| Time: | 7.30pm | Place: | Committee Room 1, Council Offices, Gernon Road, Letchworth Garden City |
| PRESENT: | Councillor David Levett (Chairman), Councillor Michael Weeks (Vice- Chairman), Councillor Bill Davidson, Councillor S.K. Jarvis (substitute), Councillor David Kearns, Councillor Ian Mantle and Councillor M.R.M. Muir. |
| IN ATTENDANCE: | Norma Atlay - Strategic Director of Finance, Policy and Governance Andy Cavanagh - Head of Finance, Performance and Asset Management Tim Neill - Accountancy Manager Nigel Schofield - Committee and Member Services Officer Phil Westerman - Grant Thornton |
| ALSO PRESENT: | John Robinson - Strategic Director of Customer Services |
| Item | Description/Resolution | Status | Action | |
| PART I | ||||
| 50 |
APOLOGIES FOR ABSENCE An apology for absence had been received from Councillor Lawrence Oliver and in accordance with NHDC regulations Councillor S.K. Jarvis advised the Chairman that he would be a substitute for Councillor Lawrence Oliver. An apology for absence had been received from Richard Lawson of Grant Thornton. |
Noted | ||
| 51 |
MINUTES Minutes RESOLVED: That the Minutes of the Meeting of the Finance, Audit and Risk Committee held on 6 December 2012 be confirmed as a true record of the proceedings and be signed by the Chairman. |
Agreed | ||
| 52 |
NOTIFICATION OF OTHER BUSINESS There was no other item of business tabled. |
Noted | ||
| 53 |
CHAIRMAN'S ANNOUNCEMENTS The Chairman welcomed everyone to the meeting and reminded Members that, in line with the Code of Conduct, any Declarations of Interest should be declared immediately prior to the item in question. The Chairman also advised the Committee that the meeting of FAR scheduled for 11 February 2013 would not take place. The reports on Capital and Revenue Monitoring 3rd Quarter 2012-2013 would be included with the Cabinet papers for the meeting scheduled for 19 February 2013 and could be provided to Members on request to the Accountancy Manager. |
Noted | ||
| 54 |
PUBLIC PARTICIPATION There was no public participation. |
Noted | ||
| 55 |
CORPORATE BUSINESS PLANNING - BUDGET 2013 -2014 Report Appendix 1 Appendix 2 Appendix 3 Appendix 4 Appendix 5 Appendix 6 Appendix 7 The Accountancy Manager (AM) presented the report of the Strategic Director of Finance, Policy and Governance which was in its final format for presentation to Cabinet on 29 January 2013 and emanated from the Council's Medium Term Financial Strategy on 6 September 2012 (Minute 41 refers) to provide the financial background to the Corporate Business Planning Process for 2013-2014 and that a budget must be set by 31 March 2013. The Accountancy Manager reminded the Committee that Members had commented on the efficiency and investment proposals at Member Budget Workshops held in October 2012 and had commented on the Draft Budget Proposals in December 2012. The Accountancy Manager referred the Committee to the estimates for 2013-2014 (Appendices 1 to 7) and advised that a full budget book would be made available to Members and that high level summary general fund estimates were presented at Appendix 1. The Committee noted that a net district expenditure of £16.641M was forecast for 2013-2014 (£16.729M for 2012-2013). The Accountancy Manager proceeded to advise the Committee of the reasons behind each of the 12 recommendations listed at Section 2 of the report and specifically the proposed efficiency and investment proposals described at Paragraph 8.6. In response to a question the AM provided an update on the position with regards to Efficiency Proposals E5, E7, E8 and I1 which remained as ‘to be confirmed' in the report. These efficiencies were highlighted for Members as potentially forthcoming changes to the budget but figures could not be confirmed at the moment. The Accountancy Manager next reviewed the implications for the Council if no increase in Council Tax was made and the Council Tax Freeze Grant was taken and that from a long term financial planning aspect it would be advantageous to make a modest increase of 1 to 2 per cent to mitigate the impact of inflation. The Committee noted the details in Appendices 1, 2 and 3 and that an increase in Council Tax of one per cent would lose the Government grant but would provide income in the future and that an increase in the Council Tax of 1.9 per cent in 2013 - 2014 would be equivalent of £3.74 per annum on a Band D property and the Accountancy Manager referred the Committee to Table 10 which showed the effect of Council Tax rises on the amount of efficiencies to be made. The Chairman thanked the Accountancy Manager for the presentation of the report and the reasoning behind the efficiency and investment proposals and the Head of Finance, Performance and Asset Management commented that approximately a third of Local Authorities had indicated they would not take the Council Tax Freeze Grant. The Chairman invited questions and or comments from the Committee. The Committee applauded the amount of work undertaken by the Accountancy Manager and the Finance Department in preparing the proposed budget for 2013 - 2014. The Committee noted the 12 recommendations to Cabinet and noted the efficiency proposals at Table 8 supported by Appendices 4, 5 and 6 which indicated £26 K in efficiencies and £92K in income generation and £105K of investments. However, during the ensuing debate it was clear that the Committee remained very concerned about the possibility of the Council accepting the Government Council Tax Freeze Grant and the effect on future base budgets. The Committee agreed that Cabinet should be requested to consider again the impact on future base budgets if no increase in Council Tax was made. (FAR Committee - 6 December 2012 - Minute 46 refers). The Committee next reviewed the Efficiency and Investment Proposals as detailed at Appendices 4 and 5 and in particular Efficiency E1- Committee and Member Services which concerned the distribution of Committee Papers to Members, Officers, the Public and Outside Organisations. Following a short discussion the Committee agreed that perhaps more savings (than those proposed) could be made on the printing of Committee agenda and that it would be appropriate for Cabinet to request officers to make further analysis of the Committee Agenda printing and distribution. In response to a comment on the funding of the new waste collection service the Strategic Director of Finance, Policy and Governance (SDF) advised that the funding would be from the Capital Budget and not reserves. The SDF confirmed that a fifty per cent reserve was a prudent way forward and that this policy was in line with our neighbouring authorities. Comment was made as to the provision for bad debts and the AM advised that this was reported to Cabinet and also that Cabinet were advised by officers as to the status of Risks and that all risks are regularly reviewed as risks were not consistent from year to year. In response to a question concerning Royston Market the Strategic Director for Customer Services (SD) advised that there was a lot of information available but much was subject to the requirements of commercial sensitivity. The SD stated that there was progress and that Royston Town Council would meet soon to discuss their participation in the management of Royston Market. The SD also advised that the income from the reservations made for Mausoleum Service at Wilbury Hills Cemetery had been very welcome and this income would be maximised wherever possible. RESOLVED: (1)That the contents of the report be noted; (2)That the recommendations to Cabinet be noted; (3)That Cabinet be advised that the FAR Committee remained concerned about the effect on the 2013 - 2014 and future budgets of accepting the Council Tax Freeze Grant this year; (4)With reference to Efficiency E2 - Distribution of Committee Papers the Committee requested that Cabinet should authorise further investigation on the proposed efficiency to ascertain if more savings than those proposed could be made. RECOMMENDED TO CABINET: (1)That Cabinet be requested to consider again the views made at a previous meeting of the Finance, Audit and Risk Committee of the implications on the base budget of a Council Tax Freeze in 2013 - 2014; (2)That Cabinet be requested to approve further investigation of where more savings on the printing and distribution of Committee Agenda to Members, Officers, The Public and Outside Organisations could be made. REASON FOR DECISION: To note all the factors that were taken into consideration for the setting the Council Tax precept for 2013 - 2014 and reiterate the concerns of the Finance, Audit and Risk Committee should there be a Council Tax Freeze in 2013 -2014. |
Agreed | ||
| 56 |
TREASURY STRATEGY 2013-2014 Report Appendix A Appendix B Appendix C The Accountancy Manager (AM) presented the report of the Strategic Director of Finance, Policy and Governance which was in its final format for presentation to Cabinet on 29 January and included a proposed recommendation from Cabinet to Council that the 2013 - 2014 Treasury Statement for 2013 - 2014 as presented at Appendix C with the Treasury Limits for 2013-2014 be adopted before 31 March 2013. The AM referred the Committee to Appendices A, B and C for further detail. The Accountancy Manager reminded the Committee that the Treasury Strategy was prepared and influenced by three headings: Security, Liquidity and Yield. In particular yield from investments was a very important income stream for the general fund with a projected above average yield of £700K interest per annum under the current strategy. Also, that during the current economic turmoil within the money markets and collapse of banks and other financing institutions it was more important than ever to have sound treasury management. The Committee noted that it was becoming more difficult to achieve a reasonable return on cash investments as the Government scheme to lend money to counter parties for on loan to businesses was thought to have reduced the need to access Local Authority funds. The consequence of this was to investigate other options for cash investment in order to maintain the overall yield from investment. However, as market rates had not changed very much during the year it might be appropriate to use AAA rated money market counter parties funds - with a large spread of funds - even though the interest rates were much lower than some of the current investments. Consequently the AM advised that it was proposed to maintain a similar Treasury Management Strategy in 2013-2014 to the current strategy. The Accountancy Manager described to the Committee the four clauses that had to be considered under the Code of Practice on Treasury Management and which had to be passed in order to approve adoption of the Code as recommended by CIPFA. The Accountancy Manager clarified next the issues and problems that affected Credit Risk, Liquidity Risk, Market Risk and Borrowing. With regard to borrowing the Council would finance capital projects by drawing down from cash balances and the AM advised the Committee that due to a ten month receipt of Council Tax and Business Rates it might be necessary to borrow ‘cash' for a short period but any such borrowing would be within the limits of the strategy. The AM advised that the income yields to NHDC in the current year were better overall than neighbouring authorities. The Accountancy Manager concluded his presentation by reference to the ongoing Treasury Management Audit for 2012 - 2013 with confirmation that the 2011-2012 audit gave a substantial level of assurance. The Auditor had raised questions on Discount Houses; Agency ratings; Building Societies and Investment Houses and that answers and clarification had been given to the Auditor. The Chairman thanked the Accountancy Manager for the update on Treasury Management and invited comments and or questions from the Committee. A Member enquired if combining funds from several authorities might gain a better rate of interest with a large sum. The Strategic Director for Finance, Policy and Governance (SDF) replied that NHDC in fact had a better return on investment than Hertfordshire County Council and there would be more risk if several authorities combined investment sums. Another Member asked if loans to Housing Associations could be made and whether investments with Building Societies could be conditional on the Building Societies providing mortgages in North Hertfordshire. With regard to Housing Associations a higher interest rate might be possible for such loans. Also was it beneficial to place investments with banks on longer term arrangements than currently allowed by the Treasury Management Strategy. The SDF advised that such investments could reduce the returns to NHDC and it would be difficult to ascertain the location of properties on which mortgages. The SDF confirmed that NHDC were in the Local Government Mortgage Scheme in association with Lloyds Bank and Leeds Building Society. The Committee noted that the underlying principles were to prioritise investments according to security, liquidity and yield (in that order). Also it was noted that the security of funds was paramount and that longer term deals could impact liquidity. RESOLVED: (1) That the content of the Treasury Management Strategy 2013 - 2014 report be noted; (2) That recommendations to Cabinet be noted; REASON FOR DECISION: To note the main components of the Treasury Strategy proposed for 2013 - 2014. |
Noted | ||
| 57 |
CAPITAL BUDGET REPORT 2013 - 2014 Report Appendix A Appendix B Appendix C The Accountancy Manager (AM) presented the report of the Strategic Director of Finance, Policy and Governance which was in its final format for presentation to Cabinet on 29 January 2013. The AM advised the Committee that Cabinet would be asked to approve the investment proposals of £2.624M in 2013-2014 with reference to Appendix C together with the Capital Programme summary presented at Appendix A and the full programme at Appendix B. The AM advised that Investment Proposals C6 and C8 presented at Appendix C required some £90K of investment and that Cabinet would also be asked to confirm an ongoing commitment to the Tenant Cash Incentive Scheme, Housing Association Grant Scheme, Disability Facility Grant Scheme and Private Renovation Grant Scheme to the levels detailed at Paragraph 8.6 in this report. The AM advised that there could be changes to the proposed capital programmes as a result of future decisions on current projects. The AM confirmed that there was currently no allocation of funds for investment in office accommodation in 2013 - 2014. The Accountancy Manager took the Committee through the salient points of Capital Funding for 2013 - 2014 and onwards and Asset Disposals. With regard to the disposal of assets the AM advised the Committee that asset disposal was always affected by market conditions and that it was anticipated that there could be about £2.5M income from disposals in 2013 - 2014 and about £3.1M of similar income in 2014 - 2015. The Accountancy Manager concluded his synopsis of the Capital Budget Report with caution that the Council would need to review the affordability of the capital programme on a regular basis as this was linked to the asset disposal programme, availability of third party funds and impact on the general fund. The Committee noted that the Council operated a ten per cent tolerance limit on capital projects which could result in an extra £1.5M spend on capital projects over the next four year programme. The Chairman thanked the Accountancy Manager for the update on the Capital Budget for 2013-2014 and invited comments and or questions from the Committee. The Chairman enquired if the Capital sum for the Hitchin Swimming Centre Car Park Extension was required as he understood that there would be a re-configuration of the current car park as part of the development and whether the Capital sum for town centre pay and display machines for on street charging would be required. With regard to on street car parking ticket machines the AM advised that there would be a trial period. A Member expressed concern about the effect of the loss of lottery funding as many capital projects were joint funded with such grants and how the Council's objectives would be met if such joint funding was lost. The SDF advised that there were funds available to meet the Capital Programme including the use of set aside receipts and that there would be no more reliance on interest income now or in the future. Also that we would maintain the base level of 0.5 per cent interest income for estimating and that any income in excess of this would be placed in a capital receipt or invest to save receipt. RESOLVED: (1) That the information provided on the Capital budget for 2013 - 2014 be noted; (2) That the recommendations to Cabinet on the Capital Budget for 2013 - 2014 be noted. REASON FOR DECISION: To note the main components of the proposed Capital Budget for 2013 - 2014. |
Noted | ||
| 58 |
FEE LETTER 2012-2013 The Chairman advised the Committee that due to a breakdown in communications with the External Auditor this item had been included in this agenda when in fact the Fee Letter for 2012 - 2013 had been presented to the Committee at the meeting held on 6 December 2012 (Minute 41 refers). |
Noted | ||
| 59 |
GRANTS CERTIFICATION REPORT Introduction Report Mr Phil Westerman from Grant Thornton the external auditor thanked the Chairman for the opportunity to present the outcomes of the Certification Work in 2011 - 2012 with reference to grant claims for: Housing and Council Tax Benefit Scheme(HCTB); National Non-Domestic Rates Return (NNDR) and Disabled Facilities. Mr Westerman apologised for the non presentation of this report at the December meeting and advised that this was all due to timing and was not due to non completion of the audit. Mr Westerman advised the Committee that NHDC had submitted two claims for audit which had been presented to the correct government department by deadline. Mr Westerman stated that overall the Council had improved performance in submitting accurate claims and advised that the NNDR was not subject to amendment (as it had been in 2011-2012) and that details on certification of all claims and returns was detailed at Appendix B. The Committee noted that the HCTB claim was subject to amendment which resulted in a payment of £25,600 to the Council. Mr Westerman was pleased to advise the Committee that supporting working papers for the claims and returns were of a good standard that aided certification within the deadline and thanked the appropriate officers for their support. RESOLVED: That the Grant Certification Report for 2012-2013 be noted. REASON FOR DECISION: To ensure that the Committee were aware of the Grant Certification results for 2012 - 2013. |
Noted | ||
| 60 |
FUTURE MEETINGS - POSSIBLE AGENDA ITEMS Possible agenda items at future meetings were as follows: 1. NHDC Debtors - identification, processes and recovery; 2. A review of the proposed Internal Audit Programme for 2013- 2014 prior to implementation. 3. A review of the income from the New Homes Bonus and its expenditure. |
Agreed | ||