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Agenda Item No.

 

Matter which the Chairman has decided is urgent in order to progress those matters requiring consideration by Cabinet and Council in the current cycle

 

 

SCRUTINY COMMITTEE (CORPORATE RESOURCES)

 

Minutes of a meeting held on 8th February, 2013.

 

Present:  Councillor M.R. Wilson (Chairman); Councillor Mrs. P. Drake (Vice-Chairman); Councillors K.J. Geary, H.C. Hamilton, K. Hatton, H.J.W. James, P.G. King, R.A. Penrose and G.H. Roberts.

 

Also present: Councillors S.C. Egan and N. Moore.

 

 

825     APOLOGY FOR ABSENCE –

 

This was received from Councillor J.C. Bird.

 

           

826     MINUTES -

 

RECOMMENDED - T H A T the minutes of the meeting held on 8th January, 2013 be approved as a correct record.

 

 

827     DECLARATIONS OF INTEREST -

 

No declarations were received.

 

 

828     LOCAL FLOOD RISK MANAGEMENT STRATEGY (REF. – MINUTE NO. C1976) –

 

Cabinet had, on 14th January, 2013 been updated on the recent developments and future activities regarding the implementation in Wales of the Flood and Water Management Act 2010 and the Flood Risk Regulations 2009.  Cabinet had, inter alia, accepted Council’s responsibility to produce a Local Flood Risk Management Strategy (LFRMS) and referred the report to this and the Scrutiny Committee (Economy and Environment) as part of the consultation process.  The Director of Visible Services and Housing indicated that the Strategy had been referred to this Committee for consideration given the financial implications for the Council of implementing the requirements of the Flood and Water Management Act.  The Welsh Government had provided initial funding of £90k. in 2011/12 and a further £90k. in 2012/13.  Since only £30,182 had been spent in 2011/12, the balance had been carried forward and there was, consequently, £149,818 to spend in 2012/13.  The Director confirmed that the monies would be spent in the current financial year. 

 

He continued by stating that the financial implications for the Council were significant.  An additional officer to the one already engaged would be required and Members noted that the Council already had c. £2m. for expenditure in relation to the Coldbrook catchment and Llanmaes areas.  The WG had made it clear that the cost of mitigation measures could not be met by currently available funding and that there was an expectation that local authorities would have to afford additional expenditure in future budget setting.  National and European funding could be available and the Council would be in a position to bid for grant funding once the Strategy had been approved by Cabinet and endorsed by the WG.

 

RECOMMENDED – T H A T the Director be thanked for the information presented and the position noted.

 

Reason for recommendation

 

To have regard to the information received.

 

 

829     UPDATE ON THE BUDGET REVIEW – CAPITAL PROGRAMME 2013/14 – 2017/18 (MD) –

 

Members were updated on the progress of the Budget Review of the Capital Programme for the years 2013/14 to 2017/18 by the Managing Director.  The results of the Budget Review would inform the final Capital Programme proposals 2013/14 which would be considered by Cabinet on 25th February 2013 and Council on 6th March 2013.

 

The Managing Director explained that one of the main tenents of the Budget Review was to put in place a financial strategy for the Council to 2017 (and not for the first year only and indicative thereafter as previously).  In doing so, assumptions had necessarily been as to the level of General Capital funding (GCF) that would be received in future years from the Welsh Government (WG).  This Capital Programme was predicated consequently on a 10% cut in GCF year-on-year from 2015/16.  As part of the Budget Review a major consideration was how the Council could look to:

  • mitigate the deteriorating situation insofar as it was able by reappraising all schemes and looking to progress only those which were deemed to be key corporate priorities whilst also seeking to gain assurance that such schemes were delivered on time and within budget
  • develop a strategy to maximise the availability of resources to address those priorities.

As regards the prioritisation of schemes, details were contained within paragraphs 7 to 12 of the report, in essence the bids had been initially prioritised by the Corporate Asset Management Group of officers in the normal manner and consequently further reviewed by the Budget Working Group (BWG) in terms of their corporate priority and the risk they posed to the Council if they were not pursued.  Regard had also been given to the priorities as set out in the Draft Corporate Plan 2013/17 as well as the results of the consultation process undertaken on the Draft Plan and Council’s Initial Budget proposals.  Details pertaining to the resources available were contained within paragraphs 13 to 21 of the report.  The WG had announced the final 2013/14 GCF settlement in December 2011 which had shown a 10.7% reduction in funding from 2012/13.  As indicated above, further cuts of 10% in 2015/16 and each year thereafter had been assumed.  Members noted that another means of financing capital expenditure was through capital receipts resulting from the sale of assets.  As at 31st March 2013 the forecast balance of useable General Fund capital receipts was £1.101m. with a further £1056m. estimated  to be generated between 2013/14 and 2017/18.  Capital expenditure could also be funded by revenue contributions or the utilisation of existing resources.  Other means of generating income to fund capital projects was through money forthcoming under Section 106 planning obligations and the new Community Infrastructure Levy.  Outside of the above, the Council was heavily dependent upon specific grant funding to supplement its own resources if certain capital schemes were to be progressed.  When considering options for capital financing, the ability of the Council to finance the repayment of any loans raised for the funding of capital schemes must be considered.  In that respect, local authorities were required to have regard to the Prudential Code and, in setting the Capital Programme, the Council was required to ensure that the key objectives of the Prudential Code were complied with, namely that its capital investment plans were affordable, that all external borrowing and other long term liabilities are within a prudent and sustainable level and that a consequent treasury management decision for Prudential Borrowing were taken with good professional practice.  Members noted that total Prudential Borrowing over the next five years was estimated at £40.98m. of which £31.1m. related to the Housing Improvement Programme. 

 

As regarding matching priorities with resources, full details were contained within paragraphs 22 to 39 of the report.  Funding was available to meet those schemes assessed as either corporate priority 1 or above or medium risk or higher.  Details of those schemes were shown at Appendix A to the report.  Those schemes which were of a lower corporate priority and lower than medium in terms of risk were shown at Appendix B.  Members’ attention was drawn to the fact that, given the restricted resources available for capital schemes, funding was available only for those schemes assessed as either Corporate Priority 1 or above or medium risk or higher.  Details of those schemes were appended to the report.  The schemes in that appendix included a significant number of projects listed as:

  • School Investment Programme
  • Housing Improvement Programme and
  • Other Schemes.

The Managing Director stressed that it was of fundamental importance that the best use was made of the Council’s resources in order to meet its aspirations and priorities for the Capital Programme and mitigate the risks associated with it.  She drew attention to the fact that there still remained a number of issues, both burgeoning and extant, to which further consideration must be given that could affect the life of the next Capital Programme and or beyond.  Those issues included:

  • the increase in risk proposed by schemes which had currently been assessed medium low but were likely to increase in future years if not addressed
  • the appearance of new high priority schemes not anticipated when drawing up the Capital Programme
  • the possibility of increased demands upon flooding, coastal protection and the environment generally
  • the general shortfall of funding available to address the Council’s asset renewal requirements both in respect of public buildings and highways
  • the Council’s ambitions for regeneration and how they can be realised
  • the continued expansion over time of the School Investment Programme
  • funding of renewal areas
  • the need to increase capital receipts (particularly those associated with the School Investment Programme)
  • the establishment of collaborative partnerships associated with other public bodies and the independent / third sector as potential levers / sources of funding.

Whilst Members applauded the changes to the way schemes had been prioritised, the Managing Director agreed to look into utilising a more sophisticated method of prioritisation in future years.  The matter of the priority 2 afforded to “invest to save” was also raised, given the condition of, for example, so many of the Council’s buildings.  The Managing Director clarified the position by stating that “invest to save” had been used where there was either grant available or where there would be payback.  She also confirmed that there was a rolling programme of surveys in relation to the Council’s assets.

 

The inclusion of the ashpath footpath improvements scheme in Appendix A was welcomed by a local Member who expressed disappointed that the scheme relating to the Cross Common Road bridge was contained within Appendix B.  The local Member indicated that the route was well used, accommodated a regular bus service and that local residents felt there was a flooding problem in the area.  He asked that the scheme be reprioritised.  At this juncture, the Head of Development Services was invited to comment.  He stated that funding was difficult to come by and that Sewta funding was generally allocated to bids for highway improvements rather a scheme of this nature; he went on to say, however, that there was a possibility that, with the Community Infrastructure Levy, the scheme could be picked up in the Infrastructure Plan in the future. 

 

In response to a question as to when report would be made to this Committee in relation to the Vehicle Replacement Programme (contained within Appendix A of the report), the Chairman confirmed that would be submitted to the next meeting.

 

RECOMMENDED – T H A T the position be noted.

 

Reason for recommendation

 

To have regard to the information submitted and to inform Cabinet.

 

 

830     UPDATE ON THE BUDGET REVIEW – REVENUE 2013/14 – 2016/17(MD) –

 

Members were updated on the progress of the Review of the Revenue Budget for 2013/14 to 2016/17 by the Managing Director.  The purpose of the Review was to ensure:

  • a sustainable budget was achieved within predicted funding levels
  • the budget was aligned to the Council’s priorities as set out in the Corporate Plan
  • best value for money was obtained.

The 2013/14 Review was supported by Cost Centre Analyses (CCAs) and each cost centre had been awarded a rating that measured its relative risk (based on the Council’s risk management strategy) and corporate priority as illustrated in paragraph 7 of the report.  Members noted that the Budget Working Group (BWG) had reaffirmed the results of the relative risk and corporate priority assessment as originally reported in November 2012.  Additionally, the BWG would be considering high-level information on the comparative spending levels of individual services across Wales.

 

Details pertaining to the Final Settlement 2013/14 were contained within paragraphs 9 to 12 of the report, as summarised below.  The final Revenue Support Grant (RSG) had been announced as £125,547m.  Together with its share of the Non Domestic Rates Pool of £38.833m., the total of £164.380m. constituted the Council’s Aggregate External Finance (AEF) for 2013/14.  The Council’s final Standard Spending assessment (SSA) for 2013/14 was £219.212m.  The Council would also receive a sum provisionally set at £1.246m. through the Outcome Agreement Grant (OAG) for 2013/14.  A number of former specific grants were transferred into the RSG settlement for 2013/14 totalling £3.348 as shown in paragraph 11.  A new responsibility transferred to the Council in the final settlement was Council Tax Support of £7.97m.; the Welsh Government (WG) had subsequently allocated a further £788k., bringing the total Council Tax Support for 2013/14 to £8.735m.

 

As regards specific grant funding, Members noted that the Council was heavily reliant upon the same. For 2013/14, WG specific grant stood at over £21.23m., details of which were appended to the report.  The BWG would also consider whether further grant could be levered in through partnerships and collaborations with other public bodies and the third sector.  One such area was that of the Regional Collaboration Fund.  £1.485m. had been set aside for Cardiff and the Vale and bids for funding requested.  An outline of the bids submitted were shown in paragraph 17 of the report, details as to the partner organisations involved  and proposed collaboration projects being appended to the report.  The Managing Director indicated that there might be a further bid in relation to transport related issues.  Reference was also made to the use of reserves which would be a key consideration for the BWG when setting the future financial strategy.  The latest projections on reserves were appended to the report and outlined in paragraph 19.

 

Attention then turned to the cost pressures, it being noted that, at the time of the provisional settlement, the shortfall in the2013/14 budget was estimated at £8.426m. (assuming all cost pressures were met).  Future resource requirements were also assessed having regard to the likely revenue settlements and the cost pressure information provided at that time by services to 2016/17.  Whilst the initial projections showed a cumulative shortfall of some £25.981m. by 2016/17 (including the shortfall in 2013/14), Members were asked to treat that information with a degree of caution since it was considered that the eventual position might be better or worse than stated.  The projection assumed the level of increase in 2014/25 in AEF would be in line with the forward indication received from the WG but there had been no indication from the WG in respect of 2015/16 or 2016/17.  The biggest financial impact for the Council came in the form of cost pressures, details of which were provided as part of the initial revenue budget proposals for 2013/14.  Members noted that the BWG was reviewing the level of cost pressures and it was anticipated that the total would decrease and the Managing Director also indicated that, in order to move forward, the Council would need to manage demand in, for example, Social Services and given the impact of Welfare Reform.

 

Members accepted that whatever action was taken to mitigate cost pressures there would still be a requirement to find significant savings over the next four years and beyond.  Each Director had been asked to find savings at least equivalent to their pro rata share of the shortfall based on their controllable expenditure.  The target sums were set out in the table below, and were in addition to existing targets (including £2.544m. for Social Services as part of their Budget Plan) as follows:

 

 

Directorate

Original Target

Additional Target

 

2013/14£000

2014/15£000

2015/16 £000

2013/14£000

2014/15£000

2015/16£000

2016/17 £000

Total £000

Learning and Skills

244

257

0

1,141

642

890

844

4,018

Social Services

1,847

1,342

0

3,571

2,010

2,788

2,643

14,201

Social Services Budget Plan

303

817

1,424

0

0

0

0

2,544

Visible Services and Housing

595

266

0

1,166

656

912

863

4,458

Development

148

87

0

662

373

517

490

2,277

Resources

0

128

0

1,328

747

1,036

983

4,222

Corporate and Customer Services

38

53

0

269

151

209

198

918

Corporate Services

             0

           0

            0

        289

        163

        226

        214

         892

Total

3,175

 2,950

  1,424

 8,426

  4,742

  6,578

6,235

33,530

 

The resulting proposed areas for savings as identified by Directors to date were shown in Appendix D to the report and totalled £29.3m.  None of those proposed savings had been ratified for implementation by either Cabinet or the BWG and the BWG would be examining those propositions further whilst also considering alternative options prior to formulating its final recommendations as part of the 2013/14 Final Revenue Budget Proposals including the final strategy to 2017. 

 

As with the Capital Programme, the Managing Director stressed that it was of fundamental importance that the best use was made of the Council’s resources in order to meet its aspirations and priorities for the future.  She drew attention to the fact that there remained a number of issues, both burgeoning and extant, to which further consideration must be given. Those issues included:

  • the prospect of additional cost pressures arising between now and 2016/17
  • increased future demand for services
  • increased expectations of the Welsh and UK Government for local authority services
  • the restrictions which the reduced funding would have on future service development
  • the longer term impact of the economic recession
  • difficulties for services to continue to meet savings targets
  • the availability of additional sources of external funding compatible with Council objectives
  • the continued absorption of unfunded cost pressures within reducing service budgets
  • options for alternative forms of service delivery whilst maintaining acceptable service standards
  • the impact on future staffing levels across services.

Subsequent questions included matters pertaining to the number of former specific grants shown in paragraph 11 of the report which been transferred into the RSG settlement for 2013/14.  A query was raised as to whether consideration had been given to reviewing and reprioritising those grants now that they had been transferred into the RSG and also reviewing the necessity of the service which would attract grant funding given that there could be ongoing issues for the Council on the cessation of grant funding such as staffing, the Managing Director replied that it had.  

 

She confirmed that accommodation was being kept under review given the reducing staffing levels and the Trade Unions had been consulted on report.  A report on the issue of accommodation would be submitted to Cabinet at a later date.

 

RECOMMENDED – T H A T the position be noted.

 

Reason for recommendation

 

To have regard to the information submitted and to inform Cabinet.

 

 

831     CORPORATE PLAN (MD) –

 

The views of the Committee were sought on the revised draft Corporate Plan 2013-17 which had been amended in response to comments received through the recent consultation.  Consultation had been undertaken between

19th November and 28th December 2012.  Amendments had been made to the Plan in light of comments received and a copy of the feedback report was appended to the report.  Members noted that the majority of comments received focused on issues around health and wellbeing and employment and skills and a number of amendments had been made to reflect the comment received. 

 

Attention was drawn to the fact that the priorities in the draft Plan were consistent with the priority outcomes in the Community Strategy, which was an integrated partnership strategy.  The Plan was structured around eight priority outcomes which were carried forward into Service Plans to ensure consistency and focus.  The practice whereby all Scrutiny Committees received regular reports on progress in delivering Service Plans would continue.  The Head of Performance and Improvement stated that the whole process of the Corporate Plan had proceeded in tandem with the budget process to ensure that the objectives contained therein were affordable.

 

In response to subsequent questions, confirmation was given that the Plan made reference to the proposed sustainable development responsibilities Welsh Government was currently consulting on and that the draft Plan had been sent to all Town and Community Councils.  Given the low level of response from the same, a suggestion was made that, in the future, Town and Community Councils be asked to submit a nil return should they have no comments on the content of the Plan which would, at minimum, indicate receipt of the Plan and, at best, imply acquiescence with its content.  The Head of Service considered that the lack of responses would be better addressed when the Charter with Town and Community Councils was being reviewed shortly.

 

The Managing Director indicated that the Plan was under constant review based on the budget in order to ensure that its content was both achievable and affordable.  As regards the Council’s priorities and the role of partner organisations in delivering those priorities, the Head of Service indicated that the Corporate Plan was developed out of the Community Strategy which was drawn up by the Council and partners but that the Council had direct control and responsibility for the contents and delivery of the Corporate Plan.  A suggestion was made that the Plan should contain more in relation to, for example, job creation.  Following further consideration, the Chairman proposed that Cabinet be requested to consider including a reference to the promotion of Fair Trade by the Council within the section of the Plan entitled “Promoting Sustainability” and possibly elsewhere.

 

RECOMMENDED – T H A T the changes to the Plan be noted, that Cabinet be asked to consider including reference to the promotion of Fair Trade by the Council within the Plan and that it be noted that the Plan would be submitted to Council for consideration on 6th March, 2013.

 

Reason for recommendation

 

To have regard to the information submitted and to invite Cabinet to consider a further amendment to the Plan as indicated above.

 

 

832     END OF YEAR PERFORMANCE REPORT: NATIONAL STRATEGIC INDICATORS, PUBLIC ACCOUNTABILITY MEASURES, SERVICE IMPROVEMENT DATA (MD) –

 

Members were informed of the annual performance results in the areas of asset management, corporate financial health, energy efficiency and corporate human resources for the year ended 31st March, 2012.  Details pertaining to the Council’s performance against national indicators relating to the above matters were shown at Appendix 1 to the report and outlined in paragraph 3 of the report; Appendix 2 to the report contained, in tabular form, the individual performance of the 10 local authorities against the corporate resources indicators.

 

As regards 2 entries found under the heading of “top quartile performing indicators in Appendix 1, the Head of Performance and Development undertook to ascertain the difference between CHR/002 and CHR/001 given that the narrative to both was identical but that the figures differed.

 

In response to a comment that the staff and the Council were performing well in the current climate and that those efforts should be recognised, the Head of Service indicated that the Wales Audit Office was acknowledging that maintaining current performance in a time of straitened economic circumstances was in effect meeting the duty of continuous improvement.

 

RECOMMENDED – T H A T the performance results be noted.

 

Reason for recommendation

 

To have regard to the information submitted.

 

 

833     WELSH GOVERNMENT WHITE PAPER: A SUSTAINABLE WALES – BETTER CHOICES FOR A BETTER FUTURE (MD) –

 

The Head of Performance and Development, in presenting the above report, referred to the fact that the White Paper as appended to the report followed previous Welsh Government consultations on the topic.  The Welsh Government was proposing that a new duty would be introduced which would require specified public service organisations to embed sustainable development as their central organising principle.  Within the Implementation Plan (which was detailed on page 19 of the White Paper) it was proposed that in 2015 a number of all-Wales organisations became subject to the duty and a new Sustainable Development Body established, that from 2016 local authorities would be subject to the duty along with a number of public service providers and that from 2017 Town and Community Councils would also be subject to the duty. 

 

The Welsh Government was currently seeking responses to the five questions contained within paragraph 8 of the report and the Council’s proposed draft response was set out in Appendix B to the report.  Members were notified that the response was yet to be considered by Cabinet and that the deadline for submission of the same was 4th March 2013.  The Head of Service indicated that the Council was broadly supportive of the White Paper and was already going to considerable lengths to embed sustainability into its operations.  He also drew attention to the proposal that the body established to support organisations to embed sustainable development as their central organising principle was intended to act as a critical friend rather than a regulatory body.  A concern was, nevertheless, expressed that the new sustainable body could be both bureaucratic and regulatory, that the Auditor General could assume the role without the need for a new body to be established and that the new duty would result in making the Council less competitive than other organisations in what were already difficult times.

 

Following further discussion on the above and related matters, including the statement within the White Paper that sustainability was to be “the central core principle” rather that simply “a core organisational principle”, it was

 

RECOMMENDED – T H A T the above comments be referred to Cabinet for consideration.

 

Reason for recommendation

 

To inform Cabinet.

 

 

834     REVENUE MONITORING: 1ST APRIL TO 30TH NOVEMBER 2012 (MD) –

 

The projected outturn for the 2012/13 Revenue Budget was for an underspend of £105k.  As regards the Housing Revenue Account, the forecast was for a balanced budget.  Details were contained within the report of the financial position under the following headings as summarised below:

  • Directorate of Learning and Skills - overall the Education budget was projected to balance as at the end of March 2013
  • Schools – the delegated budget relating to schools was expected to balance
  • Libraries – the service was expected to outturn within budget
  • Catering – the service was expected to outturn on target
  • Social Services – the current forecast at year end was an underspend of £403k.
  • Directorate of Visible Services and Housing – the service was expected to outturn on target
  • Directorate of Development – whilst Public Protection and Public Sector Housing were anticipated to outturn on target, there was a favourable variance in respect of Planning and Transportation; that favourable variance would be used to offset part of the adverse variance in Leisure.  Economic Development was anticipated to outturn with an adverse variance of £36k.
  • Managing Director – an estimated underspend of £250k. from within the Policy budget would be used to offset the overspend in Leisure. All other services were currently expected to outturn on target.

Subsequent discussion focused on the volatility of the budget within Social services, particularly within Children and Young People’s Services, and ways of addressing the issue of over/underspends by using reserves or other accounting mechanisms.  The Head of Accountancy and Resource Management explained why that was not a viable long-term proposition and indicated that Social Services was addressing the issue through an approved savings programme and investigating alternative methods of service delivery.  The Chairman announced that the Director of Social Services would be in attendance at the next meeting.  Reference was also made to the projected overspend within Additional Learning Needs (ALN) of £242k. in the current financial year.

 

RECOMMENDED – T H A T the position with regard to the Council’s 2012/13 Revenue Budget be noted and a further report submitted to this Committee in April 2013 in relation to the position regarding the overspend on ALN.

 

Reason for recommendation

 

To have regard to the information submitted and to consider further the position in relation to ALN.

 

 

835     CAPITAL MONITORING: 1ST APRIL TO 30TH NOVEMBER 2012 (MD) –

 

Details of financial progress on the Capital Programme as at 30th November, 2012 were appended to the report.  Details were contained within the report under the following headings as summarised below:

  • Penarth Learning Community / St. Cyres Demountables – combine the 2 budgets
  • Day Care Reconfiguration, Hen Goleg – transfer of funds to complete the refurbishment works
  • Alexandra Gardens Community Centre Rebuild – project redesigned and a preferred contractor appointed; costs projected to be well within budget
  • Replacement of Mess Room at Court Road Depot – tenders issued for the rebuild element of the scheme.

Details in relation to the following schemes (having a value of over £500k.)  with a variance of 20% or more between actual spend to date and profiled spend were also contained within the report:

  • Coldbrook Flooding - a re-tender exercise to be undertaken delaying the progress of the scheme
  • Five Mile Lane Safety Improvements – scheme amended and costs reduced
  • Highway Resurfacing – contract ahead of the planned profile
  • Vehicle Replacement Programme – majority of vehicles anticipated by year- end
  • Leisure Centre Refurbishment – expenditure behind profile
  • Castleland Renewal Area - expenditure behind profile.

In response to a query as to the likelihood of Welsh Government agreeing to split grant aid over 2 years, the Head of Accountancy and Resources stated that efforts were made by officers from both the Council and the WG to mitigate potential problems.  When asked why the schemes in relation to Alexandra Gardens and Five Mile Lane had come in under budget, Members were notified that both schemes had been totally redesigned.

 

RECOMMENDED –

 

(1)       T H A T Members note that Scrutiny Committees had been requested to forward the following recommendations to Cabinet:

  • Penarth Learning Community - increase the 2013/14 budget to £4.923m (funded from a transfer of £97k. from the St. Cyres Demountable budget plus an additional £60k. revenue funding). Also, increase the 2015/16 budget by £3k. (funded from revenue contribution). 
  • Day Care Re-Configuration, Hen Goleg - include a budget of £37k. (funded from a transfer £37k. from the Disabled Access Improvements capital budget).
  • Alexandra Gardens Community Centre re-build - reduce the budget to £200k. (carry forward £227k. to 2013/14).  

(2)       T H A T Cabinet be recommended to seek Council approval to reduce the budget to £222k. (carry forward £30k. to 2013/14) for the replacement of the Mess Room at Court Road.

 

Reasons for recommendations

 

(1)       That Members are aware of the progress on the Capital Programme.

 

(2)       That Council approval is sought.

 

 

836     TREASURY MANAGEMENT (S151O) –

 

Members were updated by means of an interim report on the Council’s treasury management operations from 1st April to 31st December 2012 and asked to consider the proposed 2013/14 Treasury Management and Annual Investment Strategy.

 

In accordance with both the requirements of the Chartered Institute of Public Finance and Accountancy (CIPFA) and Welsh Government (WG) Guidance, a Treasury Management and Investment strategy for 2013/14 had been produced.  Members’ views were sought on the document which was attached to the report at Appendix 1 and summarised within the report under the following headings:

  • Proposed strategy – given the fragility of the market, no change proposed to the existing investment counter parties/credit rating limits
  • Interim report – all activities for the period in question had been taken in accordance with the Council’s approved strategy on Treasury Management.  Paragraphs 11 and 13 of the report respectively set out the monies borrowed/ repaid during the period and the investments made.  Reference was also made to external interest at an average rate of 5.619% (amounting to £4,521,571) accruing on the loans for the first 9 months of 2012/13; interest at an average rate of 0.25% and amounting to £242,195 had accrued from investments over the same period.

The Head of Accountancy and Resource Management, in response to questions, indicated the Council obtained 0.25% on its short term investments, that the rate offered in respect of longer term investments was not significantly better given the emphasis on security and liquidity and that using money out of reserves to repay loans was, whilst always a consideration, not necessarily in the Council’s interests.

 

RECOMMENDED –

 

(1)       T H A T the Treasury Management interim report for the period 1st April to 31st  December 2012 be endorsed.

 

(2)       T H A T it be noted that the proposed 2013/14 Treasury Management and Investment Strategy would be considered by Cabinet and thereafter referred to Council for approval including the following specific resolutions as set out in the Strategy Action Plan:

  • The Authorised Limit for External Debt be set at £167,000,000 for 2012/13, £174,000,000 for 2013/14, £191,000,000 for 2014/15 and £203,000,000 for 2015/16.
  • The Operational Boundary for External Debt be set at £151,000,000 for 2012/13, £156,000,000 for 2013/14, £173,000,000 for 2014/15 and £184,000,000 for 2015/16.
  • The Section151 Officer be given delegated authority within the total Authorised Limit and Operational Boundary as estimated for individual years to effect movement between the separately agreed limits for borrowing and other long term liabilities.
  • An upper limit is set on its fixed interest rate exposures for 2012/13 of £140,000,000, for 2013/14 of £147,000,000, for 2014/15 of £163,000,000 and for 2015/16 of £174,000,000 of its net outstanding principal sum on its borrowings / investments.
  • An upper limit is set on its variable interest rate exposures as an absolute value for 2012/13 of +/-£144,000,000, for 2013/14 of +/- £154,000,000, for 2014/15 of +/- £151,000,000 and for 2015/16 of +/- £149,000,000 of its net outstanding principal sums on its borrowings / investments.
  • An upper limit of £30,000,000 is set for total principal sums invested for over 364 days for 2012/13, 2013/14, 2014/15 and 2015/16.
  • The amount of projected borrowing that is fixed rate maturing in each period as a percentage of total projected borrowing that is fixed rate for 2013/14 be set as below:

 

 

Upper Limit

Lower Limit

Under 12 months

20%

0%

12 months and within 24 months

20%

0%

24 months and within 5 years

30%

0%

  5 years and within 10 years

30%

0%

10 years and above

100%

0%

 

  • The Prudential Indicators set out in paragraph 4.1 and 4.2 in this Strategy be approved.

Reason for recommendations

 

(1&2)  To gain the input of the Committee on the Treasury Management Interim Report and the proposed Treasury Management and Annual Investment Strategy.

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