Agenda item

This report presents an update for the Council owned company Environment SK Ltd for 2022/23. 

Members received an update from one of the Directors of EnvironmentSK Ltd.  The financial position remained largely unchanged since the update given to the Committee on 7 October 2022.  Under normal circumstances the Committee would be reviewing the Business Plan for EnvironmentSK Ltd for 2023/24. However, work was currently being undertaken to revise and update the ground maintenance specification which meant that there was uncertainty around the future of the Company.    EnvironmentSK Ltd was awaiting instruction from South Kesteven District Council before a Business Plan for 2023/2024 could be submitted.  The Committee would be informed once the position had been clarified.

EnvironmentSK Ltd was expected to be in a balanced financial position for 2022/23.  Due to one of the Directors of the Company being ill the Committee were asked to appoint Alison Hall-Wright to the Board in the short-term going forward.

One Member asked if it was possible to have an update on the review. Clarity was sought in relation to the question asked and a review of the work taking place relating to EnvironmentSK Ltd was asked for before it went to the Joint Overview and Scrutiny Committee.

The Director stated that the future of EnvironmentSK Ltd was uncertain at the present time whilst the review was taking place and until the Company heard from the Council it was difficult to plan for 2023/24.

Disbelief was expressed by one Member as it was felt that some work should have already been undertaken looking at both best case and worst case scenarios relating to grounds maintenance depending upon the way forward for the Company once a decision was made by the Council.

Reference was made to the Cabinet Member for Finance and it was stated that Councillor Adam Stokes was attending the meeting as a Director of EnvironmentSK Ltd and not as a member of the Cabinet.  The Director of EnvironmentSK Ltd was asked if he would resign as a Director of EnvironmentSK Ltd in relation to any decision over the future of the Company to which the Director replied that he would remain a Director.

Further discussion followed in respect of EnvironmentSK Ltd, fulfilling the contracts in place with Parish Councils and the tight timescale between the Joint OSC and the Cabinet meeting which was the following day.  It was again stated that until the future direction of the company was known forward planning was difficult, the company was a wholly own company of the Council and it was for the Council to make the final decision.

The issue of Directors of EnvironmentSK Ltd was then discussed and it was felt by some Members that there was a conflict of interest in that the Chairman of the Governance and Audit Committee was also a director of EnvironmentSK Ltd. The Assistant Director of Governance and Deputy Monitoring Officer stated that legal advice had been sought and there was no conflict being a director and also the Chairman of Governance and Audit Committee.  The onus was on the person as to whether there was a Code of Conduct issue or whether the Articles of the Company excluded certain positions from Directorships.  There was no legal reason why the current Chairman of the Governance and Audit Committee could not at as a director of EnvironmentSK Ltd.  The Member asked to have the legal information sent to him in writing.

ØAction

That the legal information referred to by the Assistant Director of Governance and Deputy Monitoring Officer in relation to directorships of companies be circulated to Members.

Discussion then followed on the financial position of the company and a question was asked about what happened to the £500,000 loan that had been given to EnvironmentSK Ltd if the company was disbanded. Reference was made to the cash flow and trading of the company and the loan differential and interest on the loan would be built into the cash flow of the company and accounted for in the Profit and Loss account. 

Reference was then made to the Joint OSC meeting and the fact that the Cabinet meeting was the following day. If was felt that authentic scrutiny could not take place due to the tight timescale and that it showed a contempt for the scrutiny process.  The appointment of directorships was referenced and housing directorships and it was felt that there was a potential for conflicts of interest.  It may be legal but it was felt that they were not necessarily correct. It was stated that if there was any doubt then people should remove themselves from any conflict.

One Member asked for it to be noted that he was disappointed that EnvironmentSK Ltd were unable to submit a Business Plan for 2023/24 and if the company folded what happened to the £500,000 loan.

The Chairman stated that depending upon the outcome of the Joint OSC meeting and the Cabinet meeting the Business Plan for EnvironmentSK Ltd 2023/24 would be on the agenda for the March meeting of the Committee together with what would happen to the £500,000 loan given to EnvironmentSK Ltd.

Not wishing to pre-empt any future decision, the Cabinet Member for Waste Services stated that money was used by the Council to buy assets to deliver the Ground Maintenance contract and that financial arrangement were in place with EnvironmentSK Ltd to use those assets to deliver the service on behalf of the Council.  Depreciation and outstanding liabilities would all be taken into consideration if EnvironmentSK Ltd was wound up as a company.

The need to appoint a Director to EnvironmentSK Ltd for the short term due to the illness was raised.  It was proposed, seconded and AGREED to appoint Alison Hall-Wright.

Decision

To approve Alison Hall-Wright as Director for EnvironmentSK Ltd with immediate effect.

14:42 Councillor Crawford left the meeting and did not return.