Corporate Policy and Scrutiny
Committee Room 1 Tuesday, 29 10:30 County Hall, January 2019 Chelmsford, CM1 1QH
For information about the meeting please ask for: Richard Buttress, Member Enquiries Manager Telephone: 07809 314835 Email: democratic.services@essex.gov.uk
Pages
1 Membership, Apologies and Declarations 4 - 4 To be reported by the Member Enquiries Manager.
2 Minutes of previous meeting 5 - 11 To note and approve the minutes of the meeting held on Tuesday 27 November 2018.
3 Questions from the Public A period of up to 15 minutes will be allowed for members of the public to ask questions or make representations on any item on the agenda for this meeting. On arrival, and before the start of the meeting, please register with the Committee Officer.
4 Joint Task and Finish Group - Ringway Jacobs 12 - 17 To note report CPSC/01/19.
5 Essex County Council Reserves 18 - 29 To consider report CPSC/02/19.
6 Provisional Settlement 30 - 32 To consider report CPSC/03/19.
Page 1 of 61 7 2018/19 Financial Overview as at the Third Quarter 33 - 56 Stage To consider report CPSC/04/19.
8 Work Programme 57 - 61 To note the current position regarding the committee's work programme.
9 Date of Next Meeting To note that the next meeting of the committee will be held on Tuesday 26 February 2019.
10 Urgent Business To consider any matter which in the opinion of the Chairman should be considered in public by reason of special circumstances (to be specified) as a matter of urgency.
Exempt Items (During consideration of these items the meeting is not likely to be open to the press and public)
To consider whether the press and public should be excluded from the meeting during consideration of an agenda item on the grounds that it involves the likely disclosure of exempt information as specified in Part I of Schedule 12A of the Local Government Act 1972 or it being confidential for the purposes of Section 100A(2) of that Act.
In each case, Members are asked to decide whether, in all the circumstances, the public interest in maintaining the exemption (and discussing the matter in private) outweighs the public interest in disclosing the information.
11 Urgent Exempt Business To consider in private any other matter which in the opinion of the Chairman should be considered by reason of special circumstances (to be specified) as a matter of urgency.
Essex County Council and Committees Information
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Page 2 of 61 in accordance with the requirements of the Local Government Act 1972. If there is exempted business, it will be clearly marked as an Exempt Item on the agenda and members of the public and any representatives of the media will be asked to leave the meeting room for that item.
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Page 3 of 61 Agenda item 1
Committee: Corporate Policy and Scrutiny Committee
Enquiries to: Richard Buttress, Member Enquiries Manager
Membership, Apologies, Substitutions and Declarations of Interest
Recommendations:
To note
1. Membership as shown below 2. Apologies and substitutions 3. Declarations of interest to be made by Members in accordance with the Members' Code of Conduct
Membership
(Quorum 4)
Councillor M Mackrory (Chairman) Councillor I Henderson (Vice-Chairman) Councillor V Metcalfe (Vice-Chair) Councillor J Abbott Councillor J Beavis Councillor M Buckley Councillor M Garnett Councillor M Hardware Councillor J Moran Councillor R Pratt Councillor W Schmitt Councillor A Sheldon Councillor M Steptoe Councillor A Turrell
Apologies
Councillor M Garnett – substituted by Councillor J Aldridge Councillor J Beavis – substituted by Councillor I Grundy Councillor W Schmitt
Page 4 of 61 Minutes of the meeting of the Corporate Policy and Scrutiny Committee, held in Committee Room 1 County Hall, Chelmsford, CM1 1QH on Tuesday 27 November 2018
Present Cllr M Mackrory (Chairman) Cllr M Hardware Cllr I Henderson (Vice-Chairman) Cllr I Grundy (substitute) Cllr V Metcalfe (Vice- Chairman) Cllr J Moran Cllr A Turrell Cllr R Pratt Cllr J Beavis Cllr A Sheldon Cllr M Garnett Cllr J Aldridge (substitute) Apologies Cllr W Schmitt Cllr J Abbott Cllr M Steptoe Cllr M Buckley Cllr S Barker and Cllr D Finch were present for items five and one to seven respectively.
Joanna Boaler, Head of Democracy and Transparency and Jasmine Carswell, Democratic Services Officer, were in attendance to support the meeting. 1. Membership, apologies and declarations Apologies were received from Cllr J Abbott, Cllr W Schmitt, Cllr M Buckley and Cllr M Steptoe.
Cllr I Grundy was the substitute for Cllr W Schmitt and Cllr J Aldridge for Cllr M Buckley. No declarations of interests were received. 2. Minutes of previous meeting The minutes of the meeting held on Tuesday 31 October 2018 were agreed as an accurate record of the meeting, pending one alteration relating to a grammatical error on page four and the spelling of Cllr J Abbott’s name. 3. Questions from the public
There were no public questions.
4. Commercial Property Investment
The Committee considered the report updating the Committee on the progress made in the Commercial Property Investment. Nicole Wood, Director, Finance and
Page 5 of 61 Procurement and Robert Manning, Head of Financial Strategy and Analysis, joined the meeting to introduce the item and respond to questions.
The purpose of the item was to outline the progress made to-date with the Commercial Property Fund since its inauguration in October 2017 and its adherence to the criteria set out in the Cabinet Report.
Nicole and Rob set out the context and background; in July 2017 Cabinet approved the creation of a £50m fund for Essex County Council (the Council) to purchase Commercial Property, working in partnership with the specialist advisors Lambert Smith Hampton Investment Management (LSHIM) and the investment criteria was reviewed by the Corporate Policy and Scrutiny Committee in October 2017.
The Council have invested c. £34m to date from the initial £50m fund approved by Cabinet in July 2017, purchasing an office block in Watford (November 2017), a retail park in Keighley, Yorkshire (March 2018) and an industrial site in Guildford, Surrey (July 2018). All purchases have followed the strict investment guidelines put in place in the original fund through a risk-based approach in partnership with LSHIM advisors.
During the discussion, a number of questions were asked by members, the questions and responses are as follows:
It was confirmed that all decisions made on the property portfolio are on a commercial basis and not related to social value or return, the purpose being to generate income.
It was confirmed that LSHIM are paid on a retainer basis which is paid quarterly. The retainer is paid to LSHIM for their management of properties, investigation into asset improvements and investigation into potential investments. LSHIM also receive a payment when ECC purchase a property.
It was confirmed that the £50m fund covers additional one-off costs, legal, land and purchase fees. The ongoing revenue is taken from the net profit.
Members of the Committee discussed property investment within Essex and the risks associated with this, there is greater risk in terms of business failure when investing in Essex. This is based on advice given by LSHIM and in accordance with the investment criteria, which was approved in July 2017.
It was confirmed that the Council has received advice from an independent advisor (Hymans Robertson) that until the outcome and therefore impact of Brexit is known, the commercial property programme should not be expanded. This decision will be reviewed further in the summer of 2019, along with a review of the portfolio split to assess whether the approach needs to be altered.
It was reiterated how important the geographical spread of investment is to mitigate risks to the Council, there is a reserve of £1million to provide resilience should there be any severe fluctuations within the portfolio.
Page 6 of 61 It was noted that the figure stated at 5.1 of the report (£26million) is incorrect and should read £16million of the original £50million fund remains available for further investment opportunities. There will be no further applications for more funding for this portfolio.
Conversion on property can be considered if it is evidenced that the return is significant enough to permit the cost of change.
Nicole and Rob are to create and circulate an asset list report to this committee for information to keep members up to date on the portfolio.
Actions:
i. Nicole to confirm to the Committee, the percentage of the commission LHSIM receive ii. Members of the Committee to be provided with details of the contract monitoring process and performance data. Nicole will share the papers with this Committee, that are being prepared for the Audit, Governance and Standards Committee, which include a breakdown of income from the investment portfolio iii. Nicole will circulate a current asset list to this Committee for information, to keep members up to date on the portfolio.
5. Essex Pay Implementation
The Committee considered the report providing an update on the implementation of Essex Pay across the Council. Pam Parkes Director, Organisational Design and People and Alison Woods, Head of People Business Partnering and Employment Practice, joined the meeting to introduce the item and respond to questions.
It was explained that ECC are making a £3.36 million investment in pay to put the Council in a stronger position to achieve future ambitions and to attract and retain the best employees in local government.
The new approach addresses employee feedback around inconsistencies in rates of pay and unclear levels of accountability, and will ensure the Council’s pay is more transparent, consistent, fair and equitable.
There are two sets of pay ranges in Essex Pay: Main Pay Ranges and Social Care Pay Ranges.
During the subsequent discussion, in response to questions from members of the Committee, the following points were explained:
A significant proportion of staff have been unaffected by Essex Pay with most staff benefitting. Less than 10% of employees have had detrimental changes as a result of the changes.
The new overtime arrangements which come into effect from 1 April 2019 with the new core hours being Monday to Friday 7:00 – 20:00; Saturday 08:00 – 17:00.
Page 7 of 61 Sunday working will remain at double time. (iii) Social Care staff who previously had a 4% flat rate allowance as a separate allowance, now have this consolidated into the staff’s base salary. This also means that it benefits the staff’s pension.
It was confirmed that 55% of employees have already moved onto Essex Pay. There are a further 2665 employees still to transfer, of which 152 have not opted in and the further 2513 are to move over as part of Organisational Design.
It was reiterated that information about Essex Pay can be found on the intranet and when employees go through this change, information is given to them via their managers, briefing sessions and localised communications, however, if employees wish to speak to somebody they are able to contact ODP for advice at any time.
Zone three of the new pay scales is for exceptional employees, those who are national experts in their field and for when the market demands a higher rate of pay for certain roles. It was confirmed that ECC can recruit directly into ‘zone 3’ and It has been done since the implementation.
There has been a 96% acceptance of Essex Pay from the 3362 contracts that have been provided.
There are currently six employees that are under the notice of dismissal and re- engagement, two of these employees have submitted an appeal.
The opt-in levels for the current phase is currently above 90% overall with a formal 45-day consultation period running until the New Year 2019, during which those employees can choose to opt-in.
Of the employees who have transferred onto Essex Pay so far, one-third have received a pay rise (including those who have taken on a new role).
Of those who have transferred across on same/similar roles, most of the pay rises have been to those in front-line service delivery roles, including social care practitioners, with an average pay rise of c.£2,000.
The Committee discussed the gender pay gap and when it is expected that ECC will see the pay gap disappear. It is thought that it will take a significant amount of time to become truly equal due to various reasons. 75% of ECC’s workforce is female but this is not currently reflected at a senior management level, which is only 50%. It was thought that ECC is in line, if not slightly ahead, compared to the rest of the country in terms of equality.
Actions:
i. Pam Parkes to provide to this Committee, the total number of employees who have left since the implementation of Essex Pay ii. Pam Parkes to provide this Committee with the figures and calculations detailing the impact that employees’ pension would have for those who have taken a pay cut due to Essex Pay
Page 8 of 61 iii. Pam Parkes will provide the figures to this Committee, relating to the future average loss of earnings for the 10% of employees who will see a decrease in their salary due to Essex Pay iv. Pam Parkes and the Member Enquiries Manager, will discuss a way in which the members of this Committee can engage with the employee groups
6. Brexit – How will it impact Essex County Council – Gavin Jones
Cllr Mackrory welcomed the following officers to the meeting:
- Gavin Jones, Chief Executive - Craig Elliott, Senior Strategy Advisor - Robert Surtees, Senior Strategy Advisor Gavin Jones outlined the potential impacts of Brexit on Essex County Council.
Gavin explained that we are still dealing with a lot of uncertainty and the picture and therefore the impacts changes on a daily process due to the continued unknowns around the deal or a no-deal.
Employees of the Council are working to understand the potential impacts to ensure we fully understand the implications when we know what the deal will look like.
The key dates and timeline were detailed as:
Withdrawal agreement signed on Sunday 25 November House of Commons vote is scheduled for 12 December UK deadline if the Withdrawal Agreement is not ratified by the House of Commons by 21 January 2019, the UK has five days to make a statement on how to proceed. Ratification by the European Parliament (January) UK leaves the EU formally at 23:00 on 29 March 2019 If a withdrawal agreement is agreed, UK enters a transition period – until the end of 2020 – with negotiations then progressing on finalising the future relationship.
During the subsequent, discussions the following points were highlighted: The potential impacts to Harwich Port, there is significant concern, but the full impact is not known at this point. Members also discussed what the Withdrawal Agreement will mean for ECC, they particularly were interested to understand access to funding, procurement, rights of EU nationals working for the Council and regulation. Officers clarified that as the future relationship is unknown these areas are a source of uncertainty; however, work is underway to ensure the Council understands its evidence base and our position fully so that when the impact is know it can react appropriately. He also confirmed that an officer reference group has been established which monitors both risks and opportunities of Brexit.
Page 9 of 61 Members thanked the Chief Executive for the update and requested that he came back to the January meeting and subsequent meetings as appropriate to provide an update to the Committee.
7. ECC Resourcing Contract - response to Task and Finish Group Recommendations
The Committee considered the report updating the Committee on the outcomes from the Task and Finish Group. Cllr S Barker, Cabinet Member for Customer and Corporate explained that this work was around permanent recruitment and that at Cabinet on 22 November 2018, the Committee agreed to bring permanent recruitment back in house. Pam Parkes, Director, Organisational Development, said that in the report most of the recommendations this Committee had made via its Task and Finish Group had been adopted.
Cllr V Metcalfe, on behalf of the Task and Finish Group thanked Pam Parkes for the cooperation from the staff. The professionalism, open attitude and understanding of the role of scrutiny, she said it had been refreshing. 8. Joint Task and Finish Group Update: Ringway Jacobs Contract Cllr Mackrory explained that the Place Committee held a briefing following its last meeting, as Cllr I Grundy, Chairman of the Place Committee (Place Services) was in attendance he provided an overview of that session. He explained that Cllr L Wagland, Deputy Cabinet Member for Infrastructure was currently reviewing the contract from a legal perspective.
He went on to explain that the Ringway Jacobs contract is a ten-year contract of which we are currently in the seventh year. ECC has the option to extend the contract for a further three years and the decision is to be taken in Autumn 2019.
Cllr Mackrory explained that Cllr K Bentley will be attending this Committee in January 2019 to discuss this topic in more detail and that Place Services members would be invited to attend.
The work will be primarily through a task and finish group with members from both Committees. Cllr M Mackrory explained that he will not be a member of the Group due to a conflict of interest. The members from the Corporate Policy and Scrutiny Committee who will sit on the task and finish are:
The Group will commence work in December 2019 and will agree the scoping document before proceeding with investigations.
The Task and Finish Group will present their report to this committee by June 2019 but will nominate a member to provide progress updates at each Committee.
9. Work Programme – November 2018
Page 10 of 61 Cllr Mackrory introduced the work programme and went through the items on the schedule.
Members asked for the following to be progressed and for the Work Programme to be updated, ensuring more information for each item at its January meeting: (a) Further information to be obtained about Business Rate Retention and circulated to this Committee. (b) Further information to be provided against the Fair Funding Review item. (c) Brexit, progress report from the Chief Executive to be added to the January meeting agenda. (d) Update on the December Spending Review to be added to the agenda for January. (e) Ringway Jacobs Task and Finish Group to be added to the Work Programme. (f) Engagement with Employee Networks to be added to the Work Programme. (g) Essex Pay Implementation to be brought back once all employees have been moved onto Essex Pay.
10. Date of next meeting
To note that the next meeting of the Corporate Policy and Scrutiny Committee will be held on 29 January 2019.
11. Urgent business
No urgent business had been received.
12. Urgent exempt business
No urgent exempt business had been received.
There being no further business, the meeting closed at 13:10.
Chairman
Page 11 of 61 AGENDA ITEM 4
CPSC/01/19
Committee: Corporate Policy and Scrutiny Committee
Date: 29 January 2019
Enquiries to: Name: Richard Buttress
Designation: Member Enquiries Manager
Contact details: [email protected]
Ringway Jacobs Joint Task and Finish Group
Summary/Purpose:
Following agreement from the Chairman of the Place Services and Economic Growth Policy and Scrutiny Committee and Corporate Policy and Scrutiny Committee, a joint Task and Finish group has been established to investigate renewal of the Ringway Jacobs highways maintenance contract.
The purpose of this agenda item is to note the agreed scoping document from the first meeting of the Task and Finish Group which took place on 17 December 2018.
Page 12 of 61 Essex County Council Place Services and Economic Growth Scrutiny Committee and the Corporate Policy and Scrutiny Committee
WHAT ARE WE LOOKING AT?
Review Topic Ringway Jacobs contract renewal
Type of Review Joint Task and Finish Group
WHY ARE WE LOOKING AT THIS?
Following agreement from the Chairman of the Place Services and Economic Growth Policy and Scrutiny Committee and Corporate Policy Rationale for the and Scrutiny Committee, a joint Task and Finish group has been Review established to investigate renewal of the Ringway Jacobs highways maintenance contract.
HOW LONG IS IT GOING TO TAKE?
Four month review with final report submitted to a joint committee (with members from both Place Services and Economic Growth Policy and Timescales Scrutiny Committee and Corporate Policy and Scrutiny Committee) for approval on the 18 April 2019.
Provisional 17 December 2018 18 April 2019 Timetable –
WHAT INFORMATION DO WE NEED?
The aim of this piece of work is to review current highways contractual performance and to make recommendations to the Deputy Leader and Aim Cabinet Member for Infrastructure ahead of renewal with Ringway Jacobs in November 2019.
Page 13 of 61 KPI’s
- The reason for the reduction in the amount of KPI’s set (115 down to 56) - An explanation of what the percentages mean and how they relate to performance (Appendix A) - KPI’s (Appendix A) changed to a RAG grading so it shows which targets are/are not currently being met - An explanation around KPI’s MI1 – MI3 - Investigate whether extreme weather has affected performance - Understand the mechanisms in place to ensure that KPI’s are adaptive to changing needs and circumstances - Explore whether any further KPI’s are required Other Authorities
- Explore how similar sized local authorities manage their highway maintenance contract – Kent County Council - Explore whether other authorities who use Ringway Jacobs are satisfied with the service they are receiving – Central Bedfordshire, Cheshire East, London Highways Alliance - Identify the changes that Cheshire East made to their contract Ringway Jacobs Quality of repairs Key Lines of Enquiry - Explore the detail behind the repairing defects at the first attempt - An explanation on the definition of a temporary repair - Explore the new/different ways of repairing highway defects - Explore the focus of repairs i.e. local roads, footpaths etc - Impact extreme hot and cold weather has on operations - Explanation of the fault repair process from reporting/identification through to inspection and rectification, including timescales and risk assessment process Perception
- Explore the differences between public perception of how the contract is performing against ECC’s/Ringway Jacobs perception
General
- The Essex contract makes up 50% of Ringway Jacobs business. What does the other 50% include? - Is there a communications strategy included in the contract? - An explanation from the Cabinet Member on the current highway maintenance focus (local roads, footpaths) - An explanation on the current inspection regime - Explore whether the current partnership driven contractual arrangements preferable to a more traditional, adversarial contract - Explore whether there is anything specific the Cabinet Member wishes the TaskPage and 14 Finish of 61 Group to explore - The current Ringway Jacobs contract What primary/new - evidence is needed? The current KPI’s within this contract - ECC press releases - Information on the types of enquiries received from Members, MP’s What secondary/ and members of the public relating to highways (Member Enquiries, existing information Customer Enquiries) is needed? - The types of queries reported via the online Tell Us About Something tool What briefings and Members were interested to see how highway maintenance repairs site visits might be were carried out relevant? Other work being undertaken/Relevant None. Corporate Links What is inside the All aspects relating to highway maintenance in line with the current scope of the Ringway Jacobs contract. review? What is outside the Passenger Transport – unless it pertains specifically to interactions with scope of the wider highways planning. review? WHO DO WE NEED TO CONTRIBUTE/CONSULT? (INITIAL MEETING TO ESTABLISH THIS)
Relevant Portfolio - Councillor Kevin Bentley, Deputy Leader of the Council and Cabinet Holder(s) and other Member for Infrastructure Member - Councillor Lesley Wagland, Deputy to the Cabinet Member for Kevin involvement Bentley - Andrew Cook, Director Highways and Transportation Key ECC Officers - Peter Massie, Head of Commissioning Essex Highways - Laura Lee, Category and Supplier Lead
County Authorities who also use Ringway Jacobs (Buckinghamshire, Partners and service Central Bedfordshire, Cheshire East and London Highways Alliance.) users
WHAT RESOURCES DO WE NEED?
Councillor Stephen Hillier Councillor David Kendall Councillor Jo Beavis Councillor Valerie Metcalfe Lead Member and Councillor Michael Hardware Membership Councillor John Moran Councillor Ron Pratt Councillor Anne Turrell Councillor Carole Weston Councillor Tony Ball (Lead Member)
Co-optees (if any) None.
Page 15 of 61 Lead Scrutiny Richard Buttress, Member Enquiries Manager Officer/Other Peter Randall, Senior Democratic Services Officer Expected Member A maximum of 7 meetings to be held between December 2018 and commitment April 2019, as set out below. WHAT ARE THE RISKS/CONSTRAINTS?
Risk analysis (site Risk management form to be completed if any site visits are included visits etc.) as part of the review.
Possible constraints
WHAT WILL BE REQUIRED FROM STAKEHOLDERS? Time to attend Task and Finish Group evidence sessions Internal Information and advice stakeholders Communications for any potential press release following the review Legal/contractual advice External Time to attend Task and Finish Group evidence sessions stakeholders Written evidence WHO ARE WE DIRECTING ANY RECOMMENDATIONS AND ACTIONS TO?
Recommendations Councillor Kevin Bentley, Deputy Leader of the Council and Cabinet to (key decision Member for Infrastructure makers): Task and Finish Group final report to be presented to the full joint Reporting Committee for a response from the relevant Cabinet Member on arrangements Thursday 18 April 2019. The final report should be responded to by the cabinet member in the usual way, as set out in the ‘Protocol for Working Arrangements Between the Cabinet and Overview and Scrutiny Committees’ as Follow-up agreed at Full Council in October 2013. arrangements A follow up item will be scheduled for each committee separately in October 2019 to review uptake of, and progress against agreed recommendations. ADDITIONAL INFORMATION/NOTES
Page 16 of 61 January 2019 Monday 14 January 2019 Monday 21 January 2019
February 2019 Monday 11 February 2019 Monday 18 February 2019 Meeting dates
March 2019 Monday 11 March 2019 Monday 18 March 2019
April 2019 Monday 1 April 2019
Page 17 of 61 Agenda 5 CPSC/02/19 Report title: Essex County Council Reserves Report to: Corporate Policy and Scrutiny Committee Report author: Nicole Wood, Director of Finance and Procurement Date: 29 January 2019 For: Discussion Enquiries to: Tina French, Head of Financial Strategy and Analysis Telephone: 03330 138461 Email: [email protected] County Divisions affected: All Essex
1. Purpose of Report
To provide a briefing and update on the Council’s reserves.
2. Recommendations
None – the report is for information and discussion.
3. Background
The Council holds reserves to provide some resilience to cope with unpredictable financial pressures and long term contractual commitments. The provision of adequate reserves is essential.
4. Statutory responsibility
The requirement for financial reserves is acknowledged in statute. Sections 31A, 32 42A and 43 of the Local Government Finance Act 1992 require local authorities to have regard to the level of reserves needed for meeting estimated future expenditure when calculating their budget requirement. Within this statutory framework, it is the responsibility for the Section 151 Officer to advise the Council about the level of reserves to hold and to report to all Members of the Council where reserves have become seriously depleted and it is forecast that the Council will not have the resources to meet its expenditure in a particular financial year.
There is no set formula for deciding what level of reserves is appropriate – what is appropriate will depend on the Council’s own circumstances, which will vary over time. Members are responsible for ensuring that the Council’s reserves are appropriate for local circumstances, taking into consideration the advice provided by the Section 151 Officer.
5. Importance of reserves
Reserves play an increasingly important part in the financial strategy of the authority, provide a cushion against the significant risks the Council faces, and are a source of funding for business cases to change the way it provides
Page 18 of 61 1
services and achieves future savings. The continued provision of adequate reserves is essential. Without these, it may be necessary to take remedial urgent action in-year to mitigate challenges that arise, which could lead to longer term consequences.
Our reserves acknowledge that there are an increasing number of risks associated with the budget and the financial position of the authority, most notable are the assumed full delivery of savings, the management of social care demand, exact implications of our new burdens, changes to local government funding and the budget gap in future years.
6. What is the Council’s Reserves policy?
The Council holds reserves for a range of specific purposes to manage long term financial commitments, and to ensure it has some financial resilience to cope with unpredictable financial pressures. These can be split into three types:
Restricted use funds - those reserves which are for long term contractual commitments, or are held on behalf of others and not available for use by the Council. Restricted use funds include PFI and Schools reserves
Other revenue reserves – funds earmarked to enable the Council to change the way it provides services and achieve future savings (including the Transformation Reserve and Reserve for Future Capital Funding)
General Balance – un-ringfenced funds which provide a working balance to protect the Council against unexpected cost pressures
7. What are the Council’s Reserves used to fund?
As referred to above, there are three types of reserves. The largest category is ‘Restricted Use Funds’ and represent funds set aside to meet our long term contractual commitments, or are beyond the control of the Council, and primarily comprise:
PFI reserves (£54m at 31 March 2018) The Council has entered into a number of long-term Private Finance Initiative contracts for the design, construction and ongoing maintenance of A130 road and a number of schools (including Debden Park, Clacton Secondary Schools and several schools within the Building Schools for the Future programme). These reserves have been established to equalise the impact on the revenue budget of annual differences between contract costs and PFI credits (grant) paid by the Government towards these costs Waste reserve (£100m at 31 March 2018) The Council started building the Waste Reserve in 2006/07 and is now reaping the benefits, as by spreading the costs of waste disposal across the lifetime of the contract (which runs for a further 20 years), this has meant avoidance of what would peak at the equivalent of a 2% rise in council tax, for this service alone. In part this was necessary because of significant increase in land fill tax. Drawdowns are anticipated to start in 2020/21.
Page 19 of 61 2
Grant Equalisation reserve (£11m at 31 March 2018) This reserve comprises grants given from Government for specific purposes that has yet to be utilised for its intended purpose (it is primarily a technical cash flow reserve). It cannot be applied for other purposes. Funds held on behalf of others (£45m at 31 March 2018) This includes Schools balances and partnership funds, where the authority to commit funds rests with school governors and partnership boards rather than the Council.
The next category covers earmarked reserves including those set aside to enable the Council to change the way it provides services and achieve future savings which would otherwise cause uneven cash flows and have negative effects on the Council Tax payers or services. Some examples include:
Transformation Reserve (£22m at 31 March 2018) which has been set aside to enable investment in initiatives that will deliver future savings (in the context of over £176m of savings required up to 2021/22) Future Capital Funding Reserve (£10m at 31 March 2018), which comprises revenue contributions to be used to supplement the resources available to finance future capital expenditure. The reserve also helps mitigate the impact of abortive capital schemes whose costs are then charged to revenue. Insurance Reserve (£9m at 31 March 2018): provides for potential and contingent liabilities for insurance claims; this is based on an independent actuarial valuation. Capital Receipts Pump Priming Reserve (£2m at 31 March 2018), which comprises funding to support the cost of bringing properties no longer required by the Council into readiness for disposal such as security and maintenance which aim to maximise the level of capital receipt received Collection Fund Investment Risk (£1m at 31 March 2018): we set aside a small proportion of funding to mitigate the risks of falling collection rates for council tax and non-domestic rates; this is affected by reforms of the system or changes to benefits/tax credits, affecting individuals or businesses ability to pay. This is against the collection of over £600m of council tax, with the reserve equating to less than 0.2% of that value.
The General Balance represents the final category of reserves held by the Council. This in an un-ringfenced reserve set aside to allow the Council to deal with unexpected events or costs at short notice. The general reserve balance has stood at 6% since the 2017/18 budget in recognition of the level of risk associated with reductions in Revenue Support Grant and pressures the Authority faces. The general balance (at 31 March 2018) is set at £55m which is sufficient to fund the council’s activities for 22 days.
Appendix 1 provides a brief description of each reserve and Appendices 2 to 4 provides a breakdown of the reserve balances.
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8. What have the Reserves been used to fund in the last year?
The primary movements relate to meeting our contractual and other liabilities and investing in business cases for transforming the authority. It should be noted that we budget for appropriations to reserves, in order to maintain an appropriate level to meet future liabilities and financial challenges.
Appendix 2 shows the detailed adjustments over the last two years, any usage of reserves is openly and transparently reported within our quarterly financial review.
The below tables summarise the withdrawals from the reserve categories and provides examples of activities that the reserves have been utilised for
2016/17
Reserve CategoryWithdrawn Description £m Restricted Use 21 £10m was schools balances withdrawn; £5m for PFI budgets Other revenue reserves 51 £15m to finance the capital programme; £9m approved carry forwards from 2015/16; £22m from the Transformation Reserve, which included £1m for Digital Transformation, £2m for Increasing Independence, £1m for Property Transformation
Total 72
2017/18
Reserve CategoryWithdrawn Description £m Restricted Use 26 £11m was schools balances withdrawn; £5m for PFI budgets Other revenue reserves 48 £15m to finance the capital programme; £7m approved carry forwards from 2016/17; £22m from the Transformation Reserve, which included £6m for digital and £8m for OD related costs
Total 74
9. What is the projected level of Reserves that Council will hold in the next five years?
The council projects its level of reserves for the next three financial years which align with our MTRS and were set out in the budget report endorsed by Council in February 2018. The MTRS has been refreshed for 2019/20 – Appendix 4 sets out the anticipated reserve balances to 2021/22 as per the draft budget that goes to Council in February 2019.
10. What is the rate of return on the Council’s Reserves?
The council earns interest on its level of cash balances; however these are not directly related to its level of reserves.
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The Council’s cash balances are managed in accordance with the parameters established by the annual Treasury Management Strategy (approved by full Council alongside the budget).
Cash held by the Council is either invested temporarily, or is used to offset our need to borrow for capital financing purposes, until it is needed for its intended purpose.
During 2017/18, the Council held some of its cash balances for investment, achieving investment income of £2.6m, a return of 0.64% (compared with an average 7 day LIBID rate of 0.22%. The majority of the cash balances were used to temporarily defer external borrowing, thereby avoiding an estimated £10.2m in debt financing costs in 2017/18 which would have been the equivalent of 2% council tax.
11. List of appendices
Appendix 1 – Description and purpose of each reserve Appendix 2 – 2017/18 final outturn position on reserves, including movements in the last 2 years Appendix 3 – Provisional outturn position on reserves for 2018/19 Appendix 4 – Projected level of reserves up to 2021/22
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Appendix 1 – Description and purpose of each reserve
Restricted Use Funds Description A130 PFI Equalise the timing differences between expenditure and government grant over the life of the PFI contracts. Building Schools for the Future PFI Equalise the timing differences between expenditure and government grant over the life of the PFI contracts. Clacton Secondary Schools PFI Equalise the timing differences between expenditure and government grant over the life of the PFI contracts. Debden PFI Equalise the timing differences between expenditure and government grant over the life of the PFI contracts.
Grant Equalisation reserve Equalise the timing differences between the recognition of grant income in the Comprehensive Income and Expenditure Statement (in accordance with Accounting Policy 2.6) and incurring the grant eligible expenditure.
Partnerships (not available for ECC use) To retain unspent contributions from partners and apply them in subsequent years. Schools (not available for ECC use) Schools are permitted to retain unspent resources (whether planned or unplanned), which are held in the Schools Reserves. The statutory authority to commit such resources rests with school governors.
Trading Activities Surpluses generated by trading activities, to be applied by these activities in subsequent years.
Waste To smooth the effects of future increases in the costs of waste disposal.
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Appendix 1 Description and purpose of each reserve (cont’d)
Earmarked Reserves Description Adults Digital Programme Used to meet the costs of the Adults Digital Transformation programme Capital Receipts Pump Priming Used to meet costs associated with bringing properties into readiness for disposal Carbon Reduction reserve Used to finance measures aimed at reducing the Council's carbon footprint and support the costs of the Carbon Reduction Credit scheme
Carry Forward Used to carry under spends in the current financial year forward to support expenditure plans in the forthcoming financial year.
Collection Fund Investment Risk reserve Established to mitigate the risks of falling collection rates for council tax and non-domestic rates.
Community Initiatives Fund To fund revenue and capital community initiatives
Digital Infrastructure To fund expenditure on Digital Infrastructure Emergency Planning To meet costs associated with emergency planning Future Capital Funding Comprises revenue contributions to be used to supplement the resources available to finance future capital expenditure.
General Balance Reserve set aside to allow the Council to deal with unexpected events or costs at short notice Health & Safety Used to meet the costs of undertaking asbestos, legionella and Disability Discrimination Act surveys
Innovation Reserve to fund innovate ways to tackle problems faced by the County - providing both reward and seed funding (split between staff and public)
Insurance Provides for future potential and contingent liabilities for insurance claims.
Local Projects Reserve focussed on parish areas who wish matched funding support for parish duties and f unding for voluntary groups to bid for funds to deliver community initiatives. Pension Fund Deficit reserve Established to mitigate the impact of increases in employers’ pension contributions.
Property Fund Investment Reserve created to manage the risks associated with landlord responsibility (e.g. gaps in occupancy) Quadrennial Elections Reserve established to meet costs associated with the Council's quadrennial elections
Service Investment Reserve created to fund investment in new delivery models and ways of working
Tendring PPP To meet costs associated with the Tendring PPP contract.
Transformation reserve Used to meet costs associated with project management and change management aspects of the Council’s ambitious programme of transformation.
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Appendix 2 – 2017/18 final outturn position on reserves, including movements in the last 2 years Source: 2017/18 Statement of Accounts
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Appendix 3 – 2018/19 provisional outturn position on reserves source: 2018/19 Q3 Cabinet Report
Reserves and Balances Summary
Restricted Funds
2018/19 movements
(Contributions)/ Adjustments Estimated Balance at 1 Withdrawals proposed in Future Closing April 2018 agreed quarterly report commitments balance £000£000£000 £000 £000 Long Term Contractual Commitment PFI Reserves A130 PFI (45,247)3,874- (41,373) Building Schools for the Future PFI (1,870)(315)(22)(11) (2,218) Debden School PFI (3,813) 502 4 (199) (3,506) Clacton Secondary Schools' PFI (2,836) 340159 (2,337) Waste Reserve (99,733)(8,776)2,044 (106,465) Grant Equalisation Reserve (10,787)1,927 961 (7,899) Trading Activities (not available for use) (1,417)4,397(104) (3,728) (852) Partnerships and Third Party (not available for use)(1 ,964)- 100 (1,864) Schools (not available for use) (41,649)-- (41,649)
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Appendix 3 – 2018/19 provisional outturn position on reserves source: 2018/19 Q3 Cabinet Report
Reserves and Balances Summary
Earmarked Reserves
2018/19 movements
(Contributions)/ Adjustments Estimated Balance at 1 Withdrawals proposed in Future Closing April 2018 agreed quarterly report commitments balance £000 £000 £000 £000 £000 General Balance (55,212) (48) (489) - (55,749) Reserves earmarked for future use Adults Digital Programme (6,900) 4,800 - (2,100) Capital Receipts Pump Priming (2,325) (1,000) 100 1,000 (2,225) Carbon Reduction (2,606) - 350 (2,256) Carry Forward (16,395) 11,557 (9,504) - (14,342) Collection Fund Risk (1,412) - - (1,412) Community Initiatives Fund (796) (54) (1,315) 946 (1,219) Digital Infrastructure - (4,239) 4,239 - Emergency Planning (subject to approval) - - (300) - (300) Future Capital Funding (10,061) (8,662) (4,195) 9,857 (13,061) Health and Safety (631) - - (631) Innovation (1,795) 655 1,140 - - Insurance (9,061) 1,000 - (8,061) Local Projects (867) 122 745 -- Pension Fund Equalisation (206) 206 -- Property Fund - (326) (165) (491) Quadrennial Elections (118) (500) - (618) Tendring PPP (496) - - (496) Transformation (22,015) 6,647 (1,203) 10,473 (6,098)
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Appendix 4 – Projected level of reserves up to 2021/22 source: 2019/20 Organisation Plan
Reserves and Balances Summary
Restricted Funds
Estimated closing balances 2019/20 2020/212021/22 Budgeted Balance at 1 Balance at 1 Contributions/ Assumed Closing April 2018 April 2019 Withdrawals usage balance £000£000£000£000£000£000£000
Long Term Contractual Commitment PFI Reserves A130 PFI (45,247)(41,373)3,413 368 (37,592)(33,095)(23,359) Building Schools for the Future PFI(1,870)(2,218)2,21 8(166)(300) Debden School PFI(3,813)(3,506)3,470(36)(10) Clacton Secondary Schools' PFI(2,836)(2,337)2,051(286)( 49)
Waste Reserve (99,733)(106,465)(7,869) 659 (113,675)(113,016)(112,357) Grant Equalisation Reserve(10,787)(7,899) (7,899)(7,899)(7,899) Trading Activities (1,417)(852) 338 (338)(852)(852)(852)
Partnerships and Third Party(1,964)(1,864) (1,864)(1,864)(1,864) Schools (41,649)(41,649) (41,649)(41,649)(41,649)
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Appendix 4 – Projected level of reserves up to 2021/22 source: 2019/20 Organisation Plan
Reserves and Balances Summary
Reserves
Estimated closing balances 2019/20 2020/21 2021/22 Budgeted Balance at 1 Balance at 1 Contributions/ Assumed Closing April 2018 April 2019 Withdrawals usage balance £000 £000 £000 £000 £000 £000 £000
General Balance (55,212) (55,749) (55,749) (55,749) (55,749)
Reserves earmarked for future use Adults Digital Programme (6,900) (2,100) 2,100 Capital Receipts Pump Priming (2,325) (2,225) 500 (1,725) (2,225) (2,725) Carbon Reduction (2,606) (2,256) 2,256 Carry Forward (16,395) (14,342) 4,884 9,458 Collection Fund Risk (1,412) (1,412) (1,412) (1,412) (1,412) Community Initiatives Fund (796) (1,220) 860 (360) Emergency Planning (300) (300) (300) (300) Future Capital Funding (10,061) (13,061) (4,074) 4,074 (13,061) (13,061) (13,061) Health and Safety (631) (631) (631) (631) (631) Innovation (1,795) Insurance (9,061) (8,061) (8,061) (8,061) (8,061) Local Projects (867) Pension Fund Equalisation (206) Property Investment (491) (581) (33) (1,105) (1,663) (2,194) Quadrennial Elections (118) (618) (500) (1,118) (1,618) (118) Service Investment (6,420) (6,420) (10,805) (21,610) Tendring PPP (496) (496) 496 Transformation (22,015) (6,098) (13,538) 7,000 (12,636) (8,636) (4,636)
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AGENDA ITEM 6
CPSC/03/19
Committee: Corporate Policy and Scrutiny Committee
Date: 29 January 2019
Enquiries to: Name: Tina French
Designation: Head of Strategic Finance and Insight
Contact details: [email protected]
Provisional Settlement
To receive an update on the provisional settlement for Essex County Council.
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Page 31 of 61 Provisional Settlement 1
• Not successful with our pilot bid for 75% BRR
• 15 new pilots announced (Berkshire, Buckinghamshire, East Sussex, Hertfordshire, Lancashire, Leicestershire, Norfolk, Northamptonshire, North and West Yorkshire, North of the Tyne, Solent, Somerset, Staffordshire and Stoke, West Sussex, Worcestershire)
• Settlement in line with last year of 4 year deal • Additional funding of £180m levy surplus (Essex share £2.7m) • No changes to NHB growth baseline • No changes to CT referendum principles • Additional Rural Services grant (no impact for Essex) • Removal of Negative RSG (no impact for Essex) Page 32 of 61
• Consultations• 1 on BRR and fair funding Agenda Item 7 CPSC/04/19 Report title: 2018/19 Financial Overview as at the Third Quarter Stage Report to: Corporate Policy and Scrutiny Committee Report author: Margaret Lee, Executive Director for Corporate and Customer Services Date: 29 January 2019 For: Discussion Enquiries to: Tina French, Head of Strategic Finance and Insight Telephone: 03330 138461 Email: [email protected] County Divisions affected: All Essex
1. Purpose of report
1.1 The purpose of this report is to set out the forecast financial position of Essex County Council’s (ECC) revenue and capital budgets as at the third quarter stage of the 2018/19 financial year. There is a forecast under spend of £1.3m (0.1%) against a net budget of £913m.
1.2 This is an improvement since the half year report of £1.1m
1.3 This assumes full commitment of the Emergency Contingency (£4m), which if not required would result in a full year forecast under spend of £5.3m.
1.4 The report also sets out an under spend of £29.6m on capital against the current budget of £292.7m. After taking account of budget change requests in this report there will be an under spend of £170,000.
2. Recommendations
Approval is sought for the following:
2.1 To draw down funds from reserves as follows:
i. £69,000 from the EES for Schools reserve to the EES for Schools Trading Account to offset current year pressures (see section 6.1)
ii. £263,000 from the Schools Sickness Insurance reserve to the Schools Sickness Insurance Trading Account to partially offset current year pressures (see section 6.1)
iii. £228,000 from the Transformation reserve to the Customer and Corporate Services portfolio to fund a pilot for technological solutions for Children and Families front line teams to see how productivity can be improved through use of new technologies.
Page 33 of 61 iv. £131,000 from the Community Initiatives Fund reserve to the Culture and Communities portfolio to support expenditure incurred to date, in relation to grants to third parties for community improvements
v. £269,000 from the Communities Initiative Fund Reserve to the Reserve for Future Capital Funding, via Culture and Communities portfolio to match expenditure incurred to date in relation to grants to third parties for community improvements (see section 7.5iii)
vi. £100,000 from the Innovation reserve to the Health and Adult Social Care portfolio to fund the development of alternative delivery model options for the Drugs and Alcohol service
vii. £100,000 from the Capital Receipts Pump Priming reserve to Customer and Corporate RSSS portfolio to cover costs incurred on Hamberts Farms and Newbridge House
viii. £46,000 from the Innovation reserve to the Reserve for Future Capital Funding via the Deputy Leader and Infrastructure portfolio funding for the BDUK Phase 2 capital project
ix. £24,000 from the Local Projects reserve to the Culture and Communities portfolio to cover expenditure for the management of the Local Services Fund
x. £4,000 from the Private Finance Initiatives (PFI) Equalisation reserves to the Education and Skills portfolio in relation to Debden School PFI
2.2 To appropriate funds to reserves as follows:
i. £4.9m to the Carry Forward reserve from Health and Adult Social Care portfolio to support delivery of the 2019/20 budget (£1m) and the future sustainability of Adult Social Care (£3.9m) (see section 5.1iii)
ii. £3.7m to the Reserve for Future Capital Funding from Other Operating Costs due to a different borrowing profile than originally budgeted (£2.7m) and higher than anticipated cash balances reducing the overall external borrowing requirement (£1m) (see section 5.15i)
iii. £3.4m to the Carry Forward reserve from the following portfolios relating to the capture of under spends to support the 2019/20 budget (see section 3.3): a. £1m from Other Operating Costs b. £928,000 from Finance, Commercial and Traded c. £336,000 from Deputy Leader and Infrastructure d. £323,000 from Leader e. £233,000 from Customer and Corporate RSSS f. £233,000 from Customer and Corporate g. £201,000 from Economic Development h. £122,000 from Finance, Commercial and Traded RSSS
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iv. £750,000 to be returned to the Transformation reserve from the Deputy Leader and Infrastructure portfolio relating to additional one-off funding awarded to Highways in respect of Devolution, to be drawn down for use in 2019/20. This will enable a wider roll out of devolution in Essex. A pilot has recently commenced to look at devolving certain highways activities to Parish Councils
v. £600,000 to the Carry Forward reserve from Customer and Corporate RSSS (£354,000), Customer and Corporate (£189,000) and Finance, Commercial and Traded Services RSSS portfolio (£57,000) to support delivery of the Corporate and Customer Service budget in 2019/20
vi. £489,000 to the General Balance from the Education and Skills portfolio relating to under spends within the Surplus Schools Properties budget vii. £346,000 to be returned to the Transformation reserve from the Economic Development portfolio relating to slippage in Essex Housing schemes for use in 2019/20 viii. £300,000 to the Emergency Planning reserve (see 2.3i) from the Customer and Corporate portfolio following one off income received in Emergency Planning from the Essex County Fire and Rescue Service.
ix. £200,000 to the Carry Forward reserve from the Finance, Commercial and Traded Services portfolio to support delivery of key projects in Customer Services in 2019/20
x. £240,000 to be returned to the Transformation reserve from the Customer and Corporate RSSS relating to the social care element of the implementation of Essex Pay, this will be drawn down in 2019/20 to the social care services as employees transition to the new grades
xi. £180,000 to the Reserve for Future Capital Funding from the Deputy Leader and Infrastructure portfolio due to expenditure incurred as a result of emergency work at the Army and Navy flyover xii. £95,000 to the Transformation reserve to the Customer and Corporate RSSS portfolio relating to the Property Transformation project xiii. To request re-approval of £146,000 from the Transformation Reserve to the Customer and Corporate RSSS portfolio in 2019/20 relating to the Property Transformation project (previously approved FP/431/03/16 however requesting re-approval in line with financial regulations given time lapsed)
xiv. £108,000 to the Carry Forward reserve from Customer and Corporate portfolio in relation to the Coroners service new Case Management system
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xv. £100,000 to the Carry Forward reserve from the Finance, Commercial and Traded Services RSSS portfolio for additional resource requirements for the reorganisation of transactional services.
xvi. £80,000 to the Carry Forward reserve from the Education and Skills portfolio in respect of the Harlow In Poverty project which spans two financial years
xvii. £70,000 to the Carry Forward reserve from the Finance, Commercial and Traded Services RSSS portfolio to support costs arising from the new e-procurement system deliverable in 2019/20
xviii. £22,000 to the Private Finance Initiatives (PFI) Equalisation reserves to the Education and Skills portfolio in relation to Building Schools for the Future PFI.
2.3 To approve the following adjustments:
i. To create a new reserve to be known as the Emergency Planning reserve in order to meet costs associated with emergency planning, with an opening balance of £300,000 (see 2.2 viii)
ii. To merge the balances of the Local Projects and Innovation reserves into the Community Initiatives Fund reserve to support revenue and capital community initiatives
iii. To increase the Health and Adult Social Care portfolio budget by £5.9m to be funded by the additional winter pressures money announced by Government (see 3.5)
iv. To pool £1.2m of additional winter pressures money (part of £5.9m above) into the Better Care Fund (see 3.5)
v. To amend the Place Services Traded appropriation targets; which will increase the appropriation to the County Fund by £60,000 to £205,000 and reduce the contribution to their traded reserve by £11,000 to £23,000
vi. To increase the appropriation budget by £60,000 in Other Operating Costs as a result of (v) above.
vii. To amend the EES Traded appropriation targets; which will reduce the contribution to their traded reserve by £436,000 to £0
viii. To amend the capital budget as shown in Appendices C (i) and C(ii) which allows for capital slippage of £21.1m, capital budget additions of £3.2m, capital budget reductions of £12.1m and advanced works of £573,000 (see section 7)
Page 36 of 61 3. Executive Summary: Revenue
3.1 Appendix A summarises the revenue budgets and forecast outturn for each portfolio. There is a full year forecast under spend of £1.3m, which is due to higher than anticipated business rates (£1.1m) and minor under spends on services (£225,000). This represents 0.1% of net expenditure (£913m). The position assumes full commitment of the emergency contingency of £4m, which if not required would result in a full year forecast under spend of £5.3m. Further detail can be found in Section 5.
3.2 The under spend of £1.3m is predominantly driven by a higher than anticipated business rates (£942,000) following receipt of the latest district returns. The under spend on services is due a number of offsetting variances set out in this report.
3.3 The forecast position reflects the claw back of under spends as at the end of September. This is part of the proposed budget strategy for 2019/20 (using carry forwards to support bridging the funding gap). Approval is sought in this report to transfer £3.4m to the carry forward reserve. Detail by portfolio is shown below:
Under spend as at the end of Porfolio September £000 Other Operating Costs1,019 Finance, Commercial & Traded 928 Infrastructure 336 Leader 323 Customer & Corporate RSSS 233 Customer & Corporate 233 Economic Development 201 Finance, Commercial & Traded RSSS 122 Total claw back of under spend3,395
3.4 In the Provisional Outturn Report for 2017/18 (FP/088/02/18), approval was given to increase the withdrawal from the Transformation Reserve up to £8m for redundancy costs arising from the Organisation Design. To date, £7.3m has been withdrawn from the Transformation Reserve for this purpose. The Organisation Design programme is in the final stages and to date, annual savings of circa £9.7m have been agreed which more than pay back the one- off redundancy costs. 3.5 In October the Government announced additional money of £5.9m for winter pressures for Adult Social Care which must be spent by 31 March 2019. This amount will be split equally between county-wide initiatives and funding for budgets to support pressures in local systems. This is a specific grant for the purpose of supporting the health and social care system to manage demand pressures on the NHS over the winter period. Clinical Commissioning Group
Page 37 of 61 (CCG) partners have also been allocated some additional resource to manage these pressures. In several cases, the spending proposals developed by the Council and health partners require one or other party to delegate its commissioning function to the other to secure the best value for money and the greatest contribution to achieving the aims of this funding. In order to enable all parties to delegate their functions for these purposes it is proposed to add these schemes to the Better Care Fund pooled budget arrangements. This will add £2.3m to the Essex Better Care Fund, consisting of £1.2m of social care specific grant funding and £1.1m of NHS Winter pressures grant from North East Essex CCG. Therefore approval is sought in this report for the pooling of the £1.2m element of social care winter pressures grant into the Better Care Fund.
3.6 Also additional funding has been awarded for Local Roads by the Department for Transport (DfT). This equates to £10.9m for Essex. At the time of writing the grant conditions were not available. It is intended to use this additional funding towards delivering additional highway work in 2019/20 and help to alleviate budget pressures as a result of loss of government grant (Revenue Support Grant). Schemes to benefit include potholes, street lighting, local devolution, structures and resurfacing. Until the grant conditions have been confirmed the additional funding will not be added to the budget.
3.7 During 2018/19 the Council has built the Commercial programme increasing alternative sources of income to invest in our priorities. It has achieved this through driving up profitable income in existing and new enterprises. The programme has developed new income streams in both 2018/19 and for the medium/long term through the development of a Commercial Property Investment fund, the planned growth in profitability of Essex Outdoors and the one off opportunity to sell some unused technology assets. Current performance is forecast at £1m, in line with the original ambition for the first full year.
3.8 As always, the forecast is based on current intelligence and is a mid-range position. There are net opportunities of £9.6m not yet included within the current forecasts mainly due to savings that are not reflected in the forecast due to their risk profile, and the unutilised Emergency Contingency.
3.9 The position reported in section 5 is after proposed adjustments in this report, set out in recommendations 2.1 to 2.3.
4. Executive Summary: Capital
4.1 The original capital programme for 2018/19 as set by Full Council in February 2018 was £298.6m including property investment. The forecast outturn is £263.1m. Before adjustments proposed within this report this represents an under spend of £29.6m against latest budget of £292.7m. After taking account of budget change requests in this report, there is a residual under spend of £170,000. More detail is set out in Section 7.
Page 38 of 61 4.2 Appendix C (i) summarises current year forecasts along with changes in the Capital Programme for 2018/19 since approval of the original programme in the Budget Report to Council in February 2018. Appendix C (ii) contains the detail of the budget adjustments seeking approval.
4.3 £165.3m has been spent on capital works in the first half of the year, this represents 63% of the programme’s forecast spend for the year (excluding Property Investment).
5. Revenue Position
5.1 Health and Adult Social Care – £40,000 (0%) under spend
i. The portfolio is forecasting broadly online to budget. The gross forecast reflects an over spend of £927,000 on expenditure offset by an over achievement of income (£967,000).
ii. In October the Government announced additional Winter Pressures money of (£5.9m) which must be spent by 31 March 2019, which is coming to the Council as a specific grant targeted at Adult Social Care.
iii. The forecast position reflects a request to carry forward £3.9m into 2019/20 to support the sustainability of Adult Social Care, and £1m to support delivery of the overall 2019/20 budget.
iv. The drivers of the underlying position are as follows: Cash payments and Respite care due to a combination of lower price and volume (£8.2m) Higher than budgeted Non-Residential Income due to a combination of higher average contribution level and increased volume of service users (£4.2m) Transitions (£918,000) due to a reduction in the number of service users and average package size (£918,000).
v. However, these under spends are mitigated by the following over spends: Nursing and Residential care is higher than budgeted due to volume and price £3.5m Increase in the amount of debt on both residential and non-residential charges that is over 12 months old and therefore requires a provision of £2.1m Non-delivery of Enhanced Digital Approach savings which has affected our ability to reduce Domiciliary Care costs £1.6m Lower than budgeted Residential Income £1.4m due to average contributions being lower Review of Non-Statutory Services savings £1m in respect of Grants to Voluntary Organisations.
vi. There has been an improvement since Quarter 2 of (£5.9m), before proposed adjustments. This is due to reprioritisation of winter pressure commitments held against the base budget which have now been allocated Page 39 of 61 to the specific grant funding (£3m), along with draw down of sustainability funding from the Transformation Reserve to cover the costs of additional agency staff retained in this financial year to maintain the momentum of activities required to deliver the savings programmes reliant on the completion of social work reviews (£1.1m) and reductions in domiciliary and cash payments as a result of volume and price.
5.2 Children and Families - £678,000 (0.6%) over spend
i. The forecast over spend is £678,000 against a budget of £117.8m.
ii. The over spend is due to the under delivery on the managed vacancy factor, where it has not been possible for service teams to hold vacancies for as long as planned (£389,000). Also the placing of children externally continues to be volatile and at high cost (£288,000). Competition remains high to secure these placements with external providers. The current Children in Care (CIC) population is 1,045 compared to budgeted volume of 1,087. However, it is the variation between placement types means that the authority’s CIC demand remains a risk. For example, the authority has external residential placements of 106 compared to 99 budgeted, this placement type has the highest unit cost per week.
iii. The service continues to look at mitigation and is actively reviewing children in care placement packages, in particular the length of period required and also whether the complexity of package can be safely reduced. In addition, teams will where possible delay recruitment to hold vacancies for as long as possible.
5.3 Culture and Communities - £72,000 (2.1%) over spend
i. The over spend is primarily attributable to an under recovery of income within the Essex Records Office due to delays in the go-live of Ancestry.com, the sale of our online archive platform to other users, and lower than anticipated conference centre bookings and online subscriptions.
5.4 Customer and Corporate - online (0%)
i. The position includes over spends against Customer Services and Member Enquiries staffing (£366,000) and Deputyships (£229,000) due to income pressures from lower than anticipated referrals being processed as a result of vacancies within the service. This is offset by staffing under spends in Libraries and Registrars and the removal of a historic commitment in Coroners.
5.5 Deputy Leader and Infrastructure - £1.6m (3%) under spend
i. The under spend is mainly due to lower than anticipated traffic volumes on A130 PFI (£552,000), and higher than expected income from enforcement activities (£1.4m). The under spend reported in this portfolio provide the in- year opportunity to offset the £1.3m pressure attributable to Special
Page 40 of 61 Educational Needs and Disabilities (SEND) Home to School Transport over spend, reported within the Education and Skills Portfolio. ii. £10.9m of new Local Highways maintenance funding has been awarded by the Department for Transport. A spending plan has been identified to utilise these funds and we are currently awaiting final terms and conditions. (see 3.6)
5.6 Economic Development - £506,000 (8%) under spend
i. The under spend is due to in-year staffing vacancies as a result of the recently completed organisation re-design.
5.7 Education and Skills Non Dedicated Schools Grant - £1.3m (1.8%) over spend
i. The over spend is mainly due to an increase in numbers of Special Educational Needs and Disabilities (SEND) Home to School Transport (£1m). A recovery plan is in place across the Highways and Transportation function which mostly sits within the Infrastructure portfolio ii. There is also a £200,000 over spend in Adult Community Learning due to lower than anticipated tuition fees, receiving £1.4m instead of the budgeted £1.6m. iii. There is a favourable movement of £1.1m since the Quarter 2 report due to increased confidence and certainty as transport contracts are now in place for the new academic year and a reduction of the average daily rate.
5.8 Education and Skills Dedicated Schools Grant (DSG) - £5.6m over spend
i. The over spend mainly relates to pupils with Special Educational Needs and Disabilities (SEND) where the increase in demand and costs is causing a £5.9m over spend. Due to insufficient places in Essex schools there has been an increase in the number of pupils placed in Independent Special Schools which, along with an increase in placement costs, is resulting in a £3m over spend. The other significant variance is due to the introduction of a new banding matrix for funding pupils with SEND in special schools resulting in a £2.3m over spend. Unprecedented growth for Education, Health and Care Plans (EHCPs) is causing a £700,000 over spend. This is partially offset by an under spends in Post 16 FE and fewer claims for redundancy costs. ii. The above areas account for the adverse moment of £4.2m since Quarter 2. iii. The over spend will be carried forward to 2019/20 where mitigation plans include transferring 0.5% of the Schools Block allocation (£4.3m) to the High Needs Block. This was not approved by Schools Forum, so the Authority has applied to the Secretary of State for approval.
5.9 Environment and Waste - £328,000 (0.4%) over spend
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i. The position is mainly due to an under recovery of income in Country Parks, following an unfavourable decision in relation to the planning application for the Notley Zip Wire and a three month delay in the installation of Belhus Woods play area, which has now gone live. The extreme heat that was experienced over the summer has adversely impacted car park and attraction revenue although visitor numbers across the parks remains high. Alternative long term opportunities to mitigate the shortfall are being explored but are unlikely to deliver benefits in the current financial year. ii. In addition, the service has incurred several one-off costs for repairs and security at Cudmore Grove Park, new car parking terminals for General Data Protection Regulation compliance and emergency tree works. These pressures are being partially mitigated through in-year staffing under spends.
5.10 Finance, Commercial and Traded Services - £166,000 (1%) under spend
i. The under spend is mainly due Property Investment activity being greater than anticipated and staffing vacancies are driving under spends in Traded Strategy and Support Services.
ii. There is an adverse movement of £624,000 since the Quarter 2 report due to the request to the further carry forward of under spends to support the 2019/20 budget (see 2.2 above).
5.11 Leader - £500,000 (6.3%) under spend
i. This is mainly due to a number of vacancies pending recruitment across Digital (Service Design Team) due to the delay in the service becoming fully operational.
5.12 Customer and Corporate Recharged Support Services - £46,000 (0.1%) under spend
i. The forecast position reflects a draw down from the Transformation Reserve for £1.2m to remove the impact of staff savings in Technology Services, however approval is not being sought in this report as a separate Cabinet Member decision is being prepared.
5.13 Finance, Commercial and Traded Services Recharged Support Services - £305,000 (1.6%) over spend
i. The over spend is mainly due to adjustments held against Finance RSSS that are mitigated by under spends across other portfolios.
5.14 Leader Recharged Support Services - £79,000 (0.8%) under spend
i. The under spend is due to a number of vacancies pending recruitment within Strategy, Insight and Engagement team.
Page 42 of 61 5.15 Other Operating Costs - £44,000 (0.1%) under spend
i. The portfolio is reporting a minimal under spend. Within this position, there has been a favourable movement of £3.8m attributable to a change in borrowing profile supporting a one off under spend on Minimum Revenue Provision (£3m) and higher cash balances available for investment (£800,000). As this is a timing issue and the borrowing will need to be undertaken in 2019/20 it is proposed that the under spend is transferred to the Reserve for Future Capital funding to be available when required.
6. Trading Activities
6.1 Traded Services are forecasting an under achievement of £925,000 against a target surplus of £4.9m. This is due to underachievement of income within EES. There are also pressures within the School Sickness Insurance mainly due year end accruals being understated plus claims are increasing which the scheme cannot contain.
6.2 This position does not reflect the planned sale of EES (FP/102/03/18).
6.3 Approval is requested to reduce the EES Appropriation to the service reserve by £436,000 to £0.
6.4 Approval is sought in this report to draw down £69,000 from the EES for Schools Reserve to mitigate the forecast over spend.
6.4 Approval is sought in this report to draw down the remaining £263,000 from the Schools Sickness Insurance reserve to partially mitigate the forecast over spend. The remaining pressure will be mitigated within Education and Skills portfolio.
6.5 Approval is requested to amend the Place Services Appropriation targets; County’s target to increase by £60,000 to £205,000 and Service target to reduce by £11,000 to £23,000.
6.6 Appendix B shows the position by each Trading Activity.
7. Capital
7.1 The forecast on the total capital programme is an under spend of £29.6m against the latest capital budget of £292.7m. After taking account of budget change requests in this report there is a residual under spend of £170,000.
7.2 Approval is sought for: i. Slippage of £21.1m ii. Budget additions of £3.2m iii. Budget reductions of £12.1m iv. Advanced works of £573,000
Page 43 of 61 7.3 The key points to note are listed below, and the detailed requests are shown at Appendix C(ii).
7.4 Health and Adult Social Care - £736,000 under spend
i. Pollysfield; Approval is sought to re-profile £647,000 into 2020/21, where the provider has a funding gap therefore our contribution will be slipped while alternative delivery options are considered.
7.5 Culture and Communities - £1m under spend
i. Colchester Mercury Theatre; Approval is sought to re-profile £1m into 2019/20 due to project delays whilst additional funding is sought. ii. Travellers; Approval is sought to re-profile £311,000 into 2019/20 due to project delays pending review. iii. Community Initiatives; Approval is sought to draw down from the Community Initiatives Fund Reserve for expenditure incurred to date of £269,000 in relation to grants to third parties for Community improvements.
7.6 Customer and Corporate - £588,000 under spend
i. Technology Services Portfolio; Approval is sought to reprofile £100,000 into 2019/20. This investment is subject to a business case that has been delayed. ii. Social Care Case Management; Approval is sought to reprofile £126,000 into 2019/20. This scheme is dependent on the third party supplier to deliver some functionality which is expected to now happen in the next financial year. iii. Libraries Self Serve; Approval is sought to reprofile £342,000 into 2019/20 due to delays with the new procurement framework being available for the purchased of replacement RFID units.
7.7 Deputy Leader and Infrastructure - £8.9m under spend
i. BDUK Superfast Broadband Programme; Approval is sought to re profile £1.8m in relation to Phase 3 (£1.6m) and phase 4 (£185,000). These delays relate to the Gigaclear element who have advised there is a 6-month delay to all contracts.
ii. Highways maintenance; Approval is sought to reprofile £1.2m into 2019/20 in relation to Local Highways Panels (£600,000) due to the time it has taken to agree the match funding schemes with the relevant District councils, and LED phase 3 (£500,000) as delays with agreeing compensation with Philips have now meant that the project has started several months later than originally anticipated. Additions of £474,000 are requested to enable additional S106 work and to fund the emergency works on the Army and
Page 44 of 61 Navy flyover. Reductions of (£555,000) will release savings on LED phase 3 (£500,000) and several minor schemes.
iii. Basildon Integrated Transport Package; Approval is sought to reprofile £1.3m into 2019/20 where the work will commence in March rather than January as originally anticipated.
iv. A133 Colchester to Clacton Route Based Strategy; Approval is sought to reprofile £800,000 to enable the refined scheme at Weeley roundabout to be delivered in 2019/20. An addition of £500,000 is sought to enable the scheme at Weeley roundabout.
v. Harlow Enterprise Zone Phase 2; Approval is sought to reprofile £763,000 into 2019/20 following delays to the scheme whilst its scope was assessed.
vi. Highways Major Schemes; Approval is sought to reduce the programme by £3.1m to remove the major schemes that will no longer proceed following the review of the 2019/20 capital programme.
7.8 Economic Development – £1.4m under spend
i. St Peters College; Approval sought to re-profile £613,000, of which £200,000 into 2019/20 and £413,000 into 2020/21 due to issues with bats inhabiting the site. This has resulted in demolition being unable to commence until April 2019.
ii. Maldon Friary; Approval sought to re-profile £493,000 into 2021/22 as a result of delay in planning permission being received from Maldon District Council.
iii. Rocheway; Approval sought to re-profile £337,000 into 2019/20 following receipt of the contractor’s final quote. The project spend profile has been updated to reflect the new phasing.
7.9 Education and Skills - £11m under spend
i. Epping Forest Secondary Basic Need; Approval sought to re-profile £3.8m into 2019/20 for West Hatch High School where the project has been delayed due to performance and delivery issues with the contractor. Work will continue with the contractor to address the issues and agree an appropriate way forward.
ii. Special School Delivery Programme; Approval is sought to re-profile £2.8m into 2019/20, predominantly due to the Department for Education funded schemes at Fox and Hawthorns not having yet obtained the relevant approval to commence.
iii. Basildon Primary Basic Need; Approval is sought to re-profile £956,000 into 2019/20 which relates to the scheme at Brightside Primary School where
Page 45 of 61 there have been delays while appropriate flooding design is agreed, resulting in a greater proportion of the scheme moving into 2019/20 than initially anticipated. In addition, approval is sought to re-profile £667,000 to 2019/20 in relation to Rydene Primary school to align the budget to the contractors latest cashflow.
7.10 Property Investment - £6m under spend
i. Approval is sought to reduce this scheme by £6m. Due to the uncertainties caused by Brexit and the potential impact on the property market, the scheme has been paused with no further purchases planned.
7.11 Controlled Elsewhere - £105,000 under spend
i. Approval is sought for an addition of £105,000 in relation to the Schools Devolved Formula Capital grant, which the Council hold on behalf of Essex Schools and have no control over the spend, for transactions that do not meet the capitalisation criteria.
Appendix C provides a comparison of approved and forecast outturn capital payments by Portfolio and sets out the variance plan which summarise the proposals for addressing the forecast budget variances.
8. Policy context and Outcomes Framework
This report is an assessment of the financial position of the County Council, which itself is a representation of the corporate plan. The budget and corporate plan were approved in parallel in February 2018.
9. Reserves
A summary of the forecast balances on reserves is provided in Appendix D.
10. Treasury Management and Prudential Indicators
A summary of the investment and borrowing levels is provided in Appendix E and F.
11. Financial Implications
Finance and Resources Implications (Section 151 Officer)
11.1 The report is provided by the Section 151 Officer. There are no further comments.
12. Legal Implications
Page 46 of 61 12.1 The Council is responsible for setting the budget each year. Once agreed the executive then have to implement the policy framework and keep within the budget, subject to the limits set by Financial Regulations.
13. Equality and Diversity implications
13.1 Section 149 of the Equality Act 2010 creates the public sector equality duty which requires that when ECC makes decisions it must have regard to the need to: (a) Eliminate unlawful discrimination, harassment and victimisation and other behaviour prohibited by the Act (b) Advance equality of opportunity between people who share a protected characteristic and those who do not (c) Foster good relations between people who share a protected characteristic and those who do not including tackling prejudice and promoting understanding.
13.2 The protected characteristics are age, disability, gender reassignment, pregnancy and maternity, race, religion or belief, gender and sexual orientation.
13.3 The equality implications are assessed as part of budget setting process and as part of individual schemes.
13.4 There are no equality and diversity or other resource implications associated with this report.
14. List of Appendices Appendix A Revenue Forecast Outturn Appendix B Trading Activities Appendix C (i) Capital Forecast Outturn Appendix C (ii) Capital Variance Plan Appendix D Balance Sheet - Earmarked Reserves Appendix E Treasury Management Appendix F Prudential Indicators
(Available at www.essex.gov.uk if not circulated with this report)
15. List of Background Papers Budgetary control reports.
Page 47 of 61 Appendix A Revenue Year to Date Full Year
Latest Original Budget Latest Forecast Quarter 3 Half Year Direction Portfolio Budget Actual Variance Budget Movement Budget Outturn Variance Variance Movement of Travel £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 Health and Adult Social Care279,194 273,569 (5,625) 410 ,008 1,525 411,532 411,492 (40) 1,026 (1,067) Children and Families78,621 76,946 (1,675) 116,766 1,03 2 117,799 118,477 678 88 589 Customer and Corporate12,133 8,694 (3,439) 14,706 (73) 14 ,634 14,633 (0) (345) 345 Culture and Communities2,543 2,547 5 2,877 580 3,457 3,529 72 (51) 123 Economic Development4,232 3,443 (789) 5,007 1,316 6,323 5,8 17 (506) (662) 156 Education and Skills18,591 91,200 72,609 76,318 2,511 78,8 30 85,746 6,916 3,766 3,150 Environment and Waste55,837 55,813 (24) 81,516 (6) 81,510 81,837 328 115 213 Finance, Commercial and Traded Services 10,258 12,989 2,731 16,195 (195) 16,000 15,834 (166) (790) 624 Deputy Leader and Infrastructure30,306 27,435 (2,872) 47 ,236 4,671 51,907 50,336 (1,571) (2,261) 690 Leader 5,557 4,011 (1,546) 7,809 127 7,936 7,436 (500) (101) (399) Other Operating Costs37,616 10,826 (26,790) 62,228 (26,5 77) 35,652 35,608 (44) (1,139) 1,096 Leader RSSS 6,011 4,858 (1,153) 9,706 (131) 9,575 9,497 (79) 5 (84) Finance, Commercial and Traded Services RSSS 6,389 8,881 2,492 15,504 3,213 18,717 19,022 305 (211) 516 Customer and Corporate RSSS38,200 38,620 420 49,536 11,957 61,493 61,447 (46) (26) (21) Fire Reinstatement Works(428) 449 877 (0)- (0) (0) (0) 0 (0) Total 585,060 620,283 35,223 915,413 (48) 915,365 920,711 5,347 (584) 5,931 DSG Offset 26,503 (43,132) (69,635) 3,063 (5,419) (2,356) (7,928) (5,572) (1,307) (4,265) Total Excluding DSG611,562 577,150 (34,412) 918,476 (5, 468) 913,008 912,783 (225) (1,891) 1,666 Funding Pressure (1,089) (146) (943) Revised Total611,562 577,150 (34,412) 918,476 (5,468) 91 3,008 912,783 (1,314) (2,038) 723
Appendix B Page 48 of 61 Traded Services
Forecast Appropriations Revenue Income Expenditure Forecast Variance To County To Variance Revenue reserve (Surplus) / Revenue Trading Plan reserve 1 April 2018 deficit Account Activity Proposals 31 March reserve to/(from) 2019 reserves
£000£000£000£000£000£000£000£000£000
EDUCATION TRADED EES for Schools(321) (11,498)7,429(4,070) 505 (4,139)(436) 367 (203)
FINANCE, COMMERCIAL & TRADED Schools Staff Insurance Scheme(263)(3,564)4,064 500500 --(263) 237 Information Services infrastructure(538)(6,500)6,50 0(0)(0)---(538) Place Services(293)(2,620)2,391(229)(49)(145)(34)(4 9)(316) Music Services -(4,520)4,376(144)(31)(113)--(31)
Total (1,416) (28,703)24,760(3,943) 925 (4,398)(470) 55 (851)
Appendix C (i) Capital Page 49 of 61
Year to date Budget Movement Full Year Original In year Revised Budget Actuals Variance Outturn Variance Budget approved Budget £000 £000 £000 £000 £000 £000 £000 £000 Health and Adult Social Care2,811 1,050 (1,762) 3,169 ( 516) 2,653 1,917 (736) Children and Families 200 271 71 590 100 690 687 (3) Culture and Communities1,294 689 (604) 1,910 930 2,840 1,799 (1,041) Customer and Corporate3,722 2,209 (1,513) 6,304 456 6,760 6,172 (588) Deputy Leader and Infrastructure80,540 79,029 (1,511) 1 39,591 (5,611) 133,980 125,053 (8,927) Economic Development12,905 8,528 (4,377) 19,452 1,653 21, 105 19,672 (1,433) Education and Skills78,505 68,991 (9,514) 103,651 1,329 1 04,980 94,027 (10,953) Environment and Waste3,169 3,014 (156) 4,950 293 5,243 5,079 (164) Finance, Commercial and Traded Services 414 140 (274) 343 71 414 572 158 ECC Capital Programme183,561 163,922 (19,639) 279,960 (1,294) 278,665 254,977 (23,688) Schools Cash Balance - 311 311 - - - 0 0 Devolved Formula Capital1,214 1,114 (101) 1,600 (230) 1,370 1,475 105 Total School Balances1,214 1,425 211 1,600 (230) 1,370 1,475 105 Capital Programme184,775 165,347 (19,428) 281,560 (1,5 24) 280,036 256,453 (23,583) Property Investment(3,136) 6,676 9,812 17,035 (4,365) 1 2,670 6,676 (5,994) Total Capital Programme181,639 172,023 (9,616) 298,59 5 (5,889) 292,706 263,129 (29,577)
Financed by: Budget Movement Full Year Original In year Revised Outturn Variance Budget approved Budget ECC Capital Programme £000 £000 £000 £000 £000 Grants87,937 25,273 113,210 112,159 (1,051) Reserves8,843 134 8,977 8,977 - Developer & Other contributions 14,581 5,399 19,980 19,406 (574) Capital receipts10,000 (5,000) 5,000 5,000 - Unsupported borrowing175,634 (25,564) 144,169 116,112 ( 28,057) ECC Capital Programme296,995 242 291,336 261,654 (29,682) Grants 1,600 (230) 1,370 1,475 105 Unsupported borrowing - - - - - School Balances1,600 (230) 1,370 1,475 105 Total ECC & Schools Capital Funding 298,595 12 292,706 263,129 (29,577)
Appendix C(ii) Capital Variance Plan
Page 50 of 61 Approved changes Variance Plan Advanced Approved Advanced Residual Total Slippage Additions Reductions Slippage Additions Reductions Portfolio Works changes Works Variance Variance £000£000£000£000£000£000£000£000£000£000£000 Health and Adult Social Care(516) - - - (516) (647) - (80) - (9) (736) Children and Families 100 - - - 100 - - - - (3) (3) Culture and Communities 501440 - (11) 930 (1,311) 269 - - 0 (1,041) Customer and Corporate 502 - (47) - 456 (568) - - - (20) (588) Deputy Leader and Infrastructure(1,903) 26,466 (30,621 ) 446 (5,611) (6,360) 1,081 (3,654) - 5 (8,927) Economic Development 372 10,809 (9,434) (94) 1,653(1,888) 100 (350) 573132 (1,433) Education 322 57,704 (56,928) 231 1,329 (10,173) 1,352 (1,713) - (420) (10,953) Environment and Waste 608608 (951) 28293 (150) 302 (302) - (14) (164) Finance, Commercial and Traded Services 135 - - (63) 71 - - - - 158 158 ECC Capital Programme 121 96,028 (97,981) 537 (1,294) (21,096) 3,105 (6,099) 573 (170) (23,688) Devolved Formula Capital - 859 (1,088) - (230) - 105 - - - 0 105 Total School Balances - 859 (1,088) - (230) - 105 - - (0) 105 Capital Programme 121 96,887 (99,070) 537 (1,524) (21,096) 3,210 (6,099) 573 (170) (23,583) Property Investment 224 - - 1,312 1,536 - - (5,994) - 0 (5,994) Total Capital Programme 121 96,887 (99,070) 537 (1,524) (21,096) 3,210 (12,093) 573 (170) (29,577)
Page 51 of 61 Appendix C(ii) cont’d
Advanced 2018/19 Slippage Additions Reductions Portfolio & Scheme Works Changes £000£000£000 £000 Requested Pollysfield (647)---(647) TC AWD Thistley Evegate --(80)-(80) Health and Adult Social Care(647)-(80)-(727) Community Initiatives - 269 -- 269 Travellers (311)---(311) Colchester Mercury Theatre(1,000)---(1,000) Culture and Communities(1,311) 269 --(1,041) Social Care Case Management(126)---(126) Technology Services Portfolio(100)---(100) Libraries Self Serve (342)---(342) Customer and Corporate (568)---(568) A127 Road Safety & Network Resilience Package--(483)-(48 3) A133 Colchester to Clacton RBS(800) 500 (1,070)-(1,370) A414 Harlow to Chelmsford RBS --(1,201)-(1,201) Advanced Scheme Design --(346)-(346) Basildon Integrated Transport Package(1,323)---(1,323) BDUK Essex Superfast Programme Phase 3(1,582)---(1,582) BDUK Essex Superfast Programme Phase 4(185)---(185) Beaulieu Park Station (357)---(357) Bridges - 180 -- 180 Bus Lane Camera Enforcement(90) 10 --(80) Colchester ITP (Borough Wide)(162)---(162) HEZ & A414 Pinch Point Delivery Package two(763)---(76 3) LED Rollout (500)-(500)-(1,000) Local Highways Panels (600)---(600) Other Highways Major Schemes - 107 -- 107 Road Maintenance --(3)-(3) Safety Barrier Replacement --(42)-(42) Safety Cameras --(10)-(10) Section 106 - 285 -- 285 Deputy Leader and Infrastructure(6,360)1,081(3,654) -(8,933) St Peters College (613)---(613) Maldon Friary (493)---(493) Rocheway (337)---(337) STEM Innovation Campus --- 573573 Colchester Centre for Health & Development(319)---(31 9) Basildon Craylands (126)---(126) Goldlay Gardens - 70 -- 70 Norton Road - 30 -- 30 Braintree Schemes --(250)-(250) Shernbroke Hostel --(100)-(100) Economic Development (1,888) 100 (350) 573 (1,565) continued on next page
Page 52 of 61 Advanced 2018/19 Slippage Additions Reductions Portfolio & Scheme Works Changes £000£000£000 £000 Requested Basildon Primary Basic Need(1,651) 353 (332)-(1,630) Beaulieu Park Secondary School --(50)-(50) Braintree Primary Basic Need -5(18)-(13) Braintree Secondary Basic Need(200)---(200) Brentwood Primary Basic Need(857) 51 --(806) Castle Point Basic Need --(24)-(24) Chelmsford Primary Basic Need(18) 37 -- 19 Chelmsford Secondary Basic Need(50) 25 --(25) Colchester Primary Basic Need - 442 (258)- 184 Colchester Secondary Basic Need--(127)-(127) Epping Forest Primary Basic Need-6(9)-(3) Epping Forest Secondary Basic Need(3,778)-(100)-(3,878) Harlow Primary Basic Need -6--6 Other School Schemes --(165)-(165) Other Basic Need Schemes --(3)-(3) Rochford Primary Basic Need --(23)-(23) Rochford Secondary Basic Need --(41)-(41) Schools Feasibility - 24 -- 24 Special Schools (2,794)-(135)-(2,929) Temporary Accommodation -8(173)-(165) Tendring Primary Basic Need - 28 -- 28 Tendring Secondary Basic Need(477) 117 (42)-(402) Uttlesford Primary Basic Need - 240 (210)- 30 Uttlesford Secondary Basic Need-9(3)-6 Early Years (348)---(348) Education and Skills (10,173)1,352(1,713)-(10,534) Country Parks (150) 302 (302)-(150) Environment and Waste (150) 302 (302)-(150) ECC Capital Programme(21,096)3,105(6,099) 573 (23,518) Schools Balances & DFC - 105 -- 105 Total (including School Balances)(21,096)3,210(6,09 9) 573 (23,413) Property Investment --(5,994)-(5,994) Total Capital Programme(21,096)3,210(12,093) 573 (29,407)
Page 53 of 61 Appendix D Reserves
2018/19 movements
(Contributions)/ Adjustments Estimated Balance at 1 Withdrawals proposed in Future Closing April 2018 agreed quarterly report commitments balance £000 £000 £000 £000 £000 Long Term Contractual Commitment PFI Reserves A130 PFI (45,247) 3,874 - (41,373) Building Schools for the Future PFI (1,870) (315) (22) (11) (2,218) Debden School PFI (3,813) 502 4 (199) (3,506) Clacton Secondary Schools' PFI (2,836) 340 159 (2,337) Waste Reserve (99,733) (8,776) 2,044 (106,465) Grant Equalisation Reserve (10,787) 1,927 961 (7,899) Trading Activities (not available for use) (1,417) 4,397 (104) (3,728) (852) Partnerships and Third Party (not available for use) (1,964) - 100 (1,864) Schools (not available for use) (41,649) - - (41,649) General Balance (55,212) (48) (489) - (55,749)
Reserves earmarked for future use Adults Digital Programme (6,900) 4,800 - (2,100) Capital Receipts Pump Priming (2,325) (1,000) 100 1,000 (2,225) Carbon Reduction (2,606) - 350 (2,256) Carry Forward (16,395) 11,557 (9,504) - (14,342) Collection Fund Risk (1,412) - - (1,412) Community Initiatives Fund (796) (54) (1,315) 946 (1,219) Digital Infrastructure - (4,239) 4,239 - Emergency Planning (subject to approval) - - (300) - (300) Future Capital Funding (10,061) (8,662) (4,195) 9,857 (13,061) Health and Safety (631) - - (631) Innovation (1,795) 655 1,140 - - Insurance (9,061) 1,000 - (8,061) Local Projects (867) 122 745 -- Pension Fund Equalisation (206) 206 -- Property Fund - (326) (165) (491) Quadrennial Elections (118) (500) - (618) Tendring PPP Page 54 (496)of 61 - - (496) Transformation (22,015) 6,647 (1,203) 10,473 (6,098) Appendix E
PRUDENTIAL INDICATORS AND TREASURY MANAGEMENT
TREASURY MANAGEMENT SUMMARY - 2018/19
Actual Movements Interest Balance Raised Repaid Net Balance at payable / 1 April movement 31 March (earned) to date £000 £000 £000 £000 £000 £000
Borrowing Long Term 515,487 1,917 (2,406) (489) 514,998 12,674 Temporary - 1,641 - 1,641 1,641 8 Total External Borrowing (A) 515,487 3,558 (2,406) 1,152 516,639 12,682
Investments Long Term 11,000 - (1,000) (1,000) 10,000 (313) Temporary 245,480 - (91,580) (91,580) 153,900 (1,658) Total External Investments (B) 256,480 - (92,580) (92,580) 163,900 (1,971)
Net indebtedness (A-B) 259,007 3,558 90,174 93,732 352,739 10,711
Borrowing Average long term borrowing over period to date (£000) 466,454 Opening pool rate at 1 April 2018 4.06% Weighted average rate of interest on new loans secured to date N/A Average pool rate for year 4.06%
Investments Average daily cash balance over period to date (£000) 317,867 Average interest earned over period 0.89% Benchmark rate - average 7 day LIBID rate 0.47% Page 55 of 61 Appendix F
PRUDENTIAL INDICATORS
Approved Provisional IndicatorOutturn
1 Affordability Incremental impact on Council Tax of 2018/19 and earlier years' 'starts'££92.68 £86.60 Ratio of financing costs to net revenue streams (excl. gen. govnt. grant)%7.3% 8.4% Ratio of financing costs to net revenue streams (incl. gen. govnt. grants)%6.9% 7.9%
2 Prudence Net borrowing is well within the medium term forecast of the Capital Net borrowing and Capital Financing Requirement Financing Requirement.
3 Capital Expenditure Capital expenditure £m299 263 Capital Financing Requirement (excluding credit arrangements ) £m990 932
4 External Debt Authorised limit (borrowing only) £m910 N/A Operational boundary (borrowing only) £m800 N/A Actual external borrowing (maximum level of debt during year) £m N/A 540
5 Treasury Management Interest rate exposures Upper limit for exposure to fixed rates Net exposure £m910 387 Debt 100.0% 100.0% Investments 100.0% 79.5% Upper limit for exposure to variable rates Net exposure £m273 212 Debt 30.0% 0.9% Investments 100.0% 58.6% Maturity structure of borrowing (upper limit) Under 12 months %40.0% 0.5% 12 months & within 24 months %40.0% 0.6% 24 months & within 5 years %40.0% 8.0% 5 years & within 10 years %40.0% 10.1% 10 years & within 25 years %60.0% 19.5% 25 years & within 40 years %40.0% 30.4% 40 years & within 50 years %20.0% 3.9% 50 years & above %20.0% 14.9% Total sums invested for more than 364 days Authorised limit £m50 N/A Actual sums invested (maximum position during year ) £m N/A 11
6 Summary All Treasury Management activities have been undertaken in accordance with approved policies and procedures. External debt is within prudent and sustainable limits. Credit arrangements have been undertaken within approved indicators Maturity Structure of borrowing: maturity dates for market loans are based on the next review date, not the final maturity date.
Page 56 of 61 AGENDA ITEM 8
CPSC/05/19
Committee: Corporate Policy and Scrutiny Committee
Date: 29 January 2019
Enquiries to: Name: Richard Buttress
Designation: Member Enquiries Manager
Contact details: [email protected]
Work Programme
To note the current position as regards work planning and programming.
Page 57 of 61
Page 58 of 61 CORPORATE POLICY AND SCRUTINY COMMITTEE
WORK PROGRAMME 2018/19 – (ADOPTED BY SEPTEMBER 2018 COMMITTEE MEETING) Approach to topic selection – where can the committee conduct reviews quickly, influence change and make a difference to the residents of Essex
Date/Timing Issue/Topics Focus/other comments Approach RAG January 2019 January 2019 Procurement – renewal of Joint committee work with Update on Task and Ringway Jacobs contract Place Services and Finish Group progress to Economic Growth be reported Committee January 2019 Reserves To receive a detailed Presentation by relevant update on ECC’s financial Director/Cabinet Member reserves January 2019 Provisional Settlement Learn more about Local Dependent on national Government funding plans and any local pilot distribution and any future areas. piloting of national plans January 2019 Budget Out-turn Regular half-yearly 1. To be half-yearly updates after Cabinet 2. Cabinet Member and/or relevant officer to present 3. To identify any particular issues for further ‘dive’ on an ongoing basis January 2019 Organisational Plan and To receive an update on Presentation by relevant Budget 2019/20 the 2019/20 budget officers February 2019 i) February 2019 Emerging Savings Opportunity for the Presentation by relevant committee to conduct Director/Cabinet Member proactive scrutiny work February 2019 Delivery assurance of Opportunity for the Presentation by relevant
Page 59 of 61 savings committee to conduct Director/Cabinet Member proactive scrutiny work February 2019 Procurement – renewal of Joint committee work with Update on Task and Ringway Jacobs contract Place Services and Finish Group progress to Economic Growth be reported Committee March 2019 March 2019 Procurement – renewal of Joint committee work with Update on Task and Ringway Jacobs contract Place Services and Finish Group progress to Economic Growth be reported Committee April 2019 April 2019 Procurement – renewal of Joint committee work with Update on Task and Ringway Jacobs contract Place Services and Finish Group progress to Economic Growth be reported Committee May 2019 May 2019 Emerging organisation Mid-point update on the Presentation by Cabinet strategies Organisation Strategy Member and Chief Executive May/June 2019 Budget Out-turn Regular half-yearly 1. To be half-yearly updates after Cabinet 2. Cabinet Member and/or relevant officer to present 3. To identify any particular issues for further ‘dive’ on an ongoing basis October 2019 October 2019 Budget Out-turn Regular half-yearly 1. To be half-yearly updates after Cabinet 2. Cabinet Member and/or relevant officer to present 3. To identify any Page 60 of 61 particular issues for further ‘dive’ on an ongoing basis Topics suggested to be pursued TBC Property portfolio Value of ECC Estate and To be determined disposal strategy TBC Customer Contact To be determined To be determined Centres TBC Essex Legal Services – To be determined To be determined update on external service charging TBC ECC Organisation To be determined To be determined Redesign/Transformation update TBC Overall strategic direction To be determined To be determined TBC I.T – update on ‘Azure’ To be determined To be determined system TBC Social Care Providers Review ECC’s process of To be determined dealing with providers who are in a difficult financial position – possible Task and Finish Group TBC Fair Funding Review Three key areas: To be determined i) Tax burden in London and unitary authorities ii) Disposable income iii) Projectory
Page 61 of 61