FINAL with FOI exemptions
Minutes of the 251st Meeting of the
Thursday 10 May 2007
Audit Commission Board, Millbank Tower, London
9.30am – 1.10pm
Commissioners present:
Staff in attendance:
Michael O’Higgins (Chairman)
Jeremy Boss
Steve Bundred (Chief Executive)
Gareth Davies
Dr Jim Coulter
Tracey Dennison
Jennifer Dixon
Martin Evans
Cllr Steve Houghton
Jenny Grey
Sheila Drew Smith
Roger Hamilton
Cllr Peter Jones
John Kirkpatrick (for part)
Sir Tom Legg
Ian Hickman (for part)
Prof. Peter Smith
Andy McKeon
Chris White
Pauline Painter (for part)
Zerena Quirk
Mike Robinson (minutes)
Peter Wilkinson
Brian Willmor
Apologies, Announcements and Declarations
of
Interest
Verbal
1.
The Chairman opened the meeting and made the following announcements:
a)
Apologies for absence had been received from Brian Pomeroy.
b)
The previous evening’s dinner had been most useful with interesting discussions
on strategic matters such as economic development. The points raised would be
considered as part of the CAA development work.
c)
A venue had been booked in Leeds for the September away day.
Minutes of the 22 March 2007 Board and Matters Arising
2.
The minutes were approved and the following matters arising raised:
a)
Paragraph 30 – Annual Lecture. Margot Wallström was unable to attend. Laura
Tyson of the London Business School was being invited but other suggestions
from Commissioners were welcome. The date of the lecture may be put back.
b)
Paragraph 37 – Audit Professional Developments. The briefing on International
Financial Reporting Standards had been published and copies were available.
3.
The minutes of the 250th meeting of the Board held on 22 March 2007 were
approved as a correct record and would be signed by the Chairman.
Report
of
the
Chief
Executive
CP28-07
4.
Serious Crime Bill. The Bill would need to go back to the House of Lords following
government defeat issues unrelated to the Commission. Royal assent may therefore
be delayed but we were confident that provisions relating to the Commission would
remain intact.
5.
Voice and Data Integration Project. AIBs would be asked to unblock some 0844
numbers in order to contact the Commission. This would save both them and the
Commission money but may attract comment.
6.
Cave Review. The review should report to ministers in the next few weeks
. [Section
36(2)(b)(ii)]:
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7.
The Board noted the Chief Executive’s report and:
a)
approved the appointment of Michael Scott to the Pension Scheme Trustee
Board, with effect from 1 July 2007; and
b)
authorised the Audit Committee to approve the Commission’s annual
accounts for 2006/07 at its meeting on 26 June 2007.
Comprehensive
Area
Assessment
(CAA)
CP29-07
8.
A letter from ministers was tabled; it outlined the government’s expectations for CAA
and commissioned the relevant inspectorates to develop it. A joint project board was
now developing the work streams. CLG had also established a work programme that
we were involved in and consultation events were planned. The report outlined the
aims and benefits of the new approach and views were sought on the three key areas
of: risk assessment; focus for reporting; and working with other inspectorates.
9.
Risk Assessments. This was the new and the most challenging aspect of CAA; other
areas built on existing work streams. How should we determine risks and how would
we assess them? The regime would be area based and the methodology would need
to reflect both national and local priorities as well as providing a link to local area
agreements (LAAs). The challenges would be to ensure that: focusing on areas didn’t
dilute responsibility for ownership; assessments were not risk averse; there was buy-in
from all key stakeholders, including Local Strategic Partnerships (LSPs); and that
assessments encompassed long term issues.
[Section 36(2)(b)(ii)]:
10.
Audiences for CAA. There are three key audiences for CAA: the government and
national stakeholders; the professionals within AIBs; and the general public. The
Commission was used to engaging with local and national stakeholders. The question
for CAA was how to involve communities. Should we rely on the engagement of local
bodies or do this directly?
[Section 36(2)(b)(ii)]:
11.
Working with other Inspectorates.
[Section 36(2)(b)(ii)].
12.
The Chairman emphasised that a key test for CAA would be whether participants
regarded it as a help or a hindrance - we must ensure it is seen to add value.
13.
The Board noted the report and commented on the development of CAA.
Fire
and
Rescue
Service
Assessments CP30-07
14.
The MD, Local Government explained that there were few changes to the assessment
methodology, although the indicator set would be improved with the addition of four
new PIs. The aim was for stability in the run up to a new framework.
15.
The Board approved the overall arrangements for fire and rescue performance
assessment in 2007 and 2008 as set out in CP30-06 including changes to
assessments for services, use of resources and direction of travel.
Annual
Review
2006/07
CP31-06
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16.
The MD, Communications explained that the detailed text would normally have gone to
the June Board. However, as this meeting had been cancelled, an outline was
provided for comments. The final draft would be sent for comments when available
and it was suggested that the Chairman and Chief Executive be asked to sign-off the
final version. The following suggestions were made and would be incorporated:
a)
Our efforts to embed sustainability into our work should be included.
b)
The geographical spread of case studies should be checked and there should be
one on housing.
c)
The text would draw out the impact of the Commission and how we are assessing
it; not just the detail of what we’ve been doing. We should also reference
progress in the move towards more proportionate regulation.
17.
The Board noted the annual review outline and:
a)
agreed that the full draft be sent to all Commissioners for comments; and
b)
authorised the Chairman and Chief Executive to sign off the final version.
Lyons Review into Local Government Finance – Implications for the Commission
CP32-07
18.
The report set out the key issues for the Commission from the review and sought early
comments on the various suggestions. These included providing assurance that the
regulatory burden was dropping and looking at whether the duties imposed on councils
were adequately funded. Most of the suggestions could be undertaken under current
powers and several others would be best considered as part of developing CAA.
19.
[Section 36(2)(b)(ii)].
20.
The Board’s input had been useful and would assist staff in their discussions with CLG
on the issues in due course. CLG’s response to the review was still being developed.
21.
The Board:
a)
agreed that, in consultation with central government, limited feasibility
studies should be undertaken in relation to the approach the Commission
might adopt to evaluate the impact of government decisions and actions on
local government;
b)
agreed that the work underway to review the use of resources assessment
in preparation for CAA should consider the proposal that it includes an
assessment of the delivery of the right priorities to meet the needs and
wishes of the local community; and
c)
welcomed the recommendation for an independent review of the new
performance framework.
Appointment
of
New
Commissioners
Verbal
22.
The Chairman outlined the current position in respect of new Commissioner
appointments. The Board noted the good number received and the percentages
received from women and from ethnic minority backgrounds. The Chairman was
confident that there were candidates who could make a good addition to the Board.
Approach to Sustainable Development in our work with AIBs
CP33-07
23.
The proposals in the draft publication set out how the Commission would mainstream
sustainability issues in our work with AIBs. This had been in preparation for some time
and in advance of the Sustainable Development Commission’s (SDC) recent criticism
that we were not doing enough in this area. The SDC knew the ability of the
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Commission to affect change by including sustainability issues in its assessments and
were keen to engage with us. The area was increasing in profile and importance and
would certainly be a PSA target and priority in the current comprehensive spending
review. As such, it would doubtless appear in local area agreements. The Board
discussed the key issues and the following is a summary of the comments made:
a)
The framework and action plan was a good piece of work which would assist in
the development of CAA. It followed on from the October 2006 away day when
the possibility of assessing such matters was first raised.
b)
The English Regions Network should also be consulted over our approach given
their strategic responsibilities and involvement in promoting renewable energy.
c)
Our work should be focused on sustainability in the context of reducing
environmental damage. Although ‘ensuring a just society’ was laudable it was
largely outside our remit and this should be dropped from the report.
d)
The report had been developed for internal use. However, a slightly revised
version would be put on the website and shared with interested stakeholders such
as the SDC.
Consideration should also be given to publishing a short
pamphlet setting out our approach.
24.
Subject to comments, the Board approved the approach to sustainable
development set out in CP33-07.
Internal
Environmental
Policy
Update
CP34-07
25. The
report
detailed
progress since the initial report in February. The key proposition
was that the Commission should reduce its impact rather than simply seek to offset
carbon emissions. The latter could be seen as merely media management as well as
an inappropriate use of public money. Given that the implications were complex to
assess, we needed further time to set a specific target. In the meantime, we should
set out a direction of travel, undertake more research into the matter and progress with
the ‘quick wins’. Reducing business miles would be the main way in which we would
reduce emissions. The Board approved the proposed approach and it was suggested
that
consideration be given to including a sub-heading in each Board report to
detail any environmental implications.
26.
The Board:
a)
approved the mission statement and environmental plan in the form of an
Audit Commission 2010 Charter (Appendix 1 to CP34-07) that provides ten
principles to achieve significant sustainability improvements;
b)
endorsed the aspiration to reduce the Commission’s emissions in line with
government commitment within the draft Climate Change Bill; and
c)
noted the progress made and proposed quick wins on carbon reduction as
well as the resources required to support these initiatives and the risks
associated with the work.
National
Studies
Update
2006/07 CP35-07
27.
The MD, Policy Research and Studies explained that his department was now
practically at full strength and he encouraged Commissioners to give him direct
feedback on the quality of their engagement with his staff. The report suggested
additional study options on which we should consult. The consultation process had
been refined as the large scale publication method previously used had not given the
best feedback - we would now engage with key stakeholders on an ongoing basis and
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in a more meaningful way. Decisions on which areas to address would hopefully be
aided by the new framework against which proposals would be assessed.
28.
The actual study proposals sought to fill the gaps in our knowledge and give a good
spread – both across our sectors and by type of study. They also looked to build on
key developments such as preparing for CAA. The Board was asked to agree the list
of studies which would be consulted upon and it was proposed that the final decision
on which studies to progress should be taken by the Chairman and Chief Executive.
The Board discussed in detail and the following is a summary of the key points:
a)
There was praise for the new framework for selecting studies. It gave a sound
rationale for assessing them and helped in achieving a balanced portfolio.
b)
The 10 studies proposed for consultation were agreed. Those particularly
highlighted and welcomed were:
• Measuring Progress in Sustainable Development;
• Planning and Costing Local Authority Services for an Ageing Population;
• Use of Public Resources to Improve Community Cohesion; and
• Homes not Houses – Building Diverse, Viable and Sustainable Communities.
c)
The study on workforce issues would be useful. However, it was noted this was
on hold due to the departure of the project manager.
d)
Focus would be important in the proposed study on Value for Money in Schools.
This suggestion had arisen from discussions with the DfES who were supportive.
The study would be discussed with Ofsted.
e)
It was confirmed that the possible study topics that were unlikely to go forward
would be picked up with shorter pieces of research and briefer publications.
29.
The Board:
a)
agreed the list of potential new studies set out in CP35-07; and
b)
delegated authority to the Chairman and Chief Executive to approve those
to be started, in light of the consultation.
National Study – Making Better Use of
Information
CP36-07
30.
The aim of the study was to establish an intellectual framework for the use of
information around which a series of smaller studies and tools could be developed.
These would help AIBs consider performance in this area and would lead into the
development of Use of Resources judgements. The key messages were based
around three main hypotheses. Namely, that:
a)
better use of information leads to better decisions which leads to better outcomes;
b)
a one size fits all approach does not work and the type of information required
varies on the needs of the recipient. However, common data sets on which to
draw were still possible and efficient; and
c)
information must be relevant, accurate, timely and understandable. However, this
varies on the use for which the information will be put.
31.
Commissioners’ comments were sought and the following is the key feedback given:
a)
Establishing an overall framework to be followed up with more practical tools was
the right way to approach the issue. This was certainly an area that needed
improvement and should be opened up for public debate. The issue was so
complex that the framework would have to be relatively broad brush at this stage.
b)
We need to acknowledge the implications of technology and to examine how the
private sector utilises common data sets – these were a relatively new concept in
the public sector.
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c)
The purpose of the information was important in the context of timeliness.
Sometimes real or near time data would be critical but sometimes an analysis of
long term trends would be better.
d)
This was a very topical issue and the Ministry for Justice was undertaking a lot of
work in this area.
32.
The Board:
a)
endorsed the broad outline of the discussion paper in CP36-07 and agreed
that a document based on it should be published as soon as possible;
b)
delegated authority to the Chairman and Chief Executive to approve the
final text; and
c)
approved the proposed further work programme.
Board
Performance
Report
CP37-07
33.
The Interim MD, Corporate Services explained that this was the last performance
report in this format and the final one for 2006/07. A small number of the strategic plan
targets were flagged as amber but the vast majority had been achieved.
34.
[Section 36(2)(b)(ii)]
35.
The Board noted the assessment and management of the risks and the
progress outlined on: income and expenditure; progress against strategic plan
activities; recent achievements; and publications.
Performance
Reporting
Review
CP38-07
36.
The report proposed a more streamlined and focused approach to performance and
budget reporting. The new balanced score card would provide overall feedback and
highlight the key issues from 35 high level performance indicators. Any areas flagged
as red would be the subject of more detailed reporting. It would be possible to drill
down into the detail behind the high level summary but it was not yet possible to do
this electronically.
37.
The Board approved the new performance monitoring and reporting
arrangements and the components of the scorecard.
Promoting
Audit
Quality
CP39-07
38.
Negotiations with the Audit Inspection Unit (AIU) had been satisfactorily concluded and
we would now come under their regulatory regime. This would be their first review of
public sector audit and we anticipated that it would be challenging and robust. Any
short term pain or reputational risk was expected to be worth the likely improvements
in audit quality that would follow. The initiative was part of the significant investment
made by the Commission in its core audit work.
39.
The Board welcomed the development;
it was important to submit ourselves for
self regulation and this initiative should be mentioned in the annual review.
Although the AIU did not intend to publish its report we were not looking to restrict
access to their findings and these would be included in our annual transparency report.
40.
The Board noted the Audit Inspection Unit’s proposals to inspect the
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Commission’s in-house practice and the parallel programme of work set in
place to promote audit quality.
Audit
Issues
CP40-07
41.
The MD, Audit outlined the routine decisions required and the key issues. The latter
included the merger of Robson Rhodes with Grant Thornton. This did have some
implications for the Commission as both firms undertook work for some AIBs.
However, this situation had been encountered before and could be handled.
42.
[Section 33]
43.
The Chief Executive highlighted the substantial reduction in the amount of grant
certification work as a significant achievement. The total number of schemes certified
was now 46 compared to 191 when the new lighter touch approach was first proposed.
44.
[Section 33]
45.
Although 14 per cent of police authorities had objected to the principle of setting
supplementary fees after the start of the financial year, we had made it clear from the
outset that this would be the case in respect of use of resources work.
46.
The Board noted the regulatory issues and approved the:
a)
appointment of Chris Westwood to deal with accounting issues and any
questions or objections that may arise in connection with the
commissioning of a waste incinerator by Surrey County Council;
b)
appointment of Stephen Taylor to deal with enquiries raised by a local
elector in connection with the planning department at East Hampshire
District Council, and any subsequent objections that may arise;
c)
appointment of Andy Perrin as auditor to Anglia Revenues and Benefits
Partnership Joint Committee;
d)
changes in appointed auditors for 2006/07, as set out in CP40-07; and
e)
scale of fees for Use of Resources work at police authorities in 2006/07.
Independent
Complaints
Panel
Reports
CP41-07
47.
The Chief Executive explained that these were the last of the Complaints Panel reports
prepared under the old procedure. The report set out the lessons learned from each
report and these were being taken forward. The good news was that the revised
process was working well and that all of the complaints received to date had been
satisfactorily resolved at stage 1.
48.
[Section 33].
49.
The Board:
a)
[Section 40];
b)
[Section 40];
c)
noted the recommendations on the changes to the complaints process and
the Code of Audit Practice; and
d)
[Section 40].
Any Other Business
Verbal
50.
The following additional items were raised:
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a)
The Board was advised of changes within the Department of Health. Richard
Douglas was now responsible for the finances of the department as a whole and
the Commission’s new key contact would be the Director of Finance Performance
and Operations - David Flory.
b)
The Chairman asked for feedback on the Board papers. He would do this
regularly so that Commissioners could help staff improve papers. The National
Studies and Performance reports were singled out as having been well written.
There were conflicting views over which was the most helpful style - well written
narrative or concise bullet points.
Chairman’s Speaking Engagements, Information Bulletin and Board Forward Look
CP25-07 / CP26-06 / CP27-07
51.
The Chairman’s external speaking engagements, information bulletin and Board
forward look were received without comment.
Mike Robinson
May 2007
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