The Strategic Investment Board (SIB) convened to discuss and approve the annual business plan for Connect2Surrey, and to address the corporate strategy and governance of the council's commercial investments. The board approved the Connect2Surrey business plan, with additional recommendations for reviewing the company's fee structure and maximising opportunities from local government reorganisation. They also approved the continuation of existing governance arrangements for commercial investments, while noting that an updated governance proposal paper would be presented to the SIB later in the year.

Commercial Investments: Corporate Strategy and Governance

The board approved the continuation of the existing governance arrangements for commercial investments, and noted that an updated governance proposal paper would be brought to the SIB later in 2025. They also approved six strategic principles to guide these investments.

The report on Commercial Investments Corporate Strategy and Governance outlined the arrangements for the council's commercial investments, predominantly its companies, the strategy around those investments, and the governance arrangements. The report noted that the Strategic Investment Board (SHIB) hadn't been meeting as regularly as it should have, and that this had been corrected.

The six strategic principles that the board approved were:

• Investments must either deliver a favourable financial return or provide a service.
• Services provided to the council by Local Authority Trading Companies (LATCOs) must be subject to some form of procurement or soft market testing¹ on an appropriate cycle for that service, with the award of contracts being based primarily on quality, value for money and other typical procurement criteria. Services should not rely on Teckal exemptions² without any comparison to alternative services.
• Investments for the purposes of trading or general commercial investment should produce a financial return that demonstrates financial benefits above the opportunity cost of investment and an agreed risk premium.
• Risk monitoring should be in place for each LATCO, reviewed at company board level at least quarterly, and summarised for higher level risks at the Shareholder Investment Panel (SHIP) and SIB twice per year as part of formal reporting.
• Additional consideration should be given in 2025/26 and 2026/27 to potential forthcoming changes to circumstances due to Local Government Reorganisation (LGR).
• The strategy of each LATCO should be refreshed at least every 3 years, in addition to annual business plans. These are to be reviewed by SHIP and approved by SIB.

Councillor David Lewis, Cabinet Member for Finance and Resources, noted that the report gave a good summary of all the commercial investments, what companies the council has, and how they are set up. He sought confirmation that the six strategic principles were not significantly different from how the council had been operating in the past.

In response, an officer explained that SHIB had discussed whether to capture potential changes in the report, but chose to keep the strategic principles the same and address changes on a case-by-case basis when business plans are presented to SHIB.

Councillor Denise Turner-Stewart, Deputy Leader and Cabinet Member for Customer and Communities, asked how performance issues are managed within the organisations. It was explained that performance is managed through SHIB. As an example, it was noted that Rachel, who is a director on Surrey Choices, has to be excused from discussions about Surrey Choices to avoid conflicts of interest. The council is working to resolve directorship issues to avoid such conflicts in the future.

The updated governance proposal paper is intended to address and tidy up issues such as the directorships.

Connect2Surrey Business Plan

The board approved the annual business plan for Connect2Surrey, with additional recommendations to review the fee structure and overheads of the company, and to maximise opportunities that local government reorganisation brings.

The report stated that Connect2Surrey (C2S) is the trading name for Surrey and Kent Commercial Services LLP, a jointly owned limited liability partnership with equal ownership between Surrey County Council and Commercial Services Kent Ltd.

The report recommended that the Strategic Investment Board (SIB) approve the annual business plan of Connect2Surrey (C2S).

The executive summary of the business plan included the following points:

• Strategic Vision: To be an impactful, innovative, and efficient people service partner, supporting both authorities with contingent and permanent recruitment, while aligning with the Community Vision for Surrey 2030.
• Devolution Opportunity: The proposed local government reorganisation in Surrey could expand Connect2Surrey's remit to new unitary authorities, offering growth potential.
• Performance Highlights: Customer satisfaction averaged 4.1/5; time to hire averaged 4.6 days; and the talent pool grew with an average 88 candidates engaged each month.
• Strategic Priorities for 2025/26: Increase direct fill ratio to improve margin; support permanent recruitment and reduce reliance on third-party agencies; leverage devolution to expand services; and strengthen relationships with Adults and Corporate services.

Following discussion, the committee agreed to approve the business plan, but added two further recommendations:

• For SHIB to review the fee structure and overheads of the company.
• For Connect2Surrey to maximise opportunities that local government reorganisation brings.