Decision ref
0094 2023/24
Decision date
04/04/2024
Portfolio
Corporate Services
Wards
All wards
Title
Joint Committee Governance Arrangements for the Yorkshire Purchasing Organisation (YPO)
Summary
To approve a revised Management Agreement which sets out the governance arrangements for the YPO Joint Management Committee following a review of governance and recommendations for approval.
Purpose
To seek approval to sign a revised Management Agreement which sets out the governance arrangements for the YPO Joint Management Committee following a review of governance and recommendations for approval
Background
YPO has operated as a Joint Committee since its inception in 1974 and under the governance structure in the current Management Agreement since 2010. The Management Agreement, and any changes to it, requires the agreement of each member authority through a formal resolution in their own council, along with a resolution to delegate contracting authority to the functional role of Managing Director of YPO.
In 2021 YPO Management Committee Members agreed a review of the governance structure and operating practices of the YPO Joint Committee to ensure that they are fit for purpose to deliver the recently approved 3-5 Year Strategy and to optimise benefits for member authorities in the future.
YPO operates as a Joint Committee of 13 Founder Member Local Authorities. The same 13 Authorities are also shareholders in an associated company – YPO Procurement Holdings Ltd - which operates a group company structure through which the local authorities can trade where necessary and appropriate to do so. The company structure is governed under a shareholder agreement and an appointed set of local authority councillor directors. The current governance proposals in this report relate only to the joint committee structure. A separate review of company governance is now taking place and if any changes are recommended within the company governance structures that will be the subject of a separate report.
A Working Group of a Founder Member strategic officers was formed to review current joint committee governance structures and documents and, in conjunction with officers from YPO and Wakefield Council as the Lead Authority, to submit proposed changes for consideration by members. This group met a number of times and proposed a number of changes to operating practices and to governance structures and the associated documents in which they are specified.
An external law firm was also commissioned to review the legal operating model. That concluded that there was no compelling rationale to move from the Joint Committee arrangements.
The resulting proposals were submitted to the March 2022 Management Committee for consideration and discussion prior to requesting formal approval. Members were also requested to consult within their own authorities to ensure that any final request for approval captured both the discussion in the March Management Committee and the wider views of the Founder Members.
In July 2022 Management Committee formally approved the proposals and resolved to recommend them for approval at each authority.
Full detail on the changes can be found in the YPO report and minutes at Appendix A but in summary they are
i. A reduction of elected members from two per founder member to one, with substitutes permitted. This will produce a more focused core of members with greater familiarity with the strategic challenges facing the organisation;
ii. A reduction in the number of Management Committee and Sub-Committee meetings from three per year to a minimum of two per year. This will enable members to focus on the key strategic issues facing YPO and to take decisions at key points in the annual business cycle (the recommendation to specify a “minimum” number, allowing scope to call additional meetings if required for business reasons, resulted from discussion in the March Management Committee);
iii. The removal of the Executive Sub-Committee. This body largely duplicates the function of the Management Committee and has no separate delegated powers for specific decisions;
iv. The renaming of the Audit & Scrutiny Sub-Committee to Audit & Governance with a remit to consider all items of risk and governance on behalf of member authorities.
v. A revision to the Terms of Reference of the Audit & Governance Sub-Committee, emphasising the role of this body in scrutinising risk and governance issues, holding the Executive Officers to account and reporting back to the full Management Committee;
vi. Revisions to the Scheme of Delegation, emphasising the requirement to consider political and reputational implications for members before the powers contained are exercised and reinforcing the role of the Executive Director, Finance in reporting directly to the S151 Officer in the Lead Authority in the case of any suspected breach;
vii. Revisions to the Financial Procedure Rules to reflect the commercial nature of YPO’s activities as distinct from Local Government requirements
viii. The continuation of the role of Independent Director to give elected members a level of independent assurance on the operational decision-making carried out by the Executive Board and to provide commercial advice to elected members as and when required.
Items i. to iv. require amendments to the Management Agreement which requires approval by all 13 Founder Members.
Unfortunately, YPO have sent email correspondence about this matter to a former member of staff who left the Council several years ago, hence the delay in seeking approval.
Conclusion
The purpose of the proposals is to achieve a more focussed, commercial governance structure, fit for purpose to deliver the ambitious growth plans contained in the 3-5 Year Strategy. The intention is not to diminish levels of governance, oversight or control, but, in many cases, to strengthen governance by making the control mechanisms more explicit and transparent.
Alongside the proposed changes to the formal structure are plans to increase regular engagement with founder member authorities, including a Finance Directors Forum, Heads of Procurement Forum and regular meetings with member Chief Executives.
Risk Implications
Liability for losses incurred by YPO as a result of trading conditions, fraud or mismanagement.
Measures to Redress Risk
Governance arrangements provide for appropriate scrutiny, oversight, audit and officer and member involvement.
Declarations Of Interest
None
More information
Please contact Jan Bakewell on 01744 673209
