Agenda and minutes

The Head of Legal and Democratic Services to report any changes to the membership.

1.1       It was noted that Councillor Julia Alexander had replaced Councillor Richard Holloway.

To receive declarations by Members and Officers of the existence and nature of any personal or prejudicial interests in matters on this agenda.

2.1       The known standing declarations as tabled at the meeting were as follows:

To sign the minutes of the previous meeting as a correct record of proceedings.

3.1       RESOLVED: That the minutes of the meeting held on 18^th November 2015 be signed by the Chairman as a correct record of proceedings.

4.1       RESOLVED:

1.    That the agenda items for the next meeting on 9 March 2016 be agreed

2.    That the responses to actions and recommendations as set out in the tracker be noted.

An update from the Cabinet Members on key areas within their portfolios are attached.

The Cabinet Member for Finance & Corporate Services will be in attendance to answer questions from the Committee.

5.1     The Committee received written updates from the Cabinet Member for Finance and Corporate Services and the Cabinet Member for Housing, Regeneration, Business & Economic Development on the key aspects of their portfolios. 

5.2     In the absence of the Cabinet Member for Finance & Corporate Services officers responded to questions from committee members.

          Finance

5.3     Steve Mair, City Treasurer, summarised the key updates on the finance element of the portfolio as set out in the report.

5.4     The City Treasurer was asked about the current revenue underspend relating to the Council’s budget for 2015/16 and what this was likely to be at year end.  He reported that there was currently a circa £2 million underspend and that there was likely to be a slightly increased underspend at the year end.  He was unable to provide an exact figure as we are only part way through the year

5.5     The City Treasurer was referred to the fact that the Council had used some of its reserves in the current financial year to fund discretionary housing payments and he was asked whether the Council was likely to draw on its reserves to support Council services in the coming financial year.  He stated that while it was extremely unlikely that the Council would do so he could not provide a definitive answer as the budget proposals for 2016/17 were still being finalised.  He explained that the use of the reserves in the current financial year to fund discretionary housing payments was made on an exceptional basis.  The Council had ameliorated the need to draw on the reserves to fund such payments in future years by revising the policy on determining claims for discretionary housing payments

5.6     Having noted that the average return of the investment portfolio for the first half of 2015/16 was circa 0.62% Mr Mair was asked about options to improve the Council’s investment return.  The City Treasurer recognised that the Council has a considerable sum of working capital and capital receipts and these could be invested more productively.  He advised that alternative investment opportunities will be explored as part of the Council’s medium term planning and budget process to help deliver additional revenue to meet required savings over the next few years.  This could include using available capital to minimise the deficit in the Council’s pension fund.  He undertook to bring a paper on this subject to the committee in the coming months.

5.7     The City Treasurer was referred to the powers available to the Council to raise Council tax by an additional 2% to help meet the shortfall in social care funding. He was asked whether the money raised could be used for general council spending.  He advised that government guidance has indicated that any money raised would be ring-fenced for use on Adult Social Care and that this would have to be in addition to the agreed budget.

          Corporate Services

5.8     Nick Dawe, Interim Bi-Borough Director of Corporate Services, provided an operational update on the Managed Services Programme.  He explained  ...  view the full minutes text for item 5.

Report of the Interim Tri-Borough Head of Treasury

6.1     The Committee received the Council’s Half Year Treasury report for 2015-16 in accordance with the Council’s Treasury Management practices.

6.2     The City Treasurer provided a PowerPoint presentation that covered both the mid-year review as well as the draft Treasury Management Strategy 2016-17 which also featured on the committee’s agenda.

          RESOLVED:

1.     That the Treasury position at 30 September 2015 be noted.

2.     That the recommendation of the inclusion of Bonds within the category of UK Deposits and Certificates of Deposit be supported.

Report of the City Treasurer

7.1     The Council is required under the Local Government Act 2003 (as amended) and other regulations to approve an Annual Treasury Management Strategy to cover:  Borrowing Strategy, Investment Strategy and set Prudential Indicators together with borrowing limits for the next three years.  In addition, the Council must approve an annual Minimum Revenue Provision Statement.

7.2     The City Treasurer, provided a Powerpoint presentation on the key issues set out in the report.

7.3     The Committee considered the draft strategy and asked questions and explored options in relation to the proposed investment and borrowing strategies.

7.4     The Committee noted that the average rate of return on investments for the first half of 2015/16 was 0.62%.  Members asked whether the current approach to risk control limited the Council’s investment return.  The City Treasurer advised that the Council’s current approach was to be very prudent where it might be more advantageous to adopt an approach of being appropriately risk aware.  He advised that officers had been actively considering a variety of initiatives, predominantly focusing on active risk management of the portfolios.

7.5     The City Treasurer was asked whether such an approach could include developing the Council’s property assets in partnership with commercial operators or lending funds to other local authorities at a better rate of return than it was currently achieving.  He stated that the Council had yet to explore the alternative investment options but that initiatives such as the former should be explored.  He was aware that other local authorities did participate in inter-local authority lending given the relative security that such organisations offer.

7.6     The City Treasurer was referred to the fact that other public sector organisations such as Transport for London (TfL) have more diverse investment strategies and it was suggested that the Council would benefit from examining some of these approaches.  Mr Mair informed the committee that he was due to meet with TfL in the near future and that he would take the opportunity to speak to them about their strategy.

7.7     Mr Mair was asked how the government’s proposed changes relating to the devolution of business rates to local authorities would affect the strategy.  He explained that the proposals would be taken into account in developing the strategy.  He advised that the government aimed to end core funding to local authorities by 2020.  Councils would be expected to be fully self-funding.  One of the ways that this was to be achieved would be by allowing councils nationally to retain all locally raised business rates.  The Council currently collected nearly £2 billion of business rates annually which accounted for 8% of all business rates collected in England.  He stated that in reality the changes would be phased in from 2020 and that there would still be redistribution of the rates collected.  Therefore, the proposals were unlikely to significantly assist the Council in its savings requirements over the next 4 years.  He advised that the Council was working with the Department for Communities and Local Government to inform  ...  view the full minutes text for item 7.

Report of:  Director of Housing and Regeneration and Director of Policy, Performance and Communications 

8.1       The Committee received a report that outlined the Government’s current proposals on the 1% social rent reduction and the introduction of a mandatory Pay to Stay scheme, considered the potential impacts of these proposals for Westminster and set out the Council’s response so far.

8.2       Barbara Brownlee, Director of Housing & Regeneration, introduced the report and explained that the paper had been submitted to the committee meeting following the cancellation of the first Housing Task Group meeting. The Task Group had been established to scrutinise the implications for the Council of the Housing and Planning and Welfare Reform and Work Bills.  She informed the committee that the next two meetings of the Task Group would consider supply (Right to Buy, Starter Homes and High Value Voids) and welfare reforms respectively.

8.3       Carol Maduka, Finance Manager, introduced a PowerPoint presentation on the financial consequences of the 1% social rent reduction. Martyn Jones, Head of Asset Strategy & Regeneration, CityWest Homes, outlined the impacts to the housing capital programme and the related risks and implications.

8.4       The Committee considered the information and submitted questions to officers.

            Financial Consequences

8.5       Officers were asked in relation to service charges whether enough was being done to recoup and maximise costs.  Miss Maduka informed the committee that the Council’s policy was to recover costs only and not to apply additional charges to generate revenue.  She explained that a detailed analysis of expenditure on the Council’s housing stock was undertaken each year and that CityWest Homes set service charges for the following year to cover these.  Miss Brownlee informed the committee that the process for setting service charges was complex and she suggested that it would be useful for the Council and CityWest Homes to review the process to ensure that all costs were being properly recouped.

8.6       Concern was expressed about the rent assumption in the Housing Revenue Account (HRA) Business Plan.  Officers were asked whether the Council had undertaken modelling based on a number of possible inflationary outcomes for comparison.  Miss Maduka advised that the 30 year business plan was developed in line with the Bank of England’s objective of a Consumer Price Index (CPI) of 2% plus 1% based on the Government’s previous Guarantee issued in 2014.

8.7       The Committee asked for details about the internal loan protocol between CityWest Homes and the Council including future projections.  Miss Brownlee agreed to provide the committee with a note on this matter.

            Implications for the Housing Capital Programme

8.8       Miss Brownlee advised that the previously advertised programme would go ahead as planned.  Any re-profiling or reduction to the Capital Programme would take effect from the fourth year of the 30 year programme.

8.9       The Committee questioned whether the Council could make its regeneration and renewal projects less ambitious in order to reduce some of the possible implications arising from the 1% social rent reduction.  Miss Brownlee advised that while this was possible, it was not desirable as the renewal programme will generate capital receipts for the HRA  ...  view the full minutes text for item 8.