Meeting documents

To approve as a correct record the Minutes of the meeting held on 12 October 2015, copy attached as an appendix.

RESOLVED –

That the minutes of the meeting held on 12 October, 2015, be approved as a correct record.

To consider the report attached as Appendix B.

Contact Officer:  Teresa Lane (01296) 585006

AVDC's strategy on the redevelopment of the Aylesbury town centre had three key aims, namely:

·                    To improve the attractiveness of the town centre through developments which acted as a catalyst for further investment by the private sector and other public sector partners for the overall benefit of the town and the economy.  An example of this was the theatre which had attracted a range of new restaurants to the town and was underpinning interest in the Waterside North Phase 1 development.

·                    To use its own developments to directly generate new jobs and new wealth in the local economy - Waitrose and Travelodge have collectively delivered 200 new jobs.

·                    To create a revenue stream for the council from the rental generated by tenants of the buildings constructed by AVDC.

AVDC was committed to the successful delivery of the Waterside North masterplan as the next development to help meet these aims.  A masterplan had been worked up in consultation with a number of stakeholders including Buckinghamshire County Council (BCC) who owned land adjacent to the current temporary Exchange Street car park owned by AVDC.   The plan had received widespread public endorsement through a public consultation process in May 2014.

The Committee received a report that had been considered by Cabinet at its meeting on 10 November, 2015, and that had provided an update on the current marketing process (which had commenced in Autumn 2014) to seek a suitable Development Partner for the delivery of Phase 1 of the Waterside North Scheme.  Cabinet had considered the report, as well as a separate confidential appendix which provided a detailed financial appraisal of the scheme, and had recommended to full Council (meeting to be held on 2 December, 2015) that:-

(i)         Developer A be appointed as the Council’s development partner.

(ii)        £4.1m be included in the Capital Programme in order to acquire the commercial element of the development.

(iii)       Expenditure of £3.3m be approved for the public realm element of the Scheme (also included in the Capital Programme) on the basis that this money was expected to be reimbursed by the South East Midlands Local Enterprise Partnership (SEMLEP).

In addition to the recommendations to Council, the Cabinet report set out the next steps to be taken to deliver the scheme including the procurement process and explained that the submission was not complete so further work would need to be done with the development partner to progress the scheme to detailed design as well as finessing the draft Development Agreement which formed the detailed contract between AVDC and the developer for the delivery of the scheme.  The report also included information on the financial and legal implications, on construction finance, on the public space area that would wrap around the scheme, the impacts on car parking and an assessment on the rental income the commercial space provided was likely to achieve.

The major risks faced in progressing the scheme had been considered and a Risk and Mitigation statement was attached as Appendix 3 to  ...  view the full minutes text for item 2.

To consider the report attached as Appendix C

Contact Officer:  Andrew Small (01296) 585507

The Council maintained an integrated strategic capital programme that was divided into three sections.

·                    Major Projects – that have the largest and highest profile.

·                    Housing Schemes – for housing enabling and housing grant based schemes.

·                    Other Projects – being all the other schemes included within the capital programme.

Details of the capital programme available resources and proposed capital spend for the period up until 2019/20 was included at Appendix A to the Committee report.  The programme was reviewed annually with the current programme last being approved and adopted at Council in March 2014.

The Committee received a report that had been considered by Cabinet at its meeting on 10 November, 2015, and that had provided an updated position with respect to forecast receipts, a revised position (as necessary) regarding current schemes and also seeks the inclusion of future new major investment proposals.

The economy was continuing to grow despite the wider European problems, which in turn was having a positive impact on the construction industry and, in particular, housing.  House prices had increased by 8.6% compared to last year.  However, this appeared to have had a negative impact on the appetite for home ownership amongst former Council House tenants.  As such, anticipated income from Right to Buy, one of the Council’s major sources of capital income, was likely to be down on the level received over the last couple of years.  This was despite the Government increasing the available discount for tenants from £38,000 to £75,000 in April 2012.

Any decrease in anticipated resources effectively reduced the level of resources available to fund new schemes and so increased the possibility of borrowing and this had to be factored into the programme as follows:-

·                    Share of house sale receipts from VAHT - these flow from the stock transfer agreement and run for 25 years from the transfer date. The number of sales has been forecast to be 20 for 2015/16, with the same number being forecast for 2016/17.

·                    Asset Sales - these are sums released from the disposal of Council-owned assets, mainly land or property.  The majority of these disposals are for housing development schemes.  Existing assumptions around timing and values have been reviewed on the basis of the current state of the housing market.

·                    Capital Contribution – This relates to the contribution from the New Homes Bonus reserve allocated to Capital Schemes by Council.

·                    Revenue Contributions –These include New Homes Bonus and use of Repair Reserves.

The available resources at the beginning of 2015/16 and projected resources at the end of the Capital Programme period of March 2020 before any expenditure had been taken into account was:-

The generation of sizeable capital receipts in the future would no longer be  ...  view the full minutes text for item 3.

To consider the report attached as Appendix D.

Contact Officer: Andrew Small (01296) 585507

The Scrutiny Committee received a report that set out the high level issues facing the Council when developing budget proposals for 2016/17, and also impacted on updating the Medium Term Financial Plan (MTFP).  The report also set out a proposed timetable in order to agree the budget and set the Council tax prior to the end of February 2016.  The report had already been considered by Cabinet on 10 November 2015.

The current MTFP for 2016/17 had been agreed by Council in February 2015 and predicted the need to identify £0.7 million of savings in order to balance the budget for 2016/17 based upon the information available at that time and a set of assumptions around key variables within the budget.  These key assumptions needed to be revisited and reviewed as part of the budget planning and preparation process for 2016/17 and for the future MTFP period.

The Council had responded to large reductions in funding support over the past 5 years whilst managing the expectations of the Vale’s residents and was now awaiting for the new Spending Review which would provide direction and the shape of funding for the next 5 years.  However, the Government was committed to balancing the budget within this 5 year planning period and, therefore, continued efficiency, income generation and potentially cut backs for local government were likely to continue.

The results of the Spending Review were expected on 25 November, 2015, with Councils then informed of their grant allocations in late December 2015.  Unfortunately, this was after the date when Cabinet would have published is initial budget proposals for 2016/17. As such, the report proposed a strategy for resolving the budget within this wider uncertainty, provided an update on the key assumptions / risks and also considered the options and alternative approaches available for resolving these.

Government Grant

Since 2010/11 the Council had seen its Government support (Grant) reduced from an equivalent of £13 million to £6 million in 2015/16.   Given that the Government grant in 2010/11 had funded 58% of services, the impact of the reduction had been far reaching.  The Council had reacted through increased efficiency, higher charges in some areas, new money making initiatives and through the reduction and the cessation of some services.   However, against this backdrop the majority of services survive and in many cases the quality of service provided had improved.

Since April 2013, Government Grant comprised two elements, Revenue Support Grant and Retained Business Rates.  The system of Business Rate Retention allowed councils to benefit (or lose) from changes in the amount of business rates collected in their area and thus each council would be incentivised to promote economic expansion.  Core to the Council’s financial planning was the assumption that all Government Grant support, including that represented by Retained Business Rates, would end by 2020/21.

Whilst it is believed, that the Government might not actually remove the retained element of business rates, it had been assumed that they would capture value associated with it through other means,  ...  view the full minutes text for item 4.

To consider the report attached as Appendix E.

Contact Officer: Tony Skeggs (01296) 585273

The Committee received the report on the Council's financial performance for the period 1 April 2015 to 30 September 2015. The current position after the second quarter point of the year was that there was a predicted year-end position for an additional contribution to balances of £1.076m.  Copies of the latest Quarterly Finance Digest had been circulated separately and Members referred to this document whilst considering the report.

The Council had spent £634,856 less on the provision of services during the first six months on 2015/16 than allowed in the budget.  This position resulted from increased income in some areas and reduced expenditure in other areas. Page 3 of the digest outlines the main issues and showed the Top Five Over and Under Activities as well as the areas where budget holders’ had re-forecast their expected outturn position due to activity changes in the second quarter.

The majority of the forecast related to reduced expenditure, mainly salary related, following a number of section reviews.  The savings summarised on a portfolio basis were:-

·                    Economic Development delivery – salary savings of £71,000, which were offset by redundancy and agency costs of £48,000 and the cost of replacing the microphones in the Oculus, £60,000.

·                    Environment and Waste – within the Waste Service salary savings, £100,000, and reduced fuel costs, £100,000 have been offset by reduced recycling credits of £170,000.

·                    Finance, Resources and Compliance – there had been salary savings of £50,000 within the Finance and People & Payroll Services.

·                    Growth Strategy – £90,000 salary savings had been identified within the Development Control and Planning Services areas.

·                    Leader – £32,000 of savings hade been identified within the Members’ Allowances budget.

·                    Leisure, Communities and Civic Amenities – following service reviews, salary savings of £146,000 had been realised from Housing Services, £100,000 from Leisure Administration and £115,000 from within Parks & Open Spaces. Other savings have been identified within the Grants budget, £26,000 and the Car Parking budget, £70,000. There have been some areas of additional expenditure, Community Centres, £13,000, the cost of continuing the funding of the Jonathan Play Centre, £16,000 and on Waterside Public Realm, £16,000.

As reported throughout last year, budget holders’ are asked continually to review all of their areas and to reforecast their budgets both positively and negatively in order to have as accurate a year end position as possible for the December Digest.

The New Homes Bonus schedule had been updated to reflect the contribution to be received in 2015/16 and shows the commitments against the resources.  Everything else remains the same as reported in the June Digest.

As well as the revenue budget the digest, on page 14, also reports the level of reserves and provisions and any movements that have been made during the quarter. So far this year there have been no transfers in or out of any reserve. For the majority of the reserves any movement tends to be in the last quarter so the position shown in this digest is not unexpected.

On page 16 there was  ...  view the full minutes text for item 5.

To consider the report attached as Appendix F.

Contact Officer: Tony Skeggs (01296) 585273

The Council had agreed the Treasury Management Strategy for 2015/16 and the Action Plan for monitoring performance against the strategy in April 2015.  The authority’s Treasury Management Policy required a mid year report to be brought to scrutiny prior to going to Council.  This met the needs of the Prudential Code by ensuring the capital programme and other indicators were monitored.

The objectives and main activities for the Treasury Management team for 2015/16 in monitoring the Action Plan were:-

·                    To maintain the security of the Council’s deposits by only depositing with trusted financial institutions and limiting the size and length of deposit with each organisation.

·                    To directly manage a range of deposits in order to provide sufficient flexibility to meet day to day operational needs.

·                    To only undertake new long term borrowing where justified by a business case.

The underlying economic environment for the Council remained difficult, foremost because of the continued challenging concerns over counterparty risk.  This challenge encouraged the Council to continue maintaining investments short term (less than six months) and with as high a quality counterparties as possible. The downside of such a policy is that investment returns remain low.

The Bank of England had elected in October 2015 to keep interest rates at 0.5%, with any predicted rise not now happening before June 2016, and then rates would only rise very gradually.

Inflation had also continued to fall below the Government’s 2% target and was unlikely to return to 2% until early in 2017.  The headline figure, CPI, fell to 0% in August from 0.1% in July. This was mainly due to a fall in oil prices since the start of the year.

The 2015/16 revised budget for capital expenditure was significantly higher than the 2015/16 original budget.  The majority of the increase was the carry forward of the underspend on the University Campus Aylesbury Vale (UCAV) of £6.42m and the second phase of the depot alterations of £1.83m. The increase was also due to the Swan Pool Improvement scheme that had been agreed after the capital programme had been last approved.

The additional expenditure would be financed either from capital, revenue or borrowing reserves as follows:-

Another prudential indicator was the Council’s Capital Financing Requirement (CFR). This was a measure of the Council’s underlying need to borrow. The CFR did not increase indefinitely, as the minimum revenue provision (MRP) was a statutory annual revenue charge which broadly reduced the borrowing need in line with assets life. The latest CFR projections were:-

The application of resources (capital receipts, reserves etc.) to either finance capital expenditure or other budget decisions to support the revenue budget would have an ongoing impact on investments  unless resources were supplemented each year from new resources (asset sales).  ...  view the full minutes text for item 6.

To consider the report attached as Appendix G.

Contact Officer: Craig Saunders (01296) 585043

The Committee considered their work programme for the period up until April 2016.  It was agreed that the date of the next meeting should be changed from Monday 14 December, 2015, to Thursday 17 December, 2015.

The agenda items for future meetings would be:-

(i)         17 December 2015 meeting

·                     Budget Scrutiny – Cabinet’s initial budget proposals for 2016/17.

·                     Public Sector Equality Duty.

(ii)        8 February 2016 and 5 April 2016 meetings

            No items as yet.

RESOLVED –

That the work programme be agreed, as discussed at the meeting.