Agenda and minutes

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

1.1       It was noted that Councillor Paul Dimoldenberg had replaced Councillor     Adam Hug.

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       Councillor Holloway declared that he is a board member of CityWest Homes.

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 7^th November 2016 be signed by the Chairman as a correct record of proceedings.

4.1       RESOLVED:

1.    That the agenda items for the next meeting on the 6^th March be agreed.  The item on Estate Regeneration Programme Review would include information regarding the provision, circumstances and mechanism for out of borough social housing placements.

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

4.2       ACTIONS: Provide members with the results of the “Your Voice” Staff Survey and the action plan produced to address issues of concern raised (Tara Murphy, Scrutiny Officer)

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

The Cabinet Member for Housing, Regeneration, Business & Economic Development 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     The Cabinet Member for Housing, Regeneration, Business & Economic Development responded to questions on the following issues:

          Regeneration

5.2.1   Church Street - The Committee noted that discussions are taking place with the Metropolitan Police regarding their taking a long term void shop on Church Street as a base for their neighbourhood teams serving Westminster.  This will replace the facility at Paddington Green until new facilities are provided as part of that development.  The Cabinet Member was asked about the development at Paddington Green.  He explained that the Church Street discussion related to a local neighbourhood initiative and was different to the policing operations that were provided at Paddington Green.  The latter was an issue for the Metropolitan Police and the Mayor’s Office for Policing and Crime (MOPAC).

5.2.2   Ebury Bridge & Tollgate Gardens -The Committee asked why the Council was still developing options for delivery of the Ebury Bridge Project when a vote by residents had taken place in 2013 and a planning decision obtained in 2014.  The Cabinet Member explained that property markets rise and fall while the Council’s social housing lists change and increase.  He stated that there was a need to reconsider how best to balance the community’s needs whilst also maximising the use of the land to ensure that the Council delivers the best regeneration possible.  He stated the Council will continue to look at the available options and will then revert to residents for their views.

          In response to a supplementary question, the Cabinet Member stated that he shared member’s frustration that regeneration has taken longer than expected.  However, much had been accomplished.  This included a nursery being built at Orchardson Street, Affinity Sutton taking possession of the Tollgate Gardens site, community space being provided in Church Street and ongoing consultation with residents on the Green Spine.  While the regeneration of Ebury Bridge, Tollgate Gardens and Church Street were moving forward these were complex projects with many different elements.  Unfortunately, some partner developers had withdrawn from projects which was out of the Council’s control.

5.2.3   Lessons Learned – The Cabinet Member was asked what, on reflection, he would do differently in relation to housing regeneration.  He advised that he would not tie the regeneration schemes to a resident vote on the basis that the Council is bound by the outcomes.  This prevents the Council from amending schemes where required or to take alternative decisions for wider benefits.

5.2.4   Housing Zone - Members asked for clarification on the funds allocated to Westminster under the Housing Investment Programmes provided by the GLA.  Barbara Brownlee, Director of Housing & Regeneration, advised that the Council would not be losing any funding following the review by the Mayor of London of all commitments made under the Housing Investment Programme.  The first funding agreement, which related to Lisson Arches, will be  ...  view the full minutes text for item 5.

Report of the Director of Property, Investment and Estates

6.1     The committee received a report that outlined the events which led to the council’s decision to withdraw from proceeding with the development of the new Marylebone library at Luxborough Street. 

6.2     The report responded to questions raised following a request by a member to scrutinise the issue.  These included the purpose of the project, details of the abortive costs involved, which costs are judged to be applicable to a future scheme on the site and why the project was aborted and the lessons learned.

6.3     The Committee considered the report and raised a number of questions: (i) how confident the Committee could be that the expenditure to date that would not be written off to revenue and could be re-used was accurate; (ii) what responsibility has been taken for the identified failures around the project; (iii) why Mace, who were awarded the contract to deliver the project, were able to participate in a second procurement after withdrawing their initial tender.

6.4     Guy Slocombe, Director of Property, Investments and Estates, advised that the estimated £832,000 of expenditure that would not be written off to revenue and could be re-used had been verified by the Council’s Finance team.  In response to a question whether any officers had lost their jobs following the withdrawal of the development, Guy Slocombe responded that it was the contractor that caused the scheme to fail but that the Director that led the scheme and the two Procurement officers working on it were no longer with the Council.  Mace were able to participate in the second procurement as it was determined, following the first procurement, that none of the bidders could have delivered the project based on the terms. This was because shifts in the market made the contract unprofitable by the time matters were ready to progress.  It was determined that Mace should be able to tender under the second procurement as it was not their fault that they couldn’t deliver on their original bid.  Following their withdrawal of their second tender and on the grounds that they did not evidence and sufficiently justify why they could not proceed, the Council took the decision that Mace would no longer be able to bid for any Westminster construction contracts.

6.5     The Committee noted the lessons learned which were set out in the report.  The Committee asked whether there were any further changes in procurement processes.  Mr Slocombe advised that a more rigorous and robust approach has been developed by the Procurement team.  A dynamic procurement system has been developed which provides greater flexibility to determine which developers are suitable to bid for particular contracts.  The procurement system has also been expanded to enable and encourage a broader range of suppliers to tender for projects such as this.

6.6     Mr Slocombe stated that while the Council could not predict the vagaries of the market, such as build cost inflation of 20-25% in this case, officers were confident that problems of this kind are less likely to be  ...  view the full minutes text for item 6.

Report of the City Treasurer

7.1     The Committee considered a mid-year review report on the Annual Treasury Strategy for 2016-17 in accordance with the Council’s Treasury Management practices. 

7.2     The Committee noted that there had been two breaches of compliance with the Treasury Management Strategy Statement – (i) two tranches of investments placed between May and July 2016 with the National Bank of Abu Dhabi (NBAD) and Qatar National Bank (QNB) totalling £59.8m and (ii) exceeding the counterparty limit on the Lloyds bank account since August 2016 because of overnight balances. 

7.3     Whilst the investments with NBAD and QNB met the Council’s required counterparty credit rating and are included on the list of approved counterparties issued by the Council’s treasury advisor, Capita, they were not included in the permitted country of domicile for banks.

7.4     The committee asked about the action that the Finance Service had taken to prevent re-occurrence of the breaches.  Pete Carpenter, Director of Treasury and Pensions, explained that since the matters had come to light Treasury management practices had been reviewed and improved.  Multiple signatories are now required for certain levels of investment to be placed while overnight limits with Lloyds will be managed by not reinvesting maturing funds with this bank.

7.5     The report included an update to the Annual Investment Strategy for 2016-17 that detailed ways in which the return from the Council’s short-term cash portfolio can be enhanced while maintaining security and liquidity.  The opportunities presented included; Green Energy Bonds, Building Societies, Local Government Association and Other Bonds.

7.6     Mr Carpenter was asked about the investment approach that the Council should consider in the current environment of low interest rates and returns.  He stated that the Council had close to £1 billion of potential cash investments made up of £400m held for NNDR Business Rates Appeals, £200m in general fund reserves and £200m of funding for affordable homes.  He explained that when considering how to invest the sums the Council would need to consider the grounds upon which it was holding the investment money, what it would ultimately be used for and when this would be needed.  It would also need to consider the Prudential indicators of risk, duration and return.  The Council had previously financially planned over the shorter term and it was considered that it should look at medium and long-term planning of around 10 to 15 years.

7.7     He advised that the London Borough of Newham had a strategy whereby they treated their cash balances in a similar manner to the cash investments in their pension fund.  The City Treasurer advised that subject to the Council approving proposals set out in the budget in March Westminster would use cash balances in the short term to invest in the Council’s capital programme rather than facilitate this through borrowing.

7.8     The Committee then discussed the new investment opportunities set out in the report.  Members asked about the level of risk involved in investing in Green Energy Bonds as there was a perception that solar and wind  ...  view the full minutes text for item 7.

Report of the City Treasurer

8.1       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.

8.2       The Committee considered the draft strategy and asked questions in relation to the proposed investment and borrowing strategies.  As interest rates are low, Members asked whether the Council shouldborrow now to finance future capital requirements before they rise.  The City Treasurer explained that there was a risk in borrowing before finance is required as if proposed developments do not come forward as planned the Council would be paying interest on a loan it did not need.

8.3       Officers were asked whether the Council compares its proposed investment and borrowing strategies with those of other local authorities.  Mr Carpenter advised that the Council was undertaking such an exercise which it would share at the task group that is to be established.  As an example he highlighted that the City of London manages the authority’s cash investments of around £400m via two investment fund managers.

8.4       RESOLVED: That the report be noted.