Agenda and draft minutes

To remind Members of the need to record the existence and nature of any personal, disclosable pecuniary or other registrable interests in items on the agenda, in accordance with the Members’ Code of Conduct.

There were no declarations of interest received.

Purpose: To consolidate the investments and borrowing strategy for the year ahead by detailing how and where the Council will invest and borrow in the forthcoming year, within a particular framework. This strategy is monitored throughout the year, with a mid-year report going to the Government and Ethics Committee as well as an annual report being presented to Members.

Councillor Iain Cottingham (Executive Portfolio Holder: Finance and Corporate Services) and Joseph Holmes (Executive Director – Resources) presented the Investment and Borrowing Strategy (Agenda Item 3).

The following points were raised in the debate:

·       Concerns were expressed about risks associated with commercial property investments in the current economic climate. The portfolio’s valuation as of March 2023 was £52.3M and delivered a net margin of just over £1M (1.7% return). Approval had been given to start divesting the portfolio, which would reduce risk exposure. There had been devaluation of the assets, but the government had confirmed that local authorities were no longer allowed to borrow through the Public Works Loan Board (PWLB) for this purpose. Sales would only be made at the right price, and it was emphasised that it was not a fire sale. The aim was to reduce risk for West Berkshire residents.

·       Members asked if Council funds were invested ethically. It was confirmed that most of the investments were through financial institutions or money market funds where there were no specific equity investments, but investigations were ongoing as to how these they could be rated. Meetings had been held with external parties who provided ethical investment ratings.

·       There was a question related to the current economic climate and why this presented an opportunity to review the investment portfolio. It was noted that since interest rates were higher than in recent years, the Council had an opportunity to sell and forego future capital financing needs and thus reduce costs.

·       It was confirmed that the Property Investment Strategy had not been revised, but the Board’s terms of reference had been updated to reflect the Scrutiny Commission’s recommendation to not have a hard end date for disposal of the commercial property portfolio.

·       Members asked about any anticipated change in the portfolio’s value since the last valuation. Officers were unwilling to speculate as to changes in individual valuations, however further significant decreases in valuations were not expected. It was emphasised that book value did not necessarily equate to the price realised upon disposal and until the Council tested the market, it was difficult to gauge interest in its assets. It was hoped that the assets would be attractive to potential buyers. While the assets currently enjoyed 100% rental income, this was not guaranteed for the future and any future reduction would put pressure on returns. It was also highlighted that a sinking fund would be required to pay for maintenance of the assets, estimated at £2M over 10 years.

·       A question was asked about how predictions about future interest rates by the International Monetary Fund and Bank of England were being taken into account. It was stressed that while there would be many unknown factors affecting the economy over the coming year, interest rates were expected to remain broadly stable in the short-term, then fall over the medium term.

·       It was noted that the Council was a long-term borrower and Members asked how the Council compared to other local authorities. Officers directed  ...  view the full minutes text for item 48.

Purpose:  To set out the financial planning assumptions for future years and how these align these with the Council Strategy to ensure that the Council Strategy will be delivered. The MTFS highlights the overarching key issues facing the Council’s finances as well as how there are many different scenarios and uncertainty concerning the future revenue streams for the Council in the future.

Councillor Iain Cottingham (Executive Portfolio Holder: Finance and Corporate Services) and Joseph Holmes (Executive Director – Resources) presented the Medium Term Financial Strategy (MTFS) (Agenda Item 4).

It was noted that the funding settlement had only just been received on the day before the meeting, which meant that the papers were already out of date.

The following points were raised in the debate:

·       It was highlighted that the local government settlement for 2024/25 would boost local authority budgets and Members asked how West Berkshire would be affected. Officers confirmed that the government had announced £600M for local authorities across the country. An increase of around £2M for West Berkshire had been assumed in the MTFS. This appeared to be fairly accurate, with the increase now expected to be around £1.9M.

·       Members queried the assumption in 3.4.2 that proposed care reforms would have no impact on funding in future years. It was explained that the government had previously proposed significant reforms to adult social care, capping contributions that individuals would have to make to their adult social care, but the reforms had been delayed and were not expected to be introduced for several years.

·       While it was noted that the main objective of the MTFS was to maintain the resilience of the Council budget, Members sought assurance that spend across the People and Place Directorates would be ring-fenced. It was explained that the Council was projected to have £4M of reserves by the end of the financial year, which equated to just 8 days of spend, leaving the Council vulnerable to unexpected events, so it was impossible to guarantee that additional savings would not be needed. It was highlighted that 10 high-needs social care clients were costing the Council £10M per year and any additional high-needs clients could quickly deplete remaining reserves. It was noted that speculative investors were making significant profits from the deregulated care market.

·       Members noted that business rates were a significant source of revenue, but the Council had no control over this and suggested that this was a risk. Officers indicated that of £100M of business rates collected, the Council retained around £30M. The Council did not have control over property valuations, nor the level of rates charged. There were also risks around appeals. A key risk was that West Berkshire was currently around £10M above the baseline set 10 years ago. Government had proposed to reset business rates, however, it was likely that there would be a transition period.

·       It was noted that the Council retained 100% rates income from renewable energy schemes and Members asked about the value of this income and if more schemes were being considered. It was confirmed that the Council benefited from all renewable schemes not just its own. The Council was proposing to build a solar farm, which would be a net financial benefit.

·       A question was asked about the new funding system to replace the New Homes Bonus, Services Grant and Funding Guarantee. It was assumed that where funding  ...  view the full minutes text for item 49.

Purpose: To outline the Capital Strategy covering financial years 2024/25 -2033/34 and the supporting funding framework, providing a high-level overview of how capital expenditure, capital financing and treasury management activity contribute to the provision of local public services along with an overview of how associated risk is managed and the implications for future financial sustainability.

Decisions made on capital and treasury management have financial consequences for the Council for many years into the future. Decisions are therefore subject to both a national regulatory framework and to local policy framework.

Councillor Iain Cottingham (Executive Portfolio Holder: Finance and Corporate Services) and Joseph Holmes (Executive Director – Resources) presented the Capital Strategy (Agenda Item 5).

The following points were raised in the debate:

·       Queries were raised in relation to Appendix C. It was confirmed that this set out the minimum revenue provision policy. This showed that the Council had historically set aside significant capital financing costs through the revenue budget for minimum revenue provision (MRP). Following an external review, the Council was looking to move in line with other local authorities’ MRP repayments. It was proposed to significantly reduce payments and move to a lower weighted average annuity basis. This delivered a saving in the short-term but created a higher pressure in the long-term. This was a technical accounting adjustment recommended by the external review. Repayments would be made at a future date when the value of the debt was much lower.

·       Members highlighted issues with readability due to the small font size used in tables.

·       Members welcomed the pie chart in section 4.2, which showed how spend was linked to the Council Strategy priorities, but it was suggested that this chart should include percentages.

Actions: Joseph Holmes to review the font size used in tables and to include percentages in the chart in 4.2.

·       Proposals for capital strategy investment in 5.3 were highlighted and Members queried why there was nil spend for CIL/S106. It was explained that there were restrictions around what this could be used for, so it was allocated to general fund items (e.g., Education, Highways, etc) rather than Capital Investment or Invest to Save.

·       Members queried comments about investments in the Vodafone Radio Access Network. It was confirmed that the Council was looking to work with Vodafone rather than invest in their network. Other local authorities had used technology to monitor adult social care users in their homes to help detect problems as they occurred, but connectivity was a challenge in rural areas. West Berkshire was exploring potential trials with Vodafone, which could help to transform the service and reduce unit costs in the longer-term.

·       It was noted that the report still referred to London Road Industrial Estate rather than Bond Riverside.

Action: Joseph Holmes to update LRIE references to Bond Riverside.

·       Members queried whether Bloomfield Hatch Solar Farm was mentioned in the report. This was listed under Renewable Energy Provision (Project No. 127).

·       A question was asked about the Council’s debt to capital investment ratio compared to those of other local authorities. Officers did not know.

·       It was noted that 6.7% of revenue was spent on debt finance and Members asked how that figure compared to other local authorities. It was confirmed that this information was available via Oflog. Only around 10 upper tier local authorities had a higher debt servicing cost to core spending ratio, including some that had substantial debt financing (e.g., Warrington). There would need to be a good business case for taking on further debt. Money could not be borrowed to  ...  view the full minutes text for item 50.

Purpose: To consider and recommend to Council the 2024-25 Revenue Budget.

Councillor Iain Cottingham (Executive Portfolio Holder: Finance and Corporate Services) and Joseph Holmes (Executive Director – Resources) presented the Revenue Budget (Agenda Item 6).

The following points were raised in the debate:

·       It was noted that the report quoted different figures for the Council’s tax base in the executive summary and introduction.

Action: Joseph Holmes to check the figures for the tax base.

·       Members asked about the state of the Collection Fund. Officers confirmed that the collection rate was holding up well but was slightly below pre-pandemic levels. Although the assumption about the number of new properties completed had been overly optimistic, it was expected that this would catch up in the following year. Business Rates had seen a £3M surplus in the previous year, but a £1M deficit this year. This was due to a number of factors, including revaluations.

·       Members commended the work that had gone into reviewing the budget.

·       It was highlighted that data was missing for parish expenses. Officers confirmed that figures would be added as soon as they were available.

·       Members noted proposed cost savings on grass / verge cutting and expressed concerns about the road safety implications of this, particularly in rural areas. It was also noted that previous proposals to make savings by reducing gully clearing had been dropped – this was welcomed by Members, since recent flooding events had highlighted the importance of this activity. It was explained that the public consultation had proposed around £1.5M of cost savings, but around £300,000 of these had been dropped in response to consultation feedback, including those related to gully clearance and waste / dog waste bins. Useful feedback had been received around location of dog waste bins.

·       Recent conversations related to recent flood events had highlighted that many landowners were not aware of their riparian responsibilities. It was suggested that this had implications for reducing Council costs for clearing ditches in future.

·       It was highlighted that the Council was looking at the ‘adopt a street’ initiative, which could help to reduce grass-cutting costs.

·       In relation to the ‘green bin charge’, Members noted that it was proposed to stop printing the stickers that showed which residents had taken out the subscription in order to achieve a saving. They asked how operatives would know who had paid their subscriptions. It was explained that the contractor had details of all subscribers. Members asked if the £3 reduction reflected the cost of the stickers. It was confirmed that the cost of the reduction was £100,000 and the saving from not printing the stickers was £43,000, so there was a net impact of £57,000.

·       It was suggested that the public may have ideas about where additional savings could be made. Officers agreed and indicated that discussions were ongoing with parish councils about where services could be devolved. Members highlighted some parish councils’ concerns about the Continental contract, where bins had gone unemptied. It was suggested that if services were to be devolved, then parish councils would need sufficient notice  ...  view the full minutes text for item 51.

Purpose: To report on the financial performance of the Council’s revenue budgets and provide a year-end forecast. This report is for Quarter Three of the 2023/24 financial year.

Councillor Iain Cottingham (Executive Portfolio Holder: Finance and Corporate Services) and Joseph Holmes (Executive Director – Resources) presented the Revenue Financial Performance Report for Quarter Three (Agenda Item 7).

The following points were raised in the debate:

·       Around 17% of current spend at unitary authorities was by councils that had issued a S114 report or had requested exceptional financial support - this highlighted the scale of financial pressures across the country.

·       Members welcomed the reduction in employment agency spend across the Council but questioned the spend in the Place and Resources Directorates. It was explained that spend was needed to cover gaps in specialist technical staff where the Council had been unsuccessful in recruiting to vacant posts. Where possible, posts were held vacant, or staff acted up to provide cover, but some agency staff would always be needed to cover key posts. 

·       A question was asked about vacancy rates and how these compared to other local authorities. Members were informed that information for West Berkshire Council was provided to the Personnel Committee.

Action: Joseph Holmes to liaise with Catalin Bogos regarding comparator data for staff vacancy rates.

·       Members of the Executive and Officers were thanked for their efforts to reduce the deficit and agency spend. It was suggested that the Transformation Programme would have a significant role to play in reducing costs. It was also suggested that the Scrutiny Commission should have a presentation on the Transformation Programme at a future meeting.

Action: Gordon Oliver to programme a report on the Transformation Programme in discussion with the Chairman and Gabrielle Mancini.

RESOLVED to note the report.