Agenda Document for Council, 14/02/2018 19:00

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Council

Date: Wednesday, 14th February, 2018 Time: 7.00 pm Place Kingswood Council Chamber - Kingswood Civic Centre

Notes: Chairs Briefing 5.00pm – F38 (For Chair and Vice Chair) Avon Fire and Rescue Presentation 5.30pm – Council Chamber

Group Meetings are as follows: Conservatives - 6pm – F39/F40, Kingswood Civic Centre Liberal Democrats - 6pm F36/37, Kingswood Civic Centre Labour - 6pm Room F31, Kingswood Civic Centre Distribution Councillors Ian Adams, Brian Allinson, John Ashe, June Bamford, Nick Barrett, Michael Bell, Janet Biggin, Ian Blair, Linda Boon, Ian Boulton, Keith Cranney, Ruth Davis, Tony Davis, Mike Drew, Clare Fardell, Heather Goddard, John Goddard, Robert Griffin, Dave Hockey, Pat Hockey, Shirley Holloway, Sue Hope, Brian Hopkinson, Colin Hunt, Jon Hunt, Roger Hutchinson, Trevor Jones, Dave Kearns, Gareth Manson, Adam Monk, Katherine Morris, John O'Neill, Eve Orpen, Andy Perkins, Sarah Pomfret, Shirley Potts, Christine Price, Bob Pullin, Steve Reade, Matthew Riddle, Pat Rooney, Ian Scott, Ben Stokes, Maggie Tyrrell, Keith Walker, Sue Walker, Erica Williams, Claire Young, Judy Adams, Roger Avenin, Kaye Barrett, April Begley, Samuel Bromiley, Ernie Brown, Keith Burchell, David Chubb, Rob Creer, Ken Dando, John Davis, Martin Farmer, Paul Hardwick, Paul Hughes, Rachael Hunt, Marian Lewis, Martin Manning, Toby Savage, Kim Scudamore, Gloria Stephen, John Sullivan and Nic Labuschagne

Appropriate Officers Trades Union Representatives Media and Public

PLEASE NOTE: Any member of the public or press attending this meeting may take photographs, film or audio record the proceedings and may report on the meeting including by use of social media. This will apply to the whole of the meeting except where there are confidential or exempt items, which may need to be considered in the absence of the press or public. By entering the meeting room and using the public seating areas you are consenting to being filmed, photographed or recorded. If you intend to film or audio record this meeting please contact the Democratic Services Officer named on the front of the agenda papers beforehand, so that all necessary arrangements can be made.

John McCormack, Head of Legal & Democratic Services & Monitoring Officer South Gloucestershire Council, Chief Executive & Corporate Resources Department PO Box 300, Legal & Democratic Services, Civic Centre, High Street, Kingswood, Bristol BS15 0DS Telephone (01454) 865980 E-mail [email protected] www.southglos.gov.uk

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EMERGENCY EVACUATION PROCEDURE

If the fire alarm siren sounds, leave the chamber via the committee room lobby, go down the staircase and assemble in the car park behind the Council Offices. If that staircase is unusable, use the fire escape staircase in the Council Chamber itself. Do not run or use the lifts. If you have mobility problems tell the Democratic Services Officer who will assist you. OTHER LANGUAGES AND FORMATS This information can be made available in other languages, in large print, braille or on audio tape. Please phone 01454 868009 if you need any of these or any other help to access Council services. AGENDA 1. EVACUATION PROCEDURE The Chair will draw attention to the emergency evacuation procedure as set out below:-

If the fire alarm siren sounds, leave the chamber via the entrance lobby, go down the staircase and assemble in the car park behind the Council Offices. If that staircase is unusable, use the fire escape staircase in the Council Chamber itself. Do not run or use the lifts. If you have mobility problems tell the Democratic Services Officer who will assist you.

2. APOLOGIES FOR ABSENCE To receive apologies for absence from Councillors.

3. DECLARATIONS OF INTEREST UNDER THE LOCALISM ACT 2011 Members who consider that they have an interest to declare are asked to: a) State the item number in which they have an interest, b) The nature of the interest, c) Whether the interest is a disclosable pecuniary interest, non-disclosable pecuniary interest or non-pecuniary interest. Any Member who is unsure about the above should seek advice from the Monitoring Officer prior to the meeting in order to expedite matters at the meeting itself.

On the 11 August 2015 the Standards Sub Committee approved a dispensation for all members who had a disclosable pecuniary interest or other non- pecuniary interest in the setting of the Council budget. The Sub Committee resolved: (i) That a dispensation be granted to all members of the authority to enable all members to participate in full in all decisions relating to the setting of the Council’s budget (ii) That the dispensation be granted until 1st April 2019.

4. MINUTES (Pages 7 - 36) To confirm the minutes as a correct record for signing by the Chair.

5. CHAIR'S ANNOUNCEMENTS To receive announcements from the Chair of Council.

6. ITEMS FROM THE PUBLIC Any resident of the South Gloucestershire Council Area or person affected by decisions to be taken by the Council, may address this meeting (for no more than 5 minutes) to present a petition, make a statement, contribute to views on matters under discussion or ask a question. The notice period required to address the meeting must be provided by noon the day before the meeting by contacting the Democratic Services officer named on the agenda.

7. PETITIONS Any member of Council may present a petition at a Council meeting. 8. QUESTIONS (Pages 37 - 40) To consider Members' written questions addressed to Executive members or Chief Officers on any function of the Council and any requests for mini debates. The questions submitted are attached.

The questions and answers will be circulated immediately prior to the meeting. The person posing the question can ask one supplementary question at the meeting itself.

Urgent questions can be taken, subject to the Chair’s permission, if they have been notified to the responsible officer by 5pm on the day prior to the meeting. The person posing the urgent question can ask one supplementary question at the meeting itself.

9. TREASURY MANAGEMENT AND INVESTMENT STRATEGIES FOR 2018/19 AND PRUDENTIAL INDICATORS 2017/18 - 2020/21 (Pages 41 - 82) To be presented by Councillor Roger Avenin as Chair of the Audit and Accounts Committee.

To approve:

 the Treasury Management, Borrowing and Investment Strategies which cover how the Council funds its capital spending and how it lends any surplus cash;

 the Prudential Indicators, which are measures of the affordability, prudence and sustainability of capital expenditure plans, and limit the activities of the treasury function;

 the Minimum Revenue Provision (MRP) Policy.

10. REPORT ON THE CAPITAL PROGRAMME 2018/19 - 2020/21 (Pages 83 - 122) To be presented by Councillor Matthew Riddle as the Leader of the Council.

To approve:

a) The proposed capital programme for 2018/19 to 2021/22 and its financing, as set out in Appendices 1 to 4; b) Delegate to Cabinet the setting of the financial, governance and operational arrangements for the Property Investment Strategy as noted in paragraphs 30 to 36; c) The amendments to the Financial Regulations as noted in paragraph 36; d) The Flexible Use of Capital Receipts Strategy at Appendix 5.

11. REVENUE BUDGET, SPECIAL EXPENDITURE AND COUNCIL TAX 2018/19 - 2021/22 (Pages 123 - 206) To be presented by Councillor Matthew Riddle as the Leader of the Council.

To consider the Council’s current budget position and then approve a Revenue Budget, Special Expenses and Council Tax for 2018/19 and planning totals for the following 3 years.

12. THE 2018-19 COUNCIL TAX (Pages 207 - 210) To be presented by Councillor Matthew Riddle as the Leader of the Council.

To approve Council Tax for 2018/19 to meet the budget and council tax requirements of South Gloucestershire Council, the Avon and Somerset Police and Crime Commissioner, the Avon Fire Authority and the 47 Parish/Town Councils as required by the Local Government Finance Act 1992 as amended by s72-s79 of the Localism Act 2011.

The attached document is a holding report and an update report will be issued as a supplement to the final agenda papers.

13. REMUNERATION APPROVAL (Pages 211 - 214) To be presented by Councillor Matthew Riddle as the Leader of the Council.

To request approval of the remuneration for the Director of Children, Adults & Health post.

14. WEST OF ENGLAND PARTNERSHIP AND REGIONAL ISSUES (Pages 215 - 220) To be introduced by Councillor Matthew Riddle as the Leader of the Council.

To provide a summary and update of the strategic work undertaken at a West of England level.

15. MOTIONS No ordinary motions have been submitted to this meeting.

Urgent motions can be taken, subject to the Chair’s permission, if they have been notified to the responsible officer by 5pm on the day prior to the meeting.

16. ANY OTHER ITEM THE CHAIR DECIDES IS URGENT

Agenda Item 4

Minutes

COUNCIL

Wednesday, 13th December, 2017

PRESENT

Councillors: Brian Allinson, John Ashe, June Bamford, Michael Bell, Ian Blair, Linda Boon, Ian Boulton, Keith Cranney, Ruth Davis, Mike Drew, Clare Fardell, Heather Goddard, John Goddard, Robert Griffin, Pat Hockey, Shirley Holloway, Brian Hopkinson, Colin Hunt, Jon Hunt, Roger Hutchinson, Trevor Jones, Dave Kearns, Gareth Manson, Adam Monk, Katherine Morris, John O'Neill, Andy Perkins, Sarah Pomfret, Bob Pullin, Steve Reade, Matthew Riddle, Pat Rooney, Ian Scott, Ben Stokes, Maggie Tyrrell, Keith Walker, Claire Young, Judy Adams, Roger Avenin, Kaye Barrett, April Begley, Samuel Bromiley, Ernie Brown, David Chubb, Rob Creer, Ken Dando, John Davis, Martin Farmer, Paul Hardwick, Paul Hughes, Rachael Hunt, Marian Lewis, Martin Manning, Toby Savage, Kim Scudamore, Gloria Stephen and Nic Labuschagne

Apologies for Absence

Apologies for absence were received fromCouncillor Ian Adams, Councillor Nick Barrett, Councillor Janet Biggin, Councillor Tony Davis, Councillor Dave Hockey, Councillor Sue Hope, Councillor Eve Orpen, Councillor Shirley Potts, Councillor Christine Price, Councillor Sue Walker, Councillor Erica Williams, Councillor Keith Burchell and Councillor John Sullivan.

47 EVACUATION PROCEDURE (Agenda Item 1)

The Chair drew attention to the evacuation procedure as set out in the agenda papers.

48 DECLARATIONS OF INTEREST UNDER THE LOCALISM ACT 2011 (Agenda Item 3)

The following members made a declaration of interest:

Councillor Item No Nature of Interest Ian Scott 9 Member of Avon Fire Authority

Sarah Pomfret 9 Member of Avon Fire Authority

Page 7 1 Brian Hopkinson 9 Member of Avon Fire Authority

Ruth Davis 9 Husband Member of Avon Fire Authority Jon Davis 9 Father Member of Avon Fire Authority Keith Cranney 9 Member of Avon Fire Authority

Kaye Barrett 9 Husband Member of Avon Fire Authority Ian Adams 9 Member of Avon Fire Authority

The members would leave the chamber during consideration of the item.

49 MINUTES (Agenda Item 4)

It was reported that in response to the supplementary question 20 it was recorded in the minutes that a written response would be provided. However in the action notes it states that the supplementary question was seeking the same information as the original question and not further response was required. It was agreed that officers would look into this.

Resolved: That the minutes of the meeting held on 8 November 2017 be confirmed as a correct record and signed by the Chair.

50 CHAIR'S ANNOUNCEMENTS (Agenda Item 5)

The Chair took the opportunity to wish Cllr Eve Orpen well and a speedy recovery as she had been in hospital recently and was going to be recovering into the New Year.

She also thanked Councillors who represented South Gloucestershire Council at Remembrance events by laying wreaths, attending parades and Remembrance services.

The Chair advised he had attended a number of events since the last meeting which included:

 On 9th November he attended the launch of the World War I memorials website launch which aims to make information more accessible through the use of QR codes close to the memorial which links to a website providing historical information.  On 18 November he went to the inaugural park run at the Mundy fields in Thornbury.  On 1 December he joined ‘Bookstart Bear’ at the library and enjoyed reading ‘Maisie goes to the Library’ to the children.

Page 8 2 51 ITEMS FROM THE PUBLIC (Agenda Item 6)

Dave Redgewell addressed Council regarding the Department for Transport consultation which was seeking views on future services across the Great Western network. The consultation covered a range of issues for both the medium and longer term on how services could be improved and what a future franchisee should be expected to prioritise. He urged people to respond that the franchise was not broken up.

Reg Bennett, South Gloucestershire addressed the Council regarding discrepancies with regard to the charges for pre-purchase burial plot and called on the Council to investigate and end this unfair and unjustified charge.

It was agreed the matter would be referred to the Executive Member for Communities and Tourism.

Billy Davis, Public Affairs & Policy Manager at HFT, a charity that supports people with learning disabilities addressed Council regarding the impact of Sleep-In back payments in the social care sector. He explained that government policy had recently changed to suggest that sleep-ins were now considered to be paid at the National Living Wage. However, HMRC enforcement of the policy had resulted in demands for a six year backlog of underpayment resulting in a £400m bill for the sector. It was implied that local authorities would be responsible for the payment of arrears for those on personal care budgets. He was therefore seeking clarity on this matter from the council on behalf of people HFT support.

It was agreed that the matter be referred to the Executive Member for Adult Community Care.

52 PETITIONS (Agenda Item 7)

No petitions were submitted to this meeting of Council.

53 QUESTIONS (Agenda Item 8)

The following questions were asked and answers provided.

To the Leader of the Council

Question 21 of 2017/18 asked by Councillor Sue Walker

I would like to thank the Fire Service this Council and other agencies for their continuing work on the fire at the Beeches Industrial Estate, which broke out on 24th October. I understand that the Fire Service had to use hydrants on the other side of the Iron Acton Road and pumped water from the River Frome, as there was no hydrant on Beeches Industrial Estate. Is the Leader confident that there are sufficient hydrants to serve this and other industrial estates in the area?

Page 9 3 Answer

The belief that there was no hydrant on Beeches Industrial Estate is incorrect. Avon Fire and Rescue Service report that “There are a number of fire hydrants on the site, which has a 200mm water main. When there is low water pressure from the hydrant we will ask the local water provider (this was requested during the emergency phase of the incident), to increase the water pressure. In addition to this, if there are alternative water supplies, i.e. open water source, we will always consider using this water source, as part of our operational resilience contingency planning arrangement.”

Taking this response from Avon Fire and Rescue Service into account I am satisfied that there are sufficient hydrants to serve this and other industrial estates in the area

Question 22 of 2017/18 asked by Councillor Sue Walker

I understand that it was five weeks after the fire first broke out that the Council advised local residents to limit the amount of time they spend outside. Can the Leader of Council say whether this advice should have been given to residents and businesses sooner and have any other lessons been learnt about how the Council should respond to similar incidents, in future?

Answer

The fire broke out on 24 October 2017. After the initial response to put the fire out, advice was given to residents and businesses via the media on 26 October 2017, the form of a release containing health advice from Public Health England. This news release was tweeted, sent to all councillors and added to the homepage of the council website on newsroom at http://sites.southglos.gov.uk/newsroom/environment/update-on-the-yate- warehouse-fire/

A letter providing updated advice was emailed to the agent for the landowners on 27th October 2017 following their agreement to forward this to all businesses on the estate. This information was also posted on the council website. Following questions from businesses on the neighbouring estate this advice was posted to the landowner of that estate on 15 November, with their agreement to circulate to their tenants.

Following initial work to deal with asbestos, smoke from the fire was first reported as a problem on 8th November 2017. On 15 November 2017 Public Health England gave updated advice that although the smoke posed a low risk to health; vulnerable residents should remain indoors where possible. This information was posted on the council website and circulated to the media on 17 November 2017.

Page 10 4 The council established a dedicated webpage 29 November 2017 where updated guidance and advice from Public Health England advice has been posted. Residents and businesses have consistently been directed to that site to access the most recent guidance. A press release was also issued directing the media to this page, which can be found at http://sites.southglos.gov.uk/newsroom/environment/warehouse-fire-update

The council has also supplied information to the media on seven separate occasions following requests for information.

In addition to this published information council officers have regularly been on site, and have visited and spoken direct to a number of the businesses around the incident.

Most recently Newsroom was updated on Wednesday 6 December with the latest activity, along with a Facebook and twitter post featuring images of council officers and fire service in attendance on site.

Although the council can – and does – always consider and learn lessons from incidents, such as the fire on Beeches Industrial Estate, this timeline clearly indicates that information and advice was given to businesses and residents swiftly, and was regularly updated as the council received changed guidance and advice from Public Health England

Question 23 of 2017/18 asked by Councillor Sue Walker

South Gloucestershire Council recently held consultations on the Council’s Ageing Better Plan and on Youth Services. One of the venues for the Ageing Better Plan consultation was Yate Outdoor Sports Complex (YOSC), which is remote and inaccessible, not on a bus route and is approximately half a mile from the main road. A local resident who attended this event said there were four members of staff present and no other members of the public. She then found that several service providers in the area knew nothing about the consultation. Similar questions about lack of information on consultations were also raised at the Community Engagement Forum where we heard that the Chipping Sodbury Youth Club had not been advised of the consultation on Youth Services.

I could give more examples but would like to ask if the Leader of the Council could say what steps the Authority is taking to ensure that consultation events are more adequately advertised, targeted and accessible?

Answer

The Ageing Better consultation on 22nd November was held at Yate Outdoor Sports Centre, which with hindsight was the wrong venue due to its location and accessibility. We will not use this venue again for consultation events.

The consultation has been widely promoted by the Partnership & Commissioning Team and the Consultation Team we have contacted: MPs,

Page 11 5 SG councillors, parish clerks, voluntary sector partners, GPs, community nurses, libraries, one stop shops, Merlin, Over 50s Forum, CVS, Care Forum, CCG, PN partnership, carers support centre, provider forums, equalities groups, local partnerships. We have also used Facebook and Twitter to get the message out. A local WI group shared information about the consultation using Facebook.

We have had 2 consultation events one for the general public on 22nd November and one for the voluntary sector on 29th November (50 attendees). We have attended 4 Over 50s Forum meetings during October, all of the provider forums, all equalities groups and we are attending older people’s groups on an ad hoc basis, request basis. We plan to visit some BME groups before the consultation closes on 12th January.

We also distributed a postcard giving details of the consultation and the Sirona community nursing team committed to giving a postcard to everyone they visit.

The YOSC event was a drop in event and was staffed to cope with 20-30 people turning up. As soon as we were sure the numbers attending were going to be small we stood down members of the team.

Question 24 of 2017/18 asked by Councillor Sue Walker

Can the Leader of the Council advise how many members of the public attended the consultation at YOSC on the 22nd November and what was the cost of holding the event?

Answer

The event had 4 attendees and cost £280.00.

Question 25 of 2017/18 asked by Councillor Maggie Tyrell

The Homelessness Reduction Act is due to come into force next April and will significantly increase the duties of local authorities in preventing and revealing homelessness. This is obviously welcome news but is the Leader confident that the new burdens funding provided by central government will be fully adequate to discharge these extra responsibilities?

Answer from Cllr Ben Stokes – Cabinet Member for Adult Social Care

Thank you for your question Cllr Tyrell – I am responding as portfolio holder for Housing. We will be receiving two key new sources of funding from government to fund these new burdens.

The first is the Flexible Homeless Support Grant (FHSG); this is allocated from DCLG to authorities based on relative homelessness pressures, and is specifically ring-fenced for either preventing or relieving homelessness. The Government has agreed to set allocations two years in advance to allow

Page 12 6 authorities to properly plan and South Gloucestershire’s FHSG allocations are £184,000 in 2017/18 and £206,000 in 2018/19.

The second is transitional funding from DCLG to authorities to assist with preparing councils to take on these new duties and South Gloucestershire’s transitional funding has been confirmed as £60,051 in 2017/18, £51,916 in 2018/19, and £57,994 in 2019/20.

Clearly homelessness is a demand-led budget area, and exact demand is difficult to forecast and subject to fluctuation. However, best estimates based on knowledge of the present situation and with the detail of the Council’s new duties indicate that demand on homelessness services are likely to increase because the new duties will require the Council to do more. To give an example of potential costs, there are proposals to amend our HomeChoice Rehousing policy to support our new duties will be formally consulted on, and should they be carried, they will come with some one-off implementation costs. Additionally there will be a need for a new homelessness IT system, which will also have one-off costs associated with procurement and implementation.

There is a definite need to ensure our funding on this is sufficient to meet both the demand on our service and our new statutory duties. At present we are confident that these new funding streams will meet our additional costs up to 2019/20 – we await the announcement of funding arrangements beyond that date. Should we feel resources are not sufficient there will be challenge back to our colleagues in Government.

Supplementary Question

The Executive Member is due to take a decision on the consultation on proposed amendments to the HomeChoice rehousing policy. Will the report include costs around that policy for example will it show full cost of implementation such as IT systems?

Answer

The IT scoping costs are not yet complete and is currently being looked at. If it’s not available for the report it can be shared with members soon after.

To the Executive Member for School, Skills and Employment

Question 26 of 2017/18 asked by Councillor April Begley

Back in July, the Cabinet Member and his department were very disappointed with the outcome of the Ofsted inspection of Marlwood School. What is their reaction to the recent news that Ofsted has judged Hanham Woods Academy as Inadequate and the Digitech Studio School as Requires Improvement? What is the council doing to help curb this trend and what specific support will the council seek to provide to these institutions?

Page 13 7 Answer

I am very disappointed – as I hope all members would be - with any school that isn’t performing at the level we would expect and want for our children and young people.

The Council is working with the Regional Schools Commissioner (RSC), who is represented on the LSSB, to address the issues across all the Multi- Academy Trusts (MATs). An Education Plan is being developed to address the outcomes at the end of Key Stage 4 (KS4) and to support all schools working towards a good outcome when inspected. This plan is being agreed by the Local Authority, the RSC, and all MATs and schools.

A Strategic School Improvement Fund (SSIF) bid has been submitted to provide additional resource for secondary schools, including Digitech and Hanham Wood; the outcome will be announced in January.

The Head of Education, Learning and Skills and I are meeting with the RSC and the CEO of the MAT to receive updates on the progress made by the school.

Supplementary Question

I wish the Cabinet Member and Head of Education, Learning & Skills well in their endeavours.

What can be done in the shorter term to build public confidence in our schools when parents see what appears to be a downward trend developing?

Answer

We could do a better job of communicating how we are addressing any downward trend. We will, however, continue to work with the Local School Standards Board and Ofsted to address the issues. I would welcome any ideas members have.

Question 27 of 2017/18 asked by Councillor Adam Monk

What impact has the introduction of the national apprenticeship levy had on South Gloucestershire apprenticeships?

Answer

The below table provides the information requested.

Page 14 8 Headline apprenticeship data starts full year to October 2017: Geography 13/14 14/15 15/16 16/17 Numbers % down on provisional down 16/17 from 16/17 from 15/16 15/16 South 2350 2560 2640 2600 40 1.5 Glos West of 8120 8670 8860 8640 220 2.5 England South 45960 51480 54160 53340 820 1.5 West England 434600 494200 503900 485500 18400 3.7

Extracted from FE Data Library – Apprenticeships data. October 2017

The table above provides a year on year profile of apprenticeship starts across the West of England area as a whole, the South West and England. The profile confirms that the number of apprenticeship starts in South Gloucestershire, regionally and nationally have all reduced in comparison to the same time last year (2015/16) and although this could relate to a number of economic factors, it is thought to be a consequence of the introduction of the apprenticeship levy. This reflects the informal feedback that we have received as employers report that they are reflecting on how best to deploy the use of the levy to develop their workforce.

It should be noted that the percentage reduction in South Glos (1.5%) is less than our West of England neighbours and England (3.7%).

Supplementary Question

Thank you for that information, and it is encouraging that South Gloucestershire’s reduction is smaller than average.

However, it is still a reduction, so is the Cabinet Member or his officers giving this feedback to national policymakers?

Answer

When the levy was worked up there was an assumption Apprenticeship take up would fall. We are confident we will see an improving trend.

To the Executive Member for Adult Care

Question 28 of 2017/18 asked by Councillor Sue Hope

What work is being done by the Council to assist the NHS in support of their recommissioning of their rehabilitation, reablement and recovery services?

Page 15 9 Answer

The Council has and continues to support the 3Rs programme in the following ways:

In Phase 1 of the 3Rs programme the CAH Commissioning Hub has:

- Commissioned the Pathway 2 and Pathway 3 Discharge to Assess Rehabilitation beds within local care homes using funds that are now placed in the Better Care Fund by our local NHS partners.

- Guided our NHS partners in identifying additional bedded capacity that can be commissioned for Rehabilitation to replace Elgar Ward at Southmead. During this recommissioning process Adult Social Care continues to work closely with NBT and Sirona in ensuring that any ongoing needs for South Gloucestershire residents at the end of a period of their rehabilitation or reablement are assessed and met.

- Commissioned the Reablement service funded from both NHS and social care funds that are pooled within the Better Care Fund. This service has achieved upper quartile performance in the success of reablement measured by the percentage of people still living independently at home 91 days after a period of reablement. Our local service is amongst the top 10 local authority areas in England for the coverage of reablement services as we have sought to maximise the number of people identified as having the potential to be reabled.

Phase 2 of the 3Rs programme relates to delivery of Rehabilitation capacity within a broader health and social care offer on both the Frenchay and Thornbury hospital sites.

This is an NHS-led procurement process which is therefore subject to NHS governance processes.

The Council has provided NHS partners with detail of its commissioning requirements for the social care elements of the new health and social care facilities.

The NHS established two governance bodies – an Operational Delivery Board and a Programme Board. The Council has provided three representatives to serve on these two groups – an adult social care lead, a housing enabling lead and a commissioning lead. Council representatives have supported bids to, and engagement with, the Homes and Communities Agency (HCA) in relation to Extra Care Housing delivery and also supported NHS engagement with potential deliverers of Extra Care Housing. Social Care commissioners have set out offers to negotiate a block purchase of up to a third of care home beds within the new facilities should this certainty of business aid providers in the delivery of the new facilities. The Council representatives have also encouraged and helped facilitate engagement and

Page 16 10 pre-application planning discussions with the Council’s planners by a preferred provider previously appointed by the NHS.

Question 29 of 2017/18 asked by Councillor Pat Rooney

A change in Government guidance around sleep-in shifts, resulting in a 6 year back pay bill, will cost millions to the already chronically underfunded care sector. Whilst the Government has set up a compliance scheme for providers, it has suggested that service users on individual budgets look to local authorities for guidance. What guidance has the council received from Government on this, how is it supporting and advising those individuals faced with this funding crisis, and what are the financial implications for this Council?

Answer

The rules relating to the payment of the National Minimum Wage are contained in the National Minimum Wage Regulations 2015/621, but there is various case law which also applies.

We wrote to all service users from August 2016 who were employing their own staff for sleep-ins. We advised that these personal assistants were entitled to the minimum wage for each hour of sleep-in support they were providing and we increased the service users’ direct payment to pay for this. We have been as thorough as possible in ensuring that all service users were made aware of this change in pay, and ensured that direct payment support providers were also aware of the increased rates. All new service users since August 2016 have been able to pay their staff the National Minimum Wage for their sleep in hours, and are compliant with legislation. The increased cost to the Direct Payments budget as a consequence of this change is £142,000 per annum. This was funded from the social care precept the Chancellor announced in his 2016 Budget.

Initially Government suspended HMRC from requiring back pay and the minimum wage in the care sector for sleep-in shifts until it has given consideration to the impact. Last month the Government launched a new compliance scheme for social care providers that ‘…..may have incorrectly paid workers below legal minimum wage hourly rates for sleep-in shifts’. We are currently studying this scheme and agreeing next steps, however the headlines are that Social Care employers will be able to opt into the new Social Care Compliance Scheme (SCCS), giving them up to a year to identify what they owe to workers, supported by advice from HM Revenue and Customs (HMRC). Employers who identify arrears at the end of the self- review period will have up to three months to pay workers.

Supplementary Question

We welcome the fact that South Gloucestershire is paying social care staff a fair wage for the vital work that they do.

Page 17 11 However, the Cabinet Member's answer does not address the issue of historic liabilities for those on individual budgets. Can he please confirm what guidance the Council has received from the government on this issue, and what steps are being taken to ensure that any support is available in accessible formats such as Easy Read?

Answer

We will look into developing easy read guidance. The detail is yet to be forthcoming but the Council will work closely with providers and communicating with all individuals. There may be options to delay repayments but the local authority will not be able to find the back pay money.

To the Executive Member for Children and Young People

Question 30 of 2017/18 asked by Councillor April Begley

What progress is the Cabinet Member prepared to share with Council following the Inadequate Ofsted rating for the council’s Children’s Services?

Answer

Following the Ofsted Inspection in Nov/Dec 2016 and the subsequent publication of the report in February 2017, our Integrated Childrens’ Services have been subject to an Improvement Notice.

This required the formulation of an Improvement Board which is independently chaired, has all 3 party representation as well as Senior Officers including Chief Executive, Amanda Deeks and Senior Leaders from the CCG, Sirona and the Avon & Somerset Police. The Improvement Board is chaired by Mark Gurrey, who attended Cabinet on 9th October 2017 and presented an update report on the progress of Integrated Children’s Services to Cabinet.

In addition South Gloucestershire is monitored by the Department of Education via both our Monitoring Officer John Goldup and formal review days with the DfE. John Goldup meets regularly with Head of Service and Director, attends meetings as he deems appropriate and attends the Improvement Board. The DfE undertook a review visit in October and wrote confirming their findings; the letter has been shared with Improvement Board members.

On 18th and 19th September 2017 OFSTED undertook the first of their 2 day Improvement Visits; they spent time in ART and 0-25 Service. The outcome was shared in a letter that is not published, but was shared with the Improvement Board members.

Page 18 12 The letter summarises the challenges and issues that were in the Access and Response Team (ART) at the time, but they also acknowledged significant progress in 0-25 Service including stable management at all levels, improved staffing with more permanent staff, an Open to Review system in place and improvements in practice.

The monitoring visit commented on Quality Assurance being in place, being robust and embedded, however rightly commented on the issue of maintaining consistency of quality practice across the service and that audit activity continues to show variance in this quality. This remains a key area of focus for officers and me.

Since that time further progress has been made in stabilising ART staffing, albeit with a number of agency staff, caseloads have significantly reduced and progress has been made with assessment timeliness, strategy discussions and Section 47 enquiries (where children are thought to be at risk of significant harm). A system review was undertaken swiftly after the monitoring visit in ART and recommendations to improve the efficacy of the process have been progressed. Progress is monitored weekly between the Head of Service and the Service Manager and any issues escalated.

The Multi-Agency Safeguarding Hub (MASH) continues to be an area where progress in relation to consistency and stability of partner agency presence has been difficult to achieve, however in recent weeks progress has been made and it was reported to the last improvement board that solutions had been identified.

Another area of improvement continues to be recruitment to key Team Manager posts of permanent managers and, in most teams, permanent social workers. Caseloads in some teams remain a challenge but in the main are within manageable tolerances, some quite low, depending on the specialist area of practice.

Supplementary Question

Thank you for such a full and frank answer.

If we were to be Ofsted inspected again tomorrow would we receive the same judgement?

Answer

We are confident that improvements have been made especially in the area of 0-25 and Ofsted highlighted this as a strength.

Page 19 13 To the Executive Member for Planning, Transportation and Strategic Environment

Question 31 of 2017/18 asked by Councillor Claire Young

We understand that South Gloucestershire Council have been invited to participate in a new CCTV and traffic light control centre in cooperation with Bristol City Council and FirstGroup. The control centre is intended to improve traffic management and safety across the network. Can the Cabinet Member for PTSE say whether the administration intends for South Gloucestershire to participate in this scheme?

Answer

The Council already has strong links with the control centre which monitors the Council’s CCTV cameras. In addition there are further plans to widen that involvement through the Metrobus initiative when community safety cameras at bus stops will be added to the coverage. There is a proposal under the Better Bus Area project to undertake traffic monitoring by CCTV on the A38 corridor to identify where buses are being delayed and these cameras will be controlled by SGC and also viewed by the Bristol Control Centre. There are no plans in place for traffic signals in the South Gloucestershire area to be controlled by the Bristol operations centre.

Supplementary Question

Why are there are no plans in place for traffic signals in the South Gloucestershire area to be controlled by the Bristol operations centre?

Answer

We have agreed to cooperate with Bristol through centre and all monitoring will go ahead.

Question 32 of 2017/18 asked by Councillor Claire Young

Can the Cabinet Member for PTSE say whether steps have been taken to ensure that the JSP consultation details are available in public libraries?

Answer

A printed copy of the JSP, the guidance note which explains how to make comments, and a response form have been made available in each of South Gloucestershire’s 13 libraries. Each library has also been provided with a poster and leaflets that can be displayed/given out and staff have also received a Briefing Note which helps explain the JSP process, should questions be asked.

Page 20 14 Supplementary Question

One resident has had a different experience. She went to the OSS and Yate Library and when asked for a copy of the JSP the assistants looked puzzled and couldn't find it. They eventually found JSP on the internet but it should have been on the shelf. What action will the Executive Member take so that all residents are afforded the opportunity to respond?

Answer

We want everyone to be involved in the consultation so I’m surprised the One Stop Shop and Library didn't have copies on deposit. Information should be there to access to enable views to be put forward. I will look into the reasons why.

Question 33 of 2017/18 asked by Councillor Pat Rooney

What is meant by the statement in the Kingswood section of the Local Plan Consultation Document agreed by Cabinet this month that:

‘Its role as a centre of civic activity may change but this role is important to Kingswood in terms of status and jobs.’?

Answer

Thank you for raising this at Cabinet on 4th December. I have asked officers to clarify this and as a result the sentence is now proposed to read: ‘Civic activity has formed, and continues to form, an important strand in the community life of Kingswood. The intention is that this will continue, and the maintenance of this role will therefore be a material issue in the setting of spatial policy.’

Supplementary Question

I am glad I raised the issue. Will the Cabinet Member encourage those leading the development of the Plan to work closely with Kingswood’s councillors and voluntary groups?

Answer

The wording has been corrected and we will be working with Kingswood Councillors.

Question 34 of 2017/18 asked by Councillor Adam Monk

Smart ticketing on local buses should benefit regular customers, but what is the Cabinet Member doing to increase bus journeys by occasional users when they are effectively charged a surcharge with individual fares?

Page 21 15 Answer

The discounts applied to smart tickets are a commercial decision made by the operator, it’s in the operators’ interest to encourage people to move toward smart ticketing and m-tickets as it reduces the passenger boarding times and enables services to run more efficiently.

Supplementary Question

So is the Cabinet Member uninterested in encouraging those who rarely use buses and wouldn’t be interested in smart ticketing to get out of their cars occasionally?

Answer

The matter is really an issue for the Operators. Smart ticketing does make life easier for the bus drivers but the public may still wish to use cash and we have no control over that.

Question 35 of 2017/18 asked by Councillor Martin Farmer

In Kingswood we have seen a number of dilapidated sites which have been granted approval to be re-developed, only then for the owners to sit on the sites and do nothing. Only 150 meters or so from Kingswood Civic Centre is a site which was granted planning approval in October 2016: it should provide much needed housing and new shops but is now a complete eyesore.

In his autumn budget statement Chancellor Hammond promised: (a) 100% Council Tax premium on empty premises; (b) compulsory purchase of land banked by developers for economic reasons.

What is the Cabinet Member’s plan for putting developers “on-notice” that this council will implement these powers rigorously?

Answer

I share Cllr Farmer’s concern about the impact that dilapidated sites can have in our urban areas, or anywhere else, for that matter. They can have a disproportionate impact on the visual amenity of an area and how people think about a place. They can also act as a disincentive to others to invest in their own property and can lead to other antisocial activity.

The Council has a key leadership role in helping local people ensure our older communities remain places where people want to live, work, visit, and invest in. This means we need to be clear about our vision for these areas, which we have outlined in our Council Plan and in our emerging planning strategies.

Page 22 16 To support the development of these we have already commissioned a study to help us look at how our older communities might thrive in the future, with new investment, and more work is planned. We also need to be clear about how we will support these areas through for example, our Priority Neighbourhood work. We need to use a stick and carrot approach. I welcome the potential for additional powers to be devolved to councils to help us tackle problem sites and will wait to see how these are brought forward. In the meantime we can consider the use of existing planning enforcement powers to force sites to be tidied up, and hopefully encourage redevelopment to take place where planning permission has already been granted.

Supplementary Question

Thank you for the response and I’m glad the Cabinet Member shares our concerns.

Would the Cabinet Member support a working group of Kingswood Councillors, Planning and Legal Officers to fully understand the current instruments (the carrot and sticks) available to the Council, including but not limited to Compulsory Purchase Orders?

Answer

I will have to take advice on that as we have to wait for legislation to see what is required.

To the Cabinet Members for Adult Care and for Planning, Transportation & Strategic Environment

Urgent Question 36 of 2017/18 asked by Councillor Martin Farmer

As a council appointee to Merlin Housing Society’s Customer Assembly I am surprised that the Assembly was given no forewarning of the merger talks with Bromford announced last week. With their responsibility for operational housing and strategic housing respectively, what information were the Cabinet Members for Adult Care and for Planning, Transport & Environment given about this planned merger, and when? What ongoing discussions are they having about the implications for Merlin residents?

Answer

On the morning of the 30th November, the Merlin Board agreed Heads of Terms with Bromford in respect of a potential partnership. In the afternoon of the 30th Merlin’s Chair and Chief Executive briefed the Chair of the Customer Assembly of the prospective partnership. In the following days a joint communications plan was prepared by Merlin and Bromford.

On the morning of 7th December, Merlin’s senior staff were briefed on the impending announcement. At lunchtime on the 7th the Customer Assembly

Page 23 17 was briefed and then all Merlin staff. A customer press release was issued late on the 7th and a press release was issued on the morning of the 8th December. The Council’s Chief Executive was provided with a headline briefing on the proposed partnership on 3rd December, and informed Cabinet and Group Leaders on Monday 4th December. A briefing note was sent to all Members on Friday 8th December.

The partnership between Merlin and Bromford is expected to bring opportunities for both existing and future Merlin residents, and Merlin is confident that residents will notice positive improvements to the day to day service. There will be more staff working with customers and local communities, and the organisation will be able to offer an extended service that will better meet customers’ needs and aspirations.

Merlin Housing Society will continue to exist legally, and Merlin has assured its residents and the Council that if the partnership goes ahead, existing tenancy agreements and leases would continue without any change whatsoever and tenancy rights and rents (including increases and/or decreases) would not be affected. Merlin would effectively continue to be regulated by the Homes and Communities Agency and would be subject to the same rules and regulations which govern all housing associations (as both Merlin and Bromford are presently).

The economies of scale and operating efficiencies of the partnership would allow other strategic choices such as accelerating planned investment in the transformation of older PRC and sheltered homes and additional community initiatives, which would be of direct benefit to existing residents.

There is also the option to expand Merlin’s in-house gas and other services across the entire new organisation, with potential to create increased employment and apprenticeship opportunities that Merlin residents could benefit from.

Merlin will seek feedback on the proposals over the next few months via a formal consultation with residents and stakeholders, to be launched in January.

The Cabinet Members for Adult Social Care and Housing Delivery & Public Health meet with Merlin’s Chair and Chief Executive on a twice-yearly basis, along with the Housing Spokespersons for the Liberal Democrat and Labour Groups. The next meeting is on 26th March, when the implications for existing residents will be discussed in more detail. Overall it is anticipated that Merlin residents would see a tangible benefit from the proposed partnership.

In addition, the partnership would be able to invest £1.5B in 14,000 new homes over the next decade, and deliver the largest housing association-led development programme in the operating area, in direct response to the Government’s agenda for a step-change in housing delivery. This would

Page 24 18 represent a significant contribution to delivering the Joint Spatial Plan and provide the good quality affordable homes that are needed by so many.

Supplementary Question

Has the Council received assurances from Merlin and Bromford regarding:  Continued co-regulation and how co-regulation will be organised in the South Gloucestershire area – recognising that Bromford is based in Wolverhampton;  Continued South Gloucestershire councillor representation on the merged company board?

Answer

There will be no fundamental way in which the way services will be delivered. There will continue to be South Gloucestershire councillor representation on the merged company board.

54 APPOINTMENTS TO AVON FIRE AUTHORITY (Agenda Item 9)

The following Councillors left the chamber during consideration of this item in view of their interest: Cllrs Ian Scott, Sarah Pomfret, Brian Hopkinson, Ruth Davis, Jon Davis, Keith Cranney, Kaye Barrett, and Ian Adams.

Councillor Matthew Riddle proposed and Councillor Toby Savage seconded the item.

An amendment was moved by Councillor Claire Young, seconded by Councillor Maggie Tyrell to delete recommendation 3 and insert an alternative recommendation as follows:

“3. Agree that these changes should not take effect before the Council’s 2019 Annual General Meeting, to ensure that new appointees do not find themselves ineligible to serve a full term”

Upon being put to the vote the amendment was LOST (8 for, 40 against, 0 abstentions).

The substantive motion was then put to the vote and it was CARRIED

Resolved:

i) Agree to restrict Council membership of Avon Fire Authority to a total period not exceeding 8 years. ii) Agree that a total period not exceeding 8 years may run consecutively or cumulatively. iii) Agree to apply the restriction retrospectively from 1 January 2018.

Page 25 19 iv) Request the political Group Leaders notify the Monitoring Officer of any changes to their appointees arising from the above recommendations. v) Require the Monitoring Officer to make the necessary changes to the Council’s constitution to give effect to the above recommendations.

55 ANNUAL REPORT OF THE AUDIT AND ACCOUNTS COMMITTEE (Agenda Item 10)

Councillor John O’Neill proposed, Councillor John Ashe seconded and upon being put to the vote it was unanimously resolved:

That Council approve the Annual Report of the Chair of the Audit and Accounts Committee.

56 WEST OF ENGLAND PARTNERSHIP AND REGIONAL ISSUES (Agenda Item 11)

Councillor Matthew Riddle introduced the report to Council.

The following issues were raised during discussion:

 In response to a question regarding the salaries for the 4 senior WECA posts being recruited the Chief Executive agreed to circulate the Pay Policy.  The Leader of the Council confirmed that with regard to the £80m from the ‘Transforming Cities Fund’ it was too early to say how this money would be spent but the Council would be getting its fair allocation.  In terms of the delays in the allocation of the Adult Education budget the Cabinet Member for Schools, Skills and Employment confirmed that this was a national issue. The Council was however exploring ways in which, although not formally devolved, we can influence and shape how the funding would be used.  The Leader confirmed that he would provide information as to how many people took advantage of the webcasting of the Joint Committee.

The report was received for information.

Page 26 20 57 MOTIONS (Agenda Item 12)

Motion 3 of 2017/18

Liberal Democrat Motion – Government’s Capped Expenditure Process

Councillor Claire Young (on behalf of Councillor Sue Hope) moved the Liberal Democrat motion, as set out in the agenda, on the Governments Capped Expenditure Process. The motion was seconded by Councillor Maggie Tyrrell.

An amendment was moved by Councillor Jon Hunt, seconded by Councillor Toby Savage so that the motion reads:

“Council acknowledges that there is currently a deficit of approximately £100m per annum, having never been adequately funded over the long term, within the Clinical Commissioning Group for Bristol, North Somerset, and South Gloucestershire (BNSSG CCG).

Council notes that as part of their plans to live within their means, the CCG are considering a number of ways to achieve this, including restricting IVF treatment eligibility.

Council supports the principle of IVF, but recognises that this must be viewed in context with other important services which are in need of funding, for example childrens’ mental health.

Council notes that the BNSSG CCG admits that cutbacks to many other local NHS services are likely in the coming years, in part, as a result of the Government’s Capped Expenditure Process (CEP), under which BNSSG CCG and 13 other areas across the country are required to rapidly reduce health budget deficits.

Council welcomes the Chancellor’s announcement in the Autumn Budget of £2.8bn additional funding for the NHS, including £350m to address this year’s winter pressures, and £1.6bn next year, as well as a £10bn capital investment fund for hospitals.

That the British Medical Association (BMA) has expressed that it is: “deeply concerned by the CEP, the secretive manner in which it has been introduced, the risk the proposed cuts could present to patients and NHS staff, and by the implication that deeper cuts will be made to already stretched services.”In light of stretched services, Council welcomes planned investments in health facilities at Frenchay and Thornbury.

Council recognises the need for health services to reduce deficits in order that services remain sustainable for the future and

Page 27 21 acknowledges the serious risks to the most vulnerable in society should these 8-figure deficits continue to grow.

Council further recognises that the significant transformation required to our health services in order to make it ready for the future cannot happen under the shadow of such enormous overspends.

Noting that South Gloucestershire is underfunded as an area in health terms, Council requests that the Cabinet Member for Housing Delivery and Public Health write to the Department for Health to raise this inequality in order to ensure sustainable services for the future.”

Upon being put to the vote the amendment was CARRIED (33 for: 24 Against: 0 Abstentions)

A further amendment was moved by Councillor Linda Boom, seconded by Councillor Ruth Davis to add the word ' improved' to final sentence to read "…. inequality in order to ensure improved sustainable services"

The amendment was accepted by the mover of the motion (as amended) and therefore was put to the vote and it was CARRIED and:

Resolved:

Council notes that as part of their plans to live within their means, the CCG are considering a number of ways to achieve this, including restricting IVF treatment eligibility.

Council supports the principle of IVF, but recognises that this must be viewed in context with other important services which are in need of funding, for example childrens’ mental health.

Page 28 22 That the British Medical Association (BMA) has expressed that it is: “deeply concerned by the CEP, the secretive manner in which it has been introduced, the risk the proposed cuts could present to patients and NHS staff, and by the implication that deeper cuts will be made to already stretched services.”In light of stretched services, Council welcomes planned investments in health facilities at Frenchay and Thornbury.

Council recognises the need for health services to reduce deficits in order that services remain sustainable for the future and acknowledges the serious risks to the most vulnerable in society should these 8-figure deficits continue to grow.

Council further recognises that the significant transformation required to our health services in order to make it ready for the future cannot happen under the shadow of such enormous overspends.

Motion 4 of 2017/18

Conservative Motion – 3R’s at Thornbury and Frenchay Hospital

Councillor Marian Lewis moved the Conservative motion, (with an alteration), on the 3Rs at Thornbury and Frenchay Hospital to read:

This council:

 continues to believe that the previous Labour Government’s decision to downgrade Frenchay Hospital was a travesty for local healthcare and has left South Gloucestershire patients worse off and that lessons must be learned locally and nationally;  expresses deep disappointment and frustration at the new delay introduced by the Bristol, North Somerset and South Gloucestershire (BNSSG) CCG’s revised procurement proposals for improving rehabilitation, reablement and recovery services at Thornbury and Frenchay to serve South Gloucestershire;  believes that previously proposed provision at the Thornbury and Frenchay sites is necessary  urges the BNSSG CCG in light of this additional delay to combine the separate work streams for Thornbury Hospital and Health Centre projects into one transformative and integrated scheme to benefit the town and surrounding rural communities;

Page 29 23  resolves to request that the Leader of the Council write to the BNSSG Chief Executive urging a swift conclusion to the procurement process to get the project back on track;  notes that BNSSG CCG has formally applied to NHS England to move to full delegated primary commissioning responsibility from April 2018 and welcomes the improvements to primary care that local control can bring and requests the Leader of the Council write to the Chief Executive of NHSE expressing this council’s support for BNSSG’s application; The motion was seconded by Councillor Toby Savage.

An amendment was moved by Councillor Ian Boulton, seconded by Councillor Ian Scott to delete the first bullet point and in the second bullet point to add after “Thornbury and Frenchay “and other sites in South Gloucestershire including Cossham”

Upon being put to the vote the amendment was LOST (For 12, Against 33, and Abstentions 12)

A further amendment was moved by Councillor Maggie Tyrrell, seconded by Councillor Shirley Holloway to insert the following paragraphs:

 “Requests that, in order to encourage participation and consultation with the local population, the BNSSG CCG creates new stakeholder groups, which include representatives from the local community and the NHS, for the proposed developments at Thornbury and Frenchay and other sites in South Glos including Cossham;  Expects any new plan for the Thornbury site and Frenchay to include proposals to facilitate the provision of extra care housing as previously agreed.”

Upon being put to the vote the amendment was CARRIED.

The original motion (as amended) was then put to the vote and it was UNAMINIOUSLY:

Resolved

This council:

Page 30 24  believes that previously proposed provision at the Thornbury and Frenchay sites is necessary  urges the BNSSG CCG in light of this additional delay to combine the separate work streams for Thornbury Hospital and Health Centre projects into one transformative and integrated scheme to benefit the town and surrounding rural communities;  resolves to request that the Leader of the Council write to the BNSSG Chief Executive urging a swift conclusion to the procurement process to get the project back on track;  notes that BNSSG CCG has formally applied to NHS England to move to full delegated primary commissioning responsibility from April 2018 and welcomes the improvements to primary care that local control can bring and requests the Leader of the Council write to the Chief Executive of NHSE expressing this council’s support for BNSSG’s application;  Requests that, in order to encourage participation and consultation with the local population, the BNSSG CCG creates new stakeholder groups, which include representatives from the local community and the NHS, for the proposed developments at Thornbury and Frenchay and other sites in South Glos including Cossham;  Expects any new plan for the Thornbury site and Frenchay to include proposals to facilitate the provision of extra care housing as previously agreed.

58 ANY OTHER ITEM THE CHAIR DECIDES IS URGENT (Agenda Item 13)

There were no urgent items.

The meeting closed at 9.30pm

...... Chair of the Council

Page 31 25

South Gloucestershire Council

Council Meeting – 13 December 2017

Action Notes

Minute Action Responsible Officer or Executive Member 49 Minutes Discrepancy between minutes and action point regarding The original answer outlines where we feel impacts will be had supplementary question 20. locally. If there are more specific concerns or questions we are happy to provide answers to those as they arise. 51 Items from the Public

Discrepancies with regard to the charges for pre-purchase burial Response provided on 29 January 2018 (attached) plot Page 33 Page

Clarity on Sleeping In Back Payments for HFT Organisation Response provided by Jon Shaw on 22 January 2018.

56 West of England Partnership and Regional Issues The Leader of the Council responded by email on 14 December 2017. Information on how many people took advantage of the webcasting of the Joint Committee.

57 Motion 3 - Government’s Capped Expenditure Process Write to the Department for Health to raise this inequality in order to ensure sustainable services for the future Letter issued.

Motion 4 - 3R’s at Thornbury and Frenchay Hospital

Write to the Chief Executive of NHSE expressing this council’s Letter issued. support for BNSSG’s application;

South Gloucestershire Council 22 January 2018 Briefing note

Burial Charges

Background

1. We have received a complaint that the fees charged for pre-purchasing an Exclusive Right of Burial for 50 years in our local authority graveyards does not include the cost of the first burial. We understand that this complaint was raised at the full council meeting held on 13th December 2017 by a member of the public.

Current situation

2. Local authorities do not sell graves in perpetuity (freehold) to individuals or families. We only offer a lease agreement for a set number of years and this is a legally binding process that is referred to as the ‘Exclusive Right of Burial’

3. The cost of pre-purchasing a grave lease includes the fee for reserving the plot for 50 years plus the fee of the legal process to generate the Deed of Exclusive Right of Burial between the individual/family and the local authority. The 2017-18 ‘in district’ fee is currently £1960. This includes £980 for the legal Deed and an additional £980 for the reservation of the grave space for 50 years and maintenance of the grave space on behalf of the lease holder. We do not include the burial fees in a pre-purchase as we are not able to predict the future cost of a burial.

4. When a funeral is booked with us (without a grave already having been pre- purchased) we currently charge £1960 (in district fee). This fee includes the £980 to cover the legal Deed of Exclusive Right of Burial, plus an additional cost of £980 for the interment fee of digging the grave, management of the surface settlement and laying of turf. There is no additional reservation fee as the grave is being given for immediate occupancy and thereby becomes the responsibility of the Grave Deed Owner. Any future additional interments to go in to that grave at a later date will be charged for at the time of the new funeral booking. As with pre-purchased graves we do not include this in the initial cost as we cannot predict the fee.

5. The process of pre-purchasing and Exclusive Right of Burial is normally only undertaken when an individual or family wish to secure a known grave space within a particular cemetery for future use but do not have an immediate need for use. Or if they are looking to secure their financial situation by covering any future expected costs.

Page 35 6. The majority of our cemeteries service is currently delivered at point of need rather than through the process of pre-purchase.

Officer observations

7. Managing a site that consists of hundreds of small plots sold as freehold to individuals in perpetuity would leave the local authority to manage the cost of maintenance, accessibility and liability without a yearly income to support the ongoing costs. This would be similar to the situation we face with Closed Churchyards

8. Managing a site with a number of pre-purchased but unoccupied grave spaces increases our costs of burial in the long term as we have to hand dig new graves that have become surrounded by masonry from other graves that have been occupied from point of purchase. By charging a reservation fee we aim to offset some of that additional cost that is not currently reflected in the interment charges at point of burial

9. At a local level our fees and charges are considered and kept within the same price range as our neighbouring local authorities of Bristol City Council and Bath & North East Somerset

10. At a national level our fees and charges are benchmarked with other comparable local authorities in England as recorded through CIPFA. We are currently marginally cheaper, per person per head, than our peer group average. That is to say that we subsidise the costs of burial marginally more than several of our peer group.

Contact Tina Rainey Community Spaces Maintenance & Administration Manager Tel: 01454 865876 22 January 2018

Appendices

Appendix 1: Copy of “Fees and Charges 2017-18 Rev.2”

Page 36 Agenda Item 8

COUNCIL QUESTIONS – 14 FEBRUARY 2018

To the Leader of the Council

Question 37 of 2017/18 asked by Councillor Pat Rooney

As the Leader voted this month to resolve that no WECA employee will be paid less than the UK Living Wage set by the Living Wage Foundation, why is his administration withholding this benefit from this council’s staff?

Question 38 of 2017/18 asked by Councillor Mike Drew

Where in the Constitution of the Council is the power to delegate changes to the Constitution to Officers?

Question 39 of 2017/18 asked by Councillor Claire Young

What steps are the administration taking to discuss this Council’s aspirations for the redevelopment of the Stover Trading Estate with its new owners?

Question 40 of 2017/18 asked by Councillor Claire Young

What involvement did South Gloucestershire have in the Western Powerhouse summit held in Newport on 22nd January?

To the Executive Member for Schools, Skills and Employment

Question 41 of 2017/18 asked by Councillor Gareth Manson

How does the Executive Member plan to take on board any recommendations made by the cross-party scrutiny task and finish group on standards in KS4 and KS5?

To the Executive Member for Children & Young People

Question 42 of 2017/18 from Councillor April Begley

Shortly before Christmas 2017 Ofsted and the Care Quality Commission (CQC) gave the findings from their joint inspection of special educational needs and disability services (SEND). These findings came in the form of a letter rather than a judgement. What, if this letter had been in the form of a judgement, would that judgement be? Did the contents of this letter come as a surprise?

Page 37 To the Executive Member for Corporate Resources

Question 43 of 2017/18 asked by Councillor Michael Bell

What is the current timescale for processing Blue Badge renewals and fresh applications? What can the Executive Member do to speed up the process?

Question 44 of 2017/18 asked by Councillor John O’Neill

Integra has a policy of discounting hot drinks when customers use a reusable cup, in order to discourage the use of non-recyclable disposable cups. What steps has the Council taken to encourage staff and visitors to take advantage of this policy?

Question 45 of 2017/18 asked by Councillor John O’Neill

Following on from the previous question, how many disposable cups are used at the Council’s Badminton Road offices each year and what steps have the Council taken to advise staff and visitors that they are not recyclable?

To the Executive Member for Communities and Tourism

Question 46 of 2017/18 asked by Councillor Michael Bell

How many allotments are rented out by the council, and where are they?

Question 47 of 2017/18 asked by Councillor Michael Bell

How many residents are on the waiting list for a council allotment?

Question 48 of 2017/18 asked by Councillor Ruth Davis Councillors and community groups have expressed serious concerns about the complex and time consuming Member Awarded Funding process. When will there be a review of the process. Question 49 of 2017/18 asked by Councillor Mike Drew How many old small bins have been replaced by new small bins and at what cost? Question 50 of 2017/18 asked by Councillor Claire Young Many people have raised with me that the new waste information leaflet did not explain clearly enough the new collection arrangements for recycling. Given that all the evidence shows that when people have clear information they are likely to recycle more, could the Executive Member please explain how the leaflet was tested for clarity and did any residents have the opportunity to comment on a draft version?

Page 38 To the Executive Member for Housing Delivery and Public Health

Question 51 of 2017/18 asked by Councillor Martin Farmer

Recent Government figures suggest that there are over 600,000 empty homes at any one time in the UK. Here in Kingswood we have unoccupied homes, with one notable example being left empty for almost a decade. This is against the backdrop of 4,682 families waiting on our council’s housing list. How many homes are currently unoccupied in South Gloucestershire?

Question 52 of 2017/18 asked by Councillor Martin Farmer

What are the opportunities for council land to be used for affordable, social and self- build housing? What strategies is the Executive Member pursuing to utilise council land this way, instead of putting it on the open market?

To the Executive Member for Planning, Transportation and Strategic Environment

Question 53 of 2017/18 asked by Councillor Claire Young The Department for Transport recently announced that only five authorities in the entire country had taken advantage of funding available to install electric car charging points in residential areas, the On-Street Residential Chargepoint Scheme, with £4.5 million remaining unused. Given all the new housebuilding planned and underway, will the administration be taking steps to make use of this offer?

Question 54 of 2017/18 asked by Councillor Pat Hockey The consultation on the Great Western Franchise closes on February 21 2018. Will this Council be submitting a response?

Question 55 of 2017/18 asked by Councillor Pat Hockey On average, how long does it take the Council to repair faulty street lights?

Question 56 of 2017/18 asked by Councillor Ruth Davis Last August a resident in my ward took part in a Council consultation on parking restrictions. A report on the consultation was originally due to be published in October, but that date was later changed to November, and then January. When the report did not materialize by the end of January, my resident contacted the council officer responsible, who explained he is “overworked and has not had the time to complete the work”.

Page 39 What steps will the administration take to ensure that officers are not so overworked that the council cannot meet its obligations to local taxpayers?

Question 57 of 2017/18 asked by Councillor Sue Hope What steps will the administration be taking to ensure that the new Local Plan protects land at Frenchay and Thornbury for health and care facilities?

Page 40 Agenda Item 9 South Gloucestershire Council

Council

Date: 14th February 2018

Report of the Audit and Accounts Committee

TREASURY MANAGEMENT AND INVESTMENT STRATEGIES FOR 2018/19 AND PRUDENTIAL INDICATORS 2017/18 TO 2020/21

Purpose of Report and Recommendations

1. The Council is recommended to approve:

 the Treasury Management, Borrowing and Investment Strategies which cover how the Council funds its capital spending and how it lends any surplus cash;

 the Prudential Indicators, which are measures of the affordability, prudence and sustainability of capital expenditure plans, and limit the activities of the treasury function;

 the Minimum Revenue Provision (MRP) Policy.

Executive Summary

2. The Treasury Management, Borrowing and Investment Strategies for 2018/19 are broadly similar to the strategies for 2017/18, but reflect some changes to the investment criteria following recommendations from our Treasury Management advisers Arlingclose

Background

3. The Council is required to receive and approve, as a minimum, three main Treasury Management reports each year, which incorporate a range of policies, estimates and actuals. These reports are required to be adequately scrutinised by committee before being recommended to the Council. This role is undertaken by the Audit and Accounts Committee.

4. According to regulations, the Treasury Management and Investment Strategies for the year ahead must be scrutinised by the Audit and Accounts Committee and approved by full Council before the start of the financial year (this report).

5. CIPFA’s Prudential Code requires the Council to set Prudential Indicators related to expected capital activity. As capital decisions impact on the Treasury Management function, it is expected that the Treasury Management Strategy including the Investment Strategy, and the Prudential Indicators are approved at the same time.

6. The other two reports which are required are a mid-year report and an annual report after the year-end.

Issues

7. The report addresses eight areas: Page1 41  external context  changes to Codes of Practice and DCLG Guidance  prudential indicators  treasury management and borrowing strategy  investment strategy  MRP Policy  City Region Deal  West of England Combined Authority (WECA)

External context

8. Economic background: The major external influence on the Authority’s treasury management strategy for 2018/19 will be the UK’s progress in negotiating its exit from the European Union and agreeing future trading arrangements. The domestic economy has remained relatively robust since the outcome of the 2016 referendum, but there are indications that uncertainty over the future is now weighing on growth. Transitional arrangements may prevent a cliff-edge, but will also extend the period of uncertainty for several years. Economic growth is therefore forecast to remain sluggish throughout 2018/19.

9. Consumer price inflation reached 3.0% in September 2017 as the post- referendum devaluation of sterling continued to feed through to imports. Unemployment continued to fall and the Bank of England’s Monetary Policy Committee judged that the extent of spare capacity in the economy seemed limited and the pace at which the economy can grow without generating inflationary pressure had fallen over recent years. With its inflation-control mandate in mind, the Bank of England’s Monetary Policy Committee raised official interest rates to 0.5% in November 2017.

10. In contrast, the US economy is performing well and the Federal Reserve is raising interest rates in regular steps to remove some of the emergency monetary stimulus it has provided for the past decade. The European Central Bank is yet to raise rates, but has started to taper its quantitative easing programme, signalling some confidence in the Eurozone economy.

11. Credit outlook: High profile bank failures in Italy and Portugal have reinforced concerns over the health of the European banking sector. Sluggish economies and fines for pre-crisis behaviour continue to weigh on bank profits, and any future economic slowdown will exacerbate concerns in this regard.

12. Bail-in legislation, which ensures that large investors including local authorities will rescue failing banks instead of taxpayers in the future, has now been fully implemented in the European Union, Switzerland and USA, while Australia and Canada are progressing with their own plans. In addition, the largest UK banks will ring-fence their retail banking functions into separate legal entities during 2018. There remains some uncertainty over how these changes will impact upon the credit strength of the residual legal entities.

13. Returns from cash deposits remain very low.

Page2 42 14. Interest rate forecast: The central case is for UK Bank Rate to remain at 0.50% during 2018/19, following the rise from the historic low of 0.25%. The Monetary Policy Committee re-emphasised that any prospective increases in Bank Rate would be expected to be at a gradual pace and to a limited extent.

15. Future expectations for higher short term interest rates are subdued and on-going decisions remain data dependant and negotiations on exiting the EU cast a shadow over monetary policy decisions. The risks to the forecast are broadly balanced on both sides. The central case for gilt yields (on which PWLB borrowing rates are based) is for them to remain broadly stable across the medium term. Upward movement will be limited, although the UK government’s seemingly deteriorating fiscal stance is an upside risk.

16. A more detailed economic and interest rate forecast is provided in Appendix B.

Changes to Codes of Practice and DCLG Guidance

17. CIPFA has consulted on changes to both the Prudential Code and the Treasury Management Code of Practice in 2017. The revised Codes were published around the time of drafting this report, but sector-specific guidance on the revised codes is not yet published. In addition the DCLG has consulted on proposed revisions to its Guidance on both Local Authority Investments, and on Minimum Revenue Provision. Consultation on these closed on 22 December 2017.

18. This report and its appendices reflect some of the changes in the revised Prudential Code and revised Treasury Management Code of Practice: – the prudential indicator for the incremental impact of proposed capital expenditure on Council Tax has been deleted – the treasury management indicator for principal invested for longer than 364 days has been changed to 365 days (now in line with financial reporting definitions). Other changes such as those relating to the limits on the maturity structure of borrowing and the management and monitoring of interest rate exposure will be given further consideration and reported in the mid-year Treasury Management report. Changes required by the revised DCLG Guidance will be reported at the next available opportunity, and in accordance with effective dates if stipulated.

Prudential indicators

19. These are contained in Appendix A and set out the limits to the Council’s ability to borrow to fund its capital spending. They do so in order to make transparent the impact on the council tax payer in the future. This aims to ensure that borrowing is affordable in the long term.

20. The Council predominantly funds its capital programme from capital receipts, capital grants, S106 and other contributions, also revenue contributions and from the Community Infrastructure Levy (CIL). Any balance has to be funded by borrowing.

21. Historically the costs of some borrowing (mainly for schools and transport schemes) were supported through the Revenue Support Grant. However any borrowing undertaken now by the Council is unsupported. It is sometimes called prudential borrowing. The practice in South Gloucestershire has been to engage in this type of borrowing to fund only schemes which produce a saving or help generate additional income after meeting the borrowing costs, which must be met from revenue. Page3 43 22. The current level of long term borrowing from the Public Works Loans Board (PWLB) and from banks is £113m. The proposed Medium Term Financial Plan includes an allowance for the costs of £10m of new external borrowing in 2018/19. It will also include a proposal to establish a commercial investment fund in 2018/19 (up to £50m) to generate a commercial return in line with the Council’s commercialisation aspirations. These are both subject to Council approval of the proposed revenue and capital budgets at its February meeting, but is the basis upon which the Prudential Indicators and other affected figures have been prepared in this report. This does not preclude the Council from borrowing should the need arise given the potential for further borrowing requirements related to City Region Deal schemes and any future devolution deal, as well as for new Council schemes.

23. In addition to this borrowing the Council has a deferred liability in respect of debt from the former Avon County Council which is managed by Bristol City Council. This stands at around £16.2m and reduces by approximately £0.6m each year as the Council makes repayments. South Gloucestershire Council, along with the other ex-Avon authorities is awaiting proposals for consideration of the future arrangements for this debt, including splitting and transferring the loan portfolio to the four unitary authorities. The costs and benefits of each option will be carefully considered before a decision is taken and reports will be made as appropriate.

24. Council total debt also includes long-term liabilities related to the Waste PFI which is a requirement of International Financial Reporting Standards. This has been taken into account in the indicators shown in the Treasury Management Strategy attached at Appendix B.

25. The Medium Term Financial Plan makes adequate provision for all existing and new debt albeit any investments made under the commercial investment fund would only be undertaken on the basis a return on investment in excess of costs of borrowing was achievable as such delivering a positive contribution to the Medium Term Financial Plan

Treasury management and borrowing strategy

26. The treasury management and borrowing strategy (Appendix B) sets out how the Council will borrow within the prudential limits. It also sets performance indicators.

27. Around 86% of the Council’s borrowing (excluding Avon loan debt) is from the Public Works Loans Board (PWLB), in effect from Government, and at fixed interest rates. Principal on most of this borrowing is repayable on maturity, with only a small proportion being repaid on an annuity or equal instalment of principal basis.

28. The balance of the Council’s debt (£16.2m) has been funded by four commercial bank loans from Barclays.

29. In recent years, the Chief Financial Officer has assumed for budgeting purposes that the Council would need to take some long term borrowing within the time frame of the Medium Term Financial Plan. This meant he had the necessary approvals and flexibility to borrow without having to refer back to Members. However borrowing rates continue to be significantly higher than investment rates and in recent years the Council has been able to generally postpone new external borrowing to fund capital expenditure and borrowed internally instead from cash balances while it has been prudent to do so. Some new borrowing was undertaken in this financial year to fund a specific investment proposal. It is being proposed that the budget only includes provision for the costs of new borrowing (excluding the commercial investment fund) in 2018/19 as indicated in paragraphs 22 and 25. This means that suitable alternative funding streams would have to be identified for schemes such as infrastructure related to the City Region Deal or any future devolution deal, major transport, commercial Page4 44 investments or other Council schemes. This may include funding from the Economic Development Fund under the City Region Deal to reimburse borrowing costs; grants; or underspends and savings, income or other revenue sources. Where borrowing needs to be undertaken, it will be subject to consideration of business cases and the appropriate decision-making processes.

30. In determining the timing of any borrowing the Chief Finance Officer continues to have regard to interest rate expectations. For instance, if interest rates are expected to rise, it may be beneficial to borrow in advance of need. However this must be weighed against the cost of carry - where cash borrowed has to be invested until spent, but at lower rates than borrowing rates.

31. When the Chief Finance Officer considers it necessary to take out external borrowing to fund capital expenditure, this will be at what is considered to be the most economically advantageous option available at the time, in terms of source of borrowing and maturity period. The Council will ensure that it remains eligible for the PWLB “Certainty Rate” (discount of 0.20%). The Medium Term Financial Plan assumes an interest rate for new borrowing of 2.9%. The current borrowing benchmark is to secure borrowing costs below the average for authorities in the CIPFA Treasury Management Benchmarking Club.

32. Whilst it may be possible to achieve some short term savings through restructuring debt, for example from long term borrowing to cheaper short term borrowing, it is estimated that this would be at a total life cycle cost with increased costs into the medium term. These would in part be due to large early repayment premiums which were exacerbated by the 1% increase in PWLB rates following the Comprehensive Spending Review in 2010. Another consideration is the cost of refinancing the short-term borrowing once it matures, in a rising interest rate environment. Debt restructuring would only be undertaken where the penalty of early repayment of debt is significantly outweighed by the low borrowing costs, or where it results in a reduction in risk. For these reasons this approach has not recently been taken to date.

33. Occasionally the Treasury Management team may need to borrow for short periods of time to support the day to day cash flow. Borrowing for this purpose tends to be from other Local Authorities for the shortest period of time necessary and possible.

Investment strategy

34. The Council is required to operate a balanced budget, which broadly means that cash raised during the year will meet cash expenditure. Part of the treasury management operation is to ensure that this cash flow is adequately planned, with cash being available when it is needed. Surplus monies are invested in low risk counterparties or instruments commensurate with the Council’s low risk appetite, providing adequate liquidity initially before considering investment return.

35. The investment strategy (part of the Treasury Management Strategy at Appendix B) determines with whom the Council can invest, for how long, and the maximum sums it will invest in any one counterparty.

36. The Council invests its cash with acceptable banks and building societies that are split into two “tiers” according to their credit ratings. To those in the top tier (highest credit ratings) it will not lend for more than three years, and can lend up to a maximum of £20m.

37. To those in the second tier (lower ratings but still above the Council’s minimum credit rating criteria), smaller sums will be invested, and for a maximum of one year.

Page5 45 38. The Council also uses Money Market Funds (MMFs) and similar pooled investment schemes which allow investors to participate in a more diverse and high quality portfolio than by making individual investments. They are also very liquid (most of the funds used by the Council give instant access to cash). As with other types of investment the proposed strategy imposes criteria and limits on the amount of investment in the funds. The Council currently uses three MMFs and three enhanced cash funds.

39. As reported in previous Strategy Reports, the European Commission made recommendations for the future regulation of MMFs designed to improve the resilience of MMFs in the event of financial crises, and make them less vulnerable to ‘runs’ on the funds. After over three years of negotiations, the European Parliament, European Commission and European Council reached agreement in November 2016 and the regulations were published in the summer of 2017. Three fund structures are identified: Public Debt Constant Net Asset Value, Low Volatility Net Asset Value and Variable Net Asset Value. These are described further in the Glossary in Appendix C, and each has to meet its own set of requirements. The first and third are the same as fund types already in existence. New funds will have to comply with the requirements by July 2018 and existing funds by January 2019. The Investment Strategy reflects the impact of the changes as far as is known at present, but as existing funds align themselves with the new structure types, the Chief Finance Officer and Treasury Management team will monitor and assess the potential impact on the way the Council can use these funds, and whether there is any need to amend the strategy and will update members in the regular Treasury Management reports through the year.

40. The Council may also invest directly with other local authorities, up to £15m per authority and can deposit cash directly with the UK Government without limit. It may also invest with AAA rated supranational institutions (such as the European Investment Bank or the European Reconstruction & Development Bank) within limits, but to date has not done so.

41. The Council invested £3m in the Local Authorities Property Fund in April 2016. It increased its investment to £5m in December 2017 to take further advantage of the cash dividend income which continues to be favourable in comparison to the interest earned on bank deposits, and is expected to remain so for the foreseeable future. The total return from the fund also takes into account changes in the value of the property portfolio managed by the property fund. While current accounting practice protects the Council’s general fund from variations – up or down – in the portfolio value, changes to accounting regulations mean that from 2018/19, it is expected that changes in value will have to be recognised in the income and expenditure account. It is important that this is recognised in the light of market uncertainty following the EU Referendum, which may impact on property values. At the same time it should be stressed that the investment in the property fund is a long-term investment where over time gains in property values should hopefully outweigh losses, and in addition the Council will continue to receive dividend income on a regular basis arising from property rentals. Any net losses due to property valuations would not be crystallised unless the investment was redeemed.

42. Our Treasury Management Advisers have undertaken a review of the council’s investment strategy, and have proposed the following changes which are reflected in the strategy in Appendix B and Annex B1:

- credit rating criteria – removal of short-term rating criteria. This is because the short term ratings map directly from long-term ratings and offer no more information about creditworthiness than the long term rating, which is the best indicator of creditworthiness. In selecting banks and building societies we will therefore now only

Page6 46 refer to the long term rating. This has no significant impact on which banks and building societies would be selected for the approved counterparty list.

- removal of “part-nationalised” banks as a category of acceptable counterparty. This means that we can no longer use RBS or NatWest for investments (although they can be used for transactional banking) unless and until their credit ratings improve to our minimum. This is because under bail-in legislation, the Government can no longer provide support to banks before investors have borne some of the losses. We do not currently have any investments with them.

- removal of ‘guaranteed banks’ as a category of acceptable counterparty – this was more relevant during the financial crisis when some governments guaranteed sovereign support for banks in crisis and is unlikely to occur now.

- Money market funds and enhanced cash funds – minimum credit-rating criteria changed from ‘AAA’ to ‘AA’. The rating in respect of enhanced cash funds is an indicator of liquidity and volatility rather than of creditworthiness. The reduction to ‘AA’ therefore reflects that the fund is less liquid, enabling the fund manager to make more medium term investment decisions the outcome of which is a higher level of return. It does however require the Council to commit funds for a longer period to benefit from the higher returns.

- under un-specified investments, the inclusion of additional types of pooled funds to give the council the option of investing in a greater range of investment types in line with the proposal to review our approach to treasury management activity as part of the six step investment fund approach included in the Medium Term Financial Plan. The strategy sets limits and states that proper due diligence would be undertaken before investing.

- unrated building societies have been added to un-specified investments, and building societies not meeting the Council’s normal minimum rating criteria. These would only be used after undertaking due diligence (the treasury management advisers undertake credit analysis of building societies) and are subject to appropriate monetary and time limits.

- the time limit for investments placed with other local authorities has been increased to 4 years, (roughly the length of a political cycle) and up to 25 years after further due diligence, to exclude parish councils.

– monetary limits have been amended such that they are now expressed in value terms rather than as percentages of average cash balances, which are easier to manage and monitor against

– the security benchmark against which the investment pool will be compared is now based on credit scores arising from credit ratings rather than % historic risks of default attached to the credit ratings

43. Review of Credit Default Swap (CDS) prices – One of the pieces of market information used by the Treasury Management team to select appropriate counterparties for investment is CDS prices. The Audit and Accounts Committee has requested that CDS prices be kept under review and reported back to them at regular intervals. The graph in Appendix D shows the movement in 5 year CDS prices over the twelve months to November 2017 for those banks and building societies typically being used by the Council. It also shows the movement in the CDS price index (iTraxx).

44. The graph shows that the general trend in CDS prices has been downwards over the year, and the range of CDS prices between banks has decreased for the

Page7 47 banks that the council uses. Also most prices have been below the iTraxx index. This indicates a reduction in perceived counterparty risk.

45. The Investment Strategy for 2018/19 has been revised slightly with respect to its use of CDS prices. Bank CDS prices will be monitored for notable fluctuations in their individual spread as well as against the average CDS of banks on the approved counterparty list. This average is considered a more useful comparison than the iTraxx index which as well as banks, includes other non-bank financial institutions whose CDS prices may not move in the same way as bank CDS.

46. The Medium Term Financial Plan assumes that the Council is able to earn 0.56% in 2017/18, 0.57% in 2018/19, 0.78% in 2019/20 and 1.12% in 2020/21 on its cash. The performance indicator is to exceed the 7-Day LIBID interest rate for investments managed by the in-house treasury management team. 47. Market in Financial Instruments Directive II (MiFIDII) – This EU legislation regulates firms which provide financial services to clients (e.g. brokers, treasury management advisers, fund managers, banks and building societies) and came into force on 3 January 2018. Under the legislation local authorities are automatically classified as “retail clients”. However, as previously reported, where necessary to continue to have access to the investment types it has always had access to, the Council has opted up to “professional” status by providing evidence that it satisfies the Financial Conduct Authority’s criteria to do so.

Minimum Revenue Provision (MRP) Policy 48. Capital Finance and Accounting Regulations require local authorities to make a prudent minimum provision for repayment of borrowing every year out of revenue. Guidance has been issued by the Secretary of State on determining a “prudent” level of provision (the guidance). The guidance also states that an MRP Policy should be set by the full Council before the start of the year, or if revisions are proposed during the year they should be put to the Council at that time.

49. The Council implemented the new MRP guidance in 2008/09, and set its policy in line with the main recommendations within the guidance. Revisions were made to the Policy in 2015/16, but still having regard to the requirement for a prudent level of provision. No further revisions are proposed for 2018/19.

50. Under the current policy, annual MRP on supported borrowing is calculated as 2% of the balance of the Capital Financing Requirement at the end of 2014/15. This means that the outstanding borrowing need will be fully repaid after 50 years (in 2064/65).

51. MRP on unsupported borrowing is based on the life of the asset financed by borrowing, calculated on an annuity basis.

52. In addition, MRP must be made for finance leases and on-balance sheet PFI agreements (such as the Waste Management PFI).

53. The detail of the proposed MRP Policy is set out in Appendix A and must be approved by Council before the start of the financial year.

City Region Deal

54. The City Region Deal agreed between the Government, the West of England Councils and the West of England Local Enterprise Partnership commenced on 1 April 2014. It is expected to have a negligible impact on South Gloucestershire Council’s Treasury Management in the early years, but the impact will grow over the 25 years of the agreement.

Page8 48 55. Each Council will be responsible for any borrowing required to help fund infrastructure schemes within their own areas, which are undertaken in relation to the City Region Deal. It is anticipated that the impact on the revenue budget of the related borrowing costs will be offset by reimbursement from the Economic Development Fund in full over time.

56. South Gloucestershire Council is the Accountable Body for the Business Rates Pool for the City Region Deal. The Business Rates Pool will operate according to the Business Rates Pooling Principles Agreement. This provides that funds are invested in line with South Gloucestershire Council’s own Investment Strategy, and interest payments will be made to the Pool, at the average interest rate earned by the Council.

West of England Combined Authority

1. The West of England Combined Authority (WECA) was established in 2017, and the West of England Mayor was elected in May 2017. WECA has its own borrowing powers (including an annual borrowing cap which each constituent council must approve), and it is expected that transfers of responsibilities will ultimately lead to changes in South Gloucestershire Council’s cash flows. However at this stage it is not considered that any changes to the Council’s Treasury Management Strategy are necessary and no changes are being recommended arising from the establishment of the WECA.

Consultation

57. In reviewing these strategies, the Chief Finance Officer has sought specialist advice. Following a competitive tendering exercise the Council has recently appointed Arlingclose Limited as treasury management advisers, replacing Link Asset Services (formerly known as Capita Treasury Services).

58. This report has also been considered by the Audit and Accounts committee at its meeting on 30th January 2018. At that meeting it was resolved that the Prudential Indicators, Minimum Revenue Provision Policy and Treasury Management and Investment Strategies contained in this report be recommended to Council for approval.

Risks, mitigations and opportunities

59. Any borrowing or lending policy has significant risks. These can be both about the costs of borrowing, and to the income from investments. Both can have a material impact on the Council’s budget. In the case of investing, there is also a potential risk to the Council’s capital. The Council’s strategies seek to achieve a reasonable balance between risk and reward. On borrowing, this is achieved by working with specialist advisors and setting long term objectives. On investing this is achieved by working with specialist advisors, spreading risk, being aware of general market sentiment about individual institutions, and in the case of doubt, not lending to them.

60. With both borrowing and lending, there are opportunities to reduce long term costs to the Council by choosing the most appropriate strategy.

Financial implications (includes tax implications such as VAT) (Nina Philippidis 01454 865140)

61. The whole of the report is concerned with financial implications.

Page9 49 62. The fields of borrowing and lending are closely governed by regulation. CIPFA’s Treasury Management Code of Practice requires the Council to consider strategies for both each year. This report and its appendices satisfy those regulations.

Human resource implications (Claire Kerswill 01454 866348)

63. None arising directly from this report.

Legal implications (John McCormack 01454 865980)

64. Local authorities are required by the provisions of the Local Government Act 2003 and the Local Authorities (Capital Finance and Accounting) (England) Regulations 2003 to have regard to CIPFA’s Treasury Management Code of Practice.

65. Local authorities are also required by the Local Authorities (Capital Finance and Accounting) (England) Regulations 2003 to determine an amount of minimum revenue provision which it considers to be prudent, and are required to have regard to the Secretary of State’s “Guidance on Minimum Revenue Provision”.

Sustainability Implications (includes environmental, social and economic impacts)

66. None arising directly from this report.

Equality Impact Assessment

67. None arising directly from this report.

RECOMMENDATIONS

The Council is recommended to approve:

a. The Prudential Indicators contained within Appendix A

b. The Minimum Revenue Provision Policy contained within Appendix A

c. The Treasury Management and Borrowing Strategy 2018/19 and the Investment Strategy 2018/19 contained within Appendix B and the detailed criteria included in Annex B1

Responsible Director Dave Perry, Director of Corporate Resources Tel: 01454 865001

Departmental contacts Mike Hayesman, Head of Finance and Customer Services Tel: 01454 865290 Caroline Vafeas, Accountant (Technical – Treasury Management) Tel: 01454 864727

Appendices

A The Capital Prudential Indicators 2017/18 – 2020/21 and Minimum Revenue Provision Policy

Page10 50 B Treasury Management, Borrowing and Investment Strategy 2018/19, including: Annex B1 Treasury Management Practice (TMP 1) – Credit and counterparty risk management

C Glossary

D CDS price graph

Background Papers

1. Report of the Audit and Accounts Committee to Council 15th February 2017: Treasury Management and Investment Strategies for 2017/18 and Prudential Indicators 2016/17 to 2019/20.

2. Report of the Audit and Accounts Committee to Council 8th November 2017: Mid- Year Treasury Management Monitoring Report and Prudential Indicators.

Page11 51

Appendix A

The Capital Prudential Indicators 2017/18 – 2020/21 and Minimum Revenue Provision Policy

Introduction

1. The Local Government Act 2003 requires the Council to adopt the CIPFA Prudential Code and produce prudential indicators. Each indicator either summarises the expected capital activity or introduces limits upon that activity, reflecting the outcome of the Council’s underlying capital appraisal systems. This report updates currently approved indicators and introduces new indicators for 2020/21. 2. Within this overall prudential framework there is an impact on the Council’s treasury management activity – as it will directly impact on borrowing or investment activity. As a consequence the treasury management strategy for 2018/19 is included as Appendix B to complement these indicators. Some of the prudential indicators are shown in the treasury management strategy to aid understanding. 3. The Council funds its capital programme from capital receipts, capital grants, S106 and other contributions, revenue contributions, the Community Infrastructure Levy (CIL) from 2016/17, and from borrowing. Historically this borrowing fell into two types. First, borrowing where in theory the borrowing costs were supported by Revenue Support Grant (RSG). This covered borrowing mainly for schools and transport spending where Government gave approvals. Second is unsupported, also called prudential, borrowing. There is no longer any support for new borrowing costs through the RSG and therefore any new borrowing is unsupported.

4. Unsupported capital expenditure needs to have regard to:  Service objectives (e.g. strategic planning);  Stewardship of assets (e.g. asset management planning);  Value for money (e.g. option appraisal);  Prudence and sustainability (e.g. implications for external borrowing and whole life costing);  Affordability (e.g. implications for the council tax);  Practicality (e.g. the achievability of the forward plan). 5. The revenue consequences of capital expenditure, particularly the unsupported capital expenditure, will need to be paid for from the Council’s own resources. The practice in South Gloucestershire recently has been to engage in this type of borrowing to fund only schemes which produce a long term saving after meeting the borrowing costs, this includes borrowing to fund infrastructure schemes related to the City Region Deal which have the aim of generating business rates growth.

Capital Expenditure

6. The first of the prudential indicators which must be approved by Council is the Council’s capital expenditure plans which are summarised on the next page. This includes both those agreed previously, and those forming part of this budget cycle. Members are asked to approve the capital expenditure forecasts in the following table.

Page1 53 Capital Expenditure 2017/18 2017/18 2018/19 2019/20 2020/21 £m Original Revised Estimate Estimate Estimate

Total Capital Expenditure 75 126 125 61 30 Financed by: Capital receipts -16 -19 -11 -6 -3 Capital grants -32 -38 -28 -19 -10 Capital reserves (incl S106 and CIL) -7 -5 -9 -11 -1 Revenue/Reserves -10 -26 -4 -4 -2 Revolving -2 -2 0 0 0 Infrastructure Fund Net financing need for the year 8 36 73 21 14

7. The key risks to the plans are that some estimates for sources of funding, such as capital receipts, may be subject to change over this timescale.

The Council’s Borrowing Need (the Capital Financing Requirement) 8. The capital expenditure above can be paid for immediately (by using capital receipts, capital grants etc., or revenue resources), but if these resources are insufficient any residual capital expenditure will add to the Council’s borrowing need. 9. This borrowing need, or Capital Financing Requirement (CFR), is the second prudential indicator. It is simply the total outstanding capital expenditure which has not yet been paid for from either revenue or capital resources. Following accounting changes the CFR now includes PFI and finance lease liabilities. However the Council does not need to separately borrow for these schemes as they already include a borrowing facility. The Council is asked to approve the CFR projections below:

£m 2017/18 2017/18 2018/19 2019/20 2020/21 Original Revised Estimate Estimate Estimate Capital Financing Requirement Opening CFR 197 197 228 295 309 Movement in CFR in 4 31 67 14 7 year (see below) Closing CFR 201 228 295 309 316

Net financing need 8 36 73 21 14 for the year (para. 6 above) Less MRP and write -4 -5 -6 -7 -7 downs of PFI liabilities and finance leases Movement in CFR 4 31 67 1 7

Minimum Revenue Provision (MRP)

10. The Council is required to pay off an element of the accumulated General Fund capital spend each year (the CFR) through a revenue charge (the minimum revenue provision - Page2 54 MRP), although it is also allowed to undertake additional voluntary payments if required (voluntary revenue provision - VRP).

11. CLG Regulations have been issued which require the full Council to approve an MRP Statement in advance of each year, or if revisions are proposed during the year they should be put to the Council at that time. A variety of options are provided to councils, so long as there is a prudent provision. The Council is recommended to approve the following MRP Statement: 12. The following methods are recommended for the calculation of MRP:

Supported borrowing (i.e. borrowing supported by the government through partial refund of loan charges in the Revenue Support Grant), which incorporates pre- 2007/08 borrowing and any supported capital expenditure since 2008:

MRP will be calculated based on the Capital Financing Requirement (CFR) as at 31 March 2015. The Council will repay a fixed amount per annum equivalent to 2% of the CFR at 31 March 2015 before Adjustment A, so that the whole debt is repaid after 50 years.

(“Adjustment A” was an adjustment allowed by the Government to neutralise the impact of the change to a new MRP regime in 2004.)

Unsupported borrowing (i.e. borrowing not supported by government, also called “prudential borrowing”), including schemes related to the City Region Deal and schemes funded by the Revolving Infrastructure Fund:

MRP will be calculated over the estimated remaining useful life of the asset, using the Annuity repayment method in accordance with Option 3 of the DCLG Statutory Guidance on MRP (the guidance).

This means that MRP will be calculated on an annuity basis (like many domestic mortgages) over the estimated life of the asset. Estimated life periods will be determined by the Section 151 officer under delegated powers.

In accordance with the provisions in the guidance, MRP will be first charged in the financial year following the one in which the entire asset to which the debt relates, becomes fully operational.

Finance leases and on-balance sheet PFI agreements (such as the Waste Management PFI).

MRP in relation to PFI agreements and assets acquired by finance leases will be calculated in line with the repayment life method resulting in a charge equal to the element of the lease rental/charge that goes to write down the balance sheet lease liability.

The Section 151 Officer may approve that such debt repayment provision may be made from capital receipts or from revenue provision.

Statutory capitalisations

For expenditure which does not create a fixed asset but which is to be statutorily capitalised (such as loans and grants towards capital expenditure by third parties) and which is subject to estimated asset life periods that are referred to in the guidance, these estimated periods will generally be adopted by the council. However the council reserves the right to determine useful life periods and prudent

Page3 55 MRP in exceptional circumstances where the recommendations of the guidance would not be appropriate.

Other arrangements

Where expenditure on schemes is pending receipt of an alternative source of finance (for example capital receipts), we will not charge MRP.

Local Authority Mortgage Scheme, Local Authority Partnership Purchase Scheme and Custom Build and Self Build Scheme - South Gloucestershire Council does not currently participate in these schemes. Should it decide to provide cash-backed guarantees to mortgage lenders under these schemes to help first –time home buyers in future, this would be capital expenditure and normally require an MRP charge. However the cash is placed on deposit with a bank and is refundable at the end of five years. Therefore as this is a temporary arrangement with return of the funds no MRP would be required, although the position would be reviewed on an annual basis.

Other methods to provide for debt repayment may occasionally be used in individual cases where this is consistent with the statutory duty to be prudent, at the discretion of the Section 151 Officer.

Affordability Prudential Indicators

13. The previous sections cover the overall capital prudential indicators, but within this framework prudential indicators are required to assess the affordability of the capital investment plans. These provide an indication of the impact of the capital investment plans on the Council’s overall finances. The Council is asked to approve the following indicators: 14. Estimates of the ratio of financing costs to net revenue stream – This indicator identifies the trend in the cost of capital (borrowing and other long term obligation costs net of investment income) against the net revenue stream.

2017/18 2018/19 2019/20 2020/21 Revised Estimate Estimate Estimate Ratio 4.26% 4.91% 5.40% 5.71%

15. The estimates of financing costs above include current commitments. They are provisional pending final decisions on budget proposals. These figures will change with changes to the capital programme agreed through the year in the normal course of business.

Page4 56 Appendix B

TREASURY MANAGEMENT, BORROWING AND INVESTMENT STRATEGY 2018/19

1. The capital expenditure plans set out in Appendix A provide details of the service activity of the Council. The treasury management function ensures that the Council’s cash is organised in accordance with the relevant professional codes, so that sufficient cash is available to meet this service activity. This will involve both the organisation of the cash flow and, where capital plans require, the organisation of appropriate borrowing facilities. The strategy covers the relevant treasury / prudential indicators, the current and projected debt positions and the annual investment strategy.

2. The Council’s Treasury Management activities are strictly regulated by statutory requirements and by a professional code of practice (the CIPFA Code of Practice on Treasury Management). This Council adopted the Code of Practice on Treasury Management on 21 May 2003. 3. As a result of adopting the Code the Council also adopted a Treasury Management Policy Statement at the same time. This adoption is the requirement of one of the Prudential Indicators. Current portfolio position 4. The Council’s treasury portfolio position at 31 March 2017, with forward projections is summarised below. The table shows the actual external debt (the treasury management operations), against the underlying capital borrowing need (the Capital Financing Requirement - CFR), highlighting any over or under borrowing.

£m 2016/17 2017/18 2018/19 2019/20 2020/21 Actual Estimate Estimate Estimate Estimate External Debt Debt at 1 April 113 123 122 182 181 Actual/Expected 10 -1 60 - - change in debt Other long term 26 25 24 22 21 liabilities at 31 March** External debt at 31 150 147 206 204 202 March * Capital Financing 197 228 295 309 316 Requirement – the borrowing need Under/(over) 47 81 89 105 114 borrowing * excludes temporary borrowing and overdrafts ** includes Avon loan debt and PFI liability 5. Within the prudential indicators there are a number of key indicators to ensure that the Council operates its activities within well defined limits. One of these is that the Council needs to ensure that its gross debt does not, except in the short term, exceed the total of the CFR in the preceding year plus the estimates of any additional CFR for 2018/19 and the next two financial years, ignoring any reductions in CFR over that time. This allows some flexibility for limited early borrowing for future years, but ensures that borrowing is not undertaken for revenue purposes. 6. The Chief Financial Officer reports that the Council complied with this prudential indicator in the current year and does not envisage difficulties for the future. This

Page1 57 view takes into account current commitments, existing plans, and the proposals in this budget report and the likely profile of City Region Deal requirements.

Limits to borrowing activity

7. The Operational Boundary. This is the limit which external debt is not normally expected to exceed. In most cases, this would be a similar figure to the CFR, but may be lower or higher depending on the levels of actual borrowing. Operational boundary 2017/18 2018/19 2019/20 2020/21 £m Estimate Estimate Estimate Borrowing 136 270 285 294 Other long term liabilities* 25 25 24 22 Total 161 295 309 316 * this is the Avon loan debt managed by Bristol City Council and the PFI liability, (opening balances).

8. The Authorised Limit for external debt. A further key prudential indicator represents a control on the maximum level of borrowing. This represents a limit beyond which external debt is prohibited, and this limit needs to be set or revised by the full Council. It reflects the level of external debt which, while not desired, could be afforded in the short term, but is not sustainable in the longer term. 9. This is the statutory limit determined under section 3 (1) of the Local Government Act 2003. The Government retains an option to control either the total of all councils’ plans, or those of a specific council, although this power has not yet been exercised. 10. The Council is asked to approve the following Authorised Limit:

Authorised limit £m 2017/18 2018/19 2019/20 2020/21 Estimate Estimate Estimate Debt 167 289 295 304 Other long term liabilities 25 25 24 22 Total 192 314 319 326

11. The figure shown above in other long term liabilities is South Gloucestershire’s share of the ex Avon County Council debt managed by Bristol City Council, and the PFI liability. The Chief Financial Officer may decide to vary the split between borrowing and other types of long term liabilities such as finance leases, within the overall limits above, should this be advantageous. 12. The authorised limit allows for the possibility of taking borrowing in advance of need (to take advantage of low interest rates) and includes headroom for potential short term borrowing needs, including in the event of debt rescheduling.

Page2 58 13. The impact of debt and investments on the revenue budget is shown in the table below:

£m 2017/18 2018/19 2019/20 2020/21 Estimated Estimated Estimated Estimated Interest paid on borrowing 6.9 8.4 8.4 8.5 Interest earned from investments -0.6 -0.5 -0.7 -0.8

14. The Interest on borrowing shown above includes interest paid to Bristol City Council which manages ex Avon County Council debt on behalf of the four successor authorities, and interest on the Waste PFI liability. The analysis of interest is shown in the following table.

£m 2017/18 2018/19 2019/20 2020/21 Estimated Estimated Estimated Estimated Interest paid on SGC borrowing 5.1 6.7 6.7 6.7 Interest on Waste PFI 0.9 0.9 0.9 1.0 Interest paid to Bristol CC re: ex-Avon debt 0.9 0.8 0.8 0.8 Interest paid on borrowing 6.9 8.4 8.4 8.5

15. The interest on borrowing is gross, and does not take into account the fact that unsupported borrowing costs in respect of Badminton Road, Special Schools and Leisure Centres will be met from sources other than revenue budgets. 16. The interest on borrowing assumes an interest rate for new borrowing of 2.90%. This takes into account the Council’s access to the PWLB Certainty rate (0.20% below the standard rate) until November 2018, and an assumption that the Council will continue to have access to this rate in future years. 17. Estimated gross investment income is based on average forecast cash balances for each year, assuming average interest rates of 0.56% for 2017/18, 0.57% for 2018/19, 0.78% for 2019/20 and 1.12% for 2020/21. Forecasts of interest rates supplied by our treasury management advisers are set out in the table at paragraph 18.

Prospects for Interest Rates 18. The following table gives our treasury advisor’s view on the prospects for interest rates. For borrowing rates the table shows gilt yields to which PWLB borrowing rates are linked. The certainty rate to which all local authorities have access to is set at 0.8% above the gilt yield.

Page3 59 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Average Official Bank Rate Upside risk 0.00 0.00 0.00 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.19 Arlingclose Central Case 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 Downside risk 0.00 0.00 0.00 0.00 0.00 -0.25 -0.25 -0.25 -0.25 -0.25 -0.25 -0.25 -0.25 -0.15

3-month LIBID rate Upside risk 0.10 0.10 0.10 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.22 Arlingclose Central Case 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 Downside risk -0.10 -0.10 -0.15 -0.15 -0.15 -0.25 -0.25 -0.25 -0.25 -0.25 -0.25 -0.25 -0.25 -0.20

1-yr LIBID rate Upside risk 0.15 0.15 0.20 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.27 Arlingclose Central Case 0.70 0.70 0.70 0.70 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.77 Downside risk -0.15 -0.20 -0.30 -0.30 -0.30 -0.30 -0.30 -0.30 -0.30 -0.30 -0.30 -0.15 -0.15 -0.26

5-yr gilt yield Upside risk 0.20 0.25 0.25 0.25 0.30 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.40 0.32 Arlingclose Central Case 0.75 0.75 0.80 0.80 0.80 0.85 0.90 0.90 0.95 0.95 1.00 1.05 1.10 0.89 Downside risk -0.20 -0.20 -0.25 -0.25 -0.25 -0.35 -0.40 -0.40 -0.40 -0.40 -0.40 -0.40 -0.40 -0.33

10-yr gilt yield Upside risk 0.20 0.25 0.25 0.25 0.30 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.40 0.32 Arlingclose Central Case 1.25 1.25 1.25 1.25 1.25 1.30 1.30 1.35 1.40 1.45 1.50 1.55 1.55 1.36 Downside risk -0.20 -0.25 -0.25 -0.25 -0.25 -0.30 -0.35 -0.40 -0.40 -0.40 -0.40 -0.40 -0.40 -0.33

20-yr gilt yield Upside risk 0.20 0.25 0.25 0.25 0.30 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.40 0.32 Arlingclose Central Case 1.85 1.85 1.85 1.85 1.85 1.90 1.90 1.95 1.95 2.00 2.05 2.05 2.05 1.93 Downside risk -0.20 -0.30 -0.25 -0.25 -0.30 -0.35 -0.40 -0.45 -0.50 -0.50 -0.50 -0.50 -0.50 -0.38

50-yr gilt yield Upside risk 0.20 0.25 0.25 0.25 0.30 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.40 0.32 Arlingclose Central Case 1.70 1.70 1.70 1.70 1.70 1.75 1.80 1.85 1.90 1.95 1.95 1.95 1.95 1.82 Downside risk -0.30 -0.30 -0.25 -0.25 -0.30 -0.35 -0.40 -0.45 -0.50 -0.50 -0.50 -0.50 -0.50 -0.39

1. In a 7-2 vote, the MPC increased Bank Rate in line with market expectations to 0.5%. Dovish accompanying rhetoric prompted investors to lower the expected future path for interest rates. The minutes re-emphasised that any prospective increases in Bank Rate would be expected to be at a gradual pace and to a limited extent.

2. Further potential movement in Bank Rate is reliant on economic data and the likely outcome of the EU negotiations. Policymakers have downwardly assessed the supply capacity of the UK economy, suggesting inflationary growth is more likely. However, the MPC will be wary of raising rates much further amid low business and household confidence.

3. The UK economy faces a challenging outlook as the government continues to negotiate the country's exit from the European Union. While recent economic data has improved, it has done so from a low base: UK Q3 2017 GDP growth was 0.4%, after a 0.3% expansion in Q2.

4. Household consumption growth, the driver of recent UK GDP growth, has softened following a contraction in real wages, despite both saving rates and consumer credit volumes indicating that some households continue to spend in the absence of wage growth. Policymakers have expressed concern about the continued expansion of consumer credit; any action taken will further dampen household spending.

5. Some data has held up better than expected, with unemployment continuing to decline and house prices remaining relatively resilient. However, both of these factors can also be seen in a negative light, displaying the structural lack of investment in the UK economy post financial crisis. Weaker long term growth may prompt deterioration in the UK’s fiscal position.

6. The depreciation in sterling may assist the economy to rebalance away from spending. Export volumes will increase, helped by a stronger Eurozone economic expansion.

Page4 60 7. Near-term global growth prospects have continued to improve and broaden, and expectations of inflation are subdued. Central banks are moving to reduce the level of monetary stimulus.

8. Geo-political risks remains elevated and helps to anchor safe-haven flows into the UK government bond (gilt) market.

9. The MPC has increased Bank Rate. Future expectations for higher short term interest rates are subdued. On-going decisions remain data dependant and negotiations on exiting the EU cast a shadow over monetary policy decisions.

10. The central case for Bank Rate is 0.5% over the medium term. The risks to the forecast are broadly balanced on both sides.

11. The central case for gilt yields is for them to remain broadly stable across the medium term. Upward movement will be limited, although the UK government’s seemingly deteriorating fiscal stance is an upside risk.

12. The policy of avoiding new borrowing by running down spare cash balances has served well over the last few years. However, this needs to be carefully reviewed to avoid incurring higher borrowing costs in later times, when authorities will not be able to avoid new borrowing to finance new capital expenditure and/or to refinance maturing debt.

13. There will remain a cost of carry to any new borrowing which causes an increase in investments, as this will incur a revenue loss between borrowing costs and investment returns.

Borrowing Strategy 2018/19 – 2020/21 19. The Council is currently maintaining an under-borrowed position. This means that the capital borrowing need (the Capital Financing Requirement), has not been fully funded with loan debt as cash supporting the Council’s reserves, balances and cash flow has been used as a temporary measure. This strategy is prudent as investment returns are low and counterparty risk is still an issue. This policy will continue to be pursued as long as it is prudent to do so.

20. Against this background and the risks within the economic forecast, caution will be adopted with the 2018/19 treasury operations. The Chief Financial Officer, under delegated powers, will monitor interest rates in financial markets and adopt a pragmatic approach to changing circumstances, for instance:

 if it was felt that there was a significant risk of a sharp FALL in long and short term rates, e.g. due to a marked increase of risks around relapse into recession or of risks of deflation, then long term borrowings will be postponed, and potential rescheduling from fixed rate funding into short term borrowing will be considered.

 if it was felt that there was a significant risk of a much sharper RISE in long and short term rates than that currently forecast, perhaps arising from an acceleration in the start date and in the rate of increase in central rates in the USA and UK, an increase in world economic activity or a sudden increase in inflation risks, then the portfolio position will be re-appraised. Most likely, fixed rate funding will be drawn whilst interest rates are lower than they are projected to be in the next few years.

21. The current Medium Term Financial Plan allows for £10m new borrowing in 2018/19, but does not allow for any non-funded borrowing after that. However it is Page5 61 possible that the Council will need to take further external borrowing, for instance in relation to infrastructure projects supporting the City Region Deal.

22. A further £50m of borrowing has been included within both the prudential indicators to provide financing for the proposal to establish a Commercial Investment Fund which will form part of the Cabinet’s budget proposals to Council in February 2018. There is anticipated to be a net benefit to the Medium Term Financial Plan from any proposals should the Commercial Investment Fund be approved by Council and as such no allowance is made for the costs arising from this borrowing.

23. Any decisions will be reported to Members as part of the next available Treasury Management report.

Borrowing in advance of need 24. The Council will not borrow more than or in advance of its needs, purely in order to profit from the treasury investment of the extra sums borrowed. 25. Any decision to borrow in advance will be within forward approved Capital Financing Requirement estimates (the Prudential Indicator for gross debt requires that it should not exceed the CFR for the current year plus any increases in the CFR for the next two financial years), and will be considered carefully to ensure that value for money can be demonstrated and that the Council can ensure the security of such funds.

26. The Council will borrow in advance of need where there is a clear business case for doing so. 27. Risks associated with any borrowing in advance activity will be subject to prior appraisal and subsequent reporting through the mid-year or annual reporting mechanism.

Debt rescheduling 28. As short term borrowing rates will be considerably cheaper than longer term fixed interest rates, there may be potential opportunities to generate savings by switching from long term debt to short term debt. However, these savings will need to be considered in the light of the current treasury position and the cost of debt repayment (premiums incurred).

29. The reasons for any rescheduling to take place will include:  the generation of cash savings and / or discounted cash flow savings;  helping to fulfil the treasury strategy;  enhance the balance of the portfolio (amend the maturity profile and/or the balance of volatility).

30. Consideration will also be given to identify if there is any residual potential for making savings by running down investment balances to repay debt prematurely as short term rates on investments are likely to be lower than rates paid on current debt.

31. All rescheduling will be reported as part of the next treasury management report.

32. Municipal Bond Agency

It is likely that the Municipal Bond Agency will be offering loans to local authorities in the future. The Agency hopes that the borrowing rates will be lower than those Page6 62 offered by the Public Works Loan Board (PWLB). South Gloucestershire Council will make use of this new source of borrowing if and when appropriate.

Investment Strategy 2018/19 Key Objectives 33. The Council’s investment policy has regard to the CLG’s Guidance on Local Government Investments (“the Guidance”) and the revised CIPFA Treasury Management in Public Services Code of Practice and Cross Sectoral Guidance Notes (“the CIPFA TM Code”). The Council’s investment priorities will be security first, liquidity second, then return (“yield”).

Selection of Investment Counterparties 34. The primary principle governing the Council’s investment criteria is the security of its investments, although the yield or return on the investments is also a key consideration. Therefore, the Council will ensure that: a. it has a policy covering both the categories of investment types it will invest in (see Annex B1), criteria for choosing investment counterparties with adequate security and for monitoring their security (see paragraphs 48 to 53); and b. It has sufficient liquidity in its investments. For this purpose it will set out procedures for determining the maximum periods for which funds may prudently be committed. These procedures also apply to the Council’s prudential indicators covering the maximum principal sums invested. 35. Investment counterparty list - The Chief Financial Officer will maintain a counterparty list that complies with the selection criteria listed at paragraph 52. From time to time it may be necessary to amend the selection criteria owing to changes in the financial and economic environment. When this happens the Chief Financial Officer will revise the criteria and submit them to Council for approval. 36. Credit ratings - The main counterparty selection criteria are based on credit ratings provided by the three main credit rating agencies: Fitch, Standard & Poor’s and Moody’s. These criteria are applied using the lowest common denominator method. This means that investment limits are set by reference to the lowest rating from any of these three agencies The credit rating of counterparties will be monitored regularly. The Council receives credit rating information (changes, rating watches and rating outlooks) from its treasury management advisers. 37. Changes to credit ratings during the year - Any changes in ratings and rating watches (notifications of a likely change in rating) and rating outlooks (notification of a possible longer term change) are provided to officers almost immediately after they occur by the treasury management advisers. The policy in respect of credit rating changes and negative watches during the year is as follows: a. If a counterparty’s credit rating falls below the minimum selection level during the year that counterparty is immediately excluded from the dealing list. b. If a counterparty which is at the minimum acceptable level is put on negative watch that counterparty is immediately excluded from the dealing list. c. If a counterparty which is above the minimum acceptable level is put on negative watch the continued acceptability of that counterparty will be reviewed in the light of market conditions.

Page7 63 38. Changes to credit ratings of counterparties already holding our investments – Where an investment is made in an institution that subsequently falls below the Council’s minimum selection criteria before maturity, officers will place an embargo on any further investment with that institution. They will carry out a risk assessment on the existing investment(s), considering the benefits and costs of early termination compared to the real risk of loss of capital. 39. Investment counterparties selection criteria – The criteria for providing a pool of high quality investment counterparties (for both Specified and Non-specified investments) is:

Banks 1 – Good Credit The Council will only use UK banks and building quality societies, or non-UK banks which are domiciled in a country which has a minimum Sovereign Long- (includes building societies) Term rating of AA+ and have minimum credit ratings (Fitch): - long term A- (or equivalent ratings from Moody’s and Standard and Poor’s)

Banks 2 – Council’s own Should this situation arise the Council will use its banker if not meeting any of banker for transactional purposes only and criteria above minimise the balances which will be held only overnight Money market funds and The Council will only use AA or equivalent rated similar pooled investment money market funds and enhanced cash funds. vehicles such as enhanced cash funds UK Government To include investments in Gilts, Treasury Bills and the Debt Management Agency Deposit Facility (DMADF) UK Local Authorities To include Police and Fire Authorities Supranational Institutions The Council will only use AAA rated Supranational (e.g. European Investment Institutions Bank) Other organisations and This could include for example, investment in pooled funds not covered by corporate bonds issued by companies other than the above criteria banks; investments in bond funds or property funds; or in equity or multi-asset funds. The Council will only invest in these following a creditworthiness and other risk assessment, and after taking advice from the Treasury Management advisors. Appropriate time and monetary limits will be applied.

40. Money market funds and enhanced cash funds - a fund is treated as a counterparty in its own right and has its own credit-rating. Each of a fund’s investments in banks or building societies does not therefore count against the Council’s own counterparty limit for those institutions. Money Market Funds are often domiciled in Ireland and Luxembourg, but will not count against the Council’s overseas limit (see below) as any country risk is related to the individual investments made by the fund, not where the fund itself is constituted.

Page8 64 41. Local Authority Mortgage Scheme – the Council does not currently participate in this scheme, however should it do so in future any deposits placed with banks as cash-backing for guarantees under the scheme would not be subject to the normal investment criteria. This is because they are an integral part of a service policy initiative, rather than part of the Treasury Management policy. 42. Country and sector considerations – Due care will be taken to consider the country, group and sector exposure of the Council’s investments. In part, the country selection will be made by the Sovereign Long Term Rating. In addition: a. no more than £75m of cash available for investment will be placed with non-UK countries at any time b. Group Companies – the limit for the group is equal to the limit of the highest rated bank in the group. c. sector limits will be monitored regularly for appropriateness 43. Use of additional information other than credit ratings – the CIPFA Treasury Management Code requires the Council to supplement credit rating information. Whilst the above criteria rely primarily on the application of credit ratings to provide a pool of appropriate counterparties for officers to use, additional operational market information will be applied before making any specific investment decision from the agreed pool of counterparties. This additional market information (for example Credit Default Swaps, negative rating watches/outlooks) will be applied to compare the relative security of differing investment counterparties. Economic and political environments in which institutions operate will also be assessed for their impact on the creditworthiness of the financial sector. 44. Credit Default Swap (CDS) prices - CDS prices will be monitored and taken into consideration when arranging an investment. CDS are a form of insurance against the default of a party (e.g. a bank) to whom you have made a loan. The price of this insurance depends upon the perceived risk of default by that bank. The higher the price the higher the risk. (See also Glossary at Appendix C).

Officers will make use of the Treasury Management advisors’ creditworthiness service, which monitors the movement of CDS prices and notable fluctuations including against the average CDS.

In the case that findings suggest that an increase in CDS price is due to real financial difficulties associated with any institution, the Council will cease placing any new investments with it. It will also consider recalling any current deposits with the institution subject to a risk assessment considering the costs and benefits of early termination compared to the real risk of loss of capital.

External fund managers if used under segregated mandates - the CDS prices of banks invested in by the fund manager will be monitored in the same way as those used by the Treasury Management team, and where movements give cause for concern, (or any other factors indicate risk) the fund manager will be instructed to sell Certificates of Deposit in that bank.

1. Time and Monetary Limits applying to investments – The time and monetary limits for institutions on the Council’s Counterparty List are as follows (these will cover both Specified and Non-Specified Investments):

Page9 65 Fitch Moody’s Standard & Money Time Limit Poor’s Limit Banks 1 - Banks & Building Societies – Higher category UK High Street AA- Aa3 AA- £20m 3 yrs Banks Other AA- Aa3 AA- £15m 3 yrs Banks 1 - Banks & Building A- A3 A- £10m 1 yr Societies – Lower category Banks 2 - Use for Council’s own transactional bank if not purposes N/A N/A N/A 1 day meeting any of only and criteria above minimise balances UK Government’s 6 months Debt Management Not rated Not rated Not rated unlimited (maximum Agency Deposit available) Facility £90m of Not Money market balances applicable funds and AA or AA or available for AA or equivalent as not fixed enhanced cash equivalent equivalent investment term funds and £20M deposits per fund Local Authorities including police and fire not rated Not rated £15m 25 yrs authorities, Not rated excluding parish councils UK Gilts, treasury See table at bills and AAA AAA AAA para 10 of N/A Supranational (Supranational) (Supranational) (Supranational) annex B1 Bonds Other See table at organisations and para 10 of pooled funds annex B1

2. The proposed criteria for Specified and Non-Specified Investments are shown in Annex B1. 3. In the normal course of the Council’s cash flow operations it is expected that both Specified and Non-Specified investments will be utilised for the control of liquidity as both categories allow for short term investments. 4. The use of longer term instruments (greater than one year from inception to repayment) will fall in the Non-specified Investments category. These instruments will only be used where the Council’s liquidity requirements are safeguarded. This will also be limited by the longer term investment limits. 5. The criteria for choosing counterparties set out above provide a sound approach to investment in normal market circumstances. Whilst members are asked to approve these base criteria, under exceptional market conditions the Chief Financial Officer may temporarily restrict further investment activity to those counterparties considered of higher credit quality than the minimum criteria set out for approval. These restrictions would remain in place until the banking system returned to normal conditions. Similarly, the time periods for investments may be restricted. 6. Examples of these restrictions would be the greater use of the Debt Management Deposit Account Facility (DMADF – a Government body which accepts local authority deposits), Money Market Funds, guaranteed deposit facilities and

Page10 66 strongly rated institutions offered support by the UK Government. The credit criteria reflect these facilities.

7. Economic investment considerations – Bank Rate is forecast to remain unchanged at 0.50% until 2020. Investments will be made with reference to the core balance and cash flow requirements and the outlook for short-term interest rates. Benchmarks 8. A requirement of the CIPFA Code and DCLG is the consideration and approval of security and liquidity benchmarks. These benchmarks are simple guides to maximum risk not limits and so they may be breached from time to time depending on movements in interest rates and counterparty criteria. The purpose of the benchmarks is that officers will monitor the current and trend position and amend the operational strategy to manage risk as conditions change. Any breach of the benchmarks will be reported, with supporting reasons, in the Mid-Year Report or in the Annual Report 9. Security benchmark– The Authority has adopted a voluntary measure of its exposure to credit risk by monitoring the value-weighted average credit score of its investment portfolio. This is calculated by applying a score to each investment (AAA=1, AA+=2, etc.) and taking the arithmetic average, weighted by the size of each investment. Unrated investments are assigned a score based on their perceived risk.

Target Portfolio average credit score 6.0 10. Liquidity benchmarks – The Council seeks to maintain: a. Liquid short term deposits of at least £17m available within a month’s notice The Council also has an overdraft facility agreement with its bank. 61. Yield benchmarks – Measures of yield benchmarks are: a. Internally managed investments – 102% of 7 day LIBID rate b. Externally managed investments (by Fund Managers) if used – 110% of 7 day compounded LIBID Treasury Management Limits on Activity 62. There are four further treasury activity limits. Their purpose is to contain the activity of the treasury function within certain limits, thereby managing risk and reducing the impact of an adverse movement in interest rates. However if these are set to be too restrictive they will impair the opportunities to reduce costs or improve performance. The indicators are:  Upper limits on variable interest rate exposure – This identifies a maximum limit for variable interest rates based upon the debt position net of investments. In practice this limit is set at 100% cash balances available for investment, to allow the Council the flexibility to invest all its cash balances for periods of less than one year. Investments of under one year are treated as being at variable interest rates.  Upper limits on fixed interest rate exposure – Similar to the previous limit this covers a maximum limit on fixed interest rates. In practice this is set at the authorised limit for borrowing over the next three years – to allow the Council to borrow up to the authorised limit, all at fixed interest rates.

Page11 67  Maturity structures of borrowing – These gross limits are set to reduce the Council’s exposure to large fixed rate sums falling due for refinancing, and both upper and lower limits are set.  Total principal sums invested for periods longer than 365 days – These limits are set with regard to the Council’s liquidity requirements to reduce the need for early sale of an investment, and are based on the availability of funds after each year-end. 63. The Council is asked to approve the following limits: 2018/19 2019/20 2020/21 Interest Rate Exposures Upper Upper Upper Limits on fixed interest rates based on borrowing £314m £319m £326m (authorised limit) Limits on variable interest rates based on cash 100% of cash 100% of cash 100% of cash balances available for balances balances balances investment Maturity Structure of fixed interest rate borrowing 2018/19 Lower Upper Under 12 months 0% 30% 12 months to under 2 years 0% 30% 2 years to under 5 years 0% 30% 5 years to under 10 years 0% 50% 10 years to under 20 years 0% 75% 20 years to under 30 years 0% 75% 30 years to under 40 years 0% 100% 40 years to under 50 years 0% 100% 50 years to under 60 years 0% 100%

Principal sums invested > 365 days Upper limit on principal 2018/19 2019/20 2020/21 invested to final maturities £m £m £m beyond year end 40 30 20

Performance Indicators 64. The Code of Practice on Treasury Management requires the Council to set performance indicators to assess the adequacy of the treasury function over the year. These are distinct historic indicators, as opposed to the prudential indicators, which are predominantly forward looking. The indicators that this authority uses are:  Debt - Borrowing - Average rate of return of maximum 4.4%, and less than the average for local government  Investments – Internal - returns above the 7 day LIBID rate  Investments – External Fund Managers - returns 110% of 7 day compounded LIBID

Policy on the use of external service providers 65. Following a competitive tendering exercise the Council has recently appointed Arlingclose Limited as treasury management advisers, replacing Link Asset Services (formerly known as Capita Treasury Services). They provide a range of services including :  Technical support on treasury matters Page12 68  Economic and interest rate analysis  Debt rescheduling advice and other borrowing advice  Credit ratings and CDS prices 66. The Council recognises that responsibility for treasury management decisions remains with the organisation at all times and will ensure that undue reliance is not placed upon our external service providers.

67. It also recognises that there is value in employing external providers of treasury management services in order to acquire access to specialist skills and resources. The Council will ensure that the terms of their appointment and the methods by which their value will be assessed are properly agreed and documented, and subjected to regular review.

External Fund Managers 68. If used, external fund managers operating under segregated mandates will use both specified and non-specified investment categories and will be contractually required to comply with the Council’s investment strategy. The performance of the fund manager will be reviewed at least quarterly by the Chief Financial Officer.

Member and Officer Training 69. The CIPFA Code requires the Chief Financial Officer to ensure that members with responsibility for treasury management receive adequate training in treasury management. This especially applies to members responsible for scrutiny through the Audit and Accounts Committee. This Council continues to address this important issue by organising training sessions for members on treasury management and investment. Sessions took place in 2014 and 2015 and the last session took place at the Audit and Accounts Committee meeting on 27th September 2016. The next training session has been organised to take place at the time of the January 2018 Audit and Accounts Committee meeting. The Chief Financial Officer will keep the need for further training sessions under review. 70. Officers engaged in treasury management activities attend regular updating seminars organised by the treasury management advisers and CIPFA.

Reporting 71. The Chief Financial Officer receives updates from the Treasury Management officers at least monthly at an officer group meeting held specifically to consider Treasury Management matters and review current Treasury Management and Investment activity. 72. The Cabinet is provided with updates on Treasury Management activities as part of the quarterly budget monitoring process. 73. The Audit and Accounts Committee recommends mid-year and annual Treasury Management reports to Council, as well as this Treasury Management and Investment Strategy Report before the start of the year.

Page13 69

APPENDIX C GLOSSARY

Term Description Authorised limit A limit set on total external debt in a year, including borrowing and other long term liabilities such as leases and PFI. It should include headroom over and above the operational boundary (see definition) sufficient for unusual cash movements. This is the statutory limit of authorised external debt set by the Council and determined under s.3 (1) of the Local Government Act 2003. It represents the level of external debt which could be afforded in the short term but not sustainable in the longer term. It should not be breached. Base Rate Minimum lending rate of a bank or financial institution in the UK Basis point 1/100th of 1%, i.e. 0.01% (bps) Therefore 10 basis points is 0.10%; 50 basis points is 0.50% for example. Benchmark A measure against which performance can be compared. Capital Financing This is the Council’s borrowing need. It is the capital Requirement (CFR) expenditure which has not yet been financed by capital receipts, grants or revenue, and must be funded by borrowing. CDS A contract between two parties, being a form of protection Credit Default Swap or “insurance” against the default of an institution to which the buyer of the CDS has lent money. The buyer of the CDS makes quarterly payments to the seller of the CDS, in return for the seller paying out in the event of the institution defaulting. The cost of that protection (the CDS price or “spread”) varies according to the creditworthiness of the institution to whom money has been lent. If the price of a CDS to insure against loans to a particular bank for instance, increases, it is an indication that the market perceives that there is an increased likelihood of it defaulting. Certificate of deposit (CD) Evidence of a deposit with a specified bank or building society repayable on a fixed date. They are negotiable instruments and have a secondary market; therefore the holder of a CD is able to sell it to a third party before the maturity of the CD. CIPFA A UK professional accountancy body specialising in the Chartered Institute of Public public sector. It issues accounting guidance and codes of Finance and Accountancy practice specific to the public sector. It is responsible for the education and training of professional accountants and for their regulation through the setting and monitoring of professional standards.

Page 71 CNAV In relation to money market funds, a constant net asset Constant Net Asset Value value fund seeks to maintain a constant value per share of £1 (or $1 or 1 euro for funds denominated in these currencies). Interest earned on the assets held in the fund is distributed to investors. (Compare VNAV – variable net asset value) European Union Money Market Fund Regulations published in the summer of 2017 and coming into force over the period from July 2018 to January 2019, now identify two fund structures where CNAV is a feature: Public Debt Constant Net Asset Value money market funds, and Low Volatility Net Asset Value money market funds (see separate entries below). Coupon Total annual interest paid on a gilt holding, usually in two equal, semi-annual instalments. Expressed as a percentage of a £100 nominal holding. Corporate bond Companies issue bonds when they wish to raise long term capital other than by the issue of shares. It is therefore a loan to a company for a fixed period of time, for a fixed interest amount (the “coupon”) payable twice a year. The loan conditions are set out in a legal document. Corporate bond fund A collective investment scheme (similar to a money market fund - see below) but which invests in corporate bonds and possibly government bonds.

Enhanced cash funds, or See also “Money Market Funds” below. enhanced money market These are pooled funds which are managed with the funds aim of providing an enhanced return in comparison to “liquidity” money market funds (MMFs). They do this by investing in a wider range of instruments, and for longer periods of time. For instance the weighted average maturity (WAM) of enhanced funds’ investments could be as much as three years, whereas the maximum for liquidity MMFs is 60 days. The longer WAM means increased interest rate and credit risk compared to liquidity MMFs. However the fund managers seek to dilute this risk by wide diversification both in terms of counterparties, sectors, and investment types, and are required to do this in order to maintain AAA credit ratings. Usually two to three days’ notice is required to redeem investments in these funds, compared to the instant access available for liquidity MMFs. Enhanced cash funds have a variable net asset value (VNAV), meaning that the value of a share is variable dependent upon the value of the assets held by the fund on a daily basis; whereas liquidity MMFs aim to maintain a constant net asset value (CNAV), meaning that the value of one share is maintained at £1 and any interest income is either paid out or used to buy more shares. Fixed term deposit A loan to a bank or building society for a fixed period of time at an agreed rate of interest. Premature redemption is not normally allowed, except perhaps on payment of a penalty. Gilts Gilt edged stock-

Page 72 Registered British Government securities representing money lent to the Government and giving the investor an absolute commitment from the Government to honour the debt that those securities represent. iTraxx Senior Financials iTraxx indices comprise a “basket” of CDS prices. The index Senior Financials index is based on the CDS prices of 25 European investment grade financial institutions (i.e. may include institutions other than banks). LIBID The average interest rate at which banks are willing to London Interbank Bid Rate borrow large deposits LIBOR An interest rate at which banks can borrow from other London Interbank Offered banks, being the average interest rate at which banks are Rate willing to lend to the world’s most preferred borrowers. Fixed daily by the British Bankers’ Association it is the world’s most widely used benchmark for short-term interest rates. Liquidity Availability of cash to meet liabilities as they fall due, or the ability to convert an asset easily into cash quickly and in large volume without substantially affecting the asset’s price – for instance a Certificate of Deposit or gilts. LOBO A form of borrowing, usually for a long term such as 40 to Lender Option Borrower 60 years, whereby the lender has the option to re-set the Option interest rate at pre-determined dates (e.g. every 5 years), at which point the borrower has the option to accept the new rate, or repay the loan without incurring an early repayment penalty. LVNAV A category of money market fund introduced by new EU Low Volatility Net Asset money market fund regulation published in the summer Value of 2017. LVNAV funds are permitted to maintain a constant dealing NAV provided that certain criteria are met, including that the market NAV of the Fund does not deviate from the dealing NAV by more than 20 basis points (bps). This is a more stringent approach, as currently on a CNAV Fund they have a 50bps collar. Fund investments out to 75 days can be valued at par, thus these investments should not affect the underlying Fund’s NAV. Money Market Fund (MMF) Money market funds (MMFs) are mutual funds or pooled funds that invest in short-term money market instruments. These funds allow investors to participate in a more diverse and high-quality portfolio than if they were to invest individually. Like other mutual funds, each investor in a money market fund is considered a shareholder of the investment pool, or a part owner of the fund. All investors in a MMF have a claim on a pro-rata share of the fund's assets in line with the number of ‘shares' or ‘units' owned. MMFs are described as “liquidity” MMFs, and instant access to cash is possible; or “enhanced” MMFs where two or three days’ notice is required to redeem a holding. See also “Enhanced Cash Funds” above. MPC A committee of the Bank of England, sets interest rates Monetary Policy Committee monthly.

Page 73 MRP The prudent provision that local authorities must make Minimum Revenue each year for the repayment of borrowing used to Provision finance capital expenditure (as required by Regulation under the Local Government and Public Involvement in Health Act 2007). Net Revenue Stream Taxation and non-specific grant income – estimates of amounts to be met from government grants (excluding capital grants) and local taxpayers Operational boundary A boundary set on total external debt based on an estimate of the Council’s maximum level of debt in a year. It takes into account its plans for capital expenditure and financing, and should be based on a prudent but not worst-case scenario (compare to authorised limit). It is not significant if the operational boundary is breached temporarily. Property fund Another type of collective or pooled investment fund, whereby the investor buys a share in a pool of property investments, and receives a share of income and takes a share in the gains and losses in value of the property portfolio. Public Debt Constant Net This is a category of money market fund defined by the Asset Value new EU money market fund regulations published in the summer of 2017 as those which must invest 99.5% of their assets into government debt instruments, reverse repos collateralised with government debt or cash, and are permitted to maintain a constant dealing NAV. This type of fund is already in existence and there is no change proposed to the current structure. PWLB A statutory body which considers and makes loans to Public Works Loans Board local authorities for capital purposes. Loans are made from the National Loans Fund. Interest rates are determined by HM Treasury and are linked to gilt yields. Quantitative easing If interest rates are very low and the Bank’s Monetary Policy Committee expects inflation to fall below the Government’s 2% target, it can inject money directly into the economy to boost spending. This is QE. The Bank of England creates new money electronically to buy financial assets like government bonds. This cash injection lowers the cost of borrowing and boosts asset prices to support spending and get inflation back to target. Treasury bill A zero-coupon sterling denominated instrument of up to 12 months maturity when first issued. Treasury bills are issued at a discount and redeemed at par. VNAV In relation to enhanced cash funds for example, the value Variable net asset value of a share is dependent upon the value of the assets held in the fund, which are revalued daily using market pricing. As the value of the assets changes, so does the value of a share, hence the share (or unit) price is variable and can go up as well as down. The market value of the assets changes from day to day because the type and duration of assets held by an enhanced cash fund are more susceptible to the market’s perceptions of interest rate risk and credit risk inherent in

Page 74 the asset, as compared to those held in money market funds. The return on a share in a variable net asset value fund, is the increase in the price of the share over the period. However in adverse conditions, the price could go down. Yield Is the return or interest rate earned on investments

Page 75

APPENDIX D

Credit List – CDS Analysis Chart

Benchmark In Range iTraxx SFI Monitoring Page 77 Page

Legend Current Value 1 wk 1 mth 3 mths 6 mths 1 yr Commonwealth Bank of Australia 51.61 -0.2% -3.8% -0.1% -23.2% -30.0% Cooperatieve Rabobank U.A. 20.53 -4.6% -19.7% -32.7% -52.8% -70.4% HSBC Bank PLC 19.99 -2.5% -6.3% -34.5% -60.5% -74.3% Landesbank Hessen-Thueringen Girozentrale 40.46 -5.8% -6.0% -11.0% -33.0% -30.3% Lloyds Bank Plc 37.28 0.6% -1.5% -13.8% -27.7% -52.2% The Royal Bank of Scotland Plc 52.71 -4.1% -5.8% -1.8% -27.1% -58.7%

Annex B1 TREASURY MANAGEMENT PRACTICE (TMP 1) – CREDIT AND COUNTERPARTY RISK MANAGEMENT 1. This Council will have regard to the DCLG Investment Guidance issued in 2010, and to CIPFA’s Treasury Management in the Public Services: Code of Practice and Cross-Sectoral Guidance Notes 2. Both the Guidance and the Code require the Council to invest its funds prudently, and to give priority to security and liquidity before yield. In accordance with the Code, the Chief Financial Officer has produced its Treasury Management Practices (TMPs). This part, TMP 1, covering investment counterparty policy requires approval each year 3. Annual Investment Strategy - The key requirements of both the Code and the investment guidance are to set an annual investment strategy, as part of its annual treasury strategy for the following year, covering the identification and approval of the following: i. The strategy guidelines for choosing and placing investments, particularly non-specified investments ii. The principles to be used to determine the maximum periods for which funds can be committed iii. Specified investments the Council will use. These are high security (i.e. high credit quality, although this is defined by the Council, and no guidelines are given), and high liquidity investments in sterling and with a maturity of no more than a year. iv. Non-specified investments, clarifying the greater risk implications, identifying the general types of investment that may be used and a limit to the overall amount of various categories that can be held at any time. 4. The investment policy proposed to the Council is: 5. Strategy Guidelines – The main strategy guidelines are contained in the body of the treasury strategy statement. 6. Specified Investments – The DCLG guidance defines these investments as sterling investments of not more than one-year maturity, or those which could be for a longer period but where the Council has the right to be repaid within 12 months if it wishes. These are considered low risk assets where the possibility of loss of principal or investment income is small. These would include sterling investments which would not be defined as capital expenditure with: - The UK Government - A UK local authority (including police and fire authorities), parish council or community council - A body or investment scheme that is considered of a high credit quality

7. In accordance with the Code, the Council defines the following as being of “high credit quality” for making specified investments, with reference to minimum credit rating criteria from the ratings agencies where applicable, and subject to the monetary and time limits shown:

Page1 79 Fitch Moody’s Standard & Money Time Limit Poor’s Limit Banks 1 - Banks & Building Societies – Higher category UK High Street Banks AA- Aa3 AA- £20m 3 yrs* Other Aa3 AA- AA- £15m 3 yrs* Banks 1 - Banks & Building A- A3 A- £10m 1 yr Societies – Lower category Debt 6 months Management Not rated Not rated Not rated unlimited (maximum Agency Deposit available) Facility £90m of Money Market balances Not applicable funds and AA or AA or AA or available for as not fixed enhanced cash equivalent equivalent equivalent investment term deposits funds and £20M per fund Local Authorities – Not rated including police and fire Not rated Not rated £15m 4 yrs* authorities, excluding parish councils UK Gilts, UK sovereign UK sovereign UK sovereign treasury bills rating (gilts and rating (gilts and rating (gilts and See table at and T Bills) T Bills) T Bills) para 9 of 1 yr Supranational AAA AAA AAA annex B1 Bonds (Supranational) (Supranational) (Supranational))

* investments over 1 year in duration will be non-specified investments – see paragraph 9 below. 8. The Council has also specified the following limits for investment in Money Market Funds: i. an additional limit has been imposed on the amount of money that can be invested in pooled investment vehicles that are deemed to be non- specified (see table at paragraph 9).

9. Non-Specified Investments – These are any investments not meeting the definition of Specified Investments. The identification and rationale supporting the selection of these other investments and the maximum limits to be applied are set out below. Non specified investments include sterling investments with:

Non Specified Investment Category Limit (£ or %) a. AAA rated Supranational Bonds with a maturity of greater £40m for all than one year supranational bonds, both longer (a) Multilateral development bank bonds - These are bonds and shorter than 1 defined as an international financial institution having as one of year its objects economic development, either generally or in any region of the world (e.g. European Reconstruction and Development Bank etc.).

Page2 80 (b) A financial institution that is guaranteed by the United Kingdom Government (e.g. National Rail, the Guaranteed Export Finance Company {GEFCO} etc) The security of interest and principal on maturity is on a par with the Government and so very secure, and these bonds usually provide returns above equivalent gilt edged securities. However the value of the bond may rise or fall before maturity and losses may accrue if the bond is sold before maturity. b. Gilt edged securities with a maturity of greater than one year. £60m for all gilts These are UK Government bonds and so provide the highest and treasury bills security of interest and the repayment of principal on maturity. both shorter and Similar to category (a) above, the value of the bond may rise or longer than 1 year fall before maturity and losses may accrue if the bond is sold before maturity. c. Council’s own bank if not meeting any of Council’s credit Balances will be criteria – will be used for transactional purposes only. minimised as far as possible and on overnight basis only d. Any bank or building society, The minimum credit rating criteria Maximum limit of are: 100% of total investments, and Fitch: AA- as restricted by Prudential Indicator Moody’s: Aa3 for investments Standard and Poor’s: AA- maturing beyond 365 days for deposits with a maturity of greater than one year (including forward deals in excess of one year from inception to repayment). 3 years maximum Investments will be limited to 3 years maximum maturity. maturity The maximum limit is set at 100% because investment regulations state that, once an investment is categorised as Non- Specified, it remains in that category to maturity, even if it has less than one year to run. Although the limit is set high at 100%, liquidity requirements are maintained by the Prudential Indicator for investments maturing beyond one year. e. Money market funds/VNAV money market funds that have a credit rating of AA (or equivalent) from Standard and Poor’s, Fitch or Moody’s ratings agencies, where notice has to be given to £40m redeem funds (i.e. are not instant access) and/or which have a variable net asset value f. Local Authorities – including police and fire authorities, £15m per LA for max excluding parish councils - unrated 25 years g. Unrated building societies and rated building societies not Sector limit £15m meeting the normal minimum credit rating criteria Building Society limit £1m for 100 days h. Loan capital in a body corporate e.g. corporate bonds including £15m covered bonds – there is a higher risk of loss with this type of Internally managed – instrument. The value of the bond may rise or fall before maturity invest on a buy and and losses may accrue if the bond is sold before maturity. hold basis only i. Bond funds/multi-asset funds/equity funds – there is a higher risk of loss with this type of instrument as the value of the fund £15m investments may rise or fall. j. Pooled property funds – The Council will only invest in the £15m CCLA Local Authorities Property Fund, and property funds where Page3 81 the investment does not have to be treated as capital expenditure.

For investment types f, g, h, i and j, the Chief Financial Officer would only invest after further due diligence including proper consideration of risk and mitigating factors, appropriateness to current economic environment, and undertaking a selection process, taking external advice where necessary.

A maximum of 100% of total investments (internally and externally managed) will be held in aggregate in non-specified investments, so long as no more than £40m of investments (including externally managed) have remaining maturities of longer than one year at any time.

The maximum limit is set at 100% because investment regulations state that once an investment is categorised as Non–Specified it remains in that category through to maturity, even when it has less than one year left to run. Non-rated institutions - The Council will not invest in non-rated subsidiaries of credit- rated institutions.

Investments defined as Capital Expenditure - The Council will not use, or allow external fund managers to use, any investment that is deemed to be capital expenditure (for instance company shares).

This requirement does not apply to non-treasury investments, such as equity investments in, and loans to a Council subsidiary company, or the purchase of property for investment purposes, or loans for service purposes. These are service policy initiatives which would be the subject of the Council’s normal revenue and capital expenditure approval processes and need not comply with this treasury management strategy.

Page4 82 Agenda Item 10 South Gloucestershire Council

REPORT TO: COUNCIL

DATE: 14th February 2018

FINAL CAPITAL PROGRAMME 2018/19 to 2021/22

(All Wards)

Purpose of Report

1. To approve the Final Capital Programme 2018/19 to 2022/22 that was recommended by Cabinet on 5th February 2018.

Recommendation

2. Full Council is requested to approve:

Summary

1 The key proposals for the Final Capital Programme 2018/19 to 2021/22 are detailed within this report were recommended by Cabinet on 5th February to Council for approval on 14th February 2018.

Policy

2 The Council’s Constitution sets out the budget and policy framework. The Council is required to calculate budget requirements and levels of council tax for each financial year and to set a balanced budget. The budget for the forthcoming year must be set by midnight on 10 March in the preceding year at the latest. In addition, the Council is required to consult on its budget proposals in accordance with the requirements of the Local Government Act 1992. This Capital Programme supports the delivery of the Council’s strategic Asset Management Plan, and is consistent with the Medium Term Financial Plan.

Background

3 In February 2016, the Council approved its new Council Plan 2016/2020. This set out the Council’s priorities for the four year period. The Capital Programme is developed with these corporate priorities in mind and considers the delivery of desired outcomes. Page 83 1 The Cabinet received the Draft Capital Programme 2018/19 to 2021/22 on 6th November 2017 and the proposals have been subject to the Council’s budget consultation process.

4 Some Government departments have issued funding allocations for 2 years or more, others, for example, Department of Education, have not yet issued any information on funding allocations. However, estimates have been made for future years to allow planning for a three year Capital Programme. As in previous years, these will need to be updated once the allocations are announced and reported to Cabinet accordingly.

5 The Strategic Asset Management Plan 2014 to 2019 set out the asset strategies that will support the council commitment to deliver a balanced budget until 2020. The Capital Programme and revenue budget will continue to include the capital and revenue implications of the Council’s Asset Management Plan. The plan was approved by the Resources Sub Committee at their 3 March 2014 meeting and it’s aims can be summarised as:

 Reduction in the size, revenue cost and environmental impact of the estate;  Sharing property and co-location of services;  Full utilisation of individual properties within the estate.

6 The Capital Programme and Revenue Budget will continue to include the capital and revenue implications of the Council’s Asset Management Plan. The council also continues to look at how the estate can be used to generate a more commercial return, including through the potential acquisition of new assets.

The Issues

7 This report deals with five issues: i) Capital Programme Financing ii) Capital Programme 2018/19 to 2021/22 iii) Property Investment Fund iv) Flexible Use of Capital Receipts v) S106 and Community Infrastructure Levy

Capital Programme Financing

8 The Capital Programme is financed from five main sources:

a) Government and West of England Combined Authority (WECA) Allocations and Specific Grants, this is dominated by the schools and transport programmes. It is assumed that they are spent on the services to which they are allocated. Transport grants previously were awarded by Government but as part of the West of England 100% Business Rates Retention Pilot are now awarded by WECA.

b) Supported Borrowing: the latest allocation of EDF (Economic Development Fund) grant has been issued as revenue funding to support the costs of borrowing. In effect, this means that the council uses its own resources to fund the project through prudential borrowing and will receive bi-annual revenue payments to cover both the repayment of principal and interest (as per the rate calculated by WECA and in accordance with the Grant Offer Letter). It is anticipated that all future EDF funding will be Supported Borrowing rather than grant. This is at the risk of the Council and on the basis that the EDF generates sufficient business rates to fund. The Prudential Borrowing indicators for Page 84 2 2018/19 onwards have been adjusted to reflect this change and it is also taken into account in the Council’s revenue budget.

c) Capital Receipts: including Right to Buy receipts. These fund most of the unearmarked programme.

d) Capital Receipts – Capitalisation for Flexible Use: the Council has chosen to fund some transformational change schemes through capital receipts making use of Government guidance (Appendix 6).

e) Prudential Borrowing: the Council has chosen to fund some schemes because the expectation is that they will produce savings for the Council Tax payer in the long run which exceed the cost of borrowing, or that the new borrowing can be afforded within the revenue account.

f) Developers Contributions (S106 or Community Infrastructure Levy): The resources are used to fund the necessary infrastructure arising from increased development

9 The totals include an estimate of resources for 2018/19, 2019/20, 2020/21 and 2021/22 where these allocations have yet to be confirmed by Government.

10 The table below shows how the final 2018/19 capital programme will be funded. Appendix 1 further analyses the financing of the 2018/19 capital programme.

Amount Source of Finance (£’000) Capital Grants 33,862 Prudential Borrowing (includes WECA supported borrowing and CIL) 55,944 Capital Receipts (includes Flexible Use of Receipts) 12,754 Capital Reserves (Capital Contingency) 2,000 Revenue (includes non-capital reserves) 6,153 S106 / CIL (mostly indicative) 3,863 Economic Development Fund 17,105 TOTAL 131,681

Capital Receipts

11 Total Capital Receipts forecast for 2018/19 are £5.3m. Of this, £4.5m is expected from the sale of surplus assets and vehicles, and a further £0.80m estimated to be received from Right-To-Buy receipts arising from the housing transfer and VAT sharing agreement. A further £21.2m is currently forecast for 2019/20. The potential future receipts for 2020/21 onwards will continue to be evaluated and updated through either the quarterly capital monitors or annual capital programme reports.

12 The annual rolling capital programme is funded by circa £4m of capital receipts and this, as a minimum, needs to be generated on an annual basis.

13 The table below demonstrates that the capital expenditure planned to be financed by capital receipts is covered by the forecast income up to 2019/20 with a small surplus Page 85 3 available to support future years’ requirements. However it also demonstrates that as a minimum a further £4.4m of capital receipts will need to be generated post 2019/20 to support the ongoing capital programme. If this does not materialise, there will be a need to fund more capital investment by prudential borrowing resulting in a financial cost to the Medium Term Financial Plan.

Planned Capital Expenditure to 2019/20 * £34,315,622 Estimated Capital Receipts at February (£38,219,053) 2018 (Surplus)/Deficit (£3,903,431) Estimated Capital Expenditure 2020/21 * £4,620,000

Estimated Capital Expenditure 2021/22 * £3,655,000 (Surplus)/Deficit £4,371,569 * Funded by Capital Receipts only.

14 It should also be noted that although the total anticipated capital receipts (as detailed at Exempt Appendix 7) are sufficient to fund the proposed capital programme, there may be timing differences arising from delays in asset sales which could potentially result in the rescheduling of schemes. This risk is monitored on a quarterly basis and any necessary amendments to the programme will be reported to the Cabinet for approval. Generally, receipts from land and property sales have lagged behind Capital Programme income targets. It is necessary to ensure that, as far as possible, these receipts materialise before making future commitments and this remains a risk.

Disposal Strategy

15 To date the Council’s strategy has been to dispose of surplus assets to generate receipts and there is a level of inherent expectation within both the existing and future capital programmes which necessitates regular capital receipts. However, the council’s surplus assets are a finite resource and as opportunities for generating capital receipts diminish consideration of alternative means of funding the Council’s future capital programme needs to be given.

16 Normally where the business case for a project was based on obtaining a capital receipt and that project is progressing or complete the requisite receipt should be obtained in accordance with the current strategy (or alternative funding will need to be identified and agreed). However, for sites where this does not apply, consideration will be given to the most appropriate strategy for maximising the overall return that can be generated. This could include options around joint ventures on specific sites where the Council could contribute land, a developer builds and the Council takes a share of gross development value and the potential for the Council to set up its own development company. Some options would have the additional benefit of increasing housing numbers and jobs.

17 It is recognised that any change in strategy that could delay receipts or revenue income represents a financing risk to the Council, however this needs to be weighed up against the potential to generate additional revenue funding that would be available to the Council to support its annual capital programme. Page 86 4 Capital Programme 2018/19 to 2021/22

18 The proposed Capital Programme for 2018/19 to 2021/22 is detailed in Appendix 1 which shows the 2018/19 to 2021/22 Final Capital Programme – this covers schemes proposed previously and the Council’s rolling annual capital programme of works, re- profiling of previously approved schemes and the final proposals for new schemes. It has been assumed that all Government allocations and specific grants will be spent in the intended services areas, and is subject to the final Local Government Finance settlements for the relevant years.

Environment & Community Services Capital Programme

19 The schemes proposed by Environment & Community Services are being used to make strategic interventions, environmental improvements and deliver local interventions. The details of these schemes and allocations can be found at Appendix 2.

20 The Environment & Community Services member report on the 2018/19 Capital Programme will be taken in March 2018 once Council has approved the overall sums.

Children, Adults & Health Capital Programme

21 The schemes proposed by the Children Adults & Health department are intended to deliver the proposals contained in the Commissioning of Places Strategy to provide sufficient school places for every child in South Gloucestershire. Details of the indicative funding available and the current draft scheme proposals are outlined in Appendix 3.

22 Members should note that the funding available from central government will not be sufficient to address the range of basic need and priority maintenance issues across our schools. The level of Basic Need funding grant for 2020/21 has not been confirmed, £333k has been awarded for 2019/20.

23 The Capital Programme proposed for approval detailed in Appendix 1 carries a potential shortfall (£1,550k) which has been addressed in two ways. Firstly, £1.0m to be covered through the future disposal of land allocated for Education use and linked to the expansion of the Frenchay Church of England (CE) Primary School which has the potential to generate a receipt greater than £1.0m, albeit there are some inherent risks around the disposal and subsequent receipt, and furthermore public consultation on the disposal will be required in line with the Council’s constitution. Should the capital receipt fail to materialise, the pressure on existing capital receipt forecasts will increase and reduce funding available for future schemes.

24 Secondly, the full scheme cost of the expansion of the Frenchay Church of England (CE) Primary School is estimated to be £6.9m with the majority of the cost funded from allocated S106 resources. Under the terms of the agreements, the final amount due cannot be determined until the school has been completed so the amount of the shortfall is highly likely to change. Officers have been prudent in the estimate of funds likely to be received. It has been estimated that the shortfall of £550k could be managed within the variation on the S106 amount arising through inflation-linked changes (or the CAH Schools contingency). However, should the full £550k not materialise, the shortfall will need to be covered by a first call on the uncommitted DfE grant allocation in 2021/22. This will be monitored on a regular basis and updated provided through either quarterly monitors or the annual budget setting report. Page 87 5 Chief Executive & Corporate Resources Capital Programme

25 Within Chief Executive & Corporate Resources, schemes are proposed with the strategic intention of ensuring effective and efficient use of available resources and to facilitate the use of technology across the organisation and the locality. Details of the schemes can be found at Appendix 4.

Cost Estimate Risk Assessment

26 As noted in the Draft Capital Programme report in November 2017, a process for risk assessing proposed cost estimates has been established using a number system to consider the robustness of cost estimates and ensure a more thorough picture of the budgetary risks held within the proposed Capital Programme is presented.

27 The Cost Estimate Risk Assessment criteria is  1: Contractor appointed, Planning Application and Consultations complete. Programme / Scheme anticipated within Budget  2: Consultation and/or Planning Application in progress. Programme / Scheme budget based on estimated detailed design costs but subject to change.  3: Project / scheme costs based on initial guide costs only which are highly likely to change during detailed design and delivery phases.

28 Appendix 1 has been updated to indicate the level of risk in the future capital programme. At this stage it is normal for there to be a high level of uncertainty as scheme details are usually finalised close to commencement. The council is working with WECA / LEP on several joint schemes which have yet to have the funding / scheme details finalised.

29 Changes to the Risk Indicator will be reported as schemes are developed / tenders let, as part of the quarterly Capital Budget Monitoring report.

Investment Fund

30 Following the council’s growing desire to increase its commerciality, a range of options are currently being considered as part of a six step approach. The council’s budget consultation also supported looking to use our assets as efficiently as possible to deliver savings. An assessment of additional income possible from a combination of some or all of the options below has been included in the MTFP as part of the Final Revenue Budget Report 2018/19, on this same agenda. Development of these will require some pump-priming support from the enabling funding being created as part of this report. The six areas are:  Review of council land and buildings to confirm opportunities for future commercial development.  Look on a case by case basis, and in light of step 1, at the opportunity for future small scale joint ventures to maximise value from individual surplus sites.  Investigate the opportunity to create a commercial investment fund (up to £50m), in combination with treasury management activity (see below) to increase income streams to the council (minimum net return of 2.5%).  Investigate the creation of a Housing Company (being developed by ECS) to develop our own sites and make a financial return / dividend to the council. Page 88 6  Review our approach to Treasury Management activity, including greater use of different vehicle classes (including property funds) to increase our return on investments without materially increasing our risk exposure (look at risk substitution).  Develop overall strategy for investment and infrastructure funds across the council.

31 To start to progress the opportunity to create a commercial investment fund as outlined above, a Property Investment Strategy is being developed to enable the council to make commercial property investments for a number of purposes: a) Economic redevelopment or regeneration within the district; b) Income generation for the provision / support of services; c) A mixture of (a) and (b).

32 The purpose of the Strategy will be to enable the council to act quickly when investment opportunities arise and detail the governance arrangements to be put in place and will be presented to Cabinet in March for approval.

33 The Strategy will outline proposals to create a Property Investment Fund of up to £50m (to be managed alongside, or in combination with, the treasury management strategy) with a target rate of return determined for each investment with the intention that once borrowing and operational costs are covered the Council benefits from a 2.5%+ net return, however this will flex depending on the potential purpose of acquisition.

34 The council’s Prudential Indicators for 2018/19 onwards have been updated to take account of this proposal and will be subject to approval by Full Council on the same agenda as the Final Capital Programme for 2018/19 – 2021/22.

35 The council’s financial regulations require amendment to facilitate the operational requirements of a Property Investment Strategy. The current financial regulations state:

17.1 All land and property purchases or capitalised leases shall have the necessary capital programme approvals before the purchase or lease is completed. 17.2 The Director of Corporate Resources in consultation with the Leader of the Council shall approve any land, property or asset purchase / transfer with a value up to £500,000… 17.3 Cabinet shall have the power to purchase any land, property or asset…with a life value above £500,000 and shall be advised by the Director of Corporate Resources. 17.4 Sales and transfers set out under Cabinet and Officer Delegations in the Constitution.

36 It is proposed that the following additions are made to the council’s financial regulations to reflect that in the event that the Cabinet set the financial, governance and operational arrangements for the Property Investment Strategy those rules will apply to all relevant future land and property purchases or transactions:

17.5 When land and property purchases or transactions are made in accordance with the Property Investment Strategy the requirements of paragraphs 17.1 to 17.4 Page 89 7 above do not apply and will be superseded by the regulations within the Property Investment Strategy.

Flexible Use of Capital Receipts

37 The Government introduced guidance on the Flexible Use of Capital Receipts in March 2016 to enable local authorities to make use of their capital receipts to finance expenditure incurred to generate ongoing revenue savings in the delivery of public services and / or to transform service delivery to reduce costs or demand for service in future years.

38 The Provisional Local Government Finance Settlement extended the flexibility for another three years after 2018/19 and as such the council has considered it appropriate to firstly make use of the flexibility to ensure it maximises the financing opportunities for the Digital Programme (more detail in Appendix 4) but also to harness capital resource to assist in managing down demand for social care services and service transformation within Environment and Community Services and Corporate Resources.

39 The Flexible Use of Capital Receipts policy and proposed strategy is detailed at Appendix 5.

S106 Agreements and Community Infrastructure Levy

40 S106 income is predicted by comparing the expected build-out rate of developments with the triggers for payments detailed in the S106 agreement. Many factors influence the rate of build, including, but not exclusively, weather, the economy, interest rates, available labour, skills and materials, etc. It can therefore be difficult to state with absolute certainty when developments will be completed.

41 Based on the current Housing Trajectory figures and S106 agreements that have been signed, it is anticipated that the Council will receive in the region of £8.12m in S106 contributions in 2018/19 - £3.89m for ECS and £4.23m for CAH. The funds received are usually for specific items of infrastructure detailed within the S106 agreement.

42 S106 Agreements are agreed between developers and planning officers. The payment of S106 monies by developers is predicated upon trigger points as laid out in the agreement and often subject to indexation to take account of the time value of money. Schemes specifically funded by S106, for example schools, have to be approved and progressed often in advance of trigger points being hit and with some level of assumption around the likely level of indexation. As such, a level of inherent risk is carried by the Council in that a scheme can be developed within a cost envelope which can change subject to indexation trigger points. Whilst this is recognised, a standardised approach is required and as such sensitivity analysis be undertaken by officers on S106 sums for specific schemes based on indexation forecasts and a mid-point taken forward as the available financing with a view to mitigating any financing shortfall for the Council.

43 Community Infrastructure Levy was enacted by the Council on 1st of August 2015. Because of the nature of the scheme there has been a time lag in the receipt of funds. It was predicted that there would be an annual receipt of £1m CIL funds. The balance of uncommitted CIL funds projected at the end of 2017/18 is circa £1.0m and in 2018/19 we anticipated in the region of £1.28m of CIL receipts net of deductions of up to 5% for administration costs and 15% to be passed to the Town and Parish Councils where the developments have taken place for them to spend on infrastructure. In 2018/19, there is Page 90 8 also a commitment to use £200k per annum of CIL receipts to repay a loan for highway infrastructure works from the Revolving Infrastructure Fund, rising to £290k in 2019/20 and 2020/21, then £380k in 2021/22. The capital programme proposals for 2018/19 include £1.5m of CIL funding, firstly, £1.0m to the North Fringe to Hengrove Metrobus scheme and secondly, £500k to the Watermore School scheme. These proposals enable the continued investment in highways and schools maintenance. Both proposals are in line with the current approved 123 List for allowable CIL expenditure.

44 CIL receipts can only be used on projects detailed in the Community Infrastructure Levy Regulation 123 list published by the Council.

45 The financial implications of Cribbs Patchway New Neighbourhood S106 Framework Agreement, a planning agreement generating £98m of developer contributions over 25 years supported by £45.6m of transport infrastructure schemes delivered by the Council, were considered by Cabinet on 4th December 2017. The capital programme and financing requirements have been built into Appendix 1 and the revenue implications included in the Revenue Budget report, on this same agenda.

Consultation

46 Public consultation including with partners and other stakeholders commenced on 6th November as part of the overall budget process.

Risk Assessment

Financial Implications (includes tax implications such as VAT) (Nina Philippidis, Deputy Head of Finance, 01454 865140)

47 The report is entirely about financial implications.

48 The council’s capital financing requirement measures an authority’s underlying need to borrow or finance by other long-term liabilities for a capital purpose. It represents the amount of capital expenditure that has not yet been resourced absolutely, whether at the point of spend (by capital receipts, capital grant/contributions or from revenue income), or over the longer term (by prudent minimum revenue provision (MRP) or voluntary application of capital receipts for debt repayment etc.). Alternatively, it means capital expenditure incurred but not yet paid for. The council’s programme is fully funded in line with the capital financing requirement and is monitored through its treasury management activities.

49 Any changes to the capital programme which impact on financing would need to be reflected in the revenue budget and Treasury Managements reports. The Medium Term Financial Plan 2018/19 to 2021/22, on this same agenda, is currently predicated on the basis of the current proposed capital programme.

Legal Implications (John McCormack, Head of Legal, Governance and Democratic Services, 01454 865980)

50 The Council is obliged to set a balanced and sustainable budget, and Members must exercise their fiduciary responsibilities when making decisions on the budget. The consultation options set out in the report would meet the legal requirements.

Page 91 9 Human Resources Implications (Claire Kerswill, Head of Human Resources, 01454 866348)

51 There are no HR implications directly arising from this report.

Social Implications (Mark Pullin, Strong, Safer Communities Manager, 01454 868480)

52 Whilst there are no direct social implications arising from this report a number of the projects mentioned have potential implications and these will have been considered by the relevant department / service manager.

Environmental Implications (Lucy Rees, Senior Environmental Policy & Climate Change Officer, 01454 862224)

53 There are a number of direct environmental impacts resulting from this Capital Programmes report. Programmes put forward in the report will contribute directly to the Council’s carbon emissions reductions targets and to the delivery of the Climate Change Strategy.

Economic Implications (Antony Merritt, Strategic Economic Development Manager, 01454 863870)

54 There are no direct economic implications arising from this report however elements of the capital programme will have wider implications on the local economy.

Equality Impact Assessment (Nina Philippidis, Deputy Head of Finance, 01454 865140)

55 There are no direct equalities impacts arising as a result of the Capital Programme 2018/19 to 2021/22. It is worthwhile noting that individual projects have specific Equality Impact Assessments aligned to them which are able to identify any issues emerging and plan to maximise the Council’s work towards the advancement of equality of opportunity for all. Likewise, the Council has in place a comprehensive approach to equalities in procurement which ensures the application of the Equality Act within all individual schemes. The overall Equality Impact Assessment covering the Budget process has been updated for the Final Revenue Budget report on this same agenda.

Privacy Impact Assessment (Nina Philippidis, Deputy Head of Finance, 01454 865140)

56 There is no direct requirement for a Privacy Impact Assessment to be undertaken.

Risks, Mitigations and Opportunities

57 City Region Deal: The proposed Capital Programme 2018/19 to 2021/22 includes a number of estimated and future funding resources. It should be noted that there is a level of financial risk should future funding streams not materialise. The potential use of funding set aside centrally to support future capital pressures as part of future Capital Programme planning, would help to mitigate against this risk as a risk remains as to the timing and total level of funding available through the City Region Deal. Ultimately, the LEP (now WECA) will only be able to commit the actual funding it has within the EDF at any point in time. Further risks will arise when these schemes are approved and underwritten by the Council in respect of the Economic Development Fund (EDF). These have been set out in previous reports, and will need to be considered as individual decisions are taken on the more material schemes. These could be considerable should Page 92 10 EDF funding cease to be available in the future. Funding has been set aside in the City Region Deal - EDF Smoothing Reserve to meet the shortfall in the revenue costs of borrowing during scheme development until such time that the Economic Development Fund begins financing. Based on the current timings, it is anticipated that there is sufficient resources available to cover the forecast costs, however this will be monitored throughout the financial year.

58 Capital Receipts: Previously approved capital schemes are ongoing and are reported to the committees on a quarterly basis through the capital monitors. It is important to note that these approved schemes are also supported by capital receipts. Although the total anticipated capital receipts are sufficient to fund immediate 2018/19 proposed capital programme, there may be timing differences arising from delays in asset sales which could potentially result in the rescheduling of schemes. This risk is monitored on a quarterly basis and any necessary amendments to the programme will be reported to the committee for approval.

59 Impact of Brexit: Whilst the impact of leaving the European Union (EU) is not yet known, concerns are being raised by the Royal Institution of Chartered Surveyors (RICS) around how the outcomes will affect the drivers for construction tender prices, i.e. demand, the cost of labour, materials and plant, and the availability of contractors. Each of these will be affected differently depending on the final agreement for the UK leaving the EU. The budgets built into the capital programme are based on Building Cost Information Services (BCIS) data which cannot predict with any certainty the impact of the points raised above and it is worth noting that there is a significant risk that the costs (particularly for those schemes further out on the proposed programme) will change during and following the UK’s exit from the EU.

60 Development of joint transport plans with WECA: A Key Route Network (KRN) is being developed by WECA which will inform the transport infrastructure investment priorities for the wider region. This will impact this Council firstly in terms of its own local transportation investment plans and secondly, as it (or one of the other unitary authorities) be commissioned by WECA to deliver the KRN schemes as WECA does not have statutory highways powers in its own right.

61 Continuation of government grant funding: A significant proportion of the Council’s capital programme is predicated on the receipt of government grant funding. The notification of grant funding has historically not been aligned with timings of the Council’s budget setting process and as such there is an inherent risk around the approvals being made and subsequent adjustments are often necessary. Furthermore, there is a risk that as the Government’s priorities change, the funding received by the Council will alter accordingly.

Author:

Dave Perry, Director of Corporate Resources and Deputy Chief Executive, Badminton Road Tel: 01454 865001.

Departmental Contact: Mike Hayesman, Head of Finance and Customer Services, Badminton Road Tel: 01454 865290

Nina Philippidis, Deputy Head of Finance, Badminton Road Tel: 01454 865140. Page 93 11 Background Papers:

Report to Council on 15 February 2017 – Capital Programme 2017/18 to 2019/20 Report to Council on 15 February 2017 - The 2017/18 Council Tax Draft Capital Programme Report 2018/19 to 2021/22 – Cabinet 6th November 2017 Finance Capital Programme Report 2018/19 to 2021/22 – Cabinet 5th February 2018 Local Government Finance Act 1992

Appendices

1 Final Capital Programme 2018/19 to 2021/22 2 Environment & Community Services Final Capital Programme 3 Children, Adults & Health Final Capital Programme 4 Chief Executive & Corporate Resources Final Capital Programme 5 Flexible Use of Capital Receipts 6 EXEMPT – Capital Receipts Forecast

Page 94 12 APPENDIX 1: FINAL CAPITAL PROGRAMME 2018/19 ONWARDS

2018/19 2019/20 2020/21 2021/22 Totals Comments £000 £000 £000 £000 £000

External Sources of Funding CAH allocations (DfE) - Condition -2,000 -1,500 -1,000 -550 -5,050 2019/20 figures not announced CAH allocations (DfE) - Basic Need 0 -333 0 0 -333 2019/20 figures not announced CAH allocations (DfE) - Schools Devolved -500 -500 -500 0 -1,500 Estimated annual grant (3 year funding) CAH grant rephased spending from earlier years (DfE) allocation -4,598 -57 -33 0 -4,688 Management of Committed Programme slippage CAH - SEN Planning Fund grant -398 -398 -399 0 -1,195 Ad Hoc grant allocations will be approved through capital monitor Vinney Green Secure Unit funding 0 0 0 0 0 report Integrated Transport Block (WECA) -1,277 -1,277 -1,277 -1,277 -5,108 Funding will be paid direct to WECA by DfT for distribution to the Highways Maintenance Funding Formula (WECA) -4,088 -4,088 -4,088 -4,088 -16,352 council in line with DfT 6 yearly allocations. Highways Maintenance Incentive Formula (WECA) -851 -851 -851 -851 -3,404 National Productivity Investment Fund -450 -450 Low Emission Bus -1,540 -1,540 Go Ultra Low City -226 -79 -48 0 -353 MetroBus Extension -723 -723 Challenge Fund (grant funding)(DfT) -5,260 -5,260 BDUK & LGF2 -3,446 -3,446 Disabled Facilities Grant -1,900 -1,900 -1,900 -1,900 -7,600 Grants to fund one-off schemes (ECS) -6,605 -1,509 0 0 -8,114 Sub Total -33,862 -12,491 -10,096 -8,666 -65,115

Internal Source of Funding Capital Receipts -8,254 -5,924 -5,170 -3,105 -22,453 Includes additional allocation to CAH as per this report Capital Receipts - Flexible Use -4,500 -4,500 Appendix 6 Prudential Borrowing -73,049 -22,543 -13,293 -8,604 -117,489 Revenue Funded Capital -2,811 -1,450 -1,555 -3,804 -9,620 Capital Reserve -2,000 -2,000 Revenue Reserve (Waste Escrow) -1,000 -2,904 -3,904 S106 / CIL -3,863 -10,751 -11,105 -400 -26,119 Community Infrastructure Levy -1,500 -1,500 North Fringe Hengrove Package (S106/CR/REV) -2,342 -2,342

Total Available Resources -133,181 -56,063 -41,219 -24,579 -255,042

RISK RATING OF Total Scheme Funding SCHEME SCHEME DESCRIPTION Value 2018/19 2019/20 2020/21 2021/22 Totals Source Comments £000 £000 £000 £000 £000 £000 CAH (See Appendix 3 for details) GA/S106 Includes Capital Receipt as requested in this report and first call 3 Schools Programme 9,610 13,389 13,288 0 36,287 /CR/CIL funding against future grant allocation 3 Children's & Adult's Social Care 2,725 1,615 1,000 0 0 2,615 Ad Hoc grant allocations will be approved through capital monitor 1 Vinney Green 0 0 0 0 0 report 3 Special Education Needs Planning Fund 1,195 398 398 399 0 1,195

1 Schools Devolved 500 500 500 1,500 Approx. £500k per annum, plus Revenue contributions from schools

Sub total 12,123 15,287 14,187 0 41,597 ECS 1 LTP Funded 6,216 6,216 6,216 6,216 24,864 GA 1 Highways S106 415 312 400 400 1,527 S106 1 Unearmarked Highways Spend (Capital Receipts and CIL) 3,000 2,000 2,000 2,000 9,000 CR Includes £1m of CIL, £1m to be allocated for NFHP in 2018/19. 1 Highways Revenue and Third Party Contributions 80 80 Includes £50k Revenue for Mobility Works 1 Local Highways Maintenance Challenge Fund 3,189 3,189 GA/CR 1 Bromley Heath Viaduct 10,300 800 800 2 Challenge Fund - Drainage 3,680 2,330 2,330 Some grant transferred to BHV scheme 1 National Productivity Investment Fund 1,010 450 450 3 Emersons Green Composite Bridge 6,747 4,136 1,309 5,445 GA/S106 1 Cribbs Patchway New Neighbourhood - Cycle Links 200 150 150 GA West of England Combined Authority (Investment Fund) 1 Wraxhall Road Roundabout Improvements 200 125 125 GA West of England Combined Authority (Investment Fund) 1 Great Stoke Roundabout Capacity Improvements 550 250 200 450 GA West of England Combined Authority (Investment Fund) 1 Sustainable Transport Package 845 845 GA 1 Low Emission Bus 4,791 1,540 1,540 GA 1 Go Ultra Low City 1,715 226 79 48 353 GA GUL Programme Board 1 LED Replacement Street Lights 625 625 625 625 2,500 PB 10 year programme to 2023/24 1 Street Lighting Column Replacement 600 600 600 600 2,400 REV 1 Vehicle Replacement 1,223 777 882 3,131 6,013 REV 2 Page Park 2,163 1,069 1,069 GA Heritage Lottery Fund 3 Waste Services 14,140 1,000 2,904 3,904 REV Waste Escrow Reserve 2 Open Spaces S106 567 567 S106 2 Disabled Facilities Grant 1,900 1,900 1,900 1,900 7,600 GA 1 Housing Enabling 200 200 400 S106 Oaktree Avenue 1 Extra Care Housing 1,200 1,200 CR 2 North Fringe Hengrove Package 117,900 2,342 2,342 CR/S106/CIL 3 MetroWest 1,588 173 173 173 2,107 REV/CR £44.4m scheme. £1.9m council liability

Sub total 36,066 17,295 12,844 15,045 81,250 CECR £850k pa but some flexibility based on spending plan needs in the 2 Backlog Maintenance (non schools) 850 760 850 850 3,310 CR year. 3 Community Asset Transfers 1,111 200 243 443 CR Includes Winterbourne Barn 2 ICT 890 560 670 705 2,825 CR 17/18 costs funded from revenue; 18/19 from PB and Flexible Use of 2 Digital Strategy 5,000 6,250 6,250 REV/CR/PB Capital Receipts (Appendix 6) 3 Transformational Change & Bending the Curve 1,000 2,000 2,000 FCR 3 Land Preparation for Disposal 7,700 2,000 4,000 400 200 6,600 PB/CR Estimated values 2 Accommodation Strategy 3,330 923 923 PB/CR To meet CSP savings target 3 Property Investment Fund 50,000 50,000 50,000 PB 3 Thornbury Library move 650 650 650 Agreed by Cabinet Dec 17 2 Faster Broadband 7,486 4,124 0 4,124 GR Bid being made to EAFRD funding for 19/20 allocation

Sub total 67,887 5,563 1,920 1,755 77,125

EDF 3 Metrobus Extension 34,160 11,805 11,400 5,850 29,055 PB/EDF 3 Avonmouth/Severnside - Flood Mitigation and Ecology 24,728 5,300 5,000 6,000 5,000 21,300 PB/EDF SGC liable for 50%

Sub total 17,105 16,400 11,850 5,000 50,355

CPNN 3 Cribbs Patchway New Neighbourhood - 0 1,518 418 2,779 4,715 PB Capital programme approvals as reported to Cabinet in Dec 2017

Sub total 0 1,518 418 2,779 4,715

Total - Capital Programme 133,181 56,063 41,219 24,579 255,042

Financing of Capital Programme Government Grants -33,862 -12,491 -10,096 -8,666 -65,115 Prudential Borrowing -55,944 -6,143 -1,443 -3,604 -67,134 Capital Receipts (CR) / Flexible Use (FCR) -12,754 -5,924 -5,170 -3,105 -26,953 Capital Reserves -2,000 0 0 0 -2,000 Revenue / Reserves -6,153 -4,354 -1,555 -3,804 -15,866 S106/CIL -5,363 -10,751 -11,105 -400 -27,619 EDF -17,105 -16,400 -11,850 -5,000 -50,355

Total - Capital Financing -133,181 -56,063 -41,219 -24,579 -255,042

RISK Definition 1 Contractor appointed. All necessary Planning Applications and Consultations complete. Programme/Scheme completion anticipated within budget. 2 Consultation and/or Planning Permission in progress. Programme/Scheme budget based on estimated detailed design costs, which are subject to change during delivery phase. 3 Project/Scheme budget based on initial guide costs only, which are subject to change during detailed design and delivery phases.

Page 95

APPENDIX 2

Environment & Community Services Final Capital Programme 2018/19 to 2021/22

1 It is proposed that the following schemes are included in the Environment and Community Services Capital Programme 2018/19 to 2021/22.

Local Transport Capital Programme

Highways Maintenance

2 The Department for Transport (DfT) announced the Local Transport Capital Block Funding allocations for South Gloucestershire Council (comprised of Integrated Transport Block (£1.277m) and Highways Maintenance Block (£4.939m) in letters received in July and December 2014. These cover funding for financial years up to 2020/21, with indicative allocations given for 2018/19 to 2020/21. However, following the West of England Devolution Deal, Local Transport Capital Programme funding is now manged as a single capital pot by the West of England Combined Authority and distributed to the individual authorities. The West of England Combined Authority (WECA) approved that for 2018/19 South Gloucestershire Councils Local Transport Capital Programme funding allocation will continue to be the same as would have been received directly from the DfT. Going forwards, distribution may change to reflect future proposals and priorities including meeting the costs of the Key Route Network which will be agreed in due course. This will be dealt with through WECA working with the constituent councils with all proposals to be agreed through the WECA Joint Committee.

3 The Capital Programme currently includes an additional allocation by the Council to fund a further £2m per annum for Highway Maintenance as set out in Appendix 1 of this report. Environment and Community Services Committee on 29 March 2017 took the view that the additional local contribution required for the North Fringe to Hengrove MetroBus scheme would be funded from this allocation over a number of years at a rate of £1m per year until 2025/26, and the remaining £0.55m in 2026/27, unless alternative options could be identified. A review of available Community Infrastructure Levy (CIL) funding has been undertaken enabling the 2018/19 contribution to be made through CIL, in line with the current approved123 List for allowance expenditure, allowing the full £2m of capital receipts to be used on Highways Maintenance as planned in 2018/19.

Integrated Transport Block

4 The proposed Integrated Transport Block expenditure consists of priority schemes up to the value of the funding allocation, and a group of second priority schemes to be progressed only if other schemes in the programme become undeliverable within the year, thus minimizing the risk that delivery of the full programme will result in an over-spend.

Page 97 Major Schemes and Grant Funded Schemes

Sustainable Transport Package

5 South Gloucestershire Council are able to bid each year for Local Growth Fund funding to implement sustainable transport measures aimed at promoting economic growth. Details of new bids with be included in quarterly monitor reports as they are made.

Local Highways Maintenance Challenge Fund

6 The major works on the A403 between Aust and Avonmouth are complete. Further work to complete the Local Highways Maintenance Challenge Fund (A4174) programme will be undertaken in 2018/19.

Local Highways Maintenance Challenge Fund – Tranche 2A

7 South Gloucestershire Council has been successful in a bid for the second round of Highways Maintenance Challenge funding. The additional grant funding from the Department for Transport will increase weather resilience and support the local economy and communities by improving highway drainage to remove flood risk across South Gloucestershire and Bristol.

Bromley Heath Viaduct

8 The Capital Programme includes funding to meet the estimated cost of the combined project for the refurbishment of the Southern Bromley Heath Viaduct and improvements to the cycle network following successful bids to the Local Maintenance Challenge Fund and Cycle City Ambition Fund. Cabinet approved on the 10 July the inclusion of £2.8m of additional funding in the Capital Programme in order to reduce the duration of the combined project to an estimated 33 weeks.

Emersons Green Composite Bridge

9 The Emerson’s Green East Composite Bridge is the first to incorporate the extended use of composite materials for elements other than bridge deck. The West of England Combined Authority has approved Local Growth Funding of £4.049m to enable an increase in the total scheme budget to £6.493m.

Low Emission Bus Schemes

10 The West of England authorities have worked with First Bristol Limited (FBL) to secure a total sum of £4.79m from the Department of Transport Low Emission Bus Scheme grant that seeks to achieve a step change in the local bus fleet operating services within the West of England, focussing on routes passing through Air Quality Management Areas. The funding secured will enable FBL to introduce 110 new gas- powered buses to their fleet, as well as the fuelling infrastructure to accommodate another 40 gas-powered buses. The buses will operate using Compressed Natural

Page 98 Gas (CNG) technology, achieving significant reductions in emissions compared to the 80 diesel (Euro 3) buses being replaced through this investment. The remaining 30 buses will be additional to the existing FBL fleet and will be used to operate new services on the MetroBus network.

Go Ultra Low City

11 Go Ultra Low City is a capital funding stream for initiatives to increase the use of low emission vehicles, over 5 years until 2021. West of England authorities have been awarded £7m in total following a successful bid with South Gloucestershire Council’s allocation being just over £1m plus a further match funding element that will be finalised in due course, to promote sustainable travel across three main themes:  Expanding the charging network – Increasing public and business charging points together with the construction of a new flagship charging hub for electric vehicles at the UWE site on Coldharbour Lane;  Increasing the fleet of Electric Vehicle;  Low emission zones & other policy measures.

National Productivity Investment Fund

12 The proposed 2018/19 schemes for the remaining National Productivity Investment Fund to improve roads, cut congestion and improve journey times will be included in the Executive Member decision report.

North Fringe to Hengrove Package

13 The proposed Capital Programme 2018/19 onwards includes provision for the North Fringe to Hengrove MetroBus scheme in keeping with the £117.9m revised forecast scheme cost approved by Cabinet on 10 July 2017.

MetroWest

14 MetroWest Phase 1 would see enhanced rail services to and from Severn Beach; MetroWest Phase 2 would provide two new stations on the Henbury Line (at North Filton and Henbury, plus a new station in Bristol at Ashley Down) and the introduction of more rail services to and from Yate. Phase 1 is nearing the end of Network Rail GRIP Stage 3, whilst Phase 2 started GRIP Stage 3 in February 2017; however, the capital costs for Phase 1 have escalated resulting in the specification, programme, and funding being reviewed. This could impact on the timing of phase 1 and/or phase 2 moving forward.

15 The Council’s liability for MetroWest capital scheme costs has been included in both the Capital Programme and revenue budget. The revenue budget for Phase 1 is currently capped at 5% or £50k per annum, because the Council has only a small stake in Phase 1 (Severn Beach service enhancements). Phase 2 is led by the Council and costs shared with Bristol City Council shared 78%/22% respectively. It should be noted that both MetroWest projects are likely to require a period of train service revenue support, up to 3 years following start of services, which will need to be met in due course. Officers are reviewing the funding package for this revenue support, which for the Council includes use of S106 funding.

Page 99 West of England Combined Authority (Investment Fund)

16 The West of England Combined Authority have approved a number of early investment opportunities funded from the West of England Combined Authority Investment Fund (‘Gainshare’), ahead of developing a fully funded investment programme, for feasibility studies for a number of strategic transport schemes and the development of business cases for smaller schemes that support the delivery of housing, the South Gloucestershire Council schemes are as follows:

 Cribbs / Patchway cycle links (£200k across 2017/18 and 2018/19);  Wraxall Road/roundabout Signalling (A4174) (£200k across 2017/18 and 2018/19);  Winterbourne / Great Stoke Way ‘Rabbit’ Roundabout (£550k across 2017/18 to 2019/20).

Severnside area development and M49 Avonmouth Junction

17 Following confirmation that construction of the new M49 Avonmouth Junction will commence in 2018, it is recognised that some mitigation measures in the local area may be needed to accommodate the new junction and other development in the vicinity. Work to determine the scope and funding profile for this mitigation is in progress, and will be reported to Environment and Community Services Executive Members separately, and added to the Capital Programme when appropriate.

Environment and Community Services Capital Programme

Street Lighting

18 The proposed Capital Programme 2018/19 onwards continues to include annual sums for the 10 year LED Street Light replacement programme ending in 2023/24 together with £0.6m for the annual Street Light column replacement programme.

Vehicle Replacement

19 The proposed Capital Programme 2018/19 onwards also continues to include annual sums for vehicle replacement funded from the Vehicle Replacement Reserve based on the forecast spend on vehicles.

Page Park

20 The Page Park project is continuing with work on the restoration of walls, gates and railings and other heritage features, resurfacing of paths around the park, additional planting, signage and bins. Capital works are due to be completed by 2018/19 and the whole project which includes activities (revenue works) is to be completed 2020/21.

Page 100 Waste Services

21 The Capital Programme 2018/19 onwards will continue to include schemes in keeping with the adopted Waste Strategy 2015-2020. In particular, this will include provision for a new waste transfer station for the North Fringe.

Open Spaces S106

22 Under Section 106 of the Town and Country Planning Act 1990 (as amended) the Council is able to secure financial contributions from developers in order to offset the costs of the external impacts arising from the development. A transparent process for the delivery of Section 106 funded infrastructure schemes for Public Open Space (POS) improvements was previously agreed in January 2012 by members and officers. Section 106 POS improvement projects are delivered through a rolling programme. Projects selected for delivery from 2018/19 onwards have been compiled using the agreed prioritisation process. A total of 10 contributions with a value of £566,841 will be included in the Executive Member decision report. Many of the larger contributions will be delivered over more than one financial year by external third parties (sport and play).

Disabled Facilities Grant

23 Disabled Facilities Grant will continue to be included in the Better Care Fund. The Better Care Fund is a pooled budget that shifts resources into social care and community services for the benefit of the NHS and local government. South Gloucestershire Council received an allocation of £1.756m in 2017/18 (double the amount allocated in 2015/16) with the use of these increased funds approved by Cabinet on the 10 July. There has been no further announcement on the Disabled Facilities Grant allocations for 2018/19 onwards. An estimated sum of £1.9m has been provisionally included for 2018/19 onwards based on the previous announcement that Disabled Facilities Grant would increase nationally to £500m by 2019/20 with the Council’s actual allocation expected to be confirmed in February 2018.

Housing Enabling

24 The Council has secured payments from private developers where affordable housing was required through planning policy but could not be delivered on site. These payments are ring-fenced for the provision of affordable housing in order to subsidise the development of additional affordable housing to meet identified housing need and specific council priorities which cannot be funded through other current forms of public investment. Policy and Resources Committee approved the future process for the use of these funds when they met on 6 February 2017. Individual schemes will be approved as part of the quarterly capital monitoring process.

Page 101 Extra Care Housing

25 The proposed Capital Programme includes a sum of £1.2m to reinvest in an alternative Extra Care scheme to the one originally proposed on the Newton House, Cadbury Heath site. The final payment for the ExtraCare scheme on the Land East of Coldharbour Lane will be made in the 2018/19 financial year

City Region Deal – Cribbs Patchway MetroBus Extension

26 The Council’s approved Capital Programme includes pump priming support for design/development work to progress the Cribbs Patchway MetroBus Extension to the final approval stage. Policy and Resources Committee at their 14 December 2016 meeting made a further capital allocation available, subject to affordability within the total scheme budget, to secure the required land in order to progress the scheme.

City Region Deal – Avonmouth/Severnside Flood Mitigation and Ecology

27 The Council’s approved Capital Programme includes pump priming support for design/development work to progress the Avonmouth/Severnside Flood Mitigation and Ecology to the final approval stage. Resources Sub Committee at their meeting on 14 December 2016 made a further capital allocation available, subject to affordability within the total scheme budget, to secure land considered suitable for the ecological mitigation requirements of the Avonmouth/Severnside Enterprise Area.

28 The decision to move forward with the construction phase of this scheme will be taken by Cabinet once the Full Business Case is completed and in line with the funding envelope approved by Council. The Full Business Case is likely to be completed by summer 2018.

Page 102 APPENDIX 3 CHILDREN, ADULTS & HEALTH CAPITAL PROGRAMME 2018/19 to 2020/21 1. It is proposed that the following schemes are included in the Children, Adults and Health Capital Programme 2018/19 to 2021/22 (see Table 1 for detailed programme).

2. Priority Repairs and Maintenance 2018/19 onwards: Each year, the Council receives details of school capital funding allocations to support priority condition works identified in schools of community and controlled school status. For the 2018/19 financial year, the total condition grant allocation is £2m. This is £0.76m less than the total allocation awarded in the 2017/18 financial year. There is no obvious reason for the reduced level of funding awarded. The backlog of priority condition repair and maintenance works across community and controlled schools totals an estimated £18m and the methodology used by the DfE to determine the allocation has remained the same as the previous year. To continue to maintain levels of investment in schools the council has identified £500k of capital receipts to increase the R&M allocation in 2018/19. This is made possible through the switching of funding streams used to support the existing capital programme. More specifically, this relates to the use of Community Infrastructure Levy (CIL) funding to support the provisions of additional places at Primary Schools (as allowed for under the current approved 123 List for expenditure) which releases the funding from capital receipts.

3. Continuing with the approach in previous years, it is proposed to undertake a range of priority repair/maintenance works in schools using the total allocation for this purpose. The allocation will be divided into two amounts as follows:

 £0.25m is set aside to deal with responsive maintenance works that arise throughout the year;  £2.25m is set aside to address the most urgent priorities (£2.25m will address 13% of the overall repairs and maintenance issues identified). The list of priority planned maintenance works in schools is provided at Table 2. Table 2 identifies priority condition works planned at 9 primary schools including recladding, re-roofing, rewiring, replacement heating/hot water plant and replacement hot and cold water services. Additionally, a number of other primary schools will benefit from a programme of investment to upgrade obsolete heating controls, replace electrical distribution boards incorporating residual circuit devices and alterations to electricity mains to facilitate metering and installation of smart meters. The work in schools is identified from the data collected from the Property data surveys.

4. Healthy Schools Fund: The Healthy Schools Fund is money set aside from the Soft Drinks Industry Levy. Details of how the fund will be distributed was expected in 2017 and all Local Authorities are expecting an allocation in the 2018/19 financial year. The fund is intended to improve access to facilities for physical activity, healthy eating, mental health and wellbeing and medical conditions (such as kitchens, dining facilities, changing rooms, playgrounds and sports facilities). The Council will receive a direct allocation from the healthy schools capital fund in addition to the school condition allocations. At the time of writing this report, the precise allocation of Health Schools Fund is unknown.

5. Energy Saving Projects: Paragraph 17 Appendix 4 sets out that energy projects for schools (and non-schools) will be subject to business case approval and will be requested on a case by case basis through the quarterly monitor report. This means that a loan facility remains in place for schools to achieve energy efficiencies and details of specific loans approved will be reported at the point of the loan agreement with individual schools.

6. Devolved Formula Capital 2018/19: It is expected that Devolved Formula Capital (DFC) will be allocated to support minor capital works in community schools and to VA schools. Page 103 7. Basic Need 2018/19 - Primary School Places: The Implementation Plan contained within the Commissioning of Places Strategy 2017-2021 sets out the proposed actions necessary to maximise the efficient use of resources and secure sufficient school places. While the strategy identifies that demand for primary school places in 2018/19 is not expected to exceed the current supply of places, a review of the admission preference data in January 2018 will be important to determine the need for additional places across primary schools in Area 3 from 2018/19 onwards. This is an area where demand for places in recent years has exceeded projected numbers requiring the provision of additional school places. To this end, a pragmatic approach to place planning is necessary and any requirement to fund additional places will be reported through the quarterly monitoring reports as necessary.

8. The Implementation Plan also sets a requirement to work with small and rural primary school headteachers and governing bodies to assess the impact on falling pupil numbers as part of the Council’s small schools agenda. This work requires small scale investment to address a range of premises issues which help resolve school organisation constraints and provide support for continued school improvement. As these small schemes develop, the appropriate approvals will be sought and included in subsequent monitoring reports. In all cases, the Local Authority will ensure where possible that other priorities are taken into account at the same time to help address, existing condition, maintenance and accessibility priorities. This will help achieve value for money and provide an opportunity for schools to use their Devolved Formula Capital (DFC) to contribute to schemes which might otherwise prove unaffordable.

9. Basic Need 2018/19 - Secondary School Places: In secondary schools the demand for places is increasing year on year and the LA has agreed increases to existing admission numbers in consultation with multi-academy trusts. Existing capacity across the school estate will absorb proposed increases for 2018/19 without the need for capital investment. A review of existing accommodation is required in order to determine the need for minor works to facilitate proposed increases to admission numbers in 2019/2020. An annual review of the pupil projections will help to inform the requirement for alterations and expansions to cope with sustained growth. Schemes will benefit from both basic need and Section 106 funding.

10. SEND Capital Planning Allocation: The SEND capital funding allocation for South Gloucestershire Council totals £1.195m for the period 2018/19 – 2020/21. It is planned to invest in provision for pupils with special educational needs and disabilities aged 0-25 to improve the quality and range of provision available to the local authority. The High Needs Working Group has developed 3 individual project proposals which together will provide an additional 59 specialist places across all 3 schemes.

11. The first of the schemes to be costed, designed and delivered is The Chase. Working in partnership with South Gloucestershire and Stroud College, this project will provide an additional 25 places for Post 16 children with SEND from September 2018. The other two schemes are being drawn-up and include the provision of new Key Stage 1 places for children with Social Emotional and Mental Health difficulties at the New Horizons and the creation of new pre-school places at Warmley Park for children with Severe Learning Difficulties and Profound and Multiple Learning Difficulties. It is planned that both schemes will be delivered for September 2019.

12. Accessibility Works and Advanced Design Fees: It is important to allocate funding upfront to fund professional/design fees. This allows for forward planning of schemes and ultimately ensures that future major schemes are deliverable within the required time frames. It also provides for a planned approach to investment in existing schools which are likely to form part of basic need proposals in the future. Schemes will continue to be developed and phased over the course of the next 3-5 years to provide affordable and flexible options for expansion and at the same time address other premises related priorities. It should be noted that any costs that do not result in a capital project must be written back to revenue, this is currently managed on an ad hoc basis through the management of total capital resources. Page 104 13. CAH Contingency Fund: This is the amount available to allocate to schemes and arises from project underspends in the previous year.

14. Major New Scheme for Approval – Frenchay CE Primary School: It is proposed to allocate £6.9m to enlarge the existing Frenchay CE Primary School to provide up to 420 places and move the school to land secured for the provision of primary school places on the former Frenchay Hospital site. The scheme will help mitigate the impact of new house building on the demand for school places in Frenchay and will achieve the local community’s aspiration to achieve one school to serve both the existing and growing Frenchay community. The development is estimated to generate 180 primary school age children and the financial contribution secured from the developer will be used to fund the majority of the scheme to enlarge the existing school and move to the new site.

15. The proposal will increase the supply of places by up to 280 additional places and will help meet the demand for places generated by other housing developments within a 2 mile radius. The proposal will address a number of important considerations and would:

 provide one school to serve the whole of Frenchay rather than two separate schools;  provide the additional places necessary to meet growth arising from families moving into new homes;  provide purpose built accommodation with all appropriate facilities to enhance the teaching and learning experience;  provide additional primary school places to meet sustained growth in the future.

16. Other important considerations in balancing the merits of the scheme are as follows:

 the existing school site is small and supports the total provision of just 140 places across the primary age range. There are suitability and sufficiency issues presented by the current site and buildings;  there is a significant back log of urgent repairs and maintenance issues on the existing school site.

17. The proposed transfer and enlargement of Frenchay CE Primary School is a major step. A drop-in session was held at Frenchay Village Hall on 15 January 2018 and provided parents/cares and local residents with the opportunity to hear about the proposals for the scheme. In the event that approval for the scheme is given as outlined above, the Council will need to undertake the legal process for enlarging Frenchay CE Primary School starting with a 6-week period of consultation beginning in February 2018.

18. It is planned that Section 106 contributions will be used to fund the majority of the scheme. The value of the respective Section 106 contributions will be adjusted in accordance with any change in the Royal Institution of Chartered Surveyors (RICS) Building Cost Information Service (BCIS) “All in Tender” Index. The adjustment will reflect the change in index between the time of signing/negotiating the Section 106 agreement and the date of actual payment. Using current and projected prices, the value of the Section 106 contributions are set out in the table below. The base value is the value calculated at the time of agreeing the Section 106. The current value is indexed as at December 2017 and the projected value is calculated based on when the contributions are expected to be received and the corresponding projected index rates. The table identifies the value of the contributions at risk. This is the difference between the current value and the projected value and shows the amount at risk in the event that the Index does not increase as projected.

Page 105 Frenchay CE Primary School – Section 106 Funding

Funding Base Current Projected Amount Source Value Value Value at Risk Frenchay Hospital Section 106 2,270,733 3,159,680 3,240,123 80,443 LECL Section 106 1,585,410 1,698,752 1,775,541 76,789 Bonnington Walk Section 106 450,000 457,897 457,897 0 Total 4,306,143 5,316,329 5,473,561 157,232 Current value calculated using Indexing to December 2017. Projected value based on phasing/triggers of contributions. 19. Section 106 funding is insufficient to meet the total costs of the scheme and additional sources of funding will need to be identified. Based on cost estimates for the enlargement of the existing Frenchay CE Primary School), there is a projected shortfall of £1.69m based on the current value of the respective Section 106 contributions. It is proposed that the capital receipt from the sale of land at Malmains Drive will contribute to the cost of the scheme. The projected value of the S106 contributions may also contribute to the identified shortfall.

Frenchay CE Primary School – Cost estimate and shortfall

Projected Current Value Value Total S106 Contributions 5,316,329 5,473,561 Cost estimate for scheme £6,900,000 £6,900,000 Shortfall without capital receipt £1,583,671 £1,426,439

20. Movement onto one school site may generate the opportunity for the Council to receive the proceeds of sale of the existing Frenchay CE Primary school site. The site and buildings are not owned by the Council and therefore negotiation with the Diocese of Bristol and the trustees is required and is underway in order to understand the potential for the proceeds of sale to contribute to the total costs of the scheme. This site has the potential to generate proceeds of approximately £0.5m though the proceeds cannot be incorporated as contributing to the scheme at this early stage.

21. Section 106 Schemes: It is anticipated that over the next 3 years, there will be a requirement to commission new school provision which will utilise Section 106 financial contributions as a result of ongoing major new house building. Feasibility work will be undertaken to start to feed into the commissioning process for new primary school provision on North Yate New Neighbourhood. Given the complex nature of major housing developments, the exact timing of new educational infrastructure is speculative at this stage and therefore the programme of investment is subject to change. Any changes to plans will be reported through the quarterly monitoring reports as necessary.

22. North Yate New Neighbourhood – The capital programme includes a Section 106 financial contribution of £5.388m towards the provision of a new 420 place primary schools from September 2020. Further work will be needed to consider the cost and funding options available and updates will be presented in quarterly monitor reports.

23. Vinny Green Secure Unit: The Council is in discussion with the DFE to understand the total amount of the external grant available. Future quarterly monitoring reports will provide details of the updated position.

24. North Yate New Neighbourhood – The capital programme includes a Section 106 financial contribution of £5.388m towards the provision of a new 420 place primary schools from September 2020. While a corresponding scheme budget of the same amount has been included in the capital programme, this should not be viewed as a cost estimate. At this early stage, no design work has been undertaken, and based on previous schemes, the initial assessment is that this sum will be Page 106 insufficient and therefore presents a financial risk. Further work will be needed to consider the cost and funding options available and updates will be presented in quarterly monitor reports.

25. Free Schools Programme: Local Authorities are waiting to see if the Government will announce a fresh new wave of Free Schools. While the majority of new mainstream school provision in South Gloucestershire will be commissioned through the Free School Presumption Route (and funded using Section 106), there are some instances in which it will be appropriate to commission new school provision via the DfE’s Free School route. Schools commissioned in this way benefit from capital funding and revenue start-up costs are also absorbed centrally. There are two new Free Schools planned in South Gloucestershire and these include new primary school provision to meet excess demand across Kingswood and Warmley and the new all-through school at Lyde Green. The all-through school will be part funded by Section 106 funding though this is insufficient and it is anticipated that the remaining funding will come from Free Schools Capital. However, in the absence of firm commitment to a Wave 13 programme, there is uncertainty about the availability and timing of funding and alternative sources of funding may need to be identified by the Council as a contingency plan.

26. Community Infrastructure Levy (CIL) and Capital Investment in School Places: In the future, it is anticipated that schemes commissioned to create additional primary and secondary school places will benefit from funds collected through the CIL introduced in 2015. However, the CIL collected from various housing developments will be allocated to infrastructure schemes of competing priority across the Council and there is no guarantee of the availability of funding. The impact of CIL on the provision of sufficient school places will be discussed at the first meeting of the School Place Planning Board in February 2018.

Page 107 CHILDREN, ADULTS AND HEALTH CAPITAL PROGRAMME 2018/19 TO 2020/21 TABLE 1

2017/18 2018/19 2019/20 2020/21 2021/20

£'000s £’000s £’000s £’000s £’000s DFE ALLOCATIONS FUNDING DESCRIPTION Basic Need 2019/20 Allocation Estimated 0 333 Capital Maintenance 2018/19 and 2019/20 Allocation Estimated 2,000 1,500 1,000 550 Healthy Schools Fund 2018/19 only TOTAL DFE (SCHOOL) ALLOCATIONS 2,000 1,833 1,000 550 Unearmarked Funded allocated to CAH Capital Receipts awarded 2017/18 1,261 Community Infrastructure Levy for Additional Primary School places 500 2018/19

sub-total TOTAL UNEARMARKED CAPITAL ALLOCATION 500 1,261 0 0 (Capital Receipts and Community Infrastructure Levy)

SEN Planning Fund 3 years of funding approved 398 398 399 Devolved Schools DfE grant Schools have 3 years to spend each year's allocation 500 500 500 Children & Adults ICT System Supported by Unearmarked allocations 1,615 1,000 Vinney Green Secure Unit DfE funding Grants for specific projects at Secure Unit TOTAL NON SCHOOLS FUNDING 2,513 1,898 899 0

S106/CIL CONTRIBUTIONS SCHEME DESCRIPTION Emersons Green S106 - Primary & Secondary All-through school 4-18 age - Castle Schools Education Trust (CSET) 7,500 Emersons Green CIL - Primary & Secondary All-through school 4-18 age - Castle Schools Education Trust (CSET) 0 Charlton Hayes S106 - Primary 2 FE Primary School - Endeavour Academy Trust 2,512 2,285 Frenchay Hospital Site Proposed Enlargement of Frenchay CE Primary School 3,160 Land East of Coldharbour Lane Proposed Enlargement of Frenchay CE Primary School 1,699 Bonnington Walk Proposed Enlargement of Frenchay CE Primary School 458 Windmill Green - Secondary Proposed expansion of existing secondary schools 454 North Yate New Neighbourhood New Primary School 5,388

TOTAL S106/CIL CONTRIBUTIONS 2,512 10,239 10,705 0 1. TOTAL ALL RESOURCES 7,525 15,231 12,604 550 RISK SCHEME NAME SCHEME DESCRIPTION RATING OF SCHEME 1 Contingency Amount Available to Allocate to Schemes 167 0 REPAIRS AND MAINTENANCE 1 Planned Maintenance (R&M) 17/18 Priority repairs & maintenance works community/controlled schools - 100 1 Urgent Responsive Maintenance (R&M) Urgent Responsive M£a2in.0te5n0amn caello (cRa&tiMon) TOTAL REPAIRS & MAINTENANCE prior years 100 0 0 0 BASIC NEED 2 Warmley Park Special School Additional Specialist School Places for Sept 2017/R&M works - £4.8m 493 allocation 3 Watermore Primary School Provide permanent accommodation for increased numbers/rationalise 3724 500 0 0 onto one school site 3 Primary and Secondary School Places 19/20 Additional Place Provision for September 2019 750 3 Emersons Green All-through school All-through school 4-18 age - Castle Schools Education Trust (CSET) 7500 3 Charlton Hayes Primary School 2FE Primary School - Endeavour Academy Trust 2512 2285 0 0 TOTAL BASIC NEED 2015/16 to 2017/18 SCHEMES 6,729 11,035 0 0

A. TOTAL FUNDING COMMITTED PRIOR TO 2018/19 6,996 11,035 0 0

PROPOSED NEW SCHEMES 18/19 ONWARDS REPAIRS AND MAINTENANCE (R&M) 1 Planned Maintenance 18/19 onwards Priority R&M works for community/controlled schools 2,250 1,250 1,000 1 Urgent Responsive Maintenance (R&M) 18/19 Urgent Responsive Maintenance (R&M) onwards 250 250 TOTAL REPAIRS & MAINTENANCE 2018/19 onwards 2,500 1,500 1,000 0

SECTION 106 SCHOOLS SCHEME DESCRIPTION 3 Proposed Enlargement of Frenchay Primary School Proposed Enlargement of Frenchay CE Primary School 6,900 3 Proposed expansion of existing secondary schools Windmill Green - Secondary 454 3 New Primary North Yate New Neighbourhood 5,388 0 TOTAL SECTION 106 SCHEMES 454 12,288 0 BASIC NEED 3 Basic Need Provision of additional school places 300 TOTAL BASIC NEED 2018/19 -2020/21 0 300 0 0

1 ACCESSIBILITY WORKS Minor Accessibility Works to Respond to Changing Needs of Children on Roll 50 50 SEN Planning Fund 3 years of funding approved - remainder (unallocated) 0 296 399 0 3 The Chase Provision of 25 new places for children with SEND 398 102 3 Warmley Park New nursery provision for 8 children with SEND 3 New Horizons Learning Centre Key Stage 1 provision (14 places) for children with SEMH Early Years (DfE) grant funded Schemes approved in 17/18 1 Devolved Schools DfE grant Schools have 3 years to spend each year's allocation 500 500 500 3 Children & Adults ICT systems 1,615 1,000 0 0 1 Vinney Green Secure Unit DfE funding Grants for specific projects at Secure Unit 1 ADVANCED DESIGN FEES Fees to progress future planned schemes to feasibility/design stages 64 50

B. TOTAL - SCHEMES FOR WHICH APPROVAL REQUIRED 5,127 4,252 14,187 0 2. TOTAL SPENDING ON SCHEMES 12,123 15,287 14,187 0 (A. SCHEMES REQ APPROVAL + B. COMMITTED) 3. IN-YEAR BALANCE REMAINING -4,598 -57 -1,583 550 (1. TOTAL ALLOC - 2. TOTAL SPENDING) 4. UNDERSPEND FROM PREVIOUS YEAR 4,687 5. CUMULATIVE BALANCE REMAINING 89 33 -1,550 -1,000 (4. UNDERSPEND FROM PREVIOUS YEAR - 3. IN YEAR BALANCE REMAINING)

Page 108 Primary School Capital R&M Priorities 2018/19 - 2020/21 TABLE 2

Cumulative Work Building / Total Cost Primary School Total 2018/19 (in priority order) Services £000 £000

Elm Park Primary Reroofing B 250 250

Hanham Abbotts Junior Complete Heating System Replacement S 220 470

Wellesley Primary Reroofing B 50 520

Complete Rewire. Replacement of Heating Christchurch Infants Pipework & Heat Emitters, Hot and Cold Water S 700 1,220 Services Pipework & Suspended Ceilings

Crossways Infants Reroofing B 250 1,470

Replace hot and cold water services pipework in Alexander Hosea Primary main (original) building. Replace boiler plant in S 100 1,570 infants block Electrical service alteration (subject to WPD area network improvement) + Replace off peak heaters Rangeworthy Primary S 30 1,600 and electric over sink water heaters in main school

Additional Unearmarked Resources allow Various additional allocation - to be reported through B/S 500 2,100 Budget Monitor when fully costed Replace obsolete heating/ hot controls (incl Various Bromley Heath Infant & Juniors, Samuel White S 100 2,200 Infant & Wellesley Primary)

Various Electricity mains alterations S 50 2,250

Cumulative Work Building / Total Cost Primary School Total 2019/20 (in priority order) Services £000 £000

Various Highest Priority Building and Services Works B/S 1,150 1,150

Various (3 schools to be Replace obsolete heating/ hot controls S 100 1,250 identified) Cumulative Work Building / Total Cost Primary School Total 2020/21 (in priority order) Services £000 £000

Various Highest Priority Building and Services Works B/S 1,000 1,000

Total 2018/19 to 2020/21 4,500

Page 109

APPENDIX 4 CHIEF EXECUTIVE & CORPORATE RESOURCES CAPITAL PROGRAMME 2018/19 to 2021/22 1 It is proposed that the following schemes are included in the Chief Executive & Corporate Resources Capital Programme for 2018/19 to 2021/22.

Faster Broadband 2 The Phase 1 Superfast Broadband Project contract was signed in January 2013 with British Telecom (BT) and Phase 1 completed in March 2015. In March 2015 the Phase 2 Superfast Extension Programme (SEP) contract was signed with BT with an anticipation of completion in 2017/18.

3 As well as the Phase 1 and Phase 2 rollouts, in December 2016 an open procurement for a Phase 3 was launched. In June 2017, a contract was signed with BT. This is intended to continue to push fibre broadband coverage into many of the remaining areas of South Gloucestershire which are not currently receiving a broadband service with completion anticipated in 2018/19.

ICT 4 ICT budgets have been adjusted to reflect the remaining local area network (LAN) project being amalgamated with WiFi upgrade which has made more efficient use of resources. The new equipment for these projects will be purchased just prior to installation.

5 The adjusted profiling and introduction of budget allocations in 2020/21 and 2021/22 takes into consideration the refreshing of both hardware and support/maintenance of current equipment.

Digital Programme 6 Supporting the Council’s 2020 Vision, the Digital Transformation Programme is a capital funding programme to transform how the council serves its customers. The capital provision will enable the delivery of business change efficiencies through digital transformation to meet £3.2m recurring benefit per annum (net £1.7m which is included in the CSP after meeting additional potential operating costs) through:

Services  Service efficiencies through improved processes, digital systems and digital transformational change;  Improved staff satisfaction through improved digital experience and digital capabilities; Residents  Improved resident satisfaction and experience through centralisation of processes/services and digital journeys like a single Residents Council Online Account;

Page 111  Increased use of web site/customer account – through channel shift and increased number of customer accounts created;

Systems  Consolidation and reduction in IT systems – cost savings against multiple platforms supporting common functions;  Consolidation of Residents data from multiple systems to drive a “single customer view”.

Innovations  Through analytics, insights and cognitive computing driving a better understanding of our residents providing opportunities like:  Personalisation and relevant online residents journeys, relevant targeted communications and relevant messaging  Personalised services  Potential automated systems (Like “Chatbots”)

7 The Digital Transformation Programme will be delivered through Tranches and will utilise Agile as the delivery methodology. The first three tranches will deliver the Digital technical foundations (due during the first quarter of 2018). The fourth Tranche, following a test and learn strategy, will be an opportunity to pilot 3 initiatives which will test the Agile methodology, Transformation processes, Business Change activities and Residents Digital experience. The following Tranches will focus on on- boarding customers to the Digital platform, Service efficiencies / FTE efficiency, improving Residents Digital experience and Systems consolidation. The exact phasing of the capital expenditure will need to remain agile and regular updates will be provided as part of the quarterly monitor reports.

8 The original financing of the Digital Programme was from a mix £500k revenue resource and £2.5m existing capital resource and £2.0m of prudential borrowing. The Council now intends to make use of the Flexible Use of Capital Receipts Guidance introduced by the Government in March 2016 following the decision in the Local Government Finance Settlement to extend it for a further three years after 2018/19 (see Appendix 6). The Digital Programme is an excellent example of the sort of scheme the guidance was designed to support as delivering transformational change can result in a mix of revenue and capital costs. As such the financing of this scheme will be revised under the requirements of the guidance to ensure there is maximum flexibility across revenue and capital expenditure to deliver to necessary outcomes outlined above. This will mean the switching of financing sources within the capital programme to allow up to £3.0m (and increase from £500k) of the scheme in total to be used to fund a mixture of capital and revenue transformational change.

Land Preparation for Disposal

9 In 2015 Policy & Resources Committee agreed to the use of capital resources from the centrally held contingency fund to meet the costs of infrastructure works to bring a key site to market, to be repaid from the resultant capital receipt.

Page 112 Infrastructure works are being carried out in collaboration with the adjoining developer and subject to planning it is anticipated that the major earthworks will commence in 2018.

Backlog Maintenance

10 In January 2016, Resources Sub Committee considered a paper setting out the condition and long term capital maintenance requirements of the Council’s non- schools property assets. The committee approved proposals for additional funding for non-schools backlog maintenance be included in the Capital Programme.

11 The funding was based on high level plans that assessed the likely capital R&M that would be required over the next 30 years. These plans have been refreshed and a summary is attached. More significant changes and issues are:

i. Badminton Road Refurbishment of the turbo chiller that cools the main office and meeting rooms is required (£30k). Due to the increase in number of electric vehicles more charging points are needed. Whilst it may be possible to secure grants to fund these, a budget estimate of £70k has been included.

ii. Broad Lane The buildings at rear of the site are in poor condition with some coming to the end of their economically viable life. For 2018/19 and 2019/20 an allowance of £50k is included to address any health and safety issues, but beyond this more major works would be required. Most significant would be the re-roofing and recladding of the Modern Records building.

iii. Leisure Centres The refresh has identified some works to leisure centres need to be brought forward from the previous assessment. Allowances for the following works have been included between 2018/19 and 2021/22:

a) Bradley Stoke – Dry side boiler plant replacement and car park resurfacing. b) Kingswood – Heating boiler replacement and car park resurfacing. c) Thornbury – Replacement of the pool ventilation system, boiler replacement, re-roofing and car park resurfacing. d) Yate – Boiler plant replacement, emergency lighting central battery replacement and phase 2 of the re-roofing and recladding.

Leisure Centres require more expenditure than any other building type (60% of the total estimated budget between 2018/19 and 2021/22). It is proposed that detailed condition surveys will be carried out during 2018 in order that more accurate estimates can be included and programming agreed with Circadian Trust.

Page 113 iv. Libraries Previously there was an allowance of £400k for works to Thornbury library This is no longer required as the decision was made at Cabinet in December 2017 to relocate the library from the existing building to Turnberries.

v. Public conveniences A significant number of wallgates (hand wash/dryer unit0 need urgent replacement hence the allowance for public conveniences has been increased in 2018/19.

vi. Community buildings Urgent works are also required to Willsbridge Mill and whilst the aspiration is to lease the site to a community group this has not yet taken place.

12 As project / scheme costs included in Table 1 below are based on initial guide estimates only which are highly likely to change during detailed design and delivery phases, all of the figures should be considered to be in the red in accordance with the Cost Estimate Risk Assessment (para 26/27 in the main report).

13 In January 2016, Resources Sub Committee approved including £850k annual funding for non-schools backlog maintenance be included in the Capital Programme, there may need to be some flexibility between years in order to complete some larger projects, subject to available resource. It is proposed that this figure should be included in the 2018/19 programme. During 2018/19 further survey work will be carried out at Leisure centres as noted above and there will be further consideration of future requirements for Broad Lane, both of which have the potential to impact future funding requirements.

The Grange

14 The Draft Capital Programme paper approved by Cabinet in November 2017 outlined the potential for the Accelerated Construction (AC) Initiative run by the Home & Communities Agency (HCA). The Council was successful in getting to the due diligence stage, however, the outcome is not now expected prior to the end of February 2018. If successful this would initially meet the cost of demolition, estimated to be £1m, as part of a loan agreement. The results of the due diligence will be reported to the HCA in early 2018, however, there is no date for the HCA decision. Should the council be unsuccessful on the AC Initiative the decision on funding the demolition will be considered as part of a future capital monitor paper. Any delay in demolishing the building will have revenue implications (£15k per month) which may need to be considered in future revenue monitors.

Land Release Fund

15 A joint West of England bid was submitted in autumn 2017 for both One Public Estate (OPE) revenue funding and Land Release Fund (LRF) capital funding.

Page 114 An announcement has been made that the partnership was successful in being awarded some OPE funding, however, no details have been received.

16 DCLG have yet to make an announcement on LRF funding, however, the LGA Regional Programme Manager advised that nine Council sites were being recommended for approval with a grant of just over £2m.

Energy saving projects

17 Energy Projects for non-school and school sites will be subject to Business Case approval and will be requested on a case by case basis through the quarterly monitor report.

Page 115 TABLE 1: BACK LOG MAINTENANCE 2018/19 to 2045/46 Page 116 Page Appendix 5 Flexible Use of Capital Receipts Policy

Purpose 1. This report reviews the statutory guidance on the flexible use of Capital Receipts and its application within this council.

Background 2. Capital receipts can only be used for specific purposes and these are set out in Regulation 23 of the Local Authorities (Capital Finance and Accounting) (England) Regulations 2003 made under Section 11 of the Local Government Act 2003. The main permitted purpose is to fund capital expenditure and the use of capital receipts to support revenue expenditure is not permitted by the regulations.

3. The Secretary of State is empowered to issue Directions allowing expenditure incurred by local authorities to be treated as capital expenditure. Where such a direction is made, the specified expenditure can then be funded from capital receipts under the Regulations.

4. The Secretary of State for Communities and Local Government issued guidance in March 2016, giving local authorities greater freedoms with how capital receipts can be used to finance expenditure. This Direction allows for the following expenditure to be treated as capital:

“expenditure on any project that is designed to generate ongoing revenue savings in the delivery of public services and/or transform service delivery to reduce costs and/or transform service delivery in a way that reduces costs or demand for services in future years for any of the public sector delivery partners.”

5. In order to comply with this Direction, the Council must consider the Statutory Guidance issued by the Secretary of State. The guidance recommends the Strategy setting out details of projects to be funded through flexible use of capital receipts be prepared prior to the start of each financial year; however if this isn’t done, the Strategy should be presented to full Council at the earliest possible opportunity. Local authorities can update their Strategy but will have to notify DCLG of such changes so they can keep track of planned use.

6. The initial Strategy can be replaced by another Strategy at any time during the year, on one or more occasions. The initial Strategy should specify the circumstances in which a revised Strategy is to be prepared, but a revised Strategy may be prepared in other circumstances, if at anytime it is considered to be appropriate. When setting a revised Strategy it is necessary to amend the Prudential Indicators at the same time. Where an authority presents a revised Strategy during the year this should be copied to DCLG by email.

Page 117 7. The guidance applied from 1st April 2016 to 31st March 2019 and local authorities could only use capital receipts from the disposal of property, plant and equipment assets received in the years when the flexibility is offered. The Provisional Local Government Finance Settlement on 19th December 2017 extended this flexibility for a further three years. Local Authorities cannot use any existing stocks of capital receipts to finance the revenue costs of reform.

8. There is no prescribed format for the Strategy, the underlying principle is to support local authorities to deliver more efficient and sustainable services by extending the use of capital receipts to support the revenue costs of reform projects.

9. The Statutory Guidance for the Flexible Use of Capital Receipts Strategy states that the Strategy should include a list of each project which plans to make use of the capital receipts flexibility, together with the expected savings that the project will realise. The Strategy should also include the impact of this flexibility on the affordability of borrowing by including updated Prudential Indicators.

10. The Flexible Use of Capital Receipts Strategy is set out below:

Flexible Use of Capital Receipts Strategy

11. Government has provided a definition of expenditure which qualifies to be funded from capital receipts. This is:

“Qualifying expenditure is expenditure on any project that is designed to generate ongoing revenue savings in the delivery of public services and/or transform service delivery to reduce costs and/or transform service delivery in a way that reduces costs or demand for services in future years for any of the public sector delivery partners. Within this definition, it is for individual local authorities to decide whether or not a project qualifies for the flexibility.”

12. The Council's intends to use the following use of capital receipts to fund the following transformation projects:

Project Description 2018/19 £m Digital Programme * 2.50 Transformational Change & ‘Bending 2.00 the Curve’ ** Total 4.50

* Digital Programme is already included within the 2018/19 capital programme; the council is looking to switch its original financing to make use of the flexible use introduced by Government. Full details of the purpose and intended outcomes of this programme are contained in Appendix 4 CECR Capital Programme 2018/19 to 2021/22.

Page 118 ** These relate to the savings programmes for ECS/CECR and CAH respectively. Full details are contained in Appendix K and L of the Final Revenue Budget 2018/19 Report, on this same agenda.

13. The savings generated by these projects are set out in the table below.

Project 2018/19 2019/20 2020/21 2021/22 Total Description £m £m £m £m Digital 0.60 0.60 0.50 0.0 1.70 Programme Transformational 0.0 3.670 2.744 3.117 9.531 Change ‘Bending the 0.0 3.159 2.382 2.202 7.743 Curve’ Total 0.60 7.429 5.626 5.319 18.474

14. This strategy may be updated one or more times during the course of the financial year to reflect changing priorities or requirements. As such, a revised strategy may be presented to Council as more detailed savings options are consulted upon following the approval of the Medium Term Financial Plan to 2021/22 in February 2018.

Impact on Prudential Indicators 15. The guidance requires that the impact on the Council’s Prudential Indicators should be considered when preparing a Flexible Use of Capital Receipts Strategy.

16. The indicators that will be impacted by this strategy are set out below:  Estimates of Capital Expenditure Indicator increased by £2.0m  Financing costs as a percentage of net revenue stream (%), noting that the savings generated from these projects will meet the debt financing costs arising from the additional borrowing.

17. The Prudential Indicators show that this Strategy is affordable and will not impact on the Council’s operational and authorised borrowing limits.

Page 119

By virtue of paragraph(s) 3 of Part 1 of Schedule 12A of the Local Government Act 1972.

Document is Restricted

Page 121

Agenda Item 11 South Gloucestershire Council

REPORT TO: COUNCIL

DATE: 14th February 2018

REVENUE BUDGET, SPECIAL EXPENSES AND COUNCIL TAX 2018/19 to 2021/22 (All Wards)

Purpose of Report

1. This report requests Full Council to consider the council’s current budget position, and approve the recommended revenue budget, Special Expenses and a Band D Council Tax for 2018/19 with the planning totals for the following three years. As the Final Local Government Finance Settlement 2018/19 was not released at the time of this report, a further update will be provided to Cabinet as part of the normal financial reporting cycle once more information is available. If the proposals set out in this report are agreed, it will lead to a 4 year Medium Term Financial Plan which is balanced for the first three years, and remaining £5.0m core deficit in year 4.

Recommendations:

2. Full Council is recommended to: a. Note the responses to the budget consultation;

b. Take into account the Chief Financial Officer’s comments on the robustness and sustainability of the budget;

c. Approve a Revenue Budget of £215.902m for 2018/19, and an increased Band D Council Tax of £1,441.07. Set planning totals for future years of £210.143m, £214.569m and £217.959m for 2019/20 to 2021/22 respectively based on the contents of this report including illustrative increases in Band D Council Tax levels of £1,484.15, £1,513.69 and £1,543.81 respectively, which includes the additional adult social care precept increase of 3% on the basis this will be spent on adult care costs;

d. Approve move to increase the council tax charge on empty properties from 50% to 100%;

e. Note the revised Council Savings Programme at Appendix E;

f. Approve the proposed Transformational Change Programme 2018/19 to 2021/22 targets at Appendix L and note that detailed proposals will be presented to Cabinet during 2018/19 and subject to separate consultation as appropriate;

g. Approve the proposed ‘Bending the Curve’ Programme 2018/19 to 2021/22 targets at Appendix L and note that detailed proposals will be presented to Cabinet during 2018/19 and subject to separate consultation as appropriate;

h. Approve the total and distribution of Special Expenses as set out in Page 123 Appendices H and I;

i. Approve the 2018/19 Annual Pay Policy Statement as set out in Appendix J;

j. Note the contents of the Medium Term Financial Plan (Appendix D) and its assumptions for later years, including the potential use of General Fund Balances;

k. Note the position on Earmarked Reserves as set out in this report and at Appendix F;

Policy

3. The Council’s Constitution sets out the process for the budget and policy framework. In addition, the Council is required to conduct a public consultation process prior to setting the budget. The Council is required to set its budget by, at the latest, midnight on 10th March 2018.

4. The Chief Financial Officer also has a statutory duty to report on the robustness of estimates and the adequacy of reserves when the Council is considering its budget requirement.

Background

5. Cabinet has considered a number of reports as part of the build-up of the revenue budget. Cabinet set the overall budget assumptions on which the revenue budget was prepared on 3rd July 2017. This has then been updated following further consideration of the revenue budget by Cabinet on 6th November 2017. Cabinet considered the proposed revenue budget report on 5th February 2018 and have recommended on to Full Council.

6. The Council has also undertaken a budget consultation exercise between 6th November and 12th January to gather residents’, businesses’ and key stakeholders’ views on priorities, core services and the Council’s high level savings targets. The results of this consultation are set out in this report.

7. Cabinet agreed the Council Tax Base figures on 4th December 2017 which have been used in this budget report. The formal estimate of the 2017/18 Collection Fund year-end balance is included on the agenda for this meeting.

8. The Autumn Statement 2017 with the annual update of the Government’s plans for the economy was announced on 22nd November 2017 and the Provisional Local Government Finance Settlement for 2018/19 was issued by the Department for Communities and Local Government on 19th December 2017 and updated on the 18th January 2018.

9. The local government national pay award was announced at 2% across all HAY graded staff with additional increases for those on the lowest grades. This was in excess of the 1.5% across the board increase assumed in 2018/19 within the MTFP. Page 124 10.The first and second quarterly monitors for 2017/18 saw increasing pressures building within Children’s and Adults Services which were in excess of the growth originally assumed within the MTFP. This was contrary to the general trend seen over recent years following the transformation work undertaken by the Department. As a result, an extensive analysis of price and activity trends was undertaken with the support of CIPFA and the results of this have been included within this report. The third quarter monitor is on this same agenda and highlights these continuing pressures which have been rolled forward and taken into account in the establishment of the 2018/19 base budget.

11.The MTFP in November 2017 indicated a budget deficit of £16.8m by 2021/22 and proposals have been made as to how the budget will be balanced from 2019/20 onwards in Appendix K and L subject to further more detailed Cabinet reports and public consultation where necessary.

Issues

12.The main issues to be considered and covered in this report are:

i. The External Environment ii. Budget Consultation Results iii. Council Funding 2018/19 (including School Funding) iv. Revenue Budget 2018/19 to 2021/22 v. Reducing the Budget Deficit vi. Earmarked Reserves and General Fund Balances vii. Reform of the Local Government Finance System viii. Special Expenses ix. West of England Combined Authority i. The External Environment

13.The latest economic and fiscal outlook produced by the Office of Budget Responsibility (OBR) was published to coincide with the Chancellor’s Autumn Statement in November 2017. The OBR report indicated that real GDP growth had slowed noticeably during 2017 and that the fall in the pound following the EU referendum had pushed up consumer price inflation (CPI) and squeezed households’ real incomes and spending. The report also highlighted a continuing pattern of weaker productivity growth and stronger employment growth which continues to feature in OBR forecasts. More detailed analysis is provided in the Treasury Management reports to Audit and Accounts Committee and Council.

14.Following the OBR report, the Department for Communities and Local Government announced the provisional Local Government Finance Settlement (LGFS) for 2018/19 on 19th December 2017, together with indicative figures for 2019/20. At a high level, the provisional LGFS:

a. Confirmed continuing cuts to Revenue Support Grant; b. Updated Core Spending Power figures; c. Adjusted business rates baselines and tariff / top-ups to reflect the 17/18 revaluation and the change from RPI to CPI inflationary rate; Page 125 d. Announced a consultation in the Spring 2018 on ‘negative RSG’ in 2019/20, and launched a high level consultation on relative need formula moving forward; e. Announced the intention to move to 75% local business rate retention and loss of certain grants from 2020/21; f. Increased the general council tax referendum limit by an extra 1% for 2018/19 and 2019/20; g. Confirmed New Homes Bonus framework remains unchanged for 2018/19.

15.The financial implications arising from the provisional LGFS are considered in more detail throughout this report. It should be noted that at the time of writing this report the final settlement had not been announced by Government, which could make changes to the above. ii. Budget Consultation Results

16.An important part of the Budget and Council Tax setting process is the budget consultation with South Gloucestershire residents and businesses. The following methods have been used this year: paper survey mailed to residents, online survey; viewpoint citizens’ panel, invitation to comment via letter, email and social media.

17.The deadline for responses to the Budget Consultation was 12 January 2018 and the summary results from the budget consultation exercise are shown in Appendix A. Any further comments received that could impact on these results will be updated to the Cabinet. The main outcomes from the responses are:

Main outcomes Resultant actions Council Tax- 73% of Residents have continued to be supportive of an overall residents support an increase in council taxes to support ongoing service increase in council tax, provision. There also continues to be support for a further with 28% supporting an increase via an adult social care precept specifically to fund increase of 4.99%. adult social care. Overall 28% supported a 4.99% increase, and 27% a 3.99% increase in Council Tax (with 17% supporting a 1.99% increase). 19% supported a freeze. Responses to the supplementary question around an additional 1% increase on basic council tax above the above were small with mixed views. ACTIONS: The budget proposals set out in the MTFP are for an overall increase of 5.99% in 2018/19 in council tax, 2.99% in 2019/20, and 1.99% in subsequent years. Future years are for planning purposes only, and will be subject to decision making and consultation responses in future years. Satisfaction with Results have generally been consistent with previous years, services and support services with the highest satisfaction being parks and open for Core Council spaces, libraries, sport and leisure and waste and recycling. Activities as part of Lowest satisfaction seen around children’s social services, service prioritisation environmental health and trading standards, highways and process roads, and planning. Looking at the core services the Council has identified to support priority setting and funding decisions, those with highest support were maintaining safe Page 126 Main outcomes Resultant actions and clean communities, safeguarding children and adults, and delivering jobs, homes and infrastructure. The least well supported was closing the gap. Whilst 84% of residents were satisfied with South Gloucestershire as a place to live, less than half of respondents think the Council keeps them informed about services, changes, or that the council acts on their concerns. ACTIONS: The budget proposals set out in this report seek to continue to protect core areas as far as is possible, with flexibilities around Council Tax to support adult social care being taken up, and significant additional funding being put into adults and children’s social services. Many of the services that respondents rank highly and value are also the council’s highest spending comparatively to other authorities. To enable the council to meet its budget pressures, a number of these areas will form part of a savings review within the ECS department over the coming years, these reviews will seek as far as is possible to protect outcomes and are looking to still protect our net cost of service at above the average of other similar authorities. The budget also includes additional funding to educational attainment across our schools, and support for care leavers. The Council’s support for a devolution deal should continue to promote a more West of England focussed solution to strategic issues around skills, jobs, transport infrastructure and homes, as well as unlocking significant new funds for the area to invest in this priority. A key element of the Council’s new digital strategy is focussed around engaging externally, and better communication with residents, the funding previously included with the MTFP should deliver improvements in this area over the medium term. Satisfaction with The most supported approaches to delivering savings approaches to savings remain through more efficient use of council assets, land funding and buildings, the better use of technology, and working in partnership with other public bodies. There was increased support for targeting our resources on the most vulnerable. The lowest areas of support were for reducing quality of services, transferring services to the private sector, and scaling back or stopping services. There was also increased support (by 4%) for increasing fees and charges for some services. ACTIONS: The Council’s CSP continues to focus around doing things differently, and delivering savings through efficiencies where possible, however given the level of savings required it is recognised that this alone is not enough. The Council continues to look for savings through the use of its accommodation, with significant savings achieved from the ongoing rationalisation of its office suite. The Council’s digital strategy should lead to not only improvements in customer service, but greater staff productivity and financial savings from the use of technology. The Council continues to look for savings and added value from working in partnership with other public Page 127 Main outcomes Resultant actions sector bodies, including health, neighbouring councils, and the combined authority. The new savings programmes included within this MTFP will continue this trend, looking at alternative delivery models, smarter commissioning, and the targeting of our limited resources more effectively on the most vulnerable.

18.The Government announced on 19th December that they were lifting the referendum limit for 2018/19 and indicatively for 2019/20 from 2% to 3%. The budget consultation period closed on 31st December and insufficient time was available to consult the public fully and as such the council has welcomed views outside of the consultation period but these have not been able to form part of the formal budget consultation process although the comments received are captured in the Full Consultation Output Report. iii. Council Funding 2018/19

Core Spending Power 19.The 2018/19 Provisional Local Government Finance Settlement figures for this Council are provided below. As in previous years, these are subject to confirmation when the Final Settlement is published, which is usually in early February 2018. The Council’s overall provisional headline funding amounts for 2018/19 are:

CORE SPENDING POWER 2018/19 £m Settlement Funding Assessment 46.1 (provisional) Compensation for under-indexing the 0.8 business rates multiplier New Homes Bonus 6.3 Improved Better Care Fund 3.3 Assumed by Central Government: Council Tax requirement 123.9 Additional Revenue from referendum 9.9 principle for social care Core Spending Power 190.3

20.The Spending Review set out the expected available revenue for local government spending through to 2020/21, using Office of Budget Responsibility (OBR) estimates, to help provide local government with an understanding of the likely resources available to the whole sector to deliver services during this Parliament. The local authority core spending power figures set out indicative figures for the potential income from core components that could be available to authorities over those four years. It should therefore be noted that, for example, the Council’s actual income from council tax is £300k less than that assumed by Government in the table above.

Page 128 21.The Spending Review in 2015 applied a reduction in funding of £1.4bn or 28% across local government between 2017/18 and 2018/19. Between 2016/17 and 2019/20, local government’s funding reduced by £4.9bn or 68% and taken account of within the Core Spending Power figures presented each year as part of the Local Government Finance Settlement. The table below shows that after the council’s share of the reductions proposed in 2015 covering 2016/17 to 2019/20, the council’s core spending power has increased by only 1.4%, between 2017/18 and 2018/19, a significant shortfall compared to current inflation rates increases.

22. The Council’s Settlement Funding Assessment, which is the revenue received by local authorities in the form of Revenue Support Grant from central government and the share of business rates retained locally shows a 9.6% reduction between 2017/18 and 2018/19, and a further 11.2% in 2019/20. The national average change in SFA for unitaries against 2017/18 is 7.5% in 2018/19 and 8.5% in 2019/20.

23. The council is also involved in a business rates pilot. Technically, the pilot has only been agreed to continue until the end of 2018/19, however for local financial planning purposes the council is assuming the pilot will continue into 2019/20 until the changes to the Local Government Finance System which are understood to be due to be implemented from 2020/21. There are also a number of other grants received from Central Government outside of the Local Government Finance Settlement, which are budgeted for in accordance with the specific conditions applying.

Business Rates 24.The 2013/14 Finance Settlement saw the launch of the Business Rates Retention scheme as the principal form of local government funding from Government. From 1st April 2017, this Council became part of the West of England 100% Business Rates Retention Pilot as a result of the Devolution Deal and formation of the West of England Combined Authority. This saw the council trialling the risks and rewards arising from removing central government’s share of local business rates retention. The MTFP shows the current benefits to the council of this are approximately £5m per annum across 2018/19 and 2019/20, although this will not be confirmed until after the end of each financial year.

Page 129 25.The Medium Term Financial Plan and the 2018/19 budget includes a revised forecast of the council’s business rates revenue – this has been adjusted since November 2017 to reflect the latest available data and takes account of the technical adjustments announced in the LGFS that impacted upon net business rates retained by local government as well as local changes relating to appeals and reclassifications.

26.The first change relates to the decision to move from RPI to CPI as the annual rate of increase to business rates bills. This change resulted in a loss of business rates income to local government and as a result Government committed to compensating the sector. An initial assumption was made in 2017/18 that the loss of income would arise from a reduction from RPI at 3.2% to CPI at 3.0%. However, RPI actually stood at 3.9% so local government has been compensated through s31 grant for the 0.7% additional loss of business rates income as well as the additional drop of 0.2% originally planned for in 2017/18. This has resulted in an additional one-off s31 grant of £755k in 2018/19 related to 2017/18 and an ongoing increase in s31 grant.

27.The second change relates to the business rates revaluation which took effect from 1st April 2017. Revaluation is intended to be a revenue neutral exercise nationally so that total rates bill will stay the same at the England level in real terms, after allowing for appeals. At the local authority level, overall bills will increase or fall depending upon whether rateable values in that area have performed above or below the average for England, after allowing for appeals. This creates change in the system outside the control of local authorities. When the Government introduced the 50% business rate retention scheme it signalled that it would adjust each authority’s tariff or top up following a revaluation to ensure, as far as is practicable, that their retained income is the same after revaluation as immediately before.

28.In November 2017, adjustments to the nationally set tariff were estimated based on available data and using the methodology as it was understood to operate. However, in the provisional LGFS these have been updated following receipt of updated valuation information from the Valuation Office Agency using an adjustment methodology that has been changed at settlement taking into account an adjustment for appeals. These adjustments have resulted in an increase in the tariff paid by this council and have been incorporated into the revised MTFP accordingly. Representations have been made to ask for transitional grant to smooth this position, given it was not consulted on as part of the summer consultation on changes undertaken by the Government.

29. 100% business rates retention pilot – Since 1st April 2017 the council has been part of the West of England 100% Business Rates Retention Pilot, Government have confirmed this will continue in 2018/19 and the MTFP assumes further continuance into 2019/20 on the basis that the Government has indicated that substantial changes including the introduction of 75% rates retention nationally will be introduced in 2020/21. The Council continues to implement its local strategy of setting aside the gains generated from the pilot into the Financial Risks Reserves to support budget deficits in future years. Across 2017/18 to 2019/20, the MTFP assumes the council will have benefited from an estimated £18.5m in additional revenue funding through the establishment of the West of England business rates pilot. Page 130 30. The West of England Combined Authority (WECA) continues to lead the negotiations around pilot extensions direct with MHCLG and the Treasury and these conversations will continue over the forthcoming financial year with updates brought back to members as appropriate.

Council Tax – General Precept 31.Council Tax income has now been updated to reflect the Council Tax Base figures approved by Cabinet in December 2017. The Local Council Tax Reduction scheme impact on the 2018/19 Council Tax Base has been estimated on a snapshot of data. In practice, individual Council Tax payer’s circumstances will vary over time and this will have an unquantifiable effect on Council Tax yield. In turn this will have an impact on the Collection Fund surplus/deficit position at the end of 2018/19. The Council Tax income figure for 2018/19 is based on the current Local Council Tax Reduction scheme as approved by Council on 10 December 2014.

32.The Provisional LGFS has increased the general council tax referendum limit from 2% to 3% in 2018/19 and indicatively in 2019/20. The resources available to the Council to fund its services (and the MTFP / budget proposals included in this report) have been updated to take account of the additional council tax revenue arising of £1.259m in 2018/19 rising to £2.672m in 2019/20.

33.It also deferred the setting of referendum principles for town and parish councils for 3 years subject to the sector taking all available steps to mitigate the need for council tax increases across the sector and the government seeing clear evidence of restraint.

34.In November 2017, the Chancellor announced that local authorities were to be able to charge a 100% premium on council tax for empty properties after two years. The premium is currently at 50% and any change will apply from 2019/20 resulting in an additional £70k of income per annum included in the MTFP. The Council is required to approve this change and as such a recommendation is included in this report to increase the charge for these premises from 50% to 100%.

Council Tax – Adult Social Care Precept 35. During the Spending Review period (2016/17 – 2019/20) social care authorities (like South Gloucestershire Council) are able to increase their Council Tax by 2 per cent per annum over the existing referendum threshold, with the proviso that the additional income from the ‘social care precept’ is spent on adult social care services. In last year’s LGFS, councils were given the choice to raise the precept by up to 3% in 2017/18 and 2018/19, provided the total increase over the 3 years (to 2019/20) did not exceed 6%. If taken up, councils needed to justify social care precept rises to taxpayers, and be able to show how the additional income is being spent to support people who need care in their area and how it improves adult social care services. The budget proposal in this report continue on the basis of that agreed this year, in have a social care precept of 3% in the first two year, and 0% in 2019/20 based on current guidance.

36. The Medium Term Plan forecasts for Council Tax income are therefore based on a Council Tax increase of 5.99% (2.99% plus 3% ‘social care precept’) in 2018/19,

Page 131 followed by a further 2.99% Council Tax in 2019/20 and 1.99% increase thereafter for planning purposes.

37. The Adult Social Care (ASC) precept continues to be used to fund, in part, the cost pressures arising from adult social care cost within the 2018/19 budget. These pressures are covered in more detailed elsewhere in this report and in Appendix L.

38. To make use of the extended 1% precept flexibility outlined in paragraph 36, the Council is required to publish a description of its plans, including changing levels of 2018/19 spend on adult social care and other services which must be signed off by the Chief Financial Officer. Appendix L discusses the current cost pressures, the forecast budget growth within adult social care and the approach to service change.

39.There were no new announcements in the provisional LGFS in respect of funding for children’s or adults social care services with the Government confirming it will publish a Green Paper on adult social care in summer 2018.

40. Based on the 3% ASC precept and included within the base budgets, the following investment has been made into Adult Social Care across 2016/17, 2017/18 and 2018/19 since the precept was introduced:

Collection Fund 41. The Council is also required to adjust its budget for 2018/19, for its share of any estimated Council Tax Collection Fund surplus/deficit for 2017/18. This is the subject of a separate report on this agenda. It should be noted that it is planned to offset the Council’s share of the Collection Fund deficit in the 2018/19 budget with a release from the Financial Risks Reserve as planned in the draft Revenue Budget report in November 2017.

New Homes Bonus 42. In the provisional Local Government Finance Settlement, the allocation for New Homes Bonus was increased slightly nationally. The LGFS confirmed that, as consulted on in 2016, the length of time that the bonus is paid will reduce from five years to four years in 2018/19 and thereafter (the MTFP had already accounted for this). The threshold over which the bonus will be paid has remained at 0.4%, and the Government has decided against going ahead at present with the change consulted on which would have meant the bonus not being paid for homes which had been granted permission by the Planning Inspectorate (i.e. on appeal). This has confirmed that the NHB will not be reducing as quickly as had originally been assumed in the MTFP and additional resources have been included to reflect this.

Page 132 Available Resources 43. The funding level below assumes the Council’s business rates income plus rolled-in grants matches the “no detriment” position of the pilot. The forecast gain has been captured as a transfer to the Financial Risks Reserve for release in future financial years.

2018/19 2019/20 2020/21 2020/21 Resources Available (estimate) £'000 £'000 £'000 £'000 Council Tax 123,804 130,421 135,874 141,552

Council Tax – Adult Social Care precept 9,684 9,877 10,075 10,276

Business Rates - funding net of tariff 48,285 46,180 37,696 38,450

Business Rates - s31 grant 5,724 5,027 3,419 3,488 Business Rates - Renewable Energy 1,015 624 630 636 Schemes Revenue Support Grant 3,174 2,419 City Deal growth funding * 12,619 10,962 11,072 11,183 Improved Better Care Fund 3,341 3,561 2,246 2,246 New Homes Bonus 6,227 5,650 4,000 2,700 Collection Fund Deficit -2,069

Total Estimated Resources Available 208,629 212,302 208,186 212,950 Estimated Business Rates Pilot Gain - -4,982 -5,104 0 0 transferred to Financial Risks Reserve Net Estimated Resources Available 203,647 207,198 208,186 212,950 * paid into WoE City Region Deal pool for which SGC is the accountable body

44. In projecting the level of future business rates income, one of the most complicated issues is making an assessment around the impact of business rate appeals. The Council is required to meet its share of any losses on business rate appeals over which the Council has no influence or control. In effect this is part of the process of sharing the benefits and risks of business rate localisation. Under the pilot, the council is required to meet all business rate appeal risk. A reasonable level of provision has been set aside for appeal risk.

Schools Funding

45.The Dedicated Schools Grant allocation for 2018/19 is presented in four blocks. The schools block is used to fund mainstream schools and their provision. The central school services block is funding that local authorities use to provide services for all schools. The early years block is used to fund early years’ provision for 2, 3 and 4 year olds. The high needs block brings together funding to enable commissioning of places and support for Children and young people with special Educational Needs or Disabilities from 0-25 years of age

Page 133 46.The 2018/19 Dedicated Schools Grant for South Gloucestershire before funding is transferred to the Educational and Skills funding Agency for academies and post 16 high needs places. This is summarised below:

2018/19 £000s Schools Block 151,188 Central Schools Block 4,145 High Needs Block 31,098 Early Years Block 16,015 Total 202,446

47.On 14th September 2017, the Government published its final position on how the new national funding formula and high needs formula would work from 2018/19. In doing this the Government made a number of changes to the formula with the overall impact that all schools nationally will attract higher levels of funding under the national funding formula with 8,405 or 42.3% of all schools gaining over 3%, and 4,240 or 21.4% over 6%.

48.In South Gloucestershire, although on a per pupil basis, we are the lowest funded local authority, through the new National Funding Formula we have seen a Schools Block funding increase excluding pupil number changes of £4,300k – a significantly above average increase.

49.Deficit Recovery Plan - 2018/19 will be the second year of the 4 year DSG deficit recovery plan approved by Council and the Schools Forum. The plan forecasts the DSG to achieve an in-year £70k underspend in 2018/19. Any surplus or negative balance will be transferred to the ring fenced DSG recovery reserve at year end. The recovery plan forecasts a cumulative deficit reserve balance of £10,506k at the end of 2018/19, reducing to a balanced position by 2020/21. Performance against the plan will be reported to Cabinet as part of the quarterly revenue budget monitor reports.

50.After consulting with all South Gloucestershire Schools and the Schools Forum a request was submitted to the Secretary of State for Education to transfer funding from the Schools Block of the DSG to the High Needs Block as part of the DSG Deficit Recovery Plan. The Council received the positive news on 18 January 2018 that the Secretary of State was in principle minded to approve the request subject to the Council providing clarification on 2 points of the submission. Following submission of this further information it is anticipated a final decision will be made by early February which will allow the Council to produce final school budgets by the statutory deadline of 28 February 2018.

51.Schools in Financial Difficulties – Given the increasing financial pressures schools are facing, during 2017/18 the council proactively set up a Schools in Financial Difficulty (SFiD) Group to work with schools experiencing financial difficulties. There is already positive indicators that this group is making a real difference in strengthening the financial governance and sustainability of the schools it is working with. Looking forward, it has already identified a number of further schools who could be at risk of falling into a deficit position that Council Officers can provide early support to.

Page 134 52.The School Balances reserve will reduce if schools continue to rely on their one-off school reserves to balance their budgets and more schools convert to academies. Should schools balances be fully depleted there is a risk that financial support will fall on the council’s own general balances. This risk is being monitored through the SiFD group and further updates will be brought forward over the course of 2018/19 as required. iv. Revenue Budget 2018/19 to 2021/22

53.The 2018/19 to 2021/22 revenue budgets are based on the assumptions agreed by Cabinet in July 2017, and the revised draft MTFP presented to Cabinet on November 2017. These draft revenue budgets have been updated to take account of any technical adjustments arising as well as any other changes necessary to better reflect future spending projections and Cabinet decisions, since the Cabinet budget report on 6th November 2017. These updates are included in the revised revenue budgets 2018/19 to 2021/22 in Appendix B.

54.The budget changes since the November 2017 meeting are summarised in Appendix D, with the main areas detailed below:  The interest rate forecasts have been updated to take account of forecast cash balances and the revised Capital programme, including taking account of the cash flow financial implications of the Cribbs Patchway New Neighbourhood S106 agreement as considered by Cabinet on 4th December 2017.  The council’s capital charges have been updated to reflect the revised capital programme and its financing arrangements.  The growth forecasts for the City Region Deal (CRD) have been refreshed with the impact being seen in both an increase in available resources and net increase in payments by the council into the CRD pool. Whilst this grossing up of cost and income is net neutral to the council, it does see benefit locally through Tier 1 and Tier 3 income streams, the forecasts of both have been updated resulting in an additional £1.562m income in 2018/19. Of the total income received in 2018/19, £439k comes from Tier 3 income which is local benefit arising from being part of the City Region Deal.  On 5th December 2017, the National Employers, who negotiate on behalf of 350 local authorities across the UK, proposed that the majority of employees (all HAY graded staff for this authority) should receive a 2% increase for 2018/19 and a further 2% in 2019/20. They further proposed that staff on lower salaries should receive higher increases. The financial impact of this proposal on our directly employed staff and relevant contracts has been modelled across the council and the additional cost captured into the MTFP.  During 2017/18, the council has seen increasing overspends forecast across children’s and adult services within the CAH directorate. To address this, the council commissioned specialist financial support through CIPFA to review its historical trends in terms of price, demand and activity to establish the likely growth needed in the 2018/19 budget and ongoing across the duration of the MTFP. Further detail is shown in Appendix L.  Integra have been in the process of developing a business plan identifying the commercial opportunities available to take the council’s traded services forward. The MTFP recognises that there will be a financial pressure arising

Page 135 across traded services as the earmarked reserve is depleted supporting the forecast budget deficit of £599k for the service in 2018/19.  The Council holds a Corporate Allowance to act as a buffer for areas of demand, volatility or significant financial risk. The Corporate Allowance in 2017/18 was £600k and held to cushion rising cost pressures within Children’s Services. The 2018/19 Budget and MTFP assumes the £600k will be transferred on a permanent basis to the CAH department to partly offset the growth requirements. The Corporate Allowance has subsequently been refreshed to increase the level of contingency held to primarily manage increasing prices and demand pressures across social care services, as well as a small number of other potential cost pressures (see para 57 below).  Income, Trading & Commercial opportunities and Savings & Efficiencies across the departments have been reviewed resulting in an additional £2,070k of support to the 2018/19 budget and recurrently thereafter. The details of which are shown in Appendix D MTFP. This includes potential income from the creation of property investment fund and/or different approaches to our treasury management activities, and also the potential creation of housing company.  This point above includes income arising from the provisional LGFS where it was confirmed that local government will be able to increase planning fees by 20% where they commit to spending the additional income on the planning service. This council’s planning service is significantly subsidised and as such a prudent estimate of the additional income has been allocated to reduce this subsidy with any remaining surplus fees being earmarked for transfer into a planning appeals reserve.

55.In addition to these changes, the budget includes a number of service enhancements as set out in Appendix B. These include additional funding:  To support the work of the CVS  Supporting our care leavers through additional promotion of apprenticeships  Supporting our care leavers through the creation of a policy to provide council tax support  Promote STEM innovation amongst our school students through funding access to Bristol Aerospace  Promotion of excellence, aspiration and best practice across our schools through a School Awards Evening  Additional funding to support school improvement activity

Corporate Allowance

56.The Council holds a Corporate Allowance to act as a buffer for areas of demand, volatility or significant financial risk. The Corporate Allowance in 2017/18 was £600k and held to cushion rising cost pressures within Social Services. The 2018/19 Budget and MTFP assumes the £600k will be transferred on a permanent basis to the CAH department to partly offset the growth requirements. The Corporate Allowance has subsequently been refreshed to ensure sufficient contingency is held to manage increasing prices and demand pressures across social care services as well as a creating some capacity for any wider cost pressures. It is held within Central Items and draws upon it are reported and approved through quarterly revenue monitor reports to Cabinet. A summary is shown below: Page 136 2018/19 2019/20 2020/21 2021/22 £'000 £'000 £'000 £'000 Children's & Adults - Price Increase Risk 2,428 2,428 2,428 2,428 Children's & Adults - Demand Risk & Demographic Growth 1,288 2,888 5,599 8,310 General Risk Contingency 300 1,350 1,750 1,750 Total Corporate Allowance (cumulative) 4,016 6,666 9,777 12,488

Revised Budget Position 2018/19 to 2020/21

57.The overall position is set out in the table below:

2018/19 2019/20 2020/21 2021/22 £'000 £'000 £'000 £'000 1 Total Estimated Resources Available 208,629 212,302 208,186 212,950 2 Base Budget 224,175 220,866 226,574 235,282 Draft Net Expenditure – Deficit (-)/ 3 -15,546 -8,564 -18,388 -22,332 Surplus (Row 1 less row 2) 4 Current Council Savings Programme 6,203 3,844 CECR & ECS - initial savings 5 1,570 * see Appendix K for details CAH - initial savings 6 500 * see Appendix L for details Revised Net Expenditure – Deficit (-) / 7 -7,273 -4,720 -18,388 -22,332 Surplus (Row 3 plus rows 4, 5 and 6) 8 Contribution to (-) / use (+) of reserves 7,207 -2,103 Revised Year End Deficit (-)/Surplus 9 -66 -6,823 -18,388 -22,332 after use of reserves (Row 7 plus 8) Cumulative Deficit (-)/Surplus before 10 -66 -6,889 -25,277 -47,609 cost pressures

58.The graph below shows the movement between the annual base budgets within the MTFP for resources and net expenditure, showing the growing budget deficit identified in the table above.

Page 137 59.Following the updates for the points raised above, the most significant being the increasing pressures arising from Children’s and Adults Social Care, this table shows a budget deficit of £66k rising to £6,823k in 2019/20, after the application of one-off funds across both years amounting to £5,102k from the Financial Risks Reserve. This is in line with the proposals brought forward in November 2017. Following this drawdown there is forecast to be a remaining balance of £9,010k on the Financial Risks Reserve at 31st March 2019, rising to £10,623k by 31st March 2020 due the Council’s strategy of setting aside gains from the 100% Business Rates Pilot (this is on the assumption the council sees a third year of the business rates pilot on the same basis as years 1 and 2).

60.After 2019/20 the Council sees a rising core deficit (after achievement of the Council Savings Programme targets) of £18,388k rising to £22,332k in 2021/22. Further savings are required to reduce the core deficit and bring the budget back in balance, and these are considered in more detail in paragraphs 66 to 77. The council’s history of strong and robust financial management means the current Medium Term Financial Plan provides the time to implement budget savings as well as capturing budget opportunities realisable in 2018/19. Significant new savings are not required for next year, and following previous practice this enables time for detailed proposals to be worked up and consulted on deliver the savings required in years 2-4 of the MTFP. Work has already commenced in the identification of fresh opportunities to either reduce cost, generate income, manage demand or undertake further transformational change across the council as set out later in this report. More detailed updates and proposals will be brought back to Cabinet by the summer.

Departmental Base Budgets and Funding 61.Taking on board the proposals set out in this report the overall budget position for the next two years by Portfolio would be as follows. This is analysed in more detail in Appendices B and C:

Page 138 2018/19 2019/20 Net Revenue Base Budget £'000 £'000 Children, Adults & Health 127,602 127,654 Environment & Community Services 45,611 46,544 Chief Executive & Corporate Resources 19,250 18,832 Central Items 19,423 17,326 Corporate Allowance 4,016 6,666 Total Base Budget 215,902 217,022 Funded by Council Tax 123,804 130,421 Council Tax – Adult Social Care Precept 9,684 9,877 Business Rates - Funding Net of Tariff 48,285 46,180 Business Rates - S31 grant 5,724 5,027 Business Rates - Renewable Energy 1,015 624 Schemes City Deal growth funding 12,619 10,962 Improved Better Care Fund 3,341 3,561 New Homes Bonus 6,227 5,650 Collection Fund Deficit -2,069 Total Resources 208,629 212,302 Budget Deficit 7,273 4,720 Transfer to Financial Risks Reserve - Pilot Gain 4,982 5,103 Transfer from Financial Risk Reserve - Budget Deficit Support -12,189 -3,000 Net Budget Deficit 66 6,823 (Note: The Director of Corporate Resources and Deputy Chief Executive is responsible for the Central Items budget)

62.The overall MTFP is prepared on the basis of these assumptions, the contents of this report, the achievement of the Council Savings Programme, and a Council Tax increase of 5.99% in 2018/19 followed by 2.99% Council Tax increase thereafter. These are believed to be reasonable assumptions given the current economic climate and when assessed against the risks and levels of Earmarked Reserves / General Fund Balances demonstrate that the proposed 2018/19 budget is sustainable in the short term. It should be noted that the medium term position is predicated on a number of assumptions which are set out more fully under the risk section. Appendix D shows the revised 10 year Medium Term Financial Plan. v. Reducing the Budget Deficit

Current Council Savings Programme

63.This Council to date has been very successful at delivering savings and mitigating the impact on services as a result of early planning and robust delivery. It is important that this continues through this next cycle of budget pressures and resultant saving requirements. Whilst the level of savings still required for delivery under the original Council Savings Programme is falling as implementation occurs, there still remains a risk, and taken with the projected Page 139 future core deficit the overall need to deliver savings will remain a key risk to the Medium Term Financial Plan moving forward.

64.The Medium Term Financial Plan in this report includes a key assumption that the Council Savings Programme savings total will be met in full by the required timescale. The level of savings, that the Council has achieved to date through the Transformation Programme, together with the remaining savings in the Council Savings Programme, is unprecedented. The revised Council Savings Programme sets out overall targets for Departments set around ensuring continued support for the Council’s core service areas. If a Department decides to change the Savings Programme targets/areas within its remit, and not deliver certain savings, then it will need to find alternative savings if a balanced budget is to be maintained. It should be noted that the challenging savings targets for the Digital Programme are included within the overall Council Savings Programme.

Budget Strategy 2018/19 to 2021/22 to mitigate core deficit

65.As detailed above, the council has a core budget deficit rising to just over £22m by 2021/21 assuming the Council’s Savings Programme referred to in the paragraphs above are delivered in full and on time. The council needs to address the core budget deficit immediately to ensure that savings materialise by 2019/20 as well as making best use of its Financial Risks Reserve to manage risk and cushion budget deficits to ensure services are protected.

66.As a result the council, is developing a fresh Budget Strategy that focusses on transformational change within its core services (including focussing on those service which remain high cost compared to our peers for various reasons) and demand management and price reduction in those areas where we are seeing increasing cost pressures. This is presented through a multi-stranded approach recognising the council has already made and has existing plans to make significant savings through efficiencies and that these are in the main captured in the existing Council Savings Programme (including the Digital Programme). These are captured under two broad headings: firstly ‘Transformational Change’ which covers CECR and ECS departments, and secondly, ‘Bending the Curve’ in respect of the CAH department. The areas being considered are discussed in more detail below.

67.The impact of these programmes on the revised budget deficit identified above is set out in the table below:

Page 140 2018/19 2019/20 2020/21 2021/22 £'000 £'000 £'000 £'000 Budget Deficit -66 -6,823 -18,388 -22,332

Transformational Change Income, Trading, Commercial Review ECS 600 600 600 CECR 700 700 700 Central Items 164 169 175 Savings, Efficiency, Benchmarking ECS 2,096 4,725 7,696 CECR 160 270 410 Total 3,720 6,464 9,581

Bending the Curve - CAH 3,159 5,541 7,742 Total Estimated Budget Reductions 6,879 12,005 17,323

Budget Deficit less Estimated Budget Reductions -66 56 -6,383 -5,009

Use of Financial Risks Reserve 66 -56 6,383 1,730

Net Budget Deficit 0 0 0 -3,279

68.This shows that with the new savings programme identified below, and the remaining use of the Financial Risks Reserve after putting aside contingency sums, the MTFP is balanced for the next 3 years rising to a £3.3m deficit still to find in the fourth year.

Transformational Change – CECR and ECS

Income, Trading, Commercial Review 69.Looking at further opportunities to increase income, either through analysis of fees and charges including trends over time, or more broadly when compared to that currently assumed in the MTFP. This includes greater opportunities for commercialisation, for example the work currently underway by the Scrutiny Commission working group in respect of a housing company. It also assumes either the creation of an investment portfolio and resultant return as set out in the capital programme report elsewhere on this agenda, or a review of our treasury management activities to look at increased returns (or a mix of both). As per the current council motion, income opportunities excludes any option for charging across our car parks.

Savings, Efficiency, Benchmarking 70.Reviewing existing budgets and third party spend to identify areas where further budget reductions can be captured. Furthermore looking at those services which on first analysis are currently above average in cost according to national bench marking data, and if proved to be so, whether there is proper policy or other reasoning for this. Leading on from this, identifying opportunities to reduce costs closer to group average. This review has led to the following key areas of cost review for CAH and ECS.

Page 141 71.In response to the benchmarking assessment, CIPFA were engaged to undertake a high level financial assessment of some specific services within ECS where costs were significantly above the group average. This work was able to confirm the robustness of the earlier assessment and made some suggestions for areas of focus to realise financial savings. These are discussed in more detail in Appendix K and may represent a mix of changing service provision/specification, reviewing fees and charges, as well as strategic service reviews.

‘Bending the Curve’ – CAH

72.This relates to initiatives specifically related to Children’s and Adults Social Care Services with the intention that price, demand and activity is reduced over time in a sustainable and effective manner as part of the delivery of an overarching strategy for the delivery of these core services. Whilst further savings against current spend may be possible, this work is focussed on reducing the rate of growth in expenditure currently projected moving forward, i.e. bending that upward expenditure line down. These are detailed in Appendix L.

Enabling Capacity and Pump Priming

73.It is recognised that to deliver the level of savings identified in the table above (c. £36m across 2019/20 to 2021/22) , particularly in light of the significant savings and change delivered to date, enabling capacity is necessary as well as pump priming support to facilitate delivery. As a result the council, has chosen to taken advantage of the Government guidance on the flexible use of capital receipts for transformational change to create a funding pot to support delivery. The Final Capital Programme report on this same agenda includes a Flexible Use of Capital Receipts Strategy and the approval of £2m to support the transformational change and bending the curve work across the council from 2018/19.

Financial Risks Reserve

74.The council’s Financial Risk Reserve is purposefully intended to support the council’s budgetary position and provide cushioning should financial risks materialise. The council has been setting aside the gains made for the Business Rates Pilot to ensure sufficient funding is available in the medium term to meet this aim. As such, following the application of the reserve assumed in the Draft Budget Report received by Cabinet in November 2017, a forecast balance of £10,623k is available in the reserve by 31st March 2020 (subject to business rates pilot as set out above).

75.Given the uncertainties around business rates performance across the pilot authorities, service pressures, the requirement for additional pump priming support to deliver the change outlined above, and the risk of timing differences in the cash flow delivery of savings it is proposed to soft earmark £2,500k of the reserve to act as a potential contingency, leaving £8,123k to support the MTFP and the Budget Strategy outlined above.

Page 142 76.Furthermore, the council is forecasting that it’s Tier 1 and Tier3 income through the City Region Deal is likely to increase over the course of the MTFP however there are inherent risks around the current forecasts. As such, it is intended that the income be set aside in the Financial Risks Reserve. On the basis the income is received, this will result in £1.320m across the MTFP which is soft earmarked to support any exceptional costs arising through the one significant planning appeal currently being considered which may fall in excess of earmarked reserves available to the ECS department.

77.There continue to be timing differences in terms of the recognition of income within the City Region Deal and payments to the pool. Such timing differences will continue to be managed through the Financial Risks Reserve. vi. Earmarked Reserves and General Fund Balances

78.Reserves are reviewed on a quarterly basis and reported as part of the annual Outturn report to the Cabinet with quarterly updates received in the revenue monitor reports. Reserves play an important part in managing the Council’s finances, and ensuring the materialisation of risks does not impact on service provision. Equally, it is important that the Council does not hold money in reserves and balances unnecessarily. A full statement of the latest reserves position is set out in Appendix F and will be revisited at year end as part of the 2017/18 Outturn report in July 2018.

79.The latest position includes the planned use of reserves to help offset in year deficits in future years in order to ensure a broadly balanced revenue budget over the next three years.

80.The Chief Financial Officer advises the Council on the adequacy of reserves. In considering the level of general reserve, the Chief Financial Officer will have regard to:  Significant financial risks faced by the Council resulting from change in policies, or financial factors predominantly outside of its control for which there is no base budget provision.  Shocks to demand driven and income budgets.  Policy changes in year or at short notice which could have significant financial impact on the Council.  Unplanned events resulting from Council decisions.  Civil emergency.  Supporting the delivery of savings in the current economic climate.  Any guidance or requirements by appropriate bodies

81.Having had regard to these matters, the Chief Financial Officer will advise the Cabinet and Council on the monetary value of the required general reserve. The Council will not hold significant reserves above those required by the Medium Term Financial Plan. As at 1st April 2017, the General Fund Balances stood at £8.738m. This continues to be marginally below the target level of 5% or £9m and it is remains proposed that one-off underspends at the year end are used to replenish this reserve over a period of time to the targeted level, given the risks set out later in this report.

Page 143 82.As in previous years the use of some reserves, including General Fund Balances may be required to smooth cash-flows over the medium term. This is specifically the case in respect of the Council Savings Programme and the forthcoming Transformational Change and ‘Bending the Curve’ programmes, where the exact phasing of savings being delivered can change through to decision point and during implementation, even if the end target achievable remains the same. A similar situation arises in the case of the Severance budget allowance where block annual allocations are being put aside which whilst sufficient over the next few years based on expected need may not match the exact timing of payments going out. Looking to the future, the Cabinet may also be required to approve the utilisation of balances or reserves to support the delivery of future savings (e.g. through one off investment requirements on Invest to Save principles).

83.The Council has continued to review its balance sheet as a matter of good practice, releasing any funding no longer required to revenue and regularly assessing accounting treatment. vii. Reform of the Local Government Finance System

84.The foundations of the Local Government Finance System are in the process of being fundamentally reviewed through various mechanisms.

85.Firstly the Settlement Funding Assessment, which is the revenue received by local authorities in the form of Revenue Support Grant from central government and the share of business rates retained locally, is subject to both the forthcoming Spending Review in 2019 following the end of 4 year Settlement and also the Fair Funding Review, which is looking to set new baseline funding allocations for local government considering relative need, relatives resources (those raised locally) and transitional arrangements (damping). The government have indicated a new funding mechanism for local government will be used from 2020/21, this is likely to impact on the future financing of the council although it is too early to project in the MTFP what this will mean.

86.Secondly, Business Rate Baseline is due to be reset which if fully reset could see all local growth redistributed across the country. Whether this is full or partial, allowing a proportion of growth to be retained, will be a crucial issue and information should start being made available by Government from late spring at the earliest.

87.Thirdly, Business Rates Baseline growth is all based on local performance and economic development. This needs to be lead locally, to date this council has seen the majority of its business rates growth within the City Region Deal (CRD) as has been the strategy for the region. However there is a growing need for locally retainable growth outside of CRD albeit this could potentially be muted depending on the outcome of the points made above regarding the reset.

88.Finally, New Homes Bonus which is a core revenue income stream for the council is still subject to further potential Government reform as well and local and national performance. Both these factors make it a challenge to rely upon it as a base funding stream in the MTFP as there is a risk that whilst local Page 144 performance may grow this may not be at a pace with others nationally resulting in a smaller share of a decreasing pot.

89.The changes briefly outlined above will be fundamental to medium term financial planning of this council over the forthcoming months and years. Additional focus will be needed in this area to ensure the council is maximising opportunities, engaging with Government appropriately and financially modelling and forecasting complex funding scenarios. viii. Special Expenses

90.The Special Expenses scheme was consulted on with parish and town councils during 2016/17 and the results reported to Policy & Resources Committee in December 2016. At this point it was agreed to continue with the Special Expenses Scheme and the scheme is proposed to continue in 2018/19.

91.Under the Special Expenses scheme some South Gloucestershire Council costs are charged only to Council Tax payers in areas where the services are provided, rather than being an average cost at Council Tax payer level across the whole Council area. Examples of the costs involved are: allotments, bus shelters, children’s play areas, Christmas lights, community centres, open spaces, playing fields and public conveniences. Treating these costs as special expenses does not change the Council’s net spending, or its average Band D Council Tax. Treating these costs as Special Expenses marginally reduces the 2017/18 Band D Council Tax for all areas, and the Special Expenses costs are then allocated solely to those areas benefiting from the specific activity.

92.Appendix H sets out the details of the amounts of Special Expenses split by service and area. Appendix I sets out the Special Expenses Council Tax charge for each area where Special Expenses apply. ix. West of England Combined Authority (WECA)

93.The Budget for the WECA will be set on 2nd February 2018 by the WECA Committee – the budget assumptions set out below are based upon the WECA Budget proposals and are subject to the outcome of the above meeting.

94.The following elements of the WECA Budget and medium term financial plan have therefore been incorporated within the Council Budget proposal:

 Capital Grant payments in respect of Highways Maintenance and Transport Improvement funding will continue in line with the 4-year allocations provided indicatively by DfT covering 2017/18 to 2020/21. The total allocation for the Council is £6,216k including £851k for the highest level of incentive grants which is automatically provided for Mayoral Combined Authority areas.

 Appropriate commissioning payments from the WECA to the Council for delivery of transport activities to ensure continuity of service provision in line with the Inter- Authority Agreements (concessionary travel, community transport and bus information).

Page 145  Contributions to the WECA from the Council (from existing budgets) to meet the Levy for costs of associated transport functions (concessionary travel, community transport and bus information). The basis of the Levy remains in line with the Councils estimated share of costs and is set at £2,485k for this council with a £100k reduction in cost included and contributing towards ECS CSP savings targets. The net impact is neutral for the Council reflecting the movement of funds in line with the devolution arrangements.

 The Business Rates Collection Fund continues to provide for an appropriate share of Business Rates to be allocated to the WECA in accordance with the 100% Business Rate Retention pilot to meet the costs of Highways Maintenance and Transport Improvement Grants (this does not impact on the Council’s significant benefits from participation in the Pilot).

 Grants funding received from the WECA for feasibility studies and business case development for infrastructure schemes. These are funded from the additional investment funds received by the WECA as part of the devolution arrangements and reflected accordingly with the Councils revenue and capital budget proposals. Further bids for infrastructure funding may be made in line with the WECA Strategy and Assurance Framework and may come forward for inclusion in the capital programme in line with future delivery arrangements.

 A saving of £40k has been provided against the Council’s annual contribution of £150K towards the running of the LEP/WoE Office reflecting the efficiencies that have been achieved though integrating these arrangements with WECA including the accountable body role for the significant WoE Growth and City Deal funds. Furthermore, an under spend arising in 2017/18 on funding held by WECA on AGE is due to be returned to the West of England authorities and these budget proposals intend that this be used within South Gloucestershire to support apprenticeships for care leavers.

95.The WECA is not permitted to raise a Council Tax to fund any of its activity and therefore no precept will be requested.

96.The Council will continue to work with the WECA to identify opportunities to deliver efficiencies and savings particularly relating to transport and infrastructure functions.

97.The WECA will not seek to hold specific financial reserves. The associated risks will be mitigated through a number of financial control and management measures although as WECA is not a precepting body, it may ultimately be underwritten by the constituent councils.

98.Full details of the WECA Budget proposals are available at www.westofengland-ca.gov.uk

Consultation

99.This report contains the outcome of the public consultation process. A summary of this is found at Appendix A.

Equality Impact Assessment and Analysis Page 146 100. A comprehensive Equality Impact Assessment and Analysis (EqIAA) has been conducted in respect of the Council Revenue Budget and is provided as a background paper. The EqIAA has been continuously developed year-on-year and examines data and information covering a 5 year period; as such, it covers a wealth of information and highlights significant trends in respect of Protected Characteristic groups. This information should inform the decision making process - the Council is reminded of its statutory duty, in the exercise of its functions, to have due regard to the need to eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by the Equality Act 2010, advance equality of opportunity between persons who share a protected characteristic and persons who do not share it, and foster good relations between persons who share a protected characteristic and persons who do not share it.

101. This year specific feedback has been received in response to consultation concerning race equality in education. The feedback states:

“The performance of pupils from BAME backgrounds in South Glos is hugely below the national average year-on-year; The council has provided very minimal resource to addressing this year-on-year; It doesn’t appear that the council has properly ‘clocked’ this trend – there are no strategies or plans in place that even mention this let alone address it; As such, the council isn’t complying with its Equality Duty and needs to act now to increase the resource it gives to this issue”. The feedback provides a recommendation that “the council find the right resources to address the above – SARI and the South Gloucestershire Racial Equality Network or SGREN (now funded for 3 years by your Council) are happy to support you with identifying what this might be”; and “Involve specialist such as SARI and the SGREN to address the above”.

Please refer to page 50 of the Budget and Council Savings Plan 2018-19 Consultation Output Report which is provided as a background paper/appendix for full text of the feedback received.

102. In response to the feedback a Report to the Lead Member for Education and Skills on 5 February 2018 setting out a review of standards and performance for 2017 clearly sets out an overview of the standards achieved in South Gloucestershire in the 2017 national tests and examinations and disaggregates this information according to ethnicity (as well as a range of other categories, such as FSM). The data shows some differences for pupils from some ethnic backgrounds, most notably pupils from ‘Mixed’ and ‘Black’ backgrounds; for example, the performance of pupils from a ‘Mixed’ background at Key Stage 2 ranks at 134 (out of 152) in England. The report also shows significant positive performance, for example, pupils from ‘Asian’ backgrounds in South Gloucestershire showing a good level of development at EYFS ranks at first (out of 152) in England.

103. The standards data has been proactively examined and this will continue. A set of actions have already been planned for delivery during 2018/19 which seek to positively address the instances where further support will tackle issues emerging.

104. Changes to services through the Council Savings Programme or similar projects have been subject to separate decisions which have properly discharged Page 147 the Public Sector Equality Duty. Future decisions will continue to follow this practice.

Risk Assessment

Financial Implications

105. There are a range of safeguards in place to help prevent local authorities over committing themselves financially. The two main requirements are a duty on the Council to set a balanced budget requirement (sections 32, 43 and 93 of the Local Government Finance Act 1992), and the Chief Finance Officer’s duty to report on the robustness of the budget estimates and the adequacy of reserves (under section 25 of the Local Government Act 2003) when the authority is considering its budget requirement.

106. The principal way of demonstrating that the budget balances and is sustainable into the immediate future, is through the detailed budget proposals set out in this report. The Medium Term Financial Plan set out in Appendix D shows a 10 year period that indicates the budget is balanced in 2018/19, on the basis of the achievement of the current Council Savings Programme, use of reserves, and in anticipation that additional resources will arise from the Council Tax annually, but that further savings will be required from 2019/20 onwards to balance the budget. The savings required in the immediate period remain challenging.

107. The ‘excessive’ amount for basic council tax has been confirmed as 3% for 2018/19 following the Provisional Local Government Finance Settlement. In addition, social care authorities (like South Gloucestershire Council) are able to increase their Council Tax by 3% over the existing Referendum Threshold, with the proviso that the additional 3% ‘social care precept’ is spent on adult social care services and be separately itemised on Council Tax bills. Should a council wish to exceed this prescribed amount, as part of its budget setting process it will be required to set two budget requirements, one of which would be based on its proposals to exceed the threshold, and one where it did not exceed the threshold, and go out to public referendum.

108. The revenue budget proposals set out in this report take account of the capital financing requirements associated with the existing proposed Capital Programme 2018/19 and onwards (unless otherwise stated in that report) being considered by the Cabinet also on this agenda. This would need to be revised if further changes to the Capital Programme are recommended to the Council by Cabinet. It is important to note the linkages between the capital programme, treasury management reports, and the revenue budget. In particular, any increase in capital financing or other revenue costs above that assumed in the revenue budget would need to be covered by virement proposals.

109. The MTFP includes forecasts of both business rates income and the tariffs payable to government. With the level of uncertainty being faced in terms of the future of the business rates system, and the changes made to date in terms of revaluation, appeals provision adjustments and the move from RPI to CPI, fluctuations in net business rates income may occur as technical Page 148 adjustments to the financial forecasting and modelling once assumptions made are firmed up. A further piece of technical work will be undertaken over the next 6 months to assess current forecasting and modelling in light of system and government changes.

110. The Council also has a fiduciary and statutory duty to the Council Tax payers of the area to obtain value for money. The Council continues to demonstrate value for money through the delivery of good quality services matched against comparatively low levels of external funding. The Council Savings Programme continues to play a key part in demonstrating the on-going delivery of value for money services.

111. At the time of despatch of this report the final Local Government Finance Settlement had not been received, nor a number of specific grants. As a result of this the final figures are likely to change and an update will be provided to the Cabinet setting out the latest position if necessary. It is also recommended that the Director of Corporate Resources be given delegated authority to make technical changes to the report if required ahead of final despatch to Council.

Nina Philippidis – Deputy Head of Finance - 01454 865140

Legal Implications

112. The main legal requirements in setting the budget have been set out under the financial implications section and there are no additional legal implications arising.

John McCormack – Head of Legal, Governance and Democratic Services – 01454 865980

Human Resources Implications

113. This report sets out continuing requirements for savings as part of the revised Council Savings Programme and new transformation and bending the curve programmes. Many decisions taken within the programme of reviews may have significant impact on the Council’s workforce and any future change not yet at decision stage is also likely to impact on the workforce. Robust workforce change procedures have operated successfully during the first phases of the Council Savings Programme and these will continue through the subsequent phases and any future organisational change where there is a significant impact on staff. The Human Resource implications associated with each change project will continue to be clearly defined within Cabinet / Executive Member / Director Reports and Trades Union/staff consultation documents.

114. The Council is under a statutory requirement to approve its Pay Policy Statement on an annual basis. Council first approved this Statement in 2012/13. Appendix J sets out the Statement for 2018/19. It has been updated to reflect changes in the staffing arrangements within the Council over the last 12 months.

Claire Kerswill – Head of Human Resources – 01454 866348 Page 149 Environmental Implications

115. The report sets out the current economic climate in which the Council has to balance a complex budget situation. The Council’s Capital Programme continues to include the Schools Energy Savings Programme and Renewables/Solar projects, which will both contribute towards energy savings and meeting the Council’s environmental policies.

Lucy Rees – Senior Environmental Policy Officer & Climate Change Officer – 01454 862224

Social Implications

116. There are broad social implications to the council, its residents, communities and businesses that arise depending on the spending decisions made. This report tries the balance the financial pressures on the Council with the demands and suggests a way forward. Detailed decisions that will arise from the recommendations in this report will need have any social implications carefully considered at that time.

Mark Pullin, Strong, Safer Communities Manager – 01454 868480

Economic Implications

117. There are no direct economic implications arising from this report.

Antony Merritt, Economic Development Manager - 01454 863870

Privacy Impact Assessment

118. There is no direct requirement for a Privacy Impact Assessment to be undertaken.

Risks, Mitigations & Opportunities

119. The Chief Financial Officer has consulted with Directors, and reviewed the Council’s Risk Register. There are considered to be six main risks to the 2018/19 budget. These are set out in the table in Appendix G.

120. A number of these risks relate to the medium term, and there is insufficient detail to quantify their size, likelihood or impact at this time. However, it is critically important that to mitigate these risks, the Council continues to proactively monitor and review its Medium Term Financial Plan and planning assumptions to ensure future changes can be appropriately prepared for and managed. Similarly, whilst it is highly unlikely all these events would occur at the same time, the Council must continue to hold and plan for appropriate levels of General Fund Balances to manage such risks in the short Page 150 to medium term. In a worst case scenario the budgetary risks could easily equate to over £30m (over three times our current general fund balances), but even taking more realistic risks around the Council Savings Programme, forthcoming savings pressures and City Region Deal infrastructure investment, General Fund Balances would only see the Council through a one year material shock.

121. Most of the savings for future years included within this report will require a full business case to be drawn up before they can be confirmed. Some of these may require additional revenue or capital investment to deliver. This additional investment has not been quantified in detail, although some allowance has been made in the MTFP as set out earlier in this report.

122. The West of England Combined Authority will begin making significant infrastructure investment decisions based the priority needs of the locality in line with the original intention of the combined authority and its awarded powers. The council will need to consider its scrutiny of such proposals and ensure it has robust processes in place to capture the revenue running costs of such investments e.g. Metrowest 1 to ensure that it is not left exposed to ongoing costs subsequent to the decision to invest being made. A full business case assessment jointly between the local authorities and WECA will be necessary to mitigate the risk of unfinanced revenue exposure.

123. The proposed revenue budget continues to include budgetary provision for the estimated running costs of the original North Fringe to Hengrove MetroBus together with funds for MetroWest Phase 1, which is currently capped at 5% or £50k per annum, because the Council has only a small stake in Phase 1 (Severn Beach service enhancements). Any changes to phase 1 could lead to different cost profiles which would need to be considered at that time. MetroWest Phase 2 is led by the Council and costs shared with Bristol City Council currently shared 78%/22% respectively. It should be noted that both MetroWest projects are likely to require a period of train service revenue support, up to 3 years following start of services, which will need to be met in due course. Officers are reviewing the funding package for this revenue support, which for the Council includes use of S106 funding. The revenue budget for the estimated running costs for the Cribbs Patchway MetroBus Extension will need to be considered in due course alongside the future decision by Cabinet to consider moving forward with the construction phase of this scheme once the Full Business Case is completed.

Robustness and Sustainability Implications

124. The Chief Financial Officer (Director of Corporate Resources and Deputy Chief Executive) is required by section 25 of the Local Government Act 2003 to report to the Council on the robustness and sustainability of the estimates in the budget report, and on the adequacy of the reserves and balances. The Council is required to take these comments into account when making its budget and Council Tax decisions.

125. The Chief Financial Officer has assessed the balance of risk and the associated mitigating actions, as set out earlier in the report, and considers, on this basis the budget for 2018/19 to be robust. It is noted that this is based on Page 151 the overall level of savings being delivered, provisional current year budget and Collection Fund position, and the mitigating actions being put in place as set out in this report should this not be possible. The risk paragraphs and appendix of this report cover the mitigation action that has been taken, and the provision that exists to manage any in year residual risk that may materialise. Of specific note in respect of the robustness judgement for this year (as last year), Members’ attention is drawn to the assumptions around the additional risk posed to budgets resulting from decisions not being taken on the Council Savings Programme or new future programmes, and business rate growth/appeal risk from 2013/14 onwards, and the potential consequent requirement to call on reserves and balances. Additional risks will arise in the medium term and will be kept under review, especially in relation to the new Savings Programme, and adults and children’s demographic cost pressures. As set out earlier in the report, there is a real prospect the Council may need to call on General Fund balances to meet these additional costs if they are in excess of the centrally held Corporate Allowance set aside and mitigating action cannot be taken by Departments. Some of these pressures could be mitigated as a result of decisions taken by Members in year following proper consultation.

126. In coming to the conclusion that the proposals are robust, the Chief Financial Officer has placed weight on the budget process that has been followed in the development of the budget, and the assurances provided by Chief Officers which they have brought to the attention of Cabinet where material. In this respect, it is noted that:

 The 2018/19 budget process started on 6th July 2017 with the Cabinet setting the assumptions on which the base budget was to be developed. All departments were engaged over the summer period on the development of base budgets which have been produced by the corporate finance team associated with each department in conjunction with the department’s officers who have had chance to agree the base budgets.  During the course of the development of the proposals, known pressures that have developed during the course of the year have been considered, underlying spend profiles considered by departments, and appropriate projections of future budgetary requirements, including demographic growth have been undertaken.  Organisational capacity has been assigned to the development of savings programmes, including the setting aside of investment and Severance Provision funding. A robust governance framework has been developed to support the delivery of savings.  The proposed budget has been informed by a budget consultation, and is in line with the themes of the Community Strategy.  The proposed budget complies with the latest available guidance about the requirement to hold a Referendum if the proposed Council Tax increase were to exceed a prescribed percentage.  The Council continues to face significant budget pressures, especially across its demand driven budgets. These have been successfully mitigated during the course of this year at a council wide level. Additional funding has been allocated for adult and children’s social care demographic and price growth next year, and the current projection, notwithstanding these pressures, is for a broadly balanced budget over the next three years on the presumption that identified and planned savings targets are delivered, but noting this is being achieved by the use of reserves or other one off funding which would not be sustainable into the medium term. Page 152  The new Transformational Change and ‘Bending the Curve’ savings programmes’ targets have been arrived at following external professional support and guidance from CIPFA to provide a degree of external challenge and independence.

127. The key budgetary risks have been considered and brought to Members’ attention. These are set out earlier in this report and during the course of the year, with any associated mitigating action.

128. It is recognised that the current economic climate and policy environment is unprecedented, and this brings significant risks that have been outlined in this report and the Council’s Risk Register. As a result of this, risks need to be carefully balanced, and an assessment made about which risks have such certainty they can currently be planned for, and for any remaining risks, the levels of reserves and General Fund Balances are such that they can be mitigated in the immediate future should the need arise in year.

129. The Chief Financial Officer asks Members to note that the delivery of the savings targets set out in the budget as part of the Medium Term Financial Plan is critical in ensuring the continued robustness and sustainability of the budget. Whilst decisions have been taken on some of the Council Savings Programme, there still remains implementation and delivery risk. The savings required through the Transformational Change and ‘Bending the Curve’ Programmes will need further development, planning and decision making which represents an inherent risk to the MTFP. Any savings proposals not accepted through options development will need to be replaced with alternative efficiencies/savings, or the generation of additional income by Departments, to ensure the Council maintains a balanced budget. This will be the responsibility of Departments in the first instance.

130. Further savings are still required towards the end of the MTFP 4 year period and as set out in the 10 year Medium Term Financial Plan Appendix D. To ensure continuing budget sustainability, it will be important that the Council notes that during next financial year detailed proposals for the delivery of the Transformational Change and ‘Bending the Curve’ Programmes will be developed. Furthermore, emerging thinking nationally on the new local government finance system will continue as noted in the body of the report. This latter issue remains a considerable unknown risk to the MTFP.

131. It is noted that the budget set out in this report for 2018/19 is still based on the announced provisional grant figures, that some specific grant amounts remain unknown, and assumes a Council Tax increase of 5.99% in 2018/19. Members’ attention is drawn to the fact that a number of figures within the 2018/19 budget projections will require further confirmation over the next twelve months, including an assumption around the future Council Tax Base growth and the related impact of business rate changes as part of the pilot. Similarly the Business Rates growth assumptions need to be kept under review and the phased impact of the City Region Deal. Given this, and the current call on reserves to balance, Members should continue to make efforts to balance the budget in 2019/20 onwards without the further use of reserves to further mitigate these risks.

Page 153 132. The level of Earmarked Reserves has been reviewed and is considered to be appropriate for the risks faced. The level of General Fund Balances at the start of the year is in the region of £9.0m. The policy on General Fund Balances was set out earlier in this report.

133. The combination of the centrally held Corporate Allowance, Earmarked Reserves and General Fund Balances is considered to be proportionate and adequate when assessed against the balance of identified risk for next year. However, given that the Council has no control over business rate appeal risk, and given the known number of appeals currently lodged with the Valuation Office, these could pose a considerable risk to budgets and reserves in the short to medium term.

134. The Chief Financial Officer’s conclusion therefore is that the proposed revenue budget for 2018/19 is robust based on the criteria set out above and that the budget is sustainable in the short term, but it is exposed to a higher level of risk due to external factors than has been experienced historically. This risk is further increased as a result of the size of the revised new Savings Programme targets and the remaining core deficit still to be found, together with a high degree of uncertainty remaining over any future local government finance system. However, through a combination of the centrally held Corporate Allowance, Earmarked Reserves and General Fund balances, the budget provides adequate protection against the risks identified in this report in the short term. This allows time for future corrective budgetary actions to be taken should they be required as a result of the new and emerging financial risks faced by the Council. These could be fundamental to the future shape and nature of the Council and could place medium to long term risk on the future financial sustainability of the Council

Reasons for Decision

135. The Council is required to set its budget by 15th March 2018.

Author

Dave Perry, Director of Corporate Resources and Deputy Chief Executive Tel: 01454 865001

Departmental Contact Mike Hayesman, Head of Finance and Customer Services Tel: 01454 865290

Nina Philippidis, Deputy Head of Finance Tel: 01454 865140

Background Papers

1 Report to Council on 15 February 2017 - Revenue Budget, Special Expenses and Council Tax 2017/18 to 2020/21 2 Report to Council on 15 February 2017 - 2017/18 Council Tax Setting 3 Report to Cabinet on 3rd July 2017 – 2018/19 Base Budget Assumptions 4 Local Government Finance Act 1992 Page 154 5 Local Authorities (Calculation of Tax Base) Regulations 1992 No. 612 6 Local Government Changes for England (Calculation of Council Tax Base) Regulations 1994 No. 2826 7 Local Authorities (Calculation of Council Tax Base) (England) Regulations 2012 No. 2914 8 Council Tax Base records held by Finance and Customer Services 9 Local Council Tax Reduction Scheme – Council 10 December 2014 10 Documents on the Special Expenses and Local Council Tax Reduction Support Grant consultations 11 Review of Council Tax Reduction Scheme papers held by Finance & Customer Services 12 Full EqIAA – Council Revenue Budget 2018/19 13 Budget and Council Savings Plan 2018/19 Consultation Output Report 14 Final Revenue Budget, Special Expenses and Council Tax 2018/19 to 2021/22 – Cabinet 5th February 2018

Appendices

A. Budget Consultation Summary B. Revenue Base Budget 2018/19 to 2021/22 C. Policy Base Budgets 2018/19 D. Medium Term Financial Plan 2018/19 to 2027/28 E. Council Savings Programme F. Earmarked Reserves G. Budgetary Risk Assessment H. Recommended Special Expenses 2018/19 to 2021/22 I. Special Expenses by Parish Area 2018/19 to 2021/22 J. Pay Policy Statement 2018/19 K. Transformational Change Programme L. CAH – Financial Forecast & Demand Management (‘Bending the Curve’ Programme)

Page 155

Summary of Budget Consultation Responses APPENDIX A

Budget and Council Savings Plan 2018-19 consultation

Key Findings

Council Tax Options

 Overall a majority of respondents (73%) were in favour of some level of council tax increase in 2018/19.

 By a very small margin, the most popular option for council tax was a preference for a 1.99% increase in council tax and a 3% adult social care levy in 2018/19 (28% of respondents vs. 27% for 1.99% +2% levy).

Satisfaction with council services

 Service satisfaction is highest for parks and open spaces (79%), libraries (79%) and sports & leisure facilities (78%).

 Service satisfaction is lowest for highways and roads (31%), children’s social services (41%) and planning (33%).

 There have been significant improvements in satisfaction for children’s social services (+25 percentage points) and public health (+13 percentage points).

Core activities  All core activities are supported by the majority of respondents. The three activities with the highest support were maintaining safe and clean communities (87%), safeguarding vulnerable children and adults (81%) and delivering jobs, homes and infrastructure (74%).

 The majority of suggestions for other core activities from respondents echo the three most supported existing core activities; StreetCare services (particularly road maintenance), care and support services (especially for the elderly), and building more housing and roads.

Page 157 Summary of Budget Consultation Responses APPENDIX A

Support for Council Savings Plan approaches

 “Making more efficient use of council assets, such as land and buildings”, was the most popular approach with 90% agreement. This was followed by ‘‘Working in partnership and sharing services with other councils and public sector agencies” (81% agreement).

 “Changing working practices to make better use of technology and more efficient ways of working” is still popular with 80% agreement but has seen an 8-percentage- point decrease since to 2015.

 “Targeting resources on the most vulnerable and people most in need” had the largest increase in agreement of 5 percentage points, now making it the fourth favourite option at 71% agreement.

Perceptions of the council and local area . Overall, 83% of respondents were satisfied with South Gloucestershire as a place to live.

. When asked if they felt that South Gloucestershire has become a better place to live, become worse or stayed the same, 63% of respondents felt that it had stayed the same with 8% stating it had improved and 26% saying it had got worse.

. When asked how satisfied they are with the way that South Gloucestershire Council runs things, 59% of those responding stated that they were satisfied.

. Under half of those responding (44%) agreed that the council keeps them informed about the services it provides and 42% agreed the council keeps them informed about proposed changes.

. Less than half of respondents (45%) agreed that the council provides value for money.

. 38% of respondents stated that they felt that the council acted on the concerns of local residents either a great deal or a fair amount.

. Less than a quarter (21%) of respondents agreed they have the ability to influence local decisions; an increase of 3 percentage points from last year.

Page 158 REVENUE BASE BUDGETS 2018/19 to 2021/22 APPENDIX B

2018/19 Environment & Children, Adults Corporate Community Central Items Total & Health Resources Services £000 £000 £000 £000 £000

Draft 2018/19 Base Budget agreed by Council 15 February 2017 117,890 46,160 18,771 20,166 202,987

Adjustments made for assumptions agreed by Cabinet in July and reported to Cabinet in November Inflation Pay 66 195 82 343 Price -132 19 54 -59 Income 109 -19 -78 12 Local Government Pension Scheme 384 309 186 -1,160 -281 Landfill Tax 0 Supplementary iBCF Adult Social Care Funding: Expenditure 2,600 2,600 Bus Services Operators Grant - removed in 2017/18 and now continuing -464 -464 Transfer of Budgets between Departments 723 -723 0 Adjustments to interest receivable and payable -51 -51 Increase to Corporate Allowance 964 964 City Region Deal - increase in payment to pool (contra held in Resources) 1,086 1,086 Reversal of rounding adjustments -67 -32 29 148 78 Sub Total 2,960 8 996 264 4,228

Adjustments made in developing Final Revenue Budget Increase in Adult Services budgets - roll forward of 2017/18 overspend, actvity growth 4,441 4,441 Increase in Children's Services budgets - roll forward of 2017/18 overspend, activity growth 2,563 2,563 Increase to Corporate Allowance to cover Children's & Adult Service Price Risk and Future Growth 1,202 1,202 Pay Offer Increases - pay and prices inflation 256 154 161 571 WECA - reduction in ongoing annual contribution -40 -40 City Region Deal - increase in payment to pool (contra held in Resources) 4,391 4,391 City Region Deal - increase in Tier 1 & Tier 3 income -1,562 -1,562 Net adjustments to interest and capital charges -697 -697 Pension deficit repayment from Fund relating to 2017/18 (one-off) -40 -40 Severance Provision - reduction in annual contribution -100 -100 PAAL Scheme - increase income budget in line with take up -100 -100 Release of one-off interest contingency -85 -85 Transfer of Budgets between Departments -111 74 37 0 Commercial investment set up costs 50 50

Growth Items Growth item - Additional support to CVS 25 25 Growth item - School trips to Bristol Aerospace 40 40 Growth item - School Awards Evening 13 13 Growth item - Fund for School Improvement activity / interventions 50 50 Growth item - Council Tax discount for care leavers 35 35

CAH Efficiencies Realigning grant funding streams -300 -300 Housing Services contingency release -200 -200

Transformational Change Income, Trading and Commercial Review -250 -110 -360 Commercial Investment -50 -50 Property Investment Fund, Treasury Management increased income -600 -600 Savings, Efficiency & Benchmarking -520 -40 -560 Sub Total 6,752 -557 -517 3,009 8,687

2018/19 Base Budget 127,602 45,611 19,250 23,439 215,902

Page 159 REVENUE BASE BUDGETS 2018/19 to 2021/22 APPENDIX B

2019/20 Environment & Children, Adults Corporate Central Items Community Total & Health Resources * Services £000 £000 £000 £000 £000

2018/19 Budget 127,602 45,611 19,250 23,439 215,902

Net budget adjustments included in draft base budgets reported to Council in February 2017 - including previous assumptions on inflation, pensions, growth etc, and CSP allocations -277 858 -295 222 509

Adjustments made for assumptions agreed by Cabinet in July and reported to Cabinet in November Inflation Pay 30 157 112 299 Price 75 -249 11 -163 Income 45 64 75 184 Local Government Pension Scheme -27 -33 -21 -1,721 -1,802 Supplementary iBCF Adult Social Care Funding: Expenditure 1,300 1,300 Transfer of Budgets between Departments -650 650 0 Adjustments to interest receivable and payable -16 -16 Sub Total 1,423 -61 -473 -1,087 -198

Adjustments made in developing Final Revenue Budget Pay Offer Increases - pay and prices inflation 758 146 171 1,074 City Region Deal - increase in payment to pool (contra held in Resources) 236 236 City Region Deal - increase in Tier 1 & Tier 3 income -27 -27 Net adjustments to interest and capital charges -517 -517 Increase in Adult Services budgets - actvity growth (previously held in Corporate Allowance) 1,288 -1,288 0 Removal of existing demographic growth in MTFP within CAH to be held in Corporate Allowance and released with -3,100 2,888 -212 annual MTFP refresh coupled with increased Corporate Allowance for price risk and activity growth Support for non-integra commercial activity (community meals, catering, small schools) * 500 500 Land Charges - delay in transfer of function to Land Registry -400 -400 Council Savings Programme: Democracy savings - write down of target following Boundary Commission Review 130 130 Pension deficit repayment from Fund relating to 2017/18 (one-off) 40 40 Release of one-off interest contingency 85 85 Commercial investment set up costs (one off) -50 -50 Growth Items Growth item - Additional support to CVS -10 -10 Growth item - School trips to Bristol Aerospace -40 -40 Sub Total -1,095 136 351 1,417 809

Transformational Change Programme Income, Trading, Commercial Review -600 -700 -164 -1,464 Savings, Efficiency, Benchmarking -2,096 -160 -2,256 Sub Total 0 -2,696 -860 -164 -3,720

Bending the Curve Programme -3,159 -3,159

Draft 2019/20 Base Budget 124,495 43,848 17,973 23,827 210,142 * Following support to Integra trading position in 2018/19 of £599k through use of Integra Reserve (as detailed on Appendix F).

Page 160 REVENUE BASE BUDGETS 2018/19 to 2021/22 APPENDIX B

2020/21 Environment & Children, Adults Corporate Central Items Community Total & Health Resources * Services £000 £000 £000 £000 £000

Draft 2019/20 Budget 124,495 43,848 17,973 23,827 210,142

Net budget adjustments included in draft base budgets reported to Council in February 2017 -669 1,557 182 847 1,917 - including previous assumptions on inflation, pensions, growth etc, and CSP allocations

Adjustments made for assumptions agreed by Cabinet in July and reported to Cabinet in November Inflation Pay 25 174 124 323 Price 25 -287 35 -227 Income 62 52 -2 112 Local Government Pension Scheme 225 224 156 -847 -242 Improved Better Care Fund: Expenditure 2,200 2,200 Transfer of Budgets between Departments -300 300 0 Adjustments to interest receivable and payable -88 -88 Sub Total 2,537 163 13 -635 2,078

Adjustments made in developing Final Revenue Budget Pay Offer Increases - pay and prices inflation 713 148 200 1,061 City Region Deal - increase in payment to pool (contra held in Resources) 110 110 City Region Deal - increase in Tier 1 & Tier 3 income -27 -27 Net adjustments to interest and capital charges -112 -112 Removal of existing demographic growth in MTFP within CAH to be held in Corporate Allowance and released with -625 2,711 2,086 annual MTFP refresh coupled with increased Corporate Allowance for price risk and activity growth Reverse removal of 1% ASC precept and build into base budget 2,500 2,500 Reduction in support for non-integra commercial activity (community meals, catering, small schools) -50 -50 Growth Items Growth item - Additional support to CVS -10 -10 Sub Total 2,588 138 150 2,682 5,558

Transformational Change Programme Income, Trading, Commercial Review -5 -5 Savings, Efficiency, Benchmarking -2,629 -110 -2,739 Sub Total 0 -2,629 -110 -5 -2,744

Bending the Curve Programme -2,382 -2,382

Draft 2020/21 Base Budget 126,569 43,077 18,208 26,716 214,569

Page 161 REVENUE BASE BUDGETS 2018/19 to 2021/22 APPENDIX B

2021/22 Environment & Children, Adults Corporate Central Items Community Total & Health Resources * Services £000 £000 £000 £000 £000

Draft 2020/21 Budget 126,569 43,077 18,208 26,716 214,569

Net budget adjustments included in draft base budgets reported to Council in February 2017 250 -100 150 - including previous assumptions on inflation, pensions, growth etc, and CSP allocations

Adjustments made for assumptions agreed by Cabinet in July and reported to Cabinet in November Inflation Pay 742 640 461 1,843 Price 2,026 784 149 19 2,978 Income -463 -237 -28 -728 Local Government Pension Scheme 73 63 46 -350 -168 Landfill Tax 32 32 Sub Total 2,378 1,282 628 -331 3,957

Adjustments made in developing Final Revenue Budget Pay Offer Increases - pay and prices inflation 687 10 105 802 City Region Deal - increase in payment to pool (contra held in Resources) 111 111 City Region Deal - increase in Tier 1 & Tier 3 income -28 -28 Net adjustments to interest and capital charges 660 660 Reduction in support for non-integra commercial activity (community meals, catering, small schools) -50 -50 Land Charges - reversal of delay in transfer of function to Land Registry 400 400 Increased Corporate Allowance for Children's & Adults price risk and activity growth 2,711 2,711 Growth Items Growth item - Additional support to CVS -5 -5 Sub Total 687 5 455 3,454 4,601

Transformational Change Programme Income, Trading, Commercial Review -6 -6 Savings, Efficiency, Benchmarking -2,971 -140 -3,111 Sub Total 0 -2,971 -140 -6 -3,117

Bending the Curve Programme -2,202 -2,202

2021/22 Base Budget 127,432 41,643 19,151 29,733 217,958

Page 162 POLICY BASE BUDGETS 2018/19 APPENDIX C

2017/18 2018/19 BUDGET Change SUMMARY BUDGET from POLICY BUDGET HEADING NET GROSS GRANT OTHER USE OF NET 2017/18 EXPENDITURE EXPENDITURE INCOME INCOME RESERVES EXPENDITURE £000 £000 £000 £000 £000 £000 %

Chief Executive & Corporate Resources 19,390 105,509 -61,553 -23,656 -1,050 19,250 -0.7

Children, Adults & Health 113,345 381,324 -225,851 -26,838 -1,033 127,602 12.6

Environment and Community Services 47,250 112,537 -4,754 -63,328 1,156 45,611 -3.5

Central Items 13,266 30,189 0 -7,278 528 23,439 76.7

Page 163 Page TOTAL 193,251 629,559 -292,158 -121,100 -399 215,902 11.7 POLICY BASE BUDGETS 2018/19 APPENDIX C

2017/18 2018/19 BUDGET Change BUDGET from CHIEF EXECUTIVE & CORPORATE RESOURCES NET GROSS GRANT OTHER USE OF NET 2017/18 POLICY BUDGET HEADING EXPENDITURE EXPENDITURE INCOME INCOME RESERVES EXPENDITURE £000 £000 £000 £000 £000 £000 %

Directorate 648 731 -77 654 0.9

Strategic Communications 660 696 -20 -46 630 -4.5

Human Resources 1,730 1,813 -24 1,789 3.4

Finance and Customer Services 6,102 70,467 -61,189 -2,661 -421 6,196 1.5 Page 164 Page ICT 2,146 2,616 -313 2,303 7.3

Legal, Governance and Democratic Services 3,339 4,964 -1,665 -4 3,295 -1.3

Property Services and Business Support 4,730 9,657 -5,329 20 4,348 -8.1

Integra / Traded Services (provisional subject to 35 14,565 -364 -13,567 -599 35 - agreement on Business Plan)

TOTAL 19,390 105,509 -61,553 -23,656 -1,050 19,250 -0.7 POLICY BASE BUDGETS 2018/19 APPENDIX C

2017/18 2018/19 BUDGET Change CHILDREN, ADULTS & HEALTH BUDGET from POLICY BUDGET HEADING NET GROSS GRANT OTHER USE OF NET 2017/18 EXPENDITURE EXPENDITURE INCOME INCOME RESERVES EXPENDITURE £000 £000 £000 £000 £000 £000 %

School Related - 213,057 -213,128 71 0 -

Directorate 138 179 179 29.7

Integrated Children's Services 26,251 38,210 -1,080 -8,449 -420 28,261 7.7

Education, Learning and Skills 3,236 5,003 -837 -604 -83 3,479 7.5

Assessment, Review and Care Management 6,298 8,242 -525 7,717 22.5 Page 165 Page

Bed Placements 37,528 47,640 -1,825 45,815 22.1

Community Based Support 27,346 43,341 -1,427 -12,261 29,653 8.4

Housing Services 3,458 4,695 -1,557 3,138 -9.3

Public Health 976 11,366 -9,379 -272 -601 1,114 14.1

Organisation & Business Support 2,815 5,616 -1,089 4,527 60.8

Partnership & Performance 3,199 3,975 -256 3,719 16.3

Adult Social Care - Improvement (Grant & Precept) 2,100 0 -100.0

TOTAL 113,345 381,324 -225,851 -26,838 -1,033 127,602 12.6 POLICY BASE BUDGETS 2018/19 APPENDIX C

2017/18 2018/19 BUDGET Change BUDGET from ENVIRONMENT & COMMUNITY SERVICES NET GROSS GRANT OTHER USE OF NET 2017/18 POLICY BUDGET HEADING EXPENDITURE EXPENDITURE INCOME INCOME RESERVES EXPENDITURE £000 £000 £000 £000 £000 £000 % Community Services Directorate 167 300 300 79.6

Operational Support Services including Central Budgets 2,468 2,687 -188 -256 2,243 -9.1

Safe and Strong Communities 6,644 10,207 -200 -3,503 -199 6,305 -5.1

Strategic Planning 1244 4,917 -591 -2,932 -484 910 -26.8 Page 166 Page Strategic Projects and Transport 2,216 3,088 -1,406 11 1,693 -23.6

Streetcare and Transport 16,421 69,190 -723 -53,879 1,984 16,572 0.9

Waste Management 18,090 22,148 -3,052 -1,352 -156 17,588 -2.8

TOTAL 47,250 112,537 -4,754 -63,328 1,156 45,611 -3.5 POLICY BASE BUDGETS 2018/19 APPENDIX C

2017/18 2018/19 BUDGET Change CENTRAL ITEMS BUDGET from POLICY BUDGET HEADING NET GROSS GRANT OTHER USE OF NET 2017/18 EXPENDITURE EXPENDITURE INCOME INCOME RESERVES EXPENDITURE £000 £000 £000 £000 £000 £000 %

City Region Deal 3,585 10,726 -3,954 528 7,300 103.6

Central Services Costs 3,633 1,588 1,588 -56.3

Council Savings Programme 1,206 657 657 -45.5

Financing & Investment Income and Expenditure 6,634 7,487 -604 6,883 3.8

Internal Recharges -2,159 34 -2,493 -2,459 10.6 Page 167 Page

Movement in Reserves Statement -1,345 4,504 -189 4,315 -420.8

Other Operating Expenditure 1,112 1,177 -38 1,139 2.4

Corporate Allowance 600 4,016 4,016 569.3

TOTAL 13,266 30,189 0 -7,278 528 23,439 77

MEDIUM TERM FINANCIAL PLAN 2018/19 to 2027/28 APPENDIX D

2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000

Council Tax (prior year estimated surplus) 2,937 Council Tax 123,804 130,421 135,874 141,552 146,739 152,112 157,678 163,442 169,413 176,462 Council Tax - Adult Social Care Precept 9,684 9,877 10,075 10,276 10,430 10,587 10,746 10,907 11,070 11,292 Business Rates (prior year estimated deficit) -5,006 Business Rates Pilot - SGC Income share 122,562 125,258 66,600 67,932 69,291 70,676 72,090 73,532 75,002 76,502 Business Rates Pilot - Adjusted Tariff -73,603 -79,078 -27,298 -27,844 -28,401 -28,969 -29,548 -30,139 -30,742 -31,357 Business Rates Pilot - Tariff adjustment Revaluation 2017 one-off -674 Business Rates Pilot - Adjusted Levy 0 0 -1,606 -1,638 -1,671 -1,704 -1,738 -1,773 -1,808 -1,845 Business Rates Pilot - Section 31 grant 6,025 6,180 3,817 3,894 3,972 4,051 4,132 4,215 4,299 4,385 Business Rates Pilot - Section 31 grant Tariff adj -1,056 -1,153 -398 -406 -414 -422 -431 -439 -448 -457 Business Rates Pilot - Section 31 Grant to compensate for change from RPI to CPI 755 Business Rates Growth - Renewable Energy Schemes 610 624 630 636 642 649 655 662 668 675 Business Rates Growth - Renewable Energy Schemes (prior year adjustment) 405 0 0 0 0 0 0 0 0 0 Business Rates Growth - City Region Deal (paid into Pool) 10,726 10,962 11,072 11,183 11,183 11,183 11,183 11,183 11,183 11,183 Business Rates Growth - City Region deal (prior year adj - paid into Pool) 1,893 Revenue Support Grant - assumed return following end of business rate pilot 3,174 2,419 0 0 0 0 0 0 Improved Better Care Fund (iBCF) funding 700 2,200 2,246 2,246 2,246 2,246 2,246 2,246 2,246 2,246 Supplementary iBCF Adult Social Care Funding 2,641 1,361 New Homes Bonus 6,227 5,650 4,000 2,700 2,700 2,700 2,700 2,700 2,700 2,700

Total Estimated Resources 208,629 212,302 208,186 212,950 216,718 223,109 229,713 236,535 243,584 251,787

Base Budget as per February 2017 (before future Council Savings Programme) 209,190 219,746 210,643 214,569 217,958 228,678 239,398 250,118 260,838 271,558

Council Savings Programme (CSP) -5,703 -3,344 Page 169 Page Digital Programme -500 -500 -500

MTFP Update - Draft Base Budget 2018/19 as per February 2017 202,987 215,902 210,143 214,569 217,958 228,678 239,398 250,118 260,838 271,558

Net budget adjustments included in draft base budgets reported to Council in February 2017, including previous assumptions on inflation, pensions, growth etc, and CSP allocations 508 1,917 150 Adjustments made for assumptions agreed by Cabinet in July & reported to Cabinet in November 2017 (as detailed in Appendix B) 4,228 -197 2,077 3,957 6,720 6,720 6,720 6,720 6,720 6,720 Adjustments made in developing Final Revenue Budget (as detailed in Appendix B) 8,687 809 5,558 4,601 4,000 4,000 4,000 4,000 4,000 4,000 Transformational Change Programme -3,720 -2,744 -3,117 Bending the Curve Programme -3,159 -2,382 -2,202

Adjusted Final Base Budget (Appendix B) 215,902 210,143 214,569 217,958 228,678 239,398 250,118 260,838 271,558 282,278

In Year Deficit (-) / Surplus -7,273 2,159 -6,383 -5,009 -11,961 -16,289 -20,406 -24,303 -27,974 -30,491

Transfers to Financial Risks Reserve 2018/19 Business Rates Pilot Gain -4,982 2019/20 Business Rates Pilot Gain -5,103

Transfers from Financial Risks Reserve - as per November 2017 position 12,188 3,000 Additional transfers (to)/from Financial Risks Reserve (release of £8.123m to support budget) 66 -56 6,383 1,730

Cumulative Deficit (-) / Surplus 0 0 0 -3,279

Assumptions: RESOURCES BASE BUDGET Council Tax Base increase of 2% per annum. Base Budget inflation of 2% per annum from 2021/22 to 2027/28 Council Tax increase of 5.99% in 2018/19, 2.99% in 2019/20, and 1.99% thereafter. Council Savings Plan will be fully achieved. Council Tax collection rate of 98.6%. Digital Programme savings will be fully achieved. Business Rates Multipler 2.2% inflationary increase in 2018/19 and 19/20, 2% thereafter Integra savings will be fully achieved. Business Rates Pilot until 2019/20 and performance as forecast. Additional savings in future years will be fully achieved. Business Rates National Reset in 2020/21

APPENDIX E Revised Council Savings Programme 2014-15 to 2019-20

14/15 15/16 16/17 17/18 18/19 19/20 TOTAL Department / Service Area £'000 £'000 £'000 £'000 £'000 £'000 £'000 Notes ECS Spatial Plans, Specialist Advice 0 70 0 0 0 0 70 Development Mgmt and Strategic Major Sites 0 35 0 0 0 0 35 Housing Enabling 0 35 35 100 0 0 170 Strategic Projects and transport policy 0 200 0 0 0 0 200 Strategic environment and climate change 0 0 71 0 0 0 71 Asset and Infrastructure 0 65 35 0 0 0 100 Community Composting 0 130 0 0 0 0 130 Highway design and maintenance 0 100 400 0 0 0 500 Street Lighting 0 250 50 0 0 0 300 Sports Pitch Maintenance & Mgmt 0 0 0 145 0 0 145 Transport Services 0 900 400 0 0 250 1,550 3,330 Waste 200 600 0 1,250 1,230 50 Commercial/Charging 0 100 45 45 25 25 240 Anti social behaviour and community safety 0 0 142 135 0 0 277 Art Development 0 66 0 0 0 0 66 Building Control 0 50 0 0 0 0 50 Community Engagement 0 100 100 0 0 0 200 Environmental Health 0 125 165 0 0 0 290 Libraries, toilets and community hubs 0 0 0 234 266 0 500 Parking 171 Page 0 100 0 0 0 0 100 Private sector housing 0 168 0 0 0 0 168 Sport and Leisure - mgmt of dual use facilities 0 146 147 0 0 0 293 Sport & Leisure (Buildings) 50 50 50 50 50 250 Trading Standards 0 50 0 0 0 0 50 Senior Management savings 0 0 0 50 0 0 50 Operational Support Services 0 156 161 176 52 30 575 Central budgets (incl training) 11 51 61 30 40 40 233 Directorate including Strategic Partnership 0 0 30 74 0 0 104 Other review (to offset Libraries target change) 0 0 0 0 150 0 150 Winter maintenance 0 0 0 0 100 0 100 Community grants 0 0 0 0 50 0 50 Bus lane enforcement 0 0 0 100 0 0 100 ECS procurement 0 0 0 131 230 292 653 Reallocation of procurement cross cutting reviews - moved from cross cutting ECS TOTAL: 211 3,547 1,892 2,520 2,193 737 11,100 TP2 Savings 1,570 200 0 0 0 0 1,770 ECS TOTAL SAVINGS: 1,781 3,747 1,892 2,520 2,193 737 12,870 APPENDIX E Revised Council Savings Programme 2014-15 to 2019-20

14/15 15/16 16/17 17/18 18/19 19/20 TOTAL Department / Service Area £'000 £'000 £'000 £'000 £'000 £'000 £'000 Notes CAH Adult Social Care - Review of Charging Policy 0 0 200 20 30 30 280 Budget reduction - Graduate Leader Fund 0 220 0 0 0 0 220 NHS Integration 0 1,575 112 0 0 0 1,687 Integrated Children's Services 0 590 0 0 0 0 590 Assistance with Travel to School 100 657 0 0 0 0 757 Rapid Response 0 53 0 0 0 0 53 Armadillo 9 40 50 0 0 0 99 Voluntary Sector Support 147 152 75 0 0 0 374 Early Years/Schools Improvement 0 0 75 0 0 0 75 Adult Provider Services (extended WPDDTD) 0 375 0 0 0 0 375 Adult Social Care Workforce 40 210 0 0 0 0 250 Home Choice 45 138 0 0 0 0 183 Adult Provision - Developing SDS 175 175 0 0 0 0 350 Adult Community Care 0 75 50 0 0 0 125 Contracts and Commissioning Hub 0 100 0 0 0 0 100 Senior Management savings 0 0 0 50 0 0 50 Business Support HQ 32 115 45 3 0 0 195 Budget Reduction Public Health 250 250 0 0 0 0 500 EPHs 0 100 0 0 100 0 200

Page 172 Page -100 100 0 Rephasing of savings target Budget Reduction - traded services 0 50 0 0 0 0 50 Budget Reduction - FISS/YISS 15 0 0 0 0 0 15 Budget Reduction - Looked after Children 24 0 0 0 0 0 24 Budget Reduction - YOT 20 0 0 0 0 0 20 Budget Reduction - Intermediate Care Flat 11 0 0 0 0 0 11 Budget Reduction - Delayed Transfer of Care 45 45 0 0 0 0 90 Budget Reduction - Supporting People 50 250 0 0 0 0 300 Adult social care - commissioning 0 530 0 0 0 0 530 Adult social care - Day Services 0 0 0 150 0 0 150 Housing Related Support - older people 0 100 289 253 0 0 642 Support for Youth Services 0 0 187 25 75 0 287 Housing Related Support - youth 0 0 0 100 0 0 100 Care home commissioning 0 0 0 150 0 0 150 -150 150 0 Rephasing of savings target Recommissioning of support in ExtraCare Housing 0 0 0 150 50 0 200 50 50 Increase in savings target ICS commissioning - Southern Brooks 0 0 45 25 0 0 70 ICS commissioning - 16-25 independent people 0 0 25 10 0 0 35 Community based support recommissioning 0 0 0 0 200 0 200 Housing related support / supported living for people 0 0 0 100 0 0 100 with LD -100 100 0 Rephasing of savings target Review of sensory support service contract 0 0 0 50 0 0 50 -50 -50 Saving area not to be progressed Adult social care direct payments 0 0 0 200 0 0 200 Adult social care commissioning 0 0 0 183 0 0 183 Adult social care - care placements 0 0 0 206 0 0 206 -206 -206 Saving area not to be progressed Reablement - packages of care 0 0 0 50 100 0 150 Integrated community equipment support 0 110 0 0 0 0 110 APPENDIX E Revised Council Savings Programme 2014-15 to 2019-20

14/15 15/16 16/17 17/18 18/19 19/20 TOTAL Department / Service Area £'000 £'000 £'000 £'000 £'000 £'000 £'000 Notes New opportunities under review or to be identified 0 0 0 153 670 370 1,193 Replaced by various new projects -153 -670 -370 -1,193 Release contingency re HRS 0 0 0 0 105 0 105 New project area Promoting opportunities/Day Services/Post 18 0 0 0 175 120 0 295 New project area Review of business support (children's) 0 0 0 0 45 0 45 New project area Review opportunity for further public health 0 0 0 0 0 270 270 intervention New project area Budget realignment using new funding streams 1,303 (precept funding) 0 0 0 771 335 197 New project area ICS over achievement 47 47 Closed project. CAH TOTAL: 963 5,910 1,153 2,212 1,260 697 12,195 TP2 Savings 4,050 4,050 TOTAL CAH SAVINGS: 5,013 5,910 1,153 2,212 1,260 697 16,245 Page 173 Page APPENDIX E Revised Council Savings Programme 2014-15 to 2019-20

14/15 15/16 16/17 17/18 18/19 19/20 TOTAL Department / Service Area £'000 £'000 £'000 £'000 £'000 £'000 £'000 Notes CECR Strategic Communications (including emergency 34 190 15 30 24 0 293 Removed Digital element of Strategic Comms Review - see below planning function) Digital Team (Communications) 16 11 27 Digital element of Strategic Comms Review Corporate Finance Exchequer and Payroll 0 40 275 150 205 90 760 Change, performance and procurement 0 0 0 131 200 150 481 Customer Services/Community Hubs 30 60 200 0 0 0 290 Human Resources and Employee Relations 0 0 0 34 66 0 100 Workforce Development 0 0 18 27 0 0 45 Trade Union Representation 0 0 0 0 20 0 20 Internal Governance 0 0 180 0 50 0 230 Legal Services 0 23 35 85 0 0 143 Cost of democracy 0 0 152 25 0 265 442 -130 -130 Reduction due to boundary commission findings Corporate Property 0 0 0 22 440 350 812 Business Support 0 50 50 200 100 100 500 100 -100 0 f£100k savings brought forward by one year. ICT 0 132 150 105 0 0 387 Senior Management savings 0 0 0 50 0 0 50 Commercial/Trading 0 120 20 0 0 0 140

New 174 Page Trading Opportunities 0 0 0 0 100 100 200 New savings target (additional £100k anticipated in 20/21) Corporate support demands 0 -61 -66 -127 Minimum Revenue Provision 2,800 -100 -100 -100 2,500 Procurement CECR 0 0 0 55 95 121 271 Savings target moved to Departmental targets July 2017 TOTAL CECR SAVINGS: 64 615 3,895 830 1,250 780 7,434 TP2 Savings 783 22 0 0 0 0 805 TOTAL CECR SAVINGS: 847 637 3,895 830 1,250 780 8,239

CROSS CUTTING REVIEWS Review of organisational ways of working 0 150 50 0 0 0 200 Digital First 0 100 100 100 600 600 1,500 Inflation 800 800 800 800 800 800 4,800 Growth Agenda 0 0 100 100 100 100 400 0 0 0 320 560 710 1,590 Procurement -1,590 Savings target moved to Departmental targets July 2017; CAH share of £666k allocated across -320 -560 -710 new project areas. TOTAL CROSS CUTTING SAVINGS: 800 1,050 1,050 1,000 1,500 1,500 6,900

Total Council Savings Programme 2,038 11,122 7,990 6,562 6,203 3,714 37,629 Total TP2 Savings 6,403 222 6,625 TOTAL 8,441 11,344 7,990 6,562 6,203 3,714 44,254 List of Earmarked Reserves APPENDIX F

Forecast Forecast Forecast Forecast Closing Forecast Forecast Forecast Closing Forecast Closing Opening Transfers Balance as Transfers Closing Balance Transfers Balance as at Transfers Balance as at Balance as at from/(to) at 31st from/(to) as at 31st from/(to) 31st March from/(to) 31st March Target Name of Reserve 1st April 2017 Reserve March 2018 Reserve March 2019 Reserve 2020 Reserve 2021 Level Purpose £ £ £ £ £ £ £ £ £ £

Arts Funding (86) 6 (80) 6 (74) 6 (68) 6 (62) 0 To fund art development projects and officer resource Building Control (111) 18 (93) (17) (110) (110) (110) 0 To hold any surpluses/deficits arising from the separate rolling trading account as required under legislative requirements. Cultural Diversity (71) 40 (31) 31 0 0 0 0 To fund community events such as Armed Forces Day, Ambitions and St Georges Day Domestic Homicide Review (40) 0 (40) 0 (40) (40) (40) 0 To fund domestic homicide reviews Drainage Strategic Works (183) 81 (102) 54 (48) 48 0 0 0 To meet the cost of Strategic Drainage Developments ECS IT Equipment (181) 102 (79) (79) (79) (79) 0 To purchase IT Equipment within ECS Housing Enabling (510) 170 (340) 170 (170) 170 0 0 (510) To provide a 3 year contingency to mitigate any fall in fees against newly set income target Licensing (400) 161 (239) 86 (153) (153) (153) 0 To hold surpluses relating to licensing to support the ongoing delivery of the licensing service in line with statutory guidance. 15.01.2018 - transfer from reserve in 2018/19 to keep all taxi fees the same as 2017/18 - will need approval by the Regulatory Committee and will be confirmed in Qtr 1 2018/19.

Local Infrastructure Funding (352) 200 (152) 152 0 0 0 0 To hold grant funding received from DCLG for extra capacity within the planning department for use on New Neighbourhood areas Local Plan/Development Framework (337) 105 (232) 104 (128) 104 (24) 24 0 0 To support the costs of the Local Plan through its 6 year rolling cycle of

Page 175 Page development Oldbury Nuclear Planning (375) (10) (385) (385) (385) (385) (1,000) To provide funding for any costs that are not covered by the Planning Performance Agreement for the potential plan at Oldbury on Severn Open Spaces Improvements (236) 50 (186) 0 (186) (186) (186) 0 To fund open spaces works for a defined purpose, either revenue or capital

Planning Appeals (708) 668 (40) (100) (140) (100) (240) (100) (340) (500) To meet the legal costs of any planning appeals that exceed revenue budget and includes funds to support additional capacity Planning Capacity Funding (224) 112 (112) 112 0 0 0 0 To hold grant funding received from DCLG to provide additional planning capacity to keep application process running as efficiently and effectively as possible Planning Enforcement (83) 42 (41) 41 0 0 0 0 To contribute towards larger planning enforcement case which can not be covered by base budget Private Sector Housing - Accommodation Survey (33) (8) (41) (8) (49) (8) (57) (8) (65) 0 To provide cyclical funding for 5 yearly accommodation survey Proceeds of Crime (80) 34 (46) 34 (12) 12 0 0 0 To partly fund dealing with envirocrime over the next three years

Prosecution (73) 23 (50) 23 (27) 23 (4) (4) (50) To cover the costs of prosecution on issues of licensing, envirocrime, planning enforcement and trading standards Smart Cards (121) 72 (49) 63 14 14 14 0 To meet the development costs of Smart Ticketing and Contactless Payments across the West of England public transport network Remedials Reserve 0 (192) (192) (192) (192) (192) 0 Remedial reserve to fund remedal Highways Expenditure

Page Park Maintenance 0 (7) (7) 1 (6) (1) (7) (1) (8) 0 To use rental income on Page Park to fund r&m in the Park. This is required under HLF funding conditions Travellers Unit (37) 37 0 0 0 0 0 This reserve is held to fund the replacement of the Travellers Unit van.

Waste Management Equalisation (24,383) (484) (24,867) 598 (24,269) 4,095 (20,174) (79) (20,253) 0 To equalise the costs of the PFI waste contract over its life to 2025/26

Total ECS Reserves (28,624) 1,220 (27,404) 1,350 (26,054) 4,349 (21,705) (158) (21,863) (2,060) List of Earmarked Reserves APPENDIX F

CAH Service Development (1,508) 484 (1,024) 195 (829) (829) (829) 0 To support future one-off service requirements and smooth demographic pressured. Drug Action Team (350) 66 (284) 111 (173) 111 (62) 62 0 (400) To support drug action within South Gloucestershire Public Health (935) 61 (874) 490 (384) 312 (72) 72 0 0 To support the public health functions of the council

Dedicated Schools Grant 4,841 4,089 8,930 (71) 8,859 (3,380) 5,479 (5,479) 0 0 To hold ring-fenced grants related to non-schools budgets funded from Dedicated Schools Grant (DSG)

School Balances (3,717) 3,160 (557) 557 0 0 0 0 0 (6,600) To hold ring-fenced grants related to individual schools balances funded from Dedicated Schools Grant (DSG).

Troubled Families (293) 130 (163) 163 0 0 0 0 To complete the five year work plan associated with Troubled Families initiative.

Psychology Service (88) 5 (83) 83 0 0 0 0 To ensure delivery of Psychology Services purchased by schools through integra, including cover of sickness and maternity, equipment and training. Page 176 Page

Total CAH Reserves (2,050) 7,995 5,945 1,087 8,302 (2,957) 5,345 (5,345) 0 (7,000)

Elections (302) (32) (334) (32) (366) 290 (76) (32) (108) 0 To fund the cost of full council elections and any by-elections

Economic Development (907) 283 (624) (624) (624) (624) 0 To partly offset the revenue cost of carry borne by the Council when initially funding City Region Deal infrastructure schemes, together with the costs of the Devolution Agreement and any subsequent underwriting of the West of Insurance (4,517) 517 (4,000) (4,000) (4,000) (4,000) (4,000) To fund the potential costs of claims incurred but not yet reported where the council may be liable and to cove claims liabilities which fall outside the scope of the council's insurance cover. Invest to Save (1,905) 852 (1,053) 998 (55) (55) (55) 0 To meet the costs of projects which support the Council Savings and Digital Programmes

New Homes Bonus (1,836) 51 (1,785) (1,785) (1,785) (1,785) 0 To hold the balance of New Homes Bonus grant allocated by Area Fora

Print and Multi Functional Device Renewal (426) (20) (446) (20) (466) (20) (486) (20) (506) (500) To cover the renewal of print and MFD equipment

Severance (730) 0 (730) 0 To support the costs of achieving staffing reductions

Traded Services (786) 100 (686) 599 (87) (87) (87) (500) To meet in-year trading deficits and provide funding for transition costs to move the service into a LA company. Corporate Telephone System 0 (230) (230) (230) (230) (230) 0 To fund the replacement of the Council's telephone system.

Universal Credit Implementation (formerly Local Council Tax (330) 0 (330) 165 (165) 165 0 0 0 To absorb any additional costs to the council following the introduction of Reduction Scheme) Universal Credit Total CECR Reserves (11,739) 1,521 (10,218) 1,710 (7,778) 435 (7,343) (52) (7,395) (5,000) List of Earmarked Reserves APPENDIX F

Budget Carry Forward (1,478) 1,478 0 0 0 0 0 To hold carry forwards at year end for transfer to relevant service areas in the new financial year City Region Deal - EDF Smoothing (5,933) (5,933) (5,933) (5,933) (5,933) 0 To hold the Council's share of unallocated funds in the City Region Deal Business Rates Pool Financial Risks (18,450) 2,234 (16,216) 7,234 (8,982) (2,563) (11,545) 5,995 (5,550) 0 To give cover for possible adverse impacts arising from the economy, business rate appeals, exceptional planning appeals and welfare responsibilities, and to help offset projected in year deficits in future years to ensure a broadly balanced budget in the medium term.

Housing Revenue Account - residual balance (13) (13) (13) (13) (13) 0 To hold the HRA balance at the time the LSVT housing transfer in 2007 and delegated to members to fund projects in former council housing areas

Total Central Reserves (25,874) 3,712 (22,162) 7,234 (14,928) (2,563) (17,491) 5,995 (11,496) 0

TOTAL RESERVES EARMARKED FOR REVENUE PURPOSES (68,287) 14,448 (53,839) 11,381 (40,458) (736) (41,194) 440 (40,754) (14,060)

£ £ £ £ £ £ £ £ £ £ Major Transport Schemes (1,531) (173) (1,704) 427 (1,277) (173) (1,450) 529 (921) 0 This Reserve is used to contribute towards the funding of transport schemes in South Gloucestershire e.g. Metrowest.

Page 177 Page Major Transport Schemes Reserve - Stoke Gifford Transport Link 0 0 0 0 0 0 0 Reserve to contribute towards major schemes in the Stoke Gifford area, near ring road. It is intended for the reserve to be drawn down in 2017/18 to support the NFHG scheme costs arising from the potential shortfall in the identified capital receipt.

Street Care Fixed Asset Replacement (2,723) 561 (2,162) (1,025) (3,187) (1,738) (4,925) (1,872) (6,797) (1,500) This reserve provides the financing for the replacement of vehicles and equipment, as supported by the Asset Replacement Plan. It is funded by user contributions with a programme of replacement. Decisions on the timing of major purchases (e.g. gritters, planer and buses) can have a significant impact on the level of balances in any year.

BAC Trust (2,000) 1,000 (1,000) (1,000) (1,000) (1,000) 0 This reserve was set aside to underwrite loan funding for BAC Trust.

Capital Fund (1,166) (1,000) (2,166) (2,166) (2,166) (2,166) 0 The reserve is for funding to support the capital programme.

TOTAL RESERVES EARMARKED FOR CAPITAL PURPOSES (7,420) 388 (7,032) (598) (7,630) (1,911) (9,541) (1,343) (10,884) (1,500)

TOTAL GENERAL FUND EARMARKED RESERVES (75,707) 14,836 (60,871) 10,783 (48,088) (2,647) (50,735) (903) (51,638) (15,560)

GENERAL BALANCES (8,738) (8,738) (8,738) (8,738) (8,738) (9,000)

BUDGETARY RISK ASSESSMENT APPENDIX G

Budgetary Risk Assessment – General Fund Balances Risk Area Mitigation Value 1) Council Savings Programme, Transformational Change This risk is mitigated by the existence of the planning and £1m - £2m and ‘Bending the Curve’ Programmes - the level of planned review framework, robust governance arrangements, and savings as part of the 3 programmes will not be achieved, or that clear delivery requirements on service departments and they will be achieved later than planned, and that the level of Cabinet with similar arrangements to be implemented for Severance allowance set aside by the Council will not be sufficient the Transformational Change and ‘Bending the Curve’ based on need. The risk in respect of the revised Council Savings Programmes. Inevitably some residual risks remain and Programme was considerable but reducing over time as individual these will be considered as part of the business cases proposals have been worked up in full detail and approved for developed for Cabinet by June/July 2018. These can be implementation over the next few years. This same process will mitigated in the short term through the Council Savings commence for the Transformational Change and ‘Bending the Programme contingencies, and in any remaining risk into Curve’ Programmes as part of the council’s strategy to resolve the the medium term through the use of reserves as an interim core budget deficit and as such the level of financial risk remains measure. over the course of the MTFP. Page 179 Page 2) Local Government Finance System - the Council now holds The Council implemented its own Local Council Tax £3m+ risk previously held by central government in respect of the Local Reduction scheme with the resultant associated costs. The Council Tax Reduction scheme (LCTRS)(formerly Council Tax 2015/16 Local Council Tax Reduction scheme, approved Benefit) and business rates generation (including the impact of lost by Council on 10 December 2014, continues to broadly business rate appeals). match the reduced level of resources included in the Any LCTRS costs above the level of grant received from central Finance Settlements from 2013/14 onwards. government are now met by the Council. In addition, any year on year demographic growth which is in excess of the assumptions The Council aims to mitigate the effect of business rate made nationally is met by the Council (e.g. in times of recession as appeals by making adequate provision for appeals. This a welfare based scheme costs could go up). provision is reviewed on a regular basis taking account of In respect of the localisation of business rates there are three changes and developments both locally and nationally. primary risks. Firstly, that our business rate income does not Quarterly proactive monitoring of business rates materialise as projected. Secondly, that losses due to successful performance covering reliefs and growth is undertaken in business rate appeals to the Valuation Office are higher than respect of business rates. Work continues at a national projected, and that reliefs awarded to business rates payers are level to improve information supplied to councils from the higher than forecast Thirdly, the 100% Business Rates Retention Valuation Office on appeals. The council actively engages Pilot and its continuation into 2019/20. in government consultation on changes to the Local Government Finance System including modelling the financial impact of proposals where possible. The West of BUDGETARY RISK ASSESSMENT APPENDIX G

Budgetary Risk Assessment – General Fund Balances Risk Area Mitigation Value Further changes are anticipated from 2020/21 with the Government England Business Rates pilot continues to provide a direct issuing a consultation paper in respect of the Fair Funding Review line into government on development of new system, and in conjunction with changes to the Business Rates System and the enables the council to assess potential issues earlier. baseline reset.

3) Pressures on Base Budget - that costs will rise above base This has been mitigated in part though the additional £2m+ budget sums. The two highest risk budgets are looked after budgets built into the Medium Term Financial Plan for the children/safeguarding and care for the elderly. The MTFP has seen roll forward of the 2017/18 social care overspends, increasing budget pressure from these areas recognising the forecast demographic growth over the next few years, a forecast overspend in 2017/18 and ongoing price, cost and activity proposed centrally held Corporate Allowance including a pressures across forthcoming financial years. contingency for price risk, improved projection techniques Page 180 Page Over and above these areas, there remains ongoing risk in other in particular around social care, and active in year demand driven and trading budgets across the Council. Risk also monitoring. arises from potential changes to the national and international economic environment, for example, the impact of Brexit, increasing rates of inflation, interest rates or increased austerity measures. Increasing housing numbers will also need to be closely managed in respect of pressures being generated and funded through council tax and other revenue streams. Furthermore, increases in public sector pay has resulted in significant budgetary pressures which may continue to rise in excess of the budgeting assumptions currently made.

4) Legislative/Policy Change - generic risk around managing the Active monitoring and early identification of issues. £1m+ impact of future planned (but not detailed) legislative and policy Proactive campaigning via the LGA to ensure new changes at a national level, for example the introduction of Burdens Doctrine applies to mitigate financial pressures Universal Credit is likely to impact on the local government locally. The council will continue to actively engage in finances, or future Care Act pressures, or pressures arising from government consultation on changes to the Local Brexit. In practice actual costs of these new duties could be higher Government Finance System including modelling the than available funding and are not always accompanied by New financial impact of proposals where possible. Burdens Funding from Government. The proposals around the BUDGETARY RISK ASSESSMENT APPENDIX G

Budgetary Risk Assessment – General Fund Balances Risk Area Mitigation Value move to National Business Rates Retention are linked to the transfer of duties to local government to ensure that the overall financial outcome is net neutral. This carries and inherent risk for local government particularly should any of the services proposed for transfer are demand led.

5) Unforeseen operational/strategic risks - on-going operational Council planning activity and taking of appropriate advice. £1m+ activity and potential unforeseen events where the Council would Review of earmarked reserves in specific areas to ensure be required to meet the costs (at least in part). These could include sufficient funding set aside, and the potential for some the ability of the Council to manage the associated costs of things external government grant support in severe cases, helps such as unforeseen health and safety requirements, litigation to mitigate some of this risk. Proper business continuity claims, judicial reviews, or costs associated with areas such as and Emergency Plan procedures in place. significant planning appeals. The Council is also required to

Page 181 Page maintain sufficient funds to enable it to manage civil emergency events, such as severe weather/terrorism occurrences/events. The council is seeing particular pressures arise in relation to planning appeals with the forecast depletion of the planning appeals reserve in 2017/18.

6) City Region Deal and Devolution - There is a risk that a future If there is a significant adverse change in the financial £2m+ Government over the operating period of the City Region Deal framework applying to the City Region Deal, the councils (CRD) may adversely alter the relevant financial framework under will be able to dissolve the agreement but may have which the CRD operates. The council also underwrites any failure entered into long term commitments in the expectation that of the EDF to generate sufficient funds to reimburse capital costs there would be reimbursement through the City Region on schemes funded by the council through this route. During Deal. These could be substantial and have a material 2017/18, the council’s budgets were amended to take account of impact on services. the West of England Combined Authority (WECA) and further This is mitigated through close monitoring and robust updates are included in the proposed 2018/19 budget. The three business rate projections, as well as governance through WoE councils may be forced to underwrite WECA in the event of theWoE Pooling Board. The governance structure of significant financial difficulties. WECA, and appropriate in year budget monitoring and budget setting ensures financial information is shared across the local authorities BUDGETARY RISK ASSESSMENT APPENDIX G Page 182 Page APPENDIX H

RECOMMENDED SPECIAL EXPENSES 2018/19 BY SERVICE AND PARISH AREA

Open Spaces Acquired PARISH Allotments Closed Churchyards Bus shelters Christmas Lights Open Spaces (plus Parks) Commuted Sums Play Areas Playing Fields Public Conveniences 2018/19 TOTAL Housing Land Acton Turville £0 £0 £0 £0 £0 £370 £0 £0 £0 £0 £370 Almondsbury £0 £0 £1,103 £0 £4,053 £523 -£2,285 £0 £0 £0 £3,394 Alveston £0 £106 £0 £0 £4,827 £450 £0 £0 £0 £0 £5,383 Aust £0 £0 £0 £0 £0 £39 £0 £0 £0 £0 £39 Badminton £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Bitton £0 £0 £3,677 £0 £46,409 £2,555 £0 £12,749 £3,404 £0 £68,794 Bradley Stoke £0 £0 £11,398 £0 £96,662 £14,001 -£3,307 £37 £0 £0 £118,791 Charfield £0 £2,240 £0 £0 £9,578 £108 £0 £1,530 £0 £14,333 £27,789 Cold Ashton £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Cromhall £0 £0 £0 £0 £190 £97 £0 £0 £0 £0 £287 Dodington £0 £0 £5,515 £0 £98,676 £646 £0 £0 £0 £0 £104,837 Downend & BH £0 £4,111 £1,471 £0 £50,444 £0 -£7,397 £9,117 -£22,392 £12,628 £47,982 Doynton £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Dyrham & Hinton £0 £0 £0 £0 £52 £618 £0 £0 £0 £0 £670 Emersons Green £0 £0 £7,354 £0 £87,404 £14,602 -£13,319 £3,916 £983 £0 £100,940 Falfield £0 £0 £0 £0 £98 £455 £0 £0 £0 £0 £553 Filton £0 £2,773 £2,941 £0 £2,833 £1,115 £0 £0 £0 £14,983 £24,645 Frampton Cotterell £0 £0 £1,103 £0 £19,074 £938 £0 £4,649 £0 £0 £25,764 Hanham £1,010 £0 £2,574 £4,986 £24,305 £2,710 -£364 £4,080 £420 £27,367 £67,088 Hanham Abbots £0 £0 £1,471 £0 £45,292 £204 -£376 £6,596 £0 £0 £53,187 Hawkesbury £0 £2,876 £0 £0 £87 £506 £0 £0 £0 £0 £3,469 Hill £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Horton £0 £2,277 £0 £0 £0 £0 £0 £0 £0 £0 £2,277 Iron Acton £0 £0 £0 £0 £0 £727 £0 £0 £0 £0 £727 Little Sodbury £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Marshfield £0 £0 £0 £0 £482 £842 £0 £0 £0 £9,787 £11,111 Oldbury £0 £0 £0 £0 £19 £59 £0 £0 £0 £0 £78

Oldland 183 Page £0 £0 £8,824 £0 £117,422 £8,976 £0 £23,616 £0 £0 £158,838 Olveston £0 £0 £0 £0 £2,835 £1,289 £0 £0 £0 £0 £4,124 Patchway £0 £0 £5,883 £0 £18,295 £22,148 £0 £0 £0 £0 £46,326 Pilning & Severn £0 £0 £0 £0 £14,260 £581 -£695 £0 £0 £11,181 £25,327 Beach Pucklechurch £0 £0 £0 £0 £16,013 £3,175 £0 £0 £0 £0 £19,188 Rangeworthy £0 £666 £0 £0 £380 £88 £0 £0 £0 £0 £1,134 Rockhampton £0 £0 £0 £0 £98 £191 £0 £0 £0 £0 £289 Siston £0 £0 £2,206 £0 £67,666 £2,662 -£3,602 £6,326 £0 £13,296 £88,554 Sodbury £0 £1,686 £4,412 £0 £30,694 £5,200 £0 £0 £0 £0 £41,992 Stoke Gifford £0 £0 £5,515 £0 £110,288 £14,784 -£67,051 £6,584 £0 £0 £70,120 Stoke Lodge and the £0 £0 £1,103 £0 £6,833 £502 £0 £0 £0 £0 £8,438 Common Thornbury £0 £0 £0 £0 £61,544 £18,522 £0 £0 £0 £0 £80,066 Tormarton £0 £0 £0 £0 £319 £65 £0 £0 £0 £0 £384 Tortworth £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Tytherington £0 £1,756 £0 £0 £574 £471 £0 £0 £0 £0 £2,801 Westerleigh £0 £0 £5,148 £0 £1,073 £101 £0 £0 £0 £0 £6,322 Wick & Abson £0 £0 £0 £0 £1,031 £1,080 £0 £0 £0 £0 £2,111 Wickwar £0 £1,563 £0 £0 £8,822 £321 £0 £0 £0 £0 £10,706 Winterbourne £0 £0 £1,103 £0 £6,471 £3,678 £0 £0 £2,698 £14,353 £28,303 Yate £0 £0 £13,237 £0 £174,521 £15,418 -£11,981 £590 £0 £0 £191,785 Unparished Areas £1,321 £11,163 £13,237 £22,870 £168,591 £42,023 -£1,405 £22,493 £2,764 £71,458 £354,515

TOTAL £2,331 £31,217 £99,275 £27,856 £1,298,215 £182,840 -£111,782 £102,283 -£12,123 £189,386 £1,809,498 APPENDIX H

Recommended Special Expense Recharges per Parish 2019/20

Open Spaces Acquired PARISH Allotments Closed Churchyards Bus shelters Christmas Lights Open Spaces (plus Parks) Housing Land Commuted Sums Play Areas Playing Fields Public Conveniences 2019/20 TOTAL Acton Turville £0 £0 £0 £0 £0 £381 £0 £0 £0 £0 £381 Almondsbury £0 £0 £1,136 £0 £4,175 £539 -£1,765 £0 £0 £0 £4,084 Alveston £0 £109 £0 £0 £4,972 £464 £0 £0 £0 £0 £5,544 Aust £0 £0 £0 £0 £0 £40 £0 £0 £0 £0 £40 Badminton £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Bitton £0 £0 £3,787 £0 £47,801 £2,632 £0 £13,131 £3,506 £0 £70,858 Bradley Stoke £0 £0 £11,740 £0 £99,562 £14,421 -£3,307 £38 £0 £0 £122,454 Charfield £0 £2,307 £0 £0 £9,865 £111 £0 £1,576 £0 £14,763 £28,623 Cold Ashton £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Cromhall £0 £0 £0 £0 £196 £100 £0 £0 £0 £0 £296 Dodington £0 £0 £5,680 £0 £101,636 £665 £0 £0 £0 £0 £107,982 Downend & BH £0 £4,234 £1,515 £0 £51,957 £0 -£5,735 £9,391 £0 £13,007 £74,369 Doynton £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Dyrham & Hinton £0 £0 £0 £0 £54 £637 £0 £0 £0 £0 £690 Emersons Green £0 £0 £7,575 £0 £90,026 £15,040 -£12,723 £4,033 £1,012 £0 £104,964 Falfield £0 £0 £0 £0 £101 £469 £0 £0 £0 £0 £570 Filton £0 £2,856 £3,029 £0 £2,918 £1,148 £0 £0 £0 £15,432 £25,384 Frampton Cotterell £0 £0 £1,136 £0 £19,646 £966 £0 £4,788 £0 £0 £26,537 Hanham £1,040 £0 £2,651 £5,136 £25,034 £2,791 -£364 £4,202 £433 £28,188 £69,112 Hanham Abbots £0 £0 £1,515 £0 £46,651 £210 -£376 £6,794 £0 £0 £54,794 Hawkesbury £0 £2,962 £0 £0 £90 £521 £0 £0 £0 £0 £3,573 Hill £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Horton £0 £2,345 £0 £0 £0 £0 £0 £0 £0 £0 £2,345 Iron Acton £0 £0 £0 £0 £0 £749 £0 £0 £0 £0 £749 Little 184 Page Sodbury £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Marshfield £0 £0 £0 £0 £496 £867 £0 £0 £0 £10,081 £11,444 Oldbury £0 £0 £0 £0 £20 £61 £0 £0 £0 £0 £80 Oldland £0 £0 £9,089 £0 £120,945 £9,245 £0 £24,324 £0 £0 £163,603 Olveston £0 £0 £0 £0 £2,920 £1,328 £0 £0 £0 £0 £4,248 Patchway £0 £0 £6,059 £0 £18,844 £22,812 £0 £0 £0 £0 £47,716 Pilning & Severn Beach £0 £0 £0 £0 £14,688 £598 -£695 £0 £0 £11,516 £26,108 Pucklechurch £0 £0 £0 £0 £16,493 £3,271 £0 £0 £0 £0 £19,764 Rangeworthy £0 £686 £0 £0 £391 £91 £0 £0 £0 £0 £1,168 Rockhampton £0 £0 £0 £0 £101 £197 £0 £0 £0 £0 £298 Siston £0 £0 £2,272 £0 £69,696 £2,742 -£3,602 £6,516 £0 £13,695 £91,319 Sodbury £0 £1,737 £4,544 £0 £31,615 £5,356 £0 £0 £0 £0 £43,252 Stoke Gifford £0 £0 £5,680 £0 £113,597 £15,228 -£67,051 £6,782 £0 £0 £74,235 Stoke Lodge and the Common £0 £0 £1,136 £0 £7,038 £517 £0 £0 £0 £0 £8,691 Thornbury £0 £0 £0 £0 £63,390 £19,078 £0 £0 £0 £0 £82,468 Tormarton £0 £0 £0 £0 £329 £67 £0 £0 £0 £0 £396 Tortworth £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Tytherington £0 £1,809 £0 £0 £591 £485 £0 £0 £0 £0 £2,885 Westerleigh £0 £0 £5,302 £0 £1,105 £104 £0 £0 £0 £0 £6,512 Wick & Abson £0 £0 £0 £0 £1,062 £1,112 £0 £0 £0 £0 £2,174 Wickwar £0 £1,610 £0 £0 £9,087 £331 £0 £0 £0 £0 £11,027 Winterbourne £0 £0 £1,136 £0 £6,665 £3,788 £0 £0 £2,779 £14,784 £29,152 Yate £0 £0 £13,634 £0 £179,757 £15,881 -£11,981 £608 £0 £0 £197,898 Unparished Areas £1,361 £11,498 £13,634 £23,556 £173,649 £43,284 -£1,405 £23,168 £2,847 £73,602 £365,192

TOTAL £2,401 £32,154 £102,253 £28,692 £1,337,161 £188,326 -£109,004 £105,351 £10,577 £195,068 £1,892,978 APPENDIX H

Recommended Special Expense Recharges per Parish 2020/21

Open Spaces Acquired PARISH Allotments Closed Churchyards Bus shelters Christmas Lights Open Spaces (plus Parks) Housing Land Commuted Sums Play Areas Playing Fields Public Conveniences 2020/21 TOTAL Acton Turville £0 £0 £0 £0 £0 £393 £0 £0 £0 £0 £393 Almondsbury £0 £0 £1,170 £0 £4,300 £555 -£1,765 £0 £0 £0 £4,260 Alveston £0 £112 £0 £0 £5,121 £477 £0 £0 £0 £0 £5,711 Aust £0 £0 £0 £0 £0 £41 £0 £0 £0 £0 £41 Badminton £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Bitton £0 £0 £3,901 £0 £49,235 £2,711 £0 £13,525 £3,611 £0 £72,984 Bradley Stoke £0 £0 £12,092 £0 £102,549 £14,854 -£3,307 £39 £0 £0 £126,227 Charfield £0 £2,376 £0 £0 £10,161 £115 £0 £1,623 £0 £15,206 £29,481 Cold Ashton £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Cromhall £0 £0 £0 £0 £202 £103 £0 £0 £0 £0 £304 Dodington £0 £0 £5,851 £0 £104,685 £685 £0 £0 £0 £0 £111,222 Downend & BH £0 £4,361 £1,561 £0 £53,516 £0 -£5,735 £9,672 £0 £13,397 £76,772 Doynton £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Dyrham & Hinton £0 £0 £0 £0 £55 £656 £0 £0 £0 £0 £711 Emersons Green £0 £0 £7,802 £0 £92,727 £15,491 -£12,723 £4,154 £1,043 £0 £108,494 Falfield £0 £0 £0 £0 £104 £483 £0 £0 £0 £0 £587 Filton £0 £2,942 £3,120 £0 £3,006 £1,183 £0 £0 £0 £15,895 £26,146 Frampton Cotterell £0 £0 £1,170 £0 £20,236 £995 £0 £4,932 £0 £0 £27,333 Hanham £1,072 £0 £2,731 £5,290 £25,785 £2,875 -£364 £4,328 £446 £29,034 £71,196 Hanham Abbots £0 £0 £1,561 £0 £48,050 £216 -£376 £6,998 £0 £0 £56,449 Hawkesbury £0 £3,051 £0 £0 £92 £537 £0 £0 £0 £0 £3,680 Hill £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Horton £0 £2,416 £0 £0 £0 £0 £0 £0 £0 £0 £2,416 Iron Acton £0 £0 £0 £0 £0 £771 £0 £0 £0 £0 £771 Little Sodbury £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Marshfield £0 £0 £0 £0 £511 £893 £0 £0 £0 £10,383 £11,788 Oldbury £0 £0 £0 £0 £20 £63 £0 £0 £0 £0 £83 Oldland 185 Page £0 £0 £9,361 £0 £124,573 £9,523 £0 £25,054 £0 £0 £168,511 Olveston £0 £0 £0 £0 £3,008 £1,368 £0 £0 £0 £0 £4,375 Patchway £0 £0 £6,241 £0 £19,409 £23,497 £0 £0 £0 £0 £49,147 Pilning & Severn Beach £0 £0 £0 £0 £15,128 £616 £0 £0 £0 £11,862 £27,607 Pucklechurch £0 £0 £0 £0 £16,988 £3,369 £0 £0 £0 £0 £20,357 Rangeworthy £0 £707 £0 £0 £403 £93 £0 £0 £0 £0 £1,203 Rockhampton £0 £0 £0 £0 £104 £203 £0 £0 £0 £0 £307 Siston £0 £0 £2,340 £0 £71,787 £2,824 -£3,602 £6,711 £0 £14,106 £94,166 Sodbury £0 £1,789 £4,681 £0 £32,563 £5,517 £0 £0 £0 £0 £44,549 Stoke Gifford £0 £0 £5,851 £0 £117,005 £15,684 -£67,051 £6,985 £0 £0 £78,474 Stoke Lodge and the Common £0 £0 £1,170 £0 £7,249 £533 £0 £0 £0 £0 £8,952 Thornbury £0 £0 £0 £0 £65,292 £19,650 £0 £0 £0 £0 £84,942 Tormarton £0 £0 £0 £0 £338 £69 £0 £0 £0 £0 £407 Tortworth £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Tytherington £0 £1,863 £0 £0 £609 £500 £0 £0 £0 £0 £2,972 Westerleigh £0 £0 £5,462 £0 £1,138 £107 £0 £0 £0 £0 £6,707 Wick & Abson £0 £0 £0 £0 £1,094 £1,146 £0 £0 £0 £0 £2,240 Wickwar £0 £1,658 £0 £0 £9,359 £341 £0 £0 £0 £0 £11,358 Winterbourne £0 £0 £1,170 £0 £6,865 £3,902 £0 £0 £2,862 £15,227 £30,027 Yate £0 £0 £14,043 £0 £185,149 £16,357 -£11,514 £626 £0 £0 £204,661 Unparished Areas £1,401 £11,843 £14,043 £24,263 £178,858 £44,582 -£1,405 £23,863 £2,932 £75,810 £376,190

TOTAL £2,473 £33,118 £105,321 £29,552 £1,377,276 £193,975 -£107,842 £108,512 £10,894 £200,920 £1,954,200 APPENDIX H

Recommended Special Expense Recharges per Parish 2021/22

Open Spaces Acquired PARISH Allotments Closed Churchyards Bus shelters Christmas Lights Open Spaces (plus Parks) Housing Land Commuted Sums Play Areas Playing Fields Public Conveniences 2021/2 TOTAL Acton Turville £0 £0 £0 £0 £0 £404 £0 £0 £0 £0 £404 Almondsbury £0 £0 £1,205 £0 £4,429 £571 -£1,765 £0 £0 £0 £4,441 Alveston £0 £116 £0 £0 £5,275 £492 £0 £0 £0 £0 £5,882 Aust £0 £0 £0 £0 £0 £43 £0 £0 £0 £0 £43 Badminton £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Bitton £0 £0 £4,018 £0 £50,712 £2,792 £0 £13,931 £3,720 £0 £75,173 Bradley Stoke £0 £0 £12,455 £0 £105,625 £15,299 -£3,307 £40 £0 £0 £130,113 Charfield £0 £2,448 £0 £0 £10,466 £118 £0 £1,672 £0 £15,662 £30,366 Cold Ashton £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Cromhall £0 £0 £0 £0 £208 £106 £0 £0 £0 £0 £314 Dodington £0 £0 £6,026 £0 £107,826 £706 £0 £0 £0 £0 £114,558 Downend & BH £0 £4,492 £1,607 £0 £55,122 £0 -£1,152 £9,962 £0 £13,799 £83,830 Doynton £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Dyrham & Hinton £0 £0 £0 £0 £57 £675 £0 £0 £0 £0 £732 Emersons Green £0 £0 £8,036 £0 £95,509 £15,956 -£12,723 £4,279 £1,074 £0 £112,131 Falfield £0 £0 £0 £0 £107 £497 £0 £0 £0 £0 £604 Filton £0 £3,030 £3,214 £0 £3,096 £1,218 £0 £0 £0 £16,372 £26,930 Frampton Cotterell £0 £0 £1,205 £0 £20,843 £1,025 £0 £5,080 £0 £0 £28,153 Hanham £1,104 £0 £2,813 £5,449 £26,559 £2,961 -£364 £4,458 £459 £29,905 £73,343 Hanham Abbots £0 £0 £1,607 £0 £49,492 £223 -£376 £7,208 £0 £0 £58,154 Hawkesbury £0 £3,143 £0 £0 £95 £553 £0 £0 £0 £0 £3,791 Hill £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Horton £0 £2,488 £0 £0 £0 £0 £0 £0 £0 £0 £2,488 Iron Acton £0 £0 £0 £0 £0 £794 £0 £0 £0 £0 £794 Little 186 Page Sodbury £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Marshfield £0 £0 £0 £0 £527 £920 £0 £0 £0 £10,695 £12,141 Oldbury £0 £0 £0 £0 £21 £64 £0 £0 £0 £0 £85 Oldland £0 £0 £9,642 £0 £128,310 £9,808 £0 £25,806 £0 £0 £173,567 Olveston £0 £0 £0 £0 £3,098 £1,409 £0 £0 £0 £0 £4,506 Patchway £0 £0 £6,429 £0 £19,991 £24,202 £0 £0 £0 £0 £50,622 Pilning & Severn Beach £0 £0 £0 £0 £15,582 £635 £0 £0 £0 £12,218 £28,435 Pucklechurch £0 £0 £0 £0 £17,498 £3,470 £0 £0 £0 £0 £20,968 Rangeworthy £0 £728 £0 £0 £415 £96 £0 £0 £0 £0 £1,239 Rockhampton £0 £0 £0 £0 £107 £209 £0 £0 £0 £0 £316 Siston £0 £0 £2,411 £0 £73,940 £2,909 -£3,602 £6,913 £0 £14,529 £97,099 Sodbury £0 £1,842 £4,821 £0 £33,540 £5,682 £0 £0 £0 £0 £45,886 Stoke Gifford £0 £0 £6,026 £0 £120,515 £16,155 -£63,721 £7,195 £0 £0 £86,169 Stoke Lodge and the Common £0 £0 £1,205 £0 £7,467 £549 £0 £0 £0 £0 £9,220 Thornbury £0 £0 £0 £0 £67,251 £20,239 £0 £0 £0 £0 £87,490 Tormarton £0 £0 £0 £0 £349 £71 £0 £0 £0 £0 £420 Tortworth £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Tytherington £0 £1,919 £0 £0 £627 £515 £0 £0 £0 £0 £3,061 Westerleigh £0 £0 £5,625 £0 £1,172 £110 £0 £0 £0 £0 £6,908 Wick & Abson £0 £0 £0 £0 £1,127 £1,180 £0 £0 £0 £0 £2,307 Wickwar £0 £1,708 £0 £0 £9,640 £351 £0 £0 £0 £0 £11,699 Winterbourne £0 £0 £1,205 £0 £7,071 £4,019 £0 £0 £2,948 £15,684 £30,927 Yate £0 £0 £14,464 £0 £190,704 £16,848 -£11,514 £645 £0 £0 £211,147 Unparished Areas £1,443 £12,198 £14,464 £24,990 £184,224 £45,920 -£1,405 £24,579 £3,020 £78,084 £387,518

TOTAL £2,547 £34,112 £108,480 £30,439 £1,418,595 £199,795 -£99,929 £111,767 £11,221 £206,947 £2,023,974 APPENDIX I

Recommended Special Expenses Council Tax by Parish Area 2018/19 to 2021/22

2018/19 2019/20 2020/21 2021/22

Net Effect Net Effect Net Effect of Net Effect of Special of Special TAXBASE Special TAXBASE Special of Special TAXBASE Special Expenses TAXBASE Special Expenses (Number of Special Expenses Expenses (Number of Expenses Expenses (Number of Expenses on Band D (Number of Expenses on Band D Total Special Band D per Band D on Band D Total Special Band D per Band D on Band D Total Special Band D per Band D Council Total Special Band D per Band D Council Parish / Town Council Expenses Properties) Property Council Tax Expenses Properties) Property Council Tax Expenses Properties) Property Tax Expenses Properties) Property Tax

Acton Turville £370 159 £2.33 -£17.20 £381 164 £2.32 -£17.71 £393 166 £2.36 -£17.92 £404 170 £2.38 -£18.21 Almondsbury £3,394 2,038 £1.67 -£17.86 £4,084 2,120 £1.93 -£18.10 £4,260 2,153 £1.98 -£18.30 £4,441 2,189 £2.03 -£18.56 Alveston £5,383 1,291 £4.17 -£15.36 £5,544 1,332 £4.16 -£15.87 £5,711 1,355 £4.21 -£16.07 £5,882 1,379 £4.27 -£16.32 Aust £39 222 £0.18 -£19.35 £40 232 £0.17 -£19.86 £41 235 £0.18 -£20.10 £43 239 £0.18 -£20.41 Great Badminton £0 3,194 £0.00 -£19.53 £0 3,293 £0.00 -£20.03 £0 3,350 £0.00 -£20.28 £0 3,410 £0.00 -£20.59 Bitton £68,794 6,869 £10.02 -£9.51 £70,858 7,129 £9.94 -£10.09 £72,984 7,239 £10.08 -£10.20 £75,173 7,364 £10.21 -£10.38 Bradley Stoke £118,791 1,000 £118.79 £99.26 £122,454 979 £125.08 £105.05 £126,227 1,008 £125.22 £104.94 £130,113 1,036 £125.59 £105.00 Charfield £27,789 130 £213.76 £194.23 £28,623 132 £216.84 £196.81 £29,481 136 £216.77 £196.49 £30,366 138 £220.04 £199.45 Cold Ashton £0 301 £0.00 -£19.53 £0 304 £0.00 -£20.03 £0 310 £0.00 -£20.28 £0 317 £0.00 -£20.59 Cromhall £287 2,348 £0.12 -£19.41 £296 2,434 £0.12 -£19.91 £304 2,475 £0.12 -£20.16 £314 2,516 £0.12 -£20.47 Dodington £104,837 4,554 £23.02 £3.49 £107,982 4,687 £23.04 £3.01 £111,222 4,772 £23.31 £3.03 £114,558 4,860 £23.57 £2.98 Downend and Bromley Heath £47,982 151 £317.76 £298.23 £74,369 156 £476.72 £456.69 £76,772 159 £482.84 £462.56 £83,830 162 £517.47 £496.88 Doynton £0 141 £0.00 -£19.53 £0 148 £0.00 -£20.03 £0 151 £0.00 -£20.28 £0 153 £0.00 -£20.59 Dyrham & Hinton £670 5,780 £0.12 -£19.41 £690 5,591 £0.12 -£19.91 £711 5,794 £0.12 -£20.16 £732 5,952 £0.12 -£20.47 Emersons Green £100,940 242 £417.11 £397.58 £104,964 244 £430.18 £410.15 £108,494 251 £432.25 £411.97 £112,131 255 £439.73 £419.14 Falfield £553 3,039 £0.18 -£19.35 £570 3,114 £0.18 -£19.85 £587 3,173 £0.18 -£20.10 £604 3,234 £0.19 -£20.40 Filton £24,645 2,547 £9.68 -£9.85 £25,384 2,631 £9.65 -£10.38 £26,146 2,674 £9.78 -£10.50 £26,930 2,723 £9.89 -£10.70

Frampton 187 Page Cotterell £25,764 108 £238.56 £219.03 £26,537 112 £236.94 £216.91 £27,333 113 £241.89 £221.61 £28,153 115 £244.81 £224.22 Hanham £67,088 2,028 £33.08 £13.55 £69,112 2,085 £33.15 £13.12 £71,196 2,121 £33.57 £13.29 £73,343 2,162 £33.92 £13.33 Hanham Abbots £53,187 2,319 £22.94 £3.41 £54,794 2,396 £22.87 £2.84 £56,449 2,438 £23.15 £2.87 £58,154 2,480 £23.45 £2.86 Hawkesbury £3,469 523 £6.63 -£12.90 £3,573 536 £6.67 -£13.36 £3,680 545 £6.75 -£13.53 £3,791 556 £6.82 -£13.77 Hill £0 53 £0.00 -£19.53 £0 55 £0.00 -£20.03 £0 55 £0.00 -£20.28 £0 56 £0.00 -£20.59 Horton £2,277 183 £12.44 -£7.09 £2,345 188 £12.48 -£7.55 £2,416 192 £12.58 -£7.70 £2,488 195 £12.76 -£7.83 Iron Acton £727 579 £1.26 -£18.27 £749 577 £1.30 -£18.73 £771 592 £1.30 -£18.98 £794 606 £1.31 -£19.28 Little Sodbury £0 53 £0.00 -£19.53 £0 55 £0.00 -£20.03 £0 56 £0.00 -£20.28 £0 57 £0.00 -£20.59 Marshfield £11,111 718 £15.47 -£4.06 £11,444 740 £15.47 -£4.56 £11,788 754 £15.63 -£4.65 £12,141 767 £15.83 -£4.76 Oldbury on Severn £78 359 £0.22 -£19.31 £80 371 £0.22 -£19.81 £83 377 £0.22 -£20.06 £85 384 £0.22 -£20.37 Oldland £158,838 4,793 £33.14 £13.61 £163,603 4,953 £33.03 £13.00 £168,511 5,031 £33.49 £13.21 £173,567 5,124 £33.87 £13.28 Olveston £4,124 895 £4.61 -£14.92 £4,248 921 £4.61 -£15.42 £4,375 938 £4.66 -£15.62 £4,506 955 £4.72 -£15.87 Patchway £46,326 3,430 £13.51 -£6.02 £47,716 3,315 £14.39 -£5.64 £49,147 3,439 £14.29 -£5.99 £50,622 3,532 £14.33 -£6.26 Pilning & Severn Beach £25,327 1,159 £21.85 £2.32 £26,108 1,200 £21.76 £1.73 £27,607 1,219 £22.65 £2.37 £28,435 1,241 £22.91 £2.32 Pucklechurch £19,188 902 £21.27 £1.74 £19,764 932 £21.21 £1.18 £20,357 948 £21.47 £1.19 £20,968 965 £21.73 £1.14 Rangeworthy £1,134 287 £3.95 -£15.58 £1,168 291 £4.01 -£16.02 £1,203 296 £4.06 -£16.22 £1,239 303 £4.09 -£16.50 Rockhampton £289 83 £3.48 -£16.05 £298 86 £3.46 -£16.57 £307 88 £3.48 -£16.80 £316 89 £3.55 -£17.04 Siston £88,554 1,576 £56.19 £36.66 £91,319 1,629 £56.06 £36.03 £94,166 1,655 £56.90 £36.62 £97,099 1,685 £57.63 £37.04 Sodbury £41,992 2,037 £20.61 £1.08 £43,252 2,078 £20.81 £0.78 £44,549 2,130 £20.92 £0.64 £45,886 2,166 £21.18 £0.59 Stoke Gifford £70,120 5,340 £13.13 -£6.40 £74,235 5,350 £13.88 -£6.15 £78,474 5,473 £14.34 -£5.94 £86,169 5,604 £15.38 -£5.21 Stoke Lodge and The Common £8,438 703 £12.00 -£7.53 £8,691 726 £11.97 -£8.06 £8,952 737 £12.15 -£8.13 £9,220 751 £12.28 -£8.31 Thornbury £80,066 4,858 £16.48 -£3.05 £82,468 4,773 £17.28 -£2.75 £84,942 4,903 £17.32 -£2.96 £87,490 5,040 £17.36 -£3.23 Tormarton £384 171 £2.25 -£17.28 £396 177 £2.23 -£17.80 £407 180 £2.26 -£18.02 £420 183 £2.29 -£18.30 Tortworth £0 61 £0.00 -£19.53 £0 63 £0.00 -£20.03 £0 64 £0.00 -£20.28 £0 65 £0.00 -£20.59 Tytherington £2,801 307 £9.12 -£10.41 £2,885 308 £9.37 -£10.66 £2,972 318 £9.34 -£10.94 £3,061 324 £9.45 -£11.14 Westerleigh £6,322 1,361 £4.65 -£14.88 £6,512 1,414 £4.61 -£15.42 £6,707 1,437 £4.67 -£15.61 £6,908 1,461 £4.73 -£15.86 Wick & Abson £2,111 723 £2.92 -£16.61 £2,174 747 £2.91 -£17.12 £2,240 759 £2.95 -£17.33 £2,307 773 £2.98 -£17.61 Wickwar £10,706 712 £15.04 -£4.49 £11,027 736 £14.98 -£5.05 £11,358 748 £15.18 -£5.10 £11,699 761 £15.37 -£5.22 Winterbourne £28,303 3,437 £8.23 -£11.30 £29,152 3,564 £8.18 -£11.85 £30,027 3,618 £8.30 -£11.98 £30,927 3,682 £8.40 -£12.19 Yate £191,785 7,067 £27.14 £7.61 £197,898 7,311 £27.07 £7.04 £204,661 7,412 £27.61 £7.33 £211,147 7,556 £27.94 £7.35 Unparished Areas £354,515 11,800 £30.04 £10.51 £365,192 12,107 £30.16 £10.13 £376,190 12,339 £30.49 £10.21 £387,518 12,569 £30.83 £10.24

TOTAL £1,809,498 92,631 £19.53 £0.00 £1,892,978 94,486 £20.03 £0.00 £1,954,200 96,376 £20.28 £0.00 £2,023,974 98,304 £20.59 £0.00

APPENDIX J

South Gloucestershire Council

Pay Policy Statement 2018/19

This Pay Policy Statement is produced on an annual basis in accordance with Section 38 (1) of the Localism Act 2011. It is made available on the Council’s website. The Council’s website also includes separately published data on salary information relating to Chief Officers.

The statement does not cover staff employed to work in schools.

Date: February 2018

Contents

 Context and scope  General Principles  Senior Employee Pay  Employee Pay  Pay Principles

2013-14Page 189 APPENDIX J

Context and Scope

The statement does not cover staff employed to work in schools.

General Principles

South Gloucestershire Council values all its employees and aims to apply a consistent and fair approach to pay and benefits in line with the following principles:

 Recognition of both financial and non-financial rewards in its approach to determining its employment package for employees.  Consistency and fairness in the processes used to manage pay and benefits  Commitment to remain within the framework of the relevant national pay bargaining agreements.  Commitment to equal pay through the use of a robust job evaluation system (HAY) and regular equal pay audits.  Ensuring our pay and benefits policies and processes are fair and transparent to all employees.  Enabling the Council to attract and retain talent, being mindful of prevailing labour market conditions and pay rates and the need to be competitive.  The pay structure and employment package must be affordable to the organisation and aligned with organisational objectives.   The organisation remains in a period of change and its approach to pay reward and job design needs to align with new models of service delivery and the external environment within which it operates. The council has commissioned a review of its pay and grading framework which will report during the currency of this statement. Significant changes to terms and conditions, including pay determination and rewards, which may occur during the currency of this statement are subject to approval by the Council’s Appointments & Employment Sub-Committee. 1. Senior Employee Pay

1.1 Guidance has been issued by DCLG in respect of the prior approval of full Council to the payment of salary packages that will exceed £100,000. Under the Council’s constitution (PartA4) the Appointments and Employment Sub Committee is responsible for adopting arrangements for the appointment of chief officers and 2nd tier JNC officers, having first sought prior approval from

2013-14Page 190 APPENDIX J Council to the payment of a salary package that exceeds £100,000 (or such amount as directed by the Secretary of State).

1.2 The job size of the post of Chief Executive and other senior management posts in the Council is determined by job evaluation using the Hay Job Evaluation process (the same methodology is used for all Council jobs). Jobs are allocated to a pay band (grade) dependent on the Hay points established for each role. There are five senior manager pay scales to cover a range of Hay points. Each pay scale is made up of incremental points. There is a separate pay band with incremental points for the Chief Executive. An independent review of senior management pay bands carried out in 2007 established a pay range for each band. A subsequent review of senior manager pay in 2014 which reported to the Appointments and Employment Sub-Committee confirmed the current arrangements remain effective.

1.3 Any increases in pay rates will be in line with those negotiated nationally by Joint Negotiating Committees (JNC’s) for Chief Executives and Chief Officers respectively or as locally determined. The pay policy, whilst agreed in advance of the financial year to which it relates, can be amended during the course of the year to incorporate a pay award negotiated nationally.

1.4 Where a pay band consists of a number of different salary points, progression is on an annual basis from 1 April each year subject to six months’ service in that pay band and the maximum not being exceeded.

1.5 Senior staff are not differentiated from other members of staff in terms of remuneration on resignation or termination. The Council’s arrangements for severance apply to this staff group.

1.6 Other conditions of service are those determined nationally by the JNC’s specifically for these appointments or, as locally determined for all other Council staff except teaching staff.

1.7 The Council complies with the Code of Recommended Practice for Local Authorities on Data Transparency. Data is published on the Council’s website on senior salaries above £58,0001. This data also shows the Senior Management posts with associated grade and pay band.

2. Employee Pay and the definition of Lowest and Highest Paid Employees

2.1 The majority of the workforce is employed on National Conditions as determined by the National Joint Council for Local Government Services (commonly known as the ‘Green Book’). Posts are allocated to a pay grade through the process of job validation. The values of the spinal column points in these pay grades are uprated by the pay awards notified from time to time by the NJC for Local Government Services or as locally determined.

1 http://www.southglos.gov.uk/council-and-democracy/performance/value-for-money/senior-officers-pay/

2013-14Page 191 APPENDIX J 2.2 There are a small number of employees who are subject to conditions of service determined by the JNC for Youth & Community Workers. There are some specialist posts covered by the Soulbury Committee as well as a few historical grades.

2.3 The ‘lowest’ paid is defined as a full time employee on the lowest grades H14- scp 10 of H13 which are paid at the protected 2014/15 Living Wage Foundation rate (£15,144.93 per annum). These are the lowest paid employees other than apprentices. Following the introduction of the Apprenticeship Levy in May 2017 newly recruited apprentices are paid the age related living wage during their apprenticeship or a career grade aligned to existing council pay grades dependent on the apprentice framework. Existing employees undertaking apprenticeships retain their existing salary.

2.4 The post of Chief Executive is the largest job size and is defined as the ‘highest’ paid post within South Gloucestershire Council.

2.5 The Chief Executive’s salary is £158,855 per annum, which is 10.49 times the full-time salary of the Council’s lowest paid employees whose salary is £15,144.93 per annum. This is calculated as follows: Chief Executive’s salary (£158,855)/full time salary of lowest paid employees £15,144.93). The Council’s pay multiple (the ratio between the highest paid employee and the median basic salary across the Council) is 6.79:1. The median basic salary is £23,398. The mean basic salary is £26,331.72.2

3. Pay Principles

3.1 Pay Determination

 Base pay is determined by the role and its accountability using the Hay job evaluation methodology described above.  Any allowances or enhancements to basic pay are made following the Council’s published policies covering allowances, enhancements and premium pay such as honoraria.  As a general principle the Council avoids the use of market supplements, but where these have been established as necessary to ensure staff with the right level of skills for the effective delivery of services are attracted and retained, this will be done in consultation with the Head of HR to make sure a consistent approach is taken across the Council.

2Calculation – the mean is calculated by adding together all of the FTE salaries and dividing by the number of lines of data (headcount) to give the average salary value. The median is calculated by sorting into order the FTE salaries to find the middle salary value on the list. Data as at 31/12/2017. For reference, the Chief Executive’s salary was 10.39 times more than the full time salary of the Council’s lowest paid employees in the 2016/17 pay policy statement. The pay ratio was 6.79:1 in the 2016/17 statement. The median basic salary reported in 2016/17 was £23,166. The mean basic salary in 2016/17 was £25,422.40.

2013-14Page 192 APPENDIX J  Incremental progression (i.e. movement through the column points within a grade) takes place on 1st April each year subject to minimum service requirements and the top of the grade not being exceeded.  Where an increase in pay has been negotiated through the national negotiation framework, it will be implemented normally with effect from 1st April of the appropriate year. If negotiations are not concluded by 1st April the increase will be paid at the earliest opportunity together with back pay from 1st April.  The Council currently does not apply performance-related pay or bonuses to any employee group.

3.2 Pay on Appointment

All appointments are normally made to the bottom of the pay grade at which the post has been evaluated. Managers have discretion to appoint at a higher scale point within the grade when necessary to secure the best candidate for the role.

3.3 Termination of Employment

On ceasing to be employed by the Council, any individual (including Chief Executive and Chief Officers) will only receive compensation:

(a) in circumstances that are relevant (for example, redundancy); and (b) that is in accordance with our published policy on how we exercise the various employer discretions provided by the Local Government Pension Scheme (LGPS); and/or (c) that complies with the specific term(s) of a settlement agreement.

Redundancy payments were reviewed and capped in 2010. Payments are currently capped at twice the number of weeks required by Employment Rights Act and use actual weekly pay up to twice the statutory maximum at the time of calculation.

Any decision to re-employ an individual, who was previously employed by the Council and, on ceasing to be employed, was in receipt of a severance or redundancy payment, will be made on merit. Individuals returning to the Council following a redundancy dismissal would be subject to the provisions of the Redundancy Payments (Continuity of Employment in Local Government, etc.) (Modification) Order 1999.

3.4. Ensuring consistency and equal pay

The Council seeks to ensure consistency through the following processes:

 The council introduced role profiles to ensure work is described in a consistent way across the organisation.  All departments are provided with the same quality of internal support in the job evaluation process which is co-ordinated by an Hay trained Job Analyst

2013-14Page 193 APPENDIX J  Validation panels for role profiles comprise management and Trade Union representatives.  The council is committed to the principle of equal pay for work of equal value. It published an Equal Pay Audit report in 2016: http://www.southglos.gov.uk//documents/Equal-Pay-Audit-2015-16-FINAL.pdf  The council also published a Gender Pay Gap report in December 2017: http://www.southglos.gov.uk//documents/Gender-Pay-Gap-report-Mar17- FINAL.pdf

2013-14Page 194 APPENDIX K TRANSFORMATIONAL CHANGE PROGRAMME 1. The council is developing a fresh Budget Strategy to manage its budget deficit with two strands which focus on maintaining valued services and ensuring value for money with continued efficiency. This appendix focusses on the first strand: Transformational Change.

2. Transformational Change is a shift in the business culture of an organisation resulting from a change in the underlying strategy and processes that the organisation has used in the past. It relates to a programme of change identified to reduce the cost of core services and/or generate additional income – this may be through innovative new routes, maximising current income streams, or recognising we can no longer do as much as we once could, whilst continuing to embed fundamental changes to the council’s culture to ensure further progress is made in encouraging the council’s commercial and customer focused journey.

3. The Transformational Change Programme focusses on the services and opportunities within Environmental & Community Services and Chief Executive & Corporate Services departments. This is in addition to the changes and savings already underway as part of the Council Savings Programme. Appendix L covers the approach being taken within the Children’s Adults & Health department as part of the Bending the Curve Programme.

4. The forthcoming paragraphs discuss the broad areas covered under this programme and provide additional information in relation to the targets included within the MTFP. It should be noted that these are high level proposals and indicative targets to illustrate the opportunities available. Whilst the targets have been verified at a high level through either independent assurance or external due diligence, individual proposals will be brought forward for Cabinet approval where necessary on a business case basis incorporating relevant consultation where appropriate.

5. As noted in the main report, the council has identified funding to support the implementation of programme schemes through the Government’s guidance on the Flexible Use of Capital Receipts. As business cases are brought forward for approval, funding will be allocated from the overall programme funding budget.

6. The Transformational Change Programme covers two main work streams:

a. Income, Trading and Commercial Review b. Savings, Efficiency and Benchmarking

Income, Trading and Commercial Review

Review of Current Income Trends 7. An initial review of the council’s current income streams and trends over the last three years has been undertaken to identify opportunities for bringing additional income into the council’s budget. To date the council has taken a fairly prudent approach to budgeting for income which has allowed for flexibility as well as cushioning for any in year overspends. However, given the increasing pressures facing the council a robust review has been undertaken allowing £250k from ECS and £60k from CECR to be released in 2018/19 and included in the proposed budget. It should be noted that there is an inherent risk of underachievement which will need to be monitored throughout the course of the next financial year.

Page 195 2018/19 2019/20 Total Income Stream ECS CECR ECS CECR ECS CECR £'000 £'000 £'000 £'000 £'000 £'000 Recognition of additional planning and licencing income, potential development of new income streams from commercial waste 250 600 850 0 Recognition of additional income in Legal and Human Resources 60 0 60 Potential additonal income from looking to sell legal services 50 50 0 100 Planning fee - share of 20% 200 200 450 110 600 50 1,050 160

Commercial Opportunities

8. In addition to the above the council has been looking at further opportunities to raise commercial income. An example of this is looking at the ability to trade our legal services to other bodies, including potentially the West of England Combined Authority. However the most significant of these is looking at our approach to land and property, and whether through a different approach the council could raise more income. A six stage plan is being considered which is set out below. As an example of this, the council is currently progressing the purchase of a flagship commercial investment from the Homes England following capital programme approval for 2017/18. This scheme, subject to the conclusion of due diligence and legal arrangements, is forecast to generate financial support to the council which has been taken into account in the income targets from 2018/19 on the basis the deal is completed by the end of the current financial year and with one-off costs allowed for in 2018/19 to allow for operational set up arrangements to be put in place internally.

Six Step Investment Fund Approach 9. Following the council’s growing desire to increase its commerciality, a range of options are currently being considered as part of a six step approach. An assessment of additional income possible from a combination of some or all of the options below has been included in the MTFP. Development of these will require some pump-priming support from the enabling funding being created as part of this report. The six areas are:  Review of council land and buildings to confirm opportunities for future commercial development.  Look on a case by case basis, and in light of step 1, at the opportunity for future small scale joint ventures to maximise value from individual surplus sites.  Investigate the opportunity to create a commercial investment fund (up to £50m), in combination with treasury management activity (see below) to increase income streams to the council (minimum net return of 2.5%).  Investigate the creation of a Housing Company (being developed by ECS) to develop our own sites and make a financial return / dividend to the council.  Review our approach to Treasury Management activity, including greater use of different vehicle classes (including property funds) to increase our return on investments without materially increasing our risk exposure (look at risk substitution).  Develop overall strategy for investment and infrastructure funds across the council.

Page 196 10. The council’s Final Capital Programme 2018/19 to 2021/22 report, on this same agenda, contains further details and the full strategy for approval, in respect of the commercial investment fund element above. The MTFP report includes the financial benefits anticipated from a proposed overall level of investment return tapered across 2018/19 and 2019/20. This is to allow time for maximum investment based on a 3.5%+ net return/gain on the equivalent of £50m investment initiative across the range of activities set out above (once all borrowing and operational costs are covered where relevant), albeit this target return is anticipated to flex depending on the exact mix agreed.

CECR / Central Items 2018/19 2019/20 2020/21 2021/22 £'000 £'000 £'000 £'000 Commercial Investment 50 264 269 275 Additional income from Investment fund and property opportunities 600 1,200 1,200 1,200

Total 650 1,464 1,469 1,475

Savings, Efficiency and Benchmarking

11. The council has also taken the opportunity to review it’s existing budgets and third party spend to identify areas where further budget reductions can be captured. To undertake this task thoroughly, it has reviewed national benchmarking data produced by CIPFA using the council’s revenue outturn for 2015/16 and 2016/17, and its revenue budget analysis for 2016/17 and 2017/18. This benchmarking looks to compare both actual and budgeted costs of services against the averages of similar sized and purposed local authorities. This identified services within ECS where, on the face of it, the council was paying more than group average for the delivery of similar services leading to potential opportunities to reduce the council’s cost of service to be more in line with the group average.

12. This piece of work is therefore focussed on those services across the council that are perceived to be high cost in bench marking terms (this may be due to policy decisions taken by the council, local market factors etc), and opportunities to start bringing the cost of these service down closer to the average. Across ECS this identified opportunities in the region of £20m, but after accounting for known policy and other known issues (e.g. we do not charge for use of our car parks) this figure falls closer to £12m. Realistically independent assessment has indicated range of savings in the region of £8-10m of savings should be possible. The savings target from this work has therefore been set in the middle at £8m.

13. To ensure the process and approach being followed for the identification of areas for cost reduction was robust, CIPFA were commissioned to undertake a high level financial assessment of some specific services within ECS where costs were significantly above the group average. The conclusion of this work has confirmed the focus for savings is in the direction of those with real potential and has resulted in some specific suggestions for areas of consideration. The ECS department worked closely with CIPFA in delivering the outcome of this work and identified a number of the potential work streams through their open and transparent engagement in the process.

Page 197 14. The options moving forward may cover a range of solutions including, changed service provision and specifications, different commissioning models,reviewing fees and charges, as well as strategic service reviews. Delivery of this level of saving will be challenging, requiring a transformational approach to the current work of the department, and robust governance through implementation. The high level proposals are summarised below:

Service Area Potential Work Streams 2018/19 2019/20 2020/21 2021/22 £'000 £'000 £'000 £'000 Waste Management Review of PFI, operating model and service level provision 50 1,250 2,600 Transport planning, policy and strategy, Review level of service provision and current specifications of discretionary fares and support to operators, work, options for sharing and different commissioning models, highways and roads, traffic management, additional procurement opportunities, review of fees and street care operations charges 125 1,750 2,925 4,351 Development control and planning policy Review of service provision, cost and performance - opportunities for income generation and reducing subsidy further 50 200 350 500 Community development, evironmental Review of costs and financing, alternative service delivery services, licencing, cemeteries, crime models, greater income maximisation and ensuring full cost 145 416 520 565

ECS Total 320 2,416 5,045 8,016 Further business efficiency reviews Review of internal processes and service sharing opportunties to follow on from end of current CSP and digital assumptions, including business support, capturing audit fee reductions, property and general procurement savings 40 150 210 250 Other efficiency and service savings To be determined following confirmation of changes within ECS and CAH as client departments. 50 100 200 CECR Total 40 200 310 450 Overall Savings Target 360 2,616 5,355 8,466

15. All of the potential work streams listed above will need to be considered in more detail and full business cases proposed to Cabinet for approval as noted above. The CIPFA review work and ECS engagement has flagged a significant number of options and opportunities which have the potential to release £8.466m of savings to help close the council’s budget deficit.

16. A further £450k has been assumed within CECR across 2019/20 to 2021/22 to follow on from the current round of CSP savings and digital work which are in process of being implemented. Whilst elements of this are identifiable in respect of potential opportunities, £250k has been assumed more generally, although detailed identification of these will be dependent on the outcome of other savings work across the council. Moving Forward 17. The delivery of such ambitious targets will be challenging, particularly in light of savings achieved to date and those still in the pipeline for delivery across 2018/19 and 2019/20 coupled with the Digital Programme aspirations. However, by developing a broad strategy with headline targets supported by appropriate levels of one-off funding and an MTFP that allows time for the preparation of comprehensive business cases as well as implementation of approved proposals, the council is in a strong position to not only reduce its net budget requirement but deliver the necessary cultural change to take the council forward as a commercial and customer focused organisation. This is consistent with the approach taken through the earlier iterations of savings programmes, with high level opportunities identified at targets set for service areas, and more detailed work then being undertaken to confirm, consult, and decide on their actual achievement. However it should be noted that specific allocations may change as the business plans are developed.

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APPENDIX L FINANCIAL FORECAST AND DEMAND, PRICE AND ACTIVITY STRATEGY and ‘BENDING THE CURVE’ PROGRAMME ADULTS AND CHILDREN SOCIAL CARE 1. FINANCIAL FORECAST The council has seen significant increased financial pressures growing within the CAH department specifically in relation to Adults and Children’s social care which has materialised into a significant forecast overspend within the department in 2017/18. To better understand how the trends being seen over the course of 2017/18 may develop into 2018/19 and beyond, the council has sought specialist expert advice through CIPFA to review its forecasting and modelling of social care price, activity and demand, and support it in producing financial forecasts that take account of the current position and likely changes into the medium term as well as developing detailed understanding as to the reasons for the in- year overspending. ADULTS Summary In 2016-17, the council spent £82m on long term support to 3,450 people. £46m of this was for care to the 920 people in a care home setting, the balance for the 2,420 people supported in the community. The council allowed for an increase of £6.1m to cover an increase in demand and an increase in prices to cover increased costs for providers including the National Living Wage. Like many other councils, this allowance was not enough with total spending forecast to increase by £9.5m between 2016-17 and 2017-18, an increase of over 11.5%. This change with other changes in Adult Social Care leading to actual spending being £3.6m more than budget. The analysis has identified a current underlying increase in demand of £2.6m a year – an increase of 3.1% which is close to many other councils, and the national increase of 2.8% a year. Detail At quarter 3 2017/18, Adults Services (bed placements and community based support) are forecasting an over spend of £3.653m which has been offset by the one-off funding received through the Adult Social Care Grant in 2017/18. This will increase to £4.553m in 2018/19 due to one-off grant funding of £900k no longer being available to reduce the overspend. The change from 2016/17 to 2017/18 has seen a total increase in spend of £9.531m - £2.575m of this due to a 3.0% increase in the number of bed placements and 3.3% increase in the use of community based support; £6.244m is in relation to price increases with the council seeing a 5.9% increase in the price of bed placements and a 9.7% increase in the price of community based support; with the remaining £712k in respect of college placements and costs arising from the delay in closing council owned care homes. Between 2016/17 and 2017/18, overall the council has seen an increase of 10.5% in bed placements and 13.0% in community based support. This impact has been rolled forward into 2018/19 with £4.553m built into the base budget to cover the over spend in 2017/18 and loss of one-off grant, with a further £2.575m set aside each year of the MTFP to address rising demand. Page 201 CHILDREN Summary The council spent £24.8m on its support to children within Integrated Children’s Services (ICS) in 2016-17. The council allowed £0.3m to cover increased prices and growth in demand – an increase of 3.1%. Like many other councils this allowance was not enough with demand increasing by £0.3m and prices by £0.55m a total change of £0.85m – an increase of 8.8%. Increases in staffing to respond to the OFSTED and SEND inspections including the need to appoint agency staff and a number of other changes resulted in spending from the main pressure areas within ICS increasing by £1.75m between 2016-17 and 2017-18 leading to an overall Children’s forecast overspend of just over £1.45m Spending on Children’s Services is the most volatile nationally – with most councils holding some corporate contingencies to cover this volatility as South Gloucestershire does. Even with these contingent sums most councils are also reporting overspends in this service area. Detail At quarter 3 2017/18, Integrated Children Services are forecasting an overspend of £1.471m; the department is forecasting this to increase in 2018/19 as a result of a reduction in the ability to generate budgeted income and an increased draw on agency staff taking the roll forward of the 2017/18 budget into 2018/19 up to £1.845m. The change from 2016/17 to 2017/18 has seen a total increase in spend of £1.749m within the pressure areas of Integrated Children’s Services. Of this, £296k was due to demand increases, £551k due to price increases, £115k due to a reduction in generated income and £787k due to staffing costs within the Access and Response Team (ART) and the Community Teams. The 2018/19 forecasts also take account of the likely demographic growth in Children Services of £718k in 2018/19, falling to £313.5k in 2019/20 and then settling at £136k per annum in 2020/21 and 2021/22. The demographic growth is forecast to arise following the recent OFSTED and SEND inspections which identified Children with Disabilities as a key area of service with financial pressure and risk which is anticipated to lead to an increase level of demand. The forecasts take account of the necessity to have additional staff support to accommodate increased demand and caseload requirements. OVERALL SUMMARY In total Adults and Children Services will require an additional £8.291m of budget support in 2018/19 with £1.288m of this held in Corporate Allowance for release through quarterly monitoring of activity changes during the year and is detailed below.

2017/18 2018/19 2018/19 2018/19 2018/19 2019/20 2020/21 2021/22 2018/19 2019/20 2020/21 2021/22 Budget Starting Activity Proposed Additional Forecast Forecast Forecast Forecast Forecast Forecast Forecast Position Growth Budget budget Activity Activity Activity Activity Activity Activity Activity (17/18 requirement Growth Growth Growth Growth Growth Growth Growth Commitments / Overspend Roll Forward) £ £ £ £ £ £ £ £ No. No. No. No. CAH Demand Increases Children 11,916,010 1,845,000 718,000 14,479,010 2,563,000 313,500 136,000 136,000 49 20 20 20 Adults 68,459,000 4,553,000 2,575,000 75,587,000 7,128,000 2,575,000 2,575,000 2,575,000 127 127 127 127 Existing Demographic Growth in MTFP for Adults -1,400,000 -1,400,000 -1,400,000 -1,800,000 -625,000 50% of Activity Growth held in Corporate Allowance -1,287,500 -1,287,500 -1,287,500

80,375,010 4,998,000 2,005,500 87,378,510 7,003,500 1,088,500 2,086,000 2,711,000 176 147 147 147 Page 202 The table above identifies the forecast budgetary and volume growth across 2018/19 to 2021/22 in terms of activity increases. In 2018/19 50% of the Adult’s Growth is held in Corporate Allowance, with 100% of the Children’s and Adults growth from 2019/20 onwards, along with an allowance for price risk. These amounts are available to be released to the department either through the quarterly monitor reports, or as part of the annual budget setting process in line with the budgetary position forecast at that time. MOVING FORWARD Nationally, overspending on Adults and Children's services was £1bn in 2016-17 and is expected to top this in 2017-18. On a proportionate basis the figure for South Gloucestershire would be £5.1m. There are a group of councils, however whose spending has been consistently within budget. They do so through following an approach which it is recommended that the council should follow. In taking the outcome of this work forward, the key points arising were that the council should:  Adopt a set of principles that will reduce the risks of spending out of line with budget;  Have sufficient investment capacity to ‘bend the curve’ of demand and other cost pressures;  Have regular and robust information on activity, price and cost produced, reviewed, reported and enacted upon across adults and children’s with a consistent quality across both and:  Have a programme of ‘bending the curve’ of demand, prices and costs in adults and children’s services.

These points are considered in more detail below: a) Adopting a set of principles to reduce the risks of over spending against budget In undertaking this work, the following budgeting principles have been considered and developed into the budgetary forecasts tabled later in this appendix:  Rebasing or zero basing – making sure budgets are based on what is actually happening on the ground.  Activity and price – having robust activity and price data - how these have changed and what this means for the future.  Staffing budgets - based on current and future trends.  Realistic budget assumptions – an expectation of improving value – based on realistic assumptions.  Contingent funding – to recognise volatility of demand (held within the Corporate Allowance centrally).

The principles will be used to roll forward the quarterly monitor forecasts to update the MTFP for demand, price and costs to ensure that the risks of over spending are mitigated as far as possible and the good practice embedded through this budget process is built into business as usual. b) Sufficient investment capacity to ‘bend the curve’ of demand and regular and robust information The principles below are key areas of consideration in terms of how the council manages and mitigates the recognised cost pressures over the course of the medium term financial plan. It Page 203 is essential that it has the tools in place to track data and deliver changes, both of which require:  Enabling capacity – to support improvement.  Analytical capacity – having systems in place which analyse activity and price – and sufficient staffing where there are system gaps

Over the next few months, the CAH department will need to consider any additional information management requirements needed for meeting the challenges faced in terms of monitoring and managing complex and changing service areas for both price, activity and cost.

It will also need to consider its enabling capacity requirements to support improvement as future demographic and other pressures will be directly affected by the level of investment in improvement / ‘bending the curve’.

The council has also made use of the Government’s guidance on the Flexible Use of Capital Receipts to earmark funding to support the capacity requirements of the department. This is referred to in more detail in the council’s Final Capital Programme 2018/19 to 2021/22, on this same agenda.

c) A Programme of ‘Bending the Curve’

As part of the support and advice provided by CIPFA, a number of proposals for ‘Bending the Curve’ were made and broad savings targets applied by the department based on service knowledge and financial assessment.

Each of these proposals will need to be fully worked up into a detailed business case with enabling capacity identified and as such proposals will be presented to Cabinet in June/July 2018 to seek approval to progress.

The current targets have identified £500k to support the budget in 2018/19 and are included in the MTFP. These savings are already in progress and will not need the level of capacity investment and business case development of the ‘Bending the Curve’ Programme from 2019/20 to 2021/22. These start at £3.659m in 2019/20 rising through to a cumulative £8.243m by 2021/22, with £7.743m specifically related to ‘Bending the Curve’.

The high level savings targets and proposals are summarised below:

Page 204 Service Area & Potential Work Streams 2018/19 2019/20 2020/21 2021/22 £'000 £'000 £'000 £'000 Children's - Intensive Therapeutic Care 145 290 Children's - Reducing Residential School Placements and Costs 100 200 Children's - Learning Disability with a high risk of moving into 250 500 residential care Children's - Redesign of a variety of elements of the current system

Adults - Strengths Based approach focussing on 3 tiers of support 190 380 380

Adults - Reducing Placements in Residential and Nursing Care for 847 1,694 2,541 those over 65 Adults - Reviewing The Support Given to Those with Learning 85 170 265 Disabilities over 60 Adults - Reviewing support given to working age adults, increased 460 920 1,380 independence strategy Adults - Reducing residential school placement and costs 75 150 Adults - Increased use of Managed Personal Budgets / review of 910 910 910 costs and rates used in Direct Payments Adults - Review of Prices 230 460 Community Based Support procurement 667 667 667

TOTAL BENDING THE CURVE 0 3,159 5,541 7,743

Realigning grant funding streams 300 300 300 300 Housing Services contingency release 200 200 200 200

TOTAL 2018/19 BUDGET SAVINGS 500 500 500 500 OVERALL SAVINGS PROPOSALS 500 3,659 6,041 8,243

2. DEMAND, PRICE AND ACTIVITY MANAGEMENT STRATEGY

The council is in the process of developing a Demand, Price and Activity Management Strategy which will be presented to Cabinet in the late spring for further consideration. The Strategy will incorporate a lot of projects and initiatives already underway to positively impact on future demand and costs but will also cover completely new areas of development. Some of these initiatives have been quantified as savings in the table above but further detailed work will be required to finalise the levels of savings deliverable. Some of the initiatives being explored in the developing Demand Management Strategy may deliver savings beyond those captured in the table above which could further contribute to the level of efficiencies deliverable but at this stage it is too early to quantify these. These changes will potentially impact on a broad range of areas and affect current culture, practices and structures. Importantly many of these complex changes will require up-front investment to realise ongoing efficiencies. The key principles and areas that the Demand Management Strategy will potentially capture include: 1. The development of a Strengths Based approach to Adult Social Care focused on the following 3 tiers of support:

(i) we enable people to maximise independence - help you to stay well and connected

(ii) in times of crisis, we offer early help to regain independence and we will intervene when people are at risk of abuse or harm - help you when you need it and help you to stay safe Page 205 (iii) we work closely with people to meet their long-term care and support needs – ongoing support for when you need it

This will change the approach from the current assumptions of more traditional forms of social care interventions to one based on utilising existing strengths of individuals their families and communities. 2. Increasing the use of Managed Personal Budgets and ensuring appropriate value for Money in terms of the rates used

3. Reviewing the numbers of clients over 65 in Residential and Nursing Care leading to more Clients receiving alternatives to residential support

4. The increasing Independence Strategy for Working Age Adults - reviewing the support given to working age adults

5. Reviewing the cost effectiveness of support given to those with Learning Disabilities over 60

6. Recommissioning Community Based Support to deliver greater Value for Money

7. Enhancing support for those transitioning to adulthood and reducing longer term costs of support.

8. More timely reviews of care assessments in ASC to ensure the appropriate level of support is in place at any point in time

9. Investment in greater and more effective use of technology and data

10.Developing intensive therapeutic Foster Care options for Children and thus reduce the need for out of authority placements

11.Reviewing post 16 Residential costs to ensure the quality and Value for Money of the support provided

12.Develop greater Local Authority provision for Care Leavers with complex needs

13.More effective use of DSG funding to support Schools to intervene and provide support at the earliest opportunity when SEND and Social Care needs emerge

14.Redesigning the Council’s Early Help offer available to children, young people and their families thus providing greater and more effective support earlier than is currently the case

An integral part of the Demand Management Strategy will be the development of key outcomes and measurable success markers that will be tracked and regularly reported on.

Page 206 Agenda Item 12

SOUTH GLOUCESTERSHIRE COUNCIL

COUNCIL

14 FEBRUARY 2018

THE 2018/19 COUNCIL TAX

(To be presented by Councillor Matthew Riddle, Leader of the Council)

Purpose of Report

1 Council is due to set the approved Council Tax for 2018/19 to meet the budget and Council Tax requirements of South Gloucestershire Council, the Avon and Somerset Police and Crime Commissioner, the Avon Fire Authority and the 47 Parish/Town Councils as required by the Local Government Finance Act 1992 as amended by S72-S79 of the Localism Act 2011. For this budget cycle, Council is also being asked to set the indicative 2019/20, 2020/21 and 2021/22 Council Tax levels based on indicative budgets for those years.

2 Full details are not yet available from the Avon and Somerset Police and Crime Commissioner, and the Fire Authority who at the time of writing are in the process of setting their budgets. All but one of the Parish/Town Councils have set their 2018/19 Budgets and Precepts and the remaining ones are expected to be available before the Council meeting. A full update report will be published as soon as practicable before the Council meeting on 14th February 2018.

Policy

3 The Council has a statutory obligation to set a Budget and the related Council Tax incorporating its own requirement and those of the 2 major and 47 local precepting bodies.

Background

4 South Gloucestershire Council’s own Council Tax requirement for 2018/19 will be based on the proposed budget as recommended by Cabinet at their meeting on 5th February 2018, including the recommended special expenses, and noting that the final Local Government Finance Settlement is unlikely to be available until after the Council meeting.

5 In the event that any changes are made by the Council at this meeting, to either the budgets or to the special expenses, an adjournment will be necessary in order to amend the update report and recommendations in order to ensure that the Council makes the correct determinations.

6 As indicated above, it is also intended to provide indicative details for 2019/20, 2020/21 and 2021/22.

Page 207 1 7 In considering the South Gloucestershire Council Budget and Council Tax proposals for 2018/19 onwards, Council will need to strike a balance between the interests of service users and those of Council Tax payers.

8 Under Section 25 of the Local Government Act 2003, the Council is also required to take the Chief Financial Officer’s comments on the adequacy of the reserves and balances, and on the robustness and sustainability of the Budget into account when making its decisions, which are set out in the Budget report elsewhere on this Agenda.

9 Under the Localism Act 2011, the Secretary of State is no longer able to cap Authorities which are considered to have set excessive increases for 2018/19, but this former constraint is now replaced by a requirement to hold a local referendum if the proposed Council Tax increase exceeds a prescribed figure, which has been set generally as an increase of 3% or more, for Authorities in 2018/19. Should the Council seek to increase its Council Tax by more than this prescribed figure, then Council will need to approve a Budget and thus the associated Council Tax increase both at the proposed level (which would trigger a referendum), and a lower Budget and Council Tax increase that is compliant with not exceeding the prescribed referendum threshold. The higher budget and Council Tax is then subject to the outcome of the local referendum, where if voters veto the higher increase, then the lower increase is confirmed automatically. Similar regulations also apply to the Police and Crime Commissioner, and to the Fire Authority. It was confirmed in the Provisional Local Government Settlement 2018/19 that no referendum requirement will apply for Parish/Town Councils in 2018/19.

10 Government announced in the Spending Review that for the rest of the current Parliament, councils responsible for adult social care (like South Gloucestershire Council) were able to increase their Council Tax by 2 per cent over the existing referendum threshold, with the proviso that the additional 2 per cent ‘social care precept’ is spent on adult social care services. From 2017/18, councils were given the choice to raise the precept by up to 3% next year and the year after, provided that the total increase over the next 3 years is not more than 6%. If taken up, councils continue to need to justify social care precept rises to taxpayers, and be able to show how the additional income is spent to support people who need care in their area and how it improves adult social care services.

11 The proposed Council Tax increase in 2018/19, based on the proposed budget as recommended by Cabinet at their meeting on 5th February 2018, is 5.99% (2.99% as possible within the referendum limit plus 3 per cent ‘social care precept’).

12 The original 2% Adult Social Care (ASC) precept is used to fund in part a number of additional adult social care cost pressures within the 2018/19 budget including demographic growth, inflation, and costs arising from the implementation of the National Living Wage on adult social care contracts. To make use of the extended 1% precept flexibility outlined above the Council is required to publish a description of its plans, including changing levels of 2018/19 spend on adult social care and other services which must be signed off by the Chief Financial Officer.

Page 208 2 Consultation

13 The South Gloucestershire Council Budget has been set following a range of consultation processes as set out in the Budget report elsewhere on this Agenda. The Precepts and consequent Council Tax requirements of the two major and 47 local precepting bodies have been set by those bodies.

Risk Assessment

Finance, Legal and Human Resources Implications (Nina Philippidis, Deputy Head of Finance, 01454 865140)

14 There is a statutory obligation to set the Council Tax for the following Financial Year by midnight on 10 March each year. The Council has to incorporate the Precept requirements of the major and local precepting bodies in setting the total Council Tax in order to collect the Council Tax on their behalf, and has to pay the requested Precepts to the precepting bodies, taking account of any triggered referendum outcomes. There are no human resources implications directly associated with this report.

Sustainability Implications (includes environmental, social and economic impacts) (Nina Philippidis, Deputy Head of Finance, 01454 865140)

15 There are no sustainability, environmental, social or economic implications arising directly from this report.

Privacy Impact Assessment (Nina Philippidis, Deputy Head of Finance, 01454 865140)

16 There is no direct requirement for a Privacy Impact Assessment to be undertaken.

Equality Impact Assessment (Nina Philippidis, Deputy Head of Finance, 01454 865140)

17 There are no equality impact assessment implications arising directly from this report.

Risks, Mitigations and Opportunities

18 The Council has a statutory obligation to set the Council Tax to meet its own Budget requirements and the Precepts set by the major and local precepting bodies.

RECOMMENDATION

1. Council is requested to note the current position and that an update report will be issued as soon as possible once the final Precept decisions are available.

Page 209 3 Author

Dave Perry, Director of Corporate Resources and Deputy Chief Executive, Badminton Road. Tel 01454 865001

Departmental Contact

Nina Philippidis, Deputy Head of Finance, Badminton Road. Tel 01454 865140

Background Papers

Cabinet – Budget Reports – 3rd July 2017, 6th November 2017 and 5th February 2018 Cabinet – Council Tax Bases and Local Council Tax Reduction Support Grant Allocations 2018/19 to Parish/Town Councils – 5th December 2017 Budget and Council Savings Plan 2018/19 Consultation Report Local Government Finance Act 1992 Localism Act 2011 Correspondence with Police and Crime Commissioner, Fire Authority and Parish/Town Councils

Page 210 4 Agenda Item 13

South Gloucestershire Council

COMMITTEE: COUNCIL

DATE: 14 February 2018

REPORT TITLE: Remuneration approval

Purpose of Report

To request approval of the remuneration for the Director of Children, Adults & Health post.

Recommendation

To approve option (a) which is the offer of a basic salary within the council’s established Senior Manager 1 range of £119,141 to £127,502 with the option of offering a market supplement of up to £10,000 if required to attract and secure a successful candidate.

Policy

2 Under the council’s constitution (Part A4) the Appointments and Employment Sub Committee is responsible for adopting arrangements for the appointment of Chief Officers and 2nd tier JNC officers, having first sought prior approval from Council to the payment of a salary package that exceeds £100,000 (or such amount as directed by the Secretary of State). This report seeks approval in accordance with this requirement.

The Children Act 2004 requires every top tier local authority to appoint a Director of Children’s Services. Statutory guidance issued in 2006 instructs local authorities to appoint an officer as the Director of Adults Social Services.

The Council’s published pay policy statement sets out the pay policy for posts within the council. This post will be offered on the terms referenced within that statement.

As a general principle the Council avoids the use of market supplements, but where these have been established as necessary to ensure staff with the right level of skills for the effective delivery of services are attracted and retained, this will be done in consultation with the Head of HR to make sure a consistent approach is taken across the Council. Benchmark and market information support such an approach for this role.

Background

3 In February 2012 the Department for Communities and Local Government (“DCLG”) issued guidance under section 40 of the Localism Act in relation to openness and accountability in local pay. The guidance states that full council should be offered the opportunity to vote before large salary packages are offered in respect of a new appointment. The Secretary of State considers that £100,000 is the right level for that threshold to be set. For this purpose, salary packages should include salary, any Page 211 bonuses, fees or allowances routinely payable to the appointee and any benefits in kind to which the officer is entitled as a result of their employment.

The council’s pay policy statement and the council’s Constitution reflect this requirement.

The Director of Children, Adults & Health will leave the council in May 2018. The Appointments and Employment Sub Committee met on 12 January 2018 to approve arrangements for the recruitment and appointment to the post which becomes vacant on 31 May 2018. The committee approved the role profile for the post and received benchmark information on appropriate remuneration to secure and retain a successful postholder. The committee agreed to recommend to Council that Council approves the salary package recommended in this report prior to formal offer to a successful candidate.

The Issues

4 The council’s pay policy statement sets out reward principles for senior staff and provides information on officer pay. The post of Director of Children, Adults and Health is a critical leadership post for the council’s chief officer management team and for the department the post leads. The post holder will be the statutory Director of Children Services. The market for this level of post is highly competitive.

The post has been evaluated within the council’s SM1 grade which has an established salary range of £119,141 to £127,502.

Market information and public sector median (excluding London) benchmarking data indicates the established salary range for a role of this size at South Gloucestershire Council may not attract candidates from a national labour market pool. A market supplement may be required to secure a high calibre candidate.

Consultation

5 The Appointment and Employment Sub-Committee considered this at its meeting on 12th January 2018 and has recommend the matter to Council for approval in accordance with the Constitution

Equalities Considerations

6 The post has been evaluated using the Hay job evaluation methodology and the salary applied to the post based on job size.

Options

(a) To approve the offer of a basic salary in the range of £119,141 to £127,502 and permit the offer of a market supplement of up to £10,000 as recommended by the Appointments & Employment Committee. (b) To approve the offer of the basic salary in the range of £119,141 to £127,502.

Risk Assessment

Page 212 The basic salary range is established within the council’s pay and grading structure and appointing within this range retains the integrity of that structure. If the package is not approved with the option to enhance with a market supplement, it may deter high calibre applicants and ultimately make securing a timely appointment less likely. The post would remain vacant and costly interim management resource would be required. The post is a senior leadership post within the council and sector and failure to appoint carries risk to the council in its strategic priority and service delivery obligations.

Financial Implications (includes tax implications such as VAT)

8 The post is an established post and is fully funded within the CAH directorate budget. The market supplement and any recruitment costs will need to be accommodated within the department existing budgets.

Nina Philippidis – Deputy Head of Finance - 01454 865140

Legal Implications

9 The Children Act 2004 requires every upper tier local authority to appoint a Director of Children’s Services and this post discharges that statutory responsibility for the council. This report discharges the requirement to seek prior approval from full Council to the payment of salary packages that will exceed £100,000. There are no other legal implications.

Gill Sinclair – Deputy Head of Legal & Democratic Services – 01454-863039

Human Resources Implications

10 The role is placed, through job evaluation process, within the council’s established pay and grading structure. The salary is within the range assigned to the job grade. Information on senior pay and benefits is set out in the council’s pay policy statement which is approved by council annually. Should the council not attract high calibre candidates and be in a position to make an offer of employment, there is a leadership risk and service risk of holding a vacant post at this level.

Claire Kerswill – Head of Human Resources – 01454 866348

Environmental Implications

11 There are none that arise directly from this report.

Social Implications

12 This post directs and shapes service provision which directly impacts upon the community the council serves

Economic Implications

13 There are none that arise directly from this report.

Page 213 Privacy Impact Assessment

14 not applicable

Risks, Mitigations & Opportunities

15 There is a risk to council and service leadership if a high quality candidate cannot be sourced and appointed within a reasonable timescale or at all.

Conclusions

17 The basic salary recommended is consistent with existing Chief Officer posts within the council and the appointment is within the established pay and grading structure and existing terms and conditions for posts at this level. The option to offer a market supplement gives reward flexibility to be market competitive and attract the best talent from a small, national labour market for posts with these accountabilities.

Author

Amanda Deeks, Chief Executive

Departmental Contact

Claire Kerswill, Head of Human Resources

Page 214 Agenda Item 14 South Gloucestershire Council

COUNCIL MEETING

UPDATE ON STRATEGIC WEST OF ENGLAND ISSUES (ALL WARDS)

Purpose of Report

1. The report provides a summary and update of the strategic work undertaken at a West of England level. South Gloucestershire Council is a constituent council of both the West of England Combined Authority and the West of England Joint Committee. Members are invited to note the content of the update.

The Issues 2. This report provides an update on the following West of England activity: a. West of England Combined Authority b. Joint Committee c. Infrastructure - West of England Joint Spatial Plan (JSP) - West of England Joint Local Transport Plan (JLTP) - Bristol Arena d. Skills e. Business f. Scrutiny and Audit g. Diary

a. West of England Combined Authority

3. The West of England Combined Authority (WECA) has been allocated £1m each year for the next two financial years. This money comes from the Capacity Fund for Mayoral Combined Authorities, which was announced in the Chancellor’s Budget. The WECA budget report for 2018/19 confirms that the primary purpose of the funding will be to facilitate and accelerate delivery of infrastructure and related investment projects funded from the significant investment resources now being directed toward combined authorities.

4. The West of England Combined Authority met on 2 February 2018 at Kingswood Civic Centre, BS15 9TR. The following matters were considered;

i) Approval of the budget in respect of Mayoral Functions for 2018/19.

ii) Approval of the budget in respect of the WECA for 2018/19.

iii) Approval of the Treasury Management Strategy and Investment Strategy

iv) Consent to the Combined Authorities Borrowing Regulations and the setting of a Borrowing Cap for the WECA

v) Approval of the supplementary grant funding allocation (Pothole Action Funding) for 2017/18. This included £263,000 to South Gloucestershire Council.

The meeting was webcast and a link to this and the papers is provided here. Page 215 1 https://www.westofengland-ca.gov.uk/2-february-2018-west-england-combined- authority-committee/

b. Joint Committee

5. The West of England Joint Committee also met on 2 February 2018 at Kingswood Civic Centre, BS15 9TR. The following matters were considered;

i) Approval of the budget in respect of the Local Enterprise Partnership (LEP) and Invest Bristol & Bath (IBB) for 2018/19.

ii) A Transport Update within which members endorsed a regional response to the DfT consultation on the new Great Western Franchise. Members were also asked to note the decision taken by the MetroWest Rail Programme Board to go forward with the Henbury East Station site in respect of the two options considered for the new Henbury Station.

iii) Approval of business cases for the following schemes;

• Weston-super-Mare Town Centre Transport Enhancement Scheme (LGF) • A4018 Corridor Improvements (LGF) • Somer Valley Enterprise Zone Commercial Delivery Framework (RIF)

Further to matters arising from the public meeting, including a statement from a UNITE Union representative about the reported threat of a hostile takeover of the Filton-based aerospace and engineering company GKN, the Committee agreed to prepare a joint letter to the Secretary of State addressing the serious concerns presented by the reported position. The letter will set out the importance of both GKN and the aerospace industry as a whole to the regional economy and demand support in defending such a takeover.

The meeting was webcast and a link to this and the papers is provided below.

https://www.westofengland-ca.gov.uk/2-february-2018-west-england-joint- committee/

c. Infrastructure

Joint Spatial Plan (JSP)

6. The public engagement process closed on 10 January 2018. The Plan and public submissions will be passed to the Planning Inspectorate in early 2018 and the Plan will then be examined in public by an independent Planning Inspector. Further details are available at www.jointplanningwofe.org.uk.

Joint Local Transport Plan

7. The four West of England Local Authorities and the West of England Combined Authority have started work on developing the next Joint Local Transport Plan. Public Consultation on the JLTP will take place during the summer of 2018, with the plan due to be finalised by the end of the year.

Page 216 2 Bristol Arena

8. Members will likely be aware that a report was considered by Bristol City Cabinet on 23 January 2018 which confirmed that alongside a value for money study of the Arena Island project, an approach had been made by YTL in respect of an alternative site at the Brabazon Hangar on the southern edge of the Filton Airfield site and just inside the Bristol City Authority boundary. YTL have spoken to South Gloucestershire Council about their proposition and have shared their early design work for a 12,000-15,000 capacity arena. Council officers are working with officers at Bristol City Council and WECA to examine the deliverability of this site and the impact of an arena site in Filton for traffic generation and infrastructure implications. A further update on the progress of this work will be reported to the 21 March 2018 Council Meeting in advance of further consideration by Bristol City Cabinet in April 2018.

d. Skills

9. The Skills Advisory Board met on 23 January 2018. The Board was given updates on a series of standing items. One of these was the Employment Support and Innovation Pilot, for which an MoU between DWP and WECA has now been signed, such that the recruitment process can be undertaken and the pilot can effectively go live from 1 April 2018. A full briefing session is being arranged for South Gloucestershire Members on 19 March 2018.

10.The Board were advised that some implementation funding has been awarded by DfE in respect of the Adult Education Budget transition and this funding will support analysis of the 2017/18 spend on WECA residents. WECA are continuing to prepare for full devolution of the Adult Education Budget in 2019. This work includes the development of a Skills Strategy in a series of phases to meet government requirements.

11.The Board discussed the latest work on the Regional Strategy and heard an update on work undertaken to assess the skills demands of the construction industry in the West of England.

e. Business

12.The Business Advisory Board met on 12 January 2018 and discussed the region’s ambitions and opportunities for enhanced business support. The Board heard a presentation from Tony Bray (Cities & Local Growth Unit) on the preparation of a Local Industrial Strategy and the Board heard a short introduction to the emerging West of England Digital Strategy. South Gloucestershire officers are working closely with WECA and the appointed consultants on the data analysis and preparation of this strategy.

13.The new LEP Board met for the first time on 24 January 2018. The Board was presented with the latest work on the emerging Regional Strategy and was introduced to the LEP Investment Programme. The membership of the new LEP Board is set out below;

Page 217 3 f. Scrutiny and Audit

14.The West of England Combined Authority Overview and Scrutiny Committee met on 31 January 2018 at City Hall, Bristol, BS1 5TR. They considered the Mayoral, WECA, LEP and IBB budgets, the latest on the Regional Strategy and a report on a regional approach to air quality. A link to the papers is provided here.

https://www.westofengland-ca.gov.uk/31-january-2018-west-england-combined- authority-overview-scrutiny-committee/

The Audit Committee met on 25 January 2018 at 3 Rivergate, Bristol, BS1 6ER. A link to the papers is provided here.

https://www.westofengland-ca.gov.uk/25-january-2018-weca-audit-committee/

g. Diary

Date & Time Meeting Venue

21 March 2018 WECA Overview & Council Chamber, Guildhall, Scrutiny Committee High Street, Bath, BA1 5AW 10.30 am

18 April 2018 WECA Committee Council Chamber, Guildhall, High Street, Bath, BA1 5AW 13.00 pm

18 April 2018 WoE Joint Committee Council Chamber, Guildhall, High Street, Bath, BA1 5AW 15.30 pm

26 April 2018 WECA Audit Committee Tbc – contact [email protected]

1 June 2018 WECA Committee AGM Tbc – contact [email protected] 10.30

1 June 2018 WoE Joint Committee Tbc – contact AGM [email protected] 13.00

Page 218 4 Consultation

15.Where consultation or public engagement is referred to, this has been carried out through the West of England region.

Financial Implications

16.There are no financial implications arising directly from this report, although some of the issues on which progress has been reported are likely to have significant implications, which have been or will be addressed in reports to the appropriate Committee and/or Council on the individual projects. (D Perry x5001)

Legal Implications

17.There are no legal implications arising directly from this report, although some of the issues on which progress has been reported are likely to have significant implications, which have been or will be addressed in reports to the appropriate Committee and/or Council on the individual projects. (G Sinclair, x3039)

Human Resources Implications

18.There are no human resources implications arising directly from this report, although some of the issues on which progress has been reported are likely to have significant implications, which have been or will be addressed in reports to the appropriate Committee and/or Council on the individual projects. (C Kerswill x6348)

Sustainability Implications (including environmental, social and economic impacts)

19.Each of the Enterprise Areas within South Gloucestershire is recognised within the council’s emerging Core Strategy as a strategic area for sustainable economic development. (A Merritt, x3645)

20.Some of the issues on which progress has been reported are likely to have significant environmental, social and economic implications, however these have been or will be addressed in reports to the appropriate Committee and/or Council on the individual projects.

Equality Impact Assessment

21.There are no equalities impact issues arising directly from this report. Although some of the issues on which progress has been reported are likely to have significant implications, which have been or will be addressed in reports to the appropriate Committee and/or Council on the individual projects.

22.It should be noted that the West of England Combined Authority, Joint Committee and LEP Board have acknowledged the importance of equalities and diversity in all elements of their activities, not least the processes of West of England Combined Authority funding allocations and the Joint Committee/LEP’s strategic allocation of funding. An Equalities and Diversity Group has become a sub-group within the LEP SME cross-cutting group, and all WECA/LEP staff are undertaking equalities and diversity training.

Page 219 5 Risks, Mitigations and Opportunities

23.As this report sets the scene for a number of a strategic issues relating to the West of England, there are no risks arising directly from this report. However, there are potential risks and opportunities associated with a number of issues on which progress has been reported. The risks, mitigations and opportunities associated with these projects have been or will be addressed in reports to the appropriate Committee and/or Council on the individual projects.

RECOMMENDATION 1) To note the content of this report

Author Amanda Deeks, Chief Executive Departmental Contact James Cooke, [email protected] 01454 863429

Background Papers Link to West of England Combined Authority website for Meetings and Reports https://www.westofengland-ca.org.uk/

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