 14 - (14) Favourable 14 - (14) Favourable

Customer and Client Receipts - - - - - -

Financing and Investment Income 6 21 15 Adverse 21 41 20 Adverse

Government Grants - - - - - -

Other Grants and Reimbursements - - - - - -

Total Income 8,469 8,365 (104) Favourable 17,102 16,729 (373) Favourable

Expenditure

Employee Costs 903 972 (69) Favourable 2,076 2,030 46 Adverse

Capital Spend - IT Projects 111 - 111 Adverse 390 - 390 Adverse

Overtime 2 14 (12) Favourable 4 29 (25) Favourable

Premises Costs 34 1 33 Adverse 2 2 -

Transport Costs 14 35 (21) Favourable 29 70 (41) Favourable

Supplies & Services 505 429 76 Adverse 814 1,041 (227) Favourable

Depreciation and Impairment Losses 7 7 (0) Favourable 13 13 -


1,832 1,562 270 Adverse 3,502 3,392 110 Adverse

- -

Net Surplus (6,637) (6,803) 166 Adverse (13,600) (13,337) (263) Favourable

Contribution to earmarked Reserves (Welfare Reform) 240 0 240 Adverse

(13,360) (13,337) (23) Favourable


CORNWALL HOUSING Appendix E

Capital Management Fee - Property Improvement Spend

ACTUALS AND BUDGET UP TO 30 SEPTEMBER 2014

Indicative End of Year Forecast

Actual Budget Variance Actual Budget Variance

Income £'000 £'000 £'000 £'000 £'000 £'000

Total Capital Management Fees 5,584 5,244 (340) Favourable 13,691 12,432 (1,259) Favourable

Other Income 0 0 0 0 0 0

Total Capital Income 5,584 5,244 (340) 0 13,691 12,432 (1,259) Favourable

Property Capital Expenditure

Externally Contracted Works 4,681 3,729 952 Adverse 9,990 9,031 959 Adverse

Work Completed Internally 955 1,515 (560) Favourable 3,327 3,027 300 Adverse

Total Capital Property Spend 5,636 5,244 392 Adverse 13,317 12,058 1,259 Adverse

Net Profit (52) 0 (52) Favourable 374 374 0

Six Months ending 30 September 2014

F:\shared\Carrick Housing\Financial Services\_Accounts\Management Accounts\Accounts\2014-09 Sep 2014 Accounts\Budget Monitor\New Budget Monitor Detail VSep (2014-10-

28).xlsx

Appendix F

Capital Management Fee - Six Months ending 30 September 2014

Actual Budget Variance

£'000 £'000 £'000

Capital Management Fee 5,584 5,244 (340) Favourable

Internal Costs Recovered

73901 - Kitchen Works [CHL] 166 145 21 Adverse

73902 - Bathroom Works [CHL] 102 81 21 Adverse

73903 - Central Heating Works [CHL] 36 196 (160) Favourable

73904 - Re-roofing [CHL] 2 120 (118) Favourable

73905 - Double Glazing [CHL] 368 546 (178) Favourable

73906 - Decent Homes Works (Other) [CHL] 43 101 (58) Favourable

73915 - Struct Wks - External [CHL] 2 0 2 Adverse

73916 - Other - Fire Safety [CHL] 0 18 (18) Favourable

73919 - Rewiring Electrical [CHL] 10 26 (16) Favourable

73920 - Rewiring - Smoke Alarm [CHL] 1 41 (40) Favourable

73921 - Roofs - Guttering [CHL] 62 0 62 Adverse

73922 - Struct Wks - Internal [CHL] 124 203 (79) Favourable

73923 - Disabled - Adaptions [CHL] 39 38 1 Adverse

955 1,515 (560) Favourable

External Spend

89151 - Kitchen Works 537 283 254 Adverse

89152 - Bathroom Works 61 140 (79) Favourable

89153 - Central Heating Works 482 347 135 Adverse

89154 - Re-roofing 133 173 (40) Favourable

89155 - Double Glazing 1,043 822 221 Adverse

89156 - Decent Homes Works (Other) 237 305 (68) Favourable

89160 - PVCu Doors 177 0 177 Adverse

89162 - Env Wks- Paths Fences 73 250 (177) Favourable

89166 - Insulation - External (7) 244 (251) Favourable

89169 - Other - Asbestos Work (67) 0 (67) Favourable

89171 - Struct Wks - External 764 272 492 Adverse

89172 - Other - Fire Safety 115 35 80 Adverse

89173 - Other - Lifts 26 83 (57) Favourable

89176 - Rewiring Electrical 16 49 (33) Favourable

89177 - Rewiring - Smoke Alar 17 63 (46) Favourable

89180 - Struct Wks - Internal 158 150 8 Adverse

89181 - Asbestos Removal 138 0 138 Adverse

89184 - Disabled - Adaptions 778 513 265 Adverse

4,681 3,729 952 Adverse

Total Capital Works 5,636 5,244 392 Adverse

Excess of Spend over Fees (52) 0 (52)


28).xlsx

HOUSING OPTIONS Appendix C-5



£'000 £'000 £'000 £'000 £'000 £'000

Income


Customer and Client Receipts - - - - - -


Government Grants 8 8 - 17 17 -

Other Grants and Reimbursements 15 65 50 Adverse 130 130 -

Total Income 1,373 1,440 67 Adverse 2,893 2,880 (13) Favourable

Expenditure


Internal Recharges - - - - - -

Premises Costs 8 17 (9) Favourable 27 35 (8) Favourable

Transport Costs 17 27 (10) Favourable 40 54 (14) Favourable



Third Party Payments 7 2 5 Adverse 5 5 -

Tenants Payments - - - - - -

Depreciation and Impairment Losses - - - - - -

Recharges 5 25 (20) Favourable 50 50 -


Net Surplus (133) (1) (132) Favourable (175) - (175) Favourable

General Fund Overall

Housing Options (133) (1) (132) Favourable (175) - (175) Favourable

Gypsy & Travellers (8) 0 (8) Favourable 8 1 7 Adverse

(140) (1) (140) Favourable (167) 1 (168) Favourable

Transfer to Reserves

Pay & Reward 26 26

SIP 16 16

(125) 1 (126)


28).xlsx

0

ASSETS– SERVICE PLAN REVIEW OCTOBER 2014

Table of contents

Page

1. Financial position for the current period 1

2. Progress on our key objectives, Balanced Scorecard, 2

Complaints and projects for this year

3. Risks associated with the service area 8

4. What is the progress on measurements of quality for the 8

Directorate?

1

1. Financial Position for the current period

ASSETS Appendix C-2

Six Months ending 30 September 2014 Indicative End of Year CorecastActual Budget Variance Corecast Budget Movement£'000 £'000 £'000 £'000 £'000 £'000

IncomeCapital Cee - Property Improvments 5,584 6,216 632 Adverse 13,691 12,432 (1,259) Cavourable

Capital Grants - - - - - - Cavourable

Capital Cee - Development 487 2,315 1,828 Adverse 3,729 4,630 901 Adverse


Other Grants and Reimbursements 41 114 73 Adverse 285 228 (57) Cavourable

Total Income 6,129 8,721 2,592 Adverse 17,756 17,441 (315) Cavourable

ExpenditureExternally Contracted Property Repairs

Reactive 2,280 1,190 1,090 Adverse 3,030 2,380 650 Adverse

Planned 507 739 (232) Cavourable 1,828 1,858 (30) Cavourable

Capital 4,679 4,702 (23) Cavourable 9,990 9,031 959 Adverse

- Development Cee 487 2,315 (1,828) Cavourable 3,729 4,630 (901) Cavourable

Employee Costs 3,248 3,149 99 Adverse 6,311 6,375 (64) Cavourable

Materials 1,271 1,123 148 Adverse 2,275 2,245 30 Adverse

Internal Recharges - - - - Premises Costs 382 338 44 Adverse 748 663 85 Adverse


Supplies & Services 46 53 (7) Cavourable 93 106 (13) Cavourable


Recharges 9 224 (215) Cavourable 37 449 (412) Cavourable

13,347 13,968 (621) Cavourable 28,753 28,112 641 Adverse

bet Expenditure 7,218 5,247 1,971 Adverse 10,997 10,671 326 Adverse

Internally Completed RepairsReactive (650) (1,382) 732 Adverse (2,764) (2,764) - Planned (153) - (153) Cavourable - - - Capital (952) (1,514) 562 Adverse (3,327) (3,027) (300) Cavourable

(1,755) (2,896) 1,141 Adverse (6,091) (5,791) (300) Cavourable

bet Spend inc Internal Recharges 7,202 5,247 - - 10,997 10,671 - Adverse

Total Capital Property RepairsInternally Completed 955 1,515 (560) Cavourable 3,327 3,027 300 AdverseExternally Contracted 4,681 3,729 952 Adverse 9,990 9,031 959 Adverse

5,636 5,244 392 Adverse 13,317 12,058 1,259 Adverse

2

2. Progress on this year’s objectives, balanced scorecard, Complaints and Projects

From the service plans pull out the key objectives and projects for the year and provide an update on progress etc in the table below

Objective/Project Expected benefits

Progress to date

Expected completion date

Asset Management Strategy

Production of a consolidated investment strategy and plan for the housing portfolio

Draft document to be submitted to DLT in December 2014

Following consultation process final document to be agreed by April 2015

Development of new Gypsy and Traveller Sites

New transit pitch provision

Project has been terminated and the HCA funding switched to a refurbishment programme for 64 pitches

Establish a new homes partnership to maximise efficiencies generated through procurement

More cost effective procurement of housing development projects

Draft Development Plan to Property Development Committee in November 2014

Needs to align with CC Housing Mandate proposals

Implementation of Asset Management System

Single IT system to manage data and model financial investment programmes

Procurement issues have significantly delayed this project – re-evaluation of software options in October has resulted in revised procurement decision

Implementation planned for June 2015

Improvement project for Gypsy and Traveller Sites

Investment secured from the HCA to refurbish the 64 G&T pitches

Contract agreed with Cormac November 2014 for start on site November 2014 – Practical completion March 2015

March 2015

3

Key Objectives for 2013/15

Achieve Cornish Housing Standard compliance of 60% of all properties by 31/03/15

Single property standard for all properties

Target revised to 82% for 2014/15 due to current progress

2017

Achieve Housing Capital Programme expenditure of £12m for 2014/15

Achieve efficiency targets in line with Star Chamber submissions by 31/03/14

Deliver Development Programme target for 2014/15 – 45 properties (start on site) @ £4.6m

Complete the delivery of the HCA G&T site programme – 30 pitches £1.24m

Achieve efficiency targets in line with Star Chamber submissions

Develop more detailed proposals for stock disposal as part of the Asset Management Plan

Maximise service efficiencies via the introduction of mobile working technology for trade teams

Procure and implement a single IT Asset Management Software system

4

Procure/commission G&T refurbishment programme funded via Capital Gateway £750k

5

CORNWALL HOUSING CAPITAL PROGRAMME 2014/15

Component

Total jobs planned

Jobs completed

% Completed

Windows 987 510 51.67% Kitchens 579 381 65.80% Bathrooms 579 237 40.93% Heating 783 365 46.62% Doors 278 77 27.70% Rewires 27 17 62.96% Roofing 284 46 16.20% Heath and Safety 35 31 88.57% Structural Internal 21 8 38.10% Structural External 243 124 51.03% Capital Work from Response 13 7 53.85% External Cladding 7 2 28.57% Environmental Works 30 20 66.67% Energy Conservation 273 88 32.23% Voids 128 95 74.22% Total 4267 2008 47.06%

CARRY OVER PROGRAMME FROM 2013/14

Component

Total jobs planned

Jobs completed

% Completed

Kitchens 93 21 22.58% Bathrooms 102 28 27.45% Heating 258 246 95.35% Structural Internal 2 1 50.00% Structural External 4 1 25.00% Total 459 297 64.71%

Stock Surveys

Total Stock 10590

Surveyed Edited Combined

3782 (35.7%) 1529 (14.4%) 5311 (50.2%)

6

CHS Failures by

Category

Section Item Status/Failures

PART 1 Good State of Repair

Equivalent to DH2 120

PART 2 Safe & Secure

UPVC Windows & Doors 1283

Up-to-date Service (Gas,Oil,SF)

100%

10yr Electric Cert (Desirable) Ongoing

PART 3 Adequately Heated & Insulated


Full Heating 1069

Loft Insulation 50

Insulated HWC 8

PART 4 Up to Date Facilities


Kitchens over 20 746

Bathrooms over 30 931

PART 5 Fire Prevention

A smoke Alarm Fitted 100%

Fire Risk Assessment (CA) 100%

PART 6 Estate & Environmental Work

Horticultural Standard 100%

PART 7 Specific Requirements

HHSRS 100%

No. of Failures by

Property

No. of Failures No. Of Properties Total Failures

5 Failures 7 35

4 Failures 42 168

3 Failures 141 423

2 Failures 528 1056

1 Failure 2182 2182

Totals 2900 3864

7

CHS Compliance

Pass Fail Total

73% (7690) 27% (2900) 100% (10590)

Complaints/Compliments - At end of Quarter 2

Number of stage 1 received and resolved

48

Total stage 1 received 69

Stage 1 Complaint Outcomes Upheld 11 Partly Upheld 11 Not Upheld 22 No Finding 4

Average Turnaound Step 1 15.25

Number of Stage 1 Received by Directorate

Assets 39 56.52% Housing Needs/Options 12 17.39% Landlord Services 16 23.19% Finance 0 0.00% Resources 2 2.90%

Complaint Categories Assets Directorate

Failure to provide a service 7 Dissatisfaction with our policies 0 Unreasonable delays in the provision of service

11

Failure to provide adequate standards of service

16

Failure to fulfil statutory responsibilities 2 An employee's attitude or behaviour 2

Complaints Avoided 8 Assets 7 Housing Needs/Options 1 Landlord Services 0 Finance 0

8

Resources 0

Compliments 40 Assets 17 Housing Needs/Options 11 Landlord Services 9 Finance 1 Resources 2

3. What are the risks associated with the directorate The major risks for the Directorate relate to the operational works activity. The revised Asbestos Policy will ensure compliance with all legislative H&S requirements and ensure safe working practices for respective staff. Additional staffing resources have been aligned to ensure that the requirements of the H&S Gap Analysis are fully addressed. Gas Servicing continues to require intensive management to ensure that all appliances are serviced within the set timescales. Work is underway to address the Statutory Testing process which is, at present, focussed around the void property stock. 4. What is the progress on measurements of quality for the directorate? Audit Recommendations Satisfaction surveys Benchmarking KPI monitoring for all procured contracts

9

Appendix A Key risks for service area put into the following table

Cause Trigger Effects1 Jul-13 Political The Company

is tasked with providing Gypsy and Traveller sites in specified locations across the county. The Company has secured £1.2m

Public opposition creates difficulty in identifying sites and obtaining planning permissions.

• Failure to achieve target of 30 pitches• Failure to provide suitable authorised sites for Gypsies and Travellers • Loss of

3 3 9 • Close working relationship with the Planning Service (action completed)• Project Plan in place (action completed)• Lessons learned from Tregantle application being applied to future sites (action completed)• Consultation protocol in place and being followed. (action completed)

A. Pengelly 2 3 6 This risk has changed to reflect the change in direction on the focus of repairing and upgrading established gypsy and traveller sites. This risk is therefore removed. Please see new risk.

25 Oct-14 Legal Asbestos An incident occurs that puts a member of staff and/or p blic at isk of

• Can result in prosecution of significant civil claims for e pos e

• Asbestos Policy finalised and procedures in place

A. Pengelly 4 3 12

32 Oct-14 Technological Gas servicing If gas appliances, such as ovens, cookers and boilers, are not properly installed and maintained,

• Prosecution• It is illegal for an unregistered person to carry out work on any domestic gas appliance

• Update polices, advice and guidance on maintaining and servicing gas appliances• Ensuring that gas pipework appliances and flues are regularly maintained• Check to ensure that all rooms with gas appliances have adequate ventilation• Robust managemnt and review of contractor requires implementation

A. Pengelly 2 3 6

34 Oct-14 Technological Working with electricity and associated processess

Lack of work planning, risk assessments, procedures and training. Lack of fault or incident reporting

• Fatality• Electricl burns• Fire or Explosion

• To ensure that those working on electrical equipment, machinery or installations are competent to do•make sure staff are trained to appropriate level, experience and re-assessment• To remove all old policie and procedures replacing with relevant consistent documentation

A. Pengelly 3 2 6

NoDate of origin

Category

Latest ActionsCurrent position: 27.10.14

Impact Score Mitigations OwnerLike-

lihoodImpact Score

Previous position at end of Q1

Like-lihood

Scenario

Finance Service

Service Plan Update as at Quarter 2 2014/15

Table of contents

Page


2. Progress on our key objectives, Balanced Scorecard, 3


3. Risks associated with the service area 4

4. What is the progress on measurements of quality for the 5

directorate?

2


The overall budget for the Finance Directorate for 2014/15 can be summarised as follows

Total Finance £000’s

Corporate Finance £000’s

Finance Service £000’s

Total Income (16,729) (16,688) (41)

Total Expenditure 1,617 903 714

Net (15,112) (15,785) 673

Forecast at August 2014

(15,354) (16,039) 684

Variance (242) (254) 11

As demonstrated, there are 2 elements to the budget.

The Corporate Finance budget contains some corporate budgets such as insurance and corporation tax, and the revenue management fees. The variance of £254k has arisen mainly on the Welfare Reform one off improvement budget which has been reviewed to determine the likely level of spend within the year. The remaining balance of £240k will now be transferred to earmarked reserves for drawdown in future years.

The Finance Service budget relates to the costs associated with the provision of the finance service. Current indications show a projected overspend of £11k on this budget.

This has mainly arisen due to

• A reduction in the anticipated level of interest which will be generated on the company’s SIBA (Special interest bearing account) funds resulting in reduced income of £20k

• An overspend on transport costs (£4k) which has arisen due to costs being incurred within the directorate but the budget being held within Resources

• Offset by savings on salary costs £13k

However, once the transport budget has been transferred to the Directorate, this projected overspend should reduce to £7k.

It is also worth noting that there should be a reduction on corporation tax implications due to the reduced interest which will reduce costs by a further £4k, albeit within the corporate finance budget.

3


Overall performance is progressing well within the Finance Service. The structure is now fully recruited (from September) and progress is being made in many key areas, and it is anticipated that further improvements will be made over the second half of the year as the team continues on their current learning curve.

The key difficulties that the Finance Team face are in relation to the current IT systems and the level of manual workarounds that are still required, both on ERP and the legacy Housing Management Systems. The current culture within the company is also hampering progress in some areas with resistance to the new ways of working still being experienced.

Continuously increasing workloads also place demand on resources.

Key Objectives for 2014/15

Expected Benefits Progress to date Anticipated Completion

Production of robust Statutory Accounts resulting in an unqualified audit report

Unqualified audit report

Complete 7 Sept 2014

Embed a Value for Money culture across CHL

Full delivery of efficiency savings targets, vfm at heart of the company so continuous savings are achievable

Significant progress made but still experiencing difficulties in some areas

Ongoing

Embed a fully devolved budget management and monitoring framework across CHL

Effective financial management and decision making, outturn in line with target

Significant progress made but still experiencing difficulties in some areas

Ongoing

Embed Finance Structure and develop a fit for purpose ‘value adding’ finance service

Finance able to effectively support business, subject to limitations of current IT systems

Ongoing with significant progress being made but delays in recruitment and constantly increasing workload will potentially result in slippage on target date for completion

31.03.2015

Carry out specific VFM Service Reviews

Continuous improvements in service delivery

Continuously increasing workload demands have resulted in reduced progress in this area. DLO review absorbing significant resources due to the level of manual workarounds required – no interface with ERP from Open Contractor

31.03.2015

4

Refresh the medium term financial strategy and financial plan for CHL to reflect newly emerging Group Structure proposals

Financial strategy aligned to new requirements, clear targets set for the company in terms of financial position

Current MTFS approved and in place but delays on refresh for group structure -Due to commence January 15

Dependent on Group Structure progress

Develop the financial system, in conjunction with Cornwall Council, to ensure the system is fit for purpose

Efficient and robust processes delivering effective management information

Ongoing – progress is being made on ERP but the system is still significantly below standard. Alternative systems currently being considered as part of Group Structure

Dependent on Group Structure progress

Develop a fit for purpose Growth Strategy and decision making framework

Only feasible options progressed with risks fully considered and mitigated

Ongoing 31.03.2015

In terms of the Balanced Scorecard, the majority of indicators relate to the financial performance of the company rather than the performance of the Finance Team eg

• amount spent against profiled budget – current projected overspend against budget £149k,

• percentage of efficiency savings made against target – on target,

• current tenant arrears – HRA better than target

• former tenant arrears – HRA on target

• number of audit recommendations outstanding – 69 actions much worse than target of 0, although the target of 0 was not a realistic target and needs to be reviewed

There have been no complaints received to date for the Finance Service and 1 compliment.

3. What are the risks associated with the directorate The key financial risks can be summarised as

• Government / Council spending cuts resulting in reduced resources

• Ineffective financial management across company resulting in overspends against resources available

Although action plans have been put in place around efficiency savings, income generation, and financial management, there has been varying success levels across the company. Current indications demonstrate that

5

both of these risks are materialising which are creating significant financial pressures for the company. It is anticipated that DLT will focus on this area over the next quarter to ensure that action plans can be put in place to mitigate these risks and minimise the impact. 4. What is the progress on measurements of quality for the directorate? The focus for the Finance Team over the remainder of the current financial year is on improvements and the key areas can be summarised as follows

• Developing relationships with the council to streamline processes and remove duplication, and ensure the services provided to CHL are aligned to our needs

• Redesign of the budget monitoring processes to ensure they are aligned to budget holder needs and requirements

• Working with the assets directorate to develop workarounds to address the weaknesses of the current HMS systems and lack of interfaces with ERP

• Contribute to the development of the DLO Trading Accounts and subsequent identification of action plan to address emerging issues

• Review processes cross the company for payment of invoices to streamline processes, remove duplication and provide a framework to ensure invoices are paid on time

• Production of a budget holder handbook and a training package to ensure all budget holders are fully aware of their responsibilities and are empowered to deliver their devolved budget management role

• Continue to work with other directorates to improve income collection rates

• Develop robust processes to assess financial viability of new business proposals

It is hoped that this work and the subsequent improved processes will contribute to changing the current culture within CHL, and subsequently release finance team resources to start working more closely with managers across the company with a focus on adding value.

Table of contents

Page

1. Financial position for the current period

2. Progress on our key objectives, Balanced Scorecard,


3. Risks associated with the service area

4. What is the progress on measurements of quality for the

directorate?

xxx Service Plan Update

Cornwall Housing Ltd, Version v0.0, DD Month Year Author/s:


The following table shows the Quarter 2 position for the CHL budgets.

HOUSING OPTIONS Appendix C-6

Up To 30 September 2014 Indicative End of Year CorecastActual Budget Variance Corecast Budget Movement

---------- £'000 £'000 £'000 £'000 £'000 £'000

IncomeGeneral Fund Management Fee 1,326 1,322 (4) Cavourable 2,644 2,644 - Recharges 24 45 21 Adverse 102 89 (13) Cavourable

Government Grants 8 8 - 17 17 - Customer and Client Receipts - - - - - - Other Grants and Reimbursements 15 65 50 Adverse 130 130 -

Total Income 1,373 1,440 67 Adverse 2,893 2,880 (13) Cavourable

ExpenditureEmployee Costs 1,173 1,226 (53) Cavourable 2,374 2,451 (77) Cavourable

Premises Costs 8 17 (9) Cavourable 27 35 (8) Cavourable

Transport Costs 17 27 (10) Cavourable 40 54 (14) Cavourable

Supplies & Services 30 142 (112) Cavourable 222 285 (63) Cavourable

Third Party Payments 7 2 5 Adverse 5 5 - Recharges 5 25 (20) Cavourable 50 50 -

1,240 1,439 (199) Cavourable 2,718 2,880 (162) Cavourable

bet Surplus (133) (1) (132) Cavourable (175) - (175) Cavourable

The general fund budgets are split across both Cornwall Council and Cornwall Housing Ltd, and are perhaps some of the most vulnerable in the company, being subject to both the Council’s savings targets as well as the company targets.

The table below summarises the Quarter 2 position for the Cornwall Council budgets:


DepartmentCost Centre Description Current Budget

Profiled Budget

Actuals & Commitments

(ERP) VarianceFull Year Forecast

Forecast Variance

Housing Options (CH) 105001 Housing Mgt £3,143,868 £1,571,935 £1,446,937 -£124,998 £3,307,368 £163,500

105202 Homechoice Partnership £0 -£31,861 -£47,101 -£15,240 £0 £0105003 CHL Independent Living Service £0 £0 £0 £0 £0 £0

£3,143,868 £1,540,074 £1,399,836 -£140,238 £3,307,368 £163,500105402 Hendra Hostel -£124,716 -£62,358 -£40,425 £21,933 -£83,216 £41,500105413 BB Accomodation £134,741 £67,371 £67,371 £0 £134,741 £0105424 Leasehold Dwelling Countywide -£355,455 -£177,726 £11,739 £189,465 -£94,455 £261,000

105304 Homeless Prevention Projects £17,725 £8,862 £26,896 £18,034 £47,725 £30,000-£327,705 -£163,851 £65,738 £229,589 £4,795 £332,500

d ce & Prevention (JB) 105201 CBL & Housing Register £0 £0 £0 £0 £0 £0

105301 Homeless Prevention West £20,557 £10,280 £32,383 £22,103 £20,557 £0105302 Homeless Prevention Central £13,113 £6,557 £23,803 £17,246 £13,113 £0105303 Homeless Prevention East £10,737 £5,370 £21,571 £16,201 £10,737 £0

£44,407 £22,207 £77,757 £55,550 £44,407 £0Housing Services (MV) 105101 Housing Strategy £10,300 £0 £0 £0 £10,300 £0

£10,300 £0 £0 £0 £10,300 £0

Total (excluding Gypsy & Travellers) £2,870,870 £1,398,430 £1,543,331 £144,901 £3,366,870 £496,000

Temporary

Accomodation (JB)

CHL budgets tend to be primarily staffing related and relatively stable, whereas the retained budgets are more operational and volatile.

At this point in the financial year, the position on the CHL budgets is favourable with underspends being reported across all areas and sufficient budget being aside for future year’s pay commitments.

However, on the Cornwall Council side, there is significant pressure and overspends projected of around £500k, with approximately 50% of this being attributable to a shortfall in bad debt provision, which has only just been brought to light. At the time of writing, we are still fully exploring some of the assumptions being made around the overspend as well as developing recovery plans in conjunction with Cornwall Council to reduce this forecast variance and reflect any variance as accurately as possible. Should there be any action required to transfer any of the CHL surplus budgets across to Cornwall Council, further information and reports will be brought to the Committee.

As a combined budget of approximately £2.7m, the Directorate is seeking to make a 15% saving (£405k) on the combined budges for 2015/16. Plans and proposals have been made to meet this budget reduction and are still subject to confirmation.


The table below sets out the key objectives and projects for the year from the Housing Options Service Plan.


Objective/Project Expected benefits

Progress to date

Expected completion date

We will implement the changes from the Allocations Policy review with minimal service and budgetary impact by 31/3/15

Members have reviewed policy and incorporated some changes permitted via Localism Act

Policy has received cabinet approval and we are now into an implementation phase which is split into 2 phases, due to new system required for phase 2.

Phase 1 changes on target

Phase 2 changes 30/9/2014

We will deliver Service Improvement via the Housing Options Gold Standard (Bronze by 31/3/15) and embed quality control measures across the Service areas

Working towards a clear vision within a clear operational and strategic framework will ensure that we can deliver effective and cost efficient prevention services

On track.

Peer review completed with successful score

Continuous improvement plan in place

Gold standard submission made but awaiting outcome

31/3/15

We will achieve the Temporary Accommodation reduction plan target of 335 including a B&B target of no more than 60 households

Reduced costs associated with service provision, better outcomes for service users/customers

Exceeding overall target with 296 households in TA at end of Q2

On target to achieve no more than 60 households at year end

31/3/15

We will develop a Lettings Agency for Stepping Stones to Homes

Relieve pressure on Temporary Accommodation

Relieve budget pressure via income generation

Behind schedule overall

Project Plan in place

Anticipated launch Jan 2015

31/3/15


but assumed income for current year will not be achieved.

Private market rented properties being let and managed for Cornwall Council (CTE)

We will carry out Homelessness Strategy Review by 31/3/15 in conjunction with strategic partners, including a consultation event to develop strategic themes

Clear strategic framework in place for delivery of homelessness prevention / response services across Cornwall via multi-agency/partnership approach

Suitable corporate commitment (gold standard challenge 1)

Review stage almost complete to inform future strategic themes and resources required.

31/3/15

We will effectively consult with staff on changes and implement the communication cascade

Engaged, informed and motivated staff team

On track – 1:1s, team meetings, directorate newsletters and annual away day in place

31/3/15

We will deliver channel shifts towards on-line access for our initial point of contact services, with clear branding for the service, quality measures and specialist staffing

Better VFM in service deliver

Enabling service users/customers to access info 24/7

Sound quality measures in place to assess effectiveness

Complete review of web pages complete for peer review with positive feedback, including videos for key client groups

Some shift toward on-line access for Homechoice but more can be

31/3/15, but some delivery may extend into 2015/16


done to improve efficiency

The directorate performance Balanced Scorecard Indicators are as follows :

Description Target Frequency April May June July Aug Sept Status Notes

%age customers satisfied with our service 90 Monthly 100 94.12 91.3 93.55 95.45 96.72

Much better than

target

Average length of stay in B&B (days) <42 Quarterly 31.7 32.82

Much better than

target

The Move On Team have removed focus to B&B due to the amount of voids within the PSL stock. This has seen a targeted approach to B&B move on.

Successful preventions as a % of all approaches where the threat of homelessness is identified.

20 Quarterly 16.6 22Better than

target

No notes provided

% refusal rate of lettings: CHL stock. 40 Quarterly 40.45 38.37

Better than

target

We have reviewed the definition and the formula for measuring the refusal rates. Looking at all the properties let between 01/04/2014 and 30/09/2014 and the number of refusals against these lets, Cornwall Housing have improved on applicant and landlord refusals over the last 6 month

% refusal rate of lettings: CBL partnership stock

45 Quarterly 69.06 37.02

Much better than

target

We have reviewed the definition and formula for measuring this indicator. Looking across all the RPs and the properties let between 01/04/2014 and 30/09/2014 and the number of refusals against these lets, there has been a significant improvement in individual provider lettings as well as applicant and landlord refusals over the last 6 month cumulative period. Some of the smaller providers have no refusals. Where it is felt that

Current rent arrears as a percentage of rent debit (hostels)

2 Quarter;y 1.85 1.33

Current rent arrears as a percentage of rent debit (PSLs)

2 Quarterly 2.91 3.03

The directorate also collects a range of local indicators (weekly and monthly) to collect data and inform management around some of our key service areas including Homechoice applications, case numbers and management, detailed use of temporary accommodation and Bed & Breakfast to enable close management and targeting of resources.

Complaints & compliments

The directorate dealt with 12 complaints during the quarter, which represents 17.4% of the complaints for the whole company. Of these 12, 5 were either upheld or partly upheld. In quarter 1, the directorate dealt with ?? complaints.


During quarter 2, the options directorate received 11 compliments, which represents 28% of all compliments received for the company.

The directorate is committed to service improvement and always seeks to learn from compliments and complaints received. As part of improving our customer journey we have recently introduced some interim management arrangements across the front line to put all services under one manager. This manager has also put in place arrangements to better manage complaints into the service and is very proactive in problem solving and responding to customers, which I believe has and will impact on our customer satisfaction. In a service area where we constantly have to manage customer expectations, it is a delicate balance to provide great customer service whilst not always being to give the customer what they want or expect.

3. What are the risks associated with the directorate Risks for the directorate are attached in Appendix A In addition to the risks set out below, it is apparent that there is an emergency risk around general fund budgets, both in terms of the management across two entities (Council and CHL) and the risk to budgets during the Council’s rigorous budget reduction programme. This will be identified/captured and added to the risk register for quarter 3. 4. What is the progress on measurements of quality for the directorate? The directorate is highly committed to an improvement framework and one of our key priorities is working toward the National Gold Standard for Housing Options. As part of this, the directorate participated in a ‘peer review’ this June – a precursor for progressing to an application under the Gold Standard Framework. The directorate achieved a very good score of 72% with the national benchmark minimum being 60%. We have just submitted our first application for a bronze grading (as Authorities must work towards gold progressively) and await the outcome of this. Very few authorities nationally have been through the process so Cornwall is certainly leading the way and fully committed to service improvement. We regard this as a long-term improvement programme and the Gold Standard Framework sets out standards of excellence for a fully effective and cost efficient options service.

Appendix A Key risks for service area are set out below

Prevention Activity not being recharged as per policy.

Service demand leading to high volumes of prevention cases, leading to increased expenditure - ie spend exceeds profiled budget.

Income does not match expenditure, leading to budget overspends.

3 2 6 •Monthly budget monitoring (action ongoing) • Provide all relevant officers/managers with relevant codes for recharges (action completed) • Ensure all officer/managers are fully trained on relevant policies (action completed) • Sign off of spend and recharge procedures (action ongoing) • Detailed void monitoring (action ongoing)

A. Brooks

PSLs / Hostels vacancy rate exceeds budgeted tolerances.

Homelessness decisions not being made in a timely way, no 'match' of suitable. homeless household to vacancy, oversupply.

financial rent loss in excess of budgeted levels, failure to meet targets within management agreement

3 2 6 • Weekly void monitoring (action ongoing) • Handback schedule developed (action needed) • Use of PSL/hostel as emergency accommodation (action ongoing) • Review Temporary Accommodation Plan (action completed)

J. Couch


Households are placed in B&B when their case is not an emergency.

3 2 6 • Weekly review by managers of all cases in B&B (action ongoing) • Focus on move-on to incorporate Stepping Stones to Homes (action ongoing) • Active procurement of alternative forms of temporary accommodation (action ongoing)

J. Couch

1

LANDLORD SERVICES – SERVICE PLAN REVIEW OCTOBER 2014

Table of Contents


2. Progress on our key objectives, Balanced Scorecard, Complaints and projects for this year 3-7

3. Risks associated with the service area 7-8

4. What is the progress on measurements of quality for the Directorate? 9

2

1. Financial Position for the Current Period The overall budget for Landlord Services up until the end of September this year is showing a favourable variance of £43k with a projected favourable variance at the end of the financial year of £12k. Within that overall picture there are a number of issues that need to be brought to the attention of the Finance and Performance Committee. The Landlord Services Directorate is basically split into two distinct areas; housing management and the Independent Living Service. There are two main areas of overspend on the housing management side which impact negatively on the bottom line. Utility costs continue to increase year on year which is predominantly the cost of the Landlord’s electric in communal areas of flatted schemes – predominantly for lighting. We are predicting that we will overspend this budget by the end of the financial year by over £100k. The budget set for this area has not increased for several years now whereas energy costs have increased massively in the same period. The revenue spend in this area could be brought down but it would involve a relatively high level of capital investment in energy efficient lighting and possibly pv panels, or similar, on schemes. The other area of overspend on the housing management side is travel where we are predicting a £15.5k overspend at the end of the year. Whilst efforts will be made to try to reduce travel as much as possible, again, this is an area where the budget may have to be increased. Within the Independent Living Service we are showing huge savings on salaries and supplies and services. This is due to the cessation of our largest contract with Cornwall Council and although this also means a large loss of income, at present we anticipate that there will be a surplus by year end. The small amount of retained staff within the ILS will be working on the small Gypsy and Traveller/Homeless support contracts, the Individual Budget (Learning Disability) contract, delivering the chargeable service and retaining a presence in our Cat 2 sheltered housing schemes. We are carrying out a fundamental review of these schemes over the next 5 – 6 months.

3

2. Progress on this year’s objectives, balanced scorecard, Complaints and Projects Objective / Project Expected Benefits Progress to Date Expected Completion Date Older Person Accommodation Review – Phase 2 (Mid)

Best use of housing stock and bring consistency with recent OPA review in East

Delayed due to resources not being available

March 2015

Complete ILS Restructure and Review

To comply with contract price and specification

Complete but contract then terminated shortly after!

Implications of WR – Phase 2

Mitigate Impact of WR Ongoing – Berryfields pilot project about to start

Nov. 2015 for the pilot project. Overall project ongoing

Communal Service/Service Charge/Project

Consistent communal services and service charging. Possible increased income through service charges

Started but then suspended and now delayed due to lack of resource

November 2015

Review Lifeline and Telecare Service Provision – implement chargeable service for Lifelines

Additional income to support the service

Chargeable service implemented from last December. Expansion plans held to tie-in with Handyperson Service

December 2014 for pilot handyperson service to start

Review Management and Use of Polruan Hostel and Hendra Hostel

Best use of stock Complete Decision to de-commission Hendra – now with Housing Options

Investigate and review the use of fixed-term and flexible tenancies

Best use of stock Complete but rejected by tenant forums and Board

Cat 2 sheltered housing Best use of stock Underway March 2015

4

review

Tenancy Fraud pilot Tackle tenancy fraud Started August 2014. Key amnesty to start within next two months

Pilot to run until July2016

Explore opportunities to generate income

Increased income generation Limited so far to Lifeline (ILS) More opportunities to be explored over the next year.

Performance Indicators

Description Responsible Officer

Target Performance Qtr 2

Status Notes

% of customers satisfied with our services

90 97.61 This is a weighted av. For all our customer satisfaction PIs

ASB Case Handling A Fitzpatrick

90 93.9 Better than target

One customer dissatisfied with actions of an HMO

New tenancies satisfaction

M Gallagher/M Clemens

90 98.98 Much better than target

ASB: % of interventions out of total actions (intervention + legal action) to tackle ASB.

A Fitzpatrick

97 100 Better than target

As this PI is capturing all interventions and legal enforcement it is effectively capturing all cases where any action has taken place and therefore should always result in 100% as we should have no cases where we have failed to act in any way.

Tenants evicted for any reason (num and %)

S Blackie 30 (0.3%)

9 (0.086%)

Much better than average

6 evictions for rent arrears, 2 evictions for housing management, 1 eviction for neighbourhood enforcement

5

Ave re-let time per dwelling

L Stevens 18.5 24.26 Much worse than target

At the end of this period we have let a total of 355 properties with an average void time of 24.26 days. There were 157 voids classified as major - 44.23%. During September, we let 76 properties with an average void time of 30.49 days and there were only 25 major voids - 32.89%, when in previous months the average was 47.31%. The increase in the void time this month is due to the reduction in the number of properties requiring major works and hence the property being ready to let prior to an applicant having been verified, offered and accepted a tenancy. We have addressed this problem and are currently now advertising properties at the earliest opportunity and seeking for surveys to be carried out during the notice period. We organised 7 direct lets to tenants moving off the management and welfare direct let lists. 7 properties were let on the 4th or more verification completed by the Landlord Services team. We are continuing to monitor the process and take necessary action to reduce the void times and to offer sustainable tenancies. During this month we let 1 Poldhu Road, Liskeard, this property had been requested to be held by Legal Services as part of a Legal case for possession of another

6

property and therefore had been a long term void.

Ave. end to end re-let time

L Stevens 55 54.55 Better than target

At the same point in time last yr the average was 62.26 days.

Rent collected as a % of rent owed (HRA)

L Howarth 98.86 99.25 Better than target

Rent Collection is on target, this can be attributed to the hard work of the Rent Management Officers and the support available to tenants from the Welfare Project Advisors.

Current tenant arrears as % of rent debit (HRA)

L Howarth 2.3 2.09 Better than target

Rent Arrears are continuing to reduce; this can be attributed to the hard work of the Rent Management Officers and the support available to tenants from the Welfare Project Advisors.

Complaints Landlord Services has received 16 complaints in the first half of this year. 15 have been completed and 1 is still ongoing.

The shortest turnaround time was 1 day and the longest being 28 days with an average turnaround of 10.6 days against a target of 10 days.

Failure to provide a service 3

Dissatisfaction with our policies 1

Failure to provide adequate standards of service 8

An employee’s attitude or behaviour 4

Upheld 1

7

Partially upheld 3

Not upheld 11

3. What are the risks associated with the directorate Cause Trigger Effects Mitigations Likeliho

od Impact Score Latest Actions

Loss of independent living services

Increase in void rates for Cat 2 schemes as support is no longer available

Increase in refusals to Cat 2 schemes, loss of rental income, loss of reputation due to poor service provision

A review of Cat 2 schemes

4 4 16 Resources need to be assigned to delivering the mandate and developing a range of options for the company and objectives agreed by directors. Report to directors to be developed by the end of the financial year.

Proposed implementation of Govts. UC scheme – timetabled for 2016

Direct payments to tenants of their housing benefit

Inc in rent arrears, inc in resources required to chase debt, poor company performance, Loss of reputation, increase in evictions, loss of company income

Universal Credit pilot project

3 3 9 Pilot project about to start

8

Our main source of ILS funding has already been cut and 14 staff have been made redundant and 14 posts have been terminated. We are attempting to mitigate the impact by pursuing other contracts, reviewing our Cat. 2 schemes and attempting to expand the chargeable service. Our pilot project that will inform us of the resources required to mitigate the impact of Universal Credit is about to commence on Berryfields Estate in Bodmin.

9

4. What is the progress on measurements of quality for the directorate? The Landlord Services directorate continues to perform well in most areas, especially income management and neighbourhood enforcement. We have slipped in our performance indicator on void performance (minor works voids) with a turnaround of 24.26 against a target of 18.5. However, the void end to end times has improved from last year and is within the target of 55 at 54.55. It is this indicator that affects the void rent loss, therefore we have a smaller void rent loss than this time last year. The Independent Living Service has seen the loss of its most significant contract from Adult Care (Education, Health and Social Care) of Cornwall Council. The contract was for £716k for the year and was terminated with three month notice after six months of the year. This has meant a loss of £358k and has led to us making 14 staff redundant and 14 staff had their contracts terminated. We are keeping some staff within the service for support for our hostel at Polruan and for the G&T community as well as to run the Individual Budget (Learning Disability) contract. We also have our chargeable clients and are keeping some staff to run this service and to look after our Cat 2 sheltered housing schemes during the Cat 2 review that we are currently carrying out.

1

RESOURCES– SERVICE PLAN REVIEW OCTOBER 2014

Table of contents

Page


2. Progress on our key objectives, Balanced Scorecard,

Complaints and projects for this year 4-10

3. Risks associated with the service area 10-11

4. What is the progress on measurements of quality for the

Directorate? 11

2


For the period ending the 30th September 2014 the net expenditure position is as follows for resources:

Current budget predictions estimate a favourable year end position of £21k. This includes a positive variance for transport costs, this is now a saving as a result of the move away from paying essential user car allowances to staff when they transfer to Cornwall Housing contracts of employment. The main adverse variance at this stage is in the staff costs where efficiency savings identified for two large change projects (the review of administration and telephony across the company) have resulted in the budget being adjusted to reflect the savings. These projects are in the process of being linked into a larger project which will require some additional resources to manage. We will endeavour to identify other efficiencies throughout the year to offset this potential shortfall. Discussion are also being had regarding the IS Service Charge which is partially top sliced and partially charged direct. BT Cornwall are keen to charge us direct for this service in line with our consumption of their services. If this does happen a mechanism is being looked at to ensure that it is cost neutral to us.

3


Service plan objectives and Projects:

Resources provide support services to the company as a whole and many of the services provided are in the form of projects.

Progress on Projects Resources are managing 19 projects at this time, some of which are corporate projects and some are service projects that may be companywide. Directorate Status Total projects Resources Project Completed - 2

Behind Schedule - 6 Project Terminated - 1 Project Brief -5 On Target - 5

19

Below is a progress update on the projects that are Behind Schedule at this stage and other objectives from the plan.

The full list of projects is appended to a previous report.

Objective /Project (P =Project Started)

Expected Benefits

Progress to Date Expected Completion Date

Review car parking and essential user allowances across the company (P)

More efficient working – reduce unnecessary travel

Work started on this with the trial of Video Conferencing, accessibility to Pool Cars and the Terms and Condition of Cornwall Housing not including essential car allowance. Completed what can be done so far but need to link now with other projects

Expected slippage on end date to September 2015 – linked with Accomodation Review

Make better use of IT across the company

• Implement the new Housing Management System and Asset Management

Efficiencies in working practices. Streamlining processes and automating events where possible. Coupled with equipping workforce to work more remotely and

Housing Management System (HMS) slipping slightly so we have moved more dedicated resource into the project. Further resources will be required in the final 6 months of

June 2015.

4


Expected Benefits


System (P)

• Investigate document management systems with a view of implementing in the following year

• Further roll out mobile working across the company

• Link with the Modern Working project

thereby reduce unnecessary travel time

implementation being implemented

Asset Management System is close to going to procurement. Specification has been updated and requirements identified.

Document management system is being investigated and we are awaiting the a Council decision on its own system route which may affect our options.

Mobile working will be looked at after the go live of the Housing Management System in June 2015

Modern working will link into the Office Accomodation project

Aiming to link with the above

Waiting on options appraisal

Project Planning how to take this forward but not enough resources to deal with this until the HMS installed

September 2015

Review of Business Admin across the company (P)

Efficiency and avoiding duplication

Roles with Administration duties included have been scoped

Project slipped due to resources issues within the team to complete this. Expected end date now September 2015

Review of call handling – Phase 2 (P)

Better customer service

Reviewing current arrangements. New project officer advertised to take this project forward

December 2015

Windows 7 Implementation (P)

Provision of supported

Project rolled out by the Council but has

March 2015

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Expected Benefits


operating system significant disruption to the company. Roll out commenced for the company in August. Expected to continue for several months

Review Service Level Agreements (P)

Ensure we are receiving Value for Money and the service we are requiring

This has now stalled due to the Council not being able to cost the SLAs. Limited service specific information on what can be delivered is available

Unknown

Re-evaluate new Intranet and implement improvements/ future Developments (P)

Increase opportunities for customers to self-serve.

Should be completed by year end. Not all service areas fully updated the Intranet yet

March 2015

The Resources team have a significant number of projects to complete along with the everyday element of their work. There is one general project officer in the team and a temporary project manager brought in to manager the Accomodation Project. Other projects are picked up by teams whilst managing the every day work. This then makes the project vulnerable to slippage if the officers are caught up in every day issues. As a result not all of the project are able to be progresses in a timely manner.

6

Performance Indicators Resources are responsible for 13 indicators shown on the balanced scorecard. Of the six where the performance is much worse than target further information is provided below. Out of the indicators shown

Customers: Excellent customer service is at the heart of the company

Q1 Q2

PI Description Responsible person

Target Frequency

June Sept Status Notes

2

% of tenant compact delivered (completed).

E West 100 Monthly 0 20

Much worse than

target

Most of our compact action plan outcomes are projects that are ongoing throughout the year or take many months. The projects are underway but will be completed later in the year.


Target Frequency June Sept Status

Notes

Learning and growth: CHL invests in the skills and knowledge of our staff

Q1 Q2

1 % of Roles and Goals completed.

T Harris 100 Monthly

0

Much worse than target

(April - September) The R&Gs process this year was delayed resulting in some managers yet to complete their staff appraisals. Results are being logged but an accurate figure is not yet known.

2

% of approved training completed.


0


(April - September) Not all R&G returns have been received - this work has not yet been completed.


Target Frequency

June Sept Status Notes

Financial: CHL delivers value for money and is cost effective in our services

Q1 Q2

6

Amount of new business income generated.

J Marks £50,000 Monthly

0

Much worse than

target

Funding of £9359 has been brought into the company to deliver the commercial awareness and additional training New business income will be generated via the projects Stepping Stones to Homes and Under One Roof which final business cases will be presented to Finance and Performance in January 2015.

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Target Frequency June Sept Status

Notes

Learning and growth: CHL invests in the skills and knowledge of our staff

Q1 Q2

3

% of mandatory training completed.


0


(April - September) The L&D Officer has only just returned from Secondment and will be developing reporting mechanisms to ensure accurate reporting of attendance in future. Currently seeking options for mandatory training to be booked via ERP. Some mandatory training areas are under review.

4

Average number of working days lost to sickness per employee.

C Martin 8 Monthly 3.32 6.97

Much worse than

target

(April - September) Sickness absence is significantly over target at the end of quarter 2 and performance is worse than at the same point of 2013/14. The absence management policy has recently been agreed and is the process of being rolled out across the company. Long term sickness is being closely monitored and short term sickness is being reviewed with managers and review meetings will be held where appropriate. However, 37% of sickness for this quarter is registered as being stress related. The Stress Survey also highlighted this and an action plan has been developed and is being implemented over the coming months. Long term sickness (= 20 working days) accounts for 64% of all sickness absence. Not including long-term sickness, the average number of working days lost per employee is 2.51. This highlights the significance of long term sickness for Cornwall Housing and points to where efforts should be focussed to reduce absence. The top five reasons for sickness absence are: Stress, Depression & Mental Health Stomach, Liver, Kidney & Digestion Chest & Respiratory Shoulder Injury/Dislocation (Related) Ear, Eyes, Nose & Throat (Cold/Flu)

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The items that are down as much worse than target the key indicators include:

• Average working days lost to sickness. Our target for the year is 8 days and we currently are at approximately 7 days, this will get progressively worse throughout the year as the number of sick days recorded increases (the base position of staff numbers stays fairly constant). Projected outturn figures are looking like 14 days. Sickness management is crucial to bringing this down but there are other factors that are contributing to this result. The work we have ben undertaking within the Health, Safety and Wellbeing working groups on Stress and musculoskeletal disorders will hopefully help us mitigate some of these longer term issues. This is data that is companywide

• Amount of new business income generated. We are below the £50k target at this stage. There are a number of projects monitored by the new business and corporate project board which will hopefully produce some income during this financial year. The sign off process to go live involves 3 different meetings and so fitting with the meeting cycles significantly slows down any start dates.

• % of tenants compact completed – this is ongoing and linked to the work plan. It is anticipated that all actions will be completed by the end of the financial year.

• The Roles and Goals data for the company is being chased and logged, current details on numbers completed are not known but will be in place for quarter 3.

3. What are the risks associated with the directorate There are 12 risks registered for resources but many of these are Corporate risks. There were four existing risks that were on the Register at the previous quarter and there has been some movement between quarters:

• Transporting data risk has gone from an amber score of 9 down to a green score of 4. This is as a result of the mitigating actions being completed. However, we are continuing to publicise this particular issue as there is always a need to be vigilant. Looking to set up a wider risk around information security.

• The business continuity plans are nearly signed off and are back with the

service areas for their final sign off by their directors. The score is reduced but it remains green

• No costed SLAs with council services – this has gone down in risk slightly between quarters as we have been assured that there will be no increase in costs from the council from the services provided. The reduction of risk is because of this surety of cost. However, the performance against the SLA is still difficult to measure as the full plans have not been scoped and agreed.

• Windows 7 implementation – this is still a high risk project due to it delivery by an external company. Testing on software for compatibility has been patchy and demands on our teams for immediate checking and testing has been significant during the last three months. Downtime for staff while they get their computers can be up to a day and missed appointments with the implementation team may be charged in future.

9

In the last quarter there have been eight more risks added. These have been as a result of a number of reasons.

• Poor service from BT Cornwall on answering Out of Hours calls • A service failure for the Lone Worker system when there were changes made to

the process and telephone numbers and Cornwall Housing was not made aware. • Two Health, Safety and wellbeing surveys recently undertaken highlighted

issues with work related stress (linking with sickness absence) and musculoskeletal disorders

• Other health and safety work highlighted violence and aggression not being reported, gaps in health and safety policies, identification of training requirements and renewals

• Problems getting timely reports from ERP All of these risks are currently amber and we are working on further mitigations. 4. What is the progress on measurements of quality for the directorate? Performance information is in varying stages of completion. Call handling: Call handling statistics are in place that track the numbers of calls received by certain teams. The percentage of calls received and answered is tracked. We are further developing performance measures within the teams using quality monitoring techniques. Communications channels monitoring: We are in the process of gathering statistics on contacts to the company. Ie how many pieces of post we receive (and send) and what that post is. Call numbers, both internal and external. This will be used to help evaluate the current cost of services and the savings we can generate by providing information online for people to self-serve (where appropriate). Other areas: The use of Survey monkey is to be investigated to gain quality information on some of the services we provide other areas of the Company. This could be particularly useful for our internal IT team.

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Agenda No: 10

Report to: The Board


Title: Property Development Committee Report to Board

Author: Adrian Pengelly Role: Director of Assets

Contact: 01208 265771

For Board reports only

Committee: Property Development Committee

Date: 16 October 2014

Recommendations to the Board:

1. That the update report is noted.

1. Agenda Items

The following items were discussed at the meeting;

Draft Development Strategy Paper A paper outlining the Development Strategy was tabled. It was agreed that the paper needs to be further developed and considered by the Committee. This will build the case around building for affordable, intermediate and social rents to the housing need identified on Homechoice. The comments of the Committee will be incorporated and considered and further scoping is ongoing. Development Programme Update The individual elements of the development programme were reviewed by the Committee including all firm business case proposals and all schemes currently under consideration. Gypsy and Traveller Update It was confirmed that Cormac are currently pricing for the refurbishment works and two new pitches on the existing sites. 2. Decisions of the Committee None. Date: 20 October 2014

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