Agenda item

To consider a report by the Director for Digital and Resources, copy attached as item 8

Before the Committee was a report by the Director for Digital and Resources, attached as item 8. The report before Members provides an overview of the work being undertaken by the Councils relating to food and support for the vulnerable experiencing food insecurity. This report provided an update on the budget strategy position for 2021/22 and beyond.

The head of financial Services introduced the report with the Committee and highlighting in particular the challenges created by the Covid lockdowns.

A Member asked the following question: Regarding the Fall out of SDLT pension costs page 29 and the Triennial pension under valuation and reduction in contributions, has the same under valuation happened with pensions for Council staff and can the reason for the fall out of SDLT pension costs be expanded upon? Members were told that the reduction in pension costs were due to a reassessment of the pension fund position by the actuary. Consequently, the actuary had reduced the level of contributions required for the three years 2020 - 23. The Councils were required to ensure sufficient contributions were made to the pension fund to pay all likely liabilities (pension payments) as assessed by the actuary over a 20 year period. Under the terms of the contract, the Council funded the difference between the initial pension contribution (16.8%) and the current pension contribution (25.3%). This was a typical risk sharing approach for the cost of LGPS pensions within local authority contracts and ensured that the contractor did not price in pension risk into the contract price. The SDLT trust pension payment reduction was due to staff retiring or leaving where the Council was no longer required to fund the difference between the contribution rate specified in the contract and the current pension contribution rate.

A Member asked the following question: Can you explain 3.3 point 6 (page 10) of the agenda, what surplus assets are in the criteria and can you give some examples please? The Committee was told that Surplus assets were assets that were no longer required for operational requirements or had failed to meet property performance indicators regarding revenue performance and long term management costs. Examples included underused car parks, vacant former caretaker properties and isolated commercial premises with little or no alternative use prospects and diminishing returns based on maintenance costs. Officers were working through the council’s asset list to evaluate assets on a case by case basis and individual decision notices would be brought forward after consultation with relevant members to approve any disposals.

A Member asked the following question: On Page 17, there is reference to the reduction in interest rates and the impact on council investments in 2021/22.  We are all familiar with these historically low rates - please can you give us an overview on how the council is looking to maximise its return and brief details of any new, innovative investment projects. Members were told that whilst cash investments were extremely low the Council had mitigated the impact of this in two ways: Firstly Adur Council had invested £3m in the CCLA property fund. This was providing a 3% return. Secondly, the councils had been funding the capital programme via the cashflow rather than borrowing. Typically borrowing costs over 2% compared to the 0.1% that the councils generated from investment, so this reduced the cost of funding the capital programme. The Councils were also investigating investing in energy renewables to reduce our carbon footprint, reduce our energy costs and obtain an income stream through the sale of surplus energy to the grid.

A Member asked the following question: Do the Council have any input on which pension provider is used by SDLT and how many staff this relates to? Members were told that those staff who TUPE transferred to SDLT were entitled to access the LGPS (Local Government Pension Fund) or an equivalent scheme under the pension regulations (Best Value Authorities Staff Transfer (Pension) Direction 2007). However, SDLT were responsible for determining their own pension provider for any new staff that they employed.

A Member asked the following question: Page 13, changes to business rate forecast £99,000 please explain what happened to lead us to the deficit net use of business rate smoothing reserve and what this latter term means? Members were told that The overall position for business rate income has improved since July by £99,000. Nevertheless the Collection Fund was in deficit (Adur - £1,111,000) and this is explained in more detail in the report. There are several factors sitting behind position: The amount that could be taken from the Collection Fund was set before the start of the financial year via a government return (NNDR1) and could not be changed in year. Consequently if there were any changes in-year within the Collection Fund, this was not passported through to the General Fund and the preceptors until later years (1 or 2 years later). The Council has granted more reliefs than originally expected within the collection fund. Reliefs could increase during the year due for a couple of reasons - the Government changes the business rate relief scheme in the Spring Budget or more businesses qualify for reliefs than expected in January. Whilst a large proportion of these reliefs are funded by the Government via grants (S31 grants), these grants are paid into the General Fund in year. This leads to the situation where the cost of the reliefs are funded a year or two after the impact in the collection fund whilst the General Fund benefits from the compensatory grants within the year. The inherent timing difference in the collection fund led to the creation of the business rate smoothing reserve which was designed to address these differences. There was an unexpected substantial revaluation of the Power Station in June 2020 (valued downwards form £1.5m to £1.32m) with the change backdated to 1/4/2017 - this reduced the income to the collection fund in year (and was a contributory factor in the deficit for 2019/20). Similarly there had been two major national changes to the valuation methods - Doctors purpose built surgeries which reduced by one third and ATMs within supermarkets which are no longer rateable. This happened in May and was backdated to 2010.

A Member asked the following question: What can be done by the Council to prevent the pension costs of both Trusts continuing to increase above what would be expected if these Trusts (SDL and Theatres) remained under the Council pension fund? Members were told that pension costs of both trusts related to those staff who had TUPE transferred across the the new trusts. The risk associated with pension costs was mitigated due to factors including staff who were entitled to LGPS retiring or leaving, and the way that the actuary valued the pension fund contribution for contractors.

A Member asked the following question: 6.3 page 20, a contributory factor to the - - 422k figure in 24/25 assumes the cost of food waste will be borne by AWC and not central gov funding WSCC? Are you being cautious, or expecting this? Members were told that the public finances for non protected services like local government would be difficult. Government commitment to other sectors meant that there may not be sufficient funding to completely fund significant new commitments. WSCC was under significant financial pressure although there would be some savings to the County through avoided landfill costs. The Councils were therefore planning to find a significant proportion of the costs and would have a clearer picture closer to the time (both of the associated costs and any available funding)

Resolved: that the report be noted.