Agenda item

4.1

The Director of Creative Sheffield introduced a report of the Interim Executive Director, Resources that presented the findings from the independent review undertaken by KPMG of the South Yorkshire Digital Region Project and considered the implications and lessons learned.  The report also provided an update on the close down of Digital Region. Appended to the report were the Review Report and the Cabinet report from September 2008. The review examined:

·         The original business case

·         Governance arrangements

·         Information flows and decision making

·         Risk management; and

·         Procurement arrangements and specialist advice

4.2

The Director stated that the project risks were set out in the business case and the Council’s analysis of those risks as part of the decision making process were felt to have been more robust than other stakeholder authorities. The key findings from the Review report had been accepted by the Leaders of the four South Yorkshire local authorities. In conclusion, the Council knowingly entered into considerable commercial risks. However, technological advances, market conditions and delays in obtaining European approvals all contributed to making the project fail commercially.

4.3

The Director of Creative Sheffield and Interim Executive Director, Resources responded to questions from members of the Committee.

4.3.1

On the issue of sales and marketing targets and why officers felt that the BT price would come down, the Director indicated that there were not enough major Internet Service Providers (ISPs) on the network and there were issues on the cost and difficulties with the equipment. At the time, officers felt close to signing a deal with a major ISP and that Ofcom would force BT to reduce its price. In respect of the involvement with Ofcom, the correspondence was kept by DRL Limited.

4.3.2

In terms of the lessons learnt and how these were being shared, the Director indicated that the Review Report had been discussed by the South Yorkshire Leaders and the conclusions from the consideration by the other South Yorkshire Audit Committees could be circulated to members of this Committee. The Council’s internal procedures, Programme Boards etc. would now apply different levels of rigour to that in 2007. The Interim Executive Director stated that an immediate lesson had been learnt with regard to the BDUK broadband programme in that the Council was not taking the risk.

4.3.3

In response to a question on Member involvement in the decision making process, the Director indicated that the key decisions were taken by Members and there were Cabinet Member briefings. However, there could have been more Member briefings during the trading period. The Interim Executive Director added that the project started with high level involvement of the Leader and the Chief Executive but during the mid-part of the project there was not clear Cabinet Member leadership.

4.3.4

A Member asked if there was any course of action that could have saved the project. The Interim Executive Director indicated that there had been sufficient attempts to seek to save the project.

4.3.5

A member asked how the lessons learned would be applied to ensure they did not recur. The Interim Executive Director indicated that safeguards were in place, there was an improved Commercial Services function and prioritisation of projects. At the time of the Digital Region project, advice was given and decisions taken. That process has since been strengthened, particularly in dealing with risk. It was not possible to entirely close off the possibility of taking a risky decision but any risks would be carefully assessed. There would also be very tight arrangements for setting up any future arm’s length company.

4.3.6

In response to further questions, the Interim Director of Legal and Governance stated that the Directors of Legal Services in the four South Yorkshire local authorities worked together and were now aware what was taking place on joint projects. For example, on the BDUK broadband project all the authorities had obtained legal advice and understood the risks and liabilities and there was an Inter-Authority agreement. It may be possible to include a requirement in future agreements that there was consideration by all the authorities’ Audit Committees. The Interim Executive Director added that they had tried to have a standard reporting template for Digital Region but it was reported differently as each Council had its own governance arrangements. Joint projects in the future would be via the Combined Authority and this would ensure consistency. That Authority also had its own Audit Committee.

4.3.7

In terms of the recommendations in the review report, the Interim Executive Director highlighted the need to ensure Cabinet Member and senior officer ownership and devolving responsibility to a Special Purpose Vehicle.

4.3.8

Members of the Committee made the following points:

·         There was a need to keep a central record of the lessons learned.

·         Progress reports on joint projects should be considered by the local authorities at the same time.

·         There should be the same accountability procedures in each authority and they should have the same degree of rigour and robustness.

4.4

Resolved: That the Committee:-

(a)

notes the report and comments now made on the wider implications and lessons learned from the independent review report on the Digital Region South Yorkshire Broadband Project; and

(b)

requests that the conclusions on the review report from the other 3 South Yorkshire Councils’ Audit Committees are circulated to members of this Committee for information.