(Public Pack)Agenda Document for Council, 16/03/2021 14:00

Public Document Pack

 Agenda

Council

Time and Date 2.00 pm on Tuesday, 16th March, 2021

Place This meeting will be held remotely. The meeting can be viewed live by pasting this link into your browser: https://youtu.be/N7bwj0sNslk

Public Business

1. Apologies

2. Minutes of the Meeting held on 23 February 2021 (Pages 5 - 22)

3. Exclusion of the Press and Public

To consider whether to exclude the press and public for the items of private business for the reasons shown in the report.

4. Correspondence and Announcements of the Lord Mayor

5. Petitions

6. Declarations of Interest

Matters Left for Determination by the City Council/Recommendations for the City Council.

It is anticipated that the following matters will be referred as Recommendations. The reports are attached. The relevant Recommendations will be circulated separately.

From the Cabinet Member for Policing and Equalities meeting on 8 March 2021

7. New Code of Conduct for Elected and Co-opted Members (Pages 23 - 40)

8. Proposed Changes to the Constitution (Pages 41 - 96)

9. Licensing Act 2003 - Revised Statement of Licensing Policy 2021-2026 (Pages 97 - 130)

From the Cabinet meeting on 9 March 2021

10. Strengthening Families - Family Valued Programme (Pages 131 - 140)

11. Maintained Schools Energy Efficiency Retrofit Grants (Pages 141 - 150)

Page 1 12. Holiday Activities and Food Programme 2021: Acceptance of Grant and Proposed Distribution (Pages 151 - 158)

13. Investment in Material Recycling Facility - Update (Pages 159 - 190)

14. Provision of Loan Funding to Support a Key Regeneration Priority in Friargate (Pages 191 - 202)

15. Coombe Abbey Park Ltd - Shareholder Refinancing Proposal (Pages 203 - 214)

16. Birmingham Airport (Pages 215 - 222)

Item(s) for Consideration

17. Annual Pay Policy Statement 2021-2022 (Pages 223 - 236)

Report of the Director of Human Resources

Matter(s) for Noting

18. Exercise of Emergency Functions (Pages 237 - 240)

Report of the Chief Executive

19. Question Time

19.1 Written Question – There are no written questions

19.2 Oral Questions to Chairs of Scrutiny Boards/Chair of Scrutiny Co-ordination Committee

19.3 Oral Questions to Chairs of other meetings

19.4 Oral Questions to Representatives on Outside Bodies

19.5 Oral Questions to Cabinet Members and Deputy Cabinet Members on any matter

20. Statements

21. Debates

21.1To be moved by Councillor P Male and seconded by Councillor J Lepoidevin:

“This Council welcomes the extension of the Furlough Scheme that will protect jobs in Coventry”

Page 2

21.2 To be moved by Councillor C Thomas and seconded by Councillor K Caan:

“This Council condemns the Government’s proposals to award only a 1% pay increase to NHS workers.

NHS staff deserve a pay rise that reflects the sacrifices they have made during this year of working on the frontline in the fight against Coronavirus.

This Council joins with other organisations and our NHS colleagues to urge the Independent Pay Review Body to reject the Government’s proposals and recommend the substantial increase that NHS workers so richly deserve”.

Private Business

It is anticipated that the following matters will be referred as Recommendations from Cabinet 9 March 2021. The reports are attached. The relevant Recommendations will be circulated separately.

22. Investment in Materials Recycling Facility - Update (Pages 241 - 278)

(Listing Officer: Layla Shannon, Tel: 024 7697 2007)

23. Provision of Loan Funding to Support a Key Regeneration Priority in Friargate (Pages 279 - 290)

(Listing Officer: A Hunt, Tel: 024 7697 6853)

24. Coombe Abbey Park Ltd - Shareholder Refinancing Proposal (Pages 291 - 302)

(Listing Officer: P Helm, Tel: 024 7697 2092)

25. Birmingham Airport (Pages 303 - 316)

(Listing Officer: Michael Rennie, Tel: 024 7697 2628)

26. Additional Document - Recommendation Minutes (Pages 317 - 358)

Julie Newman, Director of Law and Governance, Council House Coventry

Monday, 8 March 2021

Note: The person to contact about the agenda and documents for this meeting is Usha Patel/Suzanne Bennett 024 7697 2301 / 2299

Membership: Councillors F Abbott, N Akhtar, P Akhtar, M Ali, R Ali, A Andrews, R Auluck, R Bailey, L Bigham, J Birdi, J Blundell, R Brown, K Caan, J Clifford, G Duggins, B Gittins, L Harvard, G Hayre, M Heaven, P Hetherton, J Innes, T Jandu, Page 3 B Kaur, L Kelly, T Khan, AS Khan, R Lakha, R Lancaster, M Lapsa, J Lepoidevin, G Lloyd, A Lucas (Chair), P Male, K Maton, T Mayer, J McNicholas (Deputy Chair), C Miks, J Mutton, M Mutton, J O'Boyle, G Ridley, E Ruane, K Sandhu, T Sawdon, P Seaman, B Singh, R Singh, D Skinner, R Thay, C Thomas, S Walsh, D Welsh and G Williams

Usha Patel/Suzanne Bennett 024 7697 2301 / 2299

Page 4 Agenda Item 2 Coventry City Council Minutes of the Meeting of Council held at 2.00 pm on Tuesday, 23 February 2021

Present: Members: Councillor J McNicholas, Deputy Lord Mayor (Chair)

Councillor N Akhtar Councillor R Lancaster Councillor P Akhtar Councillor M Lapsa Councillor M Ali Councillor J Lepoidevin Councillor R Ali Councillor G Lloyd Councillor A Andrews Councillor P Male Councillor R Auluck Councillor K Maton Councillor R Bailey Councillor T Mayer Councillor L Bigham Councillor J McNicholas Councillor J Birdi Councillor C Miks Councillor J Blundell Councillor M Mutton Councillor R Brown Councillor J O'Boyle Councillor K Caan Councillor G Ridley Councillor J Clifford Councillor E Ruane Councillor G Duggins Councillor K Sandhu Councillor B Gittins Councillor T Sawdon Councillor L Harvard Councillor P Seaman Councillor M Heaven Councillor B Singh Councillor P Hetherton Councillor R Singh Councillor J Innes Councillor D Skinner Councillor T Jandu Councillor R Thay Councillor L Kelly Councillor C Thomas Councillor T Khan Councillor S Walsh Councillor AS Khan Councillor D Welsh Councillor R Lakha Councillor G Williams

Apologies: Councillor F Abbott, G Hayre, B Kaur, A Lucas and J Mutton

Public Business

79. Chair

In the absence of the Lord Mayor, Councillor A Lucas, in accordance with the Constitution, the meeting was chaired by the Deputy Lord Mayor, Councillor J McNicholas.

80. Minutes of the meeting held on 19 January 2021

The minutes of the Meeting held on 19 January 2021 were agreed as a true record.

81. Exclusion of the Press and Public

– 1 – Page 5

RESOLVED that the City Council agrees to exclude the press and public under Sections 100(A)(4) of the Local Government Act 1972 relating to the private report in Minute 91 below headed ‘Property Acquisition and Acceptance of Grant’ on the grounds that the report involves the likely disclosure of information as defined in Paragraph 3 of Schedule 12A of the Act, as it contains information relating to the financial affairs of a particular person (including the authority holding that information) and in all circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

82. Correspondence and Announcements of the Lord Mayor

The Deputy Lord Mayor referred to the recent deaths of:

• Former Councillor Malkiat Singh Auluck. Malkiat served as a Labour Councillor for Foleshill Ward for 12 years. During this time, he sat on a number of Scrutiny Boards and was a member of the Foleshill Ward Forum.

• Former Council employee, Bob Mullins. Bob worked for the Council for 34 years until his retirement in 2017. He was a valued member of the Central Accommodation Services Team and was well known to Members.

• Councillor G Hayre’s wife, Gurbaksh Kaur.

Members paid tribute to Malkiat, Bob and Gurbaksh and noted that letters of condolence had been sent to their families.

A minute’s silence was then observed in their memory.

83. Petitions

RESOLVED that the following petition be referred to the appropriate City Council body:

• Objection to Planning Application FUL/2021/0221 (43 Earlsdon Street) – 18 signatures, presented by Councillor B Gittins.

84. Declarations of Interest

There were no declarations of interest.

85. Motion without Notice

In accordance with the Constitution, a Motion without Notice was moved by Councillor M Mutton, seconded by Councillor S Walsh and adopted that agenda items 7 (Council Tax Setting Report 2021/22) and 8 (Budget Report 2021/22) be considered together.

It was noted that, in accordance with the Constitution, a recorded vote would be taken in respect of all decisions relating to matters the subject of Minutes 86 and 87 below (including any amendments).

86. Council Tax Setting Report 2021/2022

– 2 – Page 6

Further to Minute 75 of the Cabinet, the City Council considered a report of the Director of Finance which calculated the Council Tax level for 2021/22 and made appropriate recommendations to the Council, consistent with the Budget Report 2021/22.

The report indicated that some of the figures and information set out within the report were identified as provisional, as the Police and Crime Commissioner and the Fire and Rescue Authority precepts had not been confirmed at the time of publication. The Cabinet were advised by the Director of Finance that confirmation had now been received in relation to these precepts and that the figures within the report were all confirmed as accurate.

The report incorporated the impact of the Council’s gross expenditure and the level of income it would receive through Business Rates, grants, fees and charges. This resulted in a Council Tax requirement, as the amount that its expenditure exceeds all other sources of income.

The report included a calculation of the Band D Council Tax that would be needed to generate this Council Tax requirement, based on the City’s approved Council Tax base. The 2021/22 Band D Council Tax that was calculated through this process had increased by £83.30 from the 2020/21 level.

Each year the Government determined the maximum Council Tax increase that local authorities could set without triggering a referendum. For 2021/22 the Secretary of State had published a report which proposed that the rise in Coventry City Council’s Council Tax must be below 5% in 2021/22 to avoid triggering a referendum, comprising a 3% precept for expenditure on adult social care and a maximum of 2% for other expenditure. At the time of writing, the Secretary of State’s report was subject to parliamentary approval. The recommendations within the Budget Report 2021/22 were based on a proposed increase in Council Tax of 4.9%, including a core Council Tax rise of 1.9% and a 3% Adult Social Care Precept.

It was noted that the recommendations followed the structure of resolutions drawn up by the Chartered Institute of Public Finance and Accountancy, to ensure that legal requirements were fully adhered to in setting the tax. As a consequence, the wording of the proposed resolutions was necessarily complex.

RESOLVED that the City Council:

1) Note the following Council Tax base amounts for the year 2021/22, as approved by the Cabinet on 12th January 2021, in accordance with Regulations made under Section 31B of the Local Government Finance Act 1992 (“the Act”):

i) 82,717.1 being the amount calculated by the Council as its Council Tax base for the year for the whole Council area;

Allesley 330.0 Finham 1,513.9 Keresley 309.2

– 3 – Page 7

being the amounts calculated by the Council as its Council Tax base for the year for dwellings in those parts of its area to which one or more special items relate.

2) That the following amounts be now calculated by the Council for the year 2021/22 in accordance with Sections 31A, 31B and 34 to 36 of the Act:

(a) £774,235,566 being the aggregate of the amounts that the Council estimates for the items set out in Section 31A(2) of the Act taking into account all precepts issued to it by Parish Councils (Gross Expenditure and reserves required to be raised for estimated future expenditure);

(b) £627,959,949 being the aggregate of the amounts that the Council estimates for the items set out in Section 31A(3) of the Act (Gross Income including reserves to be used to meet the Gross Expenditure but excluding Council Tax income);

(c) £146,275,617 being the amount by which the aggregate at 2(a) above exceeds the aggregate at 2(b) above, calculated by the Council in accordance with Section 31A(4) of the Act, as its Council Tax requirement for the year;

(d) £1,768.38 2(c) = £146,275,617 1(a) 82,717.1

being the amount at 2(c) above divided by the amount at 1(a) above, calculated by the Council in accordance with Section 31B of the Act, as the basic amount of its Council Tax for the year. (Average Council Tax at Band D for the City including Parish Precepts).

(e) £46,673 being the aggregate amount of all special items referred to in Section 34(1) of the Act. (Parish Precepts);

(f) £1,767.82 = 2(d) – 2(e) = £1,768.38 - £46,673 1(a) 82,717.1

being the amount at 2(d) above, less the result given by dividing the amount at 2(e) above by the amounts at 1(a) above, calculated by the Council, in accordance with Section 34(2) of the Act, as the basic amounts of its Council Tax for the year for dwellings in those parts of

– 4 – Page 8

the area to which no special item relates. (Council Tax at Band D for the City excluding Parish Precepts);

(g) Coventry (unparished area) £1,767.82 Allesley £1,809.33 Finham £1,781.75 Keresley £1,806.28

being the amounts given by adding to the amount at 2(f) above, the amounts of the special item or items relating to dwellings in those parts of the Council’s area mentioned above divided in each case by the amount at 1(b) above, calculated by the Council, in accordance with Section 34(3) of the Act, as the basic amounts of its Council Tax for the year of dwellings in those parts of its area to which one or more special items relate (Council Taxes at Band D for the City and Parish).

(h) Valuation Parts to Parish of Parish of Parish of Band which Allesley Finham Keresley no special item relates A £1,178.55 £1,206.22 £1,187.84 £1,204.19 B £1,374.97 £1,407.26 £1,385.80 £1,404.88 C £1,571.40 £1,608.30 £1,583.78 £1,605.59 D £1,767.82 £1,809.33 £1,781.75 £1,806.28 E £2,160.67 £2,211.40 £2,177.70 £2,207.68 F £2,553.52 £2,613.48 £2,573.64 £2,609.07 G £2,946.37 £3,015.55 £2,969.59 £3,010.47 H £3,535.64 £3,618.66 £3,563.50 £3,612.56

being the amounts given by multiplying the amounts at 2(g) above by the number which, in the proportion set out in Section 5(1) of the Act, is applicable to dwellings listed in a particular valuation band divided by the number which in that proportion is applicable to dwellings listed in valuation Band D calculated by the Council, in accordance with Section 36(1) of the Act, as the amounts to be taken into account for the year in respect of categories of dwellings listed in different valuation bands.

– 5 – Page 9

3) Noted that for the year 2021/22 the Police and Crime Commissioner for the West Midlands and the West Midlands Fire Authority have stated that the following amounts in precepts issued to the Council, in accordance with Section 40 of the Act, for each of the categories of dwelling shown below:

Valuation Police and Crime West Midlands Fire and Band Commissioner for the Rescue Authority West Midlands £ £ A 118.37 42.02 B 138.09 49.03 C 157.82 56.03 D 177.55 63.04 E 217.01 77.04 F 256.46 91.05 G 295.92 105.06 H 355.10 126.07

4) That having calculated the aggregate in each case of the amounts at 2(h) and 3 above, the Council, in accordance with Sections 30 and 36 of the Act hereby sets the following amounts as the amounts of Council Tax for the year 2021/22 for each part of its area and for each of the categories of dwelling shown below:

Valuation Parts to which Parish of Parish of Parish of Band no special Allesley Finham Keresley item relates £ £ £ £ A 1,338.94 1,366.61 1,348.23 1,364.58 B 1,562.09 1,594.38 1,572.92 1,592.00 C 1,785.25 1,822.15 1,797.63 1,819.44 D 2,008.41 2,049.92 2,022.34 2,046.87 E 2,454.72 2,505.45 2,471.75 2,501.73 F 2,901.03 2,960.99 2,921.15 2,956.58 G 3,347.35 3,416.53 3,370.57 3,411.45 H 4,016.81 4,099.83 4,044.67 4,093.73

5) Determined that its relevant basic amount of Council Tax for 2021/22 is not excessive in accordance with the principles set out in the Secretary of State’s report, under Sections 52ZC and 52ZD of the Act.

Note: In accordance with the Constitution, a recorded vote was taken in respect of the Recommendations.

The Councillors voting for and against the Recommendations were as follows:

For Against Abstain Councillors: Councillors: N Akhtar G Williams P Akhtar

– 6 – Page 10

M Ali R Ali A Andrews R Auluck R Bailey L Bigham J Birdi J Blundell R Brown K Caan J Clifford G Duggins B Gittins L Harvard M Heaven P Hetherton J Innes T Jandu L Kelly AS Khan R Lakha R Lancaster M Lapsa J Lepoidevin G Lloyd P Male K Maton T Mayer C Miks M Mutton J McNicholas J O’Boyle G Ridley E Ruane K Sandhu T Sawdon P Seaman B Singh R Singh D Skinner R Thay C Thomas S Walsh D Welsh

Result: Carried

For: 46 Against: 1 Abstentions: 0

87. Budget Report 2021/2022

– 7 – Page 11

Further to Minute 76 of the Cabinet, the City Council considered a report of the Director of Finance which set the Council's Revenue Budget for 2021/22, the Capital Programme for 2021/22 to 2025/26 and the Council’s Capital, Treasury Management and Commercial Investment Strategies.

The report followed on from the Pre-Budget Report approved by Cabinet on 15th December 2020 which has since been subject to a period of public consultation. The proposals within this report will now form the basis of the Council's final revenue and capital budget for 2021/22 incorporating the following details:

• Gross budgeted spend of £774m (£30m increase from 2020/21). • Net budgeted spend of £244m (£5m and 2% higher than 2020/21) funded from Council Tax and Business Rates less a tariff payment of £19.8m due to Government. • A Council Tax Requirement of £146.3m (£4.9m and 3% higher than 2020/21), reflecting a City Council Tax increase of 4.9% detailed in the separate Council Tax Setting report on today’s agenda. • A number of new expenditure pressures and technical savings proposals. • A Capital Strategy including a Capital Programme of £220.4m including expenditure funded by Prudential Borrowing of £32.2m. • The Council’s Medium Term Financial Strategy and an updated Treasury Management Strategy, Capital Strategy and a Commercial Investments Strategy.

The financial position in this Budget Report is based on the Final 2021/22 Local Government Finance Settlement. The core funding position broadly matches that of 2020/21 although there are several new one-off funding streams, linked in the main to the effects of COVID-19. This position after 2021/22 remains uncertain and will be subject to the Government’s medium-term spending decisions and decisions about any revised local government financial allocation model and a new Business Rates retention model. As a result, it is impossible to provide a robust financial forecast at this stage and the Council has included some prudent planning figures. Initial assumptions indicate the likelihood that there will be a substantial gap for the period following 2021/22. The view of the Director of Finance is that the Council should be planning for such a position.

The Pre-Budget Report was based on an increase in Council Tax of 4.9% and this position has been maintained for the final proposals in this report. This incorporates an increase of 1.9%, which is within the Government’s limit of 2% above which a referendum would need to be held plus a further 3% Adult Social Care (ASC) Precept line with Government expectations. The Precept was trailed in the 2020 Spending Review and included in the Local Government Settlement as the means for councils to maintain their “core spending power”. Pending the delayed ASC Green Paper – the policy document which it is hoped will set out future funding arrangements for ASC – the precept is essential to enable councils including Coventry to manage increases in the costs of care. In total, the rise in Council Tax bills will be the equivalent of around £1.25 or less a week for a typical Coventry household.

– 8 – Page 12

The Local Government Finance Settlement was announced as having broadly maintained local government funding, supplemented with new grant funding to compensate councils for the effects of the Covid pandemic. In reality, the Council’s Budget position includes forecast costs and income loss from Covid for which it will not receive total compensation. Overall, the Council has been left needing to address a significant financial gap which has been balanced by additional Council Tax resources, lower costs in contingency budgets and a proposed contribution from reserve balances. All these proposals are set out in detail in Appendix 1. Where these are different to the proposals that were included in the Pre-Budget Report, this has been indicated within the appendix.

The proposals do not provide the Council with a balanced medium term position beyond 2021/22. The Council’s current medium term bottom line incorporates a combination of future inflationary and service pressures, uncertain specific grant resources and potential Government resource reductions. Some of the future funding assumptions are speculative at this stage and will be revised through 2021 as any changes to local government finance and as the longer term impacts of Covid become clearer. The initial approach will however be dictated by a need to make significant further efficiencies from, or generate further income within, Council services. The Council’s development of a ‘One Coventry’ transformation programme is currently being refined and is planned will become a key part of work programmes to feed into Budget proposals for 2022/23.

Whatever the future holds for national changes local government finance the Council remains committed to strengthening its own financial self-sustainability and the need to support the vibrancy and growth of the city. Over the coming year the Council will invest in both new and existing schemes and support its existing financial interests, including those that have been affected detrimentally by Covid. The Council’s view is that this continues to be the correct approach. A more passive strategy would risk the Council being further exposed to central government funding decisions and losing value within its portfolio of external interests. The Council’s existing financial resilience and its belief in the city’s long- term economic strength mean that this remains an ideal time to commit to Coventry’s reset and recovery.

The recommended Capital Programme proposals are a key part of the Council’s approach and amount to £220.4m in 2021/22. The proposals reflect the Council’s ambitions for the city and include: the latter stages of extensive public realm works in the city centre; extensive highways infrastructure works including specific schemes relating to air quality, Pinchpoint and the Eastern Green Housing Infrastructure Fund (HIF); final stages of the redevelopment of Coventry Railway Station (the Station Masterplan); the initial construction phase of a second office building within the Friargate district of the city; the initial construction phase also of the Council’s Materials Recycling Facility and continuation of the A46 link road to the south of the city. Over the next 5 years the Capital Programme is estimated to be £480m as part of on-going massive investment delivered by and through the City Council.

The annual Treasury Management Strategy, incorporating the Minimum Revenue Provision policy, and also the Commercial Investment Strategy are set out. These cover the management of the Council’s treasury and wider commercial investments, cash balances and borrowing requirements. These strategies and

– 9 – Page 13

other relevant sections of this report reflect the requirements of the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Treasury Management Code and Prudential Code for Capital Finance, as well as statutory guidance on Minimum Revenue Provision (MRP) and Investments. The Council’s Medium Term Financial Strategy, considered previously by the Council’s Finance and Corporate Services Scrutiny Board and consistent with the proposals in this report was also included for approval as an Appendix to the report.

A further amendment, as detailed in Appendix 1 to these minutes, was moved by Councillor Sawdon seconded by Councillor Ridley and lost.

A second amendment, as detailed in Appendix 2 to these minutes, was moved by Councillor Ridley and seconded by Councillor Sawdon and lost.

RESOLVED that the City Council:

(1) Approve the Budget proposals in Appendix 1.

(2) Approved the total 2021/22 revenue budget of £774m in Table 1 and Appendix 3, established in line with a 4.9% City Council Tax increase and the Council Tax Requirement recommended in the Council Tax Setting Report considered on today's agenda.

(3) Noted the Director of Finance’s comments confirming the adequacy of reserves and robustness of the budget in Section 5.1.2 and 5.1.3.

(4) Established an Innovation and Development Fund as set out in section 5.1.2 with decisions on the Fund delegated to Strategic Management Board following consultation with the Leader, Deputy Leader and Cabinet Member for Strategic Finance and Resources.

(5) Approved the Capital Strategy incorporating the Capital Programme of £220.4m for 2021/22 and the commitments arising from this programme totalling £479.6m between 2021/22 to 2025/26 detailed in Section 2.3 and Appendix 4 (that element represented by reports on the same agenda in relation The Albany Theatre and the Collections Centre is subject to approval of these reports).

(6) Approved the Council’s Treasury Management Strategy and Minimum Revenue Provision Statement for 2021/22 in Section 2.4 and the Prudential Indicators and limits described and detailed in Appendix 6a, the Commercial Investment Strategy for 2021/22 in Section 2.5 and Appendix 5, the Commercial Investment Indicators detailed in Appendix 6b and the Medium Term Financial Strategy in Appendix 7.

Note: In accordance with the Constitution, recorded votes were taken in respect of both the amendments and the Recommendations.

The Councillors voting for and against the first amendment as detailed in Appendix 1 to these minutes were as follows:

For Against Abstain

– 10 – Page 14

Councillors: Councillors: Councillors: A Andrews N Akhtar G Williams R Bailey P Akhtar J Birdi M Ali J Blundell R Ali M Heaven R Auluck T Jandu L Bigham M Lapsa R Brown J Lepoidevin K Caan P Male J Clifford G Ridley G Duggins T Sawdon B Gittins D Skinner L Harvard P Hetherton J Innes L Kelly AS Khan T Khan R Lakha R Lancaster G Lloyd K Maton J McNicholas C Miks M Mutton J O’Boyle E Ruane K Sandhu P Seaman B Singh R Singh R Thay C Thomas S Walsh D Welsh Result: Lost For: 12 Against: 34 Abstentions: 1

The Councillors voting for and against the second amendment as detailed in Appendix 2 to these minutes were as follows:

For Against Abstain Councillors: Councillors: A Andrews N Akhtar R Bailey P Akhtar J Birdi M Ali J Blundell R Ali M Heaven R Auluck T Jandu L Bigham M Lapsa R Brown

– 11 – Page 15

J Lepoidevin K Caan P Male J Clifford G Ridley G Duggins T Sawdon B Gittins D Skinner L Harvard G Williams P Hetherton J Innes L Kelly A Khan T Khan R Lakha R Lancaster G Lloyd K Maton J McNicholas C Miks M Mutton J O’Boyle E Ruane K Sandhu P Seaman B Singh R Singh R Thay C Thomas S Walsh D Welsh

Result: Lost For: 13 Against: 34

The Councillors voting for and against the Recommendations were as follows:

For Against Abstain Councillors: Councillors: N Akhtar A Andrews P Akhtar R Bailey M Ali J Birdi R Ali J Blundell R Auluck M Heaven L Bigham T Jandu R Brown M Lapsa K Caan J Lepoidevin J Clifford P Male G Duggins T Mayer B Gittins G Ridley L Harvard T Sawdon P Hetherton D Skinner J Innes G Williams L Kelly AS Khan

– 12 – Page 16

R Lakha R Lancaster G Lloyd J McNicholas K Maton C Miks M Mutton J O’Boyle E Ruane K Sandhu P Seaman B Singh R Singh R Thay C Thomas S Walsh D Welsh

Result: Carried

For: 33 Against: 14 Abstain: 0

88. Albany Theatre Trust Capital Project

Further to Minute 77 of the Cabinet, the City Council considered a report of the Director of Business Investment and Culture which sought approval for the award of a grant of £2.908m towards a capital project at the Albany Theatre, and the borrowing necessary to enable this decision.

The project comprised improvements to the studio theatre, building of three new studio spaces, and improvements to the café and front of house areas. It had been developed to create a viable future business model for the operator, Albany Theatre Trust which was currently unsustainable. The proposed investment would increase the Trust’s potential to generate earned and contributed income through growth in hires, the public-facing cultural programme and associated secondary spend.

The Albany had been identified as a significant cultural asset for the city. In recent years the theatre has been increasing its attendances, its outreach and training programmes. The improvements to the premises would build on previous investment, facilitate increased use and opportunities for cultural participation for the benefit of the residents of the city. This would contribute to the legacy of the City of Culture title.

The report indicated that £500,000 of the funding required had been earmarked from the City of Culture Capital Fund managed by the Council The remaining capital sum of £2.408m required to meet the total cost of the capital project was proposed to be funded from prudential borrowing, and the resulting debt repayment cost incorporated into the formal budget setting report for 2021/22.

– 13 – Page 17

RESOLVED that the City Council

1) Approved a grant of up to £2.908m be provided to the Albany Theatre Trust to support the capital proposal summarised in Section 2 of this report, subject to the conditions set out in Section 6.2.

2) Noting that £500,000 of the required total has been earmarked from funds already approved), approved that additional capital expenditure for this purpose of up to £2.408m is added to the approved capital programme, to be funded from prudential borrowing.

3) Noted that subject to the approval of this report, estimated annual debt servicing costs of c£250k will be incorporated into the 2021/22 (and ongoing) budget report for approval by full Council.

4) Delegated authority to the Director of Business Investment and Culture and the Director of Finance, following consultation with the Cabinet Member for Housing and Communities and the Cabinet Member for Strategic Finance and Resources, to take all necessary steps to negotiate and enter into all necessary legal agreements to effect the recommendations in this report.

89. Property Acquisition and Acceptance of Grant

Further to Minute 78 of the Cabinet, the City Council considered a report of the Director of Business, Investment and Culture which sought approval for the acquisition of the IKEA premises and adjoining land and property at Croft Road, Coventry (the Premises) for the purpose of creating a nationally significant Collections Centre for the storage, care and management of cultural, arts and historical artefacts. The report was further seeking acceptance of capital grant towards the ‘New Collections Centre’ project, along with the design and professional fees that will be required to take the scheme through detailed design and tendering.

A corresponding private report was also submitted to the meeting setting out the commercially confidential matters of the proposals (Minute 91 below refers).

The IKEA premises closed for business in March 2020 and the long leasehold interest was available for purchase. The purchase price, plus fees and taxes, were set out in the Private section of the report. The Council already owned the freehold of the site. The Council had been working with Arts Council England, the British Council, Culture Coventry Trust and more latterly, Coventry University, to explore options for converting the building to a new shared national Collections Centre facility, along with associated education, skills and learning facilities to provide opportunities for much greater public access and engagement with these extensive and important collections. The modelling of the options within the building had arrived at a ‘base’ option which has proved to be technically deliverable and financially viable, with the capital expenditure, fees and costs of capital financing being serviced through the rent received over the length of the leases, subject to agreeing terms with the partners.

– 14 – Page 18

However, there was ongoing feasibility work to explore the deliverability of more expansive options, such that the report was seeking only to acquire the Premises and obtain further fees for detailed development, on the basis that a further report would be brought before Cabinet and Council once further feasibility had been undertaken as to these more expansive options.

Having arrived at a base option that is technically deliverable and financially achievable, the timing to acquire the Premises is being driven by the small window of availability to secure proposed capital grant funding towards the acquisition, the details of which were set out in the private section of the report.

The following amendment, was moved by Councillor Lepoidevin seconded by Councillor Bailey and lost:

That the Recommendations in relation to Agenda Item 10 – “Property Acquisition and Acceptance of Grant” be amended by the insertion of the following additional Recommendation after Recommendations 1) and 2):-

3) Instruct officers to explore the feasibility of including the Coventry Police Museum within the new facility

RESOLVED that the City Council:

1) Approved capital expenditure in the sum specified in the Private section of this Report for the purchase (plus acquisition fees and Stamp Duty Land tax) cost to fund the acquisition of the leasehold interest of the site shown edged red in Appendix 1, and to include this within the approved capital programme funded from a combination of capital grant and prudential borrowing.

2) Delegated authority to the Director of Business Investment and Culture and the Director of Finance, following consultation with the Cabinet Member for Strategic Finance and Resources, the Cabinet Member for Jobs and Regeneration and the Cabinet Member for Housing and Communities, to identify and bid for grant assistance, where available, that supports the aims of the Collections Centre Project. The delegated authority given under this recommendation shall include the power to accept the terms and conditions of grant funding and the entering into all necessary legal agreements to secure such grant funding.

(Note: A vote on the amendment was taken by name)

90. Statements (if any)

There were no statements.

Private Business

91. Property Acquisition and Acceptance of Grant

– 15 – Page 19

Further to Minute 89 above, the City Council considered a private report of the Director of Business, Investment and Culture, setting out the commercially confidential matters relating acquisition of the IKEA premises and adjoining land and property at Croft Road, Coventry (the Premises) for the purpose of creating a nationally significant Collections Centre for the storage, care and management of cultural, arts and historical artefacts. In addition, the report sought acceptance of capital grant towards the new Collections Centre project, along with the design and professional fees that would be required to take the scheme through detailed design and tendering.

RESOLVED that the City Council:

1. Approved capital expenditure to the sum identified within the report submitted (plus acquisition fees and Stamp Duty Land tax to the sum identified) to fund the acquisition of the leasehold interest of the site shown edged red in Appendix 1 and to include this within the approved capital programme which shall be funded from a combination of capital grant and prudential borrowing as set out in the report.

2. Delegated authority to the Director of Business, Investment and Culture and the Director of Finance, following consultation with the Cabinet Member for Strategic Finance, the Cabinet Member for Jobs and Regeneration and the Cabinet Member for Housing and Communities, to identify and bid for grant assistance, where available, that supports the aims of the Collections Centre project. The delegated authority under this recommendation shall include the power to accept the terms and conditions of grant funding and the entering into all necessary legal agreements to secure such grant funding.

(Meeting closed at 6.55 pm)

– 16 – Page 20 Appendix 1

Conservative Group Budget proposals

Council meeting on 23rd February 2021

AMENDMENT

Budget Report 2021/22 - Amendment

£000

New Spending Proposals

Highways Resurfacing & Potholes 200

Road Safety Schemes 140

Plas Dol-y-Moch 150

490

Additional Savings

Trades Union Facilities Time (400)

Removal of Deputy Cabinet Members & Cabinet Reduced to 8 members (44)

Remove Policy Contingency (46)

(490)

Proposed by: Councillor Tim Sawdon

Seconded by: Councillor Gary Ridley

Page 21

Appendix 2

Council meeting on 23rd February 2021

AMENDMENT 2

Budget Report 2021/22 – Amendment – Additional Recommendation

That a one off sum of £150,000 be allocated to Plas Dol-y-Moch to be funded from reserves to allow a decision on the future of the centre to be considered.

Proposed by: Councillor G Ridley

Seconded by: Councillor T Sawdon

Page 22 Agenda Item 7

Public report Cabinet Member Report 

Cabinet Member for Policing and Equalities 8 March 2021 Council 16 March 2021

Name of Cabinet Member: Cabinet Member for Policing and Equalities—Councillor AS Khan

Director Approving Submission of the report: Director of Law and Governance

Ward(s) affected: None

Title: New Code of Conduct for Elected and Co-opted Members

Is this a key decision?

No - the decision whether to adopt a new Code of Conduct is reserved to Council

Executive Summary:

The Local Government Association (LGA) has published a new Model Code of Conduct for Members which follows on from a consultation held in the summer of 2020. The LGA has produced the new Model Code of Conduct on the recommendation of the Committee on Standards in Public Life in its report on local authority standards published in January 2019. The Ethics Committee made representations to the LGA on the wording of the proposed Code.

Ethics Committee considered the new Model Code of Conduct at its meeting on 21 January 2021. Its comments and observations are summarised in the report. On 17 February the Constitutional Advisory Panel considered a revised Code which incorporated the changes suggested by the Ethics Committee. The Panel resolved to recommend to the Cabinet Member that he recommend to full Council the adoption of the revised Code set out in the appendix to this report.

Recommendations:

The Cabinet Member for Policing and Equalities is requested to:

1) Consider the recommendations from Ethics Committee and the Constitutional Advisory Panel 2) Approve the revised Model Code of Conduct; and 3) Recommend that the Council adopt the revised Model Code of Conduct

Council is requested to:

1) Adopt the revised Model Code of Conduct for Elected and Co-opted Members, either in whole or with modifications with effect from the start of the 2021/22 Municipal Year Page 23

List of Appendices included: Revised Model Code of Conduct

Background papers: None

Other useful documents: None

Has it been or will it be considered by Scrutiny? No

Has it been or will it be considered by any other Council Committee, Advisory Panel or other body?

Yes – this report was considered by the Constitution Advisory Panel on 17 February 2021

Will this report go to Council?

Yes – 16 March 2021

2 Page 42 Report title: Proposed Changes to the Constitution

1. Context

1.1 On 17 February 2021, the Constitutional Advisory Panel considered a number of proposed changes to the Constitution. These are set out in more detail in the body of the report.

1.2 The Constitutional Advisory Panel recommended that the Cabinet Member recommend to full Council that the proposed changes set out section 2 of this report be approved in full.

2. Options considered and recommended proposal

Contract Procedure Rules

2.1 The Contract Procedure Rules (the CPRs) are the City Council’s Standing Orders as required by the Local Government Act 1972. They form part of the City Council’s constitution and are the instructions to officers and councillors for making contracts on behalf of the Council. The purpose of these CPRs is to set clear rules for the procurement of works, goods and services for the Council and to ensure a system of openness, integrity and accountability

2.2 The CPRs have been reviewed by officers who are suggesting some amendments to the rules to ensure they are up to date and fit for purpose.

2.3 The changes as highlighted in the appendix include:  Clarity around framework agreements requiring relevant Procurement Board or Panel approval with individual contracts over £1,000,000 requiring Cabinet approval.  Ensure authority for the signing and sealing of contracts is aligned to delegated authority at Part 2M of the constitution.  The value at which a Director can grant an exception to the CPRs to be increased to £100,000 to align with the tender values.  Confirm requirement to follow set process when contracts are being executed by electronic means.

2.4 A revised version of the CPRs is attached at Appendix 1 for consideration by the Cabinet Member.

Code of Conduct for Employees

2.5 The City Councils constitution includes a Code of Conduct for Employee’s. This Code, when viewed, should reflect the Seven Principles of Public Life namely Selflessness, Integrity, Objectivity, Accountability, Openness, Honesty and Leadership.

2.6 The Code of Conduct for Employees forms part of officer’s terms and conditions of employment but does not apply to school-based teaching staff or centrally employed teachers who should maintain their own code.

2.7 The proposal is to review the Code so that it focuses on the overarching principles expected of those working in public services. It would then remove the additional rules, policies and procedures which should sit in a separate Procedural Code outside of the Constitution that can be updated as required by the Human Resources team in 3 Page 43 consultation with the Cabinet Member for Finance and Resources and Trade Union colleagues.

2.8 The Gifts and Hospitality Register for employees will continue to be reviewed quarterly by the Ethics Committee and will align with the proposed new Members requirement to register all gifts and hospitality over £50.

2.9 A proposed revised version of the Code of Conduct for employees is attached at the Appendix 2 for consideration by the Panel. The existing Code is attached as Appendix 3.

Approval of Prosecutions by Planning Committee

2.10 On 14 January 2014, full Council resolved to amend the terms of reference of Planning Committee and the Officers’ Scheme of Delegation to require all proposed prosecutions for matters within the terms of reference of the Committee to be first approved by the Committee. This brought the arrangements for planning prosecutions in line with the existing requirement for Licensing and Regulatory Committee to approve any proposed prosecutions within its terms of reference.

2.11 At its meeting on 8 September 2020 the Council resolved to approve changes to the terms of reference of Licensing and Regulatory Committee and to the Officers’ Scheme of Delegation which removed the requirement for officers to obtain prior approval of the Committee before instituting prosecutions.

2.12 The Cabinet Member is now asked to approve removing the requirement for prior approval of planning prosecutions in order to retain consistency of approach between the two committees. This will entail deleting Paragraph 6.2 from the Terms of Reference of Planning Committee in Part 2G of the Constitution and Paragraph 6.14 of the Scheme of Delegation to Employees in Part 2M.

Updates to the Code of Good Planning Practice for Members and Employees Dealing with Planning Matters

2.13 The Planning Code is currently set out in Part 4C of the Constitution.

2.14 Part 2G, paragraph 4 (f) of the Constitution states the following:

Functions of Planning Committee…Functions Delegated to the Planning Committee…To approve, adopt, review, amend and revise codes of best practice and procedure for planning and other matters, including the Planning Code of Good Practice, within its terms of reference and to make the same publicly available.

It is therefore within the Planning Committee’s powers to review and approve the updates to the Planning Code.

2.15 Paragraph 2.4 of the existing Planning Code states the following: The Code will be appended to the Council's Constitution and is available to all Members, employees and members of the public.

2.16 Currently the Planning Code has been absorbed into the Constitution, rather than appended to it.

2.17 The Planning Code of Good Practice (the “Model Code”) was originally prepared in 2014 4 Page 44 in response to a series of successful court challenges concerning themselves with local planning authorities and the Members’ conduct or conflicts of interests. It replaced what was a number of individual and sometimes haphazard approaches in individual councils at the time. The drafting of the Model Code was subject to consultation and comment from a number of local authorities through the machinery of the Association of Council Secretaries and Solicitors (now Lawyers in Local Government), the Local Government Association, the Local Government Ombudsman, Audit Commission and from firms of solicitors or counsel acting on their behalf.

2.18 Following its publication, the Model Code proved to be one of the most successful and popular guidance documents produced by LLG, being adopted by councils across the country.

2.19 The Model Code takes into account the following:

 updates to the Seven Principles of Public Life (the ‘Nolan principles’);  commentary from the Committee on Standards in Public Life;  the changes in the approach to codes of conduct;  the changes to predetermination introduced by the Localism Act 2011;  the guide on ‘Openness and transparency on personal interests’ published by the Department for Communities and Local Government 2013.

2.20 In accordance with good practice, it proposed to undertake a review of the Planning Code to encompass the changes embodied in the Model Code as identified and ensure that the Council’s Planning Code is current, relevant and fit for purpose.

2.21 The Cabinet Member is asked to approve the proposal that once the Planning Committee has approved the new Planning Code, the new Planning Code is appended to the Constitution and made available on the Council’s website, in accordance with the Constitution.

2.22 Recommendations:

The Cabinet Member for Policing and Equalities is requested to:

1) Approve the proposed changes to the Contract Procedure Rules shown in Appendix 1 to the report;

2) Approve the revised Code of Conduct for Employees set out in Appendix 2 to the report;

3) Approve the changes to the Terms of Reference of Planning Committee and the Scheme of Delegation to Employees set out in paragraphs 2.10 to 2.12 of the report

5) Recommend that the Council adopt the proposed changes to the Constitution.

Council is requested to:

1) Approve the proposed changes to the Contract Procedure Rules shown in Appendix 1 to the report;

5 Page 45 2) Approve the revised Code of Conduct for Employees set out in Appendix 2 to the report;

3) Approve the changes to the Terms of Reference of Planning Committee and the Scheme of Delegation to Employees set out in paragraphs 2.10 to 2.12 of the report

3 Results of consultation undertaken The proposed changes to the Constitution have been considered by the Constitutional Advisory Panel.

4 Timetable for implementing this decision

It is proposed that the changes will take effect immediately on approval by full Council.

5 Comments from Director of Finance and Director of Law and Governance

5.1 Financial implications

There are no specific financial implications arising from the recommendations within this report.

5.2 Legal implications

There are no specific legal implications arising from this report. However the Council has a legal duty to keep and maintain up to date its Constitution.

Other implications

6.1 How will this contribute to the Council Plan (www.coventry.gov.uk/councilplan/)?

Not applicable

6.2 How is risk being managed?

There is no direct risk to the organisation as a result of the contents of this report.

6.3 What is the impact on the organisation?

The Constitution needs to be kept up to date and under review so that it reflects the current practices of the Council.

6.4 Equality Impact Assessment (EIA)

There are no public sector equality duties which are of relevance at this stage.

6.5 Implications for (or impact on) climate change and the environment

6 Page 46 None

6.6 Implications for partner organisations?

None

Report author(s):

Name and job title: Carol Bradford, Corporate Governance Lawyer, Regulatory Team, Legal

Services

Directorate: Law and Governance

Tel and email contact: 024 7697 7271 [email protected]

Enquiries should be directed to the above person

Contributor/approver Title Service Area Date doc Date response name sent out received or approved Contributors: Usha Patel Governance Law and 24.02.21 24.02.21 Services Officer Governance

Names of approvers for submission: (officers and members)

Finance: Graham Clark Lead Accountant Finance 24.02.21 24.01.21

Legal: Julie Newman City Solicitor and Law and 24.02.21 26.02.21 Monitoring Governance Officer

Councillor Abdul Khan Cabinet Member 26.02.21 26.02.21 for Policing and Equalities

7 Page 47 This page is intentionally left blank

Contract Procedure Rules (CPRs)

September 2020

Page 49

Index Paragraph Introduction 1 Summary of CPRs – Governance Process 2 Summary of CPRs – Financial Thresholds for Procedure 3 Objectives 4 Scope of Contract Procedure Rules (CPRs) 5 Compliance 6 Justification of Need 7 Approvals required before certain Relevant Procedures are commenced 8 The Procurement Board and Panels 9 Exceptions to Contract Procedure Rules 10 Valuation of contracts 11 Duties of Directors and the Head of Procurement & Commissioning Services 12 Selection of Procurement Route 13 Authority to enter into a contract 14 Specifications 15 Contract procedures 16 Invitations to formal tender 17 Opening formal tenders 18 The quotation procedure 19 Acceptance of formal tenders and quotations 20 Electronic tendering and quotations 21 Amendments and alterations to tenders and quotations 22 Contract extensions 23 Contract Variations 24 Form of Contract 25 Social Value 26 Contract administration and management 27 Prevention of fraud and corruption 28 Freedom of Information Act 29 Management of risk in contracts 30 Impact of other legislation 31 Definitions 32

Page 50 CONTRACT PROCEDURE RULES

1. Introduction

1.1 These Contract Procedure Rules (CPRs) are the standing orders required by the Local Government Act 1972. They are part of the Council’s Constitution and are, in effect, the instructions of the Council to officers and councillors for making contracts on behalf of the Council. The purpose of these CPRs is to set clear rules for the procurement of works, goods and services for the Council and to ensure a system of openness, integrity and accountability, in which the probity and transparency of the Council’s procurement process will be beyond reproach. Accordingly, these CPRs must be followed for all contracts (but excluding the categories listed in Rule 6.2, grants and land contracts which are dealt with under different rules) for:

 the supply of goods to the Council;

 the supply of services to the Council; and

 the execution of works for the Council.

1.2 The Council has a Procurement Strategy, setting out how the Council intends to go about procuring works, goods and services. Conformity to these CPRs, and the Council’s Employee Code of Conduct, will ensure that contracts are let in accordance with the Procurement Strategy and any associated User Guides and Procedures.

1.3 The Council is subject also to the Public Contracts Regulations 2015 (SI 2015/102), the legislation which reflects the EU Public Procurement Directives. This legislation requires contract letting procedures to be open, fair and transparent. These CPRs provide a basis for true and fair competition in contracts, by providing clear and auditable procedures, which, if followed, will give confidence that the Council has a procurement regime that is fully accountable and compliant with the legislation.

Page 51 2. Summary of CPRs – Governance Process

Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 Column 7

Financial Value Approval to Process Contract Opening of Authority to Contract (per Contract) Procure Terms tenders Award Contract Signing for Governance £1,000,000 and Procurement Competitive Standard or Bespoke Electronic If within Head of Legal above Board tenders Form of Contract. tenders via approved Services or in compliance Where contracts are CSW- JETS tolerance authorised In addition, with Public in the form of Deeds, agreed at deputy Cabinet, where Contract they must be Column 2, e.g. the Contract Regulations executed by Legal <10% above Value (not 2015 Services. estimated estimated (Note 1 below) Contracts over price, or report framework £1,000,000 will need back to agreement to be in the form of a relevant body value) is Deed in Column 2 for £1,000,000 and approval above on a Per annum basis

£100,000 and Procurement Standard or Bespoke Director up to £999,999 Panel Form of Contract. and/or Head Where contracts are of Service in the form of Deeds, they must be executed by Legal Services. £10,000 up to Director Minimum of 3 Official order form or Officers are Director or Endorsed/ £99,999 approval or written or oral Standard Form of encouraged authorised Signed by delegated quotations Contract to use the deputy Director or authority to (see 3 below electronic authorised budget holder for Quotations deputy (Copies of thresholds). Pack via In- Quotations Where tend for MUST be appropriate, a contract forwarded to minimum of 2 values Procurement & should be from £25,000 - Commissioning local suppliers £99,999 Services for the or social order to be enterprises approved)

Below £10,000 Budget holder Use of Official order form (or N/A Authorised by Authorised corporate Council Procurement Budget Holder by Budget contract or Card) Holder demonstrable value for money

Page 52 Note 1 – Where PCR 2015 thresholds are not exceeded, a minimum of 3 competitive tenders must be sought with the tender advertised on Contracts Finder Note 2 – Framework agreements need approval by the relevant Procurement Panel or Procurement Board only, based on the total estimated/potential expenditure. Cabinet Approval will also be required for each individual Contract placed against a framework agreement where the annual value is £1,000,000 or over.

3. Financial Thresholds for Procedure

Contract Procedure Rules (CPRs) Quick Reference Guide Table – Financial Thresholds

Above PCR 2015 thresholds (Note 2 below)

£4,733,252+ Competitive tenders in compliance with the Public Contracts Regulations 2015 required for Works and Concession contracts.

£663,540 Competitive tenders in compliance with the Public Contracts Regulations 2015 required for Supplies and Services contracts that are subject to Regulation 74 (Light Touch Regime) for Health and Social Care contracts.

£189,330 Competitive tenders in compliance with the Public Contracts Regulations 2015 required for Supplies and Services contracts.

Form of Contract:

Contracts for £999,999 or less in value can be signed for and on behalf of the Council under hand by Directors and Heads of Service.

As a general rule, any works contract and high value contract with a value equal to or exceeding £1,000,000 which are to be expressed to be executed as deeds must either be:

 made under the Council’s seal attested by the City Solicitor or authorised signatory; or

 signed by at least two officers of Legal Services duly authorised by the City Solicitor

Below PCR 2015 thresholds

Page 53 £100,000 – up to PCR At least three potential contractors should be invited to tender. Where thresholds as listed appropriate those invited to tender should include at least two local above (relevant to spend suppliers i.e. Head Office located within CV1-CV6 postcodes. type, e.g. Works, Supplies or Services) MUST be advertised on Contracts Finder.

£10,000 - £99,999 MUST use corporate contracts where one exists. Competitive quotations: £10,000 and up to £24,999 - Oral quotations (which MUST be confirmed by email) can be sought - quotation pack use is optional. Over £25,000 – a minimum of 3 quotations MUST be requested in writing using quotation pack (preferably via In-tend with option to publish on Contracts Finder). Where appropriate those invited to tender should include at least two local suppliers i.e. Head Office located within CV1-CV6 postcodes.

Below £10,000 MUST use corporate contracts where one exists or show value for money.

Note 3: PCR Thresholds PCR Thresholds are revised every 2 years on 1st January. Figures quoted above for Works and Concessions (£4,733,252), Light Touch Regime Services (£663,540) and Supplies and Services (£189,330) are applicable from 1st January 2020 – 31st December 2022.

3.1 The Director responsible for Procurement & Commissioning Services and the Chief Finance Officer (if they are not the same officer) or his/or her authorised deputy, subject to conditions, may authorise a contract as an exception to the CPRs if the works or goods/services are below PCR thresholds. An exception cannot be granted where a breach of any UK legislation would be incurred.

4. Objectives

4.1 The CPRs exist to achieve the aims set out below and to assist and protect the interests of the Council and individual Officers.

It is important that they are viewed as an aid to good management and not as a hindrance. Followed properly they provide protection for Officers against criticism and support good procurement practice.

Officers must be able to demonstrate that they followed procedure or had obtained the necessary authority for not doing so, in order to:

 ensure value for money is obtained;

 ensure probity in the award of Council contracts;

 ensure fairness, equity, openness and transparency in the treatment of contractors/suppliers;

Page 54

 ensure that procedures for placing contracts/orders comply with legislation;

 ensure records are kept which demonstrate compliance with Rules for Contracts.

5. Scope of CPRs

5.1 All purchases and contracts made in the name of and binding the Council must comply with these CPRs and also any contract that involves income to the Council. This includes contracts where the expenditure is grant aided by a third party. These rules also apply to a company which is owned or controlled by the Council or is funded by public money. Any arrangement where the Council pays or receives money or equivalent value, other than a contract to employ staff, must comply with these Rules. This includes contracts for:

(a) buying and selling goods; (b) any work being carried out; (c) services (including financial and consultancy services); (d) hire, rental or lease (of goods) (e) concession agreements

5.2 To receive and deal with expressions of interest (through the Procurement Board or the Panels as appropriate) from relevant bodies in providing or assisting in providing a relevant service on behalf of the Council in accordance with Part 5, Chapter 2 of the Localism Act 2011 and to consult with the relevant Cabinet member on each expression of interest that is received.

6. Compliance

6.1 Every contract entered into on behalf of the Council must comply with these CPRs and all relevant UK legislation.

6.2 The only areas excluded from these rules are:

(a) Internally recharged services;

(b) Schemes where the Council has delegated a function to a third party to perform and where a contract makes separate provision for procurement rules

(d) Land transactions

(d) Grants

6.3 All contracts must be in writing. Whenever possible, contracts under

Page 55 £100,000 in value must be made on an official Council order form or standard form of contract, as appropriate, approved by a designated Authorising Officer, with the Council’s standard terms of trading endorsed or referred to. For works contracts, one of the standard forms of contract, such as the NEC, JCT or ICE forms may be appropriate. The Procurement & Commissioning Services Team, in consultation with Legal Services, will advise on other suitable forms of contract.

6.4 Responsibility for compliance with CPRs remains at all times with Council officers. Directors and the Head of Procurement will be responsible for monitoring compliance against these rules, aided by internal or external audits or inspections which will be carried out as appropriate.

6.5 See Rule 8 regarding approvals required before a Relevant Procedure (as defined in Rule 8.1.1) may be commenced.

7. Justification of Need

7.1 Before any Relevant Procedure (as defined in Rule 8.1.1) is commenced consideration must be given to:

(a) whether the expenditure is really necessary;

(b) whether a critical review has been carried out to identify if the requirement can be met from within existing resources or whether it is being funded through grants or other approved income sources;

(d) in any case, whether the necessary approvals in Rule 8 have been obtained.

8. Approvals Required before certain Relevant Procedures are Commenced

8.1 Rule 8 applies to any Relevant Procedure:

8.1.1 Relevant Procedure: means any procedure conducted by or on behalf of the Council for the genuine purpose of the Council (alone or with others) entering into a contract for the purchase of goods, services and/or works, subject to the following:

(a) This shall include (without limitation), the seeking of quotations, the conduct of any tender exercise, the conduct of any mini- competition exercised under a framework agreement, the making of a purchase under a dynamic purchasing system or off an approved list (or the like), and the conduct of a negotiated procedure by or on behalf of the Council.

(b) This shall not include any genuine exercise to research market

Page 56 conditions (including without limitation, any soft market testing or benchmarking exercise) which is not in itself genuinely intended to directly result in the Council entering into a contract for the purchase of goods, services and/or works.

8.1.2 This Rule 8 only applies to conduct involving Council members and its officers and does not apply as between the Council and the public at large. Accordingly (and without limiting the implications of this), non- compliance by the Council or by any of its members or officers with all or any part of this Rule 8 shall not in itself result in any of the following:

(a) Any act by or on behalf of the Council resulting from that non- compliance being invalid for any reason (including without limitation, any assertion that the Council has acted beyond its powers).

(b) Any member of the public (including any person who takes part in a Relevant Procedure which is conducted in breach of this Rule 8) having any claim of any kind whatsoever against the Council, including any claim for compensation.

8.2 Requirements before a Relevant Procedure may be commenced:

All of the following, to the extent relevant, and without limiting other requirements elsewhere in the Council’s Constitution but subject to the exceptions in Rule 8.5 must be completed before a Relevant Procedure may be commenced:

(a) The expenditure must be within approved budget and policy framework which has been approved by Members.

(b) The use of expenditure must have been approved by the Procurement Board (or on the Procurement Board’s behalf by the Procurement Panel where relevant) in accordance with Rule 8.3.

(c) Where the Relevant Procedure is a sensitive matter (see Rule 8.4), the Procurement Board shall consider and give its approval or delegate the approval to the Procurement Panel.

8.3 Delegation by the Procurement Board of the task of considering whether to approve a prospective Relevant Procedure for the purposes of Rule 8.2(b).

The Procurement Board may (but shall not be obliged to) delegate that task to Procurement Panel (or any other relevant subcommittees the Procurement Board has in place from time to time), but only if both of the following conditions apply to the prospective Relevant Procedure under consideration:

(a) The reasonably estimated total value of the contract or contracts for goods, services and/or works expected to be entered by the Council at the conclusion of the Relevant Procedure (whether

Page 57 under a single contract, as aggregated under a framework agreement across its full term, across two (2) or more lots contained in the same Relevant Procedure, or as aggregated under a series of reasonably connected contracts) is less than £1,000,000 (one million pounds). Where there is reasonable doubt about whether the value is to exceed that figure, there shall be a presumption for the purposes of this Rule 8.3 (a) that it does exceed that figure; and

(b) The Relevant Procedure is not a sensitive matter (see Rule 8.4).

8. 4 Any of the following may constitute a ‘sensitive matter’ for the purposes of this Rule 8 but the Procurement Board or Procurement Panel will make the decision.

(a) There is a significant risk (on a reasonable view) that the Relevant Procedure (and/or any purchase of goods, services and/or works resulting from it) will create serious adverse publicity for the Council.

(b) Under the proposed contract for the purchase of goods, services and/or works expected to result from the Relevant Procedure, the Council would be required to deal with a particular supplier or provider on an exclusive basis.

8.5 Exceptions to obtaining any of the approvals required in Rule 8: only with the written consent of the Director responsible for Procurement & Commissioning Services and the Chief Finance Officer (if they are not the same person).

9. The Procurement Board and Procurement Panel

9.1. Composition of the Procurement Board:

(a) Appointment and removal of Procurement Board members: from time to time in accordance with its approved terms of reference and its members must include the Chief Finance Officer, a minimum of three Directors and the Head of Procurement & Commissioning Services.

(b) How the Procurement Board is to conduct itself: as determined by the Procurement Board from time to time, acting reasonably and in good faith, and in any case, lawfully.

(c) The Procurement Panel shall include: Directors, Heads of Function and other officers of the Council appointed or removed in accordance with its approved terms of reference.

9.2 The Procurement Board shall have the following powers:

(a) To determine whether to approve or refuse any proposed Relevant Procedures which it has not otherwise delegated according to Rule

Page 58 8.3;

(b) To monitor compliance with contract rules and monitor spend and contracts; to achieve savings;

(d) To establish and dissolve the Procurement Panel or similar sub- committee;

(e) To establish the composition of members of the Procurement Panel or similar sub-committee, including appointment and removal of members, including any alternates;

(f) The conduct of the proceedings of the Procurement Panel or similar sub-committee from time to time;

(g) Any act of the Procurement Panel or similar sub-committee (including any approval or refusal of a Relevant Procedure) shall be regarded as if it were the direct act of the Procurement Board itself;

(h) To deal with expressions of interest from a relevant body exercising the right to challenge for a relevant service under Part 5, Chapter 2 of the Localism Act 2011;

(i) To provide an annual report on the activities of the Procurement Board and Procurement Panel to Cabinet Member Portfolio Holder; and

(j) The Chief Finance Officer has the power to vary the terms of reference of the Procurement Board and Procurement Panel.

9.3 The Procurement Panel shall have the following powers:

(a) (b) (d) (e) (g) (h) and (i) detailed in Rule 9.2.

10. Exceptions to CPRs

10.1 An exception to the CPRs is a permission to let a contract without complying with one or more of the Rules. An exception to the CPRs may be granted subject to conditions. An exception cannot be granted where a breach of any UK legislation would be incurred.

10.2 Any Director may grant an exception to these CPRs where the value is below £100,000. Any exception to the CPRs of £100,000 and above (and up to PCR thresholds) will need the approval of the Director responsible for Procurement & Commissioning Services or his/her authorised deputy who may grant an exception to these CPRs. Applications for exceptions must be made in writing to the appropriate Director and include the exception that is requested and the justification

Page 59 for the exception. All Directors granting an exception or exceptions will notify Procurement & Commissioning Services of all exceptions granted at a frequency to be determined by the Director responsible for Procurement & Commissioning Services.

10.3 The Director responsible for the Procurement & Commissioning Service will keep a register of all exceptions to the CPRs, which shall be available by appointment for inspection by members of the Council and the public. An annual report on exceptions granted in the previous financial year will be presented to the Procurement Board.

10.4 An application for an exception to CPRs to allow a contract to be let without genuine competition will not be granted without a cogent reason. A lack of time caused by inadequate forward planning is not a cogent reason and will not permit an exception to CPRs. If an application is granted, the Director responsible for the contract must demonstrate that the price obtained is not in excess of the market price and that the contract represents best value for money.

10.5 Where an exception has been granted in line with these rules, a further exception must be sought if the value of the original exception has been exceeded or the time period granted for the exception has elapsed.

10.6 An exception to the requirements to follow the tender or quotation procedure may be granted in the following circumstances:

(a) an unforeseeable emergency involving danger to life or health or serious damage to property, in which the work, goods or services are required more urgently than would be possible if the tender or quotation procedure were followed;

(b) for justifiable technical reasons, the works, goods or services can be obtained from only one supplier;

(c) acquiring goods or services from a different supplier would result in incompatibility with existing goods or service or disproportionate technical difficulties;

(d) the proposed contract is an extension to, or variation of, the scope of an existing contract, if permitted by the public procurement legislation i.e. below the required PCR threshold, unless the existing contract provides for an extension;

(e) there is a need to develop and influence the market by extending the range and provision of services, provided the contract is for a fixed term of no more than three years;

(f) it is necessary to enable the continuation of a new service, development of which was initially grant-aided, provided the contract is for a fixed term of no more than three years;

(g) when a grant from a public body includes a recommendation as to

Page 60 the supplier or is time limited;

(i) in furtherance of the Council’s social enterprise policy, or other economic development aims, subject to the prevailing financial support limits for this type of activity and without breaching public procurement rules;

(g) if there are exceptional circumstances in which it would not be in the Council’s best interests to follow the tender or quotation procedure or another Contract Procedure Rule;

10.7 An exception to Contract Procedure Rules is granted and separate authorisation is not required in the following circumstances:

(a) placing an order against a contract/framework agreement let by another Public Body where contracts have been let to allow collaboration, e.g. Eastern Shires Purchasing Organisation (ESPO), Central Buying Consortium (CBC, Buying Solutions, etc.), where the value is below £100,000. If £100,000 or above, approval should be sought via the Procurement Panel or Procurement Board;

(b) as part of a partnering contract that contemplates a series of contracts with a single supplier;

(d) value for money can be achieved by the purchase of second hand/used vehicles, plant or materials

(e) the purchase of works of art, museum artefacts, manuscripts, archive collection items or the services of artistic and cultural performers;

(f) Residential Placements for an individual with a registered care provider of their choice under the Care Act 2014; and

(g) for decision making on utilities contracts. Due to the volatile nature of utilities markets and the need for expedient decision making, authority has been delegated through the approval of these rules to the Director responsible for Procurement & Commissioning Services in consultation with the Chief Finance Officer. If the Chief Finance Officer is also the Director responsible for Procurement & Commissioning Services, then the decision will be made by the Chief Finance Officer in consultation with the Chief Executive or his nominated representative. All utilities contracts will be let through Procurement & Commissioning Services and in line with the procedures dictated by the Head of Procurement & Commissioning Services.

11. Valuation of Contracts and Aggregation of Requirements

Page 61

11.1 The Director responsible for each contract must record an estimated value for the contract before any offers are sought.

11.2 The total value of the contract is the total amount that the Council expects to pay for the contract, either in a single sum or periodically over time and should be calculated in accordance with the most appropriate of the following:

(a) Capital and fixed term contracts – the total price which is expected to be paid during the whole life of the contract period, including all extension options and contingency allowance

(b) Where the contract period is uncertain, multiply the price estimated to be paid each month by 48

(c) If the purchase is one of a series of regular transactions for the same type of item, the ‘Total Value’ is the expected aggregate value of all of those transactions over a 12-month period

(d) For feasibility studies, it is the value of the scheme or contracts which may be awarded as a result

11.3 Contracts for the same works, goods or services must not be split into smaller, separate contracts to avoid compliance with these CPRs or the Public Contracts Regulations 2015.

12. Duties of Directors and the Head of Procurement & Commissioning

12.1 The Director is responsible for ensuring that all expenditure involving procurement activity complies with the CPRs and is responsible for ensuring that contracts within his/her division are managed and operated within the terms of the contracts themselves.

12.2 The Head of Procurement is responsible for maintaining a register of contracts and for providing an up-to-date copy of the register. Contracts for less than £25,000 need not be recorded in the register. The contracts register is to be published on the Council’s website in accordance with the Local Government Transparency Code. Directors responsible for entering into contracts for £25,000 or more must notify the Director responsible for Procurement & Commissioning Services of contracts entered into at a frequency determined by the Director responsible for the Procurement & Commissioning Services.

12.3 As soon as practicable after the Council’s budget has been set and in any event before the end of March in each financial year, the Director must notify the Head of Procurement & Commissioning Services of all contracts (including their values) that his/her division plans to enter into during the following financial year.

12.4 The Director must use corporate contracts, where they are in place. To

Page 62 do otherwise would be unlikely to give value for money for the Council and may be in breach of the Public Contract Regulations 2015.

12.5 If there is an in-house service available that operates as a trading unit, the Director must consider, in accordance with Value for Money principles, whether that service should be used or whether a contract should be let to an external provider, although all resource implications (e.g. TUPE implications and/or redundancies for directly employed staff), must be considered as part of the best value assessment.

13. Selection of Procurement Route

13.1 When selecting the most appropriate procurement route to secure value for money, the Director, in consultation with the Head of Procurement & Commissioning Services, shall adhere to the following principles:

(a) All practical options for contract packages and methods of procurement should be analysed and evaluated, with the object of selecting the option that most effectively ensures value for m oney is achieved. The preferred option must provide full, fair, transparent and open competition and be identified as the most economically advantageous bid.

(b) The scope of contract packages should take into account cross- cutting themes and outcomes identified by strategic, policy and service reviews. Stakeholders within and outside the Council should be consulted about service standards and specifications and investigation of the market undertaken. Performance under any current contract should be appraised and prospective performance considered in the light of consultations and investigations.

(c) The contract package should seek to stimulate diversity and innovation, enhance choice for service users and attract new suppliers.

(d) Partnerships between the public, private and voluntary sectors should be sought, which demonstrate a shared commitment to objectives that benefit users of the Council’s services.

14. Authority to Enter into a Contract

14.1 Officers may only enter into a contract if authority is delegated to them or by specific decision of the Council, the Cabinet or Cabinet Member or Procurement Board or Procurement Panel.

14.2 Unless an officer has been given authority to enter into a contract, all contracts involving capital expenditure must be authorised by a specific decision of the Cabinet or a Cabinet member.

14.3 Unless an officer has been given authority to enter into a contract, all contracts involving revenue expenditure must be authorised by a

Page 63 specific item in the approved revenue budget for the relevant year. A specific item in the approved revenue budget is deemed to be an authority for the relevant Director to enter into a contract up to the value estimated.

14.4 All contracts will be let with the involvement of Procurement & Commissioning Services in consultation with service users and technical experts. See Appendix 1 for Governance Flowchart

15. Specifications

15.1 The Director, in conjunction with the Head of Procurement & Commissioning Services, must ensure that an appropriate specification is prepared for every contract, which sets out clearly the Council’s requirements with regard to the works, goods or services to be supplied.

15.2 All works, goods and services must be specified by reference to European or national standards where appropriate.

15.3 Specifications should incorporate measurable and, so far as is possible, objective quality and performance criteria to enable the contract to be monitored and managed and should build in a capacity for flexibility and innovation, to secure sustained improvements and the ability to meet changing local and national circumstances.

15.4 Where appropriate, specifications should identify and allocate the risks inherent in the contract.

15.5 If a contract may involve the transfer of employees (from the Council to a contractor or from one contractor to another), the tender documents should, if the contractor has assured confidentiality of personal information, include all relevant information relating to those employees.

15.6 The Director must obtain all necessary professional and technical advice and assistance in preparing a specification, to ensure a comprehensive document that expresses the Council’s requirements and protects its interests. Consultants or other third parties who assist in the preparation of a specification must not be invited to tender or quote for the contract.

16. Contract Procedures

16.1 If a corporate contract is in place for the supply of any works, goods or services, the Director must place orders under that contract. Procurement & Commissioning Services publishes data to enable Directors to order from corporate contracts.

16.2 The Director, in conjunction with the Head of Procurement & Commissioning Services, must establish whether the public procurement legislation applies to a proposed contract. If in doubt,

Page 64 Legal Services will advise whether the legislation applies. When public procurement legislation does apply, the Director/Head of Procurement & Commissioning Services must use the open or restricted procedure unless Legal Services agrees the use of competitive dialogue or the negotiated procedure. Whenever possible, a competitive procedure must be adopted.

16.3 The Head of Procurement & Commissioning Services will place all notices relating to contracts in Find a Tender and will provide the statutory annual returns to HM Treasury of contracts let by the Council.

16.4 The Director need not obtain competitive quotations for contracts of less than £10,000 in value but must demonstrate in any event that the Council is receiving value for money

17. Invitation to Formal Tender

17.1 If the public procurement legislation applies to a contract, the selection of suppliers to be invited to tender for the contract must follow the requirements of that legislation.

17.2 If the public procurement legislation does not apply, and the estimated contract value is £100,000 or more, at least three potential contractors should be invited to tender. Where appropriate those invited to tender should include at least two local suppliers. The number of contractors invited to tender should ensure full competition is achieved. Potential contractors should be selected in the following way:

 Placing an advertisement on the Council's website or in one or more newspapers circulating in the West Midlands or in one or more newspapers or journals circulating among persons who undertake such contracts or sub-contracts.

 The placing of the advertisement should aim to achieve maximum interest amongst contractors.

17.3 Companies expressing an interest in being invited to tender in response to an advertisement, must satisfy the Council as to their legal, financial and technical capacity (including their Health & Safety and Equal Opportunities policies) to undertake the contract by completing a standard questionnaire (where relevant), or tender document where the open procedure of the Public Contract Regulations is used, in a form approved by the Head of Procurement & Commissioning Services.

17.4 The Head of Procurement & Commissioning Services shall be responsible for ensuring that an “Invitation to Tender” procedure – that demonstrates public sector best practice – is available and adhered to, at all times.

18 Opening Formal Tenders

18.1 The information obtained at the opening of tenders is confidential to

Page 65 those involved in the opening process and those directly involved in evaluation of the tenders. Confidentiality must be maintained, and any breach reported to the Monitoring Officer.

18.2 The Council uses an electronic tendering platform. The tender opening process must be appropriate to the specific electronic software employed and its facilities for guaranteed receipt of tenders.

19. The Quotation Procedure

19.1 For contracts of under £100,000 in value, suppliers to be invited to quote may be selected from an appropriate approved list, advertised on the Council's website or otherwise sought as appropriate. Where the contract value is £10,000 and up to £24,999, oral quotations (which should be confirmed by email) can be sought and the use of the quotation pack is optional. Where the contract value is £25,000 up to £99,999, a minimum of 3 quotations MUST be requested in writing using the quotation pack.

19.2 The Authorising Officer must satisfy him/herself as to the legal, financial and technical capacity of suppliers invited to quote to undertake the contract for the Council, through seeking appropriate in-house professional advice, and that they will provide value for money.

19.3 Three or more suppliers must be invited to quote to ensure genuine competition. If it is only possible to invite two suppliers to quote, authorisation must be sought from the relevant Director.

19.4 The Head of Procurement & Commissioning Services shall be responsible for all procedural aspects of seeking quotations, ensuring that probity and proper public accountability standards are in operation. Monitoring shall be carried out periodically by either the internal or external auditor.

20. Acceptance of Formal Tenders and Quotations

20.1 Where expenditure has been approved through the budget setting process, the Procurement Panel or Board has given approval to proceed and these CPRs have been followed, the Procurement Board or Procurement Panel shall receive notification of the contract award.

20.2 For contracts of £100,000 or more, contracts are to be awarded under the “most economically advantageous” criterion (see Rule 20.3). The Procurement Panel/Board shall receive a written report of the contract award from the responsible officer, seeking approval for such award where outside of the delegated authority granted at the approval to proceed stage. In extreme urgency, the Head of Procurement & Commissioning Services may agree to an oral report from the responsible officer with a written report being presented to Procurement Panel/Board within a calendar month. All papers/electronic files will be stored in line with the document retention policy.

Page 66 20.3 Tenders or quotations must be evaluated on the basis of which is most economically advantageous to the Council. When using the Public Contracts Regulations 2015, the criteria for evaluation must be set out in the invitation to tender or equivalent document depending on which procedure is used, in descending order of priority, with the weightings to be given to them. The criteria may also be set out in Find a Tender and public notices. Whole life and environmental costs may be included in criteria for evaluation.

21. Electronic Tendering and Quotations

The Head of Procurement & Commissioning Services is responsible for the procedure for these processes.

(a) tenders and quotations may be invited electronically, provided paper copies of any documents that cannot be sent on-line are sent by post and paper copies of all documents are sent to suppliers who do not specify an e-mail address for receipt of tenders or quotations. In selecting suppliers to be invited to tender or quote, the Head of Procurement & Commissioning Services must not discriminate against suppliers who do not have facilities for receiving invitations by e-mail. Where the e tendering system is the only process being used support must be found for suppliers in this category.

(b) invitations to tender and quotes may be submitted electronically through the approved e tendering system. Where electronic submissions are made outside of the approved system, submissions must be made before the official opening deadline,

22. Amendments and Alterations to Tenders and Quotations

22.1 Amendments to invitation to tender or invitation to quote documents, made after the invitations have been sent out, must be clearly headed “Tender Amendment” or “Quotation Amendment” as appropriate and sent to all suppliers who have been invited to tender or quote. If there is more than one amendment, they should be numbered consecutively. Amendments should be sent out in sufficient time to allow suppliers to adjust their tenders or quotations as appropriate.

22.2 A supplier’s tender or quotation is his offer to the Council, which the Council may accept as it stands. Once a tender or quotation has been submitted, alterations will only be accepted through formal clarifications under the restricted procedure; or negotiations under the Competitive Dialogue process of the Public Contracts Regulations 2015.

22.3 In all other situations, if a supplier attempts to alter his offer after the last date for receipt of tenders or quotations, he must be given the opportunity to stand by or withdraw his original offer. Correction of an

Page 67 obvious arithmetical error, which would reduce the price to be paid by the Council or increase the price to be paid to the Council, may be accepted.

22.4 Where performance specifications are used, a tender or quotation that is expressed to be conditional upon the Council’s acceptance of alterations to the specification or the terms and conditions of contract, may be treated as non-compliant and rejected. This does not prevent the Council inviting variant bids (that is an invitation to submit an alternative bid that could then be considered as being to the Council’s benefit provided that the condition applying to the mandatory reference bid is followed). If variant bids are invited, suppliers must be required to submit a mandatory reference bid based on the specification and terms and conditions included in the invitation to tender or invitation to quote, so that all bids may be compared fairly.

22.5 Where outcome-based specifications are used it will be for the bidder to decide the method of service delivery. Tenders or quotations will be evaluated fairly against published evaluation criteria.

22.6 A properly approved and PCR-compliant competitive dialogue process or negotiated procedure will normally result in one or more Best and Final Offers as a result of negotiation with selected bidders. No alteration to the Best and Final Offer, in terms of outcomes or contract price is permitted without the specific approval of the Monitoring Officer.

23. Contract Extensions

23.1 Where extensions to contracts have been included in the original advert, tender documentation and contract, subject to Panel/Procurement Board approval, the extensions may be agreed; where performance is satisfactory and the original contract terms are to continue (including price variations in line with the original contract) through the issuing of a contract change note. The contract change note must be kept with the original contract in line with the document retention policy and must be signed by the officer who signed the original contract, or in their absence for whatever reason, by another officer authorised to sign the original contract.

23.2 For Contracts of £100,000 in value and over, these will be approved by Procurement Panel/Board as set out in Appendix 2.

24. Contract Variations

24.1 For contracts of £100,000 in value and over, if a contract variation is proposed where the terms and conditions of the original contract will be changed; the relevant Panel/Board shall require a written report from the responsible officer requesting approval for acceptance and detailing the reasons for doing so. This shall be recorded in writing. In extreme urgency the Head of Procurement & Commissioning Services may

Page 68 agree to an oral report from the responsible officer, with a written report being signed off by the Panel/Board within a calendar month of this meeting. Once approval is received, a contract change note will be issued and kept with the original contract documentation. All written reports will be stored in line with the document retention policy. If a contract is executed as a deed, a short supplemental deed may be drafted and this will be dealt with on request to Legal Services.

25. Form of Contract

25.1 Legal Services will decide whether a contract is to be executed as a deed or under hand as a simple contract. As a general rule, any works contracts and high value contracts with a value equal to or exceeding £1,000,000 and which are expressed to be executed as deeds must either be:

25.1 made under the Council’s seal attested by the City Solicitor or authorised signatory; or

25.2 signed by at least two officers of Legal Services duly authorised by the City Solicitor

25.2 All contracts created as deeds must be made in accordance with the provisions of paragraph 25.1 above, witnessed in accordance with the relevant provision of the Scheme of Functions Delegated to Employees by an Officer authorised to do so.

25.3 A contract executed as a deed is retained for twelve years to enable any action to be taken under it, if required

25.4 Contracts up to £999,999 in value can be signed under hand by Directors and Heads of Service or an authorised signatory.

25.5 Any contracts entered into on behalf of the Council which are being executed by electronic means (using an electronic execution software tool) shall be undertaken in accordance with the process set out in the Electronic Execution Procedure Rules.

26. Social Value

26.1 The Public Services (Social Value) Act 2012 requires the Council to consider delivering Social Value through contracts for services. However, the Council encourages consideration of social value outcomes in all contracts above the PCR thresholds, where it can be evidenced that it is relevant to the subject matter of the contract.

26.2 For those contracts that fall below the threshold, the approach should be to maximise outcomes where possible.

26.3 In order to ensure that the Council adheres to the Act, the social value sought from a contract must be relevant and proportionate in respect of the proposed contract

Page 69

27. Contract Administration and Management

27.1 The Head of Procurement & Commissioning Services shall arrange for publication of a contract award notice, no later than 45 days after contract award, if appropriate, and shall keep a register of the notified information, which shall be available for inspection by appointment by any Member of the Council, internal and external auditors and any member of the public.

27.2 The Head of Procurement & Commissioning Services shall be responsible for ensuring that a procedure on “Contract Administration and Management” is made available to all officers and partners managing contracts on the Council's behalf. This will include guidance on managing partnering or partnership contracts explaining techniques such as target costing and "open book".

28. Prevention of Fraud and Corruption

28.1 All purchases, contracts and income covered by these rules must be let in line with the Council's Anti-fraud and Corruption Policy and Strategy.

28.2 If an officer of the Council has a pecuniary interest, in a contract or proposed contract, he/she must in accordance with Section 117 of the Local Government Act 1972 register the interest with the Monitoring Officer and declare it at any meeting at which the officer is present and the contract is discussed and thereafter leave the room and take no further part in the discussion.

28.3 If an officer of the Council has a personal or non-pecuniary interest in a contract or proposed contract, he/she must declare that interest to their Deputy Chief Executive or Director, as appropriate, as required by the Council’s Code of Conduct for Employees.

28.4 If a Member of the Council has a disclosable pecuniary interest or other relevant interest in a contract as defined in the Code of Conduct for Elected and Co-opted Members, the member must take such action as is required by that Code.

28.5 A contract must be terminated immediately, and any losses to the Council arising from the termination recovered from the contractor, if the contractor, or anyone acting on his behalf:

(a) offers or gives or agrees to give any member or officer of the Council any gift, benefit or consideration of any kind or value as an inducement or reward with regard to the contract; or

(b) commits any offence under the Bribery Act 2010 or section 117 of the Local Government Act 1972.

A declaration to this effect must be contained in all invitations to tender or quote.

Page 70

28.6 The attention of officers is drawn to the Council’s Code of Conduct for Elected and Co-opted Members, Whistleblowing policy, Disciplinary Policy and Procedures and the Code of Conduct for Employees. Non- compliance with these CPRs constitutes grounds for disciplinary action.

28.7 All of the requirements in Rule 27.1 to 27.6 above will apply to any third party acting on the Council’s behalf in a contractual situation e.g. consultants and community representatives on evaluation panels.

29. Freedom of Information Act 2000

29.1 When entering into contracts the Council will refuse to include contractual terms that purport to restrict the disclosure of information held by the Council and relating to the contract beyond the restrictions permitted by the Act. Unless an exemption provided for under the Act is applicable in relation to any particular information, the Council will be obliged to disclose that information in response to a request, regardless of the terms of any contract.

29.2 When entering into contracts with non-public authority contractors, the Council may be under pressure to accept confidentiality clauses so that information relating to the terms of the contract, its value and performance will be exempt from disclosure. As recommended by the Information Commissioner, the Council will reject such clauses wherever possible. Where, exceptionally, it is necessary to include non- disclosure provisions in a contract, the Council will investigate the option of agreeing with the contractor a schedule of the contract that clearly identifies information which should not be disclosed. The Council will take care when drawing up any such schedule and be aware that any restrictions on disclosure provided for could potentially be overridden by obligations under the Act, as described in the paragraph above. Any acceptance of such confidentiality provisions must be for good reasons and capable of being justified to the Information Commissioner. When entering into the above contracts the Council will make it clear that these restrictions apply to sub-contractors also and that the Secretary of State has the powers to designate them as ‘public bodies’ for the purpose of making them comply with the Act.

29.3 The Council will not agree to hold information 'in confidence' which is not in fact confidential in nature. Advice from the Information Commissioner indicates that the exemption provided for in section 41 only applies if information has been obtained by a public authority from another person and the disclosure of the information to the public, otherwise than under the Act, would constitute a breach of confidence actionable by that, or any other person.

29.4 It is for the Council to disclose information pursuant to the Act, and not the non-public authority contractor. The Council will take steps to protect from disclosure by the contractor information that the authority has provided to the contractor (which would clearly be exempt from disclosure under the Act) by appropriate contractual terms. In order to

Page 71 avoid unnecessary secrecy, any such constraints will be drawn as narrowly as possible and according to the individual circumstances of the case. Apart from such cases, the Council will not impose terms of secrecy on contractors.

29.5 The Head of Procurement & Commissioning Services will be responsible for advising on the application of the Freedom of Information Act and contracts, in conjunction with the Council’s Head of Information Governance, where circumstances arise that are not specifically covered by Council policy. He/she will also be responsible for updating procedure following any case law that materially amends or augments Council policy in this area.

30. Management of Risk in Contracts

For contracts of strategic importance, a risk register will be drawn up for the contract letting process. Once the contract is awarded, a risk register to cover the implementation and successful ongoing management of the contract will be drawn up by the Head of Service or authorised deputy. This risk register will be monitored in line with the corporate guidance on risk throughout the life of the contract.

31. Impact of Other Legislation

In addition to what has already been mentioned in these Rules, there is other legislation that may impact on the supplies, services and works required when following a contract tender or quotation procedure such as Health & Safety, Safeguarding, Modern Slavery, to name but a few. This legislation must be incorporated where relevant and appropriate. In particular, the Director must consider whether the contract needs to include, or be subject to, a Data Sharing Agreement where the nature of the contract services is such that personal data is likely to be shared.

32. Definitions

In these Contract Procedure Rules (CPRs):

Authorising Officer means: an officer authorised to approve the placement of orders or invoices for payment.

Cabinet means: the Leader of the Council and the other members of the Council’s Executive.

Chief Finance Officer means: the officer appointed under section 151 of the Local Government Act 1972.

Contract means: the agreement between the Council and a contractor/supplier/provider for the supply of works, goods or services, or for any activity that generates income for the Council.

Contractor means: a supplier or provider of works, goods or services to the Council.

Page 72

Contract change note means: the document that describes changes to the original contract which have been agreed by both parties.

Contract package means: the scope for amalgamating like requirements/services currently operating at different parts of the organisation, to suit the supply market to achieve overall better value.

Corporate contract means: a contract or framework agreement for the supply of works, goods or services to the Council e.g. for computer consumables, stationery, legal and financial services.

Decision making body means: the body responsible for decisions in the described situation under the Council's Constitution.

Director(s) means: a member(s) of the Council’s Corporate Leadership Team or Strategic Management Board.

Framework Agreement means: an agreement between the Council and a contractor for the provision of estimated quantities of goods or services. This becomes a contract when an order for a specific quantity is placed either after further competition or through the most competitive source identified in the original tender.

Head of Procurement & Commissioning Services means: the Head of Procurement & Commissioning Services or his or her authorised representative.

Monitoring Officer means: the officer designated as such under Section 5 of the Local Government and Housing Act 1989 or his or her deputy.

Outcome based specifications means: a specification that describes the required outcomes through service delivery and leaves the method of delivery to the third-party provider.

Panels means: Procurement Panel.

Performance Specifications means: a specification that provides details of the methods to be adopted when delivering the requirements.

Procurement Board means: the officer board responsible for all procurement decisions.

Procurement & Commissioning Services means: the centralised Procurement & Commissioning Service for Coventry City Council.

Public procurement legislation means: The Public Contracts Regulations 2015, the EU Directives from which they are derived, UK legislation affecting public sector contracts and any amendment, re- enactment or replacement of any of them.

Quotation means: an offer to undertake a contract of £10,000 or more

Page 73 but less than £100,000 in value.

Right to challenge means: the right to challenge for services under Part 5 of the Localism Act 2011.

Services contract means: a contract or framework agreement for the provision of services to the Council.

Supplies contract means: a contract or framework agreement for the sale or hire of goods to the Council and includes, where appropriate, installation of goods.

Tender means: an offer to undertake a contract of £100,000 or more in value.

TUPE Regulations means: the Transfer of Undertakings (Protection of Employment) Regulations 2006 and any amendment, re-enactment or replacement of the same.

Works contract means: a contract for the construction, repair or maintenance of a physical asset not defined as Services in the Public Contracts Regulations.

Page 74 Appendix 1 PROCUREMENT GOVERNANCE

Expenditure within approved budget Has the new expenditure been No & policy framework? approved by Members?

Yes Yes

Category Leads develop procurement Member approval plans with service Yes obtained to spend money in this area

Is total contract value £100k or over?

Yes No No

£1m or Less over? No than Approved to £1m? procure?

Yes Yes Yes

Procurement Procurement Outcomes reported six Board Panel No monthly as part of Procurement Strategy update

Is annual contract value £1m or over or Audit & Procurement are there particularly Committee sensitive issues that and need to be considered Cabinet Member by members?

Yes Note: Framework agreements need approval by the relevant Procurement Panel or Procurement Board only, based on the total estimated/potential expenditure. Cabinet Approval will also be required Cabinet for each individual Contract placed against a framework agreement where the annual value is £1,000,000 or over

Page 75 Page 76

Appendix 2: Proposed Revised Code of Conduct for Employees

PART 4B: CODE OF CONDUCT FOR EMPLOYEES

1.1 The Code of Conduct for Employees is based on the following key principles arising from the work of the Nolan Committee on the Standards in Public Life:- 1. The Seven Principles of Public Life The Seven Principles of Public Life (also known as the Nolan Principles) apply to anyone who works as a public office-holder. This includes all those who are elected or appointed to public office, nationally and locally, and all people appointed to work in the Civil Service, local government, the police, courts and probation services, non-departmental public bodies (NDPBs),and in the health, education, social and care services. All public officeholders are both servants of the public and stewards of public resources. The principles also apply to all those in other sectors delivering public services. 1.1 Selflessness Holders of public office should act solely in terms of the public interest. 1.2 Integrity Holders of public office must avoid placing themselves under any obligation to people or organisations that might try inappropriately to influence them in their work. They should not act or take decisions in order to gain financial or other material benefits for themselves, their family, or their friends. They must declare and resolve any interests and relationships. 1.3 Objectivity Holders of public office must act and take decisions impartially, fairly and on merit, using the best evidence and without discrimination or bias. 1.4 Accountability Holders of public office are accountable to the public for their decisions and actions and must submit themselves to the scrutiny necessary to ensure this. 1.5 Openness

Holders of public office should act and take decisions in an open and transparent manner. Information should not be withheld from the public unless there are clear and lawful reasons for so doing.

9 Page 77

1.6 Honesty

Holders of public office should be truthful. 1.7 Leadership

Holders of public office should exhibit these principles in their own behaviour. They should actively promote and robustly support the principles and be willing to challenge poor behaviour wherever it occurs.

1.2 The Code outlines the minimum standards that Council employees, must adhere to. The Code does not apply to school-based teaching staff or centrally employed teachers who have their own Code.

1.3 Employees must comply with the Code as it forms part of their terms and conditions of employment.

1.4 All employees are expected to perform their duties with honesty, integrity, impartiality and objectivity and in particular:- (a) To give the highest possible standards of service (b) To do nothing inside or outside working hours which could damage the City Council's reputation (c) To behave honestly (d) Must comply with all the City Council's policies and procedures.

Remove all further paragraphs

10 Page 78 APPENDIX 3 – EXISTING CODE OF CONDUCT FOR EMPLOYEES

PART 4B: CODE OF CONDUCT FOR EMPLOYEES

1. Introduction and Scope

1.1 This Code of Conduct is based on the key principles arising from the work of the Nolan Committee on the Standards in Public Life. The Code outlines the minimum standards that you as a Council employee, must adhere to. This Code does not apply to school- based teaching staff or centrally employed teachers who have their own Code.

1.2 You must comply with this Code as it forms part of your terms and conditions of employment. The Council believes that employees are responsible for their actions. It is the responsibility of all employees to read the Code. If any of the provisions contained within this Code of Conduct, related Codes of Practice or Policies are not fully understood, then you must, in your own interests, seek clarification from your manager or the Human Resources Service.

1.3 All employees are expected to perform their duties with honesty, integrity, impartiality and objectivity and in particular to:- (a) Give the highest possible standards of service (b) Do nothing inside or outside working hours which could damage the City Council's reputation (c) Behave honestly (d) Follow the City Council's policies and procedures.

1.4 The people who live in, work in or visit Coventry are entitled to high-quality services and a high standard of behaviour from all of the City Council's employees. Public confidence in employees' integrity would be shaken by the least suspicion that they could be influenced by improper motives. You must not put yourself in a position where your honesty or integrity could be called into question. The Council reserves the right to monitor its employees including surveillance, (in accordance with any relevant legislation and City Council policies) to ensure that the provisions of this Code of Conduct are being adhered to.

1.5 If your actions or behaviour fall below the standards set out in this Code then the City Council may take formal disciplinary action against you including the possibility of summary dismissal without notice. Serious misconduct, criminal offences or other acts committed outside working hours which bring the City Council into disrepute may also result in formal disciplinary action being taken against you, in accordance with the City Council's procedures.

1.6 You must comply with the rules and procedures set by the City Council in relation to actions and behaviours. These include:-

11 Page 79 (a) Equal Opportunities Policies (b) Race, Disability, Gender and Sexual Orientation Equality Policies (c) Anti-bullying and Dignity at Work Policy (d) Flexitime Scheme (e) Acceptable Use of ICT Facilities Policy (f) Customer Care Standards (g) Policy and Strategy on Theft Fraud and Corruption (h) No Smoking Policy (i) Addiction and Substance Misuse Policy (j) Corporate Health and Safety Policy (k) Corporate Promoting Health at Work Policy and Procedure (l) Recruitment Code of Practice

2. Working with the Community

2.1 You must always remember your responsibilities to the people of Coventry and ensure courteous, efficient and impartial service delivery to all groups and individuals within the community.

2.2 The City Council values its partnership with other public, private and voluntary organisations and all employees should create successful working relationships with these organisations.

2.3 You have a duty at all times to uphold the law and relevant guidance bearing in mind the public's trust placed in Council employees.

2.4 The City Council will not tolerate an employee's physical, emotional or verbal abuse, harassment, discrimination, victimisation or bullying of service users, members of the public or other employees. Such actions may be deemed to be misconduct or gross misconduct and may result in disciplinary action including dismissal.

2.5 Employees working with young people or vulnerable adults are in a particular position of great trust. A breach of that trust, assault or sexual misconduct or breach of policies and procedures meant to safeguard vulnerable service users and other recipients of Council services will be regarded as potential gross misconduct. This may lead to disciplinary action including the possibility of summary dismissal without notice. Directorates will have appropriate guidance on good practice and working arrangements for dealing with vulnerable people which aims to ensure an appropriate professional environment and the application of necessary safeguards through risk assessment to address any potentially vulnerable situations.

2.6 The City Council believes that all its employees are entitled to be treated with respect, free from any threat or violence from members of the public, service users or others. If a member of the public is abusive or unreasonable, and you cannot ease the situation, you should try to end the conversation politely and then tell your Manager. Do not be rude or offensive in return. You should inform your Manager in writing immediately of 12 Page 80 any aggressive or offensive customer you have dealt with. Your Manager will be able to give you details of the policies that operate within your service area for dealing with aggressive or offensive customers.

2.7 If you are assaulted, you can take reasonable action to defend yourself, but you risk breaking the law if you overreact. In certain circumstances, it may be necessary for security staff to use reasonable force to remove a person who has acted violently and refused to leave the premises. Employees can call the Police if they need their help. The City Council will support and take appropriate action on behalf of all staff who are assaulted or abused in the course of their duties.

2.8 You should never mislead people who use the City Council's services or lie about the Council's business.

3. Working with other Employees

3.1 All employees have a right to be treated with dignity at work. You should always respect your colleagues and other employees and treat them how they wish to be treated. You should always help other colleagues if they need information, advice or services.

3.2 All forms of bullying, including violence, threats or verbal aggression towards colleagues is unacceptable and will be dealt with seriously by the City Council. It is not acceptable for an employee to abuse their position with the City Council to take advantage of other employees. If there are important issues that cannot be resolved amicably with another colleague, then you must make the situation known to their Manager. It is not acceptable to fight with, or assault, any employee or stop them from working.

3.3 All employees are required to follow the Council's policies on equalities and diversity. All forms of harassment, including racial and sexual harassment, and harassment on the grounds of disability, religion, class, sexuality, age, political affiliation or membership of a Trade Union are unacceptable. If you do not understand any part of the Council's policies on equalities and diversity then you should raise the matter with your Manager.

3.4 If you leave your job, you should make sure that you leave your files and records in good order for the person taking over from them. You should put a note on each file, unless your Manager tells you otherwise, giving a brief history of the case, any action that needs to be taken and when it should be done. Any important dates and deadlines should be highlighted.

3.5 Personal relationships with colleagues who have a line management relationship with the post you hold must be declared upon appointment. If, subsequent to appointment, you develop a close personal relationship with a colleague who has a line management relationship, then you must inform your Director immediately who will consider the appropriateness of such a relationship in conjunction with the duties of the post.

13 Page 81 3.6 There are certain circumstances where close personal relationships can impact on the Council. If you are unsure about the need to inform your Director about a close personal relationship with a colleague, then you should seek advice from your Manager, or from the Human Resources Service.

3.7 The Council operates a "No Smoking" Policy. This applies to all Council buildings and those where Council services are provided. It also applies when transporting service users in Council or private vehicles. The policy also applies to visits to service users in their own homes or other establishments.

3.8 You should not consume alcohol when you are on duty, unless agreed beforehand by your Manager for specific occasions. You should make sure that if you drink any alcohol when you are off duty, but during the working day, it will not affect your ability to carry out your work or damage the reputation of the City Council. For example, this could include if you have alcohol on your breath when you need to interview the public. If you use heavy machinery or drive Council vehicles, you should never drink alcohol during the working day. Some posts carry a specific restriction concerning drinking at any time and you will be told by your Manager or the Human Resources Service if this restriction applies to your job.

3.9 You should not take any non-medical substance, such as drugs that may affect your ability to work. Prescribed drugs may be taken on condition that they do not interfere with service delivery. If a Doctor gives you any medication that may have a negative effect on your performance, you should tell your Manager in confidence. The use of illegal substances will not be tolerated by the Council and may result, not only in formal action being taken against you, including the possibility of summary dismissal, but also with the matter being reported to the Police.

4. Working with Managers

4.1 It is important that employees have an effective working relationship with their Manager. You must always be honest with your Manager. The Manager will tell you what is expected from you, respond to any concerns you may have about your work, assess your performance and give you feedback, in seeking advice on how you can improve.

4.2 Your Manager and the Human Resources Service should tell you about the City Council's personnel policies and arrange for any appropriate training and development. You should help your Manager identify what training and development you need and how this can be provided.

4.3 You can expect your Manager to be polite, reasonable and fair to you all the time. Managers are there to support employees in their job and help them, if they need it, to deal with other employees or members of the public or other service users.

4.4 You must follow any instructions that your Manager gives you to the best of your ability. You must not be negligent in your duties as this may seriously affect the City Council or the people who use its services. If there is anything about your job you are unclear about, you should ask your Manager. 14 Page 82

4.5 You must participate in any initiatives designed to improve the efficiency and effectiveness of service delivery.

4.6 You should always follow City Council policies, procedures, rules, codes of practice, and any other standards that may be set by your Manager. You should fill in any document, form or record in an honest way and never damage, alter or falsify them. You should never conceal any matter that you know you should report.

4.7 You must always tell your Manager, and update the computerised HR system, if you change your home address, telephone number and next of kin so that the City Council can contact you.

4.8 If an employee has a complaint about another employee, they should tell their Manager. The City Council has a grievance procedure to deal with complaints.

5. Working with Councillors and Political Neutrality

5.1 Members of the Council, including co-opted Members, and employees have distinct but complementary roles. It is important for the effective operation of the Council that these respective roles are well understood and relationships between Members and employees are constructive. Mutual trust and respect between employees and Members are essential to good Local Government.

5.2 In carrying out your duties you must ensure that the individual rights of all Councillors are respected. You are expected to be polite and efficient when dealing with Members and you should ensure that you follow any Directorate process for dealing with Members, for example, when answering Councillors enquiries.

5.3 You should never discuss any personal matters relating to your job with Members but should use the relevant Council procedures relating to grievances, appeals or consultation. Employees must not use Members to bypass formal Council procedures in any way.

5.4 You should never interrupt any formal Council business, such as a Council meeting.

5.5 Close personal familiarity between employees and individual Councillors should be avoided whenever possible, as this can damage the relationship, can be embarrassing to other employees and Councillors and can damage the City Council's reputation and probity. If you are in or develop a close personal relationship with a Councillor you should notify your Director who will along with Human Resources, consider the appropriateness of such a relationship in conjunction with the duties of the post.

5.6 You should never directly or indirectly seek the support of any Councillor when you are making an application for further employment within the Authority.

15 Page 83 5.7 Employees serve the Council as a whole. This includes all Councillors and not just those of a particular group. You must ensure that the individual rights of all Councillors are respected.

5.8 You must not allow your personal or political opinions to interfere with your work. Certain posts are "politically restricted" and subject to statutory requirements. If your post is politically restricted, you will be told of the restrictions that apply. If you require any further information, then ask your Manager or the Human Resources Service.

5.9 Subject to the Council's conventions, you may be required to advise political groups and must do so in ways that do not compromise your political neutrality. When you attend a political group meeting, you should only do so by invitation and are there solely to advise and to answer questions. You should leave such meetings before any decisions are taken, unless specifically requested not to do so. All employees will observe confidentiality with regard to the issues raised whilst they are present at any group meeting, except to the extent necessary to undertake any further work requested by that group.

6. Working Safely

6.1 The City Council has a duty to provide a safe and healthy working environment. The City Council will also try and protect the health and safety of the people who use our services.

6.2 You also have a responsibility for health and safety and are expected to:- (a) Make sure your working environment is safe for yourself, your colleagues and the people who use City Council services and that you do not put employees or service users in danger (b) Use any safety clothing and equipment that is needed for your work and make sure that that equipment is not misused, neglected or damaged (c) Report any accident or "near misses" you have at work as soon as you can and accurately fill in an accident report form (d) Attend the Occupational Health Service if a Manager asks you to, and to have any medical examination that Occupational Health recommend (e) Follow any particular hygiene requirements that are relevant to your job (f) Tell your Manager if you are taking any medication that may affect your job (g) Never use any machinery or drive a vehicle if you have taken any medication or drug including alcohol that will affect your ability to operate (h) Co-operate with all health and safety activities, including training which is organised to promote health and safety (i) Follow requirements under the Working Time Directive and Council's procedures to record your time.

7. Working Hours and Attendance

7.1 You should always be reliable and on time when you come to work and attend

16 Page 84 appointments. 7.2 If you need to ask for leave under any of the City Council's leave schemes, for example, maternity, sickness, flexible working hours or special leave, you must follow the conditions of the scheme. 7.3 You should fill in any relevant paperwork such as a request for annual leave or flexi leave within the time set by your Manager. The Council operates a collective agreement relating to the Working Time Regulations and this requires employees to undertake appropriate time recording and notify your Manager of any dual employment within the Council.

8. Working with Integrity and Personal Interests

8.1 If you offer or accept any bribe, money, favours or gifts from an individual or an organisation that provides Coventry City Council with goods or services or wants to do so, you may be guilty of corruption.

8.2 You should never put yourselves in debt to someone if it may influence your work in any way.

8.3 You must tell your Manager if anyone tries to bribe you or another employee or if there is any evidence of corruption or improper behaviour by others. If your Manager is involved, you should report it to the Chief Internal Auditor or to the City Solicitor.

8.4 There may be occasions where you have a financial or other interest in something being done by the City Council. (a) You will have a financial interest where either you or any member of your family has something to gain or lose financially. Such interest can be direct, such as applying for planning permission or services or grant from the Council, or indirect, such as being a member of an organisation which has made an application to the Council for a grant. (b) A personal interest is where you, or any member of your family, friends or organisation to which you belong could gain or lose (other than financially) from an act or decision of the Council.

8.5 All City Council employees have a statutory duty to declare any financial interest that they, or a member of their family has in any contract or potential contract with Coventry City Council. If you have such a financial interest, you must not take part in any negotiations or preparations for the contract. If you have an interest in a contract and have to monitor it as part of your duties, then you must advise your Director, who will decide whether or not that role can still be undertaken. This also applies in any case where the City Council pays or proposes to pay, money, for example a grant, to another organisation, whether or not there is a formal contract with that organisation.

8.6 You are required to declare to the City Solicitor, any financial interest which could conflict with the City Council's interests, including any directorships or equivalent position which you may hold.

8.7 You must declare to your Director, any other non-financial or personal interests which could conflict with the City Council's interests. Details of these interests will be kept in a register which will be open for public inspection.

17 Page 85

8.8 Employees involved in any tendering process and dealing with contractors are expected to understand and be aware of the need for accountability and openness.

8.9 You must be fair when dealing with customers, suppliers and other contractors or sub- contractors.

8.10 You must make sure you do not give any special favours to current or former employees or your friends, partners, relatives or associates when awarding contracts to businesses run by them or employing them in a senior role.

8.11 You may have access to confidential information, tenders or costs, and must not disclose that information to any unauthorised party or organisation. If you are not sure whether information is confidential or not, you should seek guidance from your Manager.

8.12 The Council will not tolerate any of its employees engaging in fraud against the City Council. If you think that a colleague may be committing fraud, you must tell your Manager, who will then tell the Chief Internal Auditor and the City Solicitor. If you cannot discuss the matter with your Manager, then you should raise the matter either with your Director or with the City Solicitor. If you report anything to your Manager, but they do nothing about it, you may contact the Chief Internal Auditor.

8.13 Defrauding, stealing or attempting to do so, from the City Council, will not be tolerated. This includes deliberately giving false information on claims, such as timesheets, mileage and travel/subsistence allowances, petty cash forms, self- certification forms or attendance records. You should always complete any document, form or record honestly.

8.14 The Council requires its employees to report genuine concerns relating to potential fraud, theft or unethical behaviour to their Managers/Supervisors. In addition, you can contact any person or organisation named in the Whistleblowing procedure.

9. Working with Money and Property

9.1 The City Council's property such as stationery, photocopiers, word processors, tools, materials, offices, car parks and facilities may only be used for Council business. Other facilities such as telephones, mobile phones, internet, email can only be used in accordance with the relevant Council policies and procedures. If you wish to use any of these facilities for private use, then you must first obtain the written consent of your Director.

9.2 You must not steal, borrow without authorisation, damage on purpose, or seriously neglect anything that belongs to the City Council. You should not steal or damage on purpose anything belonging to the Council's customers, service users, employees, Councillors, partners or anyone else who you come into contact with in your work.

18 Page 86 9.3 You must return any property or equipment which you have been allowed to borrow by your Manager as soon as you leave your job or when your Manager tells you to do so. The City Council will regard any theft or improper private use involving its money, property, equipment or investments as a serious matter and it is the policy of the City Council always to prosecute in such cases.

9.4 Telephone calls and emails/internet logging systems are in operation in the City Council and may be used to identify usage for private purposes. Any communications using City Council systems, including the use of mobile telephones may be monitored by the City Council in accordance with the law and relevant policies.

9.5 You must ensure you use public funds entrusted to them in a responsible and lawful manner in accordance with the rules prescribed by the City Council to ensure value for money and to avoid legal challenge. All employees are required to comply with the City Council's Standing Orders, regulations and administrative procedures relating to financial management.

10. Working and the Law

10.1 You are expected to keep within the law during your employment at all times. The City Council cannot act, or require, any employee to act outside or in breach of the law.

10.2 You must tell your Manager if you are charged with any offence, including driving offences. The Manager will decide if the City Council's reputation may be damaged as a result, taking account of the job and whether or not the charge might make you unfit to do your job.

10.3 You must tell your Manager, in writing, if you receive any criminal conviction, binding over or caution, unless it is excluded by the provisions of legislation relating to the Rehabilitation of Offenders.

11. Working and Contact with the Media

11.1 It is City Council policy that all media liaison relating to Council activities is headed by the Communications Team, (or Directorate team where relevant) in conjunction with Heads of Service and Strategic Management Board members. You should therefore not speak, write, give interviews or take telephone calls for "information" relating to Council business unless you have the prior permission of your Manager, your Directorate Communications Team and/or the Head of Communications.

11.2 You should pass on all enquiries from the press, radio, television or other media to the press office and your Manager, unless dealing with such enquiries is a normal part of your job.

11.3 You may write or give an interview about things that are not connected with Coventry City Council, as long as you are not identified as being a City Council employee or as representing the Council's views. Where you are writing material for publication which does not refer specifically to the City Council, but does relate to your 19 Page 87 profession/occupation, then you must notify your Director prior to publication.

11.4 You must never publicise material which is confidential or against the City Council or any employee's interest.

11.5 If you are a corporate accredited trade union official recognised by the Council then you may have contact with the media in relation to the activities of your Trade Union without seeking any prior approval of your manager or the Communications Team.

12. Use of Social Media

12.1 You must ask permission from your manager before you use social media for promoting or communicating on behalf of the Council and your service.

12.2 Examples of social media are Facebook, LinkedIn, YouTube, Twitter, Flickr, MySpace and website forums, but can include other networks.

12.3 If you are posting or communicating on a social media network in your own time and from your own personal device (whether a PC, smartphone or any other device) you must remember that many people seeing what you have posted, will know you work for the Council. You must not post or share material on any social network that others may find offensive, disrespectful or discriminatory towards council employees, service users or partners.

12.4 You should never make comments about the Council or Council business which undermine your employment relationship with the Council.

13. Gifts and Hospitality and Sponsorship

13.1 General Principles and Policy Statement

13.1.1 Coventry City Council is funded almost entirely from public funds, either through grants from central government, or through council tax and it is essential that the Council can demonstrate the highest standards of probity in general, and specifically in relation to its dealings with third parties.

13.1.2 The Council is committed to the highest standards of ethical conduct and integrity in its business activities. This policy sets out the Council’s position if situations arise where employees and managers at all levels are offered gifts and hospitality in connection with their employment.

13.1.3 The aim of the policy is to ensure transparency in the activities of the Council and consequently protect employees from accusations of misconduct. All employees are required to familiarise themselves and comply with this procedure, including any future updates that may be issued from time to time by the Council.

20 Page 88 13.1.4 Acceptance of gifts or hospitality by employees could be construed by others as influencing decisions made by those employees. The basic principle of this policy is that you should not behave in a way that might give the impression that a gift or hospitality has influenced your decision. You should consider whether it would be reasonable for a member of the public to think so - it is not enough for you to be satisfied that you would not in fact be influenced, or that it was not the intention of the person offering the gift or hospitality to influence you.

13.1.5 The following general rules should apply:  Always refuse where you think there may be an ulterior motive;  Be sensitive to the possibility that the giver may consider that even small gifts or modest hospitality will elicit prompt service or preferential treatment;  Never accept gifts or hospitality from anyone who is or may be in the foreseeable future, tendering for a contract with the Council, seeking planning consent from the Council or who is in conflict with the Council. The Chief Executive or his nominee may accept hospitality in these circumstances where they are not directly involved in the matter at issue and provided there is a clear business case for acceptance.

13.1.6 Offers of hospitality and/or gifts should normally be declined. However, it is acknowledged that some employees may, as part of their duties and responsibilities, be called upon to represent the Council for example at:  functions within the community;  meetings/visits with outside bodies;  meetings/negotiations with contractors or business partners;  conferences/courses where hospitality and gifts may be offered. Before attending any of the above, you should establish the purpose of the event, be able to justify your attendance and identify an outcome/benefit to the Council. Further guidance on when acceptance of gifts and/or hospitality may or may not be appropriate is set out below.

13.2 Bribery and Corruption

13.2.1 The Local Government Act 1972 makes it an offence for employees to accept any fee or reward (including gifts) for their employment other than proper pay. On conviction employees are liable to be fined.

13.2.2 There is a responsibility, organisationally and individually, to adhere to the provisions of the Bribery Act 2010. Where there are significant breaches of the Act, the penalties for the organisation, senior officers, employees or associated parties are severe, with up to ten years imprisonment for individuals or unlimited fines.

13.3 Gifts

21 Page 89 13.3.1 The City Council expects the conduct of all of its employees to be of the highest standard. Employees' actions must not be influenced by offers of gifts or hospitality and their actions must not give the impression that they are influenced in this way. Acceptance of any gift should be the exception. The City Council recognises that there are some items, of token value, which may be accepted.

13.3.2 You must not accept personal gifts of any kind, unless they are modest and are of token value (less than £25). Items such as coffee mugs, diaries, calendars, pens or other promotional materials can be retained if they are in use in the office and can be considered to form part of the general mailings of a company.

13.3.3 Without causing offence, you should discourage service users or other organisations from offering gifts. However, where small gifts, such as chocolates, are given as thanks for a service provided, then these can be accepted if:  refusal would cause needless offence; and  the giver is not seeking a business decision; and  they are shared within the Team or raffled for charity. No gift of alcohol or tobacco should ever be accepted.

13.3.4 Gifts other than those described in 13.3.2 and 13.3.3 may only be accepted if they have a value of £25 or less and your manager agrees that it is appropriate to accept. These gifts must be recorded in the directorate register of gifts and hospitality. If your Manager does not allow you to accept any small gifts, you must return them politely, but firmly, telling the person who gave it why and recording it in the Hospitality Register.

13.3.5 If gifts have a higher value than £25, then you should tactfully refuse them. If gifts of this value are delivered, they should be returned with an appropriate explanation. If gifts cannot be returned, then the Director, or his nominee, should dispose of them to charity and record this fact in the Hospitality Register.

13.3.6 Under no circumstances, should gifts of cash, or tokens or vouchers of a monetary value, be accepted.

13.4 Hospitality

13.4.1 The Council needs to maintain effective relationships with a wide range of partners, agents and voluntary and community groups. The giving and receiving of hospitality may form part of this activity.

13.4.2 You should only accept offers of hospitality if there is a genuine need to impart information or represent the Council in the community. Offers to attend purely social or sporting functions should be accepted only when these are part of the life of the community or where the Council should be seen to be represented. Employees attending such functions must be authorised by the Deputy Chief Executive or relevant Director and a record of that permission and details of the hospitality being accepted must be entered into the directorate register of gifts and hospitality.

13.4.3 However, in their role as a representative of the Council, it is not appropriate for 22 Page 90 employees, either during or outside working hours, to accept lavish entertainment (e.g. banquets, drinks parties, fashion shows, sporting events), and, except where there are discernible benefits to the Council and the Deputy Chief Executive or relevant Director (or nominee) has given approval (which must be recorded in the departmental register), any such offers should be declined courteously but firmly.

13.4.4. When hospitality is declined, the offer should be courteously but firmly refused, and the organiser informed of the procedures and standards operating within the Council. It is advisable for any hospitality which has been declined to be recorded in the departmental register of gifts and hospitality.

13.4.5 You must not accept hospitality that you would feel unable to report openly to a superior, a Cabinet Member or a committee. If you feel it would be open to misinterpretation in any way then the hospitality must be declined as tactfully as possible.

13.4.6 You must be alert to circumstances which might give rise to criticism, such as the forthcoming award of or tender for a contract or the determination of a planning application. Any offer of a gift or hospitality during a tender process must be reported to the Deputy Chief Executive or relevant Director.

13.4.7 Where visits are required to inspect equipment, sites etc., you must ensure that the City Council meets all the costs of such visits to avoid jeopardising the integrity of any subsequent purchasing decision. Where anything other than incidental hospitality is offered by an existing contractor, or by an organisation likely to be involved in a contract, the hospitality should be refused. You should avoid socialising with organisations and should pay your own bills for meals, travel etc., (claiming any expenditure back under the Council's procedures for reimbursement as appropriate).

13.4.8 You may accept incidental hospitality, such as light refreshments, working lunch or other meals, which is part of a visit, conference, meeting or promotional exercise. There is no requirement to register receipt in these circumstances.

13.4.9 Invitations to social events offered as part of normal working life, such as opening celebrations, annual dinners, may be accepted if authorised in advance by the appropriate Director (or nominee). You are more likely to be able to accept hospitality of this sort where it is clear that it is corporate rather than personal. You must be very cautious about accepting hospitality where it is clear that it is being offered to you as an individual.

13.4.10 Where an employee is invited to speak at a conference, seminar or similar event, an offer to reimburse or cover travel and other reasonable out-of pocket expenses by the organisers or sponsors of the event, may be accepted. This must be approved and entered onto the register.

13.4.11 Similar rules apply to those instances where employees are offering hospitality on behalf of the City Council. The following guidelines must be observed on all occasions. For the purpose of these guidelines "hospitality" excludes the normal 23 Page 91 tea, coffee and other refreshments provided at meetings:- (a) any hospitality must be provided on a modest scale. (b) so far as is practicable, hospitality must be provided in the workplace. (c) soft drinks only must be provided in the workplace, alcoholic drinks must not be available. (d) if it is necessary to provide hospitality outside the workplace, this must be on a model scale appropriate to the occasion. The cost must not be excessive. (e) the number of employees involved on any occasion when hospitality is provided must be restricted, and in any event, must not extend beyond those directly involved with the matter in hand. (f) the provision of all hospitality must be personally approved by your Manager, Director or the Deputy Chief Executive. (g) bills for hospitality provided must be certified for payment by your Manager, Director or the Deputy Chief Executive. (h) each service will maintain in their hospitality register, a record of all occasions on which hospitality has been provided, the number of persons involved, and the costs incurred.

13.5 Sponsorship

13.5.1 Where an outside organisation wishes to sponsor or is seeking to sponsor a City Council activity, whether by invitation, tender, negotiation or voluntarily, the Code concerning acceptance of gifts or hospitality applies.

13.5.2 Where the City Council wishes to sponsor an event or service, neither an employee or any partner, relative or friend is expected to benefit from such sponsorship in a direct way without there being full disclosure to, and prior approval by, their Director of any such interest. Such disclosure and approval shall be recorded in the Hospitality Register.

13.5.3 Any register of gifts or hospitality maintained under this Code of Conduct shall be open to public inspection.

14. Recruitment and Selection and other Employment Matters

14.1 If you are involved in recruitment and selection you are expected to ensure that all appointments are made strictly on the basis of merit in accordance with the City Council's recruitment and selection processes.

14.2 If you are related to an applicant for a position or have a personal or business relationship with an applicant, you should not be involved in the recruitment process.

14.3 You should not be involved in decisions relating to the discipline, promotion or pay adjustments of any other employee who is a relative, partner or close personal 24 Page 92 friend of yours.

14.4 Any reference that you give in relation to another employee on behalf of the City Council whether it is written or verbal, should be factual and/or give an honest representation of the experience, skills, abilities and/or other qualities of that employee.

15. Outside Commitments and Private Work

15.1 The City Council prefers its employees not to have any other outside employment. You must obtain prior consent of your Director before taking upon any outside employment. Consent will not be given if the outside employment could conflict with, or be detrimental to, the City Council's interests or weaken public confidence in the conduct of the City Council's business. You are particularly discouraged from using the professional skills for which you are employed by the City Council within the geographical area of the City Council.

15.2 Any secondary or other employment carried out by you must be done in your own time, including time when you are on annual leave. The work must not be done during the time the City Council employs you and that includes periods of sickness absence.

15.3 In undertaking any extra employment, unless it is on the Council's behalf, City Council facilities, such as telephones, photocopiers, word processors, e-mail, internet, vehicles or any other equipment must not be used for that purpose.

15.4 Employees can give unpaid service to voluntary or other organisations and the City Council welcomes this involvement in community affairs. However, it is important that unpaid service does not affect your job or the City Council's reputation. You should tell your Manager if you give any unpaid service including:- (a) Acting as a School Governor within schools maintained by the City Council. (b) Giving service to any organisation that receives grant aid from the City Council. (c) Giving service to any organisation or pressure group which may try to influence the City Council's policies. 15.5 You must give to the City Council any money you receive for work which you do such as lectures, broadcasts or magazine articles as part of your job. However, you can keep money for any work which is not paid for by the City Council and which is done in your own time, or when on holiday or flexi-leave.

16. Disclosure of Information and Confidentiality

16.1 You should be fair and open when dealing with others and ensure that elected Members and members of the public have access to the information they need and have a legal right to unless you have a good reason not to permit this. 16.2 Information held by the Council, especially in relation to individuals, may be subject 25 Page 93 to the provisions of the Data Protection Act or other legislation. You should never put yourself in the position where the disclosure of such information puts you and/or the Council at the risk of breaking the law. If you are in any doubt you should ask your Manager or consult the Council's Data Protection Officer.

16.3 A lot of the information held by the City Council is confidential, for example, individual case files, employee records or tendering documents. You should not pass these documents to any outside person or organisation unless you have your Manager's permission.

16.4 You must not use any information that you get in your job for personal gain or financial benefit or pass it to anyone else. You must not give information to anyone outside the Council about tenders or individual clients either when you are working for the City Council or after you have left.

16.5 You must ensure that you follow the City Council's security procedures in relation to the use of computers and the proper management of computer held information. Particular care must be taken to observe established procedures when using passwords and logging on and off. You must never share a password or similar security device which may lead to unauthorised access to Council's systems or property.

16.6 The City Council has the right to go into all its property and look at personal information, including emails and computerised data if needed. You are not permitted to take copies of any software for your own use or to use your own software, including computer games, on the City Council's equipment.

17. Dress and Personal Appearance

17.1 Council employees act as ambassadors for services and must maintain a standard of dress and appearance as appropriate or required for the workplace and to the work being undertaken. Clothes should provide sufficient cover not to be offensive and should not present a risk to health and safety. Within these general guidelines, clothes worn for cultural, religious or traditional reasons, whether on a day to day basis or to mark particular occasions will normally be acceptable.

17.2 Whilst at work, employees must be clean and tidy and ensure good personal hygiene. Where particular clothing is provided for health, safety and hygiene and/or uniform purposes, it must be worn. Name badges and identity passes must be worn whilst on City Council premises and must be available at all times when you are on City Council business. Employees must have their Identity Badges visibly displayed on their clothing so that customers can identify them as council employees. Where lanyards are used these should be the City Council lanyards issued with the badges.

17.3 Employees must not allow any other person to use their Identity Badge for access to Council Buildings or for purposes of identification of any kind. This includes other employees, contractors/agency workers or visitors. Non-employees who have not been provided with identification must be escorted at all times. 26 Page 94

18. Being a Member of an Organisation

18.1 You should ensure that your membership or involvement with any external organisation does not lead to an actual or perceived conflict of interest with your position as an employee of the City Council. Paragraph 8 of this Code of Conduct already requires you to declare any financial, nonfinancial or personal interest which may conflict with the City Council's interests. It is important to avoid any perception that advice, guidance, or decisions for which you are responsible could be influenced by your membership of a particular organisation.

18.2 You must therefore declare your membership of any organisation whose rules or requirements of membership could be regarded as suggesting a degree of loyalty to that organisation. This could arise by reason of an organisation having an obligation of secrecy about its rules, its membership or conduct and/or a commitment of allegiance or support to that organisation. Such organisations may or may not be charitable concerns and they may also have a local, regional, national or international aspect.

18.3 You should make sure that any such membership does not make you liable to act in a way that would conflict with the City Council's policies or objectives or damage the City Council's reputation or seriously affect your ability to carry out your job with the City Council.

19. Whistleblowing

19.1 The City Council has adopted a whistleblowing policy and procedure. If you believe that there has been any fraud, irregularity, corruption or the law has been broken, you should report such incidents under this policy.

19.2 The whistleblowing policy is intended to encourage and enable employees to raise concerns safely and without fear of retribution within the Council rather than overlooking a problem. If you are not aware of the contents of the policy, you should contact your Manager or the Human Resources Service for further details.

19.3 The Council recognises that the decision to report a concern can be a difficult one to make, not least because of the fear of reprisal. The Council will not tolerate harassment or victimisation and will take action to protect any employee when they have raised a concern in good faith. Similarly, no employee must treat another employee less favourably on the grounds that that employee has, intends, or suspected of doing anything under the Council's whistleblowing procedures. NOTE: A copy of the City Council's Whistleblowing Policy is available on both the Council's website and the Intranet.

20. Implementation Date

20.1 This corporate Code of Conduct applies to all employees, except school based 27 Page 95 teaching staff and centrally employed teachers, of Coventry City Council with effect from 1st June 2003. The Code will be kept under review in the light of recommendations and guidance issued nationally in relation to standards of conduct in public life and revised as necessary.

28 Page 96 Agenda Item 9

Public report  Cabinet Member Report

Licensing & Regulatory Committee 2 March 2021 Cabinet Member for Policing and Equalities 8 March 2021 Council 16 March 2021

Name of Cabinet Member: Cabinet Member for Policing and Equalities - Councillor AS Khan

Director Approving Submission of the report: Director of Streetscene and Regulatory Services

Ward(s) affected: All

Title: Licensing Act 2003 – Revised Statement of Licensing Policy 2021 - 2026

Is this a key decision? No

Executive Summary:

The purpose of this report is to update Members on the outcome of the 8-week consultation undertaken on the review of the Council’s Statement of Licensing Policy for the Licensing Act 2003 and to recommend for approval a revised policy for the period 2021 - 2026.

Recommendations

1 That Licensing and Regulatory Committee considers the results of the revised Statement of Licensing Policy consultation (Appendix B) and the revised Statement of Licensing Policy (Appendix A) and notifies the Cabinet Member of its comments.

2 That Cabinet Member considers the revised Statement of Licensing Policy (Appendix A) and the results of the consultation (Appendix B) in light of any comments from the Licensing and Regulatory Committee and, following any amendments made:

Recommends to full Council on 16th March 2021 that it adopts the revised Statement of Licensing Policy attached as Appendix A for the purposes of Section 5 of the Licensing Act 2003.

Page 97

List of Appendices included: Appendix A - Draft Statement of Licensing Policy 2021 – 2026 Appendix B - Summary of consultation responses Appendix C - Main changes to Statement of Licensing Policy.

Other useful background papers: 1. Licensing Act 2003 2. Licensing Act 2003 Guidance (section 182) 3. Current Licensing Policy 4. Government Policies and Guidance 5. The Health Protection (Coronavirus, Restrictions) (England) Regulations 2020 (now repealed and replaced with (Coronavirus, Restrictions) (England)(No.2) Regulations 2020). 6. Local Government Association Publication (updated 17 April 2020) - Approaches to managing licensing and related issues during the COVID-19 pandemic 7. Letter to Licensing Authorities (dated 8 April 2020) from Kit Malthouse MP, Minister of State for Crime and Policing

Other useful documents

Public Sector Decarbonisation Scheme Guidance Notes https://www.salixfinance.co.uk/sites/default/files/Public%20Sector%20Decarbonisation%20Sche me%20Guidance%20Note%20-%20September%202020%20V1.0_8.pdf

Coventry City Council Annual GHG Report 2019/20 https://www.coventry.gov.uk/downloads/file/30528/coventry_city_councils_annual_ghg_report_20 1819 Page 142

Has it been or will it be considered by Scrutiny?

Has it been or will it be considered by any other Council Committee, Advisory Panel or other body?

Will this report go to Council?

Yes – 16th March 2021

Page 143

Report title: Maintained Schools Energy Efficiency Retrofit Grants

1. Context (or background)

1.1. The UK Government has committed to provide financial support to help stimulate the economy following the economic downturn caused by the Coronavirus pandemic. They have established a number of funding schemes aimed at supporting the wider agenda of “Building Back Better” through supporting green job growth.

1.2. The Department for Business, Energy and Industrial Strategy (BEIS) has launched the Public Sector Decarbonisation Scheme. The Grant Scheme will be delivered by Salix Finance and will allocate £1bn of grant funding which strongly aligns with BEIS’ mission and priorities: fighting coronavirus, backing business, unleashing innovation and tackling climate change. The scheme will encourage green investment aligning with the Government’s Net Zero and clean growth goals.

1.3. The Grant Scheme is available for capital energy efficiency and heat decarbonisation projects within public sector non-domestic buildings including central government departments and arm’s length bodies in England.

1.4. Eligible projects fall into 4 categories:

Category 1 – Low Carbon Heating Category 2 – Energy Efficiency Projects Category 3 – Enabling Technologies Category 4 – Oil & Coal Replacement Projects

1.5. The first round of PSDS funding was open for applications from 1st October to 11th January with projects required to be delivered no later than 30th September 2021. The scheme was significantly over-subscribed with over £2.3bn of applications made for the £1bn of funding available. As a result, not all applications have been successful including Coventry City Council’s bid for supporting school projects.

1.6. The UK has a 2050 net zero target and the public sector will be required to make a major contribution to enabling the UK to reach this target. Coventry City Council is part of the wider West Midlands Combined Authority (WMCA) area who have recently pledged for the region to achieve a more ambitious target of reaching net zero by 2041. To do this will require significant investment in retrofitting existing buildings to improve energy efficiency and support the transition away for fossil-fuel use.

1.7. Significant reductions in the annual emissions arising from direct Council operations in recent years has resulted in the indirect emissions from the education estate to become a significant proportion of our reported emissions. In 2019/20, available data indicated that the emissions from Coventry City Council’s maintained schools now exceeded those of the Corporate Estate.

1.8. Due to significant improvements in the carbon intensity of the UK’s grid electricity, the emissions from the use of gas heating is now the largest contributor towards the emissions from the school estate. Tackling these hard to transition emissions will be a priority over the next decade.

Page 144

2. Options considered in relation to the retrofit of low carbon measures to maintained school buildings.

2.1. Option 1 – Do Nothing and rely on UK grid improvement (Not Recommended)

2.1.1. This option would not enable Coventry City Council to meet the national or regional ambitions in relation to Climate Change action.

2.1.2. Whilst the UK electrical grid has seen significant improvement in its carbon intensity over the past 5 years and is expected to continue to fall into the future, the impact of “green” gas into the national supply has shown very little impact to date.

2.1.3. Currently there are pilots being undertaken in relation to the blending of hydrogen into the gas supply however this approach is limited in terms of the maximum decarbonisation it can offer before existing natural gas appliances would have to be changed.

2.2. Option 2 – Undertake combined Low Carbon Heating and Fabric /Efficiency Measures (Recommended Option)

2.2.1. Salix Finance Ltd provided funding to enable Coventry City Council to evaluate the maintained school estate and assist with prioritising those which could benefit from funded interventions at this time.

2.2.2. The PSDS appraisal process favours the use of “Whole Building Approaches”. This will prioritise projects that look to not only improve the efficiency of the building but also incorporate the transition away from fossil fuel heating systems. This means Coventry City Council would look to include the following types of intervention in any project proposals that are submitted:

2.2.3. The inclusion of Category 1 projects in the application would therefore strengthen the grant bid. These can include: Air Source Heat Pump, Ground Source Heat Pumps, District Heating Connections and Other Electrical Based Heating. The inclusion of Category 1 projects are however not appropriate for all schools at this time. This must be taken into account when appraising which projects to put forward for inclusion in funding applications.

Project Type Low Carbon Heating Double Glazing Heating Controls Lighting Replacement Loft Insulation Pipework Improvement Pipework Insulation Roof Insulation Solar PV Wall Insulation Battery Storage Supply Upgrade Thermal Comfort Monitoring

Page 145

2.3. Option 3 – Undertake Fabric/Efficiency Only Measures (Not Recommended)

2.3.1. The PSDS scheme allows for Category 2 & 3 measures to be funded independently as long as they meet the required grant eligibility criteria and a written commitment to undertake further actions, in the form of a Decarbonisation Plan, is submitted for the buildings receiving the measures.

2.3.2. These are all solutions that would deliver energy efficiency improvements and result in both cost and carbon emissions reductions.

2.3.3. Whilst this type of project would be eligible for the PSDS grant, the exclusion of any category 1 projects would mean that our application scores less well in evaluation and reduces the chances of successful funding award. This would also result in a missed opportunity for funding some of the high cost measures needed for the future.

3. Options considered in relation to the submission and acceptance of the 100% grant for deployment of the Retrofit Measures.

3.1. Option 1 - Do Not Accept A Grant Offer (Not Recommended)

3.1.1. This option would mean not getting access to a grant offer along with the associated terms and conditions of PSDS grants from Salix Finance Ltd in order to deliver the Project.

3.1.2. This would represent a failed opportunity to secure a financial contribution to the cost of our climate change actions. The projects identified in the proposed pipeline for the grant will all need to be done at some point to achieve Net Zero and additional funding sources would need to be found.

3.1.3. Many of the projects proposed fall outside of the eligibility requirements for the existing public sector financing routes (eg. Salix Loans) therefore they would likely need to be financed directly by the Council at a future date.

3.2. Option 2 –Accept A Successful Grant Offer (Recommended)

3.2.1. The acceptance of a grant offer following a successful bid would provide the financial investment required for the project without match funding being required. It would also show that Coventry City Council is clear in its ambitions to decarbonise its school estate as well as its corporate estate and would support other funding bids to deliver similar package of measures to other stakeholders in the City.

3.2.2. The risks associated with the PSDS grant is lower compared to many other grant schemes with a much shorter and lighter touch monitoring of grant expenditure that previous EU funding for example.

3.2.3. This option is fully in line with the council’s core aim of levering additional funding through grants and bids.

4. Results of consultation undertaken

4.1. Consultation with the Head of Education Entitlement and the Education Capital Strategy manager was undertaken in relation to potential changes to the property estate. This was to ensure the risk of property disposal or redevelopment was understood and included during the evaluation of which schemes could be brought forward.

Page 146

5. Timetable for implementing this decision

5.1. Coventry City Council were initially not successful in securing funding for schools in the first round of funding that closed in January 2021 but subsequently were awarded some funding as we were on the reserve list. Whilst a second round of PSDS funding is expected to be announced no timetable has yet been set by BEIS. By approving the proposals at this time it will enable Coventry City Council to act quickly in future funding rounds and improve the potential for securing additional funding for projects. Experience from the Round 1 of PSDS funding has shown that there is likely to be insufficient time for the formal approval process to be undertaken following the confirmation of a successful bid for the funding and therefore pre-approval is being requested. The existing scheme has allowed as little as 5 days for grants to be accepted in some cases.

6. Comments from the Director of Finance and the Director of Law and Governance

6.1. Financial implications

6.1.1. The recommendations request the approval of grant funding from BEIS for a Public Sector Decarbonisation scheme (PSDS) if bids are successful. The PSDS grant scheme does not require any capital match funding to be provided locally by the City Council, but all investments must be achieved by pre-determined dates.

6.1.2. Based on the initial technical assessment of possible projects, many of the measures summarised in section 2.2.3 contribute to decarbonisation, but due to their high cost and/or long pay back, would not otherwise be considered for investment.

6.1.3. Once the full technical review of each measure has taken place, the measures to be delivered for each school will be assessed (including both up front and lifecycle capital costs) prior to any commitment, such that only those investments with expected net lifetime financial benefits would proceed to implementation.

6.1.4. It is proposed that the decision on each individual measure to proceed to implementation, is delegated to the Director of Finance and Director of Education & Skills (or appointed proxy’s) after feasibility works have been carried out.

6.1.5. Due to the long pay back nature of many of the schemes, it is expected that only marginal net annual financial savings will be achieved. Savings will however be monitored and captured for the benefit of the Medium-Term Financial Strategy.

6.2. Legal implications

6.2.1 Should the grant application be successful, the approval of the Council acting as the Accountable Body as outlined in this report will be achieved through a contractual relationship and signature of a grant funding agreement.

6.2.2 Legal colleagues are available to advise on and support the completion and signature of the grant funding agreement and to also ensure that risk to the Council is fully understood and mitigated through appropriate governance. Furthermore, support will be made available in ensuring the delivery of the project as and when required by the anticipated project team.

6.2.3 Any procurement exercise will be conducted in compliance with the Council’s policy and legal obligations, specifically in compliance with the Council’s Contract Procedure Rules and the Public Contracts Regulations 2015 and Subsidy Control Rules and supported by relevant officers. Page 147

6.2.4 The delegations sought are consistent with a proposal of this nature.

7. Other implications

7.1. How will this contribute to the Council Plan (www.coventry.gov.uk/councilplan/)?

This project directly meets two of the objectives of the Council Plan. It will directly reduce the operating cost and carbon emissions of Council associated activities and it will also lever external finance to deliver the schemes.

7.2. How is risk being managed?

The main risk is in relation to the delivering the project within the allocated timeframes. The proposal is to use existing contracts where possible to minimise the need for additional procurement. This is in line with the grant scheme terms. Additional procurement will be undertaken via further competitions from existing frameworks to minimise the risk of procurement delays.

There is a risk that projects will be determined to not be suitable during the detailed technical and financial appraisal process. There is opportunity to adjust the scope and size of grant requested at the point of final grant acceptance. Final confirmation of the project pipeline will be made once full financial impact of each measure has been confirmed. The funding also operates on a defrayal model meaning that if any projects have to be removed from scope for unforeseen reasons after formal grant award we can do so as it is possible for the council to return any unspent funding to Salix as a last resort.

7.3. What is the impact on the organisation?

The proposed project includes providing funding to support the increase in staffing to support the delivery of the project. This will improve the in-house capability of the council in relation to projects of this type. The proposed project will improve our corporate property and deliver financial and environmental benefits

7.4. Equality Impact Assessment

This project does not have any impact on the Council’s equality responsibilities as there is not expected to be any impact on broader service delivery.

7.5. Implications for (or impact on) climate change and the environment

The project proposed is in line with the Council’s existing Climate Change Strategy and will help to demonstrate leadership to wider city stakeholders as the Council embarks on developing the next Climate Change Strategy for the City.

The proposal will make a significant, measurable and demonstrable contribution towards improving Coventry City Council’s transition to a low carbon future. The project will reduce the direct emissions relating to the education estate by reducing their dependence on natural gas and improving building efficiency.

7.6. Implications for partner organisations?

None

Page 148

Report author:

Name and job title: Lowell Lewis Safety, Health, Environment & Quality (SHEQ) Manager, Facilities Management

Service: Property Services and Development

Tel and email contact: Email: [email protected] Tel: 02476 971916

Enquiries should be directed to the above person.

Contributor/approver Title Service Date doc Date response name sent out received or approved Contributors: Michelle Salmon Governance Services Law and 08/02/2021 08/02/2021 Officer Governance Sarah Mills Head of Education Education and 29/01/2021 04/02/2021 Entitlement Skills Christopher Whitely Lead Accountant Finance 03/02/2021 07/02/2021 Oluremi Aremu Major Projects Lead Law and 03/02/2021 08/02/2021 Lawyer, Legal Services Governance Names of approvers for submission: (officers and Members) Paul Jennings Finance Manager Finance 05/02/2021 10/02/2021 Julie Newman Director of Law and - 10/02/2021 10/02/2021 Governance Kirsten Nelson Director of Education - 09/02/2021 09/02/2021 and Skills Councillor K Maton Cabinet Member for - 09/02/2021 09/02/2021 Education and Skills

This report is published on the council's website: www.coventry.gov.uk/councilmeetings

Page 149

This page is intentionally left blank Agenda Item 12

Public report  Cabinet

Cabinet 09 March 2021 Council 16 March 2021

Name of Cabinet Member: Cabinet Member for Education and Skills - Councillor K Maton

Director Approving Submission of the report: Director of Education and Skills

Ward(s) affected: All

Title: Holiday Activities and Food Programme 2021: Acceptance of Grant and Proposed Distribution

Is this a key decision?

Yes - the proposals involve financial implications in excess of £1m per annum and are likely to have a significant impact on residents or businesses two or more electoral wards in the City.

Executive Summary:

The government have extended their Holiday Activities and Food Programme 2021 to deliver free activities and food during school holidays nationwide for pupils who are entitled to benefits- related free school meals. The programme was previously in a pilot phase and delivered in 17 Local Authority area (not including Coventry).

Coventry has a provisional allocation of £1.5M which will be dependent on demonstrating delivery plans for the programme and eventual delivery. The programme recognises that approaches will need to be adapted where there are COVID restrictions in place.

Recommendations:

The Cabinet is requested to recommend that Council:

1) Approve receipt of the grant allocation of up to £1.5M dependent on level of delivery

2) Delegate authority to the Cabinet Member for Education and Skills, following consultation with the Director of Education and Skills to deliver the programme. The City Council will centrally co-ordinate and will award monies to relevant organisations to deliver the programme.

Council is requested to:

1) Approve receipt of the grant allocation of up to £1.5M dependent on level of delivery Page 151

2) Delegate authority to the Cabinet Member for Education and Skills, following consultation with the Director of Education and Skills, to deliver the programme. The City Council will centrally co-ordinate and will award monies to relevant organisations to deliver the programme.

List of Appendices included:

None

Background papers:

None

Other useful documents

https://www.gov.uk/government/publications/holiday-activities-and-food-programme/holiday- activities-and-food-programme-2021

https://drive.google.com/drive/folders/1k4Fgy6ycIq-xpfMKR9AbAu2c4928eQE4

Has it been or will it be considered by Scrutiny?

Has it been or will it be considered by any other Council Committee, Advisory Panel or other body?

Will this report go to Council?

Yes – 16 March 2021

Page 152

Report title: Holiday Activities and Food Programme 2021: Acceptance of grant and proposed distribution

1. Context (or background)

1.1 Since the COVID 19 pandemic began free school meals have been funded during holiday periods (with the exception of October half term). In most cases this has been through the provision of vouchers totalling £15 per child per week, funded via the DfE initially, and more recently the COVID winter grant. FSM numbers in the city have risen significantly during that time period equating to 10,500 (19% of pupil population) at the start of the pandemic to an estimated 12,500 (22% of pupil population) in January 21.

1.2 The current forecast suggests we will be able to use the COVID Winter grant for delivery of vouchers to children eligible for benefits related FSM over the Easter period. This will be dependent on issuing vouchers prior to the 31st March 2021 to be used over the Easter period. This activity is separate to the holiday activities and food (HAF) programme.

1.3 The Government announced in November that they were making £220M available nationally to expand the (HAF) programme across the whole of England in 2021. The programme has existed since 2018 on a much smaller scale (in 2020 it delivered to 50,000 children and young people) and is to provide healthy food and enriching activities to disadvantaged children.

1.4 The HAF programme is not a direct replacement for current arrangements. It offers more in terms of activities for disadvantaged children and young people, but it only covers 6 of the 13 holiday weeks, 4 days per week.

1.5 The provision is for school age children who receive benefits-related free school meals, and attendance is optional. It is expected that the offer of free holiday club provision is available for all eligible children, but experience from previous schemes suggests that not all eligible children will participate, and the grant resource would not cover the cost if all did. Generally, intelligence gathered from previous programmes suggests attendance of between approximately 40%. Learning suggests that older children have been more difficult to engage in the programme.

1.6 As highlighted above, the aim of the programme is to make free places available to children eligible for free school meals for the equivalent of at least 4 hours a day, 4 days a week, 6 weeks a year. The funding should cover 4 weeks in the summer and a week’s worth of provision in each of the Easter and Christmas holidays.

1.7 Although there is local flexibility in terms of how this is delivered, the programme has some clear aims, which are:

 Healthy eating and greater knowledge of health and nutrition  Being more active during the school holidays  Taking part in engaging and enriching activities (with a focus on resilience, wellbeing, and wider educational attainment  Being safe and not socially isolated  Increased engagement with school and other local services

1.8 Local Authorities are encouraged to work with a wide range of providers in the delivery of this programme, in recognition of the important role that community and voluntary organisations have played in the delivery of this.

Page 153

1.9 Due to short timescales and uncertainty in relation to COVID 19 restrictions, for the Easter holiday we are proposing food parcel/hampers, activity packs, and online activity sessions for children and young people. We have been working with the Coventry Food Network to deliver this, and we will be submitting a delivery plan to the DfE in line with this. Our ambition will be to reach 25% of benefits eligible FSM pupils.

1.10 For the Summer and Christmas holidays we will be mapping out our requirements and engaging with schools, existing providers of holiday care/activities, and other relevant providers to coordinate provision. We are in the process of recruiting a team to deliver this project.

2. Options considered and recommended proposal

2.1 The City Council could decide to not run the programme in Coventry. This would mean there was no resource to support the delivery of food and activities to children and young people eligible for FSMs in the holidays. This is not the recommended option.

2.2 The City Council could seek to procure an external organisation to coordinate and deliver the HAF programme. This is not the recommended option due to timescales, and the local partnership that already exists in Coventry to support delivery of this programme.

2.3 The City Council accept the grant and co-ordinate the programme centrally. The plan is to award monies via grant agreement to organisations to deliver the provision. This is the recommended option due to short timescales to implement the programme, and recognition of the local partnership that already exists in Coventry to support delivery of this programme. We also hope that this will build on local intelligence and support for disadvantaged children and families to ensure we can embed an offer through this programme or other funding streams in the future.

3. Results of consultation undertaken

3.1 No consultation has been undertaken. A wider engagement exercise will need to take place with organisations that already deliver or may in the future be able to deliver holiday provision for the Summer and Christmas provision.

4. Timetable for implementing this decision

4.1 The acceptance of grant monies will be implemented immediately.

4.2 Interim arrangements will be in place for the Easter holiday following approval of the delivery plan via the Department for Education. This work is already ongoing. Recruitment to posts is already underway and we are engaging with possible providers in relation to Summer and Christmas provision.

5. Comments from the Director of Finance and the Director of Law and Governance

5.1 Financial implications

The indicative maximum allocation available is £150,700 for the current financial year and £1,347,890 for 21/22 financial year. The Payments will be made by DfE at various milestones throughout the year including receipt of delivery plans, and report back on actual activity and expenditure.

The funding is for the provision of free holiday club places (90% of the funding) in the Easter, Summer and Christmas holidays, and for Local Authority coordination costs (10% Page 154

of the funding). We are recruiting to a small team to support the delivery of the programme within the 10% allocation.

The DfE have confirmed that at this stage they are not looking to recoup funding if attendance/take-up in Easter is lower than anticipated as a result of COVID restrictions.

The funding is intended for revenue purposes, and although it can be used to purchase equipment for the programme, if this meets HAF criteria for classification as capital expenditure, the amount you spend on this should be limited to 2% of your overall programme expenditure.

Funding can be used to support a comprehensive, inclusive and accessible offer, e.g. setting up new provision where needed, paying for additional staff to expand existing provision or to meet additional needs, etc. Funding can also be used to support quality improvement, e.g. money to bring in activity providers such as sports coaches; money to establish partnerships with catering organisations.

As highlighted above the grant indicates that this should be available to all eligible children and young people, but the allocations are based on take up rates from pilot programmes which are significantly lower than this. We will need to manage this position and continue to liaise with the DfE in relation to take up. In the worst-case high levels of indicative take up may mean that provision needs to be scaled later in the year.

5.2 Legal implications

By section 31(3) and 31(4) of the Local Government Act 2003 (Power to pay grant) the Department for Education has made grant provision available to enable local authorities to provide to school age children who are eligible for free school meals, healthy meals and enrichment activities during the Easter, Summer and Christmas holiday periods free of charge. The Departments Guidance “The Holiday Activities and Food Programme” sets out the conditions upon which the grant has been made available and with which the local authority must comply. To include reference to specific legal powers or criteria and appropriate legislation and, if required, details of what legally needs to be achieved in order to satisfy the proposals.

6. Other implications

Any other specific implications

6.1 How will this contribute to the Council Plan (www.coventry.gov.uk/councilplan/)?

This programme aligns with the council plan, and can contribute towards the following aims:

 Improving educational outcomes by working with schools to continue to improve standards,  Improving health and wellbeing by: helping children and young people lead healthier lifestyles including better mental health; keeping children and young people safe from harm; providing early intervention for families who need it; enabling people to exercise choice and control in their daily lives; reducing health inequalities: giving our children the best start in life;

6.2 How is risk being managed?

There are a number of risks associated with delivery of programme. Page 155

We need to ensure that we safeguard children and young people. This means that it is important that holiday provision is properly registered (OFSTED if appropriate) and staff have appropriate qualifications and employment checks in place (e.g. DBS). Part of our mitigation is to use organisations that are already established to support children and young people.

The HAF programme is not a replacement of the arrangements that we have had in place for FSMs over the last year. The grant monies awarded will not be sufficient to support all children and young people in the city with food during the holidays. Through communication we will need to manage this and ensure that parents and carers are clear on the scope of this programme.

Continuing COVID 19 restrictions could impact on what we are able to offer, and take-up of that offer. The DfE have adjusted their expectations for Easter to recognise this and have indicated that required flexibility will need to continue. In the process of awarding funding we will need to balance this risk to ensure that providers have the confidence to create and build on existing provision.

The Steering Group will establish a risk and issue management approach, detailing a level of risk and issue tolerance, a threshold after which any risks to the delivery of the project or issues precipitating a significant change of approach will be reported to the Steering Group for consideration and options for mitigation/response. Risks and Issues of a lower impact will be mitigated and responded to within the day to day activity of the project team, recorded in the Project risk log.

6.3 What is the impact on the organisation?

We will be recruiting to 3 posts on a fixed term basis to coordinate and support delivery of the programme.

6.4 Equality Impact Assessment (EIA)

As part of the programme we will need to consider how to ensure provision is accessible and engaging for all eligible children and young people (including those with a special educational need and disability, and older children). We will have due regard to the requirements of the Equality Act in coordination and delivery of the programme.

6.5 Implications for (or impact on) climate change and the environment

None

6.6 Implications for partner organisations?

We will be looking to work with partner organisations in the delivery of this programme, including the establishment of a steering board to oversee. The DfE recommend the following organisations are represented on the steering board: local police and other uniform services, public health officials, school leaders, youth services, social services, charities and the voluntary sector.

Page 156

Report author(s):

Name and job title: Rachael Sugars Interim Head of Education Improvement & Standards

Service: Education and Skills

Tel and email contact: Tel: 024 7697 7278 Email: [email protected]

Enquiries should be directed to the above person.

Contributor/ Title Service Date doc Date response approver name sent out received or approved Contributors: Michelle Salmon Governance Services Law and Governance 12/02/21 12/02/21 Officer Sarah Kinsell Lead Business Partner Finance 11/02/21 12/02/21 Elaine Atkins Solicitor Law and Governance 11/02/21 12/02/21 Robina Nawaz Policy and Housing and 11/02/21 12/02/21 Partnerships Transformation Transformation Officer Helen Masefield Education Education and Skills 11/02/21 12/02/21 Improvement - Lead Lorna Holland Project Manager Education and Skills 11/02/21 12/02/21 Amanda Mayes Strategic Category Procurement and 11/02/21 12/02/21 Lead (People) Commissioning Nicole Powell Strategic Human Human Resources 11/02/21 12/02/21 Resources Business Partner Names of approvers for submission: (officers and members) Chris Whiteley Finance Manager Finance 12/02/21 12/02/21 Julie Newman Director of Law and - 10/02/21 10/02/21 Governance Kirston Nelson Director of Education - 12/02/21 15/02/21 and Skills Councillor K Maton Cabinet Member for - 12/02/21 15/02/21 Education and Skills

This report is published on the council's website: www.coventry.gov.uk/councilmeetings

Page 157

This page is intentionally left blank Agenda Item 13

Public report Cabinet Report 

A separate report is submitted in the private part of the agenda in respect of this item, as it contains details of financial information required to be kept private in accordance with Schedule 12A of the Local Government Act 1972. The grounds for privacy are that it contains information relating to the financial and business affairs of any particular person (including the authority holding that information). The public interest in maintaining the exemption under Schedule 12A outweighs the public interest in disclosing the information.

Cabinet 9th March 2021 Council 16th March 2021

Name of Cabinet Member: Cabinet Member for City Services - Councillor P Hetherton

Director Approving Submission of the report: Director of Streetscene and Regulatory Services

Ward(s) affected: Cheylesmore

Title: Investment in Material Recycling Facility – Update

Is this a key decision?

Yes - the proposals involve financial implications in excess of £1m per annum.

Executive Summary:

In September 2019 the Council approved a report to support the procurement, financing, construction and operation of a material recycling facility (MRF) to be based in Coventry. The facility at the time was in partnership with 7 other surrounding authorities (Solihull MBC, Walsall Council, Nuneaton and Bedworth Borough Council, Rugby Borough Council, North Warwickshire Borough Council), together the Partner Councils and at such time, Stratford-on Avon District Council as a feedstock supplier council only. The respective shareholding for each Partner Council is based on the total (2018/19) tonnage of recyclable material provided by each authority – for Coventry this was 27.72% in September 2019.

This paper describes the evolution of the Project over the course of the last 18 months, including the addition of 2 further Partner Councils (with Stratford-on-Avon District Council converting its status from a feedstock supplier council into a Partner Council and the addition of Warwick District Council as a Partner Council), associated increase in facility capacity and building footprint to accommodate a technologically advanced intelligent facility. This solution will mean

Page 159 the Coventry MRF will be able to deliver higher purity levels of recyclate, as well as the flexibility to ensure it can react to legislation and consumer habits and the introduction of new and changing material streams. The revised annualised net savings to the Council are c£1.4m per year, which is £0.52m pa greater than contemplated within the September 2019 business case albeit with a higher capital investment requirement.

As the procurement exercise is nearing conclusion, this paper seeks approval for the additional capital financing required, by way of a commercial loan to the special purpose company to be incorporated to operate the facility (AssetCo) which will be incorporated as Sherbourne Recycling Limited). Additional funding is required to meet the requirements detailed within the paper and summarised in the paragraph above.

Recommendations:

Cabinet is requested to recommend that Council:

1) Approve the sum as detailed in the private report for a loan facility from the City Council for the purposes of delivering the Materials Recycling Facility.

2) Delegate authority to the Director of Streetscene and Regulatory Services and the Director of Finance, in consultation with the Director of Law and Governance and the Cabinet Member for City Services and the Cabinet Member for Strategic Finance and Resources, to finalise and agree the detailed terms of the transaction with AssetCo. The authority under this delegation shall also include:  the authority to enter into two payment guarantees on behalf of AssetCo with the Civils Contractor and the Process Contractor;  the authority to incorporate AssetCo and to enter into a shareholders' agreement with AssetCo and the other Partner Councils in respect of the governance arrangements of AssetCo;  the authority to enter into the Service Level Agreement with AssetCo committing the Councils' waste tonnage for 25 years; and the authority to enter into the Loan Agreement and ancillary security documents with AssetCo for a loan over a repayment period of 25 years.

Council is recommended to:

1) Approve the sum as detailed in the private report for a loan facility from the City Council for the purposes of delivering the Materials Recycling Facility.

Page 160

List of Appendices included:

Appendix 1 - Market Paper - Frith

Background papers:

None

Other useful documents

Proposed Development of a Regional Materials Recycling Facility (MRF) with Partnering Authorities

Has it been or will it be considered by Scrutiny?

No, however the matter was considered by the Communities and Neighbourhoods Scrutiny Board (4) on 04 February 2021. The Board recommended support to the delivery of the Materials Recycling Facility.

Has it been or will it be considered by any other Council Committee, Advisory Panel or other body?

Will this report go to Council?

Yes – 16th March 2021

Page 161

Report title: Investment in Material Recycling Facility – Update

1. Context (or background)

1.1 Local authorities have a duty under the Waste Regulations 2011 to separately collect four types of recyclable material (glass, metal, paper and plastic) and to ensure that collection methods pass the national legislative requirements that they are Technically, Environmental and Economically Practical (TEEP).

1.2 CCC currently contracts the treatment of recyclate collected at the kerbside to Tom Whites Waste (bulking and haulage) and Biffa (Materials Recycling Facility). The volatility of global markets for processed recyclate has led the private sector to pass the risk of price fluctuations onto the local authorities. As a result, CCC has seen a significant rise in the cost of treatment during the life of the current contract (see Table 1).

Table 1: Bulking, haulage and MRF Costs 2014-2019

1.3 The total cost to Coventry in 2018/19 for the bulking, haulage and treatment of kerbside collected dry mixed recyclate (dry mixed recyclate) was in excess of £1.6million.

1.4 Current Materials Recycling Facility arrangements (including processing gate fees and rebate share mechanisms) are reflective of the private sector’s reluctance to absorb the risk of current market price fluctuations.

1.5 The development of an ‘in-house’ Materials Recycling Facility will allow the Partner Councils to take control of processing dry mixed recyclate collected through kerbside collections and via Household Waste and Recycling Centres (HWRC). This will allow each Partner Council to benefit more fully from any 'upside' of the price of processed recyclate in the commodity market in consideration for the risks they are required to assume in any event.

1.6 The Business Case in August 2019 set out the Projects aspirations, namely, to allow Partner Councils to;

 Take control of regional recyclate management;  Benefit from any upside of the price of processed recyclate and off-set costs and risks against income generated from the Materials Recycling Facility;  Avoid paying risk premiums to the private sector to offset market fluctuations;  Future proof the Materials Recycling Facility so that it is flexible and adaptable;  Enhance recyclate quality;  Benefit from economies of scale;  Benefit from any future expansion and commercialisation of the plant to satisfy any private sector demand; and  To have greater control on the end uses of the recyclate produced

1.7 In September 2019 the Council approved a report to support the procurement, financing, construction and operation of a material recycling facility (MRF) to be based in Coventry. The facility at the time was in partnership with 6 other surrounding authorities (Solihull Page 162

MBC, Walsall Council, Nuneaton and Bedworth Borough Council, Rugby Borough Council, North Warwickshire Borough Council), together the Partner Councils and, at such time, Stratford-on-Avon District Council as a feedstock supplier council only. The respective shareholding for each Partner Council is based on the total (2018/19) tonnage of recyclable material provided by each authority – for Coventry this was 27.72% in September 2019.

1.8 The business case for the MRF, as developed in May 2019, was initially based on a 120,000 tonne per annum plant with Partner Councils utilising 90,000 tonnes per annum rising to full capacity over the 20 years due to growth in household waste with no capacity available for recyclable materials from other (non-Partner) parties. A semi-automated process was assumed for the specification of facility within this business case, with a strong reliance on human pickers to achieve good purity levels. This information was presented to Members in the previous Cabinet paper (September 2019).

1.9 Through the course of dialogue with Bidders, engagement with recyclate markets and discussion with neighbouring authorities the Project has evolved to increase in size and sophistication to meet current and anticipated future market demands.

1.10 The final design for the facility is that of a technologically advanced solution with absolute minimum human intervention to achieve high quality standards. This change reflects change in consumer habits and anticipated legislative change as a result of the Waste and Resource Strategy, impacts of Brexit on trade and workforce’s engagement, and opportunity for additional Partners and capacity for input from commercial sources.

1.11 Following approval by Members in September 2019, a procurement exercise for a contractor for the process equipment commenced in 2019 and resulted in the selection of GMI Europe Limited (Machinex Ltd) as the Preferred Bidder for the process equipment in January 2021. The project team commenced a separate procurement exercise for a contractor for the civils works in May 2020 and are at an advanced stage with a single civils contractor (final tender submission due in mid-March).

1.12 Since May 2019 (the initial business case) there have been a number of changes to the project to accommodate additional partners, changes in the UK waste market, and new recycling market demands to make the project significantly more viable in the longer term, all of which have been presented to Project Board and agreed for inclusion within the procurement following proposal and challenge within the Project Team.

1.13 Below is a list of the range of adaptations considered, reviewed and their net impact to the Project and overall cost assumptions;

 Additional Partners – the number of Partner Councils has increased from 6 to 8 with Stratford-on-Avon District Council converting its status from a feedstock supplier council only to a Partner Council and Warwick District Council joining the project as a Partner Council, creating a larger base across which to share the project liabilities (and benefits). Coventry’s share of these liabilities has reduced from 27.27% to 21.50% as a result of the increase in Partners.

 Facility Capacity – with the inclusion of the additional Partner Councils, a review of necessary capacity and the market opportunity for third party material (and income) concluded a new optimum throughput capacity equivalent to 175,000 tonnes per annum Page 163

– this is c.45% larger than that contemplated within the business case presented in September 2019.

 Equipment and Building Size – to deliver capacity of 175,000 tonnes per annum additional equipment and a greater building size was required.

 Plastics – at the end of 2019 and into 2020 there has been a market movement on plastics with the emerging government legislation on collecting low grade plastics from consumers and the introduction of the Plastics Tax, incentivising recycled plastic content in new packaging. The plant design evolved to include low grade plastics separation to accommodate both drivers – a first in the UK.

 Advanced Technology – the procurement exercise encouraged bidders to respond with robust, technologically advanced solutions for maximising recycling rates and, importantly, recyclate quality. GMI (Machinex) Ltd offered the most advanced solution available in the waste market, with high levels of automation (very few people), Artificial Intelligence, robotics, excellent lifecycle plan, and great levels of flexibility; all of these attributes offered a lower operating cost than anticipated for the facility, however they also contributed to a higher capital cost for the purchase of the equipment solution.

 Photo-voltaic – a climate emergency was declared in June 2019 in Coventry, and similarly across the Partner Councils. In response to this, together with improving efficiency (and business case) for PV installations, a significant PV array was included within the project requirements with improved revenue benefits.

 Insurance – In addition to these project developments, some cost parameters have changed over the past 18 months, influenced not least by the global pandemic COVID- 19. Insurance costs have been materially impacted, with changes to the costs originally included in the May 2019 business case.

1.14 The project changes together with formal, contracted bids back from the bidding Process Contractors have led to an increase in the capital funding requirement for the project.

1.15 Although the capital requirement has increased the savings are expected to be at least equivalent to the level proposed when original approvals were granted, following the outcome of value engineering and cost mitigations, and extending the term for financing for the facility to 25years, which is not unreasonable for a facility which is expected to remain operational for 30+ years.

2. Options considered and recommended proposal

2.1 Option 1: Do nothing – If no further action is taken the project will not be able to proceed as the capital funding currently approved is insufficient to meet the required costs for the project. Each respective authority would have to seek alternative contracts to dispose of their waste. Based on the current markets, it is likely these contracts would exceed the current costs for waste disposal so additional revenue funding would be required.

Page 164

2.2 To complete the work to date and undertake the procurement exercise there have been developments costs which have been incurred. These costs will be sunk costs and not possible to recover from savings that were expected had the project proceeded.

2.3 This is not the recommended option.

2.4 Option 2: Retain the original smaller facility – The addition of 2 further Partner Councils since the original business case has increased the baseline tonnage from 90,000 to 112,000 tonnes per annum, rising to 143,000 tonnes per annum over the 25 year period, based on current estimates and rates of growth.

2.5 Partner tonnage would fill the original planned smaller facility (taking into account outage and maintenance) immediately, meaning some of the recyclate would need to be diverted to other facilities which would attribute higher rates, and remove the opportunity for revenue from sale of capacity to third parties.

2.6 Savings attributed from a smaller facility would not be proportionate to the reduction in size as a large proportion of the civils capex costs are associated with ground works which would be required to make use of the site regardless of the building size.

2.7 Flexibility and future proofing of the Materials Recycling Facility would be compromised by the reduction in facility size, leaving Partners exposed to future changes in legislation and consumer habits.

2.8 In order to achieve a smaller facility, the existing procurement exercise would need to be revisited and extended by at least 6 months, increasing development costs.

2.9 The existing programme for works allows Partners to exit from existing arrangements at no additional cost. An extension to programme would require Partners to extend/enter into new waste supply arrangements on short term contracts at premium rates.

2.10 This is not the recommended option.

2.11 Option 3: Proceed with the proposed larger facility and approve additional capital funding required - The final design of the Preferred Bidder (GMI) process solution contractor is a highly automated and innovative state-of-the-art facility that will be the most advanced of its kind in the UK, and potentially one of the most advanced MRF’s around the world. It will also be one of the first facilities in the world that integrate artificial intelligence at the core of its system allowing real-time interconnectivity between the main sorting equipment. This technologically advanced solution will mean the Coventry MRF will be able to deliver higher purity levels of recyclate, as well as the flexibility to ensure it can react to legislation and consumer habits and the introduction of new and changing material steams.

2.12 The original business case was costed on the basis of existing infrastructure within the UK, which is less sophisticated, and more heavily reliant on primarily manual labour to separate recyclates and remove contamination. The use of robotics and optical sorters require a higher initial investment, but in turn deliver lower operating and lifecycle costs, reducing the whole project life cost, in addition to providing a higher degree of future proofing, and savings when Partners secure a more competitive gate fee than they currently have under their existing contractual arrangements. Page 165

2.13 The replacement of manual sorting and quality control by robotics means a more efficient facility able to deliver higher purity levels of recyclate, in turn resulting in higher associated revenue and a lower proportion of waste rejected and sent to landfill.

2.14 The use of artificial intelligence (AI) technologies also allows the facility to be re- programmed as required to manage changes within minutes, without any further mechanical modification. Allowing the facility to react to compositional variations as a result of changes in legislation and consumer habit, the introduction of new material streams in the marketplace, and seasonal peaks.

2.15 The technologies suggested and design philosophy behind GMI’s solution will make it stand out from anything currently in the marketplace, in addition to built-in redundancy for future enhancements to meet market demands, an intelligence led solution will increase efficiency in daily operations reducing cost to Partner Councils in the longer-term.

2.16 The use of technology also addresses an increasing problem in the waste industry, as a result in part of Brexit, of labour shortages, with lower skilled manual sorter roles typically filled by an Eastern European workforce.

2.17 Key themes addressed at the MRF Conference in September 2020 centred on the need for greater levels of automation within the sector to manage a depleting workforce, additional reporting and measuring regimes anticipated associated with Deposit Return Schemes and End Producer Responsibilities (targeting plastics) as a result of the changes in UK legislation slated to come into force from 2023 onwards, and higher demands on purity levels.

2.18 In support of these challenges and the inclusion of low-grade flexible plastics (i.e. plastic film) at the kerbside the market was very encouraging of enlarged buildings to provide additional resilience and adaptability of future facilities.

2.19 The Project Team also commissioned an independent report by Frith Resource Limited (attached as an Appendix) on the current state of the market and developments in the MRF industry at the end of the Summer 2020 which further strengthened the case for moving from the original design premise in the business case to a more advance and larger facility.

2.20 For the purpose of providing a fair playing field the outline building design, as submitted for planning, represented an oversized building able to accommodate all process contractors involved in the procurement process, including 20% redundancy to accommodate any future further changes in operational needs not already envisaged. Following selection of the GMI, work is currently being undertaken with all parties to refine the final building design to envelop the winning process solution.

2.21 The Project Team have reached an advanced stage of negotiation with a single civils contractor, who provided an outline of anticipated costs associated with developing the site and construction of site buildings, based on the design submitted for planning permission, at the end of December 2020.

2.22 The civils contractor is due to submit their final tender return and price min-March 2021 based on the outcome of value engineering. Page 166

2.23 Coventry’s shareholding and funding liability is lower than the original report brought before Members (September 2019) as a result the number of Partner Councils increasing from 6 to 8. As a result, Coventry’s shareholding and funding liability is now 21.50%.

2.24 Although the capital requirement has increased the savings are expected to be at least equivalent to the level proposed when original approvals were granted, following the outcome of the value engineering and cost mitigations as outlined above, including the extended term for financing for the facility to 25years, which is not unreasonable for a facility which is expected to remain operational for 30+ years.

2.25 The Project Team will continue to work with GMI as the Preferred Bidder and the single civils contractor to improve the capital investment position to better the position for all Partners ahead of Financial Close, targeting 01 April 2021.

3. Results of consultation undertaken

3.1 No consultation undertaken.

4. Timetable for implementing this decision

4.1 The Project Team will continue to work with contractors to refine the final contractor costs and business case improvements in the early part of 2021, targeting final business case and Financial Close on 01 April 2021, with construction completion mid-2023.

5. Comments from the Director of Finance and the Director of Law and Governance

5.1 Financial implications

5.2 Capital investment and shareholding - Coventry City Council will have a 21.50% shareholding in AssetCo (Sherbourne Recycling Limited) and as such will make an equity investment into the company, reflecting their share of the total equity in the business. The shareholding is based on the proportion of waste (tonnage) collected by each council in 2018/19.

5.3 Coventry City Council will use prudential borrowing for the equity and loan financing into this facility designed to process the dry mixed recyclate waste for Coventry and each Partner Council. The project will deliver waste service improvements and result in savings in waste service budgets over the life of the project.

5.4 The additional capital costs result in savings over the operational phase resulting a more cost-effective solution when compared to lower capital-intensive solutions submitted during the procurement. This is due to the solution being highly automated so requiring less manual intervention in terms of staff and the ongoing lifecycle costs are lower than other solutions, which the technical evaluation team reviewed and were comfortable with the robustness of the lifecycle investment.

5.5 Capital financing

5.6 The Council will provide loan and equity financing to Sherbourne Recycling Limited to meet the capital costs required for the construction of the facility which will be shared across the Partner Councils based on their shareholding

Page 167

5.7 The capital loan will be provided to Sherbourne Recycling Limited over a 25-year term at a commercial rate generating a return back to the Council.

5.8 Revenue implications

5.9 The proportion of waste recovered from the waste stream will be higher and of better quality based on the high-tech facility, with a lower proportion of dry mixed recyclate waste being rejected and having to be sent to landfill. This will in turn results in a higher recyclate revenue being achievable from the waste commodity market which has been reflected in financial modelling at a rate of 15% more than the average market price.

5.10 The table below summarises the benefits that are expected to be delivered from this facility by way of savings in waste budgets (gate fee less recyclate revenue), the treasury benefit from the loan financing and rental income. The treasury benefit modelled has been based on the maximum value of the loan and included on an annuity basis, which will not reflect the actual repayment profile. These figures provide an indication of the quantum of savings that the Council may receive from the loan financing. The savings will vary depending on the final value of the civils works, which in turn will affect the gate fee/ disposal savings and treasury benefit. The disposal budget savings have been based on a comparison of the current costs incurred for waste disposal against the expected costs with the MRF in operation. The disposal savings take into account the net benefit received as recyclate rebate (from selling waste in the commodities market).

5.11 Legal implications

5.12 Under Section 12 of the Local Government Act 2003 the Council has a specific power to invest. The power states "a local authority may invest for any purpose relevant to its functions under any enactment or for the purposes of the prudent management of its financial affairs". This provides the Council with a power to invest in AssetCo, for any purpose relevant to its functions (this function would have to be identified) or if the Council can show it is for the prudent management of its financial affairs. Under section 1 of the Localism Act 2011, the Council also has a power “to do anything that individuals generally may do” (the “General Power of Competence”). “Individual” means an individual with full capacity. The General Power of Competence gives the Council the:

i. power to do anything conferred under section 1 anywhere in the United Kingdom or elsewhere, ii. power to do it for a commercial purpose or otherwise for a charge, or without charge, and iii. power to do it for, or otherwise than for, the benefit of the authority, its area or persons resident or present in its area.

5.13 Where the Council uses the General Power of Competence to do something for a commercial purpose, section 4 of the Localism Act 2011 requires that the Council must do so through a company (which has a wider definition than for the purposes of section 95 Local Government Act 2003).

5.14 The requirement under section 4 of the Localism Act 2011 is very similar to the requirements of section 95 of the Local Government Act 2003 (the “trading power”). The Council will be compliant with the requirements of both the General Power of Competence and the trading power as any commercial purpose activity or trading will be done through AssetCo, a private company limited by shares which will be incorporated prior to Financial Close.

Page 168

5.15 The above are the powers to be relied upon when entering into the Shareholders’ Agreement, Service Level Agreement, Loan Agreement, Security Documents and the Payment Guarantee documents.

5.16 In respect of the Payment Guarantee to be entered into by the Council with each of the civils contractor and the process contractor, it is worth noting that such guarantee is in respect of AssetCo's payment obligations only for the works. As the civils and process contract are both fixed price contracts, any liability under the Payment Guarantee is limited by AssetCo's limit on liability under the underlying contract to which the guarantee relates.

5.17 Under the shareholders' agreement with the other Partner Councils, the Council has the benefit of an indemnity in favour of it from each of the Partner Councils (in proportion to their relevant proportion) in respect of any liabilities arising under the Payment Guarantee (i.e. in the event the Payment Guarantee is called upon by the civils contractor and/or process contractor). This means that Coventry City Council will be indemnified by all other Partner Councils as per their relevant proportion shareholdings for any liabilities arising under such payment guarantee, therefore mitigating the Council's exposure to its relevant proportion shareholding (21.50%). This cabinet report considers further mitigating factors which reduces the Council's exposure under the Payment Guarantees in section 5 below.

5.18 The loan agreement, security documents and payment guarantee will be drafted on arm’s length terms. It will be compliant with the new Subsidy Control Commitment rules and legislation (replacing State Aid legislation). The Council has sought advice from external advisors Pinsent Masons and KPMG that the documents and the overall structure will be structured to be compliant with the Subsidy Control Commitment rules.

6. Other implications

6.1 How will this contribute to the Council Plan (www.coventry.gov.uk/councilplan/)?

6.2 In accordance with the Environmental Protection Act 1990 the Council has a legal obligation to undertake waste collections of household waste, including the separate collection of wate paper, metal, plastic and glass (The Waste (England and Wales) (Amended) Regulations 2012). It also ensures that collection methods pass the national legislative requirements that they are Technically, Environmental, Economically and Practicable (TEEP).

6.3 The Waste Regulations transpose the European Union Waste Framework Directive into UK law and are enforced in England by the Environment Agency. It gives top priority to preventing waste in the first place. When waste is created, it gives priority to preparing it for re-use, then recycling, then recovery, and last of all disposal (e.g. landfill).

6.4 The Councils Municipal Waste Strategy 2008-2020 outlines the Councils approach to meeting legal obligations and recycling targets set out in the Waste Strategy for England 207. Namely, 45% of household waste arising to be recycled by 2020.

6.5 In addition, Members will be aware from media coverage of the Government’s Resource and Waste Strategy review, that this includes the potential for greater producer responsibility and the introduction of deposit scheme materials, e.g. plastic bottles.

6.6 How is risk being managed?

6.7 The premise of the Project is to better manage the risks as of costs associated with the treatment of dry mixed recyclate arising in the region and particularly in Coventry.

Page 169

6.8 This notwithstanding, as with any construction project there are risks that are required to be managed effectively for the project to remain deliverable.

 A competent, professional and well-resourced project team has been established to deliver the project, which includes external advisors, and a Project Manager and Project Director committed to the Project

 A comprehensive risk register is maintained and reported on to Project Board to ensure risks are continually being monitored and managed

 The greatest risk to project viability, tonnage input risk, has been effectively mitigated through the engagement of Partner Councils committing their recyclate for the duration of the Loan Agreement.

 A Competitive Dialogue procurement procedure has been adopted to ensure that robust, deliverable proposals are received from bidders, which offer value for money and provide the quality outcomes necessary

 Sensitivities on the potential costs and income have been considered, so that the affordability of the Project is fully understood, and with exit clauses from the Joint Working Agreement (2) agreement if the Project is subsequently deemed unaffordable

 Planning risk is being managed, with early planning being sought to prevent cost impacts post-Financial Close

6.9 Moreover, the exclusive commitment by each Partner Council to direct all its recyclable materials to the Facility over a 25 year term (to align with the term of the loan) underpins the economics of the Projects and ensures that sufficient revenue shall be generated by AssetCo via its gate fee to service the loans. In addition, there is scope for additional commercial third-party waste revenue to be generated by AssetCo.

6.10 In the very unlikely event that there was a reduction in demand with a resultant potential impairment of the loan, this would be a cost to the local authority partners. Feedstock/demand is however as described in the report, expected to increase over time rather than reduce which reduces this risk.

6.11 It should be noted that suitable provisions have been included within the shareholders' agreement to deter any Partner Council from breaching the terms of the Service Level Agreement or Loan Agreement which will, in turn, terminate the shareholders' agreement and result in a significant deduction to such defaulting Partner Council's principal loan value to compensate the other Partner Councils for any direct losses caused by such defaulting Partner Council's withdrawal from the Project as well as a further percentage deduction on top of the direct losses.

6.12 The loan/investment has been considered within the context of the Council’s commercial investment strategy which takes account of both the risk of each investment made and the limits set for loans of this nature in totality. The loan proposed in this report is within the headroom currently afforded in the strategy.

6.13 What is the impact on the organisation?

6.14 None, there will be no direct impact as the facility will be operated by AssetCo.

Page 170

6.15 Equality Impact Assessment (EIA)

6.16 No formal equalities impact assessment has been carried out. However, it is not expected that there will not be any disadvantage to any group if the recommendation is approved.

6.17 Implications for (or impact on) climate change and the environment

6.18 The Waste Strategy for England 2007 outlines the Governments ambition to work towards a zero-waste economy, in which material resources are reused, recycled or recovered wherever possible and only disposed of as the option of last resort. This means reducing the amount of waste produced and ensuring all material are pushed up the waste hierarchy. The benefits will be realised in a healthier natural environment and reduce the impacts on climate change.

6.19 The proposed location will eliminate the current need to bulk and haul dry mixed recyclate collected in Coventry. A reduction in CO2 emissions will be achieved through reducing vehicle movements by collection crews, and articulated lorry movements (c.25 per week, c.1,300 per year) associated with transporting materials to the current Material Recycling Facility, in London.

6.20 Implications for partner organisations?

6.21 Benefits to all Partner Council will achieved through greater levels of control over the sorting, marketing and sale of dry mixed recyclate collected at the kerbside, increase flexibility and management of risks associated with market fluctuations directly.

Page 171

Report author(s):

Name and job title: Layla Shannon Project Manager

Service: Streetscene and Regulatory Services

Tel and email contact: Tel: 02476 972007 Email: [email protected]

Enquiries should be directed to the above person.

Contributor/approver Title Service Date doc Date response name sent out received or approved Contributors: Michelle Salmon Governance Services Law and 03/02/2021 04/02/2021 Officer Governance Grant McKelvie Project Director n/a 05/01/2021 02/02/2021 Julie Fairbrother Communications Communications 03/02/2021 04/02/2021 Officer Parminder Mudhar Finance, Programme Finance 05/01/2021 13/01/2021 Manager Gurbinder Singh Sangha Corporate and Law and 05/01/2021 12/01/2021 Commercial Lead Governance Lawyer, Legal Services Phil Helm Finance Manager – Finance 28/1/2021 02/02/2021 Place Names of approvers for submission: (officers and members) Barry Hastie Director of Finance - 03/02/2021 12/02/2021 Julie Newman Director of Law and - 03/02/2021 16/02/2021 Governance Andrew Walster Director of Streetscene - 03/02/2021 17/02/2021 and Regulatory Services Councillor P Hetherton Cabinet Member for - 16/02/2021 17/02/2021 City Services

This report is published on the council's website: www.coventry.gov.uk/councilmeetings

Page 172

Briefing note – Developments in the MRF industry

1 Introduction There have been a range of developments in the waste sector which could impact on the Sherbourne Resource Park Delivery Project; in particular, there is much discussion around packaging policy and recycling collection strategy in the UK and beyond. This briefing note is intended to provide a high-level view of the various challenges and opportunities facing the MRF industry and recycling market in general, followed by a view on how the Sherbourne project is addressing these. This briefing note has been prepared by Frith Resource Management Ltd and provides an independent opinion.

2 Developments in the recyclate market The recyclate market has historically been underpinned by fluctuations in price. This is unlikely to change in general due to the multiple supply, demand and other influences on materials commodity, such as oil prices. Moreover, in the short term, there is scope for additional volatility due to uncertainties surrounding the effects of Covid-19 and Brexit. One aspect of the recycling market that is likely to continue and grow is the focus on quality, with innovation, operational practice and technological developments evolving to respond to increasing demands for high quality. Aside from demands from the market, increased quality (and quantity) of recyclate is also being driven by national and EU policy and the Circular Economy (see Section 4.1) which will have an impact over the longer term. 2.1 Quality & Technology Since the MRF Regulations were introduced in 2014, and when China announced it was closing its doors to contaminated recyclables from the start of 2018 in its National Sword policy, there has been an increased emphasis on quality in the recycling markets. Other export markets have followed this lead, particularly in South East Asia, leading to UK MRFs focusing on improving the quality of recyclable materials, often through enhanced sorting practices. Following the tightening of import quality standards in 2018, from January 2021, China will no longer be accepting or approving ‘solid waste’ imports. High-grade copper, aluminium and ferrous scrap merchants are calling for the Chinese government to consider these material streams as a ‘resource’ rather than a waste.1

Some MRF operators are responding to the quality challenge by basic approaches to increasing manual pre-sorting and slowing down the MRF conveyor belt2, which can reduce capacity. Others are looking towards technological improvements to target different materials via optical and sensor-based sorting and robotics, with massive strides in the development of deep learning algorithms and artificial intelligence for material identification by MRF equipment providers3,4.

1 https://www.recyclingtoday.com/article/houlihan-lokey-lek-consulting-summer-2020-outlook/ 2 https://www.letsrecycle.com/news/latest-news/mrfs-running-at-slower-speed-to-improve-quality/ 3 https://resource.co/article/mrfs-look-future 4 https://www.letsrecycle.com/news/latest-news/recycleye-gains-funding-for-mrf-sensor-technologies/

Page1 173 Tag and trace technology, for identification and accountability, was trialled in the UK last year through packaging compliance scheme company Ecosurety5,6. Tag and trace technology allows brands to ‘tag’ their packaging with a unique PAC code, allowing the packaging to be ‘traced’ and sorted and reprocessed into identical grades and colours of plastic. The technology requires tagged packaging to be separately collected and processed at a Polytag MRF, therefore having the potential to remove material from the kerbside recycling scheme if the technology is widely adopted by brands. 2.2 Recyclate prices and markets Recyclate market prices are subject to variation and fluctuation, depending on factors including, but not limited to, supply, demand, quality, the price of virgin materials and the demand for the final products. A summary chart showing the average monthly market prices of recycled materials is shown in Figure 1Figure 1: Recyclate market prices, collated from Let’s Recycle published data. Actual market prices achieved for MRF outputs may also depend on contractual arrangements, the markets supplied, and the quantities sold to each market. Further detail on each of the material grades is available for inspection by the Project Board if required.

The data shows the fluctuations in market prices over the last 10-11 years. It can be seen that the prices over the last year have been fairly volatile for plastic bottles and paper. Plastic bottles of all grades (PET, HDPE, mixed and coloured) saw increases in price during 2019 and the early part of 2020, but these have now reduced closer to the long-term average prices. This fluctuation could be due to increased reprocessing capacity coming on line in the UK and businesses responding to demands for higher recycled content, as referenced in WRAP’s 2019 Plastics Market Situation Report7. The price of recycled plastic grades might be expected to increase in coming years with demand for recycled content in plastic packaging (see Section 4.3.1 below).

The price of all paper and card grades was seen to fall over 2019, to a 10-year low in the early part of 2020 but are now increasing once more. The current price for paper is still c.30-50% lower than the 10- year average. This point follows a summary document from FRM to the Project Team in November 2019, in which it was reported that the industry8 expected paper prices to recover as reprocessing capacity comes on line in South East Asia, while UK markets will continue to struggle without investment in UK paper mills.

5 https://www.packagingnews.co.uk/news/waste-management/ecosurety-funds-tag-trace-packaging-recycling- technology-trial-28-10-2019 6 An update on the trial has been requested from Polytag but has not yet been forthcoming 7 Plastics Market Situation Report 2019, WRAP 8 https://www.letsrecycle.com/news/latest-news/waste-paper-prices-at-ten-year-low/

2 Page 174 Figure 1: Recyclate market prices9

Mixed papers Mixed Glass Mixed plastic bottles Light Iron Aluminium Cans (baled) Plastic Film (80:20) £300 £1,200

£250 £1,000

£200 £800

£150 £600

£100 £400

Price (£/tonne) Price £50 £200

£0 £0 Cans(£/tonne) Aluminium

-£50 -£200 May May May May May May May May May May May January January January January January January January January January January January September September September September September September September September September September September

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 The recyclate market has been impacted by Covid-19; to a certain degree this was due to the short term effects of interruptions to household collections, coupled with the significant reduction in trade waste tonnages and increases in arisings from households affecting supply and demand, as well as the availability of reprocessing capacity. Local authorities are still experiencing c.12% increases in the tonnage of dry recycling from households (above the ‘norm’). Shorter term effects of Covid-19 on recyclate markets could lead to an oversupply of material to the market as “normality” resumes, which would drive down prices; conversely, there has been a shortage of Packaging Recovery Notes in the market, which should push material market prices back up10. The longer-term effect of Covid-19 on recyclate markets is uncertain.

The effects of Brexit offer additional uncertainties in the recycling markets and will depend on the shape of any trade deals with Europe. From January 2021, additional controls will be placed on waste movements between the UK and the EU11, which could add administrative cost to the export of recyclables, which could adversely impact market price. However, the UK relies on export of recyclables to countries outside the EU, which should be unaffected by Brexit or the UK’s trade deals with the EU. Nevertheless, c.60% of paper is exported for reprocessing to EU markets including Italy, Spain and Germany12. The UK could also see investment in its domestic reprocessing capacity over the longer term as a reaction to these changes.

9 Monthly average figures from www.letsrecycle.com 10 Webinar, Episode 3 – waste & recycling during the coronavirus pandemic: materials & markets, Environment Media Group, April 2020 11 https://www.gov.uk/guidance/importing-and-exporting-waste-from-1-january-2021 12 The Recycling Association (2020) MRF Conference.

3 Page 175 Sherbourne Resource Park approach

The Sherbourne Resource Park is designed to focus on producing quality recyclable materials to reduce the risk associated with market availability and price. The MRF equipment being procured is highly automated and will incorporate the latest technological advances. In addition to the use of technology to achieve high quality outputs, the process will include flexibility to target different materials depending on market demands, for example use of optical sorting units that can recalibrated to target different material types, colours etc and replacing some manual pickers with robotic technology, increasing accuracy and efficiency. Additionally, space is being kept available within the facility equipment configuration for contingency, should new and further advanced equipment become available and/or additional material streams require processing during the life of the plant. High purity targets have been set within the specification to drive designs to deliver high quality outputs. Furthermore, the layout and design of the facility is such that at least three days storage could be provided for output recyclate, to allow the project to ride short term market price fluctuations, or to store recyclables prior to subsequent ‘polishing’ through the MRF to enhance quality further.

In addition, the project AssetCo intends to have within the management and operations team, skills and experience in materials marketing to enable AssetCo to negotiate beneficial offtake arrangements for MRF outputs. The intention is that UK and EU markets will be sought in preference to further afield to secure long-term sustainable markets and to avoid the potential for negative publicity associated with exporting waste.

The business approach of the project is that the Partner Councils would be exposed to recyclate market price through arrangements with commercial MRFs if the Sherbourne Resource Park was not going ahead, and that risk is best managed by the Partner Councils through the project. This is a bold statement but is reflective of the statutory duty of the Partner Councils to collect and / or manage recyclable materials from households. The gate fees are determined by the fixed operating costs, with the Partner Councils each taking recyclate risk through a recycling rebate based on the composition of feedstock and the market price achieved. Each of the Partner Councils have determined their ‘worst case’ position of receiving no recycling rebate and are therefore managing this risk directly. In addition, the business case is based on no income from third party C&I feedstock.

3 International MRF Perspective The Circular Economy, environmental concerns over marine pollution and resource use and the carbon agenda are influencing waste management approaches in Western countries, including MRF developments, consequently driving up demand for high quality output materials. 3.1 North America In North America, MRF operators are facing similar challenges to those faced in the UK; including a shortage of labour, diminishing ‘news and pams’ paper grades, and an increased variety of packaging materials, notably card and plastic alternatives (see Section 4.3.3). Export restrictions from international markets have led to an abundance of mixed paper and mixed plastics, driving down the prices for these materials and as such making it challenging to move13. In terms of throughput, there is a mixed picture from the largest MRFs across North America; some reporting increases, whilst others are decreasing,

13 https://www.wastetodaymagazine.com/article/largest-north-american-material-recovery-facilities/

4 Page 176 potentially as a result of light-weighting and a continued decline in news and pams grades. Pre-sorting is common in North American and European MRFs to allow early removal of contaminants.

Most co-mingled MRFs in North America process glass using multiple disc screens. Many operators and waste contractors have had familiar discussions as those in the UK on the inclusion of glass within the co-mingled mixed dry recyclate stream. However, a study from the Closed Loop Foundation reported that investment in glass processing would make economic sense for mid to large scale facilities (processing over 10,000 tonnes of glass per annum)14. Some US facilities are reporting issues with quality combined with struggles to recruit, train, and retain employees within an already tight labour market. Operators have developed new pricing strategies in response. Upgraded and new facilities are being developed with robotic technology to become more efficient and cope with more lightweight packaging.

MRFs in the UK typically sort three grades of paper: old-corrugated cardboard (OCC), news & pams (periodicals and magazines), and mixed paper15. Some European MRFs sort into OCC and mixed paper whilst some MRFs in North America sort into six grades16. 3.1 Europe The degree to which sorting facilities are required across Europe varies widely depending on the complexity of their design and the system for collection in place. However, across Europe, recycling is recognised as a key sector to achieve climate-neutral status. Several cities have committed to becoming fully circular and to driving down residual waste. Demand for waste recycling services in Europe is expected to increase significantly over the coming years, owing to improved collection, sorting and reprocessing of waste driven by policy instruments being implemented by government bodies to improve the capture and quality of materials. From a materials processing aspect, technologies such as artificial intelligence, and robotics are increasingly being used in MRFs to automate system and reduce the human element. There is also growing interest across Europe in tackling complex material streams including plastics, and there is increasing investment in technologies to recover low-grade plastic wastes. This is demonstrated by Loop and Suez which are investing in Europe’s first dedicated 'Infinite Loop’17 plastic recovery facility which aims to provide virgin quality, food grade PET18.

Sherbourne Resource Park approach

The three bidders remaining in the procurement of process equipment for Sherbourne Resource Park all deliver to a worldwide market and are adopting increased levels of automation, the use of robotics and technology to achieve high quality and to ensure sustainable supply chains for recycled materials. This is the same ethos which underpins the Sherbourne Resource Park business case.

The three bidders are well-established international market players in MRF process equipment:

14 https://resource-recycling.com/recycling/2017/04/20/glass-costing-mrfs-150-million-annually/ 15 However, Re-Gen recently reconfigured their MRF to collect mixed paper due to increasing cardboard. 16 WRAP Recovering value from MRs 17 The Loop patented technology claims to be able to recycle waste plastic an infinite number of times with no degradation in quality. 18 https://www.suez.com/en/news/press-releases/loop-industries-and-suez-announce-strategic-partnership-to- build-first-infinite-loop-facility-producing

5 Page 177  Machinex/GMI (Canada) are turnkey technology providers, most commonly known in the UK for operating a single-stream system at UPM Shotton paper mill which handles c.270ktpa of co-mingled collections (paper, cartons, cardboard, plastic film, plastic, glass and metal containers). Technology provider Machinex/GMI are increasing levels of automation within their process including the use of robotics (SamurAI) and elliptical movements which are non-wrapping for film, helping to reduce maintenance and downtime.  SutCo (Netherlands). Recent research developments have been focused on ‘automatic bunker management operation’ for plants that are able to sort packaging waste (PP, PET, HDPE, LDPE), paper, Tetra and aluminium) and determines the best time for emptying the bunker using fill level measurements.  Bollegraaf has extensive experience with large scale MRFs. Within the UK Bollegraaf technologies are applied in Cardiff Council’s Lamby Way Depot processing c.53ktpa of MDR.19 The Sunset Park MRF (North America’s largest MRF) operated by Sims Municipal Recycling is equipped with a Bollegraaf processing system.

Further due diligence on the bidders’ capabilities have been undertaken as part of the tender dialogue and evaluation process.

4 Future challenges for MRF operators In addition to the current challenges facing MRF operators surrounding material prices, Brexit and Covid-19, there are a number of policy changes on the horizon which MRF operators will have to consider and be prepared for. Some of these changes may present opportunities, i.e. increasing card / transit packaging, whilst others such as Deposit Return Scheme (DRS) and Extended Producer Responsibility (EPR) which will drive material and tonnage change, will require preparedness and ability to adapt. In some cases, these forthcoming policy changes may necessitate contractual changes. An overview of these challenges is discussed below. 4.1 Future Policy One of the main drivers for change is the Resources and Waste Strategy for England, which was released in 2018. “Our Waste, our Resources: A Strategy for England,” is focussed on recycling quality and increasing recycling rates, particularly for business waste, and packaging producer responsibility reforms. Figure 2 shows the recycling rate since 2000/1 for Local Authority Collected Waste (LACW) across England.20 Over the last 4-5 years the recycling rate in England has stagnated at under 45%. The Strategy aims for a 65% recycling rate by 2035, in line with targets set in the EU Circular Economy Package.

19 https://www.recyclingwasteworld.co.uk/in-depth-article/still-going-after-all-these-years/148019/ 20 Defra MSW Statistics 2000/1- 2018/19

6 Page 178 Recycling rate in England 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0%

Figure 2: LACW Recycling Rate – England21

In a report by Anthesis in 201822 looking at the potential capacity and gaps within the English waste infrastructure system from 2020 to 2050, the UK needs between 1.5 and 3.3Mtpa of additional MRF capacity by 2035 if we are to reach the 65% recycling target23. However, it is worth noting that this report was written prior to the release of the English Resources and Waste Strategy. The MRF capacity required will depend on a number of variables, including the collection method of key materials.

The proposals set out within the Resource and Waste Strategy align with the commitments set out within the 25-year Environment Plan which include:

 Reforming and extending the producer responsibility system to include products not currently covered and stimulate the secondary plastics sector (Section 4.2.2)  Encouraging industry to rationalise packaging and materials formats to facilitate end-of-life processing (Section 4.2.2)  Encouraging development of bio-based, biodegradable and ‘environmentally friendly’ plastic (Section 4.3.3)

4.1 Consistent Collections Within the Resources and Waste Strategy is the objective to improve the consistency of recycling materials collected by Local Authorities and waste contractors. Subject to consultation, the Government will specify a core set of materials to be collection by all Local Authorities. During The Local Authority Recycling Advisory Committee’s (LARAC) annual conference 2020, Defra confirmed that plastic film was

21 Defra MSW Statistics 2000/1- 2018/19 22 Anthesis (2018) National infrastructure assessment: waste infrastructure analysis for England 23 Report no longer publicly available.

7 Page 179 not ‘off the table’ when considering materials to be included in the consistent collection requirements and so appropriate collection and treatment infrastructure for this stream may be required24.

The intention is to lay the regulations governing consistent collections into law by 2022 so that operations can be rolled out in 2023. It is understood that Local Authorities will be able to phase in the requirement for consistent collection from 2023 (i.e. in line with contract dates, renewal of fleets etc.).

The strategy proposes the collection of a core set of dry recyclable materials at the kerbside from houses and flats (glass bottles and containers, paper and card, plastic bottles, plastic pots tubs and trays and steel and aluminium tins and cans) unless an exemption or TEEP applies25. Subject to the next round of consultation26 it is expected that collections will also need to include cartons, aerosols, foil and plastic packaging including film. The aim of the proposals is to incentivise quantity and quality of material collected to achieve higher recycling levels, and to address householder confusion. However, it is proposed that how local authorities collect the material would be determined at a local level. Defra is due to publish new TEEP guidance for Local Authorities around the specification for material consistent collection. From a MRF perspective, the consistent collection scheme should help to reduce contamination, with more consistency and clarity on what materials can go into a mixed dry recycling collection, which could mean that there is less reliance on pre-picking of contamination. There is the risk, however, that the revised guidance strongly advocates twin stream or kerbside sort, perhaps through setting of the economic threshold within the TEEP assessment, irrespective of the quality of materials that can be achieved through a modern, high-performance MRF. This could render the MRF redundant. 4.1.1 Kerbside dry recycling collection schemes The number of co-mingled dry recycling waste collection schemes provided in the UK has steadily increased over the last 10 years, as shown in Figure 3. As of last year (2019/20), almost half of the kerbside dry recycling collection schemes were co-mingled. Twin-stream collections have also steadily increased over the last 10 years. In 2010/11, c.19% of the dry collection systems were of a twin-stream configuration compared to c.34% last year. Conversely, the number of kerbside sort systems has decreased, now only c.17% of collections are kerbside sort systems compared to 39% in 2010/11.

One of the main factors which has potentially resulted in a decrease in the number of multi stream schemes is due to austerity and the need to reduce waste collection costs. North Warwickshire BC has recently (2019) replaced its twin-stream service with a co-mingled service as it was estimated a saving of c.£75,000/annum could be achieved27.

24 The second round of consultations on this issue are due in the early 2021, and the outcome of these consultations will provide a steer on the fate of waste plastic film in England 25 Exemptions from separate collection i.e. where not practicable for technical or economic reasons or no significant environment benefit (TEEP) or where co-collection does not significantly reduce the potential for the waste stream to be recycled. 26 Expected in Spring 2021 27 https://www.letsrecycle.com/news/latest-news/north-warwickshire-opts-to-end-twin-stream-recycling/

8 Page 180 Figure 3: Kerbside dry recycling collection configuration since 2010/1128

60%

50%

40%

30%

20%

10%

0% 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20

Commingled Kerbside sort Two stream

Looking ahead and following the trend of the last few years, it is likely that Local Authorities will be considering moving towards a simplified dry recycling collection configuration. Last year Biffa recommended a collection model for households of co-mingled recycling (plastics, metals and glass) alongside a separate paper and card stream29. With regards to the twin-stream services, bags and wheeled bins are preferred over plastic inserts due to the cost of replacement. With forthcoming policy drivers, the expected quality standards, twin-stream services can be considered to be a compromise position between simplicity, cost and ensuring a high level of quality. Newcastle-Under-Lyme Borough Council (NULBC) is one of the most recent Local Authorities to move from a kerbside sort system to a twin-stream service. Due to the pressures of the Covid-19 pandemic earlier this year (2020) NULBC operated a fully co-mingled service to increase the efficiency and safety of the collections both for the crew and residents. Following this change in configuration, NULBC decided to bring forward the roll out of the twin-stream service to July 2020 which was originally scheduled for September.

Not only are Local Authorities looking at changing the configuration of their dry recycling service, the types of waste collected for recycling at the kerbside is also increasing. A growing number of Local Authorities are now collecting plastic pots, tubs and trays (PTT) at the kerbside alongside small electrical equipment and batteries. In addition, the Resources and Waste Strategy30 aims to legislate that all households and appropriate businesses have a separate weekly food waste collection31. With an increase in the number of kerbside services, it may be that Local Authorities turn to a co-mingled

28 WRAP LA portal 29 https://www.letsrecycle.com/news/latest-news/biffa-backs-twin-stream-recycling-collection-system/ 30 As also set out in the Environment Bill. 31 In Scotland, businesses producing over 5kg per week of food waste are required to have a separate commercial collection of food waste.

9 Page 181 collection to achieve cost savings. In which case, plants such as the Sherbourne Resource Park will be required to handle this material.

Speaking at this year’s MRF and Markets conference (hosted virtually by LARAC and Lets Recycling), glass reprocessor Recresco suggested that co-mingled glass was the preferred method of collection for the company. Whilst glass is often broken, Recresco technology is confident that its plants are able to sort it with good enough quality and that the overall increase in glass that is achieved through a co- mingled scheme is worth it. 4.2 Deposit Return Scheme & Extended Producer Responsibility Also within the Resources and Waste Strategy, the Government has confirmed that it will introduce a Deposit Return Scheme (DRS) and an extended producer responsibility (EPR) scheme for packaging by 2023. Introducing these policy measures will likely have an impact on the composition and tonnage of material collected at the kerbside by Local Authorities, and consequently the material processed at a facility. 4.2.1 DRS A DRS aims to improve overall recycling and resource recovery by placing a redeemable deposit on ‘in scope’ packaging. DRS has been implemented widely across Europe and is generally well received as part of a total waste management solution with Scandinavia and Germany reporting return rates of up to 95% of target packaging. From a MRF perspective, DRS has the potential to remove the higher value materials from the incoming DMR, targeting specifically PET plastics. Depending on the scale of the scheme, there will also be less steel to magnet off, less aluminium to capture through the eddy current separation and significant reductions in glass tonnages. Re-Gen, which operates a state-of-the-art MRF in Newry, Northern Ireland is predicting 25% reduction in weight input as a result of the DRS introduction and £15-20/tonne value reduction on basket value32. It may also be that significant changes in the composition of material arriving at MRFs will necessitate contract changes and/or reconfigurations at facilities. For this reason, some within the industry have called for the government to follow an ‘on-the-go’ scheme which focuses on packaging consumed outside of the home (e.g. water bottles), as this would have less of an impact on the types of materials MRFs are used to handling. However, this could provide an incentive to expand the breadth of materials collected and treated at facilities, including PTT, plastic film etc.

In Scotland, where the system is due to be implemented before England, the anticipated DRS administrator is exploring whether the industry and existing infrastructure can be used for counting and sorting material. However, this may be constrained by the existing facilities and complexities (such as ownership of unredeemed deposits) which would need to be bottomed out by Government. Following the situation in Scotland will provide key lessons for the Sherbourne Resource Park.

FRM has modelled the implications of EPR and DRS for a number of Local Authorities using the ‘Resource and Waste Policy Impact Calculator’ (RAWPIC)33. For the purposes of modelling, FRM assumed that the DRS system implemented for England will mirror the proposed DRS system for Scotland which is set to be implemented in 2022. This DRS model is classed as an ‘all in’ system which applies a 20p deposit on plastic, glass and metal beverage containers. This includes multipacks and items up to 3L in

32 LARAC MRF & Markets Conference (2020) Re-Gen 33 This is a product developed by Suez and Anthesis with support from LARAC and Kent Waste Partnership

10 Page 182 size but excludes dairy products. Working on the general assumption that the DRS will return a capture rate of approximately 85%, Table 1 shows the potential impacts on targeted material streams. 4.2.2 Extended Producer Responsibility Reforming the UK packaging producer responsibility system aims to achieve better design of packaging (e.g. through increasing recycled material content or improving recyclability of packaging products). At present, it is understood that household packaging will be included within the EPR scheme and Defra is consulting on whether other household-like waste streams should also be considered. Under EPR, producers will be responsible for the sorting costs of their packaging. As such, modulated fees on EPR for packaging aims to drive up recyclable materials (as producers change packaging to minimise the cost of recycling that packaging) and squeeze out of the market materials which are complex or unable to be recycled (e.g. composites such as Pringles’ notorious packaging and avoid it being disposed of as residual waste). For example, we should see a continued move away from black trays which MRFs cannot detect. It is therefore assumed that more packaging items are able to be recycled and diverted from the residual waste stream.

Under EPR, producers will be responsible for covering the cost of treating the packaging placed on market, so where MRFs are involved, this needs to be identified and reported appropriately. According to the Environmental Services Association34, there are three options for this arrangement:

1) The EPR scheme pays the council the lump sum for collecting and sorting, and then used to enter into an agreement with the MRF 2) A central body pays the MRF direct 3) Producer compliance scheme contracts a MRF on behalf of producer clients

Packaging coming into MRFs is going to change as a result of DRS and EPR. Under EPR it is likely that over time there will be less composites in general, fewer and more consistent material streams (i.e. an increase in PET, PP packaging). However, DRS might take out a lot of the value. It will be important for the Sherbourne Resource Park to monitor the implementation of these schemes.

As producers will be responsible for covering the treatment cost of the packaging they place on the market, from a MRF perspective more stringent reporting requirements on input and output and identifying the proportion of packaging that is ‘in scope’ will be required so that they can be identified and allocated back to the customer. As it is likely that DRS and EPR will be rolled out over similar time frames, the Government will need to make sure that producers do not double pay under the two schemes, i.e. in the case that DRS materials from the kerbside scheme arrive at MRFs the DRS administrator could pay the EPR scheme administrator to compensate them for picking up the material (as through EPR, producers will be responsible for covering this cost)35. However, it is unclear at present how this would translate to the MRF and Councils, although it is suggested that more sampling and reporting mechanisms may be required. For example, it is important to consider that glass beverage containers that are included in DRS may become broken at MRFs (as it does through kerbside collection) and so payment mechanisms need to take this into consideration, it may be that it is paid for by tonnes processed rather than per unit.

34 LARAC MRF & Markets Conference (2020) ESA presentation 35 There are ongoing discussions around the payment mechanisms that will be required to manage DRS and EPR.

11 Page 183 Both DRS and EPR are scheduled to be implemented in 2023, however it is generally assumed that DRS will have a bigger and quicker impact than EPR on kerbside collections, and therefore the ability for MRFs to adapt to changing material streams will be imperative. The view from the Environmental Services Association is that the deadlines for these policy measures seem quite tight, exacerbated by impacts from Covid. Although the industry’s response to Covid-19 has demonstrated how flexible and adaptable it can be.

As modelled using the Resource and Waste Policy Impact Calculator (Developed by Suez and Anthesis), Table 1 shows how EPR and DRS may impact the kerbside recycling arisings based on Local Authorities FRM has supported in recent years.

Table 1: Tonnage impacts of DRS and EPR Local Authority DRS Impact Range EPR Impact Range Total Recycling change -12 to -16% Paper % Card 0% Targeted plastic -15% to -30% +0% to +12% (PTT / Other Dense) Glass bottles -52% to -55% Metals -8% to -12% +0% to +14% (steel cans) Residual -2 to -3%

4.3 Plastics policies Over the last couple of years, the English Government has introduced and, in some cases, is consulting on a number of policies aimed at reducing plastic waste in line with the strategic ambition to work towards all plastic packaging placed on the market being recyclable, reusable or compostable by 2025 and to achieve the target of eliminating avoidable plastic waste by the end of 2042, which is outlined within the Government’s 25-year Environment Plan36. In addition, the following policies/initiatives have supported the reduction of plastic waste in the UK which demonstrate the strength of the focus on this material:

 Ban on plastic straws, stirrers, and cotton buds which came into force in England in October 2020.  Plastic carrier bag levy. The levy was first introduced in 2015 with a minimum charge of 5p per bag. The government announced in September 2020 that from 2021 the plastic bag levy will be doubled to a minimum of 10p and smaller retailers (those employing 250 people or less) will no longer be exempt.  Microplastics ban. A ban on the sale of products containing microbeads came into force in 2018.

The plastic policy direction at both a national and European level is to reduce the amount of plastic waste entering the system through the introduction of single use product bans. The focus is also directed at redesigning plastic products to ensure a high percentage of the plastic content is either recyclable or compostable in line with moving towards a more circular economy.

36 A Green Future: our 25-year plan to improve the environment, HM Government, 2018

12 Page 184 The introduction of these policies is already having an impact amongst the packaging industry; driving the incentive and putting pressure on plastics and flexibles to be collected. Producers are responding with the introduction of products with recycled content such as Ribena and Mars Incorporated37. As such, MRF operators will be faced with changing material inputs, including increased packaging with recycled content, alternative material components and light-weighting, as discussed in turn below.

Ribena has announced that from January 2021 its bottle design will be changed to increase recyclability. Previously the dark sleeve on the bottle and its size could stop sensors detecting the bottle, however the new bottle has been designed with a smaller sleeve and will be made from 100% recycled content38. 4.3.1 Plastics tax on recycled content From April 2022, a new tax will apply to any plastic packaging produced in or imported into the UK that does not contain at least 30% recycled plastic. This will apply to any packaging that is predominantly plastic by weight. There will be an exemption for producers and importers of small amounts of plastic packaging to mitigate against disproportionate administrative burdens in comparison to the tax liability. However, this tax will apply to all packaging, regardless of whether it is filled or not.

This is supported by other policy and voluntary measures for supporting a reduction in single use plastic, including the UK Plastic Pact. Plastics has become a high-profile material. Some brands are reacting to this by committing to eliminate ‘pointless plastic’ and are switching to non-plastic packaging. As an example, Molson Coors (UK and Ireland) committed to removing the plastic film wrap from multipack items by March this year and by March 2021 will remove the plastic rings from its Carling and Coors Light branded items, switching these out for cardboard sleeves39. This could lead to increases on other material streams such as card or glass. However, further research is required to understand the full life cycle cost of plastic packaging and other material substitutes and as such the environmental burden of these options.

As the output streams from MRFs adjust for an increase in recycled plastic content, it may be that facilities need to provide more back end sorting and investment for example, if materials are intended for food, they will need to be sorted into food grade standards.

As packaging producers work to raise the recycled content of their packaging, this in turn creates a demand for reprocessing capacity, and there has been an increasing number of investments in plastic recycling facilities as a result (e.g. plastics recycling facility being developed by Suez in Avonmouth). And earlier this year Viridor signed a contract to provide recycled plastics to a chemical recycling plant being developed by Plastic Energy40. This trend has also been supported by Government when, at the beginning of October 2020, the UK Research and Innovation (UKRI), with matched investment from industry, announced a first round of £20million research funding to develop four UK plastic focused projects. Applications were submitted to UKRI in late 2019, and form part of UKRI’s Smart Sustainable Plastic Packaging (SSPP) challenge to increase the amount of recyclable plastic packaging and reduce

37 https://www.circularonline.co.uk/news/mars-to-include-recycled-plastic-in-pet-food-packaging/ 38 https://www.packagingnews.co.uk/news/materials/labelling/ribena-announces-new-bottle-designs-boost- recycling-11-11-2020 39 https://www.packagingnews.co.uk/news/environment/brewer-remove-plastic-carling-coors-light-brands-15-08- 2019 40 https://www.viridor.co.uk/who-we-are/latest-news/2020-news/viridor-plastic-energy-circular-economy/

13 Page 185 plastic waste leakage into the environment. The range of options for post sorting and chemical recycling of plastics grades are growth areas as the UK seeks to derive more resource value from the complex mix of plastics on the market. 4.3.2 Light weighting of materials MRFs across Europe and America have been seeing the impacts of packaging light-weighting over the last few years, and with rising concerns over the environmental impact of plastic this trend is likely to continue. In addition to reducing the environmental burden of packaging, reducing material weights and modify packaging formats also has a strong business case as it often leads to a production cost reduction and efficiencies with transportation.

Nestle has reduced the weight of its water bottles by 22% over the last decade. Through technological advances, packaging providers are able to improve product durability (i.e. through injection compression technology to retain quality whilst driving down raw material use41. Unilever has also committed to halving its use of virgin plastic and using at least 25% recycled plastic by 2025. Innovations by Unilever include replacing plastic in ice cream tubs with recyclable paper-based materials42.

One of Diageo’s four sustainable packaging targets is to reduce packaging weight by 15% by 2020, alongside commitments to increase recycled content to 45% and make 100% of packaging recyclable or reusable43. The company has managed to reduce the weight of its Smirnoff glass bottles by 137g. Scaled up to the 8.7 million bottles sold, this is a significant saving44.

Light-weighting of packaging, particularly plastics, can create difficulties in mechanical sorting and separation processes, resulting in lower quality MRF outputs or reduced sorting capacity. Laminated pouches, in particular (i.e. pet food, baby food, drinks etc), have led to bespoke alternative collection systems through Terracycle to facilitate separate treatment by pyrolysis. EPR will need to take account of full life cycle costs, so the marginal sorting costs irrespective of the weight will need to be considered. 4.3.3 Composition changes Developing new materials as alternatives to plastics has also seen a growing trend over the last few years. Alternative materials have ranged from switching out plastic for conventional materials such as paper and glass to using organic compounds including fungus, seaweed, shells and plant-based material.

In reaction to the increasing negative publicity of plastics, manufacturers and businesses have been looking at alternative materials, including compostable and biodegradable plastics. However, contamination of bioplastic-based products presents a significant and increasing challenge from a collection, separation and treatment standpoint.

Firstly, there is a contamination issue for conventional plastic streams if the bioplastic materials are collected with other recyclates by mistake. And secondly, there is a challenge to maintain and improve compost quality where bioplastic products are collected with organic waste and do not decompose

41 https://www.nestle.com/ask-nestle/environment/answers/tackling-packaging-waste-plastic-bottles 42 https://www.unilever.com/news/press-releases/2020/unilever-makes-progress-on-its-sustainable-packaging- goals.html 43 https://www.diageo.com/en/in-society/pioneer-grain-to-glass-sustainability/reducing-our-environmental- impact/sustainable-packaging/ 44 https://www.diageo.com/en/in-society/case-studies/reducing-packaging-weight-we-can-handle-it/

14 Page 186 properly. There could be a significant impact on the integrity and composition of conventional recycled plastics if bioplastics cannot be adequately segregated. Therefore, proper separation and sorting and collecting of waste is imperative, alongside consistent communication on proper disposal routes for compostable/biodegradable products. 4.4 Labelling Labelling packaging is key to ensure that consumers can correctly sort and separate recycling from their residual bins. To help drive change ahead of the EPR reforms, the not-for-profit On-Pack Recycling Label (OPRL) has announced new rules for its packaging label scheme. OPRL’s aim is to provide UK-wide, consistent recycling messages for its retail and brand producer members packaging. Their two main labels signify whether an item can be recycled or not with a simple ‘Recycle45’ or ‘Don’t Recycle46’ label. This should help to improve the quality of materials received at the MRF. In addition to labelling, the organisation has also announced a ‘certified as recyclable’ scheme which provides assurance that the packaging type and materials is collected and effectively sorted for recycling at MRFs and Plastics Recycling Facilities (PRFs) across the UK, with active markets for reprocessing the materials into new products.

Sherbourne Resource Park approach

One of the main challenges facing any MRF over the next few years is the potential risk associated with reduced feedstock – this could be due to a variety of reasons, but the implications from the introduction of a DRS could be significant on the quantity of recyclable material presented by householders at the kerbside, and thus directed as feedstock to the Sherbourne Recovery Park facility. While the effects on kerbside tonnage are likely to be tempered to a certain degree by the positive impacts of EPR for packaging materials, each of the Partner Councils are expecting to see a reduction in dry recyclables collected. It is understood that AssetCo will also be taking this in account in their business planning. While recognising the risk to the project in terms of reduced quantities of feedstock direct from Partner Councils, the project also recognises the opportunity for processing bulked material collected through DRS. The collected DRS material will need to be sorted somewhere, and the Partner Councils could place themselves in a positive position to provide a service to collect / bulk the DRS material from collection points or transfer stations. As mentioned in Section 2.1 the flexibility and additional space within the Sherbourne Resource Park could mean that it would be well placed to adapt and also to accommodate tracking technology.

The project is anticipated to benefit from the additional tonnage of recyclable waste likely to emerge through the EPR scheme, although this is could be more than offset by reductions due to DRS. The operation of the facility will also be set up to deliver the stringent reporting requirements anticipated with the EPR reforms.

The MRF is primarily designed to deal with fully co-mingled recyclate, at a time when national waste strategy is championing separate collection in some contexts. Each of the Partner Councils has undertaken a TEEP assessment to support its chosen method of recyclate collection. The Sherbourne

45 “Whereby 75% or more of UK local authorities collect that type of packaging which is then effectively sorted, processed and sold as recyclate for use in new packaging or products.” Source: OPRL 46 “Whereby fewer than 50% of UK local authorities collect that type of packaging and/or it is not effectively sorted, processed or sold as recyclate for use in new packaging or products.” Source: OPRL

15 Page 187 facility does have flexibility to deal with some separately collected material streams (i.e. paper, card and glass), although the fundamental premise is to achieve high quality recyclables through the use of technology.

The flexibility to adapt the process configuration to target different materials through the use of technology will allow the facility to respond to changing feedstock composition going forwards. The facility is designed to have the ability to separate all types of plastics, including the more difficult types resulting from the light-weighting of plastic packaging (pots, trays, tubs and film). The introduction of a plastics tax is already having an impact. Major bottle beverage providers have made strong commitments to recycled plastic content which will drive demand for high quality recycled plastic. This demand will shape prices and could be a good opportunity for the Sherbourne facility if it is able to recover good PET to supply high quality plastic recyclate to the reprocessing industry. 4.5 Other considerations The adaptability to changing material inputs is the primary challenge for MRFs, with increased automation and technology developments. However, other issues for consideration include the impacts associated with Covid and Brexit, where the extent of the implications going forward are difficult to quantify. 4.5.1 Covid impacts In the initial weeks of lockdown, many industries (which were unable to work remotely) were forced to close. This created significant initial disruption within the waste industry particularly on C&I and C&D waste streams. From a municipal waste management perspective, Local Authorities had to move quickly in order to adapt service delivery and ensure continuity. For MRFs, this meant an initial increase in mixed recycling and recyclates being processed predominantly fed by kerbside collections.

Data collected by ADEPT across the period March to September 2020 showed that the majority of Local Authorities exhibited an increase in arisings (even at the end of the survey period) of between +1 and +20%, and in other Councils this is even higher. The last report was early September when 77% of Local Authorities surveyed saw an increase in residual waste, with the figure being slightly higher for Local Authorities experiencing an increase in recycling tonnage.

As reported by Suez, by mid-April waste contractors were seeing peaks in tin/cans and glass and a generally larger volume of mixed recycling, as a result of unstocking material from home and the majority of people being in lockdown. By mid-May, there were higher peaks in plastics and glass. It is assumed this is driven by a change in behaviour in the home and in turn, purchasing behaviours. By June, materials started moving back to normal in terms of composition, although were generally higher in tonnage. In comparison to previous years, Suez47 reported increases of between 9.3% within the first month of lockdown (compared to the same month in 2019), peaking at 54% increase (from the previous year) in June 2020.

Taking paper and card as an example, pre-Covid-19, paper and card was in an oversupply market and as such prices were very low. But during the initial lockdown, C&I sources of fibre shut almost overnight. Italy, Spain, Germany (UK export markets) quickly became very short of packaging, driving up demand and as such, prices. During the summer a substantial quantity of paper was leaving the country as

47 LARAC MRF & Markets Conference (2020) Suez presentation

16 Page 188 overseas markets were desperate for material to manufacture new packaging. However, collections from commercial and industrial sources were still majorly disrupted. From a MRF perspective, the composition of paper and card is changing, with board and card becoming more present in MRF streams (the ‘Amazon effect’). This was no exception during Covid-19 and is likely to remain the case as working from home continues to some degree. With Covid-19, the demand of newsprint may not recover, e.g. free print papers issued on public transport. MRFs have been adapting to the declining paper markets, including Re-Gen which actively changed from operating a separate news & pams line, and now a mixed paper grade is processed including card.

In respect to long-term impacts, although there is uncertainty over how long the immediate impacts of Covid-19 will last (lockdown), MRFs may expect kerbside recycling tonnages to remain high whilst home- working increases beyond lockdowns as our ability to deliver work remotely continues. This will also bring about new and changing compositions. For example, the way we live at home is different (i.e. lunches are not ‘on the go’), and packaging is usually for multiple items rather than single use.

This may also lead to prolonged decreases in commercial waste and impact MRFs processing dry mixed recyclate from the private sector. From a commercial waste perspective, Suez has reported a 20-25% reduction in paper and card, 25-35% reduction in glass, 20-30% reduction in metals and 20-25% reduction in plastic.

Operationally, MRFs may be required to adhere to social distancing over the medium to long term, which may require slower belt speeds to reflect lower manual sorting capacity. The use of robotics and an increase in process automation will be advantageous here too, helping to reduce the reliance on manual labour. 4.5.2 Brexit Recycled market prices may be adversely affected by Brexit, depending on the shape of trade agreements. Longer term positive effects on the recycling market could be delivered through increased reprocessing capacity in the UK. Brexit also could have an impact on capital costs for MRF equipment, depending on import tariffs from Europe.

As with many sectors, the waste industry will be monitoring the situation with Brexit for any issues with labour and disruption to supply chains.

5 Summary Over the short-term material prices are likely to be impacted by the uncertainties of Covid-19 and Brexit. Policy instruments aimed at improving quality of recycling, as driven by the push for a more circular economy, are likely to have an impact on pricing over the longer term.

Markets for MRF outputs could squeeze and will change as competition drives higher quality through stricter international standards and measures for collection of material as through a DRS and/or a kerbside sort collection service. However, this could present an opportunity for the Sherbourne Resource Park. The collected DRS material will need to be sorted somewhere, and the Partner Councils could place themselves in a positive position to provide a service to collect / bulk the DRS material from collection points or transfer stations.

17 Page 189 As Local Authorities seek to make efficiencies and cost savings, and separation technology improves, it may be that we see co-mingled streams continue on the current trend of increase, subject to new guidance on consistent collections. The Partner Councils will need to determine and confirm their positions with regards to TEEP, which could be seen as a significant risk to the MRF infrastructure. However, with incoming DRS and EPR implementation, we are likely to see significant changes in composition. During this period of transition, plants will need to be adaptable to change and, in many cases, may need reconfiguring to meet feedstock challenges and market requirements. MRF operators will have important decisions to make on changing materials, for example accepting plastic film, where food contaminated packaging poses a risk at MRFs and for reprocessors. Robust reporting will also need to be employed to support the EPR reforms.

Frith Resource Management Ltd, November 2020

18 Page 190 Agenda Item 14

 Public report Cabinet  Paragraph 3 Schedule 12A of the Local Government Act 1972

Cabinet 9th March 2021 Council 16th March 2021

Name of Cabinet Member: Cabinet Member for Jobs and Regeneration - Councillor J O’Boyle Cabinet Member for Strategic Finance and Resources – Councillor R Brown

Director(s) Approving Submission of the report: Director of Property Services and Development Director of Finance

Ward(s) affected: St Michael’s

Title: Provision of Loan Funding to Support a Key Regeneration Priority in Friargate

Is this a key decision? Yes – the Decision will result in expenditure of over £1m

Executive Summary:

Coventry City Council has a long-held ambition to realise the delivery of high-quality new hotels within the city. To support the realisation of this ambition, the Council agreed in September 2019 to enter into the necessary property arrangements with Castlebridge to help bring forward a Hotel Indigo within the Friargate area of the city. The Council also agreed funding necessary for infrastructure and public realm provision around the proposed hotel site. As a result of these decisions, the Council has been able to enter into an Agreement for Lease with Castlebridge in relation to the site for the Hotel Indigo.

In order to take forward the construction of the hotel, Castlebridge need to secure the necessary development financing. Their ability to do so has, unsurprisingly, been affected by the COVID-19 crisis over the past 12 months which has had a significant impact on the leisure and hospitality sector as well as all other sectors of the economy. Notwithstanding this, they have a private funding offer which, along with their own equity injection, will fund the majority of the cost of developing out the hotel.

Page 191 This report is therefore seeking approval to enter into a repayable loan facility agreement with Castlebridge (for an amount that is set out in the private element of this report) in order to fund the development of the hotel. The terms of the loan will be finalised following a comprehensive due diligence process to ensure the Council’s position is suitably protected.

Cabinet is recommended to:

1) Approve the Council entering into a loan facility agreement with Castlebridge for an amount that is set out in the private elements of this report to be used solely as development finance for the delivery of the hotel in Friargate, Coventry.

2) Delegate authority to the Director of Finance (S151 Officer) and the Director of Law and Governance, following consultation with the Director of Property and Development Services, the Cabinet Member for Jobs and Regeneration and the Cabinet Member for Strategic Finance and Resources, to undertake the necessary due diligence and approve the terms of the loan funding agreement and, thereafter, enter into any associated legal agreements that are necessary to give effect to the recommendations within this report.

3) Delegate authority to the Director of Finance (S151 Officer) and the Director of Law and Governance, following consultation with the Director of Property and Development Services, the Cabinet Member for Jobs and Regeneration and the Cabinet Member for Strategic Finance and Resources, to manage the loan facility. The authority under this recommendation shall include the power to negotiate and agree subsequent variations to the terms of the loan facility.

Cabinet is requested to recommend that Council:

4) Approve a loan for an amount that is set out in the private elements of this report to be added to the Council’s Capital programme as appropriate and used to provide a loan facility agreement with Castlebridge for the delivery of the hotel in Friargate, Coventry.

Council is recommended to:

1) Approve a loan for an amount that is set out in the private elements of this report to be added to the Council’s Capital programme as appropriate and used to provide a loan facility agreement with Castlebridge for the delivery of the hotel in Friargate, Coventry.

List of Appendices included:

Appendix 1 – Hotel Site Plan

Background papers:

None

Other useful documents

Coombe Abbey Park Hotel – Council Meeting – 10th September 2013 Project CAP – Council Meeting - 10th October 2017 Coombe Abbey Park Limited – Capital Financing and Country Park – Council Meeting -16th October 2018

Has it been or will it be considered by Scrutiny?

Has it been or will it be considered by any other Council Committee, Advisory Panel or other body?

Will this report go to Council?

Yes – 16th March 2021

Page 205

Title: Coombe Abbey Park Ltd - Shareholder Refinancing Proposal

1. Context (or background)

1.1 Coventry City Council (hereafter “CCC”; the Council”) has had a long-standing interest in Coombe Abbey Park Hotel partly due to the Council owning the site which is leased to the Coombe Abbey Park Limited (CAPL) the company that operates the hotel on a long lease and partly due to its shareholding interest in the company. The Council is in a unique position as the owner, landlord and the finance provider for the business.

1.2 In 2013 the Council provided a loan to CAPL on commercial terms and at a commercial rate of interest.

1.3 In December 2017 the Council acquired 100% of the shareholding in CAPL, to become the sole shareholder of the business.

1.4 In 2019 the Council approved a short-term ‘leasing’ facility that CAPL could call on as required to support capital investment supported by a business case. CAPL have drawn down three loans, all of which will continue to be repaid by 2028 to reflect the life of the assets financed

1.5 The hospitality sector has been one of the key sectors affected by Covid-19 and has seen significant downward trend in trading performance. The wider sector has been able to take advantage of the Coronavirus Business Interruption Loan Scheme (CBILS) and / or Bounce Back Loans (BBL), backed by the government through the British Business Bank (BBB). Unfortunately, the ownership of CAPL by the Council prevents access to these national funding facilities. A temporary loan arrangement was therefore put in place in 2020 to support the continued operation of the hotel under these challenging circumstances.

1.6 In 2020 the hotel was only able to trade for 78 days without any restrictions in place. A further 115 days trading took place with significant limits on party numbers and social distancing rules being required, which at best allowed for 50% of normal trade. Following the Prime Ministers announcements on 22nd February 2021 about reopening the economy, hotels will remain shut until the 17th May 2021. Coombe Abbey Hotel will therefore have been legally required to close for 219 days since the 21st March 2020.

1.7 Prior to March 2020 CAPL employed 265 members of staff on a mixture of fulltime and casual contracts. To reduce costs, CAPL have reduced permanent staff and casual staff numbers significantly. Only 6 members of staff currently remain working in the business, all other retained staff having been furloughed.

1.8 The business did see an increase in revenues in 2020 for the café in park, top pool lodge and ice cream kiosk compared to 2019 which have been able to continue to provide a limited service in line with the Covid-19 restrictions, however these will only offset the wider difficulties.

1.9 The company has had to defer a number of payments that under usual circumstances would have been made to the Council. The options presented provide a solution to support the business in continuing to operate, subject to the Covid-19 restrictions that may be required. Current assumptions are on the basis that the business will be able to re-open from May 2021, any significant delay to this would require the financial modelling undertaken by the business to be revisited.

Page 206

2. Options considered and recommended proposal

2.1 Option 1: Do nothing – by the end of March 2021, financial modelling indicates that CAPL will not have sufficient cashflow to meet their expenditure requirements. The business will not be in a position to meet the full payroll costs for March, so would have to consider making staff redundant and cease trading.

2.2 In addition to this, the business would not be able to make payments to the Council for the rent not only for the main buidling, but the café in the park, top pool lodge, the Go Ape site and the ice cream kiosk, leading to the Council losing further revenue,

2.3 Repayments due on the existing loans would not be made from April onwards, leading to the Council losing further payments and possibly having to write off the outstanding balance of the loans if the business is unable to trade. This would equate to a loss of the funds currently invested in CAPL including outstanding loans and payments deferred in 2020 and 2021.

2.4 This decision would in turn lead to the business being closed and remaining staff being made redundant. The value of the Councils investment under these circumstances would have diminished, and a distressed sale on the open market would not deliver sufficient value to cover the initial investment or losses for the Council. Any incoming operator would most likely seek to renegotiate the rent, reducing the rental income due to the Council for the main Hotel building

2.5 The Council would also have to meet the deferred VAT payment due by the business to HMRC from any value present on winding up the business.

2.6 This is not the recommended option as the CAPL Board of Directors have demonstrated to the City Council that the business is fundamentally sound, and that with a reprofiling of debt and opportunities to generate income once re-open, they can implement measures to protect and grow the business in the coming years as lockdown restrictions ease.

2.7 Option 2: Extend the temporary facility – the Council granted a temporary loan to the business in 2020 to meet the pressures they were facing as a result of Covid-19. This loan was provided to support the business during this difficult time and as such attracted a lower rate of interest but was only in place until 31st December 2021. Another option available to the Council is to extend this low interest facility and extend the loan period as allowed by the EU Commission under Article 107(3)) TFEU for its Covid-19 Framework scheme (the "Covid Temporary Framework") on 6 April 2020 Extending this loan would provide some initial relief, and reduce the interest burden, but in the short to medium term, the business would not be in a position to meet the increased loan repayments as well as all other expenditure whilst it recovers from the impact of the pandemic. This solution would require further intervention in the relatively near future and as such is not the recommended solution.

2.8 Option 3: CAPL to consolidate and refinance the existing borrowing through a bank or financial institution – CAPL could seek to secure finance from a bank but this would mean that the existing charge that the Council has over the assets as security would reduce as a bank would not be comfortable taking second charge over the asset.

2.9 The bank would also require a level of control over decisions made in relation to the operation of the business to protect their investment. This would mean that the Council as sole shareholder would not be able to make independent decision in relation to their investment without seeking permission from the third party.

Page 207

2.10 CAPL did apply for a Covid Business Interruption Loan Scheme (CBILS) but they were unsuccessful due to the strength of group parent structure, hence why Coventry City Council stepped in to provide the facility under the “Temporary Framework for State Aid Measures in the current Covid-19 Outbreak”.

2.11 This is not the proposed solution as it will not provide the business or the Council with a sustainable solution to manage the assets independently, thus rendering the option ineffective.

2.12 Option 4: Consolidate and refinance existing borrowing over a longer term (preferred) – the proposed option is to consolidate the existing borrowing that is in place over a longer time frame and provide the business with to access to additional working capital.

2.13 Part of the value of the revised loan would be retained by the Council to extinguish the outstanding liabilities of the main loan, temporary arrangement to support difficulties experienced due to covid-19 loan, existing deferred payments on the main loan and rent due.

2.14 The additional net facility is based on the business immediately drawing down a sum for working capital with a further amount held, only to be drawn down if required. The business will have sufficient cashflow available to service the debt based on the due diligence that has been carried out by the City Council on the revised business planning that has been carried out by CAPL.

2.15 One of the business recovery plans proposed by the Board of CAPL requires it to bring in additional revenue streams by using is expertise within the hospitality sector to provide services to other entities including the Council which will be done by setting up two new subsidiaries. It is proposed one of those subsidiaries will be a Teckal company. Under Regulation 12 of the Procurement Regulations 2015 the Council is able to set up a “Teckal” subsidiary and contract for services directly so long as the requirements under the Procurement Regulations 2015 are met.

3. Results of consultation undertaken

3.1 Not applicable

4. Timetable for implementing this decision

4.1 CAPL would enter into the amended loan agreement to take account of the new loan facility immediately. Once signed the Council would provide an initial tranche of the net additional loan for working capital to CAPL before the end of March 2021. Part of the new facility would be retained by the Council to meet the value of the current loans and the deferred payments due to the Council.

5. Comments from the Director of Finance and the Director of Law and Governance

5.1 Financial implications

Due to the restrictions in place as a result of Covid-19, CAPL have deferred a number of payments in 2020 and 2021 which would be repaid as part of the refinancing request. The net impact of the proposed refinancing is that the Council would make a new loan to CAPL. The Council is in the unique position, in that they are the landlord of the site, so they already have first call on the security in place for the loan.

Page 208

The Council will make available loan facilities to CAPL for the full amount as detailed in the private report and the Council would retain the balance required to extinguish existing liabilities, leaving a net additional facility for working capital. The loans will be managed by the Treasury Team in line with the commercial investments Strategy. A sum is expected to be required for working capital immediately so that CAPL can afford to pay staff, building heating and security costs, and pay rent to the City Council so that it does not fall further into arrears.

The need for further drawdown against the facility will be dependent on a number of factors, for example the ability, basis, and timing of re-opening, strength of trade/demand for the hotel, availability of the governments job retention scheme subsidy, and future rate relief. It is proposed that future drawdowns by CAPL are delegated to the s151 officer in conjunction with members and based on business case justification.

The Council will generate an annual return as a result of the margin applied on top of the rate of borrowing.

There is still a risk that CAPL could default on the Council loan. This risk will be mitigated by CAPL holding quarterly Board meetings and sharing monthly management information with the Council to enable the Council to monitor the financial performance and ability to repay the loan. As sole shareholder the Council has Senior Officers that make up the Board of Directors for the company who will be responsible for managing the Council’s investment setting the strategic aims of the business and implementing leadership to support the delivery of them. The board will continue to report to its Shareholder Panel of elected members periodically.

Interest rate

Terms and Conditions for Commercial loans in these circumstances must not be set on an advantageous basis to CAPL. This is to prevent in this case, one hotel gaining commercial advantage over a competitor. When determining an interest rate many factors need to be considered.

The recommended option has been considered in the light of the Hotel’s financial background. The company has been profitable historically and CAPL’s management and directors have provided clear explanations on how the hotel is expected to return to profitability in the future based on for example: restructuring of business operations to reduce its cost base; the introduction of additional profit-making aspects including the Go- Ape franchise and new on-site catering outlets; latent demand and the expected increase in ‘staycation’ holidays post Covid and; the likely local boost to Coventry visitor numbers during and after the City of Culture and Commonwealth Games. The Council’s role as landlord, 100% shareholder and existing creditor, also provide rationale as to why the Council wants to ensure its existing debt is repaid and that CAPL continue rent payments and enhance the future balance sheet value of the company and maintain access to future dividend payments.

5.2 Legal implications

Under Section 12 of the Local Government Act 2003, the Council has a specific power to invest (or provide a loan). The power states "a local authority may invest for any purpose relevant to its functions under any enactment or for the purposes of the prudent management of its financial affairs". This provides the Council with a power to invest in BAHL, for any purpose relevant to its functions (this function would have to be identified) or Page 209

if the Council can show it is for the prudent management of its financial affairs. Under section 1 of the Localism Act 2011, the Council also has a power “to do anything that individuals generally may do” (the “General Power of Competence”). “Individual” means an individual with full capacity. The General Power of Competence gives the Council:

 Power to do a thing anywhere in the United Kingdom or elsewhere;  Power to do it for a commercial purpose or otherwise for a charge, or without charge, and  Power to do it for, or otherwise than for, the benefit of the authority, its area or persons resident or present in its area.

The Council will be compliant with the requirements of both the General Power of Competence and the Power to Invest. This report serves as the case for the proposal and the basis on which the investment powers can be utilised.

Subsidy Control

Following the withdrawal of the United Kingdom from the European Union which came to an end at 11pm on 31 December 2020, EU State aid law no longer applies to financial assistance provided by UK public authorities.

However, under Chapter 3 of Title XI of Part 2 (the "Subsidy Control Chapter") of the Trade and Co-operation Agreement between the European Union and the United Kingdom (the "TCA"), both the EU and the UK have undertaken to implement an effective subsidy control regime in their respective territories.

It should be noted that the Subsidy Control Chapter is only relevant where a particular public intervention meets the definition of a "subsidy" in the TCA.

Market Economy Investor Principle ("MEIP") is a well-established exemption to the previous EU State Aid legislation. Such as exemption is still applicable to the Subsidy Control Regime (which replaces the previous EU State Aid Legislation). A Loan does not automatically constitute a subsidy if the Council carries out prior due diligence that demonstrates that investments are likely to generate sufficient returns that a private prudent investor would have made the same investment. i.e. the Council can invest in the proposal in return for an appropriate commercial return which would satisfy the expectations of a private prudent investor.

The risk of Subsidy is not dependent upon whether the financial return is actually ever achieved by the Council, as whether the Subsidy exists or not is assessed at the time of the funding advanced, but there must be a realistic prospect of the financial return being achieved by the Council.

In practice the Council would need to rely on the MEIP analysis as a justification for any subsidy in the event of a complaint, challenge or investigation.

The new Loan will be secured by way of a Debenture which will be entered into alongside the Loan to protect the Council as a secured creditor. Due diligence has been undertaken that demonstrates that the proposed financial support satisfies the MEOP test.

The Council is complying with Subsidy Control Regime as the transaction is being undertaken upon arms’ length terms and will comply with the MEIP principle, meaning that no benefit is conferred on the receipt and therefore there is no distortion to competition.

Page 210

The Council has received advice from Pinsent Masons LLP its external solicitors. Legal services have undertaken due diligence on the various legal advice received and are satisfied with the legal implications and regulatory compliance in setting up a Teckal Company which has also been endorsed by Senior Counsel.

6. Other implications

Any other specific implications

6.1 How will this contribute to the Council Plan (www.coventry.gov.uk/councilplan/)?

The proposals in this report support the continued operation of Coombe Abbey Hotel and will support the business the grow. With Coventry being the City of Culture in 2021 this will support visitors to the city who will require overnight accommodation which Coombe Abbey Park Hotel could offer. The working capital will ensure jobs can be retained at the hotel while the business recovers from the impact of the Covid-19. The Coombe Abbey parkland and visitor centre which is directly managed by the Council is unaffected by these proposals. The proposals in this report will protect the current annual rental income stream used support the Council's priorities and to protect the value of the Council’s commercial interest in hotel.

6.2 How is risk being managed?

The business if fundamentally sound but has been affected by the wider impact on the hospitality sector as result of the pandemic. The company has and will continue to take advantage of Government support available while the trading position recovers to pre Covid levels. The current assumptions are modelled on the basis that the business will be in a position to reopen from May 2021. If this is not the case, the funding approved should support the costs of the business but may not mitigate against the business seeking further support in the future. This is entirely dependent on decisions outside of the control of the Council and CAPL such as the timescales for the business to reopen and the restrictions that they may have to abide by.

As with any investment there is a risk that the borrower may default on the loan repayments. Providing a 12-month payment holiday will support the business to consolidate their financial position post pandemic.

As sole shareholder the Council has Senior Officers that make up the Board of Directors for the company who will be responsible for managing the Council’s investment setting the strategic aims of the business and implementing leadership to support the delivery of them. They will receive regular reports in relation to the financial performance and operation of the company and will be able to implement measures to ensure that the business is on track to meet the requirement of the loan agreement.

There is a low risk of challenge that the terms on which the loan is to be provided are perceived to provide CAPL with an advantageous position over other operators in the market. The challenge would be that the terms and quantum of the facility do not reflect commercial or market investor principles (state aid/ subsidy control). Due diligence has been carried out to ensure that the terms of the proposal reflect the commercial risk involved.

Page 211

6.3 What is the impact on the organisation?

Without the Council providing loan financing, CAPL will not be able to meet the payroll costs for the business, which is turn could lead to a number of redundancies. Implementing the proposals in the report will protect the jobs within the business and ensure when the hotel can reopen it has appropriate resource in place to continue to deliver the level of service expected from the company, and facilitate the repayment of liabilities.

6.4 Equality Impact Assessment (EIA)

No equality impact assessment has been carried out as the recommendations do not constitute a change in service or policy.

6.5 Implications for (or impact on) climate change and the environment

There is no impact for climate change or the environment.

6.6 Implications for partner organisations?

The report has implications for CAPL in which the Council has a leasehold and shareholder interest. These are detailed in the main body of the report.

Page 212

Report author(s):

Name and job title: Phil Helm – Finance Manager Paul Jennings – Finance Manager Parmi Mudhar – Programme Manager – Finance

Service: Finance

Tel and email contact: Tel: 024 7692 2092, Email: [email protected] Tel: 024 7697 7228, Email: [email protected]

Enquiries should be directed to the above person.

Contributor/approver Title Service Date doc Date response name sent out received or approved Contributors: Michelle Salmon Governance Law and 23/02/2021 23/02/2021 Services Officer Governance Michael Rennie Business Partner Finance 15/02/2021 17/02/2021 Gurbinder Sangha Major Projects Law and 15/02/2021 22/02/2021 Commercial Lawyer Governance Names of approvers for submission: (officers and members) Julie Newman Director of Law and - 23/02/2021 23/02/2021 Governance Phil Helm Finance Manager Finance 15/02/2021 23/02/2021 Paul Jennings Finance Manager Finance 15/02/2021 23/02/2021 Councillor R Brown Cabinet Member for - 23/02/2021 23/02/2021 Strategic Finance and Resources

This report is published on the council's website: www.coventry.gov.uk/councilmeetings

Page 213

This page is intentionally left blank Agenda Item 16

Public report  Cabinet

Cabinet 9th March 2021 Council 16th March 2021

Name of Cabinet Member: Cabinet Member for Strategic Finance and Resources – Councillor R Brown

Director(s) Approving Submission of the report: Director of Finance

Ward(s) affected: All

Title: Birmingham Airport

Is this a key decision?

Yes – the Decision will result in expenditure of over £1m

Executive Summary:

Birmingham Airport makes a very significant contribution to the regional economy, with a direct and indirect contribution to growth and employment. In recent years, the Council has received a significant return from its investment in Birmingham Airport Holdings Limited (“BAHL”).

2020/21 has been a challenging year due to the uncertainty created by the Covid-19 pandemic for both BAHL and the Airline sector across the UK and globally and has led to the worst decline in traffic and income in BAHL’s history. For BAHL the priority has been to maintain sufficient liquidity levels to support the airport into the future as a key strategic regeneration catalyst, whilst ensuring that it is ready to return to full capacity as soon as travel restrictions are lifted.

The purpose of this report is to seek approval for the Council to provide Shareholder support of up to £5.7m in loans if required.

Page 215 Recommendations:

Cabinet is requested to recommend that Council:

1) Approve a loan facility to BAHL on commercial market terms up to the value of £5.7m.

2) Delegate authority to the Director of Finance (S151 Officer) and the Director of Law and Governance, following consultation with the Cabinet Member for Strategic Finance and Resources, to finalise and agree the detailed terms of the transaction with BAHL. The authority under this delegation shall also include:

 the power to enter into the relevant legal agreements and associated documents necessary to complete the transaction with BAHL; and

 (in relation to the management of the loan facility) the power to negotiate and agree variations to the terms of the loan facility.

Council is recommended to:

1) Approve a loan facility to BAHL on commercial market terms up to the value of £5.7m.

 the power to enter into the relevant legal agreements and associated documents necessary to complete the transaction with BAHL; and

 (in relation to the management of the loan facility) the power to negotiate and agree variations to the terms of the loan facility.

List of Appendices included:

Appendix 1 - BAHL Current Structure

Other useful background papers:

None

Has it been or will it be considered by Scrutiny?

Has it been or will it be considered by any other Council Committee, Advisory Panel or other body?

Will this report go to Council?

Yes – 16th March 2021

Page 216 Title: Birmingham Airport

1. Context (or background)

1.1. Together, the 7 West Midland Authorities (“Authorities”) own 49% of BAHL, and vote in one block at meetings. The Council overall owns 5.79% of BAHL’s total ordinary shares and £1.8m of preference shares which pay a fixed dividend of 6.31%. Further detail of the current structure of BAHL is set out in Appendix 1. In both 2018/19 and 2019/20, the Council received over £1.6m income from its investment.

1.2. Birmingham Airport plays a very significant role in the regional economy, providing the air connectivity vital for international trade, investment and employment, the growth of inbound tourism, and access to outbound leisure destinations. Prior to Covid-19, 7,000 people were directly employed by companies located within the Airport boundary and a further 9,900 people were employed indirectly to supply goods and services to the Airport. The Airport’s net economic impact including catalytic effects in the West Midlands region was estimated as £1.5billion GVA (Gross Value Added), and 30,900 jobs.

1.3. The Covid-19 pandemic has led to the worst decline in traffic and income in BAHL’s history. In response, BAHL has reduced costs where possible, without impacting the ability to resume normal operations when travel restrictions are lifted. This includes a two-phase restructure which has resulted in around 43% reduction in roles throughout the workforce.

1.4. In recent months various UK Airports have raised capital in response to Covid-19, including Heathrow with £1.4bn of debt in October 2020, and Manchester Airport Group raised £300m from its shareholders in July 2020.

2. Matters for consideration

2.1. BAHL has external debt facilities in the form of a £105million corporate bond, £371million private placement loan notes, and a bank loan of £25 million. Debt covenants within the airport’s loan agreements require certain financial ratios to be maintained. If these ratios are not maintained, depending on the extent of failure, the agreements first restrict dividends (dividend lock-up) and then require equity cure (breach requiring a capital injection). Since the ratios are based on earnings before interest, taxes, depreciation and amortisation (EBITDA), given the current trading position, they cannot be met and so a waiver needs to be sought. A combination of a further waiver and shareholder support is therefore required to avoid a covenant breach.

3. Options and recommended proposal

3.1. Option 1. Do nothing and not agree to the loan facility. This is not the recommended option.

3.2. Option 2. Provide support if required pro rata to existing shareholding. This is not the recommended option.

3.3. Option 3- Provide support if required at a level that results in the Authorities’ total support being in proportion to their current collective investment in BAHL. This is the recommended option.

3.4. Details of the financial implications and issues which are commercially confidential are included in the private part of the agenda.

Page 217 4. Results of consultation undertaken

4.1.1. West Midlands Shareholders Airport Committee has received regular reports on the issues.

4.1.2. In the preparation of this report, independent aviation, accounting and corporate finance advice has been sought by partner authorities.

5. Timetable for implementing this decision

5.1.1. In the current environment, the precise amount and timing or any loan requirement is uncertain.

6. Comments from the Director of Finance and the Director of Law and Governance

6.1. Financial implications

6.1.1. The maximum support, if required, will be £5.7m. It is currently assessed that any support will be repaid within a short period and will not require any revenue resources.

6.1.2. The loan will be financed as part of the Council’s treasury activity and it is not anticipated that the loan will be classified as capital expenditure.

6.2. Legal implications

6.2.1. Under Section 12 of the Local Government Act 2003, the Council has a specific power to invest (or provide a loan). The power states "a local authority may invest for any purpose relevant to its functions under any enactment or for the purposes of the prudent management of its financial affairs". This provides the Council with a power to invest in BAHL, for any purpose relevant to its functions (this function would have to be identified) or if the Council can show it is for the prudent management of its financial affairs. Under section 1 of the Localism Act 2011, the Council also has a power “to do anything that individuals generally may do” (the “General Power of Competence”). “Individual” means an individual with full capacity. The General Power of Competence gives the Council:

6.2.2. The Council will be compliant with the requirements of both the General Power of Competence and the Power to Invest. This report serves as the case for the proposal and the basis on which the investment powers can be utilised.

Subsidy Control

6.2.3. Following the withdrawal of the United Kingdom from the European Union which came to an end at 11pm on 31 December 2020. EU State aid law no longer applies to financial assistance provided by UK public authorities.

Page 218 6.2.4. However, under Chapter 3 of Title XI of Part 2 (the "Subsidy Control Chapter") of the Trade and Co-operation Agreement between the European Union and the United Kingdom (the "TCA"), both the EU and the UK have undertaken to implement an effective subsidy control regime in their respective territories.

6.2.5. It should be noted that the Subsidy Control Chapter is only relevant where a particular public intervention meets the definition of a "subsidy" in the TCA.

6.2.6. Market Economy Investor Principle ("MEIP") is a well-established exemption to the previous EU State Aid legislation. Such as exemption is still applicable to the Subsidy Control Regime (which replaces the previous EU State Aid Legislation). A Loan does not automatically constitute a subsidy if the Council carries out prior due diligence that demonstrates that investments are likely to generate sufficient returns that a private prudent investor would have made the same investment. i.e. the Council can invest in the proposal in return for an appropriate commercial return which would satisfy the expectations of a private prudent investor.

6.2.7. The risk of Subsidy is not dependent upon whether the financial return is actually ever achieved by the Council, as whether the Subsidy exists or not is assessed at the time of the funding advanced, but there must be a realistic prospect of the financial return being achieved by the Council.

6.2.8. The parties involved in the transaction have sought financial advice from external financial advisors to ascertain the interest which is to be applied. The authorities (collectively) and AGIL would be investing at the same interest rate, therefore as AGIL is a private investor who are willing lend on the same interest rate as the other authorities the investment by the authorities will be on terms on which a private sector operator would also invest, and therefore that investment by the authorities would not be conveying an economic advantage and also demonstrates the MEIP test.

6.2.9. In practice the Council would need to rely on the MEIP analysis as a justification for any subsidy in the event of a complaint, challenge or investigation.

6.2.10. The Council is complying with Subsidy Control Regime as the transaction is being undertaken upon arms’ length terms and will comply with the MEIP principle, meaning that no benefit is conferred on the recipient and therefore there is no distortion to competition.

7. Other implications

7.1. How will this contribute to achievement of the Council's Plan?

7.1.1. A successful Birmingham airport is important both as a contributor to the regional economy and also in further developing Coventry as a globally connected city.

7.2. How is risk being managed?

7.2.1. The risks associated with the proposed transactions and mitigation factors are set out in the body of report in the private part of the agenda.

7.3. What is the impact on the organisation?

7.3.1. The impact to the organisation will be limited as the proposal concerns an investment in an existing asset, in order to support the airport as it manages the financial consequences of Covid-19.

Page 219 7.4. Equalities / EIA

7.4.1. Section 149 of the Equality Act 2010 requires the Council in the exercise of its functions to have due regard to the need to:

 eliminate discrimination, harassment, victimisation and other form of conduct prohibited under the act; and,

 to advance equality of opportunity and to foster good relations between persons who share a relevant protected characteristic (age, disability, gender re- assignment, pregnancy and maternity, race, religion and belief, sex, and sexual orientation) and persons who do not share it.

7.4.2. Having regard to the need to advance equality of opportunity between persons who share relevant protected characteristics and persons who do not share it involves having due regard in particular, to the need to:

 remove or minimise disadvantages suffered by persons who share a relevant protected characteristic that are connected to that characteristic;

 take steps to meet the needs of the persons who share that characteristic that are different from the needs of persons who do not share it; and,

 encourage persons of the relevant protected characteristic to participate in public life or in any other activity in which participation by such persons is disproportionately low.

7.4.3. The Equality Duty has been considered and it is felt that an Equalities Analysis is not required as the proposal concerns investment in an existing asset of regional importance in order to support the management of financial difficulties arising as a consequence of Covid- 19.

7.5. Implications for (or impact on) climate change and the environment

7.5.1. The intention is that the loan will support the airport’s return to previous passenger and traffic levels when we recover from the Covid pandemic.

7.6. Implications for partner organisations?

7.6.1. Coventry along with the other West Midlands authorities hold a majority interest in the airport.

Page 220 Report author(s):

Name and Services: Michael Rennie Lead Accountant, Corporate Finance

Service: Finance

Tel and email contact: Tel: 024 7697 2628 Email: [email protected]

Enquiries should be directed to the above person(s).

Contributor/approver Title Service Date doc Date name sent out response received or approved Contributors: Paul Jennings Finance Manager Finance 5/2/21 7/2/21 Gurbinder Singh Major Projects Law and 10/2/21 15/2/21 Sangha Commercial Lawyer Governance Michelle Salmon Governance Law and 10/2/21 10/2/21 Services Officer Governance Names of approvers for submission: (Officers and Members) Julie Newman Director of Law and - 10/2/21 15/2/21 Governance Barry Hastie Director of Finance - 5/2/21 9/2/21 Councillor R Brown Cabinet Member for - 10/2/21 16/2/21 Strategic Finance and Resources

This report is published on the council's website: www.coventry.gov.uk/meetings

Page 221 Appendix 1 Birmingham Airport Update Report BAHL current structure

A Ordinary shares A Ordinary % of A Ordinary Birmingham 60,535,200 19.2%

Coventry 18,757,100 6.0%

Dudley 18,089,000 5.7%

Sandwell 18,216,800 5.8%

Solihull 12,144,000 3.9%

Walsall 15,801,100 5.0%

Wolverhampton 15,213,100 4.8%

Authorities Total 158,756,300 50.4% Airport Group Investments Limited 156,326,600 49.6% (“AGIL”) TOTAL 315,082,900 100%

In addition, the Council holds 19.2% of the 1,000 “C” ordinary shares.

The Trustees of BAHL’s Employee Trust and ESOP hold all “B” ordinary shares.

Page 222 Agenda Item 17

Council 16 March 2021

Name of Cabinet Member: Cabinet Member for Strategic Finance and Resources – Councillor R Brown

Director Approving Submission of the report: Director of Human Resources

Ward(s) affected: None

Title: Annual Pay Policy Statement 2021/2022

Is this a key decision? No Executive Summary:

Local Authorities are required by sections 38 and 39 of the Localism Act 2011 to produce an annual Pay Policy Statement. The statement must articulate the City Council’s policies towards a range of issues relating to the pay of the workforce, particularly the most senior staff (or “chief officers”) and the relationship of their pay to the lowest paid employees. The proposed annual Pay Policy Statement for 2021/2022 is attached as Appendix 1.

Recommendations:

1. Council is recommended to approve the Annual Pay Policy Statement 2021/2022 attached at Appendix 1.

List of Appendices included:

Appendix 1 Annual Pay Policy Statement 2021/2022 Appendix 2 Local Government Pension Regulations Statement

Other useful background papers: None

Has it been or will it be considered by Scrutiny?

Has it been or will it be considered by any other Council Committee, Advisory Panel or other body?

Will this report go to Council?

Yes –16 March 2021 1 Page 223

Report title: Annual Pay Policy Statement 2021/2022

1. Context (or background)

1.1 The purpose of the Pay Policy Statement is to ensure transparency and accountability with regard to the Council’s approach to setting pay. The Pay Policy Statement when approved by Council, is publicised on the Council’s website in accordance with the requirements of the Localism Act 2011. The Policy Statement is particularly required to highlight the relationship between the pay and remuneration of the most senior staff (chief officers) and the general workforce. The Council’s statement of policy on the Local Government Pension Scheme (LGPS) Regulations 2013 is also attached at Appendix 2.

1.2 Guidance on the development of Pay Policy Statements states that authorities should explain their policy in respect of chief officers who have been made redundant and later re-employed or engaged under a contract of service, and also their approach to any shared arrangements in place. The City Council has a policy not to re-employ or re-engage chief officers and this will continue in the future.

2 Options considered and recommended proposal

2.1 Council is recommended to approve the annual Pay Policy Statement for 2021/2022 to ensure compliance with the Localism Act 2011.

3 Results of consultation undertaken

3.1 There is no requirement to consult on the Pay Policy Statement.

4. Timetable for implementing this decision

4.1 The proposed Pay Policy Statement will be effective for the financial year 2021/2022. Where actual earnings levels are referred to therein, these represent the latest figures available i.e. 2020/2021.

5. Comments from Director of Finance and Corporate Services

5.1 Financial Implications

The costs associated with the implementation of the Pay Policy are built into the City Council’s budget planning process. One-off costs arising from the termination of employment are met from specific reserves set aside for this purpose.

5.2 Legal implications

The agreement to and the publication of an Annual Pay Policy Statement is a requirement of sections 38 and 39 of the Localism Act, 2011.

6. Other implications

6.1 How will this contribute to achievement of the Council's Plan?

To assist the effective delivery of key objectives and corporate priorities the City Council must ensure key principles provide the foundation for the determination of the pay and grading of employees.

6.2 How is risk being managed?

By adopting a Pay Policy Statement as attached at Appendix 1 the City Council is compliant with the Localism Act 2011. Page 224 2

6.3 What is the impact on the organisation?

This document outlines the key principles for Coventry City Council's pay policy for 2021/2022

6.4 Equalities / EIA

As a consequence of the Equality Act and the National Joint Council (NJC) Conditions of Service the City Council is committed to ensuring equal pay principles and practice are consistently applied. The Council also publishes its Gender Pay Gap in accordance with the public sector reporting requirements.

6.5 Implications for (or impact on) the environment

None

6.6 Implications for partner organisations?

None

Report author(s):

Name and job title: Susanna Newing - Director of Human Resources

Tel and email contact: 024 7697 7158 [email protected]

Enquiries should be directed to the above person.

3 Page 225

Table of Contributors and Approvers

Contributor/approver Title Directorate or Date Date response name organisation document received or sent out approved Contributors: John O’Neill Management HR & OD 07/01/2021 19/1/2021 Information Rosemary Artman HR Advisor, HR & OD 07/01/2021 22/01/2021 Policy Robert Perks Senior Human HR & OD 22/01/2021 29/01/2021 Resources Manager Philip Johnson HR Advisor, HR & OD 07/01/2021 22/01/2021 Corporate Support Liz Read Manager – Legal & Electoral Governance 07/01/2021 11/1/2021 Services Services

Names of approvers for submission: (officers and members)

Susanna Newing Director HR & OD 18/02/2021 18/02/2021 Human Resources Barry Hastie Director of Finance & 02/03/2021 04/03/2021 Finance & Corporate Corporate Services Services Julie Newman Director of Legal & 02/03/2021 02/03/2021 Legal & Governance Governance Services Services Members: Councillor R Cabinet 04/03/2021 08/03/2021 Brown Member for Strategic Finance and Resources

Page 226 4

Appendix 1

Coventry City Council – Annual Pay Policy Statement 2021/2022

1. Introduction and Purpose

1.1 Under section 112 of the Local Government Act 1972, the Council has the power “to appoint officers on such reasonable terms and conditions as the authority thinks fit”. This Pay Policy Statement sets out the Council’s approach to setting the pay of its employees as required.

1.2 Coventry City Council is committed to operating consistent and equitable pay arrangements for all employees. The Pay Policy Statement is required to set out the Authority’s policies for the financial year relating to:

 The remuneration of it’s chief officers (this includes Chief Executive, Deputy Chief Executive, Directors and other senior Managers)  The remuneration of its lowest paid employees  And the relationship between them

1.3 The Pay Policy Statement is required to state:  The definition of ‘lowest paid employees’ for the purposes of this statement  The Authority’s reasons for adopting this definition

1.4 The Statement is also required to state the level and elements for each chief officer on the following:

 Remuneration on recruitment  Increases and additions to remuneration  The use of bonuses  The approach to payment on their ceasing to hold office under the authority or being employed by the authority  The publication of and access to information relating to their remuneration

1.5 It should be noted that the Pay Policy Statement does not include information relating to the pay of Teachers or Support Staff in schools who are outside the scope of the Localism Act.

2. Current Pay Structure

2.1 The Council uses the National Joint Council (NJC) for Local Government Services Job Evaluation Scheme and the national pay spine as the basis for it’s local grading structure to determine the salaries of the vast majority of the non-school based workforce.

2.2 Progression within the grading structure is based on the payment of increments until the top of the grade is reached.

2.3 Any changes to the current grading structure during the year 2021/2022 will be subject to approval of Council.

2.4 A similar incremental approach is also applied to other groups of employees who are governed by relevant national negotiating bodies. These groups include Soulbury Committee and JNC for Youth and Community schemes.

2.5 Increments for those centrally employed on teachers’ terms and conditions are based on performance in accordance with their national agreement.

5 Page 227

2.6 Chief Officers and other senior managers’ posts are evaluated in accordance with the Local Government Job Evaluation Scheme for senior managers. Performance is reviewed on an annual basis and may result in the award of an increment within the respective grade.

2.7 The above policies apply except where the operation of the Transfer of Undertakings (Protection of Employment) Regulations, or other statutory provision, dictate otherwise.

2.8 Where a Chief Officer is appointed under a ‘contract for service’ rather than as an employee, the Council’s ‘contracts for services’ arrangements are in place to ensure that maximum value for money is secured. Currently, Coventry City Council does not employ any Chief Officers under a contract for service but if this was the case, we would apply the ‘contracts for services’ arrangements.

3. Legal Context

3.1 This policy is in operation to ensure that Coventry City Council meets its obligations under relevant legislation including the Localism Act 2011. 3.2 With regard to the equal pay requirements contained within the Equality Act 2010, Part Time Employment (Prevention of Less Favourable Treatment) Regulations 2000 and Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 and the Agency Workers Regulations 2010, the Council ensures there is no pay discrimination in its pay structures and that all pay differentials are objectively justified through the use of an equality- proofed job evaluation mechanism, which directly relates salaries to the requirements, demands and responsibilities of the role. 3.3 The Council also publishes its Gender Pay Gap annually. 4. Chief Officers Remuneration

4.1 For the purposes of this statement, Chief Officers’ are defined within S43 of the Localism Act and by Section 2 of the Local Government and Housing Act 1989, as the Chief Executive, Deputy Chief Executive, Directors and Heads of Service.

4.2 Chief Officers’ Salaries

Salary Grade Salary Range CX1 £190,838 – £196,289

DCEO £163237 - £173,647

D1/ D2 £110,977 - £135,544 AD1/AD2 £ 83,998 – £109,049 SM1/2/3 £49,773- £78,282

4.3 The Chief Executive’s salary is £196,289

4.4 An additional payment is made for Returning Officer duties. The role of Returning Officer and its fees are independent and are determined and paid by the Cabinet Office for all National and European elections, rather than the Council. The Council covers the costs of any local elections.

Page 228 6

There have been no elections during the year 2020/21, but payments made during this year in respect of elections held during the preceding year were as follows,

European Parliamentary Election - £. £2746 General Election - £2665

Total payment to the Chief Executive during 202021, including salary and Returning Officer fees was, therefore, £201,700.

4.5 Chief Officer remuneration currently falls within the range determined by the Council. These salary scales will be increased for 2021/2022 in line with the relevant national pay award. 5. Recruitment of Chief Officers

5.1 The determination of the remuneration offered to any newly appointed Chief Officer will be in accordance with the pay structure and relevant policies in place at the time of recruitment. The Council’s policy and procedures with regard to the recruitment of Chief Officers are set out within the Council’s Constitution.

5.2 The determination of the remuneration to be offered to any newly appointed Chief Officer will be in accordance with the Council’s pay structure. Chief Officers jobs are allocated to a salary range in accordance with the job evaluation scheme.

5.3 Where the Council is unable to recruit to a post, it will consider the use of temporary market force supplements. Where the Council remains unable to recruit chief officers under an employment contract, or there is a need for interim cover for a Chief Officer post, the Council will consider engaging individuals under ‘contracts for service’.

5.4 The Council considers that decisions on salary level for a new post over £100,000 pa or any existing post regraded to over £100,000 pa should be subject to accountability and scrutiny. The Council considers that it would be preferable for scrutiny of these decisions to take place in committee rather than by full Council, and that the Audit and Procurement Committee is the appropriate forum.

6. Increases and additions to Remuneration of Chief Officers

6.1 The Council does not award any bonuses to its Chief Officers.

6.2 Incremental progression within salary scales for Chief Officers and senior managers is based upon an annual performance based assessment.

6.3 It is the Council’s policy to pay temporary and reviewable ‘market supplement’ to Chief Officer or Senior Manager salary levels where there is clear and demonstrable evidence that the salary level otherwise attached to the post creates substantial recruitment or retention difficulties. In 2020/2021 five Chief Officers or Senior Managers have received market supplements in addition to their basic salary, ranging from £5,000 to £13,000.

6.4 No Returning Officer fees have been paid during 2020/21 other than to the Chief Executive because there have been no elections during the year.

6.5 Additional allowances will only be paid to Chief Officers and senior managers where they undertake additional duties that fall outside their substantive role.

7 Page 229

7. Payments on Termination

7.1 The Council's approach to discretionary payments on termination of employment of Chief Officers in a redundancy situation is set out within its Security of Employment Agreement. In accordance with the Local Government (Early Termination of Employment) (Discretionary Compensation) Regulations 2006, the Council has used its discretion to calculate redundancy payments in accordance with the Security of Employment Agreement.

7.2 The Council does not exercise the discretion available to grant ‘added years’ of service under the Local Government Pension Scheme.

7.3 The City Council will not re-employ or re-engage previous employees within five years, if they have left as part of any voluntary redundancy/early retirement programme. It is not envisaged that any Chief Officer who leaves the Council with a severance or redundancy payment will be considered for further employment with Coventry or for the hiring of their services in another capacity save in exceptional circumstances.

8. Publication

8.1 Upon approval by the full Council, this statement will be published on the Council’s Website.

9. Lowest Paid Employees

9.1 At present, the lowest paid employees of Coventry City Council are paid £9.248 per hour. This figure will be reviewed following announcement of the national pay award for 2021/2022

9.2 The City Council employs a number of modern apprentices who are not included within the definition of "lowest paid employees" as they are employed under specific trainee contract terms. We also do not include trainees and interns within this definition.

9.3 The Code of Recommended Practice on Data Transparency recommends the publication of the ratio between the highest paid salary, the median average salary of the whole of the Council's workforce and the lowest salary level paid.

9.4 The current Council pay levels define the following rates of pay:-  Chief Executive - £196,289  Median employee - £ £26,837  Lowest paid employee - £17,842

9.5 Thus, the current pay ratios are as :-  Chief Executive to lowest paid employee = 1:11.0  Chief Executive to median employee = 1:7.3

9.6 This pay ratio figure between the highest and the lowest paid employee is within the recommended upper limit of 1:20, which was suggested by Lord Hutton in his ‘Review of Fair Pay in the Public Sector’.

10. Monitoring and Review

10.1 Once approved by Full Council, the Pay Policy statement will come into effect and will be reviewed annually in accordance with the relevant legislation at the time.

Page 230 8

Appendix Two

3. The Local Government Pension Scheme Regulations Statement of Policy  February 2019

Under Regulation 60 of the Local Government Pension Scheme (LGPS) Regulations 2013 each employer must formulate, keep under review and publish their policies on certain discretions contained within the LGPS Regulations.

This Statement is applicable to all employees of Coventry City Council who are eligible to be members of the LGPS and, where applicable, deferred or pensioner members.

1. Regulation 30 – Members request for early payment of benefits

Explanation From age 55, members who leave or have left local government employment have the right to apply for early payment of their retirement benefits subject to the consent of their employer. However, members aged 60 and over do not need their employer’s consent.

The pension benefits must be reduced in accordance with guidance provided by the Government actuary. Employers may determine on compassionate grounds that the benefits are not reduced.

Coventry City Council's Policy  Active Members (current employees) - The City Council will allow early retirements on the grounds of redundancy/efficiency of the service. This discretion will otherwise only be used in rare and exceptional circumstances.

It would need to be funded by a lump-sum contribution into the Pensions Fund by the City Council. Each specific request raised under this Regulation will be judged equally and fairly on its own merits.

 This discretion will be exercised by those officers nominated to approve existing severance packages.

 Deferred Members (Pre April 2014) – Early release of retirement benefits may be allowed in exceptional circumstances. The former employee must make an application in writing to the City Council. Each specific case will be judged equally and fairly on its own merits and where appropriate approved by the appropriate Cabinet Member.

 Waiver or reduction – Each specific case will be judged equally and fairly on its own merits and where appropriate approved by the appropriate Cabinet Member. Any cost would need to be funded by a lump-sum contribution into the Pension Fund by the City Council.

9 Page 231

2. The Local Government Pension Scheme (Transitional Provisions, Savings and Amendment) Regulations 2014 Schedule 2 - The rule of 85 for members drawing benefits between age 55-59.

Explanation The rule of 85 applies to those members who joined the LGPS before 2006 and allows them to retire earlier than their normal pension age, taking their pension benefits in full. Under the LGPS 2014 Regulations members may lose some of the rule of 85 protections if they wish to access their benefits and they are aged 55-59. An employer may resolve to reinstate the protection which would have cost implications.

Coventry City Council’s Policy Each specific case will be considered on the grounds of efficiency of the service, having fully considered service delivery and financial costs.

3. Regulation 31 – Award of Additional Pension of an active member

Explanation An employer may resolve to award a member additional pension of not more than £6,500 per year (as at 1st April 2014). An employer may make decisions on awarding additional pension for up to six months after termination of employment in cases of redundancy, in the interests of efficiency of the employing authority’s functions or at the ending of a joint appointment because the other appointment holder has left.

Coventry City Council's Policy This discretion will not be exercised by the City Council in any circumstances.

4. Regulation 16(2)e & Regulation 16(4)d – Additional Pension Contribution (APC)

Explanation An employer may make either a regular or lump sum Additional Pension Contribution (APC) to a member’s account. This may be part or whole funded.

Coventry City Council’s Policy This discretion will not be exercised by the City Council in any circumstances.

5. Regulation 30(6) and Regulation 30 (8) – Flexible Retirement

Explanation A member who is aged 55 or over and with their employer's consent reduces their hours and/ or grade can then, but only with the agreement of their employer, make a written application to the administering authority (West Midlands Pension Fund) for payment of all or part of their accrued benefits without having retired from that employment.

If payment of benefits occurs before normal retirement age the benefits can be actuarially reduced in accordance with guidance issued by the Government actuary.

The employer may choose to waive the reduction in whole or in part. If the employer chooses to do so, then the cost of waiving the reduction in whole or in part has to be paid to the Fund.

Coventry City Council's Policy Each specific case will be judged equally and fairly on its own merits, having fully considered service delivery and financial costs. The Council will normally only approve the payment of benefits where there is no additional cost to the Council.

Page 232 10

6. Regulation 17 – Shared Cost AVC

Explanation Employers may resolve to establish and maintain a Shared Cost Additional Voluntary Contribution Scheme (SCAVC). Who can join, how much the employer and employee will jointly contribute and the type of benefits provided must be considered.

Coventry City Council's Policy Coventry City Council will allow a Shared Cost Additional Voluntary Contribution Scheme.

7. Regulation 16 – Optional contributions during absence

Explanation Employing authorities have the discretion to extend beyond 30 days the period where a member can make a written request to make contributions. These contributions will cover a period of absence where pension contributions would otherwise not have been made.

Coventry City Council's Policy Coventry City Council will extend the period of 30 days in rare and exceptional circumstances or where it was beyond the member's control.

8. Regulation 22 – Re-employed and rejoining deferred members

Explanation Where a deferred member becomes an active member again, before becoming entitled to the immediate payment of retirement benefits in respect of former membership(s), he/she may elect to have former membership(s) aggregated with their current active membership. An election must be made in writing to the member’s appropriate administrating authority (West Midlands Pension Fund) before the expiry of the period of 12 months, beginning with the date that the employee again became an active member (or any such longer period as the employer may allow).

Coventry City Council's Policy Coventry City Council will extend the period of 12 months in rare and exceptional circumstances or where it was beyond the member's control.

9. Regulation 100 – Inward transfers of pension rights

Explanation

A person who becomes an active member who has relevant pension rights may request their fund authority to accept a transfer value for some or all of their former rights. An election must be made in writing before the expiry of the period of 12 months beginning with the date that he/she became an active member (or any such longer period as his employer may allow).

Coventry City Council's Policy Coventry City Council will extend the period of 12 months in rare and exceptional circumstances or where it was beyond the member's control.

11 Page 233

10. Regulation 9 (3) - Contributions payable by active members

Explanation Employing Authorities must review the contribution band to which they assign members each April, employers can also review band levels during the year

Coventry City Council Policy An employee’s contribution percentage will be determined each pay period (e.g. each months pay) based on the following: a) The pensionable pay to be paid in the pay period will be multiplied by 12 to give an annual equivalent and the contribution rate for that pay period determined according to the relevant tables. b) Any lump sums or retrospective arrears payments covering more than one pay period would be excluded from the calculation.

Employees will be notified of their pension contribution percentage on their payslip each month.

Details of the contribution rates can be found on the West Midlands Pension Fund’s website by following the link http://www.wmpfonline.com/activemember

Members of the pension scheme have the right to appeal the pension banding decision within 6 months of the change of contribution rate; in the first instance they should contact Employment Services so that the matter can be reconsidered.

If they are still dissatisfied with this decision they can make a written application to the specified person, appointed by Coventry City Council, to give a decision under dispute.

11. Regulation 91-95 Forfeiture of pension rights Explanation If a member is convicted of a relevant offence committed in connection with their employment the former Scheme employer may apply for a forfeiture certificate. A forfeiture certificate certifies that the offence was ‘gravely injurious to the state’ or is liable to lead to a ‘serious loss of confidence in the public service’. Where issued the former Scheme employer may direct that the member’s rights under the regulations are forfeited.

Coventry City Council Policy Coventry City Council will apply the provisions of regulations 91 to 95.

12. Regulation 7 – The Internal Dispute Resolution Procedure

Explanation An Internal Dispute Resolution Procedure applies to active members of the LGPS and to others such as deferred and pensioner members, whose position may be affected by decisions taken by their former employer or LGPS administrating authority.

Page 234 12

Responsibility for determinations under the first stage of the procedure rests with a “specified person” appointed by the employer. The employer must specify the job title and address of the person to whom applications should be directed.

Coventry City Council's Policy

The specified person is:

Director of Human Resources Coventry City Council PO Box 15 Earl Street COVENTRY CV1 5RR

Page 235 This page is intentionally left blank Agenda Item 18

Public report  Council Report

Council 16 March, 2021

Name of Cabinet Member: N/A

Director Approving Submission of the report: Chief Executive

Ward(s) affected: City wide

Title: Exercise of Emergency Functions

Is this a key decision? N/A

Executive Summary:

This report informs Council of a decision undertaken by the Chief Executive on 25 February, 2021 in accordance with the Constitution and following consultation with the Leader of the Council, Councillor G Duggins, to exercise emergency functions to secure additional funding made available by the Government in response to the current Covid - 19 pandemic to bring forward decarbonisation projects in the public sector to stimulate the country’s economic recovery. List of Appendices included: None

Background papers: A copy of the signed decision has been published on the Council’s website at: https://edemocracy.coventry.gov.uk/ecCatDisplay.aspx?sch=doc&cat=13299