At the meeting of Full Council on 17 December 2019, Members approved the formation of a Local Authority Trading Company (LATCo) and Rosherville Limited was duly registered as a trading company of Gravesham Borough Council (GBC) on 7 January 2020.

The Chief Executive advised that the Rosherville Limited Board currently consisted of five Directors appointed by the Cabinet; three Members and two Council Officers. To date, the Board had played a critical role in the successful implementation of the trading companies and had provided invaluable advice and challenge to ensure all Rosherville entities operated effectively. The three subsidiary companies being:-

·         Rosherville Servicing Limited;

·         Rosherville Property Development Limited; and

·         Rosherville Repairs & Maintenance Limited.

The Chief Executive advised that as the LATCo had now been operational for a number of years, it was felt that it would be beneficial to undertake a review of the governance arrangements in place with a view to ensuring that the LATCo had the best structure in place to ensure that it continued to grow as well as the subsidiaries (and any other new subsidiaries that may be commissioned).

In undertaking the review, best practice regarding the structures of LATCos had been considered, along with exploring how other LATCos were structured and public interest and best value reports that had looked specifically at LATCo governance. This included a review of the Local Partnerships document Local Authority Company Review Guidance which specifically looked at the process for reviewing trading company structures.

The Chief Executive advised that, following completion of the review, it was recommended that consideration be given to revising the structure of the Rosherville Limited Board to reflect best practice. The proposal being to remove Councillors from the Rosherville Board and replacing them with non-executive Directors and a specific Shareholder Representative at an Officer level. It was recognised that the current Members had played a critical role in the company and its subsidiaries however it was felt that it was an opportune time to re-evaluate the role of Members on the Board and remove them from direct involvement in the Rosherville entities. This approach will remove conflicts of interest for Councillors, which had always been a concern for the Board. In addition, with the recent review undertaken by the Boundary Commission, resulting in a reduction of elected Members for GBC to 39, removing Members from the Board will reduce the need for Members to remove themselves from meetings where a conflict of interest may arise and ensure consistency in membership of committees. It will also free up time of Councillors to be involved in other Council-led projects. Members would still have a role to play and this would be exercised through the formation of the Rosherville Shareholder Advisory Board. The Advisory Board will ensure that the company can be held to account by the Shareholder (the Council) with regular reporting to the Advisory Board, rather than the ad-hoc nature at the moment. Reporting to the Council’s Finance & Audit Committee would also be put in place.

The Cabinet will continue to maintain the commercial and strategic oversight of the company and its structure.

To support the ongoing development of the company and the Council’s commercial interest, it was also proposed that consideration be given to the recruitment of both a specialist manager/Director and an independent non-executive Director. Given the likely salary for such posts, it is anticipated that the Rosherville Group of companies would not be in a position to fund such posts at this stage; however, this should be a future consideration once Rosherville was able to fund these posts directly.

It was reiterated that the review of the governance arrangements and subsequent recommendations were not a reflection on the current Board Members. The Cabinet thanked Cllrs Lenny Rolles, Sarah Gow and Tony Rice for the work that had been undertaken to date. Tribute was also paid to the Officers, in particular Michelle Batstone (Corporate Change Manager), who has and continues to provide support to the Board.

The Cabinet stated that it was essential for the company and its subsidiaries to work to the principles of the Green Book and have the same terms and conditions of local government/GBC.

The Cabinet also stated that the establishment and work of the LATCo was key in generating income for the Council at a time when it continued to face significant financial pressure. It also delivered on the promise of the current administration to make the Council an entrepreneurial authority.

The Leader drew Members’ attention to section 5.5 of the report in relation to the Membership of the Advisory Board and advised that the proposed changes would not take effect until 1 April 2023 and that the political balance/split would be for the new administration to determine. The Leader envisaged that the political balance/split would be cross-party.

Resolved that the Cabinet recommends to Full Council that:-

1.    The governance framework surrounding the operating model for Local Authority Trading Companies in Gravesham be updated in line with the recommendations made within the report to better reflect best practice;

2.    A request be made to Rosherville Limited to amend its Articles of Association in line with the revised framework set out within the report;

3.    Subject to the request coming forward from the company, that delegated authority be given to the Chief Executive, in consultation with the Leader of the Executive, the Monitoring Officer, the Section 151 Officer and the Chair of Rosherville Limited to make all necessary amendments to the company Articles of Association and Shareholder Agreement to reflect the agreed changes;

4.    Upon amending the Articles of Association and Shareholder Agreement, officers submit these documents to Cabinet to formally approve the changes in March 2023; and

5.    The changes outlined in the report formally take effect from 1 April 2023.