| Time: | 7.30pm | Place: | Committee Room 1, Council Offices, Gernon Road, Letchworth Garden City |
| PRESENT: | Councillor M.E. Weeks (Chairman), Councillor John Bishop, Councillor Simon Harwood, Councillor Lorna Kercher and Councillor Deepak Sangha. |
| IN ATTENDANCE: | Norma Atlay - Strategic Director of Finance, Policy and Governance Ian Fullstone - Head of Development and Building Control Fiona Timms - Performance and Risk Manager Antonio Ciampa - Accountancy Manager Dean Fury - Corporate Support Accountant Jodie Penfold - Group Accountant Ian Gourlay - Committee and Member Services Manager Margaret Mulkerrin - Audit Manager (Shared Internal Audit Services) Richard Lawson - Engagement Manager (Grant Thornton) Michael Miller - Three Rivers District Council (Consultant) |
| ALSO PRESENT: | At commencement of meeting 1 member of the public. |
| Meeting attachments |
Agenda Front Sheets Audio Recording of meeting |
| Item | Description/Resolution | Status | Action | |
| PART I | ||||
| 37 |
APOLOGIES FOR ABSENCE Apologies for absence had been received from Councillors John Booth (Vice-Chairman) and Jim McNally. |
Noted | ||
| 38 |
MINUTES Minutes RESOLVED: That the Minutes of the Meeting of the Finance, Audit and Risk Committee held on 24 September 2015 be confirmed as a true record of the proceedings and be signed by the Chairman. |
Agreed | ||
| 39 |
NOTIFICATION OF OTHER BUSINESS There was no other item of business tabled. |
Noted | ||
| 40 |
CHAIRMAN'S ANNOUNCEMENTS (1) The Chairman announced that Members of the public and the press may use their devices to film/photograph, or do a sound recording of the meeting, but he asked them to not use flash and to disable any beeps or other sound notifications that emitted from their devices. In addition, the Chairman had arranged for the sound at this particular meeting to be recorded; (2) The Chairman advised that, in line with the Code of Conduct, any Declarations of Interest should be declared immediately prior to the item in question. |
Noted | ||
| 41 |
PUBLIC PARTICIPATION There was no public participation. |
Noted | ||
| 42 |
ANNUAL AUDIT LETTER 2014/15 Cover Page Annual Audit Letter 2014/15 The Engagement Manager (Grant Thornton) presented the Annual Audit Letter for NHDC for 2014/15. The Engagement Manager (Grant Thornton) advised that, on 30 September 2015, NHDC had been issued with an unqualified opinion/conclusion on both its 2014/15 Financial Statements and Value for Money. The Committee noted that Grant Thornton's fees for the above services had amounted to £68,482. RESOLVED: That the Annual Audit Letter 2014/15 be noted. REASON FOR DECISION: To enable the Committee to consider the contents of the Annual Audit Letter 2014/15. |
Noted | ||
| 43 |
CERTIFICATION LETTER 2014/15 Cover Page Certification Letter The Engagement Manager (Grant Thornton) presented the Certification Letter for NHDC for 2014/15. The Engagement Manager (Grant Thornton) advised that Grant Thornton was required to certify certain claims and returns submitted by NHDC. He commented that Grant Thornton had certified one NHDC claim for the financial year 2014/15, relating to expenditure of £38.3million on the Housing Benefits subsidy claim. Two matters had arisen, but had been dealt with via manual processes after the claim had been submitted. The Engagement Manager (Grant Thornton) was pleased to report that, as in previous years, the NHDC draft Housing benefit claim and supporting papers were of a very high standard and no additional testing had needed to be performed on the claim. The claim therefore had no qualifications, reflecting the high standards operated by the NHDC Housing Benefits Team. The Engagement Manager (Grant Thornton) commented that this was a fantastic outcome, especially as the Housing Benefits world had become much more complex in recent years, with the number of Local Authorities receiving qualified claim assessments rising by 20-40% nationally. The Committee thanked the Engagement Manager (Grant Thornton) for his comments and further agreed that the Housing Benefits Section be thanked for their sterling efforts in ensuring that that the Certification Letter was an unqualified assessment by the External Auditor. RESOLVED: (1) That the Certification Letter 2014/15 be noted; and (2) That the Housing Benefits Section be thanked for their sterling efforts in ensuring that that the Certification Letter was an unqualified assessment by the External Auditor. REASON FOR DECISION: To enable the Committee to consider the contents of the Certification Letter 2014/15. |
Noted | ||
| 44 |
SHARED INTERNAL AUDIT SERVICES - UPDATE ON PROGRESS AGAINST THE 2015/16 AUDIT PLAN Cover Page Progress against the 2015/16 Audit Plan The Audit Manager (SIAS) presented a report providing an update of progress against the 2015-2016 Audit Plan for the period 1 April - 20 November 2015. The Audit Manager advised that, as at 20 November 2015, 46% of 205/16 Audit Plan days had been delivered. 31% of audits had reached draft/final stage, although some other audits had commenced since the report was prepared. All start dates had been met, and appropriate resources had been allocated for the coming months. In response to questions, the Audit Manager undertook to provide Members of the Committee with the Section 106 Audit report, following agreement for the report to be released by the Strategic Director of Finance, Policy and Governance. The Chairman of the Committee commented that he would be sitting in on the start and finish of a forthcoming profit sharing audit, and he recommended that other Members of the Committee endeavour to devote some time to becoming similarly involved in other audits. RESOLVED: (1) That the Internal Audit Progress Report for the period to 20 November 2015 be noted; and (2) That the amendments to the Audit Plan, as at 20 November 2015, be approved. REASON FOR DECISION: To allow the Committee to review, comment and challenge the current status of the Internal Audit Plan. |
Noted | ||
| 45 |
RISK MANAGEMENT UPDATE Report Appendix A - Top Risks The Performance and Risk Manager presented a report which provided an update on Risk Management. In relation to the "Office Accommodation" Top Risk, the Performance and Risk Manager advised that, due to capacity issues and the project entering into the implementation phase in 2016, the likelihood of the risk had increased from a 2 to a 3. In the event of capacity causing delays to the project, a Financial Risk had been included within the Budget for 2016/17 to enable additional support to be acquired if needed. In respect of the Waste and Street Cleansing Top Risk, the Performance and Risk Manager stated that this Top Risk had a number of sub-risks that recorded what the Council needed to consider, such as the complex and evolving statutory environment for waste and recycling and changes in the disposal infrastructure and opportunities for collaborative working. The sub-risk of "Sale of Materials" had an increased likelihood score (moving from a 2 to a 3), but the overall assessment of the main risk currently remained unaltered. The Performance and Risk Manager commented that the descriptions of the above two Top Risks were attached at Appendix A to the report. The descriptions included completed and proposed measures and work to mitigate these risks. The Performance and Risk Manager explained that the Risk and Opportunities Management Strategy was not due for review at the present time as it covered the period 2014-17. However, due to the changes to the Council's Strategic Objectives for 2016, the Strategy had been amended to reflect these changes. As this amendment was relatively minor and no fundamental changes were proposed to the risk management framework at the Council, the revised Strategy had not been appended to the report. In response to a question, the Strategic Director of Finance, Policy and Governance stated that the Churchgate and surrounding area was shown as a medium risk, as Hammersmatch had exclusivity for development of the site until 31 December 2015. A Committee Member commented that, because of a lack of information provided to councillors (other than those on the Project Board), he was unable to make an assessment as to whether or not that risk assessment level was accurate. The Strategic Director of Finance, Policy and Governance undertook to investigate the likelihood of whether or not the housing of Syrian refugees in the District would in future appear in the list of risks. RECOMMENDED TO CABINET: (1) That the increased assessment of the likelihood of the "Office Accommodation" Top Risk be approved; and (2) That the increase in likelihood of the "sale of materials" sub-risk to the "Waste and Street Cleansing Contract Renewal" Top Risk be approved. RESOLVED: That the minor changes that have been made to the Risk and Opportunities Management Strategy and Policy be noted. REASON FOR DECISION: To comply with the requirements of the Risk and Opportunities Management Strategy. |
Agreed | ||
| 46 |
SECOND QUARTER REVENUE MONITORING 2015/16 Report Appendix A - General Fund Summary The Group Accountant presented a report on the Second Quarter Revenue Budget Monitoring for 2015/16. The Group Accountant advised that the Committee was requested to not that Cabinet would be recommended to approve changes to the 2015/16 General Fund budget, involving an increase in net expenditure of £8,000; and changes to the 2016/17 General Fund budget, involving an increase in net expenditure of £205,000. The Group Accountant referred to the significant changes set out in Table 1 of the report, which included a £69,000 increase in parking income; a £38,000 increase in Penalty Charges Notice (PCN) income; a £17,000 increase in Residents Parking Permits; and a £27,000 increase in Car Park Season Ticket sales. There was also an adverse variance of £170,000 for recycling - the Council used to receive income from the contractor for co-mingled recycling, but due to a downturn in the market the Council was now charged £15 per tonne for the processing of such recycling. This was set to continue, hence the increase in the budget for 2016/17 of £279,000. The third significant variance was in respect of the use of temporary accommodation for homelessness, which had increased by a total of £100,000, due to the impact of Housing Benefits payments, as there was a cap on the amount of subsidy that could be claimed back from the Department of Work and Pensions. The Group Accountant stated that there was a total of £464,000 of budgets carried forward from 2014/15 into 2015/16. As at the end of the second quarter, £161,000 of these budgets had been spent. Three carry forward budgets were at amber status. The 2015/16 efficiency proposals had been overachieved by £69,000, and the 5 Key Corporate Health Indicators were at green status. The Group Accountant explained that one financial risk had been realised, relating to legal costs incurred due to the Secretary of State calling in a solar farm planning application, which had resulted in additional expenditure of £22,000. The remaining allowance for risks was £470,000. The General Fund Balance was projected to be £6,034,000 by 31 March 2016. In respect of earmarked reserves, the Group Accountant advised that, by 31 March 2016, it was projected that £500,000 of these reserves would have been spent. The majority of the spend was to cover the deficit on the National Non-Domestic Rates (NNDR) Collection Fund. With regard to the Collection Fund, it was noted that a surplus of £160,000 on Council Tax and a deficit of £291,000 on Business Rates was expected at the end of the current financial year. It was further noted that NHDC was in a Business Rates Pool and the gain expected was estimated at £200,000. A Committee Member commented that, bearing in mind the significant increase in car parking income, perhaps there could be scope for a reduction in the level of charges for 2016/17. The Committee agreed that this matter be brought to the attention of the Executive Member for Policy, Transport and Green Issues, with a view to consideration being given to a reduction in the level of car parking charges for 2016/17, as part of the forthcoming review of the Car Parking Strategy. RESOLVED: (1) That the Second Quarter Revenue Budget Monitoring report 2015/16 be noted; and (2) That the comments made by the Committee in relation to the increase in car parking income be brought to the attention of the Executive Member for Policy, Transport and Green Issues, with a view to consideration being given to a reduction in the level of charges for 2016/17 forming part of the forthcoming review of the Car Parking Strategy. REASON FOR DECISION: To provide an opportunity for the Committee to comment as appropriate on the Second Quarter Revenue Monitoring report 2015/16. |
Noted | ||
| 47 |
SECOND QUARTER CAPITAL MONITORING 2015/16 Report Appendix A - Capital Programme Summary 2015/16 Onwards Appendix B - Capital Programme Detail 2015/16 The Corporate Support Accountant presented a report on the Second Quarter Capital Programme Monitoring for 2015/16. The Corporate Support Accountant advised that capital spend for 2014/15 was just over £4.5million, with a remaining capital receipts balance at 31 March 2015 of £851,000. The Capital budget for 2015/16 was initially £12.4million, which was slightly reduces at first quarter by £28,000, resulting in a working budget of £12.356million. The Corporate Support Accountant explained that the report requested Cabinet to reduce the Capital budget by £1.539million, due to the re-profiling of schemes into 2016/17. The largest schemes to be re-profiled were the refurbishment of the District Council Offices (£270,000); Hitchin Swim Centre Car Park Extension (£278,000); and Council property improvements following condition surveys (£250,000). The Corporate Support Accountant stated that there was another minor alteration of £19,000 to the total budget, mainly due to an overprovision of budget or underspend on schemes. The revised Capital budget for 2015/16 was therefore £10.798million. In respect of capital receipts, the Corporate Support Accountant advised that the year had commenced with £851,000 in this budget. In June 2015, the Council received £4.823million from the sale of land, which increased the capital receipts total to £5.674million. Of that total, it was intended to use £3.584million to fund current expenditure in 2015/16, which would leave a balance of £2.1 million to fund capital investment in future years. In order to finance the Capital Programme in the current year, the Corporate Support Accountant explained that this would be achieved through the drawing down of some cash investments (£4.4million), together with contributions from Government Grants, Lottery funding and Section 106 monies. RESOLVED: That the Second Quarter Capital Programme Monitoring report 2015/16 be noted. REASON FOR DECISION: To provide an opportunity for the Committee to comment as appropriate on the second Quarter Capital Monitoring report 2015/16. |
Noted | ||
| 48 |
TREASURY MANAGEMENT SECOND QUARTER 2015/16 Report Appendix A - Treasury Management Update - September 2015 The Corporate Support Accountant presented a report on the Second Quarter Treasury Management Monitoring for 2015/16. The Corporate Support Accountant referred to the changes to the 2015/16 Treasury Strategy, as set out in Paragraph 7.1 of the report. The Corporate Support Accountant advised that the Council had generated £0.221M of interest during the first six months of 2015/16. The average interest rate agreed on new deals during the first quarter by Tradition was 1.37% and in- house was 0.58%. The average interest rate on all outstanding investments at 30 September 2015 was 1.31%. The Corporate Support Accountant explained that, at 30 September 2015, the Council had 33% of its investments with banks and 67% with building societies. At the end of the second quarter the Council had 22% (£10.5M) invested for longer than 364 days. Three new deals totalling £4.75M were placed during the quarter for longer than one year. As approved in the Strategy, maturing Sterling deals had been reinvested by Tradition. £4.5M of Sterling deals that had matured in October 2015 would be retained in-house to fund Capital expenditure. The Corporate Support Accountant explained that the amount of investment interest expected to be generated during the year was £0.431M. This was an increase on the working budget of £0.018M. The increase was mainly due to in- house investments being placed for longer periods. This was possible as the level of balances increased in June 2015 when asset disposal income was received. RESOLVED: That the Second Quarter Treasury Management Monitoring report 2015/16 be noted. REASON FOR DECISION: To provide an opportunity for the Committee to comment as appropriate on the Second Quarter Treasury Management monitoring report 2015/16. |
Noted | ||
| 49 |
DRAFT BUDGET 2016/17 Report Appendix 1 - General Fund Estimates (1.9% Council Tax increase) Appendix 2 - Efficiency Proposals Appendix 3 - Revenue Investment Proposals Appendix 4 - Capital Investment Proposals Appendix 5a - Notes of November 2015 Member Workshops(1) Appendix 5b - Notes of November 2015 Member Workshops(2) Appendix 5c - Notes of November 2015 Member Workshops(3) Appendix 6 - MTFS Extract - Budget assumptions The Accountancy Manager presented the Draft Budget for 2016/17. The Accountancy Manager drew attention to the revised version of Appendix 1 to the report which had been tabled at the meeting. He explained that the revisions applied to the amount of efficiencies required in 2018/19 and 2019/20. These had been amended from £300,000 to £400,000, to ensure that the General Fund balance was maintained at a level above the allowance for known financial risks, in accordance with CiPFA guidance. The Accountancy Manager updated the Committee on the Chancellor's Autumn Statement. Public sector budget austerity was set to continue for the foreseeable future, with it becoming an increasing challenge for the Council to achieve a balanced budget. The gloomy scenario should the Council undertake no efficiency measures and not increase the Council Tax would mean that balances would be in a £290,000 debit position by 2020/21. Further details would be provided in the Government's Provisional Finance Settlement, which was expected to be confirmed by the Chancellor before Christmas 2015. The Accountancy Manager explained that the Chancellor had announced that the Government would be consulting on reforms to New Homes Bonus, including a reduction in the length of payments from 6 years to 4 years. The draft estimates set out in Appendix 1 to the report assumed no changes in New Homes Bonus, but it was likely that any changes would take effect in 2016/17. The Chancellor had also revealed that the Government would be consulting on Local Authorities being given powers to retain 1005 of Business Rates. In respect of Council Tax revenue, the Accountancy Manager was awaiting confirmation of the threshold for a Council Tax Referendum. However, the Autumn Statement had made no reference to a Council Tax freeze grant, instead making provision for an additional 25 increase above the threshold in order to fund social care. The Accountancy Manager referred to Table 2 in the report which outlined the other Government Grants received in 2015/16 and the current expectation for 2016/17. In respect of the Collection Fund, a key point was that NHDC wished to remain in the Business rates pool for 2016/17, the primary benefit being the reduced level of payment to the Government. The Accountancy Manager commented that the report explained the importance of holding a suitable level of balances and reserves. CiPFA advice was that the level of balances should be at least 5% of net expenditure to cover unforeseen circumstances. The draft NHDC budget for 2016/17 of £16.49million therefore included a sum of £835,000 for unforeseen risks. An assessment of known financial risks had also been undertaken. 57 risks had been identified, with a total risk value of £62million. Following assessment, an allowance of £844,000 for these risks had been considered prudent. Combining the balances for unforeseen and known risks, a minimum General Fund balance of £1.669million was recommended. The Accountancy Manager drew attention to the £347,000 worth of efficiency proposals set out in the report and savings of £10,000 identified from the scrutiny of existing budgets. £590,000 worth of Revenue Investment proposals had been included in the 2016/17 draft budget, together with 32 Capital Investment proposals totalling £13.175million over the next four years. The Accountancy Manager and Strategic Director of Finance, Policy and Governance answered a number of members' questions on the Draft Budget. RESOLVED: That the Draft Budget 2016/17 be noted. REASON FOR DECISION: To provide an opportunity for the Committee to comment as appropriate on the Draft Budget 2016/17. |
Noted | ||
| 50 |
BUILDING CONTROL - 7 HERTFORDSHIRE AUTHORITIES PROJECT Report The Head of Development and Building Control presented a report updating the Committee on the 7 Hertfordshire Authorities Building Control project. The Head of Development and Building Control advised that Building Control was a statutory duty for the Council. It carried out fee earning work (receiving applications, assessing plans and monitoring construction works on site) and non-fee earning work (such as dangerous structures and demolition of buildings). The Head of Development and Building Control explained that one of the problems within Hertfordshire was that Building Control Officers were generally an aging group of professionals. Hence, the proposed sharing of services would help to develop resilience. This was important because, since the mid 1990s, all Building Control activities which attracted a fee were open to private sector competition; and so effectively Building Control had been operating in the commercial world since the mid 1990s. The Head of Development and Building Control commented that one of the Council's Key Corporate Health Indicators was Building Control fees, which generated an annual income of £350,000. This was in the context of the service competing with the private sector, but not on a "level playing field". NHDC was required to issue formal Decision Notices and to publish its scale of fees (the Private Sector was not required to do either). So from a commercial viewpoint, private sector competitors could invariably undercut the Local Authority fee. The Head of Development and Building Control stated that, in 2013, it was recognised that change was needed. Accordingly, 7 Hertfordshire Local Authorities got together to address how Building Control services could be operated differently. A number of models were considered and put forward to the County Chief Executives Group. The agreed final solution was the formation of Local Authority companies, which would undertake the traditional public sector role of dealing with not for profit Building Control applications, but which could also fulfil a commercial role in competing for profit earning work. Each of the 7 local authorities would be an equal partner/shareholder in both the not for profit and for profit elements of the company. The arrangement could also allow the company to compete for work outside of Hertfordshire. The Head of Development and Building Control advised that the report to be submitted to Cabinet was to seek delegated authority for the Strategic Director of Planning, Housing and Enterprise, in consultation with relevant Executive Members and key officers, to be able to continue this work, with the caveat that the matter would be reported back to Cabinet should anything change with the Business Case and/or the overriding objectives underpinning the new company. RESOLVED: That the report be noted. REASON FOR DECISION: To provide an opportunity for the Committee to comment as appropriate on the 7 Hertfordshire Authorities Project for the provision of Building Control services. |
Noted | ||
| 51 |
FUTURE MEETINGS - POSSIBLE AGENDA ITEMS The Chairman requested that should any Members have any suggestions for agenda items at future meetings would they please advise himself, officers or the Committee Clerk. |
Noted | ||
| 52 |
EXCLUSION OF PRESS AND PUBLIC RESOLVED: That under Section 100A(4) of the Local Government Act 1972, the public and press be excluded from the meeting for the following item of business on the grounds that it involves the likely disclosure of exempt information as defined in Paragraph 3 of Part 1 of Schedule 12A of the said Act (as amended). |
Agreed | ||
| PART II | ||||
| 53 |
BUILDING CONTROL - 7 HERTFORDSHIRE AUTHORITIES PROJECT Data/Finance, Audit and Risk Committee/201512101930/Agenda/Report Data/Finance, Audit and Risk Committee/201512101930/Agenda/Appendix A - Hertfordshire Building Control Collaborative Venture - Business Case The Head of Development and Building Control presented a Part 2 report in respect of the proposed Business Case for joint arrangements with six other Hertfordshire Local Authorities for the provision of the Council's Building Control Functions. The Head of Development and Building Control advised that the draft Business Case had been initially prepared with the assistance of commercial financial advice from the East of England Local Government Association (EELGA). He introduced Mr Michael Miller, currently employed by Three Rivers District Council, who had acted as a financial consultant following on from the EELGA work. Mr Miller had worked closely with the 7 Chief Financial Officers across the participating authorities to ensure that they were all content with the financial model proposed for the project. Mr Miller explained that hard data had been collected from all 7 participating authorities, in terms of staffing costs, overheads, accommodation costs, etc. Income levels had also been assessed, and the financial model which had resulted was considered prudent (neither overly optimistic nor pessimistic). Mr Miller commented that new areas of work would be available to the new organisation, and a planned increase in work and income was shown over the initial five year period. Economies of scale had been factored into the model, including the creation of accommodation hubs, thereby saving on overhead costs. The financial model also included day to day costs (income and expenditure); start up capital (which would be by way of a loan from all 7 authorities, assumed to be repaid in Years 2 and 3); and the transfer of all existing unfinished works. Mr Miller stated that the financial model showed that, primarily due to set up expenditure and bedding in the new organisation, there would be no savings in the first two/three years, but that the upward trend from Year 3 onwards would be for a significant level of savings to be achieved. The Head of Development and Building Control advised that the Chief Financial Officers of all 7 authorities had "signed off" the Business Case, and that the Executive bodies of the other 6 authorities had approved the initial document, with it due for consideration by the NHDC Cabinet on 15 December 2015. The Group Accountant drew the Committee's attention to Tables 2 and 3 in the report, which provided five year projection figures if the Council did not join the partnership, compared to NHDC participating in the project. The projections clearly showed the financial benefit of continuing with the project. The Head of Development and Building Control commented that similar local authority collaborations were emerging in Essex and Cambridgeshire, and so potentially should NHDC not participate in the new Hertfordshire collaboration then it would be competing against them, as well as private sector providers. In response to a question regarding support services, the Head of Development and Building Control advised that these would be provided by the partner authorities for the first two years, but that thereafter the organisation had freedom to procure such services from either the public or private sector. In reply to a question regarding staff transfer to the new organisation, the Head of Development and Building Control confirmed that all staff would initially be transferred under TUPE. Staff and Unions had been initially briefed and would be consulted throughout the process. He commented that staff were aware of commerciality surrounding the functions of the operation, as there had been competition for the provision of Building Control service between local authorities and the private sector since the Mid 1990s. In terms of competitor analysis, the Head of Development and Building Control advised that there could be opportunities to undertake work in partnership or on behalf of some of the nearby county local authority collaborations. In reply to a question, the Head of Development and Building Control confirmed that the Interim Managing Director of the new organisation had been tasked with the development of a marketing strategy. The Committee agreed that Cabinet should be recommended to approve the Business Case and proceed with the project. RECOMMENDED TO CABINET: (1) That the Business Case outlined in the report, and attached as Appendix A to the report, be approved; and (2) That the Council proceeds with the joint arrangements for the provision of its Building Control functions, as outlined in the report and Business Case. REASON FOR DECISION: To provide an opportunity for the Committee to comment as appropriate on the 7 Hertfordshire Authorities Project for the provision of Building Control services. |
Noted | ||