Agenda and minutes

Finance, Commercial Revenue and Contracts Policy & Accountability Committee
Tuesday, 16th January, 2018 7.00 pm

Venue: COMMITTEE ROOM 1 - HAMMERSMITH TOWN HALL. View directions

Contact: Charles Francis, Committee Coordinator  020 8753 2062

Items
No. Item

10.

Minutes of the previous meeting pdf icon PDF 226 KB

Minutes:

The minutes of the meeting held on 13 December 2017 were approved and signed by the Chair.

 

11.

Apologies for absence

Minutes:

There were no apologies for absence

 

12.

Declarations of interest

If a Councillor has a disclosable pecuniary interest in a particular item, whether or not it is entered in the Authority’s register of interests, or any other significant interest which they consider should be declared in the public interest, they should declare the existence and, unless it is a sensitive interest as defined in the Member Code of Conduct, the nature of the interest at the commencement of the consideration of that item or as soon as it becomes apparent.

 

At meetings where members of the public are allowed to be in attendance and speak, any Councillor with a disclosable pecuniary interest or other significant interest may also make representations, give evidence or answer questions about the matter.  The Councillor must then withdraw immediately from the meeting before the matter is discussed and any vote taken.

 

Where Members of the public are not allowed to be in attendance and speak, then the Councillor with a disclosable pecuniary interest should withdraw from the meeting whilst the matter is under consideration. Councillors who have declared other significant interests should also withdraw from the meeting if they consider their continued participation in the matter would not be reasonable in the circumstances and may give rise to a perception of a conflict of interest.

 

Councillors are not obliged to withdraw from the meeting where a dispensation to that effect has been obtained from the Audit, Pensions and Standards Committee.

Minutes:

There were no declarations of interest.

 

13.

Draft Treasury Management Strategy Statement 2018/19 pdf icon PDF 624 KB

This report presents a draft of the Council’s Treasury management Strategy 2018/19 for consultation with the Finance and Delivery Policy and Accountability Committee.

Minutes:

 

Phil Triggs, Director of Treasury and Pensions presented a draft report that set out the Council’s Treasury Management Strategy for 2018/19.

 

Details were provided on the changes from the previous year and the proposal for UK Local Authorities to be provided with increased individual loan limits of £20m to £30m. Overviews were also provided on a number of key areas including borrowing, capital spend plans and managing cash balances and investments.

 

Members discussed current investment types and enquired whether these might be moved or diversified. In response, officers confirmed that UK Local Authorities were very safe and details were provided about changing investments limits across Building Societies, Enhanced Money Funds, Collateralised deposits and Green Energy Bonds. It was noted that the investment strategy sought to minimise risk and avoid harm to the portfolio.

 

Councillor Michael Adam asked for further details to be provided about Green Energy Bonds as these were a new sector. In response, Councillor Max Schmid confirmed the proposed changes included being able to hold these for an increased duration of 5 to 10 years. It was noted that when these were examined at Pensions Committee, preliminary work suggested these would typically be held for 7 years.

 

Chris Littmoden asked which body advised the Authority about its investment strategy and in terms of collateralised deposits, what the rate of risk and return was? In response, Phil Triggs confirmed the Council used Link (recently changed from Capita) and details were provided on the basis point returns.

 

Members asked for further details on commercial property. In response, Phil Triggs explained that the Asset category was new and at this stage no due diligence had been conducted. As soon as this exercise had been done, he confirmed that Councillor Max Schmid and the Strategic Finance Director would have further discussions before any decision to invest was taken. Phil Triggs explained that presently, many other Local Authorities were investing in this category but confirmed that from LBHFs perspective, the area had not been fully investigated.

 

The Chair asked officers to conduct further research into the area of commercial property and to bring back a report to the Committee and Pensions Committee before this option was considered at Cabinet?

 

Action: Phil Triggs

 

Councillor Lucy Ivimy asked about the HRA position, in view of it coming close to its borrowing limit and what the headroom was? Councillor Schmid explained this would be addressed in a later agenda item.

 

In relation to the current capital programme, the Chair asked why the Town Hall refurbishment development had not been included and what the risks were? In response, Councillor Max Schmid confirmed that an aspect of the new (Town Hall) scheme was how much revenue it might generate and confirmed the Council had been underspending for the last 6 to 7 years on a major refurbushment. As a result, it was anticipated that £7 to £8 million would be progressed through Capital Financing Requirement (CFR) and this would be discussed later in the meeting under the Capital  ...  view the full minutes text for item 13.

14.

S106 Update Report pdf icon PDF 225 KB

This report sets out how S106 funds are monitored and tracked – and how decisions are taken regarding spending S106 funds.

Minutes:

The Chair introduced the report which provided details of how s106 monies were monitored, decisions taken and what the current financial position was.

He explained that he had made a specific request in November 2017 for information to be provided on the amount of s106 monies which had been spent and what the current balance was; neither of which had been included in the report. As a result, the Chair reiterated his original request and asked for a further report to be prepared for consideration at the next meeting.

Tony Boys remarked the report provided a useful introduction but lacked detail and also the figures for expenditure over the past 7 years which had been requested. Officers apologised for the lack of information and explained that they had needed to address a number of conflicting priorities which had meant the information could not be readily supplied in the timescale requested. In response, the Chair explained that it would have been preferable if officers had explained the information could not be provided from the outset.

Tony Boys asked for details to be provided on how much of the overall s106 monies were allocated to projects, what the residual balance was and where this was held. In response, Ellen Whitchurch explained that current details of s106 projects were published on the Council’s website. Some of the s106 Agreements dated to the previous 7 years, however, due to the complex mechanics of how s106 Agreements operated, there was likely to be degree of time lag which affected how figures could be presented. Ellen Whitchurch explained that officers held a 9-page schedule which provided details on how and what s106 monies could be spent on. Examples of which included cctv, affordable housing, public realm projects and highways / infrastructure needs. Officers explained that copies of this 9-page document could be provided to Committee.

Action: Ellen Whitchurch to provide details on the types of s106 projects.

The Chair reiterated the request made by Tony Boys and asked for a one-page list to be provided on the types of projects. Councillor Vivienne Lukey welcomed that information would be provided and also requested that an additional list was provided showing how s106 monies had been spent across all wards in the Borough. In response, Ellen Whitchurch explained that this would be difficult to provide, as some s106 contributions were boroughwide, whilst others were ward specific. It was noted that until a formal cabinet decision was taken, it was not easy for officers to adjudge where every contribution could be spent as expenditure could not be predetermined.

Councillor Guy Vincent raised the Thames Tideway development as an example and asked if a residents group felt s106 monies should be spent on a specific project, whether it was legitimate for these suggestions to be aired. Ellen Whitchurch confirmed that the test which needed to be applied for the allocation of s106 monies, was that the expenditure had to be related to the development and be consummate to the scheme.  ...  view the full minutes text for item 14.

15.

2018 Medium Term Financial Strategy (MTFS) pdf icon PDF 349 KB

This report sets out the budget proposals for the services covered by this committee. An update is also provided on any changes in fees and charges.

Additional documents:

Minutes:

Hitesh Jolapara, Strategic Finance Director, introduced the report that set out the budget proposals for corporate services. Slides were presented that gave context for the scale of the challenge facing local government in recent years. It was noted that H&F’s general government grant had been reduced each year since 2010/11 and the total reduction since April 2010 to March 2018 was £70 million. He explained that in addition, there would be a further reduction in 2018/19 of £8.6 million and a further cut of £5.2 million was forecast by 2021/22. He noted that the 2018/19 budget assumed a continued freeze in council tax and no increase in fees and charges in Children’s Services, Adult Social Care, and Housing Services.

 

Members noted paragraph 3.3 of the report and asked for clarification as to whether it was correct that the Government was recommending Councils raise council tax by 6 percent. In response, Hitesh Jolapara explained Central Government grant assumptions were based on H&F raising council tax and the precept by a combined 6% per year to 2019/20, though ultimately it was the choice of individual local authorities. Councillor Max Schmid confirmed the expectation was that Local Authorities should be increasing council tax whereas the budget proposed to freeze council tax for the year.

 

Members asked for further details to be provided on business rates. Hitesh Jolapara explained that business rates were modelled to increase with inflation with allowance made for an extra £2.2m from the opening of the Westfield extension in March 2018. The Committee noted that London Local Government was working to take forward a 100% business rates retention pilot for London from April 2018. The concept of such an arrangement was that London would retain 100% of any growth in business rates, though business rates valuations and levels would still be set by Government. Early indicative modelling had suggested this might benefit Hammersmith and Fulham by £2.6m. In addition, £110m would be generated for a London wide investment pot.

 

Councillor Guy Vincent asked what would happen to the £2.2 million from Westfield. In response officers explained that this had been allowed for within the initial modelling for the business rates pilot.

 

Discussing the governments perspective on incentivized growth, Chris Littmoden asked about pay-out and whether this was a set ratio or a judgement. Andrew Lord, Head of Strategic Planning, commented that this was calculated on a fixed ratio through London Councils by a complex algorithm.

 

Members noted that the council faced a continued financial challenge due to the overall Government funding cuts, unfunded burdens, inflation, and growth pressures. Members asked about the budget gap before savingsOfficers explained that the gross budget gap before savings in 18/19 was £14.6m and increased cumulatively to £55.1m in 21/22. 

 

Members discussed the various risks posed to the Council as set out in Appendix 2 of the report. Commenting on the prevailing levels of uncertainty, Steve Miley, Director of Children’s Services drew the Committee’s attention to Care for Care  ...  view the full minutes text for item 15.

16.

Four Year Capital Programme 2018/19 pdf icon PDF 458 KB

This report presents a draft of the Council’s four-year Capital Programme for the period 2018-22 for consultation with the Finance and Delivery Policy and Accountability Committee.

Minutes:

 

Emily Hill, Head of Corporate Finance, presented the Council’s proposed four-year Capital Programme for the period 2018-22. The programme was scheduled to be approved by Council in February.

 

Officers informed members that the forecast set out in table 1 of the report for specific and external resources was based on known allocations at December 2017. However, the forecasts for both external and internal financing would be updated over the coming months in accordance with relevant government and other public and private spending announcements.

 

Members noted that the Department for Education had not made their funding allocations known beyond this financial year but they would be fed in to the programme as soon as they were available.

 

Officers provided an overview of the major projects going forwards which were detailed in section 8 of the report, including the Town Hall refurbishment Programme. Members noted that as proposals for this firmed up they would be further fed into the Capital Programme.

 

Councillor Michael Adam asked for further details to be provided on the Housing Development Programme. In response Kathleen Corbett, HCH Director of Finance and Resources, provided an explanation of the phasing and funding implications as detailed in section 8.4 of the report and comments were provided on expenditure outside the cap?

 

Chris Littmoden asked officers what the financial model was for the delivery of affordable homes. Officers were asked if a model could be provided for H&F delivery of affordable homes over the next 5 to 10 years. In response, Officers confirmed that it would be possible to construct a 30 or 50 year model which would be based on discounted cash flows and for officers to meet with PAC members to discuss how the model worked.

 

Action: Kathleen Corbett

 

Councillor Lucy Ivimy asked about the invest to save initiatives operated. In response, Emily Hill provided an overview of the flexible use of capital receipts as detailed in Appendix 5 and drew the Committee’s attention to the type of projects which had been identified on page 140 of the report. Officers were asked if these projects were one off expenditure to which officers explained that capital funding was used to deliver ongoing reserves through saving.

 

Councillor Michael Adam asked how may new homes the decent neighbourhoods Scheme would deliver? Officers confirmed that they were unsure of a precise figure and information would need to be provided outside the meeting.

 

Action: Kathleen Corbett

 

RESOLVED

To note that recommendations 2.2 to 2.7 would be put before Budget Council in February 2018.

 

17.

Corporate Revenue Monitor (Month 6) - For information pdf icon PDF 732 KB

This report details the revenue expenditure position for the Council and its departments.

 

Minutes:

Hitesh Jolapara (Strategic Finance Director) introduced the report which provided details of the revenue expenditure position for the Council and its departments. It was noted that The General Fund 2017/18 forecast outturn variance for month 6 was a gross overspend of £4.669m an improvement of £0.218m since month 5.

 

The Committee learnt that the budget area forecasting the largest overspend was General Fund Housing. Factors included, rent inflation, an increase in the number of clients housed in both temporary accommodation and Bed and Breakfast, and competition with other local authorities bidding for properties were pushing up costs. He explained that the Council was also having to fund incentive payments to landlords to secure accommodation. £0.956m of planned savings had also not been realised.

 

Details were provided on the forecast overspend outturn variances reported by other departments and in overspend value order, these were:

 

1)    Children’s Services, primarily due to Commissioning, Education, and Family Services

2)    Adult Social Care, experiencing pressures within the Home Care and Direct Payments budgets

3)    Corporate Services due mainly to overspends on Building and Property management

4)    Environmental Services, due to Environmental Health salary budget pressures

5)    Libraries & Archives, due to non-delivery of planned savings

6)    Centrally Managed Budgets, due to low interest rates on cash balances.

Concluding the meeting, The Chair thanked the Strategic Finance Director and his respective team for the answers which had been provided throughout the meeting and commented he had been impressed with the responses the Committee had received.

 

RESOLVED

 

That the report be noted.

 

 

18.

Dates of Future Meetings

The next meeting is scheduled for Tuesday 20 March 2018.

Minutes:

The date of the next meeting is Tuesday 20 March 2018.