North Yorkshire Council
Audit Committee
23 October 2023
Internal Control Matters for the
Environment Directorate
Report of the Corporate Director
– Environment
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1.0 Purpose
of the report
1.1
To provide an update to Members of
progress against the areas for improvement identified through
internal procedures.
1.2
To provide details of the latest
Risk Register for the Environment Directorate.
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2.0
Background
2.1 The
Audit Committee is required to assess the quality and effectiveness
of the corporate governance arrangements operating within North
Yorkshire Council. In relation to the Environment
Directorate, the Committee receives assurance through the work of
internal audit (detailed in a separate report to the Committee) and
the Directorate Risk Register.
2.2 To
ensure governance and internal control matters are monitored on an
on-going basis the Environment Management Team receives and
considers a report quarterly.
3.0
Directorate Update
The main areas of note for the
Directorate are:
3.1 As with
other areas of the Council, the Directorate has been, and continues
to be, impacted by wider economic factors such as the rising levels
of inflation in the UK increasing the cost of materials and
salaries which impacts the Directorate directly and also through
the supply chain. The main contributors continue to be in the costs
of labour, energy and materials although energy prices remain a
volatile fluctuating area.
3.1.1 In addition, the focus
of the Directorate has also necessarily been on implementing Local
Government Reorganisation, setting up the new North Yorkshire
Council for vesting day on 1 April 2023. Work is this area was
prioritised during 22/23 and has then continued in the months
following 1 April 2023 to ensure the smooth transition to working
as North Yorkshire Council and the new Environment Directorate.
More details are included in section 3.11 below.
Highways &
Transportation
3.2 The key
focus for the highways service was to continue to deliver business
as usual services during the lead up to LGR vesting day and beyond
which was successfully achieved. The focus has now turned
onto developing and delivering a transformation plan that gets the
best out of the move to a new unitary council which sees street
scene, parks and grounds and highways activities now being
delivered by one organisation.
3.2.1 The highways service
continues to give support to North Yorkshire Highways (NYH), as the
front-line delivery agency. Rising materials costs across the
sector continue to create significant pressures on service delivery
and this includes the programme of planned capital maintenance
schemes which are being managed through the rolling three year
approach but this will inevitably mean that some schemes will be
reprogrammed for a later date. The Council is now benefiting
from the new flexibilities of the Teckal arrangement which saw NYH
help to soften the impact of potential cost rises on the surface
dressing programme through a negotiated approach with the
contractor.
Waste Management
3.3 On the
establishment of North Yorkshire Council, the new council took on
responsibility for both the collection and disposal of household
waste. The new Council became the waste collection authority, a
role previously carried out by the district and borough councils,
along with the waste disposal authority which, prior to LGR, was
the responsibility of the county council. A
Health and Safety review is ongoing in conjunction with NYC’s
Health and Safety Team and Yorwaste.
3.3.1 On behalf of North
Yorkshire Council, Yorwaste continue to be contracted to provide
Household Waste Recycling Centre (HWRC) services and as well as the
waste transfer operations which the company was previously
contracted to carry out for the county council. Overall Yorwaste
pay health & safety of staff particular regard, having been
certified ISO45001 (Integrated HSE management system).
3.3.2 For waste transfer
station operations, focus has been on improving site monitoring to
help reduce the risk of fire. Through local & remote thermal
CCTV, Yorwaste staff can monitor the temperature of waste in every
transfer station and take action as necessary. The fire suppression
systems at each site have also been improved such that water deluge
is automatically activated should a fire break out. This action has
been instigated to help reduce insurance premium as well as
risk.
Environment & Climate Change
3.4 The
Climate change strategy has been approved at North Yorkshire
Council Executive with a Head of Service role being recruited to
drive this forward. A restructure within the team is ongoing along
with work underway with Directorates to develop climate action
plans by March 2024. In order to ensure a focus on this area, Cllr
Paul Haslam has been appointed as Climate change champion with the
role currently being reviewed and refined.
Integrated Passenger Transport (IPT)
3.5 Service
delivery across all areas continues to be difficult as the bus
industry tries to recover from the impact of the pandemic and
subsequent economic situation. In the public transport sector,
passenger numbers are slowly returning.The DfT has recently
provided a £2.9m “BSIP+” grant to the Council
which will be utilised to protect existing service provision.
A major procurement is underway for our supported local bus
services and this will be completed by 31 March
2024.
3.5.1 In the Home to School
transport sector, we continue to see challenges in the private
sector market as they struggle to secure drivers and deal with the
increased costs in relation to staff pay, fuel, parts and
maintenance. Alongside this, we have seen new operators enter
the market, one of which has considerable experience of operating
at scale across local authority areas. Work will continue to
stimulate private sector competition in an attempt to drive down
contract costs.
Fleet and Operations
3.6 The
asset management and maintenance of fleet items has been improved
by the introduction of a fleet management system across all former
district council areas. This system is shared between NYC and NY
Highways and ensures good visibility and robust management of our
fleet costs. The procurement of fleet items is centralised in the
fleet management section and is completed in association with the
Procurement and Contract Management Team. The section is developing
an approach to alternative fuel vehicles and drafting a future
fleet strategy to decarbonise our fleet in line with climate change
commitments. The Council is also committed to maintaining
high quality vehicles, with a focus on compliance with our Operator
Licence requirements (Operator Compliance Risk Score), and reports
regularly on this issue.
3.6.1 The Operations team
deliver a large number of services in-house for Health and Adult
Services and for other directorates where there is no commercial
alternative or no best value alternative. The drivers and passenger
assistants are subject to a robust selection, induction and
training framework to manage the operational risk of supporting
vulnerable passengers as well as the general public. The vehicles
are operated on transport permits but the standards of maintenance
and management are close to Operator Licence standards so to ensure
the safe and compliant operation of the service.
Harbours
3.7 A future
harbour strategy is under development, co-designed with
stakeholders, that will set out how the harbour will develop over
the next 20 years prioritising protection of the fishing industry
and maximising the opportunity from the offshore wind and leisure
sectors.
Licensing
3.8 North
Yorkshire Council adopted a new consolidated taxi licence policy as
part of the work undertaken on LGR. As part of this policy,
further work is underway to develop an inclusive service plan to
investigate measures to increase the provision of wheelchair
accessible vehicles and to ensure that taxi provision is accessible
to all. An update to the policy, to incorporate the findings
of this project, will be brought forward in the new
year.
3.8.1 As part of local
government reorganisation, North Yorkshire Council will need to
consolidate other licencing policies, such as for gambling and
licensed premises, within the next two years.
Regulatory Services
3.9 The key
focus for the Regulatory Services has been to continue to deliver
business as usual in terms of service during the initial months of
the new Unitary Council. This has meant ensuring that all of the
reactive investigatory work relating to noise nuisance, and
consumer complaints has continued under existing working
arrangements in addition to the planned inspection regimes
undertaken in respect of food hygiene and safety, animal welfare
and private water supplies.
Registrars, Bereavement and Coroners
Service
3.10 The Registrars and
bereavement service are focussing on maintaining a high-level
customer focussed service in the early months of the new
Council.
3.10.1 The support service to the Coroner
is being evaluated to consider more joined up service delivery
linked to the North Yorkshire Police function and to take into
account the directions from the Chief Coroner about developing
closer working relationships. This is all designed to allow the
Coroner to focus on the judicial role to which they are appointed
rather than the investigative and administrative tasks that are
associated with the inquest process.
Local Government Reorganisation (LGR)
3.11
Capacity and prioritisation continue
to be significant issues in the Directorate, particularly in light
of the challenges presented by Local Government Reorganisation
following the launch of the new North Yorkshire Council on 1 April
2023. The Directorate continues to play a key role in this
fundamental Council initiative and over the year has moved from
leading several LGR workstreams ahead of vesting day to
transitioning to working as part of the new Council, bringing
services from the previous county, district and borough councils
together to work in a cohesive way. Setting up the new North
Yorkshire Council involved representatives from the services within
the Directorate being involved in and/ or leading several
workstreams which ensured all necessary arrangements for each
service were in place for vesting day on 1 April 2023 including
appropriate governance arrangements.
3.11.1
Post vesting day, the Directorate
has continued the work to bring together services and ensure
appropriate governance arrangements are established, embedded and
operate effectively. In addition to this, a significant focus of
the Directorate is on transformation of services and the savings
agenda. The Directorate is working within the Corporate governance
framework which has been established for the Transformation
agenda.
North Yorkshire
Highways
3.12 The Company launched successfully on 1 June 2021
and is now in year 3 of operation. During this period the company
has been updating and refining governance and internal control
processes to ensure they are robust and fit for purpose. The
Company Secretary is from fellow Brierley Group Company First North
Law, to advise, monitor and maintain governance in respect of
investment, operational and financial decisions. Each of the
directors have undergone Director training run by First North Law
to ensure they are aware of their responsibilities as defined
within the Companies Act.
3.12.1
The Company has been set up to
ensure it has appropriate legal status: a Board of Directors with
balanced composition, including an independent Non- Executive
Director as Chair of the Board; Articles of Association established
and approved to ensure the governance around decision making of the
Company and its shareholder, NYC are understood; Contract
management in respect of the contract between NYH and NYC; Policies
and Procedures including Finance and Procurement rules and Scheme
of Delegation signed off. A range of “Reserved Matters”
which are decision making requirements that require NYC shareholder
sign off are reviewed annually and are audited by First North
Law.
3.12.2 Each year, an updated Business Plan
has been signed off by both the company Board and the Shareholder
setting out the direction for the future and long term business
commitments. This business plan is subject to an annual refresh,
vital given current market forces and high inflation concerns. The
plan is based around managing the risks as defined and set out in
the risk management plan. The plan is updated monthly by NYH Senior
Leadership Team and any issues are addressed through mitigation
measures.
3.12.3 It is recognised that people are an
integral part of how the service operates and so there has been a
focus on ensuring staff feel engaged. The initial TUPE process,
although complex, went well. A restructure of the business removing
inconsistent inefficient activities to increase productivity and
efficiency was completed in the third quarter of 22/23. NYH
continues to work towards ensuring there is a granularity of
performance and financial data. This is demonstrated to the board
members on a monthly basis.
3.12.4 Work is ongoing with IT
Infrastructure, finance, procurement and other support services to
ensure the supporting infrastructure which enables the business to
operate is available and working appropriately. The introduction of
finance systems that automate ordering of material and removal of
manual process, along with providing a hierarchical approval
process and audit trail. Coupled with having strict controls on
area by area financial performance reporting and forecast has
provided the granularity of data required to manage performance.
All business functions have documented processes which are going
through an accreditation process to the ISO 9000, 14000 and 45000
for quality, quality health and safety and environmental
compliance. Certification is expected third quarter of 23/24. This
will provide the business with the ability to not only deliver
council services to a high consistent standard but also to market
its services externally.
Capital Programme
3.13 Whilst this is
identified separately within the Directorate Risk Register there
are key items of note:
3.13.1 Construction costs and tender
prices continue to be a significant risk at the current time
although this has lessened slightly compared with situation
envisaged last year but projects will continue to be carefully
monitored to assess the potential for inflation pressures in the
construction market to impact on the delivery of the Capital
Programme. We have made a good start on site with our largest
capital scheme which is on the A59 Kex Gill with the contractor
completing the site clearance, building a 3km long haul road and
carrying out careful temporary removal of drystone
walls.
3.13.2 As previously reported, best
practice for capital management is to utilise a method called
“overprogramming”. Whilst this could be considered
‘business as usual’ for the service, Audit Committee
should be aware of the associated risks and what governance is in
place to help mitigate them. In short, the service programme to
spend more than the capital budget allocated in the financial year
on the basis that typically some schemes are delayed for a variety
of reasons, overprogramming therefore improves the likelihood of
spending on budget but at the risk of overspending. The Capital
Projects Board monitor this practice on a monthly basis taking
intervention as appropriate. The position is then reported to
Executive through the Capital Plan and quarterly forecast
updates.
4.0
Directorate Risk Register
4.1 The
Directorate Risk Register (DRR) is the end product of a systematic
process that identifies risks at Service level, and then aggregates
these via a sieving process to Directorate level. A similar process
sieves Directorate level risks into the Corporate Risk
Register.
4.2 The Risk
Prioritisation System used to derive all Risk Registers across the
Council has recently been changed. The process and reports that are
provided continue to be similar for ease of understanding, but the
Council now uses a 5x5 risk assessment ranging from very low to
very high in terms of both likelihood and impact: Once the
likelihood and impact for a risk have been assessed, the risk
scoring is calculated. The following table shows the scoring,
assessment and suggested required actions:
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Colour
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Score
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Assessment
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Required Action
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|
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1 - 2
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Very Low
(tolerate)
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Risk should not
appear in risk register.
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|
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3 - 4
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Low
(tolerate)
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Regular
monitoring, action plan not essential, acceptable just to maintain
current controls.
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|
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5 - 9
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Medium
(treat)
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Frequent
monitoring, action plan required.
|
|
|
10-12
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Medium High
(treat)
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Frequent
monitoring, action plan required to prevent from becoming a red
risk.
|
|
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15 - 16
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High
(treat)
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Constant
monitoring, action plan
required and escalation to next level for consideration /
inclusion.
|
|
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20 - 25
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Very High
(treat / terminate)
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Constant
monitoring, action plan
required and escalation to next level with request for inclusion.
Consider terminating activity (if an option) where score cannot be
reduced by risk mitigation.
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4.3 The DRR
represents the principal risks that may materially impact on the
performance and financial outcomes of the Directorate. The
Environment (previously Business and Environmental Services) DRR
has been reviewed twice since it was presented to this Committee
and was last reviewed in August 2023 and represents the risks of
the new Council Directorate.
4.4 A
summary of the DRR is attached at Appendix A. As well as
providing a quick overview of the risks and their ranking, it also
provides details of the change or movement in the ranking of the
risk since the last review in the left hand column.
4.5 The
latest detailed DRR is shown at Appendix B. This shows the
key risks and the risk reduction actions designed to minimise them
together with a ranking of the risks both at the present time and
after mitigating actions.
4.6 The key
amendments that have been made to the DRR since October 2022
including the activities and risks of the new Council Directorate
(date of last progress report to the Committee) are as
follows:-
4.6.1 Deleted risks
·
Growth – this risk has been
transferred to the Community Development Directorate risk
register.
·
Devolution Implementation in N
Yorkshire – this risk has been transferred to the Community
Development risk register.
4.6.2 New risks
·
Climate Change – this is a new
risk on the register and demonstrates the challenges for the
Council to achieve carbon neutrality by 2030.
4.6.3 Key changes to
risks
·
Statutory Duties – this risk
has increased in ranking as a result of the new Council and the
necessary work to harmonise Health and Safety risk assessments and
safe systems of work across the services.
·
Long Term Waste Service Strategy
– this risk has increased in ranking and its description has
been amended to reflect the design and implementation of a new
waste service strategy and harmonised waste collection
service. It also makes reference to climate change and the
implications of the new Emission trading scheme as it applies to
Allerton Waste Recycling Park. There are a number of
mitigating actions to be carried out relating to the harmonisation
of the waste collection service across the new Council including a
single policy, procedures and encouraging a collaborative positive
culture.
·
Delivering Transformation and Change
Programmes within ENV – this risk has had the transformation
and savings element added in as part of the work of the new
Council. This is reflected both in the current controls and
the mitigating actions to be taken. As part of this, the
restructure of the Directorate is continuing to be embedded with
appropriate support to staff through the process.
·
Capital Programme and Major Schemes
risks – these risks have had the Kex Gill project added as
well as an action to develop a long term strategy for
harbours.
·
NY Highways – although the
ranking of this risk has reduced, it stays on the Directorate
register as it remains an important part of the services and
continues to be closely monitored.
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5.0
Recommendations
5.1 That the
Committee:
i)
Note the Directorate update salient
points; and
ii)
Note the Directorate Risk Register
for the Environment Directorate; and
iii)
Provide feedback and comments on the
Directorate Risk Register and any other related internal control
issues.
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KARL BATTERSBY
Corporate Director –
Environment
October 2023
Report
prepared by Vicki Dixon
