Meetings, Agendas, and Minutes

Public Document Pack

SOUTH LAKELAND DISTRICT COUNCIL South Lakeland House Kendal, Cumbria LA9 4UQ www.southlakeland.gov.uk

You are requested to attend a meeting of the Cabinet on Wednesday, 24 July 2013, at 10.00 am in the District Council Chamber, South Lakeland House, Kendal

Membership

Councillors

Giles Archibald Town Centres and Small Business Portfolio Holder Jonathan Brook Strategic Growth Portfolio Holder David Evans Finance Portfolio Holder Sue Sanderson Environment and People Portfolio Holder Peter Thornton Leader of the Council and Promoting South Lakeland Portfolio Holder Graham Vincent Health and Wellbeing Portfolio Holder Janet Willis Deputy Leader of the Council and Innovation and Improvement Portfolio Holder

Monday, 15 July 2013

Debbie Storr, Director of Policy and Resources (Monitoring Officer)

For all enquiries, please contact:- Committee Administrator: Inge Booth Telephone: 01539 793190 e-mail: [email protected] AGENDA Page Nos. PART I

Standing Items/Monitoring Reports

1 APOLOGIES To receive apologies for absence, if any. 2 CABINET EXECUTIVE DECISIONS 1 - 8 To authorise the Chairman to sign, as correct records, the Executive Decisions made by Cabinet during on 26 June 2013 (copy attached). 3 DELEGATED EXECUTIVE DECISIONS 9 - 14 To receive the Delegated Executive Decisions made by Portfolio Holders or Officers on 20 and 26 June 2013 (copies attached). 4 DECLARATIONS OF INTEREST To receive declarations by Members of interests in respect of items on this Agenda. Members are reminded that, in accordance with the revised Code of Conduct, they are required to declare any disclosable pecuniary interests or other registrable interests which have not already been declared in the Council’s Register of Interests. (It is a criminal offence not to declare a disclosable pecuniary interest either in the Register or at the meeting.) Members may, however, also decide, in the interests of clarity and transparency, to declare at this point in the meeting, any such disclosable pecuniary interests which they have already declared in the Register, as well as any other registrable or other interests. If a Member requires advice on any item involving a possible declaration of interest which could affect his/her ability to speak and/or vote, he/she is advised to contact the Monitoring Officer at least 24 hours in advance of the meeting. 5 LOCAL GOVERNMENT ACT 1972 - EXCLUDED ITEMS To consider whether the item in Part II of the Agenda should be considered in the presence of the press and public. 6 PUBLIC PARTICIPATION Any member of the public who wishes to ask a question, make representations or present a deputation or petition at this meeting should apply to do so before the commencement of the meeting. Information on how to make the application can be obtained by viewing the Council’s Website www.southlakeland.gov.uk or by contacting the Democratic and Electoral Services Manager on 01539 793186. (1) Questions and Representations To receive any questions or representations which have been received from members of the public. (2) Deputations and Petitions To receive any deputations or petitions which have been received from members of the public. 7 PROGRESS REPORT 15 - 18 To note progress in relation to outstanding Executive Decisions as at 15 June 2013. 8 NOTICES OF INTENTION TO TAKE KEY DECISIONS/EXEC UTIVE 19 - 26 DECISIONS IN PRIVATE To note the contents of the Notices published on 12 July 2013 (copies attached). Key Decisions

9 NEW HOMES BONUS (AFFORDABLE HOUSING) (KD18/2013) 27 - 32 To consider Affordable Housing bids for New Homes Bonus funds. 10 BERNERS CLOSE, GRANGE -OVER -SANDS UPDATE AND AWARD 33 - 40 OF CONTRACT FOR BERNERS POOL DEMOLITION (KD15/2013) To provide an update on the progress of the development project at Berners Close, Grange-over-Sands and seek authority to award the contract for the demolition of Berners Pool.

Please also see Part II Appendix 2 to the report. Referrals to Council

11 2012/13 FINAL ACCOUNTS 41 - 68 To consider the Council’s Final Accounts for 2012/13. 12 DRAFT FINANCIAL STRATEGY AND MEDIUM TERM FINANCIAL 69 - 138 PLAN To consider the draft Financial Strategy and Medium Term Financial Plan. General Executive Matters

13 HEVERSHAM AND HINCASTER APPLICATION FOR DESIGNATION 139 - 168 AS A NEIGHBOURHOOD AREA To consider an application received from Heversham and Hincaster Parishes to jointly be designated a Neighbourhood Area. 14 KENDAL BUSINESS IMPROVEMENT DISTRICT 169 - 216 To consider proposals for the proposed Business Improvement District in Kendal. 15 COMMUNITY ENERGY COLLECTIVE SWITCHING 217 - 222 To provide an update on the Community Energy Collective Switching project and seek agreement to run a third auction in October 2013. 16 MEMBERS ALLOWANCES 2012/13 223 - 228 To provide details of allowances paid to Members and co-optees in the financial year 2012/13. 17 REGULATION OF INVESTIGATORY POWERS ACT (RIPA) 2000 - 229 - 248 ANNUAL REVIEW To review the operation of the Council’s policies and procedures as regards RIPA for the year 2012/13. PART II

Private Section (exempt reasons under Schedule 12A of the Local Government Act 1972, as amended by the Local Government (Access to Information) (Variation) Order 2006, specified by way of paragraph number)

Key Decisions

18 BERNERS CLOSE, GRANGE -OVER -SANDS UPDATE AND AWARD 249 - 250 OF CONTRACT FOR BERNERS POOL DEMOLITION (KD15/2013) - APPENDIX 2

- Paragraph 3 - Information relating to the financial or business affairs of any particular person (including the authority holding that information)

To provide details of tenders received.

Please also see Part I Report. 9 Item No.2 26.06.2013 Cabinet Executive Decisions

EXECUTIVE DECISION NOTICE

CABINET

A record of the decisions made at the meeting of the Cabinet held on Wednesday, 26 June 2013, at 10.00 am.

Present

Councillors

Peter Thornton (Leader of the Council and Promoting South Lakeland Portfolio Holder and Liberal Democrat Group Leader) (Chairman)

Also in attendance at the meeting were Shadow Executive Members Councillors Ben Berry (Finance Portfolio), Roger Bingham (Health and Wellbeing Portfolio), Andrew Gardiner (Town Centres and Small Business Portfolio), Tom Harvey (Deputy Leader and Innovation and Improvement Portfolio), Janette Jenkinson (Environment and People Portfolio) and David Williams (Leader and Promoting South Lakeland Portfolio) .

Apologies for absence were received from Councillor Graham Vincent (Health and Wellbeing Portfolio Holder) and Shadow Executive Member Councillor John Holmes (Strategic Growth Portfolio).

Officers

Inge Booth Senior Democratic Services Officer Helen Coffey Communications Officer Lawrence Conway Chief Executive John Dyer Principal Policy Adviser (part) Emma Gilbertson Communications Assistant Julie Jackson Senior Housing Strategy Officer (part) Shelagh McGregor Assistant Director Resources (Section 151 Officer) Simon McVey Assistant Director Policy and Performance Paul Mountford Research and Intelligence Manager (part) Simon Rowley Assistant Director Neighbourhood Services (part) Debbie Storr Director of Policy and Resources (Monitoring Officer) David Sykes Director of People and Places Tony Whittaker Housing Strategy and Delivery Manager (part)

Page 1 10 26.06.2013 Cabinet Executive Decisions

CEX/14 CABINET EXECUTIVE DECISIONS

RESOLVED – That the Chairman be authorised to sign, as a correct record, the Executive Decisions made by Cabinet on 29 May 2013.

CEX/15 DELEGATED EXECUTIVE DECISIONS

RESOLVED – That the Delegated Executive Decisions made by Portfolio Holders or Officers on 6 June 2013 be received.

CEX/16 DECLARATIONS OF INTEREST

RESOLVED – That it be noted that no declarations of interest were made.

CEX/17 LOCAL GOVERNMENT ACT 1972 - EXCLUDED ITEMS

RESOLVED – That, should discussion be necessary, the item in Part II of the Agenda be dealt with following the exclusion of the press and public.

CEX/18 PUBLIC PARTICIPATION

RESOLVED – That it be noted that no questions, representations, deputations or petitions have been received from members of the public in respect of this meeting.

CEX/19 PROGRESS REPORT

Suggestions were made for improvements to the format of the document.

RESOLVED – That the Executive Decisions Progress Report, as at 17 June 2013, be noted.

CEX/20 NOTICES OF INTENTION TO TAKE KEY DECISIONS/EXECUTIVE DECISIONS IN PRIVATE

RESOLVED – That the contents of the Notices published on 14 June 2013 be noted.

CEX/21 HOMELESSNESS STRATEGY 2013 - 2018 (KD13/2013)

Summary

Councillor Sue Sanderson reported that South Lakeland District Council and Eden District Council had been working in partnership to develop a Homelessness Strategy for the period 2013-2018. Approval was sought for the Strategy which would assist in the prevention of homelessness, the reduction of youth homelessness, the increased provision of settled housing and the provision of support where needed.

Page 2 11 26.06.2013 Cabinet Executive Decisions

It was pointed out that the Action Plan was relatively short-term, from 2013- 2015, to ensure that the Strategy remained responsive to ongoing reforms and policy changes. Many of the actions would only be achieved by close partnership working with statutory and voluntary sector agencies who dealt with homeless people on a day to day basis. It was, therefore, proposed that the Action Plan be monitored by the South Lakeland and Eden Strategic Homelessness Group. The importance of representation by Adult Social Care and Children’s Services was raised.

The Strategy had been considered by the Overview and Scrutiny Committee on 6 June and by Eden District Council on 13 June.

Members welcomed the Strategy which would help to deliver an effective service, and those involved in the production of the document were thanked for their work. It was pointed out that arrangements were in place to publicise the Strategy and ways in which the public could notify the Council about rough sleepers were to be agreed shortly.

Decision

RESOLVED – That the South Lakeland District Council and Eden District Council Homelessness Strategy 2013-2018 be approved.

Reasons for Decisions

The decision will assist in meeting the Council Plan objectives for Housing, by providing the “homes our community needs” and ensuring that the target of 20 homeless households or less in temporary accommodation is met.

The decision will support the Council’s ability to meet the priorities of reducing youth homelessness, homelessness prevention, increasing the supply of settled accommodation and providing support where needed. The Strategy will assist the Council in meeting the “Gold Standard” for homelessness that the Government is developing.

Alternative Options Considered and Rejected

The Council could decide not to approve the draft South Lakeland District and Eden District Council Homelessness Strategy 2013-2018. However, this was not recommended, as the Council has a statutory duty to publish the Strategy and stakeholders who have an interest in homelessness have all been involved in the development of the Strategy. Therefore, this would not promote good partnership working.

Page 3 12 26.06.2013 Cabinet Executive Decisions

CEX/22 SALE OF LAND AT NORTH EAST SANDYLANDS, KENDAL (KD14/2013)

Summary

Approval was sought to the terms and conditions for the sale of a Council- owned ransom strip permitting affordable housing development for local people at North East Sandylands, Kendal. Councillor Jonathan Brook advised that the sale of the land would enable the development of 94 new homes, including 47 affordable homes.

The main consideration for the release would be the grant of nomination rights to the Council in respect of the 47 affordable units, with affordability restrictions both initially and permanently on those units and with a clawback arrangement in favour of the Council to prevent any profit being made from the affordable units in the future. The transfer of the ransom strip on the terms outlined within the report meant that the Council would forego a capital receipt in return for benefits in kind – an additional 15% affordable housing in perpetuity, i.e. 14 more affordable homes than required under planning policy.

Congratulations were expressed to those involved in delivering, for both the Council and the community, 50% of the units for affordable housing.

Note – Details relating to the Heads of Terms for sale to Russell Armer and IHA; legal and financial consequences for the Council; and Schedule of Prices, were provided at Appendices 3, 4 and 5 in Part ll of the Agenda which were excluded from inspection by members of the public in accordance with Section 100 (B) of the Local Government Act 1972, as amended by the Local Government (Access to Information) (Variation) Order 2006, and , in all the circumstances of the case, it was considered that the public interest in maintaining the exception outweighed the public interest in disclosing it. Copies of the documents were excluded, as they contained information as described in Schedule 12A of the Act as follows:-

- Information relating to the financial or business affairs of any particular person (including the authority holding that information). (Paragraph 3)

Decision

RESOLVED – That

(1) the terms and conditions for sale, as set out within the report, be approved; and

(2) any further details arising be delegated to the Assistant Director (Strategic Planning).

Page 4 13 26.06.2013 Cabinet Executive Decisions

Reasons for Decision

The decision links directly to the Council’s priority of “Providing the homes our community needs.” The new homes will contribute to the target to provide 1,500 affordable homes in the period 2006 to 2021.

Alternative Options Considered and Rejected

To not sell the land, in which case the affordable housing development cannot proceed. This was not recommended.

To sell the land without the additional housing (15%). This would result in a capital receipt for the Council, but would result in the loss of 14 affordable homes. As Russell Armer had an agreement in place with Impact to purchase all the affordable homes, this could jeopardise the entire scheme which had been many years in the planning. This was not recommended.

CEX/23 MEMBER LOCALITY BUDGETS SCHEME

Summary

Within the 2013/14 Budget approved by Council on 28 February 2013, provision had been made for each Member of the Council to have access to £1,000 from the New Homes Bonus Fund, for use in relation to community projects identified by individual Members in their Wards. Councillor Peter Thornton asked Members to consider a scheme for the approval of funding applications for use of the proposed individual Member Locality Budgets.

A simple approval process and a set of approval criteria had been drafted to provide a broad framework for the fair and effective use of the funding. The proposed Scheme was set out in a Guidance for Councillors document which provided some advice on what the funds could be used for. A short list of criteria was also included to ensure probity, value for money and accountability. The document also outlined a simple process which involved the local Member liaising with the nominated officer who would assist as appropriate in the process.

Subject to approval, the scheme would come into operation and the approved Guidance and Form would be circulated to all Members, together with details of the nominated officer as the contact for support. Payments made under the scheme would be monitored through the quarterly monitoring reports.

Members welcomed the scheme.

Page 5 14 26.06.2013 Cabinet Executive Decisions

Decision

RESOLVED – That

(1) the Member Locality Budgets Scheme and associated Approval Form, as set out at Appendices 1, 2 and 3 to the report, be approved; and

(2) funding applications be authorised by the Director of Policy and Performance, in consultation with the Health and Wellbeing Portfolio Holder, as an administrative decision under the Council’s Constitution, with details of funding allocations approved being included in the quarterly financial monitoring reports.

Reasons for Decision

The proposals link to the objectives of the Council Plan through the “More Local” theme.

Alternative Options Considered and Rejected

The funding could be allocated without a Scheme, but this was not recommended and would not ensure fairness, value for money and accountability.

CEX/24 PERFORMANCE AND RISK MANAGEMENT UPDATE

Summary

The Council had existing Risk and Performance Management Frameworks. Councillor Janet Willis informed Members that revisions to the Council Plan in February 2013 had highlighted a new target on high performance culture and this had been taken into consideration as part of the Annual Review of the Performance Management Framework and the Risk Process, details of which were provided.

The Risk Process document described how the Council managed its risks. The document had been subject to a significant review during 2011, and required only minor changes.

The Performance Management Framework described how the Council monitored its performance. It had been updated to reflect performance monitoring structures and schedules.

It was intended that the documents would help support the Council in developing and embedding a high performance culture to further enhance the quality of services for the people of South Lakeland.

Page 6 15 26.06.2013 Cabinet Executive Decisions

Councillor Willis stated that she would be reviewing the Performance Management Framework further as her Portfolio developed, and added an additional recommendation for Cabinet to note that the Performance Management Framework would be reviewed after Quarter 2 reporting, with the Framework being brought back to Cabinet before the end of the year with further amendments. She also and drew attention to some typographical changes which would be made before the final version was published.

Decision

RESOLVED – That

(1) the updated Performance Management Framework and Risk Management Process be approved; and

(2) it be noted that the Performance Management Framework will be reviewed after Quarter 2 reporting and brought back to Cabinet before the end of the year with any additional amendments.

Reasons for Decision

The policy updates are key organisational controls that support good performance within the Council Plan and help develop and embed a high performance culture.

Alternative Options Considered and Rejected

The consequences of not approving updates to policies are to weaken corporate governance arrangements.

CEX/25 TRANSFORMATION CHALLENGE AWARD BID - ELECTORAL SERVICES

Summary

Councillor Thornton introduced the report which outlined proposals for the Council to submit a bid for Transformation Challenge Award funding to pilot a collaborative approach to elections and electoral registration across Cumbria. The Council had been approached informally by Manchester City Council to ascertain whether South Lakeland would consider being part of a joint bid on behalf of AGMA and Cumbrian Authorities for Transformation Challenge Award funding to explore efficiencies and increase resilience within Electoral Services. This would bring a rural two tier area into the pilot. Cabinet’s endorsement was sought for the proposals.

Decision

RESOLVED – That the proposals to submit a bid on behalf of Cumbrian authorities for transformational challenge funding for Electoral Services, as detailed within the report, be endorsed.

Page 7 16 26.06.2013 Cabinet Executive Decisions

Reasons for Decision

The proposals support the democratic process and look to make innovative changes and efficiencies in how Electoral Services evolve moving forward.

Alternative Options Considered and Rejected

Not to support the bid but this was not recommended and is seen as an opportunity to enable a full review of Electoral Services, and enable collaborative working across Cumbria on these services to improve and make clearer the Services for the benefit of all voters.

CEX/26 OVERVIEW AND SCRUTINY COMMITTEE NOMINATIONS TO CUMBRIA HEALTH AND WELLBEING SCRUTINY COMMITTEE

Summary

Members were asked to approve nominations for appointments to the Cumbria Health and Wellbeing Scrutiny Committee for 2013/14 made by the Overview and Scrutiny Committee on 6 June 2013.

Decision

RESOLVED – That the nominations made by the Overview and Scrutiny Committee of Councillors Vivienne Rees and John Clough (substitute) to the Cumbria Health and Wellbeing Scrutiny Committee for 2013/14 be approved.

Reasons for Decision

To assist in the delivery of the Council Plan through partnership working.

Alternative Options Considered and Rejected

Not to make appointments - this could affect the Council’s ability to influence partners on important strategic issues.

The meeting ended at 10.45 am

Page 8 Item No.3 5 20.06.2013 Delegated Executive Decisions

DELEGATED EXECUTIVE DECISIONS

A record of delegated decisions made by individual Portfolio holders or officers week ending Friday, 21 June 2013.

The reports (unless exempt under Section 100(B)(2) of the Local Government Act 1972, on the grounds that they involve the likely disclosure of exempt information as defined in Part 1 of Schedule 12 A of the Act as amended by the Local Government (Access to Information) (Variation) Order 2006 by virtue of the Paragraphs indicated and, in all the circumstances of the case, it is considered that the public interest in maintaining the exemption outweighs the public interest in disclosing it) are available for inspection from the Democratic and Electoral Services Manager, South Lakeland House, Kendal.

DEX/4 APPLICATION FOR DISCRETIONARY RATE RELIEF - STORTH PLAYING FIELD COMMITTEE (50133581) (ASSISTANT DIRECTOR (RESOURCES)/SECTION 151 OFFICER)

Summary

Consideration was given to an application for Discretionary Rate Relief.

Decision

In respect of Case Ref.50133581:-

(1) 20% Discretionary Rate Relief be awarded as, under the Council’s guidelines, up to an additional 20% Discretionary Rate Relief is to be awarded to Village Halls, Institutes and Community Centres registered as Charities with the Charity Commissioners.

(2) Relief is to be awarded for the period 1 April 2013 to 31 March 2014, pending the review of all Discretionary Rate Relief policies.

Reasons for Decision

It is considered that the application meets the policy guideline requirements.

The decision will assist in the delivery of the Council Plan – Our culture and wellbeing – building on the Olympic Legacy to promote healthier lifestyles through exercise and sports activity; enhancing our play areas to deliver adventure and excitement; building relationships with communities so that local ambitions are encouraged and supported.

Page 9 6 20.06.2013 Delegated Executive Decisions

Alternative Options Considered and Rejected

The application could be refused, but this has not been recommended, as the Council wants to build on the “Olympic Legacy” to promote healthier lifestyles through exercise and sports activity. The Organisation assists the Council in achieving this objective in a rural area.

Page 10 7 26.06.2013 Delegated Executive Decisions

DELEGATED EXECUTIVE DECISIONS

A record of delegated decisions made by individual Portfolio holders or officers week ending Friday, 28 June 2013.

DEX/5 APPOINTMENTS TO/REPRESENTATION ON OUTSIDE BODIES 2013/14 (LEADER AND PROMOTING SOUTH LAKELAND PORTFOLIO HOLDER)

Summary

The Leader, at the Council meeting on 22 May 2013, had announced changes to the Cabinet Portfolios (C7 (2013/14) refers). This would result in a refresh of the Council’s list of appointments to outside bodies, as many of the organisations now fell within the remit of a different portfolio. In order, therefore, to ensure that appointments for 2013/14 were made in a timely manner, the Leader gave consideration to the appointments normally delegated to individual Portfolio Holders.

Decision

Appointments of representatives to serve on outside bodies for 2013/14 be made as follows:-

ORGANISATION REPRESENTATIVE NOTES (I.E. TERM OF 2013/14 SUBSTITUTE; APPOINTMENT OBSERVER; ETC.)

Arnside/Silverdale Area of Pru Jupe Annual Outstanding Natural Beauty Executive Committee

BAE Systems Marine Ltd. Local Janet Willis Annual Joint Liaison Committee

Citizens' Advice Bureau Trustee Graham Vincent Observer only Annual Board

Page 11 8 26.06.2013 Delegated Executive Decisions

ORGANISATION REPRESENTATIVE NOTES (I.E. TERM OF 2013/14 SUBSTITUTE; APPOINTMENT OBSERVER; ETC.)

Community Transport South Chris Holland Annual Lakeland

Council of Grizedale Arts David Fletcher Observer only Annual

Cumbria Community Foundation Graham Vincent Annual

Cumbria Pensions Forum David Evans Annual

Cumbria Playing Fields Graham Vincent Annual Association

Cumbria Rural Enterprise Agency Jonathan Brook Annual

Cumbria Strategic Waste Sue Sanderson Annual Partnership Cumbria Strategic Waste Nick Cotton Substitute Annual Partnership

Cumbria Sub Regional Housing Jonathan Brook Annual Group

Cumbria Planning Group Jonathan Brook Annual

Duddon Estuary Partnership Joss Curwen Annual Consultative Committee

Duddon Estuary Partnership Janette Jenkinson Annual Consultative Committee

English Heritage Giles Archibald Annual

Glaxo Smith Kline, Ulverston Mark Wilson Annual Environment Liaison Committee

One Voice (formerly Kendal and Graham Vincent Annual South Lakes Shopmobility)

Kendal Brewery Arts Centre Graham Vincent Annual

Kendal Business Against Crime Graham Vincent Annual Partnership

Page 12 9 26.06.2013 Delegated Executive Decisions

ORGANISATION REPRESENTATIVE NOTES (I.E. TERM OF 2013/14 SUBSTITUTE; APPOINTMENT OBSERVER; ETC.)

Kendal Regeneration Giles Archibald

Kendal Traffic Study Group David Evans Annual

Kendal Traffic Study Group Giles Archibald Annual

Kendal Traffic Study Group Philip Dixon Annual

Kirkland Partnership Giles Archibald Annual

Kirkland Partnership Philip Dixon Annual Lakes Line Rail User Group Heidi Halliday Annual

Morecambe Bay Partnership Gill Gardner Annual

Traffic Penalty Tribunal Giles Archibald Annual

North West Housing Forum Jonathan Brook Annual

Parking and Traffic Regulation Giles Archibald Annual Outside London Joint Committee

Queen Katherine School David Evans Annual Governors' Community Education Committee

South Lakeland Royal Wedding Andy Shine 4 Years - 2017 Trustees

Reasons for Decision

To assist in the delivery of the Council Plan through partnership working.

Alternative Options Considered and Rejected

Not to make appointments, which could affect the Council’s ability to influence partners on important strategic issues.

Page 13 This page is intentionally left blank

Page 14 24 July 2013 EXECUTIVE DECISIONS - PROGRESS REPORT (as at 15 July 2013)

Executive Decision Report Title Action Required or Date Officer Progress or Outcome of Cabinet Decision Ref. Date Completed Completion Report Due

EX/341 16.4.10 Council Owned Land and Dispose on open market, Debbie Storr LDNPA have recently Sep-13 Property - Stock Ghyll subject to agreeing [Matthew Neal] stated that a new Cottage and adjacent appropriate terms and planning application will Closed Toilets, Stock conditions. need to be submitted. Ghyll Lane, Ambleside Therefore any sale of the (KD10/015/C&WB site is dependent on planning consent being obtained. NPS have been instructed to obtain an up to date valuation of the site, a scheme of

Page 15 works and a budget for refurbishment of the Park . Meaningful discussions cannot take place with Lakes Parish Council about future options for the Park until the above issues have been addressed. Item No.7 24 July 2013 EXECUTIVE DECISIONS - PROGRESS REPORT (as at 15 July 2013)

Executive Decision Report Title Action Required or Date Officer Progress or Outcome of Cabinet Decision Ref. Date Completed Completion Report Due

EX/055 15.7.11 New Road Common Land Implement decisions David Sykes Preparation for Oct-13 [Michael Keane] deregistration being progressed. Site investigation works completed. Further information on Canal Head development proposals required before proposals for New Road are considered.. Page 16 CEX/31 25.7.12 Leisure Services Review Implement decisions to David Sykes Detailed implementation Aug-13 (KD12/018/C&WB) enable delivery planning underway. arrangements to be in Report on outcome of place by April 2014. procurement process to be considered by Cabinet

DEX/17 8.11.12 Repairs to Wall at Contract to be awarded by David Sykes NPS placing the tender Aug-13 Fountain Brow, Kendal Cabinet following receipt [Michael Keane] invitation on the Chest . of tenders Tender invitation delayed whilst design solution finalised. Negotiations for access and levelling may be required with adjacent landowners 24 July 2013 EXECUTIVE DECISIONS - PROGRESS REPORT (as at 15 July 2013)

Executive Decision Report Title Action Required or Date Officer Progress or Outcome of Cabinet Decision Ref. Date Completed Completion Report Due

CEX/139 13.2.13 Review of the Implement decisions; Shelagh McGregor 12 months notice served Sep-13 Discretionary Rate Relief undertake consultation on all current recipients in Policy Guidelines exercise from July to March 2013 that existing September 2013; O&S to awards will terminate on consider draft Policy 31st March 2014. Next Guidelines and make stage is to put forward comment by 30 recommendations for any September 2013; new policy changes for Policy Guidelines to be consideration by Cabinet agreed by Cabinet by 30 prior to public November 2013; formal consultation.

Page 17 notice to be served by 31.3.13 on all current recipients re termination of previously-granted relief with effect from 31.3.14.

CEX/153 20.3.13 Council Tax Premium - Policy guidelines to be Shelagh McGregor First part complete - Full Sep-13 Policy Guidelines for reviewed in 2013/14 in Council agreed policy for Determining Local conjunction with general local exceptions to Council Exceptions review of discounts Tax Premium in March 2013. A review will be undertaken and reported 18/09 Cabinet in the light of the experience of the process during the year. 24 July 2013 EXECUTIVE DECISIONS - PROGRESS REPORT (as at 15 July 2013)

Executive Decision Report Title Action Required or Date Officer Progress or Outcome of Cabinet Decision Ref. Date Completed Completion Report Due

CEX/13 29.5.13 Windermere Steamboat Refer to Council David Sykes To Council 25 July 2013 N/a Museum - Request for Capital Grant Assistance

CEX/24 26.6.13 Performance and Risk Framework to be reviewed Debbie Storr [Simon Further report to Cabinet Nov-13 Management Update after Q2 reporting and McVey] due November 2013 brought back to Cabinet before end of year with any additional amendments Page 18 SOUTH LAKELAND DISTRICT COUNCIL The Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012 NOTICE OF INTENTION OF KEY DECISIONS TO BE TAKEN Notice is hereby given, in accordance with Regulations 5 and 9 of the above Regulations, that the following Key Decisions are to be considered by the Authority. The definition of a Key Decision is defined in Article 13.03 of the Council’s Constitution as being - A key decision means an executive decision which, in relation to an executive function, has a significant effect on communities in two or more Wards of the Council (or one Ward in respect of two-Member Wards) and/or is likely to result in the Authority incurring expenditure or making savings above £60,000. Where the Decision Maker is shown as being Cabinet, please note membership, as follows:- • Leader and Promoting South Lakeland Portfolio Holder – Councillor Peter Thornton Page 19 • Deputy Leader and Innovation and Improvement Portfolio Holder– Councillor Janet Willis • Environment and People Portfolio Holder – Councillor Sue Sanderson • Finance Portfolio Holder – Councillor David Evans • Health and Wellbeing Portfolio Holder – Councillor Graham Vincent • Strategic Growth Portfolio Holder – Councillor Jonathan Brook • Town Centres and Small Business Portfolio Holder – Councillor Giles Archibald

Item No.8

Key Matter to be Decision to Decision Date/ Documents being Lead Officer Deadline Decision decided be taken in Maker period submitted to decision Contact for repre- Ref No / private? in maker in relation to Information sentations Date added Y/N (if Yes, which the matter (i.e. in respect please quote de- background of reasons the relevant cision documents) why category of will be decision Schedule made to be 112A of the taken in local private * Government Act 1972) ) Page 20 KD15/2013 Demolition of Yes Cabinet 24.7.13 Cabinet Report – Caroline Leigh, 10.7.13 19/09/2012 Economic 31/05/2013 Berners Pool – Information Development & Grange –over- relating to the Asset Manager Sands financial or – business affairs of any c.leigh@southla particular keland.gov.uk

person Tony Whittaker, (including the Housing & authority Strategy holding that Delivery information) Manager – (Paragraph 3) t.whittakers@so uthlakeland.gov.

KD16/2013 To consider the No Cabinet 18.9.13 South Lakeland Private Daniel Russell N/A 14/06/2013 role of the Council Housing Stock Principal in the national Condition Survey Housing Green Deal and http://tinyurl.com/nqccdwq Renewal Officer ECO Schemes and funding for the Local Authorities and d.russell@south Council’s Draught the Green Deal, lakeland.gov.uk Busters Scheme. Department of Energy and Climate Change http://tinyurl.com/k2q5x3o SLDC Private Sector Housing Strategy Action Plan

Page 21 SLDC Housing Strategy Action Plan 2011 – 2015 Cumbria Housing Strategy http://tinyurl.com/m9d9s3s Joint Older Persons’ Housing Strategy Joint Older Persons’ Housing Strategy Cumbria Joint Health and Wellbeing Strategy Cumbria Joint Health and Wellbeing Strategy 2012 - 2015

KD17/2013 Consider the Yes Cabinet 28.8.13 Community Services Nick Pearson, 15.7.13 Service Plan 2013 – 14 21/06/2013 continuation of the Information Street Scene plastic and relating to the Manager, 07974

cardboard financial or 961920 or Plastic and Cardboard collection service business n.perason@sout Trail Survey Analysis to the households affairs of any hlakeland.gov.u Report k within an area of particular Kendal person (including the authority holding that information)

Page 22 (Paragraph 3)

KD18/2013 New Homes No Cabinet 24.7.13 New Homes Bonus Tony Whittaker, N/A

21/06/2013 Bonus Bids Cabinet Report 30/01/13 Housing (Affordable http://tinyurl.com/kwkmtlw Strategy & Housing) Delivery Manager,

t.whittaker@sou thlakeland.gov.u k ext. 3370 KD19/2013 Award of Leisure Yes – The Cabinet 28.8.13 Part II appendices will David Sykes – 16.8.13 Agenda item report on the evaluation 12/07/2013 Partnership d.sykes@southl Contract, will have of submitted bids akeland.gov.uk commencing April substantial 01539 793192 1st 2014 Part II information within appendices. Information relating to the financial or business affairs of any

Page 23 particular person (including the authority holding that information). (Paragraph 3)

KD20/2013 Revised Housing No Cabinet 26.9.13 2006 Housing Daniel Russell N/A 12/07/2013 Enforcement Enforcement Policy Principal Policy June 2013 http://tinyurl.com/pakjqln Housing Renewal Officer d.russell@south lakeland.gov.uk 01539 79 3418 KD21/2013 Approve the Yes Dele- 29.8.13 Cabinet Report George 31.7.13 purchase of 4 – no gated 12/07/2013 Information Vehicle and Plant Sierpinski, Fleet new vehicles for Executive relating to the Programme 2013/14- Manager, 01539 street cleansing Decision financial or 2019/20 793316 or and waste business D Sykes, g.sierpinski@so collection affairs of any Director – uthlakeland.gov. particular People uk person and (including the Places authority holding that information).

Page 24 (Paragraph 3)

Subject to any prohibition or restriction on their disclosure, the documents submitted to the decision maker as listed above can be viewed at the offices of South Lakeland District Council in South Lakeland House, Kendal, and on the Council’s Website. Please be aware, that other documents other than those listed may subsequently be submitted to the decision maker. If you wish to request details of those documents (if any) as they become available, please contact the appropriate Lead Officer as indicated above.

* Where it is indicated that a decision on the item may be taken in private and you wish to make representations in respect of the reasons why this decision will be taken in private please contact Democratic Services, South Lakeland District Council, South Lakeland House, Lowther Street, Kendal, Cumbria LA9 4UQ or email [email protected] by the date shown.

Debbie Storr

Director of Policy and Resources (Monitoring Officer)

Date 12 July 2013 SOUTH LAKELAND DISTRICT COUNCIL

The Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012

NOTICE OF INTENTION TO TAKE EXECUTIVE DECISION(S) IN PRIVATE

Notice is hereby given in accordance with Regulation 5 of the above Regulations that the following matters are likely to be considered in private -

Date of Decision Matter to be decided Reasons why the matter is be decided Deadline for proposed Maker/ Meeting in private representations in decision respect of reasons why decision to be taken in private Page 25 28.8.13 Cabinet Award of Leisure The Agenda item will have substantial 16.8.13 Partnership Contract, Part II information within appendices. commencing April 1st 2014 Information relating to the financial or business affairs of any particular person (including the authority holding that information). (Paragraph 3) Should you wish to make representations in respect of the reasons why this decision will be taken in private please contact Democratic Services, South Lakeland District Council, South Lakeland House, Lowther Street, Kendal, Cumbria LA9 4UQ or email [email protected] by the date shown.

Debbie Storr

Director of Policy and Resources (Monitoring Officer)

Date 12 July 2013 This page is intentionally left blank

Page 26 Item No.9

PART I

South Lakeland District Council CABINET

Meeting Date: 24 July 2013

Report Author: Tony Whittaker, Housing Strategy & Delivery Manager Portfolio: Cllr Jonathan Brook, Strategic Growth Report from: David Sykes, Director (People and Places) Wards affected: All Key Decision: KD18/2013 Key Decision 17 June 2013 Notice:

New Homes Bonus (Affordable Housing) 1.0 PURPOSE OF REPORT 1.1 To consider Affordable Housing bids for New Homes Bonus funds. 2.0 RECOMMENDATIONS

(1) Give approval for the New Homes Bonus bid for a grant of £58,000 to South Lakes Housing in respect of new affordable homes at Yewbarrow Depot, Grange-over-Sands. This to be taken from £190k of New Homes Bonus funding already approved within the Capital Programme.

3.0 BACKGROUND 3.1 The capital programme approved by Council 28 February 2013 included a budget of £350k in relation to the site assembly fund. This is supported by contributions from the New Homes Bonus Reserve of £190k and the Second Homes Reserve of £160k. The proposal is to allocate £58k of this budget to the scheme at Yewbarrow Depot, Grange over Sands.

Page 27 3.2 The Government introduced the New Homes Bonus in April 2011. For every new home or property brought back into use the Government will pay match funding to the Council equal to the additional Council Tax raised for such property and, with an additional amount of £350 for each affordable home. The match funding applies for the following six years. The scheme is however planned to be permanent and so is expected to continue beyond the first six years. 3.2 The Department of Communities and Local Government (DCLG) has set aside almost £1 billion over the Comprehensive Spending Review period for the scheme including £200 million in 2011/12 and £250 million for each of the following three years. Funding beyond these levels will be top sliced from business rates under proposals to replace Formula Grant. 3.3 New Homes Bonus is not a ring-fenced grant and Local Authorities have the freedom to spend the New Homes Bonus in line with local community wishes. 3.4 Full Council has approved, on 29 March 2012, the creation of a New Homes Bonus Reserve to enable forward funding of schemes eligible for funding through the New Homes Bonus protocol agreed by Cabinet on 21 March 2012. 3.5 The protocol established that New Homes Bonus Funds would be apportioned: • 40% Locally Important Projects • 60% Supporting Affordable Housing and investment in housing matters and Neighbourhood Planning. 3.6 At its meeting on 30 January 2013 Cabinet approved a detailed scheme to enable proposals for Affordable Housing to be received, assessed and determined through bidding rounds every 6 months. 3.7 Bids for Locally Important Projects (which will not include affordable housing) require more time for assessment and will be considered at a later Cabinet date. 4.0 RESEARCH AND CONSULTATION 4.1 A bidding round was launched and publicised in March 2013. The deadline for applications was 14 June 2013.

4.2 An invitation to bid was sent to all known housing organisations that operate in the District. Only one bid was received by the deadline. The Lake District and Yorkshire Dales National Park Authorities have been advised of this and invited to comment. Any comments received will be verbally reported to Cabinet.

4.3 The 2010 Milnthorpe Housing Needs Survey identified a need for 26 new affordable homes. The greatest need identified was for 2 bedroom accommodation.

5.0 PROPOSAL

5.1 The only bid received is from South Lakes Housing (SLH) to build three affordable homes (all social rent) on land they own at the former Yewbarrow depot in Grange over Sands.

5.2 The application has been assessed by officers against three measures:

Page 28

5.2.1 Addressing community needs – the scheme will provide three affordable homes (all 2-bed accommodation) at social rents for local people, hence making a valuable contribution towards meeting local evidenced housing needs. 5.2.2 Providing good value for money – the proposed grant per home is £19,333. Whilst this is higher than the average grant per home in 2012/13 (£11,887) the comparison is not equitable as most of the grants approved last year were for affordable rent schemes, i.e. higher rents were charged (up to 80% of market rents but no more than the Local Housing Allowance limit) hence the requirement for less grant. It does provide good value for a social rent scheme (where rents are based on a National formula and are, in most cases, significantly lower than affordable rents). For example, in 2012/13 the Council provided £168,900 towards the Nobles Rest scheme in Kendal for 8 new social rented homes (£21,113 per home). No other SLDC funding is required. 5.2.3 Deliverability - the project is considered to be deliverable. Whilst planning permission has yet to be achieved a similar scheme for the same site was approved by Planning Committee a couple of years ago but could not be taken forward at the time due to contamination issues now resolved. South Lakes Housing intends to complete the scheme by June 2014.

6.0 ALTERNATIVE OPTIONS 6.1 The alternative option would be to not approve the bid. This is not recommended. 7.0 NEXT STEPS 7.1 Provide confirmation of the approved bid and encourage South Lakes Housing to prepare a planning application. 7.2 A further bidding round will be launched in August 2013. Further bids are expected as discussions have already taken place regarding a number of potential bids. 8.0 IMPLICATIONS 8.1 Financial and Resources 8.1.1 The Site Assembly Fund has an approved budget of £350k. Of this, £190k is supported by the New Homes Bonus Reserve, The Yewbarrow Depot scheme is to be specifically earmarked against New Homes Bonus funding. Approval of the £58k contribution will leave £132k for other schemes that require New Homes Bonus funding. 8.2 Human Resources 8.2.1 None arising from this report. 8.3 Legal 8.3.1 There are no legal implications arising out of this report. 8.4 Social, Economic and Environmental Impact 8.4.1 A sustainability impact assessment has not been carried out. This would be undertaken as part of the planning application. 8.4.2 This proposal (the grant) is considered to have a neutral impact on sustainability.

Page 29

9.0 RISK ASSESSMENT Risk Consequence Controls required That planning permission The three affordable Given the planning is not secured. homes could not be history of the site this is constructed. unlikely. SLH could decide not to The three affordable To pay the grant upon proceed with the homes would not be start of construction and development. constructed and the New on the basis that this is Homes Bonus funds started by March 2014. would remain unspent. 10.0 EQUALITY AND DIVERSITY 10.1 The new homes would be let under the Cumbria Choice policy which adheres to equality and diversity principles. 11.0 LINKS TO THE CORPORATE PLAN AND PERFORMANCE INDICATORS 11.1 The proposals link to the corporate priority of ‘Providing homes to meet need’ within the Council Plan 2013 – 2017 and the target to provide 1500 affordable homes between 2006 and 2021. 12.0 CONCLUSION AND EXPECTED OUTCOMES 12.1 The proposal will provide three new affordable homes to be provided. These will make a valuable contribution to the lives of three local households. APPENDICES ATTACHED TO THIS REPORT None CONTACT OFFICERS Tony Whittaker [email protected] ext. 3370 BACKGROUND DOCUMENTS AVAILABLE New Homes Bonus Cabinet/Council reports: 21 March 2012 & 29 March 2012 http://sldc-modgov:9070/documents/s1626/New%20Homes%20Bonus%20inc%20Appendix%201.pdf 30 January 2013 & 28 February 2013 http://democracy.southlakeland.gov.uk/documents/s3903/11%2001%20New%20Homes%20Bonus%20Cab%20jan%2013.pdf

Page 30 TRACKING Assistant Portfolio Solicitor to the CMT Scrutiny Director Holder Council Committee 20/6/13 20/6/13 20/6/13 4/7/13 N/A Executive Committee Council Section 151 Monitoring (Cabinet) Officer Officer 24/7/13 N/A N/A 20/6/13 20/6/13 Human Resource Services Manager N/A

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Page 32 Item No.10

PART I

South Lakeland District Council CABINET Meeting Date: 24 th July 2013 Report Author: Caroline Leigh, Economic Development and Asset Group Manager Tony Whittaker, Housing Strategy and Delivery Manager Portfolio: Cllr Graham Vincent, Health and Wellbeing Cllr Jonathan Brook, Strategic Growth Report from: Michael Keane, Assistant Director Strategic Planning Wards affected: Grange South Key Decision: KD15/2013 Key Decision 14 TH June 2013 Notice: BERNERS CLOSE, GRANGE-OVER-SANDS UPDATE AND AWARD OF CONTRACT FOR BERNERS POOL DEMOLITION 1.0 PURPOSE OF REPORT 1.1 This report is presented to Cabinet to provide an update on the progress of the development project at Berners Close, Grange-over-Sands and seek authority to award the contract for the demolition of Berners Pool. 2.0 RECOMMENDATIONS It is recommended that Cabinet:- (1) Approve the actions and alterations to the site plan (Appendix 1) as detailed in the report; and (2) approve the award of the contract for the demolition of Berners Pool to the supplier identified in the Part II Appendix 2 report. 3.0 BACKGROUND 3.1 At Cabinet on the 19 th September 2012 and Council on the 27 th September 2012 it was agreed to proceed with a project for dealing with a development site at Berners Close, Grange-over-Sands.

Page 33 3.2 At the meetings it was agreed that the Council would work on developing a scheme for affordable homes to be built in partnership with Grange Town Council (GTC) and funds from the Homes and Communities Agency (HCA). In order to accommodate this it was agreed that the former Berners pool building was to be demolished. 3.3 It was also agreed that a small element of the site would be sold on the open market for housing to contribute towards a Heritage Lottery Fund matching fund bid for Grange Lido. 4.0 RESEARCH AND CONSULTATION 4.1 Since the Cabinet and Council meeting in September 2012 a project board has been set up and this meets on a monthly basis. The member of the board are Cllr Graham Vincent, Cllr Jonathan Brook, Cllr Tom Harvey, Cllr Andrew Gardiner, Clerk to Grange Town Council, SLDC officers from Economic Development, Housing, Finance, Legal, Planning and Development Plans and the Homes and Communities Agency (HCA). 4.2 As SLDC is providing a long lease to GTC for the affordable homes site, GTC have been through a procurement process to appoint the affordable homes provider. This is Two Castles Housing Association (TCHA) and they are also attending the project board meetings, along with their architects and development partner. 4.3 As part of the consultation on the scheme, GTC, TCHA and SLDC have carried out a public consultation at Victoria Hall in Grange about the affordable homes and open space element of the project. This was well attended with over 200 people attending the event. The majority of people attending were in favour of developing the site for affordable housing. 5.0 PROPOSAL 5.1 Since the Cabinet and Council meetings in September 2012 a scheme for the site has been developed and the proposed land split for the site can be found in Appendix 1, which has altered slightly from the previous cabinet report. It is proposed there will be in the region of 40 to 45 affordable homes on site C, along with an open space, site D. There will be a footpath through the sites C and D to connect sites A and B to Clare House Lane and the bridge to the promenade. 5.2 It is proposed that the car park and bring site will remain on site A. Once the drainage scheme for site C has been confirmed, site B will then be advertised to be sold on the open market. 5.3 The previous Cabinet report stated that the affordable homes would be split between sites A and C. However further consultation and assessment has led to the conclusion that the affordable homes would be best delivered on a single site and that this would enable sufficient car parking and coach parking for future proposed redevelopment of the Lido. 5.3 Cabinet resolved on the 19 th September 2012, amongst other matters, that the Berners Pool on Site C is to be demolished. The building has failed in performance and has significant design defects which mean that it has been uneconomical to restore or find alternative uses for the building. A formal tender process has been followed for the demolition of Berners Pool on Site C using the

Page 34 CHEST procurement system. It is proposed that the tenderer identified in the Part II Appendix 2 report should be appointed to carry out the demolition. Please note in accordance with Section 100B(2) of the Local Government Act 1972, copies of this appendix are excluded from inspection by members of the public as it contains information as described in Schedule 12A of the act, as amended by the Local Government (Access to information) (Variation) Order 2006, as follows – namely information relating to the financial or business affairs of a particular person (including the authority holding that information) (Paragraph 3). 5.4 A tender process on the CHEST has also been followed for the appointment of a Heritage Lottery Fund consultant for the stage 1 bid to devise a scheme for the Lido on site E. The winning contractor is Neo Now and Partners and they will be working on the application to be submitted at the end of the year. 5.5 The GP surgery on site F is being delivered by the General Practice Investment Corporation Limited (GPI). The lease has been completed and work has started on site. 6.0 ALTERNATIVE OPTIONS 6.1 The Council could sell the entire site on the open market for a capital receipt. Planning policy would require that 35% of any new homes built are affordable. This option is not recommended as this does not maximise the delivery of new affordable homes which is a priority for the Council. 6.2 The Council could decide not to award the contract for the demolition of Berners Pool however this would result in the building further deteriorating into a dangerous condition and not allow for the future development for the site. 7.0 NEXT STEPS 7.1 The Council will continue to work in partnership with GTC, TCHA and HCA to devise a flagship housing scheme, with a planning application for the affordable homes being submitted by August 2013. 7.2 Once the drainage scheme has been finalised site B will be marketed and a scheme will be developed for an improved car and coach park. 7.3 Work will commence on the stage 1 HLF bid for the Lido and will be submitted by the end of this year. A public consultation will commence shortly on the options for the Lido site. 8.0 IMPLICATIONS 8.1 Financial and Resources 8.1.1 It was agreed by Council that the capital receipt for the long lease and sale of sites B, C, D and F are ring fenced for the necessary infrastructure costs, the cost of the demolition of Berners Pool and for match funding for a successful HLF bid for the Lido. 8.2 Human Resources 8.2.1 Not applicable.

Page 35 8.3 Legal 8.3.1 Terms and conditions of the land sales and leases will be subject to delegated powers and legal agreements drawn up between the parties.

8.3.2 In normal circumstances the disposal of surplus Council owned property by the grant of leases in excess of seven years for less than best consideration (generally market value) would contravene S123 of the Local Government Act 1972. Also the introduction of restrictive covenants, such as restricting the use of land to artificially drive down the disposal value would also be a contravention of that Act. However, under the General Disposal Consent (England) 2003 it is permissible to make disposals at less than best consideration if those disposals contribute to the social, economic and environmental well-being of the area. Such discounts on the disposal price must not exceed £2M in each individual case. 8.3.3 Agreement in principle has already been given by Cabinet to the disposal of sites B, C and D. However Delegate Executive Decision reports for these site will set out a more detailed analysis of any undervalue and the associated social, economic and environmental benefits. There is no prospect of an undervalue in relation to any of the sites individually exceeding £2M. 8.3.4 The documentation for the contract for the demolition of Berners Pool will be dealt with by Legal Services. 8.4 Social, Economic and Environmental Impact 8.4.1 The affordable and market housing, car park and redeveloped Lido will make a significant positive contribution towards the District’s social and economic wellbeing. It will provide much needed affordable housing to local people in housing need. The environmental impact is considered at the planning application stage. 9.0 RISK ASSESSMENT Risk Consequence Controls required GTC withdrawing from It will not be possible to Engage fully and meet the process pursue the community regularly with GTC. led funding route Planning permission for The scheme cannot be Public consultation has the site is refused developed already been undertaken and the scheme was received positively. Ensure work with partners and planning officers continues. The HCA funding bid is The affordable homes Continue to engage unsuccessful will not be delivered closely with the HCA. The HLF application will The Lido will remain Specialised consultants not be successful for the derelict are now employed to Lido deliver this element The development site The affordable and open MP and officers have drainage scheme is not market homes scheme already engaged with approved by Network will not be delivered Network Rail to seek Rail approval of the scheme. Work will continue on this.

Page 36 10.0 EQUALITY AND DIVERSITY 10.1 The new affordable homes will be sold/let on the basis that this does not discriminate against any individual. 11.0 LINKS TO THE CORPORATE PLAN AND PERFORMANCE INDICATORS 11.1 Housing – providing homes to meet need 11.2 Economy – creating opportunities for economic growth 11.3 Culture & Wellbeing – improving our communities health and wellbeing 11.4 Environment – enhancing our environment 12.0 CONCLUSION AND EXPECTED OUTCOMES 12.1 The proposal will enable the Council, in partnership with GTC to deliver a community led project to deal with a problem development site in Grange town centre. This will provide 40 – 45 affordable homes and make progress on the future options for the Lido. APPENDICES ATTACHED TO THIS REPORT Appendix No. 1 Revised Site Plan Appendix 2 Part II Appendix CONTACT OFFICERS Caroline Leigh, Economic Development and Asset Group Manager – [email protected] Tony Whittaker, Housing Strategy and Delivery Manager – [email protected] BACKGROUND DOCUMENTS AVAILABLE Cabinet Report – 12 th September 2012 – Minute CEX/64 Council Report – 27 th September 2013 – Minute C/57 TRACKING Assistant Portfolio Solicitor to the SMT Scrutiny Director Holder Council Committee 26/06/2013 26/06/2013 27/06/2013 Executive Committee Council Section 151 Monitoring (Cabinet) Officer Officer 26/06/2013 27/06/2013 Human Resource Services Manager

Page 37 Note – In accordance with Section 100B(2) of the Local Government Act 1972, copies of this report are excluded from inspection by members of the public as the report contains information as described in Schedule 12A of the Act, as amended by the Local Government (Access to Information) (Variation) Order 2006, as follows:- - Information relating to the financial or business affairs of any particular person (including the authority holding that information). (Paragraph 3)

Page 38 BERNERS CLOSE, GRANGE-OVER-SANDS UPDATE AND AWARD OF CONTRACT FOR BERNERS POOL DEMOLITION – APPENDIX 1 PURPOSE OF APPENDIX 1 The purpose of this Appendix is to provide a revised site plan:

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Page 40 Item No.11 PART I

South Lakeland District Council CABINET/ COUNCIL Meeting Date: Cabinet: 24 July 2013 Council: 25 July 2013 Report Author Helen Smith, Financial Services Manager Portfolio: Councillor David Evans, Finance Portfolio Report from: Assistant Director Resources & S151 Officer Wards affected: Not applicable Key Decision: Not applicable Key Decision Not applicable Notice: 2012/13 FINAL ACCOUNTS 1.0 PURPOSE OF REPORT 1.1 This report shows the 2012/13 final Revenue and Capital Outturn positions for both the General Fund (GF) and the Housing Revenue Accounts (HRA) and the movements on reserves for 2012/13; all subject to audit. There are a number of request for carry forward of unspent estimates and additional income for both revenue and capital for consideration. A revised capital programme for 2013/14 – 2017/18 is proposed taking account of carry forwards and other requests for amendment. 2.0 RECOMMENDATIONS Cabinet is asked to recommend that Council:- 1) note the outturn figures and variance explanations set out in the report and appendices; 2) approve the contributions to and from reserves detailed in Appendix 2 3) approve the write-off of the loan to LIFE relating to Troutbeck Bridge pool (para 3.1.5); 4) approve the carry forwards listed in Appendix 3 and Appendix 6; 5) approve the draft Capital Programme in Appendix 7 and the funding of the Capital Programme in Appendix 8; 6) note the proposed use of capital receipt to fund the premium on loan repayment planned during 2013/14 (para 3.4.5);

Page 41 7) note the balances on reserves in Appendix 9 and request that officers prepare options to balance the Building Control Income Reserve. Council is requested to approve items 2) to 5) above

3.0 BACKGROUND 3.1 The 2012/13 Statement of Accounts (subject to Audit) was approved for issue by the Assistant Director (Resources) by the required statutory deadline of the 30 June 2012. These Accounts are now being externally audited and the outcome of that will be incorporated into the 2012/13 Annual Governance Report from the Audit Commission to be considered by the Audit Committee on the 24 September 2013. 3.0 PROPOSAL 3.1 General Fund Revenue outturn 3.1.1 Appendix 1 sets out the final revenue outturn figures and shows service expenditure and income variances against budget. Variance explanations are included where these are material. Overall the services show an underspend of £779k, slightly below the overall projected variance of £922k predicted in the latest (Quarter 3) Corporate Financial Monitoring report and is around 1.6% of gross service expenditure. Consideration of the impact of this increase on the Council’s financial position is being addressed in the review of the Medium Term Financial Strategy & Plan. 3.1.2 The main reasons for the overall variation in services can be summarised as follows: a. Income on services was £100k higher than budgeted, with additional income from development control (£100k) and car parking (£75k) but lower than expected income from Lake Windermere and building control. b. Overall there was an underspend of £163k on staffing budgets on top of reductions in staffing budgets as a result of the organisational review. There were additional redundancy costs, which have been met from the earmarking of part of the General Reserve. c. Higher net cost of the revenues and benefits service: overall £52k higher than budget on a budget for gross expenditure of more than £25m. d. The remainder of the underspend is taken up by other efficiencies that are individually less than £100k but that are shown in Appendix 1 3.1.3 The final position on service expenditure shows a reduced requirement of £779k. However this is not the final position on the General Fund working balance as a number of transactions are made to reflect statutory accounting practices, contributions to and from reserves and corporate interest payments and receipts, as shown in Appendix 2 . The net impact of these is an increase in the General Fund working balance of £1.14m from £4.03m to £5.17m. This is shown in the following table:

Page 42 Table One: Impact on General Fund Balance Description Variance £000 £000 Carry-forward requests (344) Other service variances (435) Total service variances (779)

Increased net interest receipts (136) Impact of Statutory practices (57) Net increase in contributions from reserves & working balances 41 HRA working balance transfer (212)

Total variations (1,143)

General Fund balance at 1 April 2012 (4,027)

General Fund balance at 31 March 2013 (5,170) Write-offs 3.1.5 A loan of £50k was made to Lakeland Initiative for Fitness and Excellence Ltd (LIFE) during 2009/10 relating to the running of Troutbeck Bridge swimming pool. Following financial difficulties LIFE went into administration in May 2011 and has now been formally dissolved. A provision for bad debt of £50k had previously been charged to the accounts. Council are now asked to approve the formal writing-off of this debt which has been reflected in the Statement of Accounts for 2012/13. Revenue Carry-forwards 3.1.6 Appendix 3 shows the requests from managers for carry-forwards of unspent estimates and additional income. The requests for carry-forward total £343.6k. All requests comply with the constitution which permits carry-forwards of up to 10% of the total gross budget for a service (excluding unplanned underspends) for use on specific items of expenditure which will have no on-going cost implications for subsequent years. Where a grant or contribution has been received for which there are no repayment conditions and the grant is unspent at the end of the financial year the manager can request the grant be carried forward. 3.2 Housing Revenue Account 3.2.1 Following the transfer of the housing stock to South Lakes Housing in March 2012 the Council has now received permission to close the HRA on 31 March 2013. 3.2.2 The balance on the Housing Revenue Account during the year reduced by £348.7k to £211.8k. This is less than the £533k anticipated in the budget and is mainly due to the requirement to charge a share of interest costs to the HRA, which had been budgeted in the General Fund. Effectively therefore the General Fund remains in the same position as budgeted for. Appendix 4 shows a summary of income and expenditure on the HRA for 2012/13. The balance at 31 March 2013 was transferred to the General Fund and its use approved within the 2013/14 budget for additional interest payments until debt is repaid

Page 43 3.3 Capital 3.3.1 Appendix 5 shows the Capital Programme approved at February 2013 and expenditure and funding for 2012/13. There was a minor underspend of £307.4k, most of which is requested to be carried-forward to 2013/14 onwards. However this does not mask the fact that the original Approved Capital Budget has been underspent by just over 50%. The largest variance from the Approved Capital Programme relates to the Vehicle replacement programme where the planned purchase of vehicles has been delayed until the kerbside recycling trial is complete. 3.3.2 There is a plan to commence work on the proposed Capital Programme for 2014/15 onwards earlier than in previous years. The way the business cases are put together for proposed and existing schemes will be more closely scrutinised before requesting that Council approve them as part of the Budget in February 2014. The aim will be to improve the profiling of such schemes. Capital Carry forwards 3.3.3 Appendix 6 shows the requests for carry forward of items within the capital programme and relate to projects that have either underspends or additional income received during 2012/13. 3.3.4 The largest request relates to the capital receipt from the sale of part of the Berners Close site at Grange over Sands. Council, at its meeting on 27 September 2012, approved part of the capital receipt from the sale of the medical centre site should be earmarked for the redevelopment of the former Outdoor Pool – Lido, the development of a new car park and other infrastructure costs as may be required to facilitate the development. It is estimated that £450k of the receipt will be required for these purposes. 3.3.5 Appendix 7 shows a revised Capital Programme for 2013/14 – 2017/18 including the requested carry forwards. 3.4 Other Capital Programme requests 3.4.1 The Draft Capital Programme incorporates three new requests for capital expenditure: a) Cabinet on 29 May 2013 approved a request for a new capital programme budget to be approved by Council for a contribution of £200,000 to Lakeland Arts Trust towards the redevelopment of the Windermere Steamboat Museum in 2014/15. b) Two s106 agreements have been approved: one relating to Tram Lane, Kirkby Lonsdale for £500k and one relating to a site in Lupton for £40k. Since these monies are ring-fenced for affordable housing, corresponding expenditure amounts have been included in the draft Capital Programme under the Site Assembly Fund project. Initially the only proposed expenditure is a contribution of £167.4k towards affordable housing development at Binfold Croft, Kirkby Lonsdale in 2013/14. 3.4.2 The Council’s Economic Development and Corporate Asset Group Manager has advised that there will be a delay in the completion of the re-roof at Castle Dairy, Kendal due to the lead-in times for the acquisition of materials. Therefore it is proposed that 75% of the approved programme sum is moved from 2013/14 to 2014/15. 3.4.3 Appendix 8 shows the actual capital income for 2012/13 compared to estimates and the suggested funding of the Draft Capital Programme in Appendix 7. As

Page 44 well as the capital receipt from the sale of part of the Berners Close site at Grange over Sands there were additional capital receipts relating to the housing transfer: a) Estimated costs of the housing transfer were deducted from the capital receipt in 2011/12; some of these estimated costs were not spent so the capital receipt has increased by £118.7k; b) Under the VAT shelter agreement the Council receives 50% of VAT recovered; for 2012/13 this was £259.6k; c) Following the Government’s changes to Right to Buy discounts, South Lakes Housing sold 19 properties: the Council is entitled to a share of the receipt and in 2012/13 this was £804k. The capital programme will be fully reviewed as part of the annual budget process to ensure it meets the Council plan priorities, is affordable and is deliverable. 3.4.4 At the time of the housing transfer it was intended to repay the element of debt attributable to the Housing Revenue Account. Due to lower than expected long- term interest rates the premium on repayment was higher than expected. It is now expected the repayment of debt will occur in 2013/14. Appendix 8 shows the proposed use of capital receipts and the remaining balance on the HRA Major Repairs Reserve to fund the premium, currently estimated at £1.79m. The premium varies depending on long-term interest rates and the repayment will be timed to attempt to minimise the premium payable. 3.5 Reserves 3.5.1 Appendix 9 summarises the balances on the Council’s reserves and working balances for 2012/13 to 2017/18. Appendix 2 shows the detailed movements on reserves and the comparisons with budgeted movements for 2012/13. Council approval is needed for movements to and from reserves. 3.5.2 The variances are: a) The approved revenue contribution for the purchase of the new patrol boat has been added to the contribution to the Fund of Revenue Monies for Capital Purposes and then used to fund the Capital Programme. There were two items in the capital programme where the expenditure is revenue in nature: these amounts have been de-capitalised and this contribution to reserves has been reduced by the same amount. b) Any monies from the additional income from second homes discounts not spent on revenue have been transferred to the Second Homes Income Reserve (£743.1k). Most of this has been used to fund the Capital Programme (£617.9k). c) The approved budget for 2012/13 assumed all the income from the New Homes Bonus would be spent on new projects. Bids are still being received and evaluated so the whole amount of the grant received has been transferred to the New Homes Bonus Reserve. d) The internal streetcare contract has realised net expenditure savings and additional income of £255.7k after allowing for statutory pension adjustments; the £255.7k has been transferred to the Waste Contract Reserve. e) Council approved the earmarking of £350k for the one-off costs of the organisational review. The actual costs for 2012/13 were £301.9k; f) The LABGI reserve contribution towards the costs of a Project Officer were slightly higher than budgeted, mainly due to incremental progression and increased pension contribution rates.

Page 45 g) Council, in December 2011, approved a contribution of £60k from the LABGI Reserve towards the costs of the Highgate redevelopment. h) During 2011/12 the Council received a grant from Government towards potential one-off costs associated with the local land charges service. This funding was placed in the Planning Development Grant (PDG) Reserve. However, a provision has now been set up for the land charges potential costs and the £52.3k of grant funding has been moved from the PDG Reserve. The balance on the Local Land Charges Income Reserve has also been moved to the new provision. i) The Council has been running a programme of support to businesses in Kendal funded from the Kendal Employment Development Fund for several years. Expenditure in 2012/13 was £13.6k j) Cabinet, in August 2012, approved some use of the Local Arts Strategic Partnership Reserve; the actual spend was £54.9k 3.5.3 It should be noted that the Building Control income reserve now has a negative balance of over £350k. The reserve is the accumulated surpluses and deficits on the chargeable element of the building control service and should break-even over a three-year period but due to the slow-down in construction, income has been lower than expected. Current estimates indicate that it is unlikely the deficit will be recovered over the following two-years. Officers should be required to examine the options for balancing this reserve. 4.0 ALTERNATIVE OPTIONS 4.1 Cabinet or Council could amend or refuse the requested carry-forwards, write- off, movements to and from reserves and amendments to the capital programme. This is not recommended, as the proposals are regarded as the most appropriate option when considered against the Medium Term Financial Plan and Council Plan priorities. 5.0 NEXT STEPS 5.1 The MTFP has been updated to reflect the final outturn and is included in the report elsewhere on this agenda, 5.2 The budgets will be updated in the ledger and close monitoring will be carried out and reported to the future relevant committee meetings and Council. 5.3 The Statement of Accounts is being audited and the final position will be reported to the Audit Committee on 23 September 2013. 6.0 IMPLICATIONS 6.1 Finance and Resources 6.1.1 Included in the report. 6.2 Human Resources 6.2.1 Not applicable. 6.3 Legal 6.3.1 Not applicable. 6.4 Social, Economic and Environmental Impact 6.4.1 Not applicable.

Page 46 7.0 RISK ASSESSMENT Risk Consequence Controls required Recommended changes Some commitments and Understanding of the not approved. corporate priorities not reasons for the changes. delivered due to insufficient resources. Statement of Accounts approved on 28 June 2013 for audit would not reflect final outturn, leading to material errors

8.0 EQUALITY AND DIVERSITY 8.1 Not applicable. 9.0 LINKS TO THE COUNCIL PLAN AND PERFORMANCE INDICATORS 9.1 Each element of the Revenue Budget and Capital Programme is considered in the light of how the initiatives meet the priorities of the Council prior to being referred to Cabinet and Council as part of the Budget Process. 10.0 CONCLUSION AND EXPECTED OUTCOMES 10.1 Adoption of the report will contribute to the outcome of the audit of the Statement of Accounts. 10.2 The 2013/14 Revenue Budget can be updated for the final accounts process to ensure the priorities of the Council are delivered. APPENDICES ATTACHED TO THIS REPORT Appendix No. 1 General Fund Expenditure and Income Variances 2012/13 by service 2 General Fund Expenditure and Income Variances 2012/13 summary 3 Requested Revenue Carry Forwards 2012/13 4 Housing Revenue Account Expenditure and Income 2012/13 5 Capital Expenditure 2012/13 6 Requested Capital Carry Forwards 2012/13 7 Draft Capital Programme 2013/14 to 2017/18 8 Capital Income and Financing 2012/13 to 2017/18 9 Reserves and Working Balances 2012/13 to 2017/18

CONTACT OFFICERS Helen Smith, Financial Services Manager, [email protected], 01539 793147

Page 47 Shelagh McGregor, Assistant Director Resources, [email protected], (01539) 793112 BACKGROUND DOCUMENTS AVAILABLE Corporate Financial Monitoring Reports: Quarter 1: http://sldc-modgov:9070/documents/s3000/Q1%20Corporate%20Finance%20Monitoring%20Covering%20Report.pdf Quarter 2: http://sldc-modgov:9070/documents/s3668/Q2%20Corporate%20Financial%20Monitoring%20Cover%20Report.pdf Quarter 3: http://sldc-modgov:9070/documents/s4195/Q3%20201213%20CFM%20covering%20report.pdf

TRACKING Assistant Portfolio Solicitor to the SMT Scrutiny Director Holder Council Committee 18/6/13 19/6/13 18/6/13 18/6/13 N/A Executive Committee Council Section 151 Monitoring (Cabinet) Officer Officer 24/7/13 N/A 25/7/13 My report 18/6/13 Human Resource Services Manager N/A

Page 48 General Fund Expenditure and Income Variances 2012/13 by Service Appendix 1 Carry Working Expenditure Income Overall Projected Actual forward Commentary on major variances Budget Variance Variance Variance Qtr 3 requested £000 £000 £000 £000 £000 £000 £000 Resources ECL Legal 7.3 0.0 (7.8) 0.5 (7.3) EFS Financial Services 36.3 0.0 (33.0) (3.3) (36.3) (30.0) There was a £20k saving on staff costs following restructuring with a further £10k due to additional 'right to challenge' grant from central government and a number of smaller variances within procurement. ERA Internal Audit 0.6 0.0 (0.6) 0.0 (0.6) ERE Asst Dir Resources (3.0) 0.0 3.0 0.0 3.0 EXC Management Team (9.2) 0.0 9.2 0.0 9.2

ERB Revenues and Benefits 4.1 0.0 17.7 (21.8) (4.1) GBN Council Tax Benefits 229.8 269.2 (27.7) 67.2 39.5

GBT Housing Bens Local Scheme 5.3 15.5 10.5 (0.2) 10.3 Taken together, Revs and Bens is £52k higher than the GFN NNDR Cost of Collection (13.5) (21.0) (6.1) (1.3) (7.4) (25.0) (25.0) budget. This is judged to be within acceptable tolerance give Page 49 GFT Council Tax Cost Collect 422.9 392.2 2.6 (33.3) (30.7) the gross expenditure of >£25m. GHX Rent Rebates 15.2 16.2 144.7 (143.6) 1.1 GRA Rent Allowances 82.4 126.2 275.8 (231.9) 43.9 GRB Discretionary Housing Bens 0.0 0.0 (8.7) 8.7 0.0 GRD Discretionary Rate Relief 59.5 59.7 0.2 0.0 0.2

GFC Contingency Provision 0.0 0.0 0.0 0.0 0.0 GFI Corporate Finance 15.2 13.6 (1.6) 0.0 (1.6) GFS Unapportionable PensionAdj 260.7 230.5 (30.1) 0.0 (30.1) (33.0) This relates to a £30k one off saving due to reduced recharges from the Greater Manchester pension fund. GGT Subscriptions Grants 18.8 18.2 (0.6) 0.0 (0.6)

GSE District Special Expenses 42.3 47.6 (0.7) 6.0 5.3 GTH Other Items 27.5 35.1 (3.3) 10.9 7.6 (20.0) The movement in the projection since qtr 3 relates to £16k charge for the general bad debt provision and £10k of costs linked to office moves. GTV Bank Charges 137.5 157.3 25.3 (5.5) 19.8 This is mainly due to increased fund management fees due to the increased cash balances held by the Council. In addition, general bank charges were also higher than anticipated.

GTW Audit and Inspection 108.0 96.6 (11.4) 0.0 (11.4) (20.0) Fees in year slightly higher than expectation but still showing £11k less than budget due to reduced fee scales and change to new provider. Total Resources 1,447.7 1,456.9 357.4 (347.6) 9.8 (128.0) (25.0) Carry Working Expenditure Income Overall Projected Actual forward Commentary on major variances Budget Variance Variance Variance Qtr 3 requested £000 £000 £000 £000 £000 £000 £000 Policy and Performance ECF AD Policy and Performance (2.8) 0.0 2.8 0.0 2.8 ECH Human Resources (9.2) 0.0 10.2 (1.0) 9.2 (40.0) (40.0) The costs include £67k of redundancy pay which is funded from reserves (see VGS34 below). Allowing for this, the variance is £58k lower which mainly relates to the training budget £40k, additional training fee income and casual staff savings. The training budget is subject to a carry forward request. ECU Customer Services (34.0) 0.0 24.0 10.0 34.0 The income variance relates to anticipated contributions that were not achieved (£10k). The expenditure variance partly relates to redundancy costs which are funded from reserves and other costs which were greater than projected on vacancy savings and pension contributions (£22k).

EDM Democratic and Member Services (6.5) 0.0 6.5 0.0 6.5 ERI Information Services 51.9 0.0 (52.8) 0.9 (51.9) (12.0) (47.7) Although work has started on upgrading the telephony

Page 50 system and content management system (website), £48k is subject to a carry forward request as completion has fallen into 13/14. ERP Printing and Graphic Design (12.1) 0.0 10.0 2.1 12.1 Over-accrued £4k click charge expenditure (ie charge per page printed) plus additional printing required during the year.

EXS Policy and Performance 47.0 0.0 (47.0) 0.0 (47.0) (70.0) (11.8) There is £46k of redundancy pay in this cost centre to be funded from reserves. Adjusting for this, the variance is £93k lower than the budget. £70k of this relates to senior staff restructuring agreed after the 2012/13 budget was set. These savings are recurring and built in to the 2013/14 budget as part of the organisational review. £12k is also anticipated to be unspent relating to access to services budgets to support One Stop Shop signage, uniforms and IT links; this will be subject to a carry forward request. There are also a number of smaller areas where expenditure was lower than budget.

GCA Corporate Administration 1,400.2 1,401.8 2.2 (0.7) 1.5 GCC Corporate Communications 153.6 197.5 26.0 17.9 43.9 15.0 Within this cost centre is redundancy pay funded from reserves. Also £15k is the non achievement of an agreed saving where it was hoped that the cost of the communications manager could be shared, this has not been possible. Of the remaining £16k, £10k is explained by additional spend on advertising including two Power Up Your Community campaigns. Carry Working Expenditure Income Overall Projected Actual forward Commentary on major variances Budget Variance Variance Variance Qtr 3 requested £000 £000 £000 £000 £000 £000 £000 GCD Partnerships and Communities 492.4 426.5 (61.7) (4.2) (65.9) (57.6) (61.0) This variance mainly relates to the older persons programme and a carry forward request has been made for £55k to deliver this scheme in 2013/14 with a further £6k for the Lakes LAP to fund the Broadgate play area in Grasmere.

GCG Community Grants 101.9 81.4 (20.4) 0.0 (20.4) (20.0) (20.0) This budget is demand led and there were no more bids in the final quarter. The remaining £20k is subject to a c/f request to fund the Tour of Britain race. GCX Corporate Management 48.8 48.8 0.0 0.0 0.0 GEL Elections 125.3 143.4 19.3 (1.2) 18.1 District elections overspend £17k due to increased postage costs and a larger number of postal votes. GEM Emergency Planning 71.9 57.7 (14.2) 0.0 (14.2) (16.0) (14.0) Expenditure was £14k lower than budget due to a County Council rebate on previous over charges. A carry forward request has been made for a one-off disaster recovery project in partnership with IT. GER Electoral Registration 148.9 153.3 6.1 (1.7) 4.4 GES SLDC Shared Services 0.0 0.0 0.0 0.0 0.0 GMM Members 417.6 405.6 (11.6) (0.5) (12.1) £8k underspend on consultancy, software and unclaimed Page 51 Members' allowances. GMY Safer Stronger 33.5 33.5 0.0 0.0 0.0 GOP Older People Programme 23.4 6.3 (17.1) 0.0 (17.1) (15.0) £15k underspend has been allocated by the Older People's Programme Board to deliver "One Contact South Lakeland 50+" grants in 2013/14; this is subject to a carry forward request. GPR Consultation 41.8 33.4 (8.4) 0.0 (8.4) GVR Chairmn Allow Civic Hosp 13.6 5.6 (5.6) (2.4) (8.0) GXW Carbon Change Prog Savings (65.0) 0.0 65.0 0.0 65.0 This is a corporate savings target which has been met within the car parking section. Total Policy and Performance 3,042.2 2,994.8 (66.7) 19.2 (47.5) (200.6) (209.5) Carry Working Expenditure Income Overall Projected Actual forward Commentary on major variances Budget Variance Variance Variance Qtr 3 requested £000 £000 £000 £000 £000 £000 £000 Strategic Planning ECC Strategic Planning Admin 24.5 0.0 (21.9) (2.6) (24.5) This variance relates to a number of areas where spend was below budget, including staff salaries and NPS property works. ESE AD Strategic Planning (3.4) 0.0 3.4 0.0 3.4 EUR AD Community Inv and Dev 69.8 0.0 (69.4) (0.4) (69.8) (74.0) This relates to senior staff restructuring agreed after the 2012/13 budget was set. These savings are recurring and built in to the 2013/14 budget as part of the organisational review. This is partly offset by a number of smaller expenditure variances. GBC Building Control 251.8 303.3 (31.0) 82.5 51.5 50.0 Income was £80k lower than budget, linked to the wider economy. This was partly offset by vacant posts which were £20k lower than budget and £10k less expenditure than anticipated on engineers costs. GCB Citizens Advice Bureaux 77.9 76.4 (1.5) 0.0 (1.5) GCV Conservation Environment 74.5 80.7 0.8 5.4 6.2

Page 52 GDC Development Control 417.3 267.6 (20.1) (129.6) (149.7) (50.0) Vacant posts led to £50k less expenditure than budgeted. There was additional, demand led income of £100k due to a number of high-value developments, e.g. Sainsbury's, Robinson's, Oxenholme Road etc. On top of this there was additional HPDG income to fund the expenditure overspend relating to arboricultural work (£25k on both expenditure and income). GDS Dangerous Structures 45.1 6.4 (31.8) (6.9) (38.7) (25.0) (20.0) Dangerous structures work was lower than budget mainly due to delayed cost of Fountain Brow wall repair works; there was also some additional demand led inspection fee income. £20k is subject to carry forward request to complete further wall works. GED Economic Development 262.2 284.9 31.2 (8.5) 22.7 The additional expenditure on this code is fully funded from economic development/LABGI reserves. GEN Enabling Role 678.8 695.8 17.0 0.0 17.0 This relates to a £15k budget adjustment on staff costs where a saving was incorrectly applied to this cost centre. GEV Events 116.8 146.7 33.5 (3.6) 29.9 This additional expenditure is funded from the Arts and Events reserve. GGV Grants To Voluntary Orgs 116.0 115.9 (0.2) 0.0 (0.2) GLC Local Land Charges 24.6 140.0 (5.2) 120.7 115.5 This relates to the setting aside of £125k provision for the potential cost of a national claim against local authorities for land searches fees. This is offset in full by a contribution out of the Land Charges reserve and the HPDG reserve. Carry Working Expenditure Income Overall Projected Actual forward Commentary on major variances Budget Variance Variance Variance Qtr 3 requested £000 £000 £000 £000 £000 £000 £000 GLP Local Plans 483.2 498.0 14.7 0.0 14.7 (20.0) The movement since the qtr3 projection is due to the timing of legal costs linked to the land allocations enquiry which was slightly above budget at year end. There is likely to be further cost incurred for the enquiry but these will be funded from the HPDG reserve. GMU Museum 126.0 124.0 (1.2) (0.8) (2.0) GNH New Homes (74.3) (68.3) 0.0 6.0 6.0 GPJ Town Centre Projects 3.2 2.8 (0.5) 0.1 (0.4) GPL Planned Maintenance 58.3 0.0 (58.3) 0.0 (58.3) This relates to the element of maintenance budget remaining at year-end after all accruals have been posted. GRM Kendal Regeneration Consultncy 2.6 9.6 19.1 (12.0) 7.1 This additional expenditure is funded from the economic development reserve. GRP Kendal Regeneration 61.9 44.1 1.0 (18.9) (17.9) (19.9) This variance relates to contributions due to other projects, such as the BID study and Kendal Food Festival; it is subject to a carry forward request. £2k of the expenditure is funded from reserves so there is £20k available to support the carry forward, if approved. GSH Second Home Discounts (417.5) (494.1) (76.6) 0.0 (76.6) (36.0) (33.0) The £76k lower than budget is due to half a vacant post, Page 53 £16k, plus a further £60k on draught proofing and housing grants. Of this, £33k is requested as a carry forward and the remaining balance has formed an additional contribution to the reserve. GSY Sundry Properties 77.9 58.2 0.2 (19.9) (19.7) This additional income is linked to rent reviews and rationalisation of the Council's asset base. GTF Town Centre Facilities 80.5 73.3 (7.2) 0.0 (7.2) GTM Town Centre Management 12.3 14.1 0.5 1.3 1.8 GTP Tourism Promotion 0.3 0.3 0.0 0.0 0.0 GUL Industrial Units Landlord (32.2) (40.9) 0.2 (8.9) (8.7) (10.0) This additional income is due to improved performance of the commercial property portfolio. GUT Indust Units Tenants 7.6 10.8 21.9 (18.7) 3.2 Total Strategic Planning 2,545.7 2,349.6 (181.4) (14.8) (196.2) (165.0) (72.9) Carry Working Expenditure Income Overall Projected Actual forward Commentary on major variances Budget Variance Variance Variance Qtr 3 requested £000 £000 £000 £000 £000 £000 £000 Neighbourhood Services EPX Offices 14.9 0.0 (10.9) (4.0) (14.9) (10.0) This is made up of a number of small variances, including £10k on vacant cleaning posts, with a net impact of £15k less expenditure than budgeted. EUN Community Services (37.5) 0.0 39.9 (2.3) 37.6 (16.0) This variance includes £51k of redundancy costs funded from reserves. The underlying variance of £13k lower than budget. This corresponds to document management/scanning costs relating to the transfer from Lalpac software to the CIVICA Flare system and is subject to a carry forward request for £16k. Although this is higher than the net underspend shown for EUN, there were uncontrollable increases to pension costs of £4k. GCK Car Parks (1,607.1) (1,819.7) (151.9) (60.7) (212.6) (50.0) £65k of this saving is offset against the £65k carbon reduction target. This leaves an underlying variance of £147k lower than budget. £22k of this related to vacant posts; £24k gritting and surfaces works; £25k electricity; £66k to one-off

Page 54 refunds relating to overcharging on water utilities; there was also £75k more income generated than the budget - this is judged to be within acceptable tolerance against a gross income budget of >£4m - due to on-street pay and display penalties which is part offset by a corresponding income shortfall in GGK. GGK Decriminalised Parking Enf 13.1 74.5 (63.1) 124.5 61.4 50.0 The variances relate to changes in the service; SLDC no longer performs on-street enforcement for the County. Although there have been £57k staff savings, this is more than offset by £124k reduced enforcement income. GCL Community Leisure 27.9 46.7 18.6 0.2 18.8 This additional expenditure relates to £23k feasibility study which was reversed from the Berner's Close capital scheme. This is funded by a reduction to the planned £100k contribution to the General Fund contribution to the capital programme. GCM Cemeteries 92.1 83.2 (19.0) 10.1 (8.9) An underspend on grave-digging costs is offset by a corresponding reduction in internment fees. GCN Conveniences 1,114.9 1,051.3 (62.1) (1.6) (63.7) (35.0) This is linked to assumed costs for third party operation of toilets in Milnthorpe which are still under SLDC management, so the £25k third party contribution is not required, but a £15k contribution to White Platts reduces the underspend to £10k. There is also £30k less spend than budgeted on the community toilet scheme as this is yet to be fully rolled-out district wide; and £23k of cancelled orders.

GCP Coast Protection 26.0 25.4 (0.6) 0.0 (0.6) GCS Caravan Site (102.0) (109.5) 33.8 (41.3) (7.5) GCZ Contaminated Land 45.2 47.3 2.1 0.0 2.1 Carry Working Expenditure Income Overall Projected Actual forward Commentary on major variances Budget Variance Variance Variance Qtr 3 requested £000 £000 £000 £000 £000 £000 £000 GEH Empty Homes 0.0 0.0 1.3 (1.3) 0.0 GFD Food Safety 335.3 370.1 31.2 3.6 34.8 (16.2) There are £43k of redundancy costs in this cost centre. These are funded from reserves and so the underlying variance is £9k. In addition there is a further £8k relating to uncontrollable pension costs meaning the £16k carry forward request is within the savings on controllable budgets.

GFW Flood Warning 10.6 6.3 (4.2) 0.0 (4.2) GGR Glebe Road Recreation Ground (9.4) 8.1 3.1 14.4 17.5 15.0 This relates to reduced income from the site as it was only fully operational for part of the year. GHL Town View Fields Hostel 30.6 11.2 (13.4) (6.0) (19.4) GHM Homelessness 222.0 245.4 8.9 14.5 23.4 (75.0) There is £30k of redundancy cost in this cost centre, funded from reserves. This brings the underlying variance to £7k lower than budget. Although previously anticipated to be £75k below budget, £60k was vired to cover the cost of the car parking legal settlement. This variance was due reduced demand for B&B accommodation. GHN Housing Renewal Grants 314.7 312.5 (2.2) 0.0 (2.2) Page 55 GHP Noise Air Water Pollution 200.9 204.3 5.2 (1.8) 3.4 GHS Health Safety 162.9 167.3 4.4 0.0 4.4 GHT Housing Standards 113.6 89.5 (19.2) (5.0) (24.2) (15.0) Net expenditure was £24k below the budget by year end. This was mainly linked to a lack of demand for consultancy advice and enforcement activity. GHV Housing Advice 0.1 0.0 (0.1) 0.0 (0.1) GLD Land Drainage 131.4 129.5 (0.8) (1.1) (1.9) GLE Leisure Centres 1,050.3 1,027.8 7.9 (30.4) (22.5) (29.0) This mainly relates to a one-off VAT claim on leisure fees and charges. GLW Lake Windermere (585.8) (527.2) (4.1) 62.7 58.6 30.0 There is a £20k redundancy cost which is funded from reserves, and a £14 underspend on NPS design fees. The £33k income shortfall mainly relates to moorings, in addition a £26k charge relating to the out-standing encroachment debt has also been made based on the Service's estimated level of recovery. GMA Hackney Carriage Licences 38.3 21.7 (7.8) (8.7) (16.5) (35.0) Taken together, licensing codes were £40k lower than budget. This is due to both £23k of additional demand led income, staff savings of £6k and £9k less than anticipated on vehicle inspections. GMC Miscellaneous Licences 22.9 18.3 (4.1) (0.5) (4.6) GMD Licensing Act (107.3) (122.0) (3.5) (11.2) (14.7) GME Gambling Licensing (8.0) (12.9) (2.3) (2.6) (4.9) GMK Markets (34.8) (31.9) (6.0) 8.9 2.9 (15.0) This cost centre is on target at out-turn rather than £15k below budget due to virement of £7k to fund indoor market service contract. GOT Environmental Health Other 36.6 31.5 (6.2) 1.0 (5.2) Carry Working Expenditure Income Overall Projected Actual forward Commentary on major variances Budget Variance Variance Variance Qtr 3 requested £000 £000 £000 £000 £000 £000 £000 GPH Public Halls 756.6 788.8 38.6 (6.4) 32.2 Kendal town hall had a number of small savings coming to £10k lower than the budget. Coronation Hall was £32k above budget due to casual and agency staff costs. Grange Victoria Hall was £10k above budget due to increased contributions made to Grange Town Council. GHG Gen Fund Contrib to HRA 19.7 168.8 149.1 0.0 149.1 This relates to GF contribution to HRA open spaces. This was judged to be appropriate as part of the closedown of the HRA but is offset against the variance in GPK where the costs were previously coded. GPK Parks 952.8 716.9 (119.5) (116.4) (235.9) (65.0) (4.0) £149k of this is due to change in presentation of Parks costs into the HRA and the required contribution through GHG above. This leaves an underlying variance of £86k. This is due to the additional budget brought in from the HRA which has not been matched by the level of additional expenditure.

GRG Recreation Grounds 188.6 181.2 (6.8) (0.5) (7.3)

Page 56 GSN Street Furniture 17.0 14.4 (2.6) 0.0 (2.6) GTC Tourist Info Centres 65.2 40.4 (4.8) (20.0) (24.8) (25.0) TICs were £25k below budget, mainly due to reduced rental costs GTG Street Cleansing Client 1,405.2 1,402.2 0.4 (3.4) (3.0) GWC Waste Coll Disposal Client 1,163.6 1,151.0 (16.1) 3.4 (12.7) GDY SLDC Depots 2.2 0.4 (14.8) 13.1 (1.7) GWF Dog Control 28.6 27.0 1.2 (2.8) (1.6) GWK Kerbside Recycling Client 1,385.1 1,362.5 (2.0) (20.6) (22.6) Increased recycling credits for kerbside and leaf collections £30k. GWR Waste Recycling 95.6 61.8 3.5 (37.3) (33.8) (20.0) Increased bring-site recycling credits £34k. GWS Water Supply and Pollution 65.2 60.0 (0.4) (4.8) (5.2) STG Street Cleansing Contractor 159.2 16.0 (143.2) 0.1 (143.1) Taken together the waste, cleansing and recycling contractor was £234k below budget at year end. This is made up of £58k less expenditure on staff due to better management of agency, overtime and vacant posts; £32k less on transport costs (mostly cleaning machine hire and tyres); reduced running costs £102k (mostly reduced tipping charges of £74k); £21k less on leaf sweeper services; £42k additional cost for financing leased vehicles; additional contract income earned of £57k. STS Transport 1.1 0.0 (9.3) 8.2 (1.1) (150.0) SWC Waste Collection Contractor 0.0 0.0 0.0 0.0 0.0 SWK Kerbside Recycling -Contractor (144.1) (236.3) (79.1) (13.2) (92.3) Total Neighbourhood Services 7,674.0 7,103.8 (430.9) (139.2) (570.1) (429.0) (36.2)

Total General Fund Services 14,709.6 13,905.1 (321.6) (482.4) (804.0) (922.6) (343.6) GENERAL FUND BUDGET SUMMARY Appendix 2

2012/13 2012/13 2012/13 2012/13 Approved Working Actual Variance Comment Budget Budget £000 £000 £000 £000 Services by Assistant Director: Neighbourhood Services 6,752.2 7,674.0 7,103.8 (570.2) Strategic Planning 3,382.8 2,545.7 2,349.6 (196.1) Policy and Performance 2,449.3 3,042.2 2,994.6 (47.6) Resources 1,795.6 1,422.4 1,457.0 34.6 Service Expenditure 14,379.9 14,684.3 13,905.0 (779.3) For more details see Appendix 1

Financing Entries: Interest Payable 636.1 597.3 887.1 289.8 Interest on housing debt not repaid on transfer: recharged to HRA Interest & Investment Income (212.5) (232.3) (361.4) (129.1) Effect of Statutory and Proper Accounting Practices: Reversal of capital charges, REFCUS etc (2,574.2) (3,797.0) (3,796.4) 0.6 Minimum Revenue Provision 270.9 270.9 232.4 (38.5) Interest charged to Housing Revenue Account 0.0 0.0 (296.8) (296.8) Interest on housing debt not repaid on transfer Adjustments relating to Pensions 0.0 745.0 720.5 (24.5) Outstanding contribution to Cumbria Pensions for early retirement costs SLDC Expenditure 12,500.2 12,268.2 11,290.4 (977.8) Page 57

Support to Capital Programme 145.0 164.0 829.5 665.5 For more details see next page(s) Contributions to Reserves 390.0 1,089.5 1,447.0 357.5 For more details see next page(s) Contributions from Reserves (166.7) (212.5) (1,584.3) (1,371.8) For more details see next page(s) SLDC Budget 12,868.5 13,309.2 11,982.6 (1,326.6)

Less: Redistributed Business Rates (4,293.0) (4,497.0) (4,496.8) 0.2 Revenue Support Grant (87.2) (87.2) (87.2) 0.0 Council Tax freeze grant (405.8) (201.8) (203.8) (2.0) (Surplus)/Deficit on Collection Fund 20.4 20.2 27.0 6.8 Special Expenses chargeable to relevant Parishes (36.9) (36.9) (36.9) 0.0 Parish Precepts and Special Expenses 1,317.8 1,317.8 1,317.8 0.0 SLDC Council Tax incl Parishes & Special Expenses (9,433.8) (9,433.8) (9,434.0) (0.2) Surplus/Deficit for year (50.0) 390.5 (931.3) (1,321.8)

Phased increase in General Fund Working Balance 50.0 50.0 50.0 0.0 Use of GF Working Balance (carry-forwards from 2011/12) 0.0 (440.5) (440.5) 0.0 (Use of)/Addition to General Fund Working Balance 0.0 0.0 1,321.8 1,321.8 (0.0) 0.0 0.0 0.0

General Fund Working Balance at 1 April 2,279.0 4,026.9 4,026.9 0.0 Phased increase in General Fund Working Balance 50.0 50.0 50.0 0.0 Use of GF Working Balance (carry-forward from 2011/12) 0.0 (440.5) (440.5) 0.0 Transfer of HRA Working Balance 0.0 0.0 211.8 211.8 Contribution to / (Deduction from) Working Balance 0.0 0.0 1,321.8 1,321.8 General Fund Working Balance at 31 March 2,329.0 3,636.4 5,170.0 1,533.6 2012/13 2012/13 2012/13 2012/13 Appendix 2 Approved Working Actual Variance Comment Budget Budget £000 £000 £000 £000

SUPPORT TO CAPITAL PROGRAMME: Capital Expenditure met by transfers from: - LABGI 100.0 100.0 60.0 (40.0) - New Patrol Boat 0.0 19.0 19.0 0.0 - IT Replacement Reserve 45.0 45.0 32.6 (12.4) - Second Homes Income Reserve 0.0 0.0 717.9 717.9 145.0 164.0 829.5 665.5

CONTRIBUTIONS TO RESERVES: General Reserve 200.0 200.0 200.0 0.0 - Annual contribution

Fund of Revenue Monies for Capital Purposes 100.0 100.0 100.0 0.0 - Support to Capital Programme Fund of Revenue Monies for Capital Purposes 0.0 0.0 19.0 19.0 - Contribution for patrol boat Fund of Revenue Monies for Capital Purposes 0.0 0.0 (6.4) (6.4) - Amounts moved from capital: Ferry Nab

Page 58 Fund of Revenue Monies for Capital Purposes 0.0 0.0 (22.7) (22.7) - Amounts moved from capital: Berners Close

Second Homes Income Reserve 0.0 699.5 743.1 43.6 - Transfer of unspent discounts to Reserve

New Homes Bonus 0.0 0.0 68.3 68.3 - Transfer of unspent grant to Reserve

General Fund Properties Major Repairs Reserve 50.0 50.0 50.0 0.0 - Transfer of annual contribution

IT Replacement Reserve 40.0 40.0 40.0 0.0 - Support to Capital Programme

Waste Contract Reserve 0.0 0.0 255.7 255.7 - Transfer of in-year surplus 390.0 1,089.5 1,447.0 357.5 CONTRIBUTIONS FROM RESERVES: General Reserve 0.0 (20.8) (322.7) (301.9) One-off costs of organisational review

LABGI Reserve (5.0) (5.0) (5.0) 0.0 - Great North Swim LABGI Reserve (12.1) (12.1) (14.8) (2.7) - Fixed term Project Officer, Culture & Economy LABGI Reserve 0.0 0.0 (60.0) (60.0) - Contribution to Highgate redevelopment

IT Replacement Reserve (45.0) (45.0) (32.6) 12.4 - Replacement of IT equipment & software

Economic Development Fund (4.6) (4.6) (7.0) (2.4)

Planning Development Grant Reserve 0.0 0.0 (52.3) (52.3) - Land charges provision

Local Arts Strategic Partnership Reserve 0.0 (25.0) (54.9) (29.9) - Contribution to expenditure 2012/13 2012/13 2012/13 2012/13 2012/13 Appendix 2 Approved Working Actual Variance Comment Budget Budget £000 £000 £000 £000 Fund of Revenue Monies for Capital Purposes 0.0 0.0 (19.0) (19.0) - Support to Capital Programme

Second Homes Income Reserve (100.0) (100.0) (717.9) (617.9) - Support to Capital Programme

Kendal Employment Development Fund 0.0 0.0 (13.6) (13.6) - Kendal Business Start Up, shop fronts & BIDS study cost

Local Land Charges Income Reserve 0.0 0.0 (72.7) (72.7) - Contribution to Land Charges Provision Local Land Charges Income Reserve 0.0 0.0 (15.0) (15.0) - Transfer of in-year surplus

Building Control Fee Income Reserve 0.0 0.0 (196.8) (196.8) Offset deficit on fee income (166.7) (212.5) (1,584.3) (1,371.8) Page 59 Appendix 3

Requested Revenue Carry Forwards 2012/13

Service Ref Service Area Area (AD) £k Revised Outturn Comment Code

1 ERB Revenues and Benefits R (SMcG) 25.0 £84k of grant was received from Central Government to support system requirements linked to changes in Council Tax Benefit; £25k balance to be spent in 2013/14. 2 ECH Human Resources PP (SMcV) 40.0 Corporate training budget (SMT Training, and Cultural Change/Customer Engagement) delayed implementation following the organisational review. 3 ERI Information Services PP (SMcV) 47.7 To complete work which has already started on upgrading the Lync telephone system; upgrade of the Contact Centre system; web migration to replace the Content Management system.

4 EXS Policy and Performance PP (SMcV) 11.8 Funding to support proposed One Stop Shop signage, uniforms and IT links. 5 GCD Partnerships and Communities PP (SMcV) 61.0 Community partnership schemes £55k allocated for the following: targeted community switching campaign; research in to micro- energy popotential projects; Children & Young People projects; communtty safety developments; alcohol and health inititatives; One South Lakeland Board development; action plan development for partnership joint working. Lakes LAP to fund the upgrade of Broadgate Meadow play area in Grasmere £6k.

6 GCG Community Grants PP (SMcV) 20.0 Underspend to be used to fund the Council's contribution to the Tour of Britain cycling event entry. 7 GEM Emergency Planning PP (SMcV) 14.0 This underspend is due to a one-off County Council rebate on previous over charges. To be spent on upgraded Emergency Planning solutions, and development and implementation of the disaster recovery project in partnership with IT. 8 GOP Older People PP (SMcV) 15.0 Funding allocated for a one-off grant award by the Older People's Programme Board 9 GDS Dangerous Structures SP (MK) 20.0 Outstanding remedial works relating to wall repair at Rosemary Hill delayed due to consent negotiations and tendering process.

10 GRP Kendal Regeneration SP (MK) 19.9 External funding received from Kendal Town Council, CCC and Cumbria Tourism to be used to fund various projects and events: BIDS Study, Food Festival, Highgate, Kendal website, New Road and training for business. 11 GSH Second Homes Discounts SP (MK) 33.0 Implementation of service delayed due to re-organisation; improvement grant for draft proofing scheme and Handyperson scheme. 12 EUN Community Services NS (SR) 16.0 Document management/scanning costs relating to the transfer from Lalpac software to the CIVICA Flare system. 13 GFD Food Safety NS (SR) 16.2 Legal costs for the Station Car Park case, barrister reports and appearances, court dates set for August 2013. 14 GPK Parks and Open Spaces NS (SR) 4.0 Balance of residents funding contribution to complete the works on Kirkfield Play Area, Ambleside, and Archers Meadow.

343.6 Total Requested Revenue Carry Forwards

Summary by Assistant Director: £k Resources R 25.0 Policy and Performance PP 209.5 Strategic Planning SP 72.9 Neighbourhood Services NS 36.2 Total Requested Revenue Carry Forwards 343.6

The tests applied to Carry Forward Requests: 1. Is the carry-forward request above the deminimis level of £10,000? 2. Is the budget concerned ringfenced or earmarked grant? 3. Does the carry-forward concern a repeated request - how many years? 4. Is the carry-forward funded by reserves? 5. Is there a corresponding underspend against the specific budget ? 6. Is there a corresponding underspend in the Service Manager Area? 7. Is there a corresponding underspend in the AD area? 8. Is there a corresponding underspend across all Council Services?

Page 60 25/06/2013 South Lakeland District Council Appendix 4 Housing Revenue Account Outturn 2012/13 2012/13 2012/13 2012/13 Working Provisional Variance Comment Budget Outturn £000 £000 £000 EXPENDITURE Sheltered Housing 0.0 0.8 0.8 Supervision & Management - General 0.0 25.5 25.5 - Right to Buy Sales 0.0 0.3 0.3 - Special 0.0 133.7 133.7 Ground maintenance costs on areas retained, all charged to GF (see below) Housing Transfer - Cost of Transfer 0.0 (118.7) (118.7) Estimated cost charged against transfer receipt but not incurred Capital Charges - Interest 0.0 315.8 315.8 Interest payable on outstanding housing debt Capital Charges - Depreciation & Impairments 0.0 101.1 101.1 Repairs & Maintenance 0.0 5.4 5.4 Rents & Taxes 0.0 (0.5) (0.5) Housing Subsidy 0.0 (20.6) (20.6)

Page 61 Contingency 0.0 0.0 0.0 TOTAL EXPENDITURE 0.0 442.8 442.8

INCOME Gross Rents 0.0 0.0 0.0 General Fund Contribution to Open Spaces 0.0 (133.7) (133.7) Ground maintenance costs on areas retained Interest on Balances 0.0 (19.0) (19.0) Other Income 0.0 (1.5) (1.5) TOTAL INCOME 0.0 (154.2) (154.2)

DEFICIT FOR THE YEAR ON HRA SERVICES 0.0 288.6 288.6 ADJUSTMENTS BETWEEN ACCOUNTING BASIS AND FUNDING BASIS UNDER REGULATIONS Depreciation and Impairment of Assets 0.0 (58.6) (58.6) Contribution to Capital Receipts for costs of asset disposal 0.0 118.7 118.7 INCREASE/DECREASE IN WORKING BALANCE 0.0 348.7 348.7

Opening Balance 1 April (563.9) (560.5) 3.4 Addition to/(Withdrawal from) Balance 0.0 348.7 348.7 Transfer to General Fund 563.9 211.8 (352.1) CLOSING BALANCE 31 MARCH 0.0 0.0 0.0

25/06/2013 Capital Expenditure 2012/13 Appendix 5

Carry- GL 2012/13 2012/13 2012/13 Programme Spending by Project Variance forward Comments Approved Funding Feburary 2013 Actual Funding Code Approved Revised Actual request £000 £000 £000 £000 £000 £000 £000 Includes £60k funded by (20.0) Single Capital Pot (grant) (11.5) Single Capital Pot (grant) JNM51 Play Area Renewals 20.0 20.0 71.5 51.5 contribution 0.0 Contribution (60.0) Contribution JNM50 HRA Planned Maintenance 0.0 0.0 56.4 56.4 Accruals from 2011/12 0.0 (56.4) HRA Major Repairs Reserve KDP01 Ecclerigg Depot 150.0 150.0 145.8 (4.2) 4.2 (150.0) Single Capital Pot (grant) (145.8) Single Capital Pot (grant) KEP51 Public Conveniences (Upgrade And Hand Over) 570.7 420.7 324.8 (95.9) 95.9 (420.7) Single Capital Pot (grant) (324.8) Single Capital Pot (grant) (242.0)DFG grant (342.4)DFG grant Additional grant income received KGD21 Disabled Facilities Grants 641.8 362.0 547.2 185.2 55.0 0.0 Contribution (55.0) Contribution from CCC (120.0) 2nd homes fund (149.8) 2nd homes fund Commitments to be delivered in (32.2) Contribution KGS01 Affordable Housing Renovation Grants (AHRG) 743.5 360.0 126.8 (233.2) 81.6 (360.0) 2nd homes fund 2013/14 (94.6) 2nd homes fund KGT20 Site Assembly Fund For Affordable Housing 476.2 476.2 475.9 (0.3) Contributions received (476.2) 2nd homes fund (475.9) 2nd homes fund KIT27 Mobile Working 50.0 0.0 0.0 0.0 KIT90 IT Replacements 45.0 45.0 32.6 (12.4) (45.0)IT reserve (32.6)IT reserve KLH01 Replacement of lighting and seating Coronation Hall 50.0 50.0 49.6 (0.4) (50.0) LSVT receipt (49.6) LSVT receipt KLL14 Patrol Boat 19.0 19.0 18.9 (0.1) (19.0) Revenue monies (18.9) Revenue reserve KLL16 Rayrigg Meadow Public Jetties 18.0 18.0 19.2 1.2 (18.0) LSVT receipt (19.2) LSVT receipt KLL17 Ferry Nab Redevelopment Phases 1, 2 and 3 755.0 0.0 0.0 0.0 KLR22 Rothay Park Ambleside 0.0 0.0 (8.5) (8.5) Accruals from 2011/12 0.0 8.5 LSVT receipt

Page 62 Wet weather delayed KLR31 Nobles Rest 66.4 66.4 2.1 (64.3) 64.2 implementation of improvemenet (66.4) Earmarked capital receipt (2.1) LSVT receipt works 0.0 (6.4) LSVT receipt KLR52 Croftlands Play Area 0.0 0.0 12.7 12.7 Fire damage (6.3) Contribution KMR01 Grange Footbridges 8.2 8.2 0.0 (8.2) (8.2) Single Capital Pot (grant) 0.0 Single Capital Pot (grant) KPG01 Historic Building Grants 8.3 8.3 6.0 (2.3) (8.3) Single Capital Pot (grant) (6.0) Single Capital Pot (grant) Westmorland Shopping Centre Car Park To complete dectorating works, KPY38 373.4 73.4 (3.1) (76.5) 68.1 (73.4) Single Capital Pot (grant) 3.1 Single Capital Pot (grant) Refurbishment CCTV and equipment repairs KPY41 DDA Works, Various car parks 63.8 63.8 32.1 (31.7) 31.7 DDA access statements (63.8) Single Capital Pot (grant) (32.1) Single Capital Pot (grant) KPY42 Replace Car Park Pay Machines 300.0 300.0 308.4 8.4 (300.0) LSVT receipt (308.4) LSVT receipt KPY43 Rydal Road Car Park, Ambleside Works to Bridge 0.0 0.0 0.0 0.0 Feasibility works charged to KRE04 Grange Regeneration 37.2 37.2 8.2 (29.0) 6.3 (37.2) Single Capital Pot (grant) (8.2) Single Capital Pot (grant) revenue KRE04 Grange Regeneration - Berners Site 0.0 0.0 0.0 0.0 450.0 Earmarked from capital receipt 0.0 Single Capital Pot (grant) 0.0 Single Capital Pot (grant) KRE55 New Road Common 27.1 27.1 0.0 (27.1) 27.1 (27.1) Single Capital Pot (grant) 0.0 Single Capital Pot (grant) (104.2) CCC asset so CCC billed net of (100.0)CCC 0.0CCC KRE59 Highgate Public Realm Improvements 260.0 260.0 155.8 0.0 £100k CCC contribution (100.0) s106 agreement (95.8) Single Capital Pot (grant) 0.0 (60.0)LABGI (60.0)LABGI KSC91 Vehicle & Plant Programme 3,100.0 1,199.0 1,211.0 12.0 (1,199.0) Borrowing (1,211.0) Borrowing KXF51 Transformation Change - Access to Services 20.0 20.0 (2.5) (22.5) 22.5 Accruals from 2011/12 (20.0) Single Capital Pot (grant) 2.5 Single Capital Pot (grant) KXW21 Carbon Reduction Programme 224.0 224.0 220.2 (3.8) (224.0) LSVT receipt (220.2) LSVT receipt KEG33 Stockbeck Flood Scheme 0.0 0.0 89.8 89.8 Encroachment payment to CCC 0.0 (89.8) Single Capital Pot (grant) Total 8,027.6 4,208.3 3,900.9 (307.4) 906.6 (4,208.3) (3,900.9) Requested Capital Carry Forwards 2012/13 Appendix 6

Ref Code Service Area Area (AD) £k Comment

Expenditure Carry-forwards: 1KXF Access to Services PP (SMcV) 22.5 Signage project delayed pending decision on new SLDC logo.

New Road de-registration delayed pending outcome of Canal 2 KRE Economic Prosperity SP (MK) 33.4 Head, plus the balance of Grange Regeneration £6.3k after allowing for non capital items moved out to revenue. 3 KEP Public Conveniences SP (MK) 95.9 Required for the completion of works. 4 KDP Ecclerig Depot NS (SR) 4.2 For completion of works by contractor. Wet weather has delayed the implementation of improvement 5 KLR Nobles Rest NS (SR) 64.2 works. NPS to complete DDA access statements for each car park 6 KPY Car Parks NS (SR) 31.7 £31.7k Replace Pay Machines overspend £8.4k; WSC Pay on Foot

Page 63 7 KPY Car Parks NS (SR) 68.1 £76.5k to complete works for decorating, CCTV and equipment damage repairs. 8 KGS Second Homes SP (MK) 49.4 Commitments to be delivered in 2013/14. 369.4 Income Carry-forwards 9 KGD Diabled Facilities Grants SP (MK) 55.0 Additional grant income received from CCC. 10 KGS Second Homes SP (MK) 32.2 Contributions received towards future expenditure Capital receipt for sale of land at Berners site to be used to 11 KYR Capital Recepits SP (MK) 450.0 fund the redevelopment 537.2

906.6 Total requested Capital Carry Forward

Summary by Assistant Director: £k Resources R 0.0 Policy and Performance PP 22.5 Strategic Planning SP 715.9 Neighbourhood Services NS 168.2 Total 906.6

1 26/06/2013 Draft Capital Programme 2013/14 to 2017/18 Appendix 7

Carry- GL 2012/13 2012/13 2012/13 2013/14 2013/14 Points Programme Spending by Project forward 2014/15 2015/16 2016/17 2017/18 Total Code Approved Revised Actual Approved Amended request £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 KNM51 Play Area Renewals 20.0 20.0 71.5 20.0 20.0 20.0 20.0 20.0 20.0 100.0 JNM50 HRA Planned Maintenance 0.0 0.0 56.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 KDP01 47 Ecclerigg Depot 150.0 150.0 145.8 4.2 0.0 4.2 0.0 0.0 0.0 0.0 4.2 KEP51 Public Conveniences (Upgrade And Hand Over) 570.7 420.7 324.8 95.9 0.0 95.9 0.0 0.0 0.0 0.0 95.9 KGD21 Disabled Facilities Grants 641.8 362.0 547.2 55.0 440.0 495.0 430.0 400.0 400.0 400.0 2,125.0 KGS01 Affordable Housing Renovation Grants (AHRG) 743.5 360.0 126.8 81.6 350.0 431.6 310.0 280.0 240.0 200.0 1,461.6 KGT20 Site Assembly Fund For Affordable Housing 476.2 476.2 475.9 350.0 890.0 350.0 340.0 320.0 323.0 2,223.0 KIT27 Mobile Working 50.0 0.0 0.0 100.0 100.0 0.0 0.0 0.0 0.0 100.0 KIT90 IT Replacements 45.0 45.0 32.6 40.0 40.0 40.0 40.0 40.0 40.0 200.0 KLH01 43 Replacement of lighting and seating Coronation Hall 50.0 50.0 49.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 KLL14 Patrol Boat 19.0 19.0 18.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 KLL16 Rayrigg Meadow Public Jetties 18.0 18.0 19.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 KLL17 61 Ferry Nab Redevelopment Phases 1, 2 and 3 755.0 0.0 0.0 755.0 755.0 795.0 386.0 0.0 0.0 1,936.0 KLR22 Rothay Park Ambleside 0.0 0.0 (8.5) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 KLR31 Nobles Rest 66.4 66.4 2.1 64.2 0.0 64.2 0.0 0.0 0.0 0.0 64.2 KLR52 Croftlands Play Area 0.0 0.0 12.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 KMR01 Grange Footbridges 8.2 8.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 KPG01 Historic Building Grants 8.3 8.3 6.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Page 64 KPY38 Westmorland Shopping Centre Car Park Refurbishment 373.4 73.4 (3.1) 68.1 300.0 368.1 0.0 0.0 0.0 0.0 368.1 KPY41 DDA Works, Various car parks 63.8 63.8 32.1 31.7 0.0 31.7 0.0 0.0 0.0 0.0 31.7 KPY42 Replace Car Park Pay Machines 300.0 300.0 308.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 KPY43 51 Rydal Road Car Park, Ambleside Works to Bridge 0.0 0.0 0.0 320.0 320.0 0.0 0.0 0.0 0.0 320.0 KRE04 Grange Regeneration 37.2 37.2 8.2 6.3 0.0 6.3 0.0 0.0 0.0 0.0 6.3 KRE04 Grange Regeneration - Berners Site 0.0 0.0 0.0 450.0 0.0 300.0 150.0 0.0 0.0 0.0 450.0 KRE55 New Road Common 27.1 27.1 0.0 27.1 0.0 0.0 27.1 0.0 0.0 0.0 27.1 KRE59 43 Highgate Public Realm Improvements 260.0 260.0 155.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 KSC91 Vehicle & Plant Programme 3,100.0 1,199.0 1,211.0 2,533.0 2,533.0 133.0 373.0 1,715.0 840.0 5,594.0 KXF51 Transformation Change - Access to Services 20.0 20.0 (2.5) 22.5 0.0 22.5 0.0 0.0 0.0 0.0 22.5 KXW21 Carbon Reduction Programme 224.0 224.0 220.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Windermere Steamboat Museum contribution 0.0 0.0 0.0 0.0 0.0 100.0 0.0 0.0 0.0 100.0 78 CRM Development 0.0 0.0 0.0 60.0 60.0 0.0 0.0 0.0 0.0 60.0 75 South Lakeland House - Universal Credit interview rooms 0.0 0.0 0.0 20.0 20.0 0.0 0.0 0.0 0.0 20.0 63 Castle Dairy New Roof 0.0 0.0 0.0 150.0 37.5 112.5 0.0 0.0 0.0 150.0 58 Town and Car Park signing 0.0 0.0 0.0 50.0 50.0 0.0 0.0 0.0 0.0 50.0 51 Recycling bins & boxes 0.0 0.0 0.0 45.0 45.0 0.0 0.0 0.0 0.0 45.0 46 Dog order signage 0.0 0.0 0.0 15.0 15.0 0.0 0.0 0.0 0.0 15.0 41 Stockghyll Wood footbridge 0.0 0.0 0.0 20.0 20.0 0.0 0.0 0.0 0.0 20.0 Kendal Town Centre Public Realm* 0.0 0.0 0.0 0.0 0.0 0.0 100.0 0.0 0.0 100.0 Arnside Car Park* 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Kendal Leisure Centre* 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Waterhead Public Realm* 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 KEG33 Stockbeck Flood Scheme 0.0 0.0 89.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total 8,027.6 4,208.3 3,900.9 906.6 5,568.0 6,725.0 2,467.6 1,939.0 2,735.0 1,823.0 15,689.6

* Potential schemes subject to business case New total: 6,725.0 2,467.6 1,939.0 2,735.0 1,823.0 15,689.6 Previous total: 5,568.0 2,078.0 1,939.0 2,735.0 1,823.0 14,143.0 Movement: 1,157.0 389.6 0.0 0.0 0.0 1,546.6

New bids 540.0 100.0 0.0 0.0 0.0 640.0 Re-profiling (112.5) 112.5 0.0 0.0 0.0 0.0 C/fwd 729.5 177.1 0.0 0.0 0.0 906.6 1,157.0 389.6 0.0 0.0 0.0 1,546.6 Draft Capital Programme 2013/14 to 2017/18 Appendix 8

Brought- Carried- Use - Capital Other Use Total Use Balance 2012/13 2012/13 2013/14 Total Programme income by source forward forward 2014/15 2015/16 2016/17 2017/18 Programme remaining Received Used Amended Income 1/4/12 31/3/13 31/3/18 EARMARKED FUNDING: £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 Disabled Facilities Grant 0.0 342.4 (342.4) 0.0 242.0 242.0 242.0 242.0 242.0 1,210.0 (1,210.0) 0.0 (1,210.0) 0.0 Nobles Rest - Earmarked capital receipt 0.0 0.0 0.0 0.0 66.4 0.0 0.0 0.0 0.0 66.4 (64.2) 0.0 (64.2) 2.2 Stockghyll Cottage - Earmarked capital 0.0 0.0 0.0 0.0 20.0 0.0 0.0 0.0 0.0 20.0 (20.0) 0.0 (20.0) 0.0 receipt Other Contributions 0.0 154.9 (153.5) 1.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.4

Second Homes Discount 207.8 743.1 (720.3) 230.6 483.6 499.7 535.7 572.5 589.6 2,681.1 (2,733.8) 0.0 (2,733.8) 177.9 assume 40% @ New Homes Bonus (60% of grant from 31/3/13 to Locally 31.9 68.3 0.0 100.2 136.6 146.6 176.7 206.9 221.6 888.4 (1,028.7) 40.1 (988.6) (0.0) 2013/14) Important Projects (revenue).

266.9 0.0 Premium on debt HRA Major Repairs Reserve (56.4) 210.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (210.5) (210.5) 0.0 repayment GF Major Repairs Reserve 285.7 50.0 0.0 335.7 50.0 50.0 50.0 50.0 50.0 250.0 0.0 0.0 0.0 585.7 IT Replacement Reserve 129.0 40.0 (32.6) 136.4 40.0 40.0 40.0 40.0 40.0 200.0 (200.0) 0.0 (200.0) 136.4 LABGI (Highgate) 166.3 0.0 (60.0) 106.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 106.3 Section 106 funds 0.0 100.0 0.0 100.0 540.0 0.0 0.0 0.0 0.0 540.0 (540.0) 0.0 (540.0) 100.0 TOTAL EARMARKED INCOME 1,087.6 1,498.7 (1,365.2) 1,221.1 1,578.6 978.3 1,044.4 1,111.4 1,143.2 5,855.9 (5,796.7) (170.4) (5,967.1) 1,109.9 Page 65

GENERAL FUNDING: Capital Receipts: Debt repayment, LSVT 13,416.2 118.7 (597.4) 12,937.5 0.0 0.0 0.0 0.0 0.0 0.0 (3,592.9) (9,344.6) (12,937.5) 0.0 premium & VRP LSVT: VAT shelter 0.0 259.6 0.0 259.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (259.6) VRP (259.6) 0.0 LSVT: RTB receipts 0.0 804.0 0.0 804.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (804.0) VRP (804.0) 0.0 Other Capital receipts 73.8 641.7 0.0 715.5 50.0 50.0 50.0 50.0 50.0 250.0 (450.0) (315.5) VRP (765.5) 200.0

Single Capital Pot 964.8 0.0 (708.4) 256.4 0.0 0.0 0.0 0.0 0.0 0.0 (256.0) (0.4) VRP (256.4) 0.0 Fund of Revenue Monies for Capital 0.0 89.9 (18.9) 71.0 438.5 100.0 100.0 100.0 100.0 838.5 0.0 (509.5) VRP (509.5) 400.0 Purposes Borrowing - Vehicles 0.0 1,211.0 (1,211.0) 0.0 2,533.0 133.0 373.0 1,715.0 840.0 5,594.0 (5,594.0) 0.0 (5,594.0) 0.0 TOTAL GENERAL INCOME: 14,454.8 3,124.9 (2,535.7) 15,044.0 3,021.5 283.0 523.0 1,865.0 990.0 6,682.5 (9,892.9) (11,233.6) (21,126.5) 600.0

PROGRAMME INCOME TOTALS 15,542.4 4,623.6 (3,900.9) 16,265.1 4,600.1 1,261.3 1,567.4 2,976.4 2,133.2 12,538.4 (15,689.6) (11,404.0) (27,093.6) 1,709.9 Reserves Summary Appendix 9

2011/12 Balance2012/13 Balance2013/14 Balance2014/15 Balance2015/16 Balance2016/17 Balance

SUMMARY PURPOSE AND COMMENTARY Use Planned Planned Planned Planned Actual Use Contribution Contribution Contribution Contribution Contribution 1 April 2012 Planned Use Planned Use Planned Use Planned Use 31 March 2013 31 March 2014 31 March 2015 31 March 2016 31 March 2017 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 GENERAL RESERVES

Buffer against future financial risks: changes in General Reserve (872.2) 1,650.8 200.0 (322.6) 1,528.2 200.0 - 1,728.2 200.0 - 1,928.2 200.0 - 2,128.2 200.0 - 2,328.2 government funding, pension contributions, legal challenges, on-off costs of service reviews. Appropriate non-recurring initiatives that contribute directly to one or more of the Council’s priority LABGI Reserve (113.7) 166.3 - (79.7) 86.6 - - 86.6 - - 86.6 - - 86.6 - - 86.6 objectives, with a preference for economic regeneration. GF Major Repairs Reserve (258.3) 285.7 50.0 - 335.7 50.0 - 385.7 50.0 - 435.7 50.0 - 485.7 50.0 - 535.7 Major repairs and renewals of Council assets IT Replacement Reserve (45.0) 129.0 40.0 (32.6) 136.4 40.0 (45.0) 131.4 40.0 (45.0) 126.4 40.0 (45.0) 121.4 40.0 (45.0) 116.4 Replacement of IT equipment Economic Development Fund - 12.1 - (7.0) 5.1 - 5.1 - - 5.1 - - 5.1 - - 5.1 Encouraging economic development in the District

Monies provided by Planning Delivery Grant in Planning Delivery Grant (25.1) 136.3 - (52.3) 84.0 - (32.0) 52.0 - (25.0) 27.0 - (25.0) 2.0 - (19.3) (17.3) 2009/10 carried forward for use in a subsequent Reserve years

Local Arts Strategic Monies provided towards Arts Strategy and related 110.6 - (54.9) 55.7 - (55.7) ------Partnership Reserve activies carried forward for use in subsequent years.

New reserve to enable forward funding of schemes

Page 66 New Homes Bonus Reserve - 31.9 68.2 - 100.1 228.1 (300.0) 28.2 228.1 (220.0) 36.3 228.1 (220.0) 44.4 228.1 (220.0) 52.5 eligible for funding through the Council's New Homes Bonus protocol

Promoting South Lakeland - - - - 60.0 - 60.0 - - 60.0 - - 60.0 - - 60.0 Promoting South Lakeland Reserve Accumulated surpluses or deficits on the Council's Waste Contract Reserve (48.2) 182.8 255.7 - 438.5 - (338.5) 100.0 - - 100.0 - - 100.0 - - 100.0 waste contract. Total: General Reserves (1,362.5) 2,705.5 613.9 (549.1) 2,770.3 578.1 (771.2) 2,577.2 518.1 (290.0) 2,805.3 518.1 (290.0) 3,033.4 518.1 (284.3) 3,267.2

CAPITAL RESERVES Monies provided from revenue to support the Capital Fund of Revenue Monies for (107.0) - 89.9 (18.9) 71.0 100.0 (100.0) 71.0 100.0 (100.0) 71.0 100.0 (100.0) 71.0 100.0 (100.0) 71.0 Programme & fund expenditure that may not be Capital Purposes capitalisable

Second Homes Income Initiatives to enable the provision of affordable (581.2) 207.8 743.1 (720.2) 230.7 483.6 (483.6) 230.7 499.7 (499.7) 230.7 535.7 (535.7) 230.7 572.5 (572.5) 230.7 Reserve housing: transfer of unspent balance at end of year Total: Capital Reserves (688.2) 207.8 833.0 (739.1) 301.7 583.6 (583.6) 301.7 599.7 (599.7) 301.7 635.7 (635.7) 301.7 672.5 (672.5) 301.7

EARMARKED RESERVES Kendal Employment Assistance to eligible developing firms in the Kendal (15.3) 51.7 - (13.6) 38.1 - - 38.1 - - 38.1 - - 38.1 - - 38.1 Development Fund area Statutory ring fenced reserve to record surpluses Local Land Charges Reserve - 72.7 - (87.7) (15.0) - (7.0) (22.0) - - (22.0) - - (22.0) - - (22.0) and losses on the trading activities of local land charges. Statutory ring fenced reserve to record surpluses Building Control Fee Income (154.1) (160.1) - (196.8) (356.9) - - (356.9) - - (356.9) - - (356.9) - - (356.9) and losses on the trading activities of building Reserve control.

Total: Earmarked Reserves (169.4) (35.7) - (298.1) (333.8) - (7.0) (340.8) - - (340.8) - - (340.8) - - (340.8)

TOTAL RESERVES (2,220.1) 2,877.6 1,446.9 (1,586.3) 2,738.2 1,161.7 (1,361.8) 2,538.1 1,117.8 (889.7) 2,766.2 1,153.8 (925.7) 2,994.3 1,190.6 (956.8) 3,228.1

Buffer against unforeseen & emergency GENERAL FUND WORKING - 4,026.8 1,143.2 - 5,170.0 - (991.1) 4,178.9 - - 4,178.9 - - 4,178.9 - - 4,178.9 expenditure, inflationary demands, adverse cash BALANCE flow, inability to use capital resources. Reserves Summary Appendix 9

2011/12 Balance2012/13 Balance2013/14 Balance2014/15 Balance2015/16 Balance2016/17 Balance

HOUSING REVENUE ACCOUNT RESERVES Statutory ring fenced reserve to record income from HRA Major Repairs Reserve (5,170.4) 267.0 42.4 (56.4) 253.0 - (253.0) ------Government's Major Repairs Allowance and expenditure; to be used 2013/14 for debt repayment

HRA Environmental Warranty Environmental insurance in 2022 relating to - 341.0 - - 341.0 - - 341.0 - - 341.0 - - 341.0 - - 341.0 Reserve warranties given as part of the housing transfer.

TOTAL HRA EARMARKED (5,170.4) 608.0 42.4 (56.4) 594.0 - (253.0) 341.0 - - 341.0 - - 341.0 - - 341.0 RESERVES

Buffer against unforeseen & emergency HOUSING REVENUE expenditure, uncommitted closing balance to be ACCOUNT WORKING (373.5) 560.5 - (560.5) ------transferred to General Fund working balance to fund BALANCE interest on housing debt 2013/14 Page 67 This page is intentionally left blank

Page 68 Item No.12

PART I

South Lakeland District Council CABINET / COUNCIL Meeting Date: Cabinet: 24 July 2013 Council: 25 July 2013 Report Author: Helen Smith, Financial Services Manager Portfolio: Councillor David Evans, Finance Portfolio Report from: Assistant Director Resources & S151 Officer Wards affected: Not applicable Key Decision: Not applicable Key Decision Not applicable Notice: DRAFT FINANCIAL STRATEGY AND MEDIUM TERM FINANCIAL PLAN 1.0 PURPOSE OF REPORT 1.1 This report presents the draft Financial Strategy and Medium Term Financial Plan which project the expected income and expenditure of the Council to support the effective planning and allocation of resources. 2.0 RECOMMENDATIONS It is recommended that Cabinet:- (1) Note the draft Financial Strategy and Medium Term Financial Plan; and (2) Agree comments to be taken forward for consideration at the Council meeting on 25 July 2013; It is recommended that Council:- (1) Note any comments from Cabinet regarding the draft Financial Strategy and Medium Term Financial Plan; and (2) Approve the draft Financial Strategy and Medium Term Financial Plan 3.0 BACKGROUND 3.1 A Financial Strategy is a key element in the effective planning and allocation of resources. Although the Council has had a number of strategies covering elements of finance, such as the annual Budget Strategy and the Corporate

Page 69 Charging Strategy, this is the first time all the basic principles have been brought together in a single document and is designed to shape the long-term financial future of the Council. The basic financial principles, if approved, will direct the assumptions within the Medium Term Financial Plan (MTFP). 3.2 The Council has produced a MTFP for several years, usually approved alongside the budgets in early spring. This year the MTFP was delayed to give an opportunity to incorporate the outcomes of the Spending Review, which were announced on 26 June 2013. 4.0 RESEARCH AND CONSULTATION 4.1 The financial projections were last reported to Council in February 2013. Since then they have been updated to reflect the Government’s Budget 2013 and a number of other funding announcements. 4.2 A number of national studies have been produced considering the state of Council finances and considering best practice in the preparation of financial plans. Relevant messages have been incorporated into the draft MTFP. A list of documents is included as an appendix to the MTFP. 4.3 The Council’s accounts are currently being finalised for 2012/13 and will be reported to Cabinet and Council alongside the Financial Strategy and MTFP. The outturn position is reflected in the financial projections within the MTFP. 4.4 Performance Sub Committee considered the draft Financial Strategy and MTFP at their meeting on 4 July 2013. Following robust questioning of the assumptions and content of the plan a number of amendments have been made to the draft now attached, in particular the nature and importance of the risks and opportunities included at Appendix 8 to the plan. 5.0 PROPOSAL 5.1 The draft Financial Strategy and MTFP is attached at Appendix 1 (the document includes ten supporting appendices). 5.2 Key messages from the updated MTFP are: a) Revenue Support Grant (RSG) has reduced by over 30% in the last two years and is projected to reduce by a further fifty per-cent from £3m in 2013/14 to £1.4m in 2016/17. b) New Homes Bonus - The estimated level for this Council in 2013/14 is £230k which is one of the lowest levels in the country. Many other authorities are able to maintain their centrally funded element of their budgets using this source; SLDC is at a considerable disadvantage. c) Non Domestic Rates (NDR) – From 2013/14 district authorities will retain a proportion of the increase in NDR collected as measured against the 2012/13 base level. This is a very complex system and there are still uncertainties about how exactly it will work. The financial model presumes net nil growth and only adds inflation to produce circa £2m per annum. d) Fees and Charges generate circa £9m. The financial model assumes a 2% increase per annum in these income budgets. e) Projected deficits - The projected deficits over the medium term increase from £0.7m in 2014/15 to £2.1m by 2017/18. It should be noted that this

Page 70 bottom line position is based on a significant number of assumptions as detailed in the following pages. f) Balancing the Budget – Options that will enable a balanced position for 2014/15 and a much improved position in the following years have been developed by the Senior Management Team and Cabinet Members. Work to balance the budget will continue and will include effective consultation with the community and stakeholders. g) Capital – The MTFP assumes the repayment of the housing debt of circa £8m. The capital receipt from the housing transfer in March 2012 will be used to finance this and the premiums that apply. The capital funds remaining uncommitted are estimated to be £2m, but these funds are all earmarked for specific purposes. The need to meet the cost of maintaining the value of the Council’s key assets will be examined. The financial model assumes all vehicles purchased from April 2013 will be funded from borrowing. h) Reserves - the Council is currently in a strong financial position if it can address the issues raised above. Revenue reserves and working balances are projected to total £7m by the end of 2013/14, of which £1m is earmarked. i) Council Tax - the Council froze the Council Tax for the fourth consecutive year. This was achieved by maximising efficiency savings and setting income generation at realistic levels with no significant impact on front line services. While this is the strategy that Members are keen for the authority to pursue in future when considering the means of balancing the Budgets in future years, there will however come a point when front line services will be affected. 6.0 ALTERNATIVE OPTIONS

6.1 The assumptions forming the Financial Strategy and the MTFP could be amended. This is not recommended, as the proposals are regarded as the most appropriate option when considered against the need to secure financial resilience and deliver the Council Plan priorities. 7.0 NEXT STEPS 7.1 The Financial Strategy and MTFP, once approved, will form the basis of the Budget Strategy for 2014/15 onwards. 8.0 IMPLICATIONS 8.1 Financial and Resources 8.1.1 Included in the report. 8.2 Human Resources 8.2.1 This report has no direct Human Resources implications. However, the principles proposed within the Financial Strategy and the need to address the deficits in the MTFP may lead to changes relating to staff. 8.3 Legal 8.3.1 This report has no direct legal implications

Page 71 8.4 Social, Economic and Environmental Impact 8.4.1 Has a sustainability impact assessment been carried out? No. 9.0 RISK ASSESSMENT Risk Consequence Controls required A full analysis of the Council’s key financial risks are detailed within the MTFP 10.0 EQUALITY AND DIVERSITY 10.1 An equality and diversity impact assessment has not been carried out. 11.0 LINKS TO THE COUNCIL PLAN AND PERFORMANCE INDICATORS 11.1 The Financial Strategy and MTFP indicate the resources available to fund the Council Plan and how these resources will be allocated. 12.0 CONCLUSION AND EXPECTED OUTCOMES 12.1 The Financial Strategy and Medium Term Financial Plan summarise the Council’s financial position and the steps to be taken to ensure the Council’s financial resilience. APPENDICES ATTACHED TO THIS REPORT Appendix No. 1 Draft Financial Strategy and Medium Term Financial Plan CONTACT OFFICERS Helen Smith, Financial Services Manager, [email protected] , 01539 793147 Shelagh McGregor, Assistant Director Resources, [email protected] , (01539) 793112 BACKGROUND DOCUMENTS AVAILABLE Identified in Appendix 10 to the Financial Strategy and Medium Term Financial Plan. TRACKING Assistant Portfolio Solicitor to the SMT Scrutiny Director Holder Council Committee 14/6/13 14/6/13 20/6/13 This report Executive Committee Council Section 151 Monitoring (Cabinet) Officer Officer 24/7/13 25/7/13 14/6/13 14/6/13 Human Resource Services Manager

Page 72

SOUTH LAKELAND DISTRICT COUNCIL

DRAFT

FINANCIAL STRATEGY AND MEDIUM TERM FINANCIAL PLAN

2013/14 TO 2017/18

The figures in the Strategy will change as further work is undertaken. After consideration of the Strategy at the 25 July Council meeting regular updates will be provided in the light of the changing circumstances.

Date Ratified Document Author & contact details Helen Smith, Financial Services Manager, x3147 [email protected] Accountable Director Shelagh McGregor, S151 Officer Document Reference FS & MTFP 2013-2018 28/06/2013 Previous Review Dates and Changes Made February 2012 – update financial position, incorporate financial strategy Date For Review February 2014 + at least quarterly update of financial model

Page 73

Contents: Page 1 Purpose and Key Messages 3 2 Introduction 4 3 Objectives 5 4 Financial Strategy 5 5 Vision for South Lakeland and Local Context 6 6 Financial Planning Framework 6 7 General Fund Revenue Account 7 8 Sensitivity Analysis and Scenario Planning 15 9 Reserves 15 10 Capital 16 11 Value for Money and Efficiency 17 12 Working with Partners 17 13 Consultation Strategy, Approval and 17 Communication Process 14 Equalities Impact Assessment 18 15 Conclusion and Way Forward 18

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Page 74 PURPOSE AND KEY MESSAGES FROM THE CHIEF FINANCE OFFICER 1.1. The purpose of the Financial Strategy and Medium Term Financial Plan (MTFP) is to enable South Lakeland District Council to ensure the effective planning and allocation of resources to enable the Council to meet the objectives it has set out in its Council Plan. This has been prepared at a time of considerable uncertainty with regard to the economy and central government’s approach to public sector funding. The MTFP will be further developed and once considered by Council at their meeting on the 25 July 2013, regular reports will be provided containing updates and performance against it. 1.2. Central Government Funding (Revenue Support Grant and New Homes Bonus) – There has been a fundamental change in the way local government is financed in the future which has regularly been reported. The key elements of funding (as well as income) for SLDC are now Revenue Support Grant (RSG) and retained Non Domestic Rates (NDR). RSG which has reduced by over 30% in the last two years, is set to reduce by a further 10% from 2014/15 onwards. At this stage the RSG level included for SLDC broadly follows the national pattern of reduction. This assumption projects a higher than fifty per-cent reduction in RSG from £3m in 2013/14 to £1.4m in 2016/17. Nationally a significant element of funding coming from central government is New Homes Bonus . The estimated level for this Council in 2013/14 is £230k which is one of the lowest levels in the country. Many other authorities are able to maintain their centrally funded element of their budgets using this source; SLDC is at a considerable disadvantage. 1.3. Non-Domestic Rates (NDR) – From 2013/14 district authorities will retain a proportion of the increase in NDR collected as measured against the 2012/13 base level. This is a very complex system and there are still uncertainties about how exactly it will work. The financial model presumes net nil growth and only adds inflation to produce circa £2m per annum. 1.4. Fees and Charges generate circa £9m. The financial model assumes a 2% increase per annum in these income budgets. 1.5. Projected deficits - The projected deficits over the medium term increase from £0.7m in 2014/15 to £2.1m by 2016/17. It should be noted that this bottom line position is based on a significant number of assumptions as detailed in the following pages. 1.6. Balancing the Budget – Options that will enable a balanced position for 2014/15 and a much improved position in the following years have been developed by the Senior Management Team and Cabinet Members. Work to balance the budget will continue and will include effective consultation with the community and stakeholders. 1.7. Capital – The MTFP assumes the repayment of the housing debt of circa £8m. The capital receipt from the housing transfer in March 2012 will be used to finance this and the premiums that apply. The capital funds remaining uncommitted are estimated to be £2m, but these funds are all earmarked for specific purposes. The need to meet the cost of maintaining the value of the Council’s key assets will be examined. The financial model assumes all vehicles purchased from April 2013 will be funded from borrowing. 1.8. Reserves - the Council is currently in a strong financial position if it can address the issues raised above. Revenue reserves and working balances projected to total £7m by the end of 2013/14, of which £1m is earmarked. 1.9. Council Tax – in February 2013 the Council froze the Council Tax for the third consecutive year. This was achieved by maximising efficiency savings and setting income generation at realistic levels with no significant impact on front line services. While this is the strategy that Members are keen for the authority to pursue in future when considering the means of balancing the Budgets in future years, there will however come a point when front line services will be affected. Shelagh McGregor June 2013

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Page 75 2. INTRODUCTION 2.1. The Financial Strategy will provide the core around which the Council’s Medium Term Financial Plan (MTFP) is constructed. The MTFP, its assumptions and their impact on the total resources picture is visited formally twice a year, initially prior to and as part of the next year’s budget round and secondly as part of the Budget considered by Council annually in February. Regular updates will continue to be provided particularly crucial in the current uncertain environment at least quarterly during the year. 2.2. Medium term financial planning is a crucial part of the Council’s strategic planning and performance framework. The current economic climate and Central Government approach to how public services are to be funded in the future have significant impacts on the way the Council will be required to operate to deliver the Council Plan objectives within the resources projected to be available. Key financial decisions need to be set in the context of a plan that looks beyond the next financial year. Forward planning more effectively links service and financial planning and performance over the medium to longer term. 2.3. The Financial Strategy provides the foundation against which the Council will strive to deliver the best possible value for money in the provision of efficient and cost effective services across the District. Through the effective development and delivery of the Authority’s financial and other resource strategies it seeks to build upon past achievements as well as provide clear direction to the attainment of the Council’s longer-term goals. Financial Planning Horizons 2.4. Different techniques are used when considering the short, medium and long-term financial planning horizons since each makes a distinctive contribution to the financial health of an organisation: • Long-term planning horizon is focused on enabling the transformation of the organisation with an emphasis on being strategic and customer-led, future orientated, proactive in managing change and risk, outcome focused and receptive to new ideas. This is seen in the Financial Strategy. • Medium-term planning horizon is focused on supporting performance with an emphasis on responsiveness to customers, efficient and effective, and with a commitment to improving performance. This is seen in the Medium Term Financial Plan • Short-term planning horizon is focused on securing stewardship with an emphasis on control, probity, meeting regularity requirements and accountability. This is seen in the annual budget process which shows the detail from the Medium Term Financial Plan for the following year to set the Council Tax. Financial Stability 2.5. The issue of financial stability is one that requires strong corporate governance supported by effective procedures, processes and controls with Council-wide involvement in supporting an integrated approach to the preparation of soundly based capital and revenue bids for resources. The Medium Term Financial Plan (MTFP) is based on sound financial assumptions that are based on robust assessments. The ‘robustness’ of the MTFP is highlighted in the Appendices to this strategy which show the key elements of the Council’s financial management framework. The risks log at Appendix 8 summaries the key financial risks facing the Council and the steps to be taken to mitigate these risks. 2.6. The medium-term financial planning process has been in place for a number of years and is an established part of the budget setting process. It provides a forecast of the cost of continuing to provide existing levels of service and the resources that are likely to be available to the Council over the period. It identifies any shortfalls and sets out how this will be managed. This document is reviewed regularly during the year; regular review and update is essential to ensure the MTFP takes full account of any changes in the Council’s

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Page 76 aspirations, strategic and service delivery priorities, changes in government legislation, financial regulation and funding streams. 2.7. The Medium Term Financial Plan (MTFP) sets out how the Council will manage its revenue finances up to 2017/18 and also covers a five-year capital programme. The Strategy also highlights the longer term challenges particularly in respect of the Council’s assets. The MTFP supports the delivery of the Council’s objectives and priorities as set out in the South Lakeland Five Year Strategy 2010-2015 and the Council Plan 2013-2017. 2.8. Underpinning the Council Plan are the individual service plans and a number of other key strategies and plans: • Corporate Asset Strategy • Capital Strategy • Information Technology Services Strategy • Workforce Plan • Procurement and Commissioning Strategy • Risk Management Strategy • Treasury Management Strategy 3. OBJECTIVES 3.1. The objectives of the Financial Strategy are: • To ensure priorities identified as part of the Corporate Planning process inform the MTFP including legislative requirements, timing and financial implications • To provide projections of spending, including spending pressures and income; and set expectations on council tax increases, over the next four years • To provide projections for our investment in assets, (our capital spend) and its impact on general day to day revenue spending • To provide a robust framework to assist the decision making process • To test sensitivity of, and apply risk analysis, to projections. • To provide a framework for consultation with the public and partners about our service priorities and resources allocated to them. 4. FINANCIAL STRATEGY The Council has not previously explicitly stated its financial strategy in previous Medium Term Financial Plans. The following principles are proposed: • Balanced budgets : Maintain a balanced budget position, and to set a medium term financial plan maintaining and strengthening that position • Five year budgets : the Council sets budgets for a five year period. • Strong financial management: The Council controls and monitors the actual position of the authority on a regular basis setting out actions to correct any emerging issues; • Understanding of key cost-drivers: The Council analyses and reviews the key elements of the service areas including the use of benchmarking; • Asset maintenance : the Capital Programme should ensure adequate programmes of maintenance to sustain values of key assets, especially income-generating assets. • Legal transactions : the approval and adoption of the Council’s Constitution, particularly the Financial Procedure Framework and the Contract Procedure Rules set foundations for ensuring legal transactions alongside the whole system of internal control reviewed annually in the Annual Governance Statement. • Affordable investment ; to undertake a prudent level of capital investment to meet the Council’s strategic priorities and remain within prudential borrowing limits • Maximise resource base; the Council will ensure the best use of physical and other assets including staff time; • Value for money ; Continuous review of budgets to ensure resources are targeted on key objectives and deliver value for money to local taxpayers.

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Page 77 • Working with others: to ensure all services are delivered by the most appropriate body. This may require the Council to work in partnership or to facilitate provision by other bodies. • Minimise financial risk including holding reserves as appropriate and sustainable levels of debt The rest of this report uses these principles to construct the Medium Term Financial Plan for 2013/14 – 2017/18. 5. VISION FOR SOUTH LAKELAND & LOCAL CONTEXT 5.1. The MTFP aims to support the Council’s overall vision for the District: “Making South Lakeland the best place to live, work and explore. 5.2. The Council’s 5 Year Strategy, (December 2010, updated February 2013) will move the Council towards being a ‘sustaining and enabling’ authority. This will mean that the authority works with partners, the public sector and the community to find the right provider for a number of its current services while retaining direct delivery control of a limited number of key services. The 5 Year Strategy sets out the strategic approach to how the Council will shape delivery of the outcomes. It is built on three key themes: • One South Lakeland – a partnership approach to better achieving priorities • Localism – Working together with our communities • A sustainable Council – Delivering Value for Money Services Common to each theme is the effective use of combined resources available to the public, private and voluntary sectors in South Lakeland. The themes of the strategy over the next 12 months will evolve as the Council aims to become a Fairer, Greener and More Devolved council. 5.3. The Council plan details the Council’s Corporate Priorities, which are • Economy : “The best place to do business”. • Housing: “Provide the homes our community needs”. • Environment : “Providing for future generations”. • Culture and Wellbeing : “An inspiring place to explore”. The budget setting process takes into account the priority framework and the priorities have a direct implication on the acceptability of the budget. 5.4. The Medium Term Financial Plan therefore provides the resources required to deliver the priorities stated within the Council Plan. 6. FINANCIAL PLANNING FRAMEWORK 6.1. The Council operates a medium term revenue and capital investment programme over a five year period. The programme is revised annually to roll forward so as to incorporate a new year, as well as to review and revise the old financial years. 6.2. The future impact of all issues have been considered as part of the 2013/14 budget setting process, including those which we already know about which may not impinge on our budgets until after the first year (2013/14). Outlined in the table below are the key stages involved in producing the budget. August /September Council approves the framework for the budget setting process for the following year. September/October Bid requested for schemes to be incorporated into the capital and revenue programme, based on Council Priorities and service requirements. October - December All capital and revenue bids are challenged and scrutinised by Senior Management Team, then by Members

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Page 78 November/December Provisional Local Government Finance Settlement announced by the Government, giving indicative levels of capital and revenue grant to be given to the Council. January The draft capital and revenue programme is presented to the Service Committees (Planning etc), Overview & Scrutiny Committee, Cabinet then Council for approval. February Budget consultation with the public is analysed and fed into the budget decision process. Full Council approves capital and revenue budget, Medium Term Financial Plan & treasury management strategy. Sets Council Tax. April The new financial year commences and the budget approved is then assessed under the monitoring process. 6.3. The development of the 2013/14 budget has taken place against the background of the Local Government Finance Review; the replacement of government grant with localisation of business rates and a review of the formula feeding the Revenue Support Grant, particularly the weighting given to the additional costs of rural services. The local government finance settlement was delayed, with the final figures not published until February 2013. This Medium Term Financial Strategy has been held back until the Local Government Finance Review and the Spending Round 2013 is completed. 7 GENERAL FUND REVENUE BUDGET Financial Context 7.1 The development of the 2013/14-2017/18 Medium Term Financial Plan has taken place during a challenging period for Local Government. Against a backdrop of a unsettled economic outlook and a national budget deficit the Government imposed a range of austerity measures which has outlined major reductions in Local authority funding in recent times. 7.2 The Budget Reports for 2013/14 included updates of the financial model and concluded that the Council’s future financial outlook was likely to be more challenging over the next few years, because of reductions in overall public spending and the associated fundamental changes introduced from April 2013 in local government finance. Council was advised that meeting new cost pressures would require an increasingly rigorous approach to identifying efficiencies, enhanced productivity, and reprioritisation of spending within services. Economic Outlook 7.3 The current Eurozone debt crisis continues to affect the UK economy and the Office for Budget Responsibility (OBR) in March 2013 has revised down the GDP growth for the medium term compared to previous forecasts in December 2012. The economic growth predictions for future years are shown below: Year Growth Projection Growth Projection Budget March 2013 Autumn Statement 2012 2013 0.6% 1.2% 2014 1.8% 2.0% 2015 2.3% 2.3% 2016 2.7% 2.7%

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Page 79 2017 2.8% 2.8%

7.4 Inflation measured using the Consumer Price Index (CPI) remained higher than the 2% target throughout 2012/13 and at the time of writing this report, the Consumer Price Inflation (CPI) stood at 2.4% and the Retail Price Index (RPI) at 2.9% and the forecasts for future years are shown below: Year CPI (OBR) CPI (Independ ent RPI (Independent Average) Average) 2013 2.8 2.8 3.3 2014 2.3 2.3 2.9 2015 2.1 2.2 3.2 2016 2.0 2.2 3.4 2017 2.0 2.2 3.6 2018 2.0 Not available Not available 7.5 In the short term, the CPI inflation will continue to be running above the government target of 2%. The RPI measure is predicated to remain at a higher level compared to CPI. It is important to note that many of the Council’s contracts are linked to either RPI or RPIX as an inflationary increase (although this is reviewed as part of each procurement process). It is likely that the contractual inflation will remain at a high level in the medium term. 7.6 The Bank of England base rate remains at a historical low level of 0.5%, this was unchanged since March 2009 and this has had a major impact on the Council’s investment income. The base rate of interest is predicted to increase slightly from March 2015: Now Mar-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Bank rate: 0.50% 0.50% 0.75% 1.00% 1.25% 1.50% 1.75% However, interest rates have been predicted to increase in 18 months for the last three years. The financial model prudentially assumes base rate remains at 0.5% for the duration of the model. Inflation 7.7 The 2011 Autumn Statement capped public sector pay awards at an average of 1% for both 2013/14 and 2014/15). This cap was extended in the 2013 Budget into 2015/16. The 2013 Budget also announced that the Government will seek significant further savings through reforms to progression pay in the Spending Round. 7.8 The government does not control pay awards within local government but it is expected that the funding to local government will be adjusted on the assumption of comparable action being taken. Local government pay was frozen for 2011/12 and 2012/13. 7.9 The 2013/14 – 2017/18 financial model assumes pay inflation of 1% until 2015/16 and 2% from April 2016 onwards. The financial impact of a 1% movement in pay inflation is around £120k change in the general fund employee budget. 7.10 In the 2013/14 – 2017/18 financial model inflation on contract prices have been uplifted by appropriate indices as stated in the conditions of the contracts. The projection assumes an overall averaged inflation rate of around 2% in each year. No inflationary increase has been applied to the general services budget, except specific items such as utilities. The financial impact on running costs of a 1% movement in inflation is around £100k. Pensions 7.11 South Lakeland District Council employees are eligible to be members of the Local Government Pension scheme, of which the Government sets the terms and conditions nationally. This is a statutory condition of employment available to all local government employees.

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Page 80 7.12 The most recently published actuarial valuations (2010) for the whole fund show that the South Lakeland Council element of the fund continues to be in deficit. The results of the next revaluation are expected in late 2013, with changes to the contribution rate taking effect from April 2014. Indications from the actuaries suggest further increases in the deficit due to low investment returns and increases in life expectancy are partially offset by the use of CPI rather than RPI in the calculation of inflation and reforms to the pension scheme from April 2014 onwards. 7.13 The Council currently pays employer contributions based on a set percentage contribution for future service accrual and a fixed monetary contribution each year for past service liability instead of a set percentage contribution covering both. This will avoid the reduction in recovery of past service liability as staffing levels decline following reduction or transfer of services. The deficit will be recovered over a 19-year period. 7.14 The previous MTFP assumed there would be no increase in contribution rates from 1 April 2014. The 2013/14 – 2017/18 financial model now assumes contribution rates relating to past service costs will increase by 1% each year from April 2014. This is equivalent to around £70k per year. If the current service element increased from 13.1% to 14.1% it would cost an additional £90k per year. 7.15 The Government announced in the Budget in March 2013 that the single tier State Pension will begin in 2016/17. As part of the changes, the ability of members of a defined benefit occupational pension scheme to “contract out” of the state second pension will end. For SLDC 90% of staff are “contracted out” and as a result the Council pays a contribution rate of 10.4% instead of 13.8%. Based on existing staffing, this change will increase Council’s budget from 2016/17 by around £200k per year. Service Demand 7.16 The current economic downturn has and will continue to place additional pressures on the demand for Council services (e.g. increase in the administration of Housing benefit and Council tax discount claimants). There is also an imposed demand by Central Government on local authorities to take a major part to revitalise the local economy and at the same time bear a significant part of the governments overall austerity measures from reduced funding. 7.17 The reintroduction of the public health function to local government from April 2013 means that district councils will need to take part to promote better public health/health equality and ensure more effective health prevention with the link to sport and fitness. 7.18 The 2013/14 – 2017/18 financial model assumes levels of demand will remain constant. Increases in demand are treated as a service growth bid within the annual budget setting process. Council Tax Support Grant 7.19 As part of the Government’s wider policy of decentralisation, the Government localised support for council tax from April 2013, reducing funding by 10%. The Council is has the discretion to decide who should pay less council tax and how much less they should pay. Council approved South Lakeland’s localised council tax support scheme in its December meeting. 7.20 Council tax benefit subsidy will be replaced by cash grant so the Council (and other major precepting authorities) will need to bear any costs that may arise for any increases in the council tax benefit take up rate from April 2013 onwards. 7.21 For 2013/14 the Council will receive grant of £565k (plus £92k relating to parish councils). From April 2014 the grant is not separately identified as it is rolled into Revenue Support Grant.

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Page 81 Universal Credits 7.22 Universal Credits will be introduced between 2013 and 2017 through the Welfare Reform Act. Universal Credits is an integrated working-age credit that will provide a basic allowance with additional elements for children, disability, housing and caring. It will support people both in and out of work. For local authorities, this means the link between Housing Benefit and Council Tax Benefit will be broken and that universal credits will be administered by the Department of Work and Pensions. 7.23 The Welfare Reform Bill indicates that the housing costs will form part of the universal credits but the housing costs for pensioners will be included in the pension credit. South Lakeland currently administers housing benefit and receives an administration grant for housing and council tax benefits administration. It is unclear at this stage whether there is a role for local authorities under the new system. 7.24 For the purpose of the MTFP, it is assumed that the costs resulting from the reform will be fully met by the government under the new burdens doctrine. The current net cost of running the Housing Benefit Service is circa £150k and this is cited as a potential saving once the changes have been implemented Housing Revenue Account (HRA) 7.25 On 5 March 2012 the Council concluded the Large Scale Voluntary Transfer (LSVT) of its housing stock to South Lakes Housing, a new social landlord created from the conversion of the Council’s Arm’s Length Management Organisation (ALMO). Following the transfer the Council has received permission to close the Housing Revenue Account from 31 March 2013. The HRA working balance at 31 March 2013 of £254k has been transferred to the General Fund working balance. 7.26 Prior to transfer, the HRA received the income from the Council’s housing stock and met the costs of all expenditure relating to those houses. This included around £300k pa of net interest payable on debt attributable to the HRA and around £300k of other costs of management which relate to HRA land and property retained by the Council following transfer. The £300k of management costs have been built into the base General Fund budgets from April 2013. Treasury Management and Debt 7.27 The Council will continue to invest in accordance with the Treasury Management Strategy and will plan any consideration of borrowing closely through the MTFP, Corporate Asset Strategy and five year Capital Budget. 7.28 At 1 April 2013 the Council had £20.5m borrowed from the Public Works Loan Board, an arm of H M Treasury. All was borrowed prior to March 2009, over a 40 year period to fund the Housing Decent Homes programme. Of this, £7.7m of the £20.5m was attributable to the Housing Stock and up until the end of 2012/13, interest was chargeable to the HRA. The financial model assumes the £7.7m is repaid by the end of 2013/14 and no annual interest has been built in to the position going forward for this element (£224k per annum). External Income 7.29 The Council relies on a number of external income sources and in the current economic downturn this had affected our income streams, in particular in service areas linked to building and housing e.g. land charges and building control income. It is estimated that the total income forgone due to the economic downturn since 2008/09 is approximately £590k. Policy on Fees and Charges a. The Council is looking to optimise the potential income from fees and charges. A significant proportion of our income is from fees and charges and a balance has to be struck between meeting our statutory responsibilities and our subsidies on

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Page 82 providing discretionary services. The Council takes the view that raising charges to recover part of costs is more preferable to removing the service completely. b. Charges are set after taking into account local circumstances (including economic conditions) and the user’s ability to pay. The Council’s fees and charges will normally increase at least in line with inflation or where appropriate statutory defined fees and charges increases. Increased or reduced income due to volume changes or charge proposals above or below inflation are addressed through the budget setting process. c. It is recognised that in developing a charging basis for specific charges it is important to consider a number of factors on an options appraisal basis i.e. considering affordability, comparability and the implications of changing charges on forecasted income levels. d. Concessionary charges should be as appropriate to the circumstances of the customer while encouraging increased participation for less advantaged groups. This should not lead to unjustifiable preferential treatment. e. The Council’s longer term policy has three fundamental principles: i. Services should explore raising income wherever there is a power or duty to do so. ii. The income raised should cover the full costs of providing the service including all overheads. iii. Any departures from this policy must be justified in a transparent manner with reference to the Council’s priorities and policies. f. When the Council does not raise income in areas where it has the power to do so, it foregoes the opportunity to raise money to improve services and leaves less money available for spending on high priority services. Members must be supplied with information to allow them to make decisions in a structured and explicit manner. A decision to forego income or to subsidise a service is a policy decision about resources as significant as any decision made in the budget setting process. 7.30 The Council has a good history of debt collection. The Council continues to build on this to maximise income received and minimise income written off. Monitoring information which is produced monthly has been enhanced to provide information on evaluating the effectiveness of debt recovery actions, associated costs, and the cost of not recovering debt promptly. 7.31 The financial model assumes income from external charges in general increases by 2% annually with the exception recycling credits (assume frozen). External Interest 7.32 Historically a key income stream for the council has been the income generated from investment of cash balances. Every 1% of movement in interest rates is equivalent to approximately £290k in income; however the actual interest earned will also be affected by the level of cash balances available. In 2008/09 the Council earned £1,851k in interest on investments, by 2012/13 this had fallen to £323k despite the levels of investments being higher. 7.33 The financial model assumes interest rates remain constant at 0.5% until 2017/18. Business Rates Retention 7.34 The government introduced fundamental changes to the way local government is financed from April 2013. In particular, business rates are no longer pooled and redistributed in full nationally; instead local authorities retain a proportion of business rates locally. The income will partially replace the formula grant that local authorities are receiving at present.

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Page 83 7.35 The Council currently collect around £38m; after the national share is paid to Government and a share is paid to Cumbria County Council a tariff is deducted and the Council estimates it will retain around £1.8m in 2013/14, rising to £2.3m by 2017/18. 7.36 The business rates retention scheme is intended to create incentives for local authorities to promote business growth over the long term, thereby strengthening the link between local authorities and local businesses without changing the way that businesses pay their business rates, nor increasing the level of business rates that they pay, and reduce local authorities’ dependency upon central government. 7.37 From the financial planning’s perspective, how much income each local authority can retain is difficult to predict and can potentially fall or rise during a financial year. The financial model assumes: • net nil growth in rateable values (with increases from new businesses offset by reductions through appeals and refunds) • the multipier (pence paid in the pound), which is set by Government, increases by inflation • around 25% of appeals are successful • the existing arrangements for small business rate relief continue (there is particular uncertainty around the arrangements for small business rate relief and whether Council’s will receive grant for additional relief granted in 2013/14). Revenue Support Grant 7.38 From April 2013 the Local Government Finance Settlement replaced formula grant with retained business rates and a recalculated Revenue Support Grant (RSG). RSG is the main general government grant received by local authorities. Under the new system the Council will receive £3.0m of grant in 2013/14 but this is due to drop to £2.275m for 2014/15 (based on the provisional settlement figures given by the DCLG in February 2013) 7.39 It is expected the actual settlement for 2014/15 will be lower than the provisional settlement since the Budget 2013 announced further cuts in government expenditure): although the Government have announced a 1% reduction in funding, since the funding from retained business rates is tied to inflation the financial model assumes the actual funding for RSG (approx. 50% of funding) from 2014/15 will be 2% lower than the provisional settlement (approx. £45k per year). 7.40 The figures in the financial model are based on Government announcements including the Budget 2013. They are based on models produced on behalf of SPARSE and the Rural Services Network, who co-ordinated the response of many rural authorities to proposed changes in the apportionment of RSG. They reflect all Government announcements up to and including the Budget 2013. 2013/14 2014/15 2015/16 2016/17 Estimated RSG £000 -3,014 -2,230 -1,811 -1,420 Movement year-on-year £000 784 419 391 Movement year-on-year % -26% -19% -22% New Homes Bonus Scheme 7.41 The New Homes Bonus Scheme was introduced in 2011/12 as a way to encourage local authorities to facilitate housing growth. In essence, for every additional property built or brought back into use, the government match funds the additional council tax, with an additional amount for affordable homes, for the following six years. The grant is topsliced from Revenue Support Grant and paid as a un-ringfenced grant and it is split 80% to district councils and 20% to the relevant county council. South Lakeland received a new homes bonus grant of £74k in 2012/13.

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Page 84 7.42 It is expected that South Lakeland will receive about £228k from the New Homes Bonus grant for 2013/14 and for the purpose of the MTFP, the income beyond 2013/14 is estimated to increase by about £50k per annum. 7.43 The Spending Round 2013 and Government infrastructure plans included in “Building Britain’s future” announced a top-slice of New Homes Bonus from 2015/16 to be pooled into the Local Enterprise Partnership (LEP) to promote economic development. The Government has announced there will be consultation on the mechanism for this top- slicing. The MTFP financial projections and capital programme have not yet been amended to reflect this announcement. 7.44 The Council resolved to earmark the monies from the New Homes Bonus into an earmarked reserve to be split 60:40 between support for affordable housing and locally important projects, including community planning. In addition, for 2013/14, Council has approved the use of New Homes Bonus to fund a budget of £51,000, giving £1,000 for each member for community projects identified by each member in their wards. Council Tax Freeze Grant 7.45 The Localism Act gives local communities the power to approve or veto excessive council tax rises. The Secretary of State will determine a limit for council tax; if an authority proposes to raise taxes above this limit they will have to hold a referendum to approve or to veto the rise. For 2013/14 this level was 2% 7.46 The Government announced the following principles on council tax freeze grant and council tax referendum threshold for 2013/14 back in October 2012. All authorities who froze their council tax in 2013/14 it will receive a grant equivalent to a 1% increase on the 2012/13 figure in both financial years 2013/14 and 2014/15. For 2013/14 and 2014/15, the Council Tax Freeze Grant for this Council is estimated at £81k. 7.47 It should be noted that the 2013/14 council tax freeze grant is only provided for two years and that this would not be built into the funding baseline for future years . Council Tax 7.48 The Council is committed to do all it could to reduce the financial burdens placed upon its residents during the current economic downturn and the Council was able to freeze its average band D council tax for the third consecutive year in February 2013. 7.49 The Council has limited income generated from council tax; for every 1% increase in the average Band D council tax; there is only an additional £43k of income. 7.50 The MTFP assumes the Council’s average band D Council tax will be 0% and 2.0% for 2014/15 and 2015/16 onwards respectively. Local government funding will be reduced by a further 2% in 2014/15 and that funding in the next Spending Review period reduces by a similar rate. It is probable that this will add extra burdens on the Council tax in the medium term. The decision on council tax will be reviewed every year as part of the budget and council tax setting process . Taxbase for Council Tax Setting 7.51 The Local Government Finance Act 2012 included a number of ‘technical changes’ to Council Tax that give councils the opportunity to change existing discounts or exemptions and to introduce premiums. In order to offset the additional costs of the Council Tax Reduction Scheme, the Council opted to remove the discount on second homes from (previously 10%) and amend the discounts for certain empty properties. Properties that are classified as empty for more than 2 years will pay a 50% premium. 7.52 The financial model assumes a static taxbase with potential increases in the number of new properties offset by potential increases in discounts granted. Levels of discounts are being closely monitored to see if this assumption is reasonable.

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Page 85 2013/14 General Fund Budget 7.53 As part of the budget setting process, information was examined relating to the level of existing resources in each service areas, including the number of staff employed and comparisons have been drawn with historical expenditure data to identify savings areas. All budget options have been considered in the context of current service performance and priorities and all the growth bids went through a challenge process. 7.54 The details of the 2013/14 general fund revenue budget, including growth and savings can be found in the 2013/14 General Fund Revenue Budget report submitted to Council in February 2013. Budget Deficit 7.55 The financial model in Appendix 1 shows a significant decrease in the projected deficits for 2014/15 and 2015/16. The table below shows the latest projected deficits and the reasons for the changes: 2013/14 2014/15 2015/16 2016/17 £000 £000 £000 £000 Projected deficit February Council: 661 1,307 1,546 1,928 less use of reserves: Use of HRA working balance to meet additional GF costs -300 0 0 0 Use of Second homes monies to meet housing costs -190 -190 -170 -150 Use of GF working balance -171 0 0 0 Deficit February Council after use of reserves: 0 1,117 1,376 1,778 Latest projected deficit 0 748 1,168 2,121 Movement in projected deficit 0 -369 -208 343

Reason for movement: MRP - fund Vehicles & Plant from capital receipt 0 -432 -402 -401 Pensions - assumed contribution rate increase 0 74 104 135 Pensions - single tier pension from April 2016 0 0 0 202 Updated interest projections 0 -27 -5 103 Other 0 16 54 104 Movement in projected deficit before Spending Round 2013 0 -369 -249 143 Council tax freeze 2014/15 & 2015/16 0 0 153 313 1% pay award 2015/16 0 0 -112 -113 Movement in projected deficit after Spending Round 2013 0 -369 -208 343

The most significant changes in the deficit projections are as a result of changes to the funding of vehicle and plant replacement in the capital programme and the impact on the Minimum Revenue Provision (MRP) and interest on balances. More details are given in section 10 below. 7.56 Although the short-term deficits have improved, the longer-term deficits currently presented remain at circa £2.0m per year. This figure worsened slightly following the incorporation of new announcements in the Spending Round 2013. 7.57 The Council is focused on achieving savings, primarily through efficiencies. During the budget and planning process there is an emphasis on ensuring resources are directed in the appropriate areas with service efficiencies monitored and reviewed highlighting where further savings can be made. 7.58 The Council base budgets already include over £3m of savings which have been achieved over the last 3 years. Officers have developed further options for Members to begin to consider. These savings options are at the early draft stage and represent potential indicative savings to enable decisions to be made about how the short and medium term Budget will be balanced. These options and the savings element of the Strategy will be

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Page 86 incorporated to the final version of the MTFS to be considered by Council on the 25 July. They include a mix of efficiencies, increase income and working with partners to reduce the burden. 7.59 Consultation on proposed savings has commenced with Members and will be extended to include the public and other stakeholders during the summer and autumn, and included in the 2014/15 Budget considered by Council in February 2014.

8 SENSITIVITY ANALYSIS AND SCENARIO PLANNING 8.1 Risk Management is a key feature of the Council’s financial planning process. The Council is very aware of the need for effective risk management and considers that the assessment and minimisation of all types of risk to be vital. It has an adopted Risk Management Strategy in place, and the financial risks to the Council are assessed in the context of the Council’s overall approach to risk management. 8.2 To mitigate risk the Council regularly monitors its budgets, the corporate Risk Management Process is used by South Lakeland to identify, monitor and report on risks. Quarterly performance monitoring reports provides a platform for the Members to scrutinise the financial and non-financial performance (e.g. local and national indicators). 8.3 Details of the risks facing the Council are highlighted in section 7 and the table below summarises the financial implications if assumptions made in the MTFP change in the future (the details of which are included in section 7 also). This gives some indications to the kind of risks which need to be allowed for in considering the level of reserves in future years. Estimated financial impact 2013/14 2014/15 2015/16 2016/17 2017/18 Assumption £000 £000 £000 £000 £000 Inflation - Pay award 1% higher than assumed 119.1 121.7 124.8 129.7 128.2 Pension contribution - contribution rate 1% higher than 162.2 193.4 227.3 282.7 288.4 expected Inflation on contracts - 1% higher than assumed 110.9 110.9 92.7 91.4 90.0 Average investment interest rate - 1% lower than 103.2 61.2 51.7 46.6 45.6 assumed Retained Business Rates income 1% lower than 18.5 20.6 21.7 22.6 23.5 assumed RSG 1% lower than assumed 30.1 22.3 18.1 14.2 14.2 Income from car parks 1% lower than assumed 40.9 41.7 42.5 43.4 43.4 Income from Council Tax £1 lower than assumed 76.7 78.2 79.8 81.4 83.0

8.4 Some of the greatest risks are around the assumptions relating to income from non- domestic rates and from Government through RSG. The Spending Round 2013 clarified the overall assumptions to be taken for projecting future RSG entitlement, although figures for individual authorities often vary significantly from the average overall change. Individual figures will not be known until the Local Government Finance settlement in November or December 2013. 8.5 There are also a number of variables that will have an impact on income from business rates. Depending on the assumptions made, income retained by the Council in 2017/18 could vary between £2.053m and £2.564m (around 25%). 9 RESERVES 9.1 The Council will retain its approved minimum Working Balance level of £1.5m, reviewing this regularly in the light of changing financial risk assessment. Risks to the Council’s financial position could derive potentially from budget overspend, loss of investment income, contractual/legislative failure or challenge and emergency events. Historically, the

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Page 87 Council has a good record of outturn financial position being within budget; therefore this is not seen as a high risk to the Council and it is not necessary to make additional significant provision. 9.2 The level of risk posed by contractual or legislative failure and emergency events is difficult to predict, but it would be a low probability with a potentially high impact. However, it is not appropriate to set aside large amounts of reserve against the possibility of this happening. Appendix 4 assesses the main financial risks facing the General Fund revenue accounts and the suggested appropriate level of reserve required to offset this risk, were it to materialise. 9.3 In setting budgets and projections for individual years, it is important that the use of reserves is not increasing and creating an unsustainable future problem. To achieve this it is important to note the requirement to meet the budget gap savings identified in Appendix 1. 9.4 Actual levels of reserves are expected to be around £7m by 31/3/14 of which around £1m are earmarked. A summary of the expected levels of reserves at the start and end of 2013/14 are shown below. A copy of the policy for reserves and balances can be found in Appendix 2 and details of the projected balances on reserves at Appendix 3. The balances beyond 2014/15 are less certain as expenditure from reserves and working balances to meet unexpected demands obviously cannot be predicted. 31/03/2013 31/03/2014 £000 £000 General Reserve 1,528.2 1,728.2 Other General Reserves 1,242.1 849.0 Total General Reserves 2,770.3 2,577.2 Capital Reserves 301.7 301.7 Earmarked Reserves (333.8) (340.8) HRA Earmarked Reserves 594.0 341.0 Total Reserves 3,332.2 2,879.1 General Fund working balance 5,280.0 4,288.9 8,612.2 7,168.0 10 CAPITAL Capital spend and funding 10.1 The Council’s Capital Strategy sets out how the Council will manage its capital investments in the future. It is agreed on an annual basis and serves the following purposes: • It sets out how capital contributes to the achievement of the Council’s corporate objectives. • It establishes the criteria for the allocation of capital resources. • It provides a framework for the administration of capital projects and monitoring of outcomes 10.2 The Capital Strategy approved by the Council in February 2012 was the basis for the preparation of the current Capital Programme. Appendix 5 updates the Capital Strategy to reflect the current financial situation. All capital investment and disposal decisions have been made with reference to the strategic objectives within the Council Plan. 10.3 The Council’s capital programme has in general been funded by the use of capital receipts, contributions, major repairs reserve or from capital grants. The current five year capital programme is underpinned by capital receipts generated through the LSVT. Other capital income has declined significantly - capital grants have diminished and there are few non- earmarked capital receipts. The Council is able to use receipts from sales of General Fund assets and Council House sales to fund any type of capital expenditure.

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Page 88 10.4 Prior to the election of the current Government the Council received significant funding from the Northwest Regional Development Agency (NWDA) towards economic development investment. Alongside the abolition of the Regional Development Agencies was a major reduction in capital funding. This has now been recognised nationally and the Government announced in the March 2013 Budget that they will implement the recommendations of the Hestletine review which included establishing a Single Local Government Growth Fund. Local Enterprise Partnerships (LEPs) will be able to bid for funding from this new fund. 10.5 The Capital Programme needs to reflect the capital expenditure necessary to maintain its key assets over the long-term, especially revenue generating assets such as multi-storey car parks. 10.6 The capital programmes for 2013/14 to 2017/18 was approved by Council in February 2013. The programme shown at Appendix 6 has been updated for requested carry- forwards from 2012/13 underspends and new requests. Ideally any new schemes would bring alternate external funds or new capital receipts from the sale of assets. Revenue implications of capital programme 10.7 One of the key drivers for the Council’s approach to capital expenditure is revenue affordability. Most Capital Projects have financial implications on the annual Revenue Budget. The revenue implications can take a variety of forms and they include: • Capital financing costs • Loss of investment income • Annual non-capital financing costs, e.g. salaries, rent, rates, energy costs, on-going maintenance costs and any income generated from the scheme or project 10.8 One of the largest revenue cost is the Minimum Revenue Provision (MRP). This is the statutory requirement to charge the revenue account with the principle cost of borrowing over the life of the asset created. For the purposes of this calculation, borrowing is treated as any expenditure not funded by capital receipts or contributions. 10.9 The Council’s Capital Strategy has traditionally used leasing or borrowing to fund the purchase of vehicles and plant. This has resulted in a large increase in the projected MRP. By applying capital receipts to the Vehicle and Plant spend for 2010/11 and 2012/13 it has been possible to reduce the MRP, although it has reduced the level of resources available for funding future capital expenditure. 10.10 The table below shows how the MRP is projected to increase to reflect the additional costs arising from using borrowing to fund the vehicle and plant replacement programme: 2013/14 2014/15 2015/16 2016/17 2017/18 £000 £000 £000 £000 £000 Projected vehicle and plant capital expenditure 2533 133 373 1715 840 Projected MRP 66 446 466 495 752 These projections are included in the General Fund financial model 2013/14 – 2017/18 in Appendix 1 and the General Fund deficit projections discussed above in section 7. 11 VALUE FOR MONEY AND EFFICIENCY 11.1 Value for Money (VFM) is an assessment of whether or not we obtain the maximum benefit from the goods and services we both acquire and provide, within the resources available to achieve it. This assessment includes considerations about suitability, quality, whole life costs and the relationship between economy, efficiency and effectiveness. 11.2 Value for money remains an integral part of the external audit opinion. The general feedback was that the council had consolidated previous improvements and demonstrates good value for money across our services.

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Page 89 11.3 The Council’s Value for Money Strategy (Appendix 7) provides a framework on how the Council aims to maximise its resources. 12 WORKING WITH PARTNERS 12.1 The council is committed to working with partners and other key stakeholders to deliver services within South Lakeland. This includes • Formal contractual arrangements as a result of competitive tendering • Transfer of assets between organisations • Sharing of premises • Informal collaborations The One South Lakeland strategic partnership exists to promote strong partnership working in areas where the Council is not the lead organisation. Some shared arrangements exist for providing services within the organisation: currently South Lakeland shares procurement, IT and Revenues and Benefits management with Eden District Council. 13 CONSULTATION STRATEGY, APPROVAL AND COMMUNICATION PROCESS 13.1 The council carries out regular consultation with local people, customers, stakeholders, and partners organisations to establish current and future needs and priorities of the community. The MTFP is submitted to Cabinet annually for approval. It is subject to challenge and scrutiny through the Overview and Scrutiny Committee before final approval by Council. 13.2 Once approved the MTFP will be communicated to all stakeholders. This will include using the internet/intranet and newsletters to staff and customers. 13.3 The MTRP is reviewed at least quarterly and forecasts are updated as necessary and reported as part of the Quarterly Corporate Financial Monitoring process. 13.4 The Council consults on its budget proposals with business ratepayers in accordance with statutory requirements. 14 EQUALITY IMPACT ASSESSMENTS (EIA) 14.1 The council is committed to ensuring equality and diversity issues are given proper consideration. Equality Impact Assessments an important part of our decision making to enable us to assess the impact of decisions on our residents, stakeholders and customers. Where the impact is high mitigation plans can be developed to reduce the impact of decisions. These are completed in accordance with national guidance and best practice. 14.2 In developing individual budget proposals officers have undertaken equality impact assessments. An overall equality impact assessment was prepared for the 2013/14 budget process and proposals and this will be reviewed as part of each annual budget process. 15 CONCLUSION AND WAY FORWARD 15.1 The MTFP should be considered in the context of the following issues: • The current economic climate and the major reductions in local government funding as indicated in the Comprehensive Spending Review 2010 and subsequent Budgets. • The Council’s undoubted financial strength as shown by the healthy General Fund balances, robust financial management and excellent track record in achieving efficiency savings • That challenging decisions will still need to be made to safeguard frontline services and maintain a balanced budget. • There will be significant changes to the local government finance system from 2013/14. A the same time the Council will have to deal with the impact of the localisation of council tax support, as well as Universal Credit, the effects of which

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Page 90 will only be known in 2013/14. There is a possibility that the funding levels in future years could be materially different compared to the assumptions made in this document. 15.2 The financial position over the medium term is shown in Appendix 1. This shows potential deficits increasing to £2m by 2017/18. The Council has begun to develop potential savings to meet this deficit and will be consulting over the summer and autumn to refine the list before the preparation of 2014/15 budgets.

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Page 91 Appendices 1 General Fund Revenue Account Forecast 2013/14 – 2017/18 & analysis of movements 2 Policy on Reserves and Balances 3 General Fund forecast reserves 2012/13 – 2017/18 4 General Fund risk assessment of Reserves 5 Capital Strategy 6 Capital Expenditure & Income Forecast 7 Value for Money and Efficiency Strategy 8 Risk & Opportunity Log & Matrices 9 Glossary 10 Key Source Documents

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Page 92 DRAFT Appendix 1 Medium Term Financial Forecast - General Fund

2013/14 2014/15 2015/16 2016/17 2017/18 Approved Projection Projection Projection Projection Budget* Expenditure £000 £000 £000 £000 tbc Direct Employee Costs 9,631 9,783 9,876 10,065 tbc National Insurance 766 783 807 1,031 tbc Pension 2,180 2,288 2,365 2,441 tbc Running Costs 9,704 9,813 9,857 9,923 tbc Capital Charges 2,300 2,675 2,536 2,351 tbc Uncommitted Growth 0 0 150 300 tbc 24,581 25,343 25,590 26,111 tbc

Income Government Grants (Including NHB) (634) (779) (829) (879) tbc Other Contributions (1,162) (1,056) (1,055) (1,060) tbc Car Parking Income (4,086) (4,168) (4,251) (4,336) tbc Lake Income (1,086) (1,405) (1,653) (1,686) tbc Recycling Credits (1,025) (1,025) (1,025) (1,025) tbc General Income (3,481) (3,531) (3,629) (3,676) tbc (11,474) (11,964) (12,442) (12,662) tbc

Total service expenditure 13,107 13,379 13,148 13,449 tbc

Corporate Items Interest payable 897 689 701 754 tbc Interest receivable (296) (98) (93) (89) tbc Council Tax Freeze Grant (81) (235) (156) 0 tbc SLDC Council Tax (excluding parish precepts) (7,707) (7,707) (7,707) (7,863) tbc Parish share of CT benefit grant 92 92 92 92 tbc NNDR retained (1,831) (2,058) (2,168) (2,263) tbc RSG Other Govt Grants (3,014) (2,230) (1,811) (1,420) tbc Reversal of Capital Charges (2,300) (2,675) (2,536) (2,351) tbc Minimum Revenue Provision 486 446 466 495 tbc Support to Capital Programme Direct Revenue Financing 145 889 975 1,062 tbc Deficit on Collection Fund 32 32 32 32 tbc Transfer from Reserves Other Funds/Reserves (167) (911) (997) (1,084) tbc Transfer to Reserves General Reserve 1,298 1,134 1,220 1,307 tbc Planned Use of Working Balance 0 0 0 0 tbc Total Corporate Items (12,446) (12,631) (11,981) (11,328) tbc

PROJECTED DEFICIT 661 748 1,168 2,121 tbc

Projected deficit February Council: 661 1,307 1,546 1,928 n/a less use of reserves: Use of HRA working balance to meet additional GF costs (300) 0 0 0 n/a Use of Second homes monies to meet housing costs (190) (190) (170) (150) n/a Use of GF working balance (171) 0 0 0 n/a Deficit February Council after use of reserves: 0 1,117 1,376 1,778 n/a Latest projected deficit 0 748 1,168 2,121 tbc Movement in projected deficit 0 (369) (208) 343 n/a

Reason for movement: MRP - fund V&P from capital receipt 0 (432) (402) (401) n/a Pensions - assumed contribution rate increase 0 74 104 135 n/a Pensions - introduction of single tier pension from April 2016 0 0 0 202 n/a NNDR updated figures for projected appeals 0 (52) (30) 3 n/a RSG - 1% reduction announced Budget 2013 (assumed to be recurring) 0 46 46 46 n/a

Collection fund deficit - assume current deficit continues in future 0 32 32 32 n/a Second homes fund & New Homes Bonus funding updated figures 0 (10) 6 23 n/a

Updated interest projections 0 (27) (5) 103 n/a Deficits before Spending Round 2013 0 (369) (249) 143 n/a Spending Round: Council Tax freeze 2014/15 & 2015/16 0 0 153 313 n/a Spending Round: 1% pay award 2015/16 0 0 (112) (113) n/a Deficits following Spending Round 2013 0 (369) (208) 343 n/a Page 93 Appendix 2

Policy on Reserves and Balances Purpose A Policy for Reserve and Balances represents good financial management and should be reviewed annually. The Local Government Finance Act 1992 and Local Government Act 2003 set out that a range of safeguards to mitigate against local authorities over-committing themselves financially. These include: the balanced budget requirement Chief Finance Officers’ duty to report robustness of estimates and adequacy of reserves when considering the budget requirement. Requirement for local authority to make arrangements for proper administration of their financial affairs and that the Chief Finance Officer is that responsible person (Section 151 duties) the requirements of the Prudential Code . the External Auditor will consider whether audited bodies have established adequate arrangements to ensure that their financial position is soundly based. Types of Reserves Reserves can be held for three main purposes: • a working balance to help cushion the impact of uneven cash flows and avoid unnecessary temporary borrowing – this forms part of general reserves • a contingency to cushion the impact of unexpected events or emergencies – this also forms part of general reserves • a means of building up funds, often referred to as earmarked reserves, to meet known or predicted liabilities. The Council also holds other reserves that arise out of the interaction of legislation and proper accounting practice. This reserves are not resource backed and cannot be used for other purposes include : • a Pensions Reserve ( required under IAS19 ). This is a specific accounting mechanism used to recognise the Council’s share of pension fund liabilities in its balance sheet. As this is a reserve which arises from an accounting standard it is not available to finance Council expenditure. • a Revaluation Reserve – this records unrealised gains in the value of fixed assets. • a Capital Adjustment Account – this is a specific accounting mechanism used to reconcile different rates at which assets are depreciated under proper accounting practice and financed through the capital controls system. For each earmarked reserve held by the Council there should be a clear protocol setting out: • the reason for/purpose of the reserve • how and when the reserve can be used

Page 94 Appendix 2

• procedures for the reserve’s management and control • a process and timescale for review of the reserve to ensure continuing relevance and adequacy. This Reserves and Balances Policy ensures that when establishing reserves, South Lakeland Council complies with the Code of Practice on Local Authority Accounting in the United Kingdom (the Code) and in particular the need to distinguish between reserves and provisions. Under the Council’s Constitution, the power to establish financial reserves is limited to full Council except that Cabinet can set aside minor amounts (up to £35,000 in aggregate) where this would assist in the efficient operation of the Council’s activities. Similarly Council determines the use of reserves although Cabinet can make or adjust transfers from reserves up to £35,000 to assist in the Council’s financial management. For balances on Reserves see Appendix 3. Policy This summary sets out the Council’s policy on each one. It details the level and nature/purpose of each reserve. In all cases these are based on an assessment of needs and risk. The fundamental principle governing the use of reserves is that they should not be used to fund recurring expenditure. If exceptional circumstances make this a necessity, the use of the reserve should be clearly stated and approved as an exception to the rule. GENERAL (UNEARMARKED) RESERVES 1. General Reserve Purpose: To provide a buffer against future financial risks in the medium term: pension fund contributions, government grant, investment income, contract review factors To enable the Council to progress major organisational and transformational changes by providing resources to fund the initial costs of those developments. Level: The level of this reserve is determined in conjunction with that of the General Fund Working Balance. Relevant factors are an assessment of risks attaching to: pay and pension costs inflationary pressures interest rates government grant income from fees and charges. (For more details of the risk and an assessment of the potential financial exposure please see the Risk Assessment of Level of Reserves – at Appendix 4). The main use of this reserve in recent years has been to fund the one-off costs of staff redundancy and early retirements to enable

Page 95 Appendix 2

organisational reorganisation and the discontinuation of direct provision of services. The Medium Term Financial Plan provisionally assumes a £200,000 annual contribution to the Reserve, depending on quantification of the potential impact of these factors. Taking these into account alongside an allowance for organisational changes, the target minimum balance for the reserve should be £1.0m with a preferred level of £1.5m which is approximately 10% of net revenue expenditure. The maximum balance should be set at £3.0m Unless allocated for a particular purpose, revenue budget under-spending and windfalls are added to the General Reserve. Following the closure of the Risk Management Fund, and the transfer of the balance on that fund to the General Reserve, £100,000 has been earmarked for risk management activities. 2. LABGI Reserve Purpose: To fund non-recurring initiatives that contribute directly to one or more of the Council’s priority initiatives, with a preference for economic development. Level: The Reserve accumulated funds from the Government’s Local Authority Business Growth Incentive (LABGI) scheme grant. Grants received under the LABGI scheme should be the only contributions to the Reserve – there should be no minimum or maximum contribution. The minimum balance on the reserve should be zero. This fund is now practically fully committed and should be closed once the committed spend is achieved. 3. General Fund Major Repairs Reserve Purpose: To fund major repairs and maintenance to General Fund properties that are not capitalisable and would be difficult to accommodate in the annual planned maintenance programme, on the basis that the Reserve: o acts as a backstop for emergency major repairs o accumulates funds as necessary to meet an abnormal year in maintenance terms o is able to assist in meeting regular maintenance costs. Level: The Reserve has been accumulating funds so that it can deal with the larger repairs for which it was established. The annual contribution is £50,000. A minimum backstop requirement of £50,000 per annum should be set for the contribution to the Reserve with a target of at least £100,000 and a maximum of £500,000 in advance of an abnormal maintenance year.

Page 96 Appendix 2

4. IT Replacement Reserve Purpose: To fund the replacement of hardware and software with a preference for the updating of the corporate and networking infrastructure. Level: The Reserve has been used regularly since its inception and is a valuable addition to mainstream funding. With the introduction of the IT shared service there will no longer be a requirement for SLDC alone to fund all replacement of servers, for example. Additionally, the use of virtual servers and increased use of thin-client technology has reduced the costs of IT replacements. The minimum level should be £40,000 and a maximum of £250,000. It is proposed the annual contribution is a minimum of £40,000. 5. Economic Development Fund Purpose: To encourage economic development in the District and to ensure that unused funds in a particular year can be carried forward. Level: The Fund assists the Economic Development Strategy by carrying forward resources that cannot be spent at the end of a budget year. Its maximum level should be linked to the Constitution’s limits and set at £35,000 plus amounts earmarked for specific purposes. 6. Planning Delivery Grant Reserve Purpose: To enable monies provided by Planning Delivery Grant to be earmarked for expenditure and to be carried forward for use in a subsequent accounting period if necessary Level: Established in March 2010 when Planning Delivery Grant was no longer earmarked by government. The balance in the fund represents monies received in 2009/10 but not spent by 31 March 2010. This source of grant funding has now been discontinued and the fund will be closed when the current balance is spent. The maximum level should therefore be £127,000 and the minimum level zero. 7. Local Arts Strategic Partnership Reserve Purpose: To enable monies received relating to the Arts Strategy to be carried forward and spend in future years. Level: The Reserve was established with an opening balance of £110,600. The minimum level is zero.

Page 97 Appendix 2

8. New Homes Bonus Reserve Purpose: To enable monies provided by New Homes Bonus to be earmarked for expenditure and to be carried forward for use in a subsequent accounting period if necessary. Level: The balance in the fund represents monies received from the New Homes Bonus received but not spent by 31 March of each year. The maximum level should not exceed £1,000,000 and the minimum level should be zero. 9. Promoting South Lakeland Reserve Purpose: To establish a fund of monies to be used to support South Lakeland. Level: The opening balance in the fund of £60,000 will be transferred during 2013/14 from the General Fund working balance. The maximum level should not exceed £60,000 and the minimum level should be zero. It is proposed that the Leader, in collaborations with the other Cabinet members would be authorised to approve expenditure from this Reserve without requiring approval of Council. 10.Waste Contract Reserve Purpose: To enable surpluses generated by the Streetcare service under the Refuse, Recycling and Street Cleansing contract to be carried forward and used in future years to offset any deficits generated under the contract. Level: The maximum level should not exceed £1,000,000 and the minimum level should be zero. CAPITAL RESERVES 11.Fund of Revenue Monies for Capital Purposes Purpose: To provide support to the Capital Programme To supplement the capital finance available to the Programme by revenue contributions To cover ‘grey area’ expenditure and allow flexibility in financing decisions. Level: The level of the Fund depends on the Council’s holding of capital receipts and its aspirations for capital expenditure. The Council aims to build up the Fund in preference to retaining capital receipts by converting and ‘switching’ resources wherever possible when financing capital expenditure. The Fund should have a minimum balance available at the 31 March each year prior to funding the capital programme of £100,000 to ensure that it has a buffer to

Page 98 Appendix 2

meet unexpected un-capitalisable expenditure. An appropriate operational maximum level for the Fund from 1 April 2011 would be £2,000,000. 12.Second Homes Income Reserve Purpose: To enable monies provided by reducing council tax discounts to be earmarked for capital expenditure and to be carried forward for use in a subsequent accounting period if necessary Level: The annual income from second homes is currently around £750,000. It is spent on a mixture of large developments and programmes of minor assistance to meet the need for affordable housing. The reserve acts to preserve the funds in the event of slippage: if expenditure matches plans, the minimum balance will be zero. The maximum level should be 25% of the annual income i.e. £250,000 although this could be exceeded in exceptional circumstances where funds are being accumulated over a period of years for a major project. EARMARKED RESERVES 13.Kendal Employment Development Fund Purpose: To assist economic development in the Kendal area. Level: The Fund was set up by a Section 106 legal agreement that made a contribution of £200,000 to the Council with strict conditions on its use. Since grants are paid out from the Fund and its only on-going source of income is loan repayments the Fund will never exceed the initial contribution. The minimum level is zero. 14.Local Land Charges Reserve Purpose: To record surpluses and losses on the chargeable elements of local land charges in accordance with statutory guidance. Level: Operating surpluses can only be used for investment back into the service. A minimum level of £100,000 debit is specified as (in theory) the Reserve could fall into deficit in the first or second years of the accounting cycle. The maximum level of £100,000 is related to the annual turnover of around £200,000. 15.Building Control Fee Income Reserve Purpose: To record surpluses and losses on the trading activities of building control in accordance with statutory guidance.

Page 99 Appendix 2

Level: Building control operates in a commercial environment with a three year rolling accounting period. Operating surpluses can only be used for investment back into the service. A minimum level of £300,000 debit is specified as (in theory) the Reserve could fall into deficit in the first or second years of the accounting cycle. The maximum level of £300,000 is related to the annual turnover of around £700,000. 16.HRA Major Repairs Reserve Purpose: A statutory reserve to record income from the HRA Major Repairs Allowance and its spending on HRA major repairs. After funding repairs on residual HRA assets during 2012/13 the remaining balance will be used to fund the repayment of housing-related debt Level: The HRA MRR had a balance of £267,000 at 1 April 2012, therefore the maximum balance is £300,000 and the minimum balance is zero. 17.HRA Environmental Warranty Reserve Purpose: This reserve was established as part of the housing transfer. Part of the costs of transfer was to fund insurance for 30-year environmental warranties given as part of the transfer agreement. Since insurance could only be procured for the first 10 years, this reserve is to fund the purchase of insurance from 2022 onwards. Level: At the time of transfer the cost of insurances for 20 years was £341,000. The maximum level of the reserve should be the estimated cost of insurances to be purchased, the minimum balance should be zero when the insurance is fully paid-for. WORKING BALANCES 18.General Fund Working Balance Purpose: To provide a general working balance and contingency to cushion the Council against uneven cash flows, sharp budgetary changes and unexpected events or emergencies. Level: The level of the Working Balance is set by reference to the risks attaching to the General Reserve. In essence the Working Balance represents the Council’s backstop contingency and its bare minimum reserve that should never be depleted. The level has been £1.0m historically but this was to be increased in £50,000 annual steps to a target level of £1.5m. Due to General Fund underspends over recent years the Working Balance increased to £5.22m, including the balance of the HRA working balance transferred to the General Fund on 31 March 2013. The forecast level at 1 April 2014 is £4.40m.

Page 100 Appendix 2

19.Housing Revenue Account Working Balance Purpose: To provide a general working balance and contingency to cushion the Housing Revenue Account against uneven cash flows, sharp budgetary changes and unexpected events or emergencies. Level: The Council sold its entire HRA housing stock to South Lakes Housing in March 2012. The Secretary of State granted approval to close the HRA on 31 March 2013. The balance on the HRA working balance was transferred to the General Fund working balance.

Page 101 Reserves Summary Appendix 3

2011/12Balance 2012/13 Balance 2013/14 Balance 2014/15 Balance 2015/16 Balance2016/17 Balance

SUMMARY PURPOSE AND COMMENTARY Use Planned Planned Planned Planned Actual Use Contribution Contribution Contribution Contribution Contribution 1 April 2012 Planned Use Planned Use Planned Use Planned Use 31 March 2014 31 March 2013 31 March 2015 31 March 2016 31 March 2017 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 GENERAL RESERVES

Buffer against future financial risks: changes in General Reserve (872.2) 1,650.8 200.0 (322.6) 1,528.2 200.0 - 1,728.2 200.0 - 1,928.2 200.0 - 2,128.2 200.0 - 2,328.2 government funding, pension contributions, legal challenges, on-off costs of service reviews. Appropriate non-recurring initiatives that contribute directly to one or more of the Council’s priority LABGI Reserve (113.7) 166.3 - (79.7) 86.6 -- 86.6 -- 86.6 -- 86.6 -- 86.6 objectives, with a preference for economic regeneration. GF Major Repairs Reserve (258.3) 285.7 50.0 - 335.7 50.0 - 385.7 50.0 - 435.7 50.0 - 485.7 50.0 - 535.7 Major repairs and renewals of Council assets IT Replacement Reserve (45.0) 129.0 40.0 (32.6) 136.4 40.0 (45.0) 131.4 40.0 (45.0) 126.4 40.0 (45.0) 121.4 40.0 (45.0) 116.4 Replacement of IT equipment Economic Development Fund - 12.1 - (7.0) 5.1 - 5.1 -- 5.1 -- 5.1 -- 5.1 Encouraging economic development in the District Monies provided by Planning Delivery Grant in Planning Delivery Grant (25.1) 136.3 - (52.3) 84.0 - (32.0) 52.0 - (25.0) 27.0 - (25.0) 2.0 - (19.3) (17.3) 2009/10 carried forward for use in a subsequent Reserve years

Local Arts Strategic Monies provided towards Arts Strategy and related 110.6 - (54.9) 55.7 - (55.7) ------Partnership Reserve activies carried forward for use in subsequent years.

Page 102 New reserve to enable forward funding of schemes New Homes Bonus Reserve - 31.9 68.2 - 100.1 228.1 (300.0) 28.2 228.1 (220.0) 36.3 228.1 (220.0) 44.4 228.1 (220.0) 52.5 eligible for funding through the Council's New Homes Bonus protocol Promoting South Lakeland - -- - 60.0 - 60.0 -- 60.0 -- 60.0 -- 60.0 Promoting South Lakeland Reserve Accumulated surpluses or deficits on the Council's Waste Contract Reserve (48.2) 182.8 255.7 - 438.5 - (338.5) 100.0 -- 100.0 -- 100.0 -- 100.0 waste contract. Total: General Reserves (1,362.5) 2,705.5 613.9 (549.1) 2,770.3 578.1 (771.2) 2,577.2 518.1 (290.0) 2,805.3 518.1 (290.0) 3,033.4 518.1 (284.3) 3,267.2

Total: Capital Reserves (688.2) 207.8 833.0 (739.1) 301.7 583.6 (583.6) 301.7 599.7 (599.7) 301.7 635.7 (635.7) 301.7 672.5 (672.5) 301.7

EARMARKED RESERVES Kendal Employment Assistance to eligible developing firms in the Kendal (15.3) 51.7 - (13.6) 38.1 -- 38.1 -- 38.1 -- 38.1 -- 38.1 Development Fund area Statutory ring fenced reserve to record surpluses Local Land Charges Reserve - 72.7 - (87.7) (15.0) - (7.0) (22.0) -- (22.0) -- (22.0) -- (22.0) and losses on the trading activities of local land charges. Statutory ring fenced reserve to record surpluses Building Control Fee Income (154.1) (160.1) - (196.8) (356.9) -- (356.9) -- (356.9) -- (356.9) -- (356.9) and losses on the trading activities of building Reserve control.

Total: Earmarked Reserves (169.4) (35.7) - (298.1) (333.8) - (7.0) (340.8) - - (340.8) - - (340.8) - - (340.8)

TOTAL RESERVES (2,220.1) 2,877.6 1,446.9 (1,586.3) 2,738.2 1,161.7 (1,361.8) 2,538.1 1,117.8 (889.7) 2,766.2 1,153.8 (925.7) 2,994.3 1,190.6 (956.8) 3,228.1

Buffer against unforeseen & emergency GENERAL FUND WORKING - 4,026.8 1,253.2 - 5,280.0 - (991.1) 4,288.9 - - 4,288.9 - - 4,288.9 - - 4,288.9 expenditure, inflationary demands, adverse cash BALANCE flow, inability to use capital resources. Reserves Summary Appendix 3

2011/12Balance 2012/13 Balance 2013/14 Balance 2014/15 Balance 2015/16 Balance2016/17 Balance

SUMMARY PURPOSE AND COMMENTARY Use Planned Planned Planned Planned Actual Use Contribution Contribution Contribution Contribution Contribution 1 April 2012 Planned Use Planned Use Planned Use Planned Use 31 March 2014 31 March 2013 31 March 2015 31 March 2016 31 March 2017 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000

HRA Environmental Warranty Environmental insurance in 2022 relating to - 341.0 - - 341.0 - - 341.0 - - 341.0 - - 341.0 - - 341.0 Reserve warranties given as part of the housing transfer.

TOTAL HRA EARMARKED (5,170.4) 608.0 42.4 (56.4) 594.0 - (253.0) 341.0 - - 341.0 - - 341.0 - - 341.0 RESERVES

Buffer against unforeseen & emergency HOUSING REVENUE expenditure, uncommitted closing balance to be ACCOUNT WORKING (373.5)560.5 - (560.5) ------transferred to General Fund working balance to fund BALANCE interest on housing debt 2013/14 Page 103 MEDIUM TERM FINANCIAL PLAN APPENDIX 4 RISK ASSESSEMENT OF LEVEL OF RESERVES

Financial Balance Risk Exposure Required Potential Risk Score Weighting (£000) (£000) Comment (Basis of Financial Exposure) Base Budget Contingency for inflation or other 4 50% 262 131 Assumed at 2% of Net Revenue Budget unanticipated rise. Underachievement of Charges Income targets 4 50% 432 216 Estimate of 5% Customer Receipts Income forecasts for 2012/13 and spending exceeds budgets Underachievement of Investment Income 4 50% 130 65 1% of exposure of average balance of £13m Unspend budgets and grants from 2012/13 include in working balance at 31/3/13 but carried- Funding of carry-forwards 9 100% 343 343 forward for spending 2013/14. Bellwin scheme cuts in at 0.2% of net budget and provides for up to 85% of eligible costs (assume Civil Emergencies 6 75% 146 110 £1m cost - not covered by insurance) Insurance Excesses 2 25% 35 9 Based on 5% of insurance premia payments

Potential costs of legal challenges 2 25% 200 50 Based on estimated cost of public enquiry

Savings not achieved 2 25% 2,236 559 Target savings from 2013/14 onwards

Vacancy target not delivered 2 25% 356 89 Staff vacancy target topsliced from salary budgets

Pay increase 3 50% 117 58 1% allowance made in budget for pay increase for 2013/14. Impact of 1% pay award

Page 104 Increase in pension contributions 4 50% 360 180 Allowance for 1.5% increase in pension fund contributions at next triennial revaluation Changes to existing government funding 9 100% 569 569 25% of Total of RSG funding, based on 2014/15 provisional settlement regimes Changes to existing government grants 4 50% 404 202 25% of total revenue grants received, excluding benefit subsidy and formula grant

Impact of introduction of Universal Credit 4 50% 450 225 Increase in homelessness, changes in administration arrangements, reduction in collection rate etc General Fund Reserve Balance - Audit Commission Guidance states prudent level is 5% of Net Dependence on reserves and general balances 3 50% 655 328 Revenue Expenditure Assume 50% of maximum exposure to reduction in rateable values before safety net (assuming Localisation of business rates 4 50% 50 25 safety net set at 7.5%) Localisation of business rates 4 50% 76 38 Assume 50% of appeals allowed: budget assumed 25% allowed

Building Control Income Reserve 9 100% 356 356 Unlikely to generate sufficient surplus to offset accumulated trading deficits

Council tax reduction scheme 4 50% 558 279 Based on 10% increase in claims based on 2012/13 estimate £5,578,000

Earmarked reserve for delivery of savings 100% 400 400 Potential one-off costs of delivery of savings

Risk Management 100% 100 100 Monies set aside to meet the one-off costs of risk management.

Emergency Contingency 100% 1,000 1,000 Emergency contingency fund - Council practice to allocate £1m for any unforeseen emergencies

TOTALS 9,235 5,331

Maximum Risk Based Reserve Balances 9,235 Total Financial Exposure Minimum Risk Based Reserve Balances 2,309 25% of Total Financial Exposure

Current Level of Reserves - General Fund Working Balance 4,401 Estimated balance 31/3/14 - General Reserve 1,850 Estimated balance 31/3/14 Current Level of Reserves (Projected as at 31/03/14) (General Fund ) 6,251

Projected (Shortfall)/Excess of Current Reserve Balance over Risk Based 920 Appendix 5

Capital Strategy 1. Introduction This Capital Strategy sets out the Council’s approach to meeting community and service needs through its capital investment programme. The Council’s priorities, objectives and corporate outcomes are set out in its current Council Plan which was approved 28 February 2013. The Plan is supported by a set of annual service plans. The Capital Strategy describes how the deployment of capital resources will contribute to the achievement of these objectives. The Capital Strategy will continue to be reviewed with regard to its relevance in the changing context in which local government organisations work. 2. Current Economic Context The current economic climate provides significant challenges for the Council. The demand for investment in the regeneration and renewal of infrastructure and assets continues, whilst at the same time the resources available to the Council are constrained by proposed reductions in public service expenditure following successive Comprehensive Spending Reviews. These reductions impact directly on the Council and on the resources available to partners. 3. Council Assets The Council owned property, plant and equipment, assets, investment properties and heritage assets with a total net book value of £46.9m at March 2013. Council assets include 47 car parks, 137 parks and open spaces, 9 cemeteries, 6 depots and 3 sports centres. The Council also owns a large number of commercial properties and agricultural land used to generate income . OVERARCHING STRATEGY 4. The Council’s capital strategy is to deliver a capital programme that: Contributes to the Council Plan, and the Council’s vision, values, strategic objectives and priorities Is closely aligned with the Council’s Asset Management Plan Supports service-specific and other plans and strategies Is affordable, financially prudent and sustainable, contributes to better value for money 5. The capital strategy will be delivered through: Effective political and corporate leadership Adequate and effective performance management arrangements Clearly defined processes for building and monitoring the capital programme Clear policies on financing capital expenditure Effective risk management arrangements A clear procurement protocol 6. In prioritising the Capital Programme, particular emphasis will be given to schemes that: Achieve the Council’s priorities Improve performance against national and local targets

Page 105 Appendix 5

Improve efficiency and effectiveness in service delivery, including through partnership working Generate or increase income streams Promote effective Asset Management, including DDA and Health & Safety issues LINKS TO OTHER PLANS & STRATEGIES 7. This Capital strategy links to, and is consistent with, the following other plans and strategies: Council Plan Service Plans & Strategies Medium Term Financial Strategy Corporate Asset Strategy Risk Management Strategy Procurement Strategy Treasury Management Strategy AFFORDABILITY, SUSTAINABILITY, PRUDENCE AND VALUE FOR MONEY 8. The Prudential Code The CIPFA Prudential Code for Capital Finance in Local Authorities (the Prudential Code) was introduced by the Local Government Act 2003. It sets out the concepts of affordability, sustainability and prudence as they apply to capital expenditure. A key objective of the Prudential Code is to ensure that the capital investment plans of the local authority are affordable, prudent and sustainable. To demonstrate that these objectives have been met the Code sets out the prudential indicators that must be used, and the factors that must be taken into account. These are designed to support and record local decision-making in a manner that is publicly accountable. Affordability The fundamental objective in determining the affordability of the authority’s capital plans is to ensure that the total capital investment remains within sustainable limits. This includes considering the impact on Council Tax. The Council is required to take into account all its current and forecast resources, together with the capital expenditure plans and revenue income and expenditure forecasts for the coming year and the following two years. This is done on a rolling basis, with regard to risk analysis and risk management strategies. Any significant known variations beyond this time frame must also be considered. Prudence and Sustainability Prudence and sustainability year on year are addressed through the prudential indicators for external debt, which must be set and revised taking into account their affordability. The key indicator of prudence laid down by the Code is that net external borrowing should not, except in the short term, exceed the total of the capital financing requirement in the preceding year, plus the estimates of any

Page 106 Appendix 5

additional capital financing requirement for the current and next two financial years. This ensures that, over the medium term, net borrowing will only be for capital purposes. It is also prudent to carry out treasury management activities in accordance with good practice, and the Prudential Code sets a number of indicators to address this. South Lakeland District Council and the Prudential Code The Council addresses the issues of affordability, prudence and sustainability in its capital investment plans by complying with the requirements of the Prudential Code. This includes the setting of the prudential indicators by Council in February and the monitoring of prudential through the Corporate Quarterly Financial Monitoring process. 9. Value for Money It is important that best value for money is obtained from capital investment. The Council is committed to making continuous improvements to processes and practices to increase value for money. Those that are embedded or being developed include: Improvements to procurement Investing to improve performance and/or generate efficiency savings (spend to save) Working with partners to improve efficiency In assessing capital bids the Council first considers whether the proposed capital investment represents the most efficient way of delivering the desired outcomes, i.e. whether there are alternative approaches to resolving the problem that provide greater value for money. 10. Minimum Revenue Provision (MRP) The Council is required to make provision for the principal repayment of borrowing. Prior to 2007-08 the Council was required by statute to provide for the repayment of a minimum amount of 4% of General Fund debt principal each year. This debt repayment is known as the Minimum Revenue Provision (MRP). New regulations, the Local Authorities (Capital Finance & Accounting) (England) (Amendment) Regulations 2008, which came into force in February 2008, now require the Council to make instead ‘prudent provision’ for the repayment of debt. A number of options for prudent provision are set out in the regulations. The underlying principle is that the repayment of debt should be aligned to the useful life of the asset or assets to which it relates. The authority is required, under the new regulations, to prepare an annual statement of their policy on making MRP for submission to Council. The Council’s policy statement on MRP is set out in the annual Treasury Strategy, which is agreed by Council during Feb/March each year.

Page 107 Appendix 5

FINANCING CAPITAL EXPENDITURE 11. Overview Decisions on capital investment are made against the background of constrained resources, and the Council is heavily dependent upon capital receipts and grants from central government to support its capital programme. Other available funding sources include prudential borrowing, third party contributions, and revenue contributions. These are all actively pursued to support capital investment. 12. Capital Receipts Capital receipts are derived from asset sales. These could include income to the Council as lessor from finance leases. Asset sales come from a variety of sources. Generally speaking, 100% of asset sales can be used to support capital expenditure. Sometimes the asset sale is linked directly to a capital project, for example in a relocation scheme. More often, asset sales relate to surplus assets that are held corporately and are not specific to a scheme or service. The Council completed the transfer of its housing stock to South Lakes Housing, a registered social landlord, in March 2012. Under the terms of the transfer agreement the Council received both an initial capital receipt and will receive future capital receipts from the sale of houses, other assets and from a VAT shelter. The amount of receipts from asset sales is dependent on both the type of asset itself and on economic and market conditions. The current economic climate has significantly reduced the number of sales and the amount of receipts. 13. Unsupported Borrowing The Local Government Act 2003 introduced new flexibilities into the capital expenditure and financing rules governing local authorities. The new rules, contained in the ‘Prudential Code’, allow local authorities to set their own limits with regard to borrowing undertaken to support capital expenditure. Additional borrowing may now be undertaken, provided that it is, and can be shown to be, prudent, affordable and sustainable. This method of financing capital expenditure is called “unsupported borrowing”. In order for unsupported borrowing to be prudent, affordable and sustainable, there must be an identifiable, long-term source of revenue funding for the associated revenue (debt financing) costs. Ideally this will come from revenue savings or additional income arising directly from the capital scheme. For example, refurbishment of a building may generate maintenance and/or energy savings, or the building of a car park could generate income through charges. The cost of borrowing therefore should be borne by the service that uses the asset. 14. Supported Borrowing The other form of borrowing available for funding the capital programme is supported borrowing. This is where the costs of the borrowing are part recognised in the formula grant settlement and are therefore ‘supported’.

Page 108 Appendix 5

However the formula grant does not cover the full cost of the borrowing undertaken. As a district authority supported borrowing allocations are very limited, generally only housing supported borrowing allocations have been made available in recent years. 15. Government Grants The conditions attached to government grants vary according to the particular grant. Some will fund the full cost of the scheme, others just a percentage, with the local authority having to fund the balance. Most, but not all, grants are time-limited. Government grants tend to be focussed towards central government priorities. 16. Third Party Contributions As with government grants the conditions attached to third party contributions vary. This category of funding is becoming of increasing importance to the Council in a climate of stretched local government resources. Included here are: Planning obligations funding from Section 106 agreements (developer contributions) National Lottery grants Contributions from local bodies. Contributions from national bodies . 17. Revenue Contributions In the past revenue contributions have been a fairly minor source of capital financing for the Council due to pressures on the revenue budget. They are, however, sometimes used to top up small shortfalls in the funding required for a particular scheme. 18. Reserves The Council uses a number of reserves to fund the capital programme. There are two main types: Reserves used to collect specific funds to be used over a number of years, such as the Second Homes Discount reserve, the LAGBI reserve or the New Homes Bonus reserve Reserves can be used to smooth the timing of the application of revenue contributions, for example the IT Reserve and the General Fund Major Repair Reserve. The Policy on Reserves and Balances gives details of the purpose of each reserve. FUNDING STRATEGY 19. The capital funding strategy is proposed as part of the overall capital strategy and is therefore also reviewed on an annual basis. The Council’s capital funding strategy for 2013/14 to 2017/18 is set out below: Funding streams are allocated in the following ways: Capital receipts are not allocated or committed prior to receipt, unless inextricably linked to a specific project.

Page 109 Appendix 5

General fund capital receipts received during the year will be added to the un-earmarked general fund capital receipts reserve and taken into account as a potential funding source for new schemes or variations in the relevant financial year or the following financial year, subject to revenue budget considerations e.g. debt financing budget implications. General Fund capital receipts received from the capital portion of finance lease income on Council owned properties under new IFRS rules will be earmarked for capital expenditure on the Council's property assets. Capital Reserves – Capital receipts generated by asset sales will be partly set aside in a capital reserve fund. This reserve provides a funding source for future priority schemes and emergencies. The only call on the earmarked general fund capital reserve during the year would be for unforeseen high priority emergency capital works that cannot be financed from alternative sources. Agreement will be through the normal channels – that is the submission of a project appraisal or variation to Cabinet with final approval by Council. Hypothecated funding – i.e. funding linked directly to a specific scheme or service area, such as grants, third part contributions, revenue contributions and supported borrowing – is allocated 100% to the relevant scheme or service. Supported Borrowing will be used if the unsupported element is affordable. Unsupported Borrowing will be used to fund capital investment if the cost of the borrowing is affordable. Ideally the capital investment itself will produce revenue savings, which will cover the cost of borrowing to invest. The IT Replacement Reserve will only be used to fund the replacement of hardware and software with a preference for the updating of the corporate and networking infrastructure. The Fund of Revenue Monies for Capital Purposes will only be used to provide support to the Capital Programme, to supplement the capital finance available to the Programme by revenue contributions and to cover ‘grey area’ expenditure and allow flexibility in financing decisions. Underspends on schemes may not be automatically diverted to other schemes. This will be considered against the demands of the programme as a whole, any reserve project list and funding requirements for the following year. The funding strategy is used to determine the allocation of funding to the programme at the start of the year and throughout the year. Depending on the timing and restrictions of the funding streams, the most appropriate funding will be used at the year end. Finance staff, under the direction of the Chief Finance Officer, will apply the available funding to the outturn expenditure in line with the best interests of the Council.

20. Revenue Implications of Capital Projects The revenue implications of capital projects are identified through medium term planning and the capital appraisal process, and fed into the Council’s

Page 110 Appendix 5

medium term revenue budget to ensure that all revenue implications are taken into account. 21. Leasing (Council as Lessee) Leases are classified in accounting terms as either finance or operating leases. This distinction is important because it dictates whether the lease must be classified as capital (finance leases) or revenue (operating leases), and different accounting treatment is required for each. Items financed through an operating lease are coded to and financed as part of the Council’s revenue budget. It is the responsibility of the budget holder to ensure that there is sufficient capacity in the revenue budget to fund the annual operating lease costs. The Council’s preference is not to enter into finance leases unless there are exceptional reasons for doing so. Where an operating lease is either not available or not suitable, a capital purchase funded by prudential borrowing generally offers greater benefits than a finance lease. The introduction of IFRS from April 2010 may reduce the number of instances where operating leases can be used to finance expenditure, particularly in the case of short life assets such as IT hardware, equipment and vehicles. Where this applies it is likely that such items will be purchased through the capital programme and financed by prudential borrowing, with the revenue cost of the borrowing met from the existing service budget. PRIORITISATION PROCESS 22. Prioritising projects All bids for inclusion in the following years programme are considered according to a set of objective criteria to assist with the prioritisation of schemes and the allocation of funds. This ensures that, in a context of limited resources, the community vision and strategy and the Council’s vision, values, objectives and priorities form the framework for decisions about investment priorities, and that capital allocations are made using clear impartial criteria. The prioritisation process is linked directly to the information given on the completed project appraisals, with weighting given to schemes that strongly support the Council’s objectives and priorities, and those that fulfil an urgent legal or statutory requirement. In summary, each bid can be rated on the extent to which the project contributes: The Council’s objectives and priorities Legal commitments or statutory duties, including DDA & Health & Safety issues Equalities Improvements in performance indicators Efficiency savings Value for money The delivery of service objectives Effective Asset Management Extent of ring fenced or specific funding

Page 111 Appendix 5

Levels of financial risk involved Impact on the revenue budget and income generation Prioritisation of the bids enables officers to put forward a recommended programme that is within available resources. The weighting within the scoring framework will be reviewed on an annual basis as part of a policy of continuous improvement and to take into account any relevant factors. Bids for work required to meet a statutory or legal obligation will be given a high priority. The prioritised programme is for guidance only. Members are responsible for agreeing the capital programme and have the discretion to include or exclude schemes as they deem appropriate. 23. Capital Programme 2013/14 to 2017/18 - Project Appraisals All bids for inclusion in the capital programme are supported by a project appraisal, the preparation of which is the responsibility of the budget holder or project manager. The project manager signs the appraisal to confirm that their Assistant Director, Director and Portfolio Holder are aware of and support the scheme. Project appraisals have been completed for all 2013/14 to 2017/18 capital programme bids. The appraisal pro-forma has been designed to ensure that the information gathered is sufficient in order to make decisions based on the criteria set out above. The de-minimus level set by the authority for capital expenditure is £10,000. Individual schemes must therefore be £10,000 and above to be included in the authorities capital programme. The only exception is where the funding for the project is external and requires the scheme to be capital. MONITORING THE CAPITAL PROGRAMME 24. Project management & monitoring Project managers are responsible for the proper and effective control and monitoring of their projects, including financial monitoring. This includes ensuring that: Only capital expenditure is charged to the capital project Only expenditure properly attributable to the scheme is coded to the scheme The scheme expenditure is contained within the agreed budget, and that any ‘unavoidable’ variations are dealt with appropriately Realistic expenditure profiles are determined A realistic forecast outturn for the financial year and the project as a whole are calculated and kept under regular review Any slippage of expenditure from current to future years is identified Any grants or third party funding is applied for and all grant conditions met The source of any revenue funding is identified

Page 112 Appendix 5

Project managers are also responsible for carrying out project reviews following scheme completion. The finance team is responsible for providing support and advice to assist project managers in managing and monitoring their capital budgets. It also has a key role in consolidating and co-ordinating the monitoring information that is required for reporting purposes. This involves reporting to Senior Management Team, Cabinet and Council. 25. Capital Programme Monitoring The capital programme position is reported to Senior Management Team, Cabinet and Council as part of Corporate Financial Monitoring report and covers the latest programme and any amendments to be notified or approved, expenditure to date, and the forecast outturn. It also outlines the financing position and any steps needed to deal with potential financing difficulties. At year-end, an outturn report and carry-forward requests are taken to Cabinet and Council. These will include an analysis of programme slippage to the following year, including the reasons for that slippage and how it is to be financed. 26. Changes to the Agreed Programme The programme for the coming year is set and agreed by Council prior to 1st April (at the February Council as part of the Budget process), but it is essential to also have a process that then allows for changes during the year. Changes may be required as a result of proposed additions to the programme, amendments to existing schemes or deletions from the programme. For example tenders may come in above or below estimate; difficulties may be encountered in implementation, which require a change of approach; funding may need to be released to support another more urgent priority. 27. Proposed additions to the programme The need to add a scheme to the programme usually arises from either access to additional funding, such as a grant or third party contribution, or as a response to an unforeseen urgent issue (often related to legal or health and safety concerns). In order to bid for an addition to the programme, a project appraisal must be completed and signed off in the usual way. The funding for the project must be identified at this stage. Where there is no additional funding to support the bid, resources must be identified from within the existing programme. The prioritisation of the proposed addition will need to be considered with reference to any reserve list of projects, as well as projects already in the programme but not yet complete. The request for the addition will either be incorporated into the regular Corporate Quarterly Financial Monitoring report to Cabinet or Council, or approved by Cabinet and Council.

Page 113 Appendix 5

28. Amendments to Existing Schemes If the proposed amendment is one of substance, which results in a scheme materially different from the original project appraisal, then the original project must be withdrawn, and a new project appraisal completed to support the new bid. If, however, the substance of the scheme remains the same, then the change can be dealt with through the Corporate Quarterly Financial Monitoring process. Formal variations to budgets for existing projects must be completed and authorised in the following circumstances: Forecast total scheme outturn is materially in excess of budget Additional funding has become available to support a scheme A forecast overspend is to be funded by a forecast underspend in another project Funding is released due to a forecast underspend on a scheme A scheme is to be withdrawn from the programme CONSULTATION 29. Consultation generated by the corporate planning process extends to the Capital Programme.

The detailed capital programme is shown at Appendix 6.

Page 114 Draft Capital Programme 2013/14 to 2017/18 Appendix 6

Page 115 KPY41 DDA Works, Various car parks 63.8 63.8 32.1 31.7 0.0 31.7 0.0 0.0 0.0 0.0 31.7 KPY42 Replace Car Park Pay Machines 300.0 300.0 308.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 KPY43 51 Rydal Road Car Park, Ambleside Works to Bridge 0.0 0.0 0.0 320.0 320.0 0.0 0.0 0.0 0.0 320.0 KRE04 Grange Regeneration 37.2 37.2 8.2 6.3 0.0 6.3 0.0 0.0 0.0 0.0 6.3 KRE04 Grange Regeneration - Berners Site 0.0 0.0 0.0 450.0 0.0 300.0 150.0 0.0 0.0 0.0 450.0 KRE55 New Road Common 27.1 27.1 0.0 27.1 0.0 0.0 27.1 0.0 0.0 0.0 27.1 KRE59 43 Highgate Public Realm Improvements 260.0 260.0 155.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 KSC91 Vehicle & Plant Programme 3,100.0 1,199.0 1,211.0 2,533.0 2,533.0 133.0 373.0 1,715.0 840.0 5,594.0 KXF51 Transformation Change - Access to Services 20.0 20.0 (2.5) 22.5 0.0 22.5 0.0 0.0 0.0 0.0 22.5 KXW21 Carbon Reduction Programme 224.0 224.0 220.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Windermere Steamboat Museum contribution 0.0 0.0 0.0 0.0 0.0 100.0 0.0 0.0 0.0 100.0 78 CRM Development 0.0 0.0 0.0 60.0 60.0 0.0 0.0 0.0 0.0 60.0 75 South Lakeland House - Universal Credit interview rooms 0.0 0.0 0.0 20.0 20.0 0.0 0.0 0.0 0.0 20.0 63 Castle Dairy New Roof 0.0 0.0 0.0 150.0 37.5 112.5 0.0 0.0 0.0 150.0 58 Town and Car Park signing 0.0 0.0 0.0 50.0 50.0 0.0 0.0 0.0 0.0 50.0 51 Recycling bins & boxes 0.0 0.0 0.0 45.0 45.0 0.0 0.0 0.0 0.0 45.0 46 Dog order signage 0.0 0.0 0.0 15.0 15.0 0.0 0.0 0.0 0.0 15.0 41 Stockghyll Wood footbridge 0.0 0.0 0.0 20.0 20.0 0.0 0.0 0.0 0.0 20.0 Kendal Town Centre Public Realm* 0.0 0.0 0.0 0.0 0.0 0.0 100.0 0.0 0.0 100.0 Arnside Car Park* 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Kendal Leisure Centre* 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Waterhead Public Realm* 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 KEG33 Stockbeck Flood Scheme 0.0 0.0 89.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total 8,027.6 4,208.3 3,900.9 906.6 5,568.0 6,725.0 2,467.6 1,939.0 2,735.0 1,823.0 15,689.6

266.9 0.0 Premium on debt HRA Major Repairs Reserve (56.4) 210.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (210.5) (210.5) 0.0 repayment GF Major Repairs Reserve 285.7 50.0 0.0 335.7 50.0 50.0 50.0 50.0 50.0 250.0 0.0 0.0 0.0 585.7 IT Replacement Reserve 129.0 40.0 (32.6) 136.4 40.0 40.0 40.0 40.0 40.0 200.0 (200.0) 0.0 (200.0) 136.4 LABGI (Highgate) 166.3 0.0 (60.0) 106.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 106.3 Page 116 Section 106 funds 0.0 100.0 0.0 100.0 540.0 0.0 0.0 0.0 0.0 540.0 (540.0) 0.0 (540.0) 100.0 TOTAL EARMARKED INCOME 1,087.6 1,498.7 (1,365.2) 1,221.1 1,578.6 978.3 1,044.4 1,111.4 1,143.2 5,855.9 (5,796.7) (170.4) (5,967.1) 1,109.9

PROGRAMME INCOME TOTALS 15,542.4 4,623.6 (3,900.9) 16,265.1 4,600.1 1,261.3 1,567.4 2,976.4 2,133.2 12,538.4 (15,689.6) (11,404.0) (27,093.6) 1,709.9 Appendix 7

Efficiency & Value for Money Strategy

1. Introduction Value for Money (VfM) is defined as the relationship between economy , efficiency and effectiveness (‘3Es’). Achieving VfM means achieving a balance between all three: relatively low costs, high productivity and valued outcomes. This is consistent with the duty of Best Value placed on the Council under the Local Government Act 1999 to “secure continuous improvement in the way in which [it] exercises [its] functions, having regard to a combination of economy, efficiency and effectiveness”. This duty has been clarified by the Best Value Statutory Guidance published in July 2011. The Council recognises its duty of Best Value and its responsibility to achieve VfM in service delivery including economic, environmental and social value provision. It will seek to incorporate VfM principles in delivering services by taking account of costs , quality of services and the local context . 2. Objectives The Objectives of this VfM Policy are to identify the Principles of VfM and to ensure that these Principles are reflected in the Council’s service planning and delivery. 3. VfM Principles The Principles of VfM are illustrated in the following diagram:

Economy is the price paid for inputs (of a given quality) to a service Efficiency is the level of productivity (the outputs produced for the level of inputs used) Effectiveness is the quantitative or qualitative impact achieved by the outputs. Social Value is about seeking to maximize the additional benefit that can be created by procuring or commissioning goods and services, above and beyond the benefit of merely the goods and services themselves. 4. Putting the Principles into Action To demonstrate VfM, the Council will seek to achieve the optimum balance between the above Principles and strive for continuous improvement in all aspects of service delivery by the following means: a) Identifying local needs and priorities We will: Recognise the Duty to Consult through the involvement of stakeholders through the use of citizens’ panels, user-satisfaction surveys and other customer feedback

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Identify priorities to meet the needs of our community, both as an individual service provider and a partner, and ensure that these take account of national and regional priorities Ensure that community needs and priorities are reflected in our plans and strategies, e.g. Community Strategy, Corporate Plan and Service Business Plans. b) Securing resources at the appropriate price having regard to the level of quality required We will: Implement our Procurement & Commissioning Strategy to secure the most advantageous combination of price and quality Consult, and work in partnership as appropriate with, other public and private sector service providers Use all appropriate methods to achieve economies, including e-procurement, joint working, shared services and market testing. Ensure that these methods are recorded in our formal procedures, including Contract Procedure Rules, Procurement Code & Toolkit and Financial Procedure Rules Restrict any budgetary growth and increases in Council Tax to the minimum necessary to achieve our declared aims Strive to attract external funding to supplement our own resources where appropriate Ensure that long-term (‘whole life’) costs are taken into account in the acquisition of resources c) Allocating resources in accordance with agreed aims We will: Ensure that resources are allocated in accordance with our plans and strategies, including our Medium Term Financial Strategy and Annual Budget Demonstrate a clear link between our agreed priorities and allocation of resources Continuously seek to identify opportunities for increased efficiency without adversely affecting service quality d) Ensuring services are delivered to meet customers’ needs, utilising the minimum level of resources required and by the most appropriate means, including via partnerships We will: Deliver services in accordance with our Business Plans and Customer Service Strategy Monitor cost levels to ensure they are commensurate with agreed service quality e) Reviewing service delivery to ensure good practice is adopted and to secure continuous improvement We will:

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Adopt working practices – independently and in partnership – to support the drive for increased efficiency and effectiveness, including promoting the use of electronic service delivery and working with other service providers as appropriate Implement our Performance Management Framework to assist in achieving economy, efficiency, effectiveness and continuous improvement in services, including: - Regularly monitoring performance and ensuring elected Members have quality information to perform the scrutiny function - Comparing the Council’s performance with that of other similar service-providers - Challenging our own performance by a variety of methods, for example through service reviews, scrutiny exercises, budget reviews, human resource reviews, compliance with our Corporate Governance Framework, internal audit functions and working with external auditors, inspectors and other agencies. Service reviews will be monitored quarterly through O&S Committees. f) Undertaking necessary training and development to promoting a ‘VfM culture’ within the Council and its partners We will: Ensure that the structure and processes of the organisation are conducive to the achievement of VfM Utilise training & development programmes as appropriate to inform Members and officers and to foster a VfM culture within the organization

5. Responsibilities While everyone within the Council has a general duty to ensure the Council provides value-for-money services, responsibilities may be summarised as follows:

Body Responsibility Council Ensuring the Vfm policy is approved Cabinet Ensuring that the Vfm Policy is adopted and adhered to Scrutiny Members Holding the Cabinet to account in this duty Senior Management Team Ensuring that the Council’s strategic direction is consistent with the contents of this Policy Assistant Directors and all officers Ensuring that services are delivered in accordance with this policy

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Risks and Opportunities Log REF VULNERABILITY / TRIGGER CONSEQUENCE LIKELI- IMPACT ACTIONS TO CONTROL THIS HOOD RISK 1. Revenue budget and Capital Resources not directed to achieving Low Marginal Both the revenue budget and the Programme may not be integrated corporate outcomes, leading to Capital Programme are now and aligned with Council Plan. inappropriate spending. embedded in the corporate planning cycle. All revenue budgets and capital programme schemes are linked to Council plan priorities 2. The programme of budget Council will be forced to cut services Low Critical Universal acceptance of the reductions does not deliver the and/or make knee-jerk and problem by heightened awareness.

Page 120 required level of savings to correct potentially irrational spending Clear direction and identification of the forecast inherent budget reductions. measures by Members and deficit. Officers. Strict project management to ensure that proposals are implemented. 3. Resources cannot be identified to Corporate outcomes may not be Low Marginal Accurate assessments of spending fund new service development. delivered. needs to be built into the budget forecast. Project management of reduction programme. 4. Further loss of income from Revenue budget unable to cope with High Marginal Retention of external fund investments as interest rates reduced income managers, close monitoring of reduce. returns, already minimal levels of projected interest receipts.

Page 1 Appendix 8

REF VULNERABILITY / TRIGGER CONSEQUENCE LIKELI- IMPACT ACTIONS TO CONTROL THIS HOOD RISK 5. Provisions for pay, price In-year budgetary pressure and Low Marginal Close monitoring and short-term inflation are inadequate e.g. potential overspending, jeopardising use of revenue contingency fuel service delivery. provision and General Reserve followed by review for following Income falls below targets year. Government grant is withdrawn suddenly 6. Whole-place approach to Reduction in funding for other Significant Marginal Monitor proposals for extension of Community budgeting diverts services Community budgeting grant to other service providers 7. The resilience of the budget is not Budget may not be able to cope with Low Marginal Close adherence to the Plan’s re-enforced by the strengthening unexpected events and spending proposals for the maintenance of Page 121 of reserves and balances. plans may have to be curtailed. reserves and balances. 8. Government introduction of more Revenue budget unable to cope with Significant Critical Maintenance of General Reserve stringent capping system through basic inflationary increases, further as a buffer against unexpected the specification of levels above pressure on resources and service restriction on council tax increases. which a referendum will be delivery. The Plan uses realistic triggered assumptions for forward planning. 9. Extension of Council Tax freeze Revenue budget unable to cope with Significant Critical Consider carefully longer-term scheme erodes taxbase and ability increase in costs but freeze in impact of accepting single year to generate income through income grant offered to freeze Council Tax. accepting single year grant but accepting loss of longer-term potential income

Page 2 Appendix 8

REF VULNERABILITY / TRIGGER CONSEQUENCE LIKELI- IMPACT ACTIONS TO CONTROL THIS HOOD RISK 10. Government proposals for Income streams will be insufficient to Significant Marginal Monitor changes in rateable values localisation of business rates fund service delivery. & proposals for new development / increase uncertainty of major closures/ other changes. Monitor income stream. Government proposals for changes in NNDR legislation. Maintenance of General Reserve as a buffer against unexpected changes in funding. 11. Council is reluctant to take tough Income streams may not be Low Critical Financial decisions in non-priority decisions in a number of service optimised leading to reduced areas should be made on areas e.g. fees & charges or resources available for spending on commercial principles backed by Page 122 grants payable priority services or projected savings sound business cases. may not be generated 12. Budgetary control procedures are Variances from budgets are not Low Marginal Ongoing review of procedures to not understood and followed. identified and acted upon, leading to ensure that budget monitoring inappropriate/unauthorised spending. information is appropriate and meaningful. Greater emphasis on trend analysis and the use of customer data. Closer liaison between Finance staff and budget holders. 13. Ferry Nab development may not Lower than expected income Significant Marginal Effective project management of deliver the predicted income streams leading to reduced development streams to the predicted resources available to spend on timescales priority services 14. Reduction in economic Inability to improve employment Significant Critical If LEP is unable to invest in development funding if Cumbria prospects within the district economic development there will LEP is unable to attract significant be increased pressure on the funding. Council’s capital programme to invest significant funds.

Page 3 Appendix 8

REF VULNERABILITY / TRIGGER CONSEQUENCE LIKELI- IMPACT ACTIONS TO CONTROL THIS HOOD RISK 15. Diversion of funds into Single Lower than expected income Very High Marginal Monitor proposals for pooling of Local Growth Fund reduces streams leading to reduced New Homes Bonus announced as funding already recognised in resources available to spend on part of Investing in Britain’s future projections priority services report and any other such proposals and respond to consultation. 16. Additional unexpected costs Budget may not be able to cope with Low Marginal Careful monitoring of liabilities following LSVT additional costs and spending plans arising from the housing transfer may have to be curtailed. 17. The Council is unable to meet Service falls below all acceptable Significant Critical future demand for services standards.

Page 123 18. Pension funding – in particular the Budget may not be able to cope with High Marginal Movement to alternative method of deficit on the Cumbria fund additional costs and spending plans contribution based on set following the international financial may have to be curtailed. percentage for current service slow-down. accrual and fixed contribution for past service costs should reduce inherent problem of declining staff base for contributions. Government reform of pension scheme should alleviate impact of declining investment returns. 19. Costs of asset maintenance, as Budgetary pressures force cuts in Significant Critical A quinquennial review of identified in the Corporate Asset standards of maintenance. maintenance requirements is Strategy, exceed resources prepared. The General Fund available. Planned Maintenance fund exists to meet abnormal spending needs. 20. Future demographic and other Budget inadequate for additional Significant Marginal Monitor impact of demographic changes demand additional spending demands changes expenditure

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REF VULNERABILITY / TRIGGER CONSEQUENCE LIKELI- IMPACT ACTIONS TO CONTROL THIS HOOD RISK 21. Potential creation of Internal Unavoidable Levy payable to Internal Very low Critical Monitor proposals, review Drainage Board Drainage Board; under proposed treatment as special expense. amendments to capping rules, levies would count against the Council’s Council Tax capping limit 22. Potential loss of surplus- Budget may not be able to cope with Low Marginal Review all requests against the generating assets through the loss of income Asset Transfer Policy proposed Community right to bid 23. Higher that estimated increase in Budget may not be able to cope with Significant Marginal costs due to international political additional costs and spending plans

Page 124 uncertainty e.g. fuel may have to be curtailed. 24. Reduced ability to attract and Inability to deliver services to current Low Marginal Monitor recruitment activity retain suitably qualified staff due to levels or additional costs of Government announcements on temporary staff pay restraint, pay progression, Local Government pension reform and increased NI contributions for national Single Tier pensions from April 2016. 25. Cost of debt repayment higher Need to commit more capital receipts High Marginal Monitor interest rates and repay than expected due to low long- to repayment of debt in order to debt when premiums are term interest rates reducing and deliver interest payment reductions minimised. therefore PWLB premiums increasing

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REF VULNERABILITY / TRIGGER CONSEQUENCE LIKELI- IMPACT ACTIONS TO CONTROL THIS HOOD RISK 26. Welfare reform: additional costs of Potential increase in support costs High Marginal Monitor proposals and respond to implementation of Universal Credit and potential increase in consultation due to need to support digital by homelessness cases due to rent default application process and arrears. payment to claimants rather than Loss of administration grant towards landlords. continuing costs 27. Procurement projects: projected Unable to deliver estimated savings, Significant Marginal Review all savings proposals for savings not generated inability to balance budget deliverability, ensure specification of proposed contract is realistic. 28. Procurement projects: challenge to Potential legal costs and additional Low Marginal All procurement exercises to follow process costs of service delivery until Council’s Contract Procedure

Page 125 challenge resolved Rules, which are updated for changes in legislation. Additional legal advice is procured for major or unusual procurement projects 29. Closure of major employer Reduction in income from business Significant Marginal Monitoring of significant employers rates but increase in demand for affordable housing and council tax reduction scheme. 30. Legal challenge, particularly of Potential need to refund income Significant Marginal The Council has been named in a charging regimes received and contribute to legal costs group action brought by a personal search company in respect of their claim that the supply of property search information has been unlawfully charged for. A provision has been made against potential costs of settlement.

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REF VULNERABILITY / TRIGGER CONSEQUENCE LIKELI- IMPACT ACTIONS TO CONTROL THIS HOOD RISK 31. Need to meet pension guarantees: Potential increase in the Council’s Low Marginal Monitor financial standing of Lakes the Council is guarantor for both future contribution rates to meet any Leisure and South Lakes Housing Lakes Leisure and South Lakes deficits if Lakes Leisure or South Housing Lakes Housing were unable to meet their liabilities These risks have been mapped onto the Council’s risk management matrix The Council has a comprehensive system of risk identification and management. These risks are monitored and reported quarterly during the period of the plan and actions taken where necessary to mitigate risks. Page 126

Page 7 Appendix 8

OPPORTUNTIES

REF OPPORTUNITY / TRIGGER CONSEQUENCE LIKELI- IMPACT ACTIONS TO ACHIEVE THIS HOOD OPPORTUNITY A. Significant increase in net Additional funding to support High Marginal Maximise addition of properties (& dwellings increases New either expansion of existing minimise removal of properties) on Homes bonus. services, provision of new valuation list by end of September services or prevents reduction in annually; maximise increase in number existing services of affordable homes through planning requirements or provision of support, financial or otherwise. This is partially offset by the Governments proposals to pool an element of the New Homes Bonus to Page 127 support LEPs. B. General Power of Potentially could allow Council to High Significant Recently approved by Localism Act, Competence provide additional services review areas where new powers could be used; powers were used to support Power up your community C. Localisation of business rates Potentially could provide funding High Marginal The Government scheme of tariffs limits to support either expansion of the potential for significant gains from existing services, provision of new increased business rates. Monitor services or prevent reduction in planning applications, Local Plan existing services proposals etc. D. Shared services Potentially could provide High Significant Review existing services, work with other additional funding to support public services in the area to review either the existing level of service service provision and potential sharing of or enhanced service levels services: depends on finding a partner.

Page 8 Appendix 8

REF OPPORTUNITY / TRIGGER CONSEQUENCE LIKELI- IMPACT ACTIONS TO ACHIEVE THIS HOOD OPPORTUNITY E. New advances in technologies Potentially could reduce staffing Low Marginal Monitor developments in technology requirements or existing non- staffing costs; could permit new or enhanced services F. Community Groups wishing to Potential transfer of costs to Low Significant Monitor requests, including those under take over services alternative provider who may be the Community Right to Challenge. able to provide existing services Currently there appears little appetite or at lower cost or enhanced capacity for further transfers. services at existing cost G. Opportunities for generating Potential increase in income High Marginal Monitor proposals, respond to

Page 128 additional income for services consultation – relaxation of national controls e.g. planning fees H. Significant increase in Ability to improve employment High Significant Funding is allocated directly to schemes economic development prospects within the district so the Council is not involved as funding if Cumbria LEP is able accountable body but funding would to attract significant funding reduce pressure on the Council’s capital through bidding for Regional programme to support economic Growth Fund or Single Local development schemes. Growth Fund monies. I. Additional capital funding as a Increased capital receipts High Significant Monitor proposed changes and respond result of Government changes increase the potential size of the to consultations. in rules, for example the capital programme and the ability increase in the level of the cap to support funding for new assets on discounts under Right to or to improve existing assets Buy (RTB) has increased the numbers of properties sold under the preserved RTB by tenants of South Lakes Housing

Page 9 Appendix 8

REF OPPORTUNITY / TRIGGER CONSEQUENCE LIKELI- IMPACT ACTIONS TO ACHIEVE THIS HOOD OPPORTUNITY J. Cost of debt repayment lower Need to commit less capital High Marginal Monitor interest rates and repay debt than expected due to higher receipts to repayment of debt in when premiums are minimised. long-term interest rates and order to deliver interest payment therefore PWLB premiums reductions reducing K. Increased income from Additional revenue income offsets Low Marginal Close monitoring of returns, minimal investments as interest rates need to find savings to balance levels of projected interest receipts in improve. budget deficit. MTFP financial model. L. Identification and delivery of Additional revenue savings Low Marginal Close monitoring of deliverability of savings enable funding of beyond those needed to offset proposed savings programme of growth and budget deficit service development Page 129 M. Corporate assets generate Additional income to offset budget High Marginal Review each asset for alternative use or new income streams, either deficit or to supplement capital sale in accordance with the Corporate revenue or capital programme. Asset Strategy N. Participatory budgeting Sharing or reduction of costs Low Marginal Review outcomes of the participatory delivers opportunities for budgeting pilot exercise. improved services or sharing of existing costs

These opportunities have been mapped onto an opportunity management matrix . These opportunities will be reviewed to determine which opportunities should be pursued actively.

Page 10 Appendix 8

MEDIUM TERM FINANCIAL PLAN - RISK AND OPPORTUNITY MATRICES

This matrix plots the risks listed in the Risk and Opportunities Logs (pages 27-32) in terms of likelihood and impact The dividing line of 'risk appetite' separates the matrix into A dividing line of 'opportunity appetite' will separate the two zones. The zone above this line represents those risks that matrix into two zones. The zone below this line will represent need managing, and will require action plans, or concern those opportunities that are worth pursuing. The external factors for which the Council has no significant control. opportunities below this line will need reviewing periodically The risks below this line will need reviewing periodically but no but no further action is necessary. This line of appetite has further action is necessary. not yet been established.

RISKS OPPORTUNITIES A A wery high very low 15 Page 130 B l B 4,18,25, i high low 26 k E,K,L,N F C 6,10,13, e C l 20,23,27, 8,9,14,17, l A,C,G,J, i significant high 29,30 19 i M B,D,H,I k D 1,3,5,7, h D e 12,16,22,2 o l low very high 4,28,31 2,11 o i E d 4 3 2 1 h o very low negligible marginal signifiant extensive 21 o d F benefits achievable almost impossible 4 3 2 1 negligible marginal critical catastrophic (mostly (some (almost no success) success) success) impact Appendix 9

Glossary

Baseline Funding Level The Government’s assessment of the Council’s share of business rates. For 2013/14 this was based on actual NNDR collected in 2009/10 and 2010/11. From 2014/15 this will be increased by inflation. Best Value A general duty for local authorities to demonstrate that they deliver high quality services that provide overall value including economic, environmental and social value. Budget A statement defining the Council’s policies over a specified period of time in terms of finance. Budgets usually include statements about the use of other resources (e.g., numbers of staff) and provide some information on performance measures. Budget Requirement The estimated revenue expenditure on General Fund services that needs to be financed from the Council Tax, Business Rates and Formula Grant after deducting income from fees and charges, certain specific grants and any funding from reserves. Capital Expenditure Spending that will provide benefit over a period of years. This includes spending on the acquisition, construction or improvements of assets (e.g. land, building, vehicles, and equipment) either directly by the Council or indirectly by grants or loans to others. Capital expenditure is defined by legislation: items falling outside of the definition must be charged to a revenue account. Capital Programme A schedule of the Council’s capital expenditure plans for a period of several years together with the funds that will pay for that spending. Capital Receipts The proceeds from the sale of land or other assets. Capital receipts can be used to finance new capital expenditure within rules set down by the Government, but they cannot be used to finance revenue expenditure. Until April 2004, the Government set proportions of receipts that were usable for capital expenditure or reserved (set-aside) for debt redemption. Since April 2004 receipts can be re-invested in new capital expenditure, subject to affordability. Capping A system of controlling the spending of local authorities whereby Central Government limits a local authority’s budget requirement either because it is deemed excessive or is deemed to show an excessive increase over the previous year. Direct capping by Ministers was replaced for the 2012/13 Council Tax setting process by local referendums if Council Tax increased by more than the amount specified by Ministers. Comprehensive Area Assessment CAA was a system set up by the Government to carry out periodic inspections and assessments of local authorities’ performance, resulting in each Council being placed in a grade which is widely publicised. The CAA was abolished by the Coalition Government in spring 2010.

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Comprehensive Spending Review (CSR) The Government sets out its plans for public spending over a three-year period via its Comprehensive Spending Review (CSR). The latest full review, CSR10, applies from 202011/12 to 2014/15; it is generally accepted as introducing a very tough regime for local government requiring just under £2bn of savings over four years. A one-year review, Spending Round 2013, continued the reductions in funding. The details for individual authorities are fleshed out in the annual Local Government Finance settlement. Contingency Money set-aside in the budget to meet the cost of unforeseen items of expenditure, or shortfalls in income and to provide for inflation that exceeds that provided in service budgets. Council Plan A document that sets out the Council’s policies, priorities, objectives and targets for a period of several years. The Plan is reviewed annually. Previously known as the Corporate Plan. Council Tax The main source of local taxation to local authorities, Council Tax is levied on households within the South Lakeland area by the District Council and the proceeds are paid to Cumbria County Council, Cumbria Police Authority, Parish Councils and its own General Fund. Damping The damping mechanism ensures that each authority received a minimum cash increase, or maximum decrease, in formula grant each year: for losing councils like South Lakeland, in the past grant was maintained at this ‘floor’ level via redistribution from gaining authorities. Although the distribution methodology was changed in 2006/07, the Council’s grant continued to be protected and for 2010/11 was £107,000 (1.6%) above its calculated level (£270,000 or 4.1% in 2009/10). Now under the formula from April 2010 South Lakeland moves from being protected by the floor arrangements to contributing to the floor protection of other authorities Debt Charges A term for the interest paid on loans raised and repayments of principal. Also known as capital financing costs or loan charges. Debt Free Status South Lakeland had no long-term external debt between December 2002 and March 2006. Until April 2004 this, together with other conditions set by statute, gave it certain concessions regarding the amounts of capital expenditure that it could finance from capital receipts. Other than a transitional benefit, this concession largely disappeared with the introduction of the Prudential Regime. Direct Revenue Financing See Revenue Contributions to Capital. Estimates The amounts which are expected to be spent, or received as income, during an accounting period. The term is also used to describe detailed budgets, which are either being prepared for the following year, or have been approved for the current year. External Audit The independent examination of the activities and accounts of local authorities to ensure the accounts have been prepared in accordance with legislative requirements and proper practices and to ensure the authority has made proper arrangements to secure economy,

Page 132 Appendix 9 efficiency and effectiveness in its use of resources. Since October 2012 the Council’s external auditors are Grant Thornton. Fees and Charges Income raised by charging users of services for the facilities. For example, local authorities usually make charges for the use of leisure facilities, car parks, planning, building regulations, collection of trade refuse etc. Financial Procedure Rules A written code of procedures approved by the Council as part of its Constitution, intended to provide a framework for proper financial management. These usually set out rules on accounting, audit, administrative procedures and budgeting systems. Fund of Revenue Monies for Capital Purposes A reserve set up by the Council by contributions from the General Fund revenue account to provide additional funds to supplement its capital programme and to meet one-off spending associated with capital schemes that fall outside the definition of capital expenditure in legislation. General Fund The main revenue account of the District Council. Day-to-day spending on services is met from the fund. Spending on the provision of Council housing, however, must be charged to a separate Housing Revenue Account. Efficiency Reviews Following its Gershon review, the Government set up a three-year initiative to demonstrate that councils are making efficiency savings in the delivery of their services. These savings could be cashable or non-cashable. An annual target level of savings was set (2.5% for 2005 to 2007): the Council had to submit plans to show how they will be achieved and subsequently account for their implementation. The Gershon programme was superseded by a further requirement to make targeted cashable savings of 3% pa for the years 2008 to 2009 and 4% for 2010. The Government has scrapped the requirement to measure efficiency savings but the financial settlement for local government assumes Council’s will continue to concentrate on efficiency as a means of saving money. The Government’s Open Public Services White Paper sets out its vision on how this can be achieved. Gross Expenditure The total cost of providing the Council’s services before taking into account income from Government grants and fees and charges for services. Growth Any increase in spending from one year to another which enables the Authority to pay for more services (staff, goods, etc) rather than to meet higher costs. Growth items are also referred to as investment or service development items. Proposals for growth are subject to a competitive bidding evaluation process to assess their contribution to corporate outcomes or statutory/health and safety requirements before being considered for inclusion in the revenue budget. Housing Revenue Account (HRA) Local authorities are required to maintain a separate account – the housing revenue account – which sets out the expenditure and income arising from the provision of Council housing. The costs of all other services are charged to the General Fund. The Council closed its HRA on 30 March 2013 following the transfer of its housing stock to South Lakes Housing, a registered social landlord.

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Interest and Investment Income Surplus cash funds held by the Council (reserves, balances, set-aside capital receipts) are invested in order to earn interest that is credited to its revenue accounts. Internal Audit An independent appraisal function established by the management of an organisation for the review of the internal control system as a service to the organisation. It objectively examines, evaluates and reports on the adequacy of internal control as a contribution to the proper, economic, efficient and effective use of resources. Leisure Trust The Council’s leisure management activities are operated by an autonomous organisation, Lakes Leisure. This Trust enjoys certain financial and other benefits that would not apply to the Council. The contract to provide leisure services from April 2014 is currently being tendered. Local Authorities Business Growth Incentive (LABGI) Scheme In 2005/06 the Government introduced a scheme whereby a proportion of business rates generated by increases in rateable values in an area beyond specified thresholds is returned to the principal authorities in that area based on a premise that economic development activity by the authorities will have stimulated the growth. The scheme was initially for a three-year trial period, later extended, and the distribution of monies was made as general grant with no conditions attaching to its use. The Coalition Government has scrapped the scheme. The Council has a LABGI reserve which earmarked the grant received for economic development activities. Net Expenditure Gross expenditure less specific services income, but before deduction of revenue support grant. Outturn Actual income and expenditure in a financial year. Provisions and Reserves/Funds Amounts set aside in one year to cover expenditure in the future. Provisions are for liabilities or losses which are likely or certain to be incurred, but the amounts or the dates on which they will arise are uncertain. Reserves are amounts set aside which do not fall within the definition of provisions and include general reserves (or ‘balances’) which every authority must maintain as a matter of prudence. Procurement Procurement is the process of acquiring goods, works and services, covering both acquisition from third parties and from in-house providers. The process spans the whole cycle from identification of needs through to the end of a services contract or the end of the useful life of an asset. Procurement involves obtaining best value for money by choosing the option that offers the optimum combination of whole life costs and benefits to meet the customer’s requirement. Prudential Regime/Prudential Code Until 31 March 2004, local authorities’ capital spending was controlled by Central Government, largely by limiting their borrowing. In April 2004 the Government introduced a new prudential system for capital finance. As well as using capital receipts and revenue monies to finance capital expenditure, Councils can now borrow up to limits set by themselves so long as their decisions can be shown to be affordable and prudent. The system is governed by a statutory code which local authorities are obliged to follow.

Page 134 Appendix 9

Reserves See Provisions and Reserves Revenue Contributions to Capital Resources provided from an authority’s revenue budget to finance expenditure on capital projects, frequently as a ‘top-up’ to other capital resources. Also known as Direct Revenue Financing (DRF). Revenue Expenditure/Revenue Account Running costs, including employees, premises, supplies, services and debt charges. These are recorded in revenue accounts together with income from Government grants, fees and charges. Revenue Support Grant (RSG) A grant paid by Central Government to aid local authority services in general, as opposed to specific grants, which may only be used for a specific purpose. Grant is distributed to Councils based on the Government’s assessment of their spending needs. This is determined by a set of formulae that reflect factors such as population, geography, deprivation and economic characteristics. Right to Buy (RTB) A Government scheme whereby tenants of Council houses are offered incentives to buy their homes. The sale proceeds represent capital receipts for the Council. Following the housing transfer some tenants still have a preserved right to buy: as part of the transfer agreement the Council shares the proceeds of sales from March 2012. Spending Power Term introduced by the local government finance settlement in December 2010 to take into account other sources of fund when comparing government grant allocation between authorities. Spending power is the total of Council Tax, formula grant, specific grants & NHS spending to support social care & benefit health. Treasury Management Management of the Council’s cash flow, borrowing and investments, governed by agreed policies and annual statements. Value for Money (VFM ) A much-used term that describes a service or product that demonstrates a good balance between its cost, quality and usefulness to the customer. A VFM audit takes into account the economy, efficiency and effectiveness (known as the ‘three Es’) of a local authority service, function or activity. Zero Based Budgeting An approach to building budgets up from scratch which is essential when creating a new budget and useful when reviewing budgets or calculating estimates for periodic and ad hoc income and expenditure. Under this approach, estimates are constructed on the basis of the individual activities the authority plans to enter into and the particular revenues it expects to generate.

Page 135 Appendix 10

KEY SOURCE DOCUMENTS SLDC Documents: 5 Year Strategy (December 2010, updated February 2013) http://www.southlakeland.gov.uk/pdf/5year%20Strategy_Jan2013_v3%20March.pdf Council Plan 2013 – 2017 (February 2013) http://www.southlakeland.gov.uk/pdf/CouncilPlan_v23.pdf Sustainable Procurement & Commissioning Strategy 2013-2016 http://www.southlakeland.gov.uk/pdf/ProcurementStrategy_Jan2013.pdf Revenue Budget and Capital Programme 2013/14: Reports of Assistant Director (Resources): Cabinet, Joint O&S Committee & Council December 2012, January & February 2013 http://democracy.southlakeland.gov.uk/mgChooseDocPack.aspx?ID=3210 Constitution: Financial and Contract Procedure Rules (Part 4) http://www.southlakeland.gov.uk/pdf/Part%204%20-%20Rules%20of%20Procedure%20-%20June%202013.pdf Treasury Management Policy & Treasury Management Plan 2013/14 (March 2013) http://democracy.southlakeland.gov.uk/mgChooseDocPack.aspx?ID=3210 ‘Financial and Performance Snapshot’ report of Anna Capaldi, Consultant (November 2004) External Documents: ‘Delivering Efficiency in Local Services’: ODPM Initiative (Gershon Review) http://webarchive.nationalarchives.gov.uk/20051012022236/http://www.odpm.gov.uk/stellent/groups/odpm_localgov/documents/do wnloadable/odpm_locgov_032674.pdf Open Public Services White Paper: HM Government (July 2011) http://files.openpublicservices.cabinetoffice.gov.uk/OpenPublicServices-WhitePaper.pdf Localism Act 2011 http://www.legislation.gov.uk/ukpga/2011/20/contents/enacted Best Value Statutory Guidance: DCLG (July 2011) https://www.gov.uk/government/publications/best-value-statutory-guidance--4 Local Government Finance Act 2012 and associated documents http://www.legislation.gov.uk/ukpga/2012/17/enacted Local Government Finance Review 2012: DCLG https://www.gov.uk/government/policies/giving-local-authorities-more-control-over-how-they-spend-public-money-in-their-area--2 Spending Review 2010: HM Treasury https://www.gov.uk/government/publications/spending-review-2010 Autumn Statement 2012: HM Treasury https://www.gov.uk/government/publications/autumn-statement-2012-documents Budget 2013: HM Treasury https://www.gov.uk/government/publications/budget-2013-documents 50 Ways to save. Examples of sensible savings in local government: DCLG December 2012 https://www.gov.uk/government/publications/50-ways-to-save-examples-of-sensible-savings-in-local-government Inflation Report May 2013: Bank of England http://www.bankofengland.co.uk/publications/Pages/inflationreport/2013/ir1302.aspx

Page 136 Appendix 10

Funding outlook for Councils from 2010/11 to 2019/20: Local Government Association June 2012 http://www.local.gov.uk/c/document_library/get_file?uuid=c98405b7-b4a6-4b25-aebf-a63b5bcfa5c1&groupId=10171 CIPFA Documents: Prudential Code for Local Authorities http://www.tisonline.net/localauthorityaccounting/content/Prudential_Code_2011.pdf Guidance on Local Authority Reserves and Balances (February 2003) http://www.charnwood.gov.uk/files/papers/resources_item_7_appendix_10_march_2004/Resources+Item+7+Appendix+10+March+ 2004.pdf After the Downturn: Managing a significant and sustained adjustment in public sector funding (December 2009) (with SOLACE) http://www.solace.org.uk/library_documents/After_the_Downturn.pdf Rebalancing the Public Finances: the end of the beginning (October 2010) (with SOLACE) http://www.solace.org.uk/library_documents/Rebalancing_the_public_finances_181010.pdf A Practical Guide for Local Authorities on Income Generation (2011) http://www.cipfa.org/policy-and-guidance/publications/a/a-practical-guide-for-local-authorities-on-income-generation-2013-edition Thinking Ahead: Developing a financial strategy (2012) http://www.cipfa.org/policy-and-guidance/publications/t/thinking-ahead-developing-a-finance-strategy The Long Downturn: implications for public sector organisations (2012) http://www.cipfa.org/policy-and-guidance/reports/the-long-downturn External Audit Documents Positively Charged: Maximising the benefits of local public service charges: Audit Commission 2008 http://archive.audit-commission.gov.uk/auditcommission/subwebs/publications/studies/studyPDF/3423.pdf Tough Times 2012: Cou ncil’s financial health in challenging times November 2012 http://www.audit-commission.gov.uk/wp-content/uploads/2012/11/20121121toughtimes2012.pdf Towards a tipping point? Grant Thornton December 2012 http://www.grant-thornton.co.uk/Global/Publication_pdf/towards-tipping-point-report.pdf Financial sustainability of local authorities: National Audit Office January 2013 http://www.nao.org.uk/report/local-services-financial-sustainability-of-local-authorities/ Striking a balance: Improving council’s decision making on reserves: Audit Commission December 2012 http://www.audit-commission.gov.uk/wp-content/uploads/2012/12/strikingabalance.pdf

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Page 138 Item No.13

PART I

South Lakeland District Council Cabinet Meeting Date: 24 th July 2013 Report Author: Lorayne Woodend, Strategic Systems and Delivery Officer Portfolio: Jonathan Brook, Strategic Growth Report from: Director – People and Places Wards affected: Levens Ward Key Decision: Not applicable Key Decision Not applicable Notice:

Heversham and Hincaster Application for designation as a Neighbourhood Area

1.0 PURPOSE OF REPORT 1.1 This report is presented to seek a decision on the application received from Heversham and Hincaster Parishes to jointly be designated a Neighbourhood Area for the purposes of enabling those Parishes to prepare a Neighbourhood Plan. 2.0 RECOMMENDATIONS It is recommended that Cabinet:- (1) Approve the designation of Heversham and Hincaster Parishes together as a Neighbourhood Area. (2) Approve Heversham Parish Council as the Neighbourhood Planning Body for this area with assistance from Hincaster Parish Meeting 3.0 BACKGROUND 3.1 Under the Localism Act (2011) communities have new rights and powers to shape new development by coming together to prepare Neighbourhood Plans and Neighbourhood Orders.

Page 139 3.2 A Department for Communities & Local Government (DCLG) scheme offered a grant of up to £20,000 towards the cost of independent facilitation, plan preparation, community engagement, and evidence base work for a Neighbourhood Plan Pilot in each Local Authority area. Expressions of interest were invited from local councils, or groups of local councils in the South Lakeland District Council Planning Authority area. 3.3 The Council received expressions of interest from several Town and Parish Councils and a Local Area Partnership. Heversham Parish Council, in partnership with Hincaster Parish Meeting was selected as the Neighbourhood Planning Pilot in South Lakeland (see evidence contained within Appendix 1). The DCLG funding to support the pilot has now been received by the Council. Some of the funding received has already been utilised to support Heversham and Hincaster parishes in preparatory work. 3.4 In accordance with the Neighbourhood Planning (General) Regulations 2012, Heversham Parish Council, with the support of Hincaster Parish Meeting, has now applied to the Council for the two Parishes together to be designated as a Neighbourhood Area (see application at Appendix 1) in order that they can proceed to prepare a Neighbourhood Plan. 3.5 Under the Localism Act, within an area with a Parish Council such as Heversham, only a Parish Council can prepare a neighbourhood plan. Hincaster has a parish meeting not a parish Council. This means that for a plan covering both parishes, only Heversham Parish Council can be the statutory Neighbourhood Planning Body. However Hincaster Parish Meeting are supportive of the proposal, are represented on the plan steering group. It is vital that Hincaster remain engaged with the process and for this reason assistance from Hincaster is specified in the recommendation.

4.0 RESEARCH AND CONSULTATION 4.1 In line with the requirements of the regulations, the Council publicised and invited comments on the Neighbourhood Area application for 6 weeks from 11th February to 25th March 2013. There were four respondents, the three statutory bodies and United Utilities. All comments received were advisory and/or supportive comments. The comments can be viewed on the Councils website . There were no objections to the designation of Heversham and Hincaster Parishes together as a Neighbourhood Area. 5.0 PROPOSAL 5.1 It is proposed that the application to designate Heversham and Hincaster Parishes together as a Neighbourhood Area be approved to enable the Parishes to prepare a Neighbourhood Plan and that Heversham Parish Council be approved as the Neighbourhood Planning Body with assistance from Hincaster Parish Meeting. 6.0 ALTERNATIVE OPTIONS 6.1 The alternative option is to refuse to designate Heversham and Hincaster Parishes together as a Neighbourhood Area. 6.2 If the Council refused the application, this would prevent these Parishes, which together are an identified Neighbourhood Planning Pilot area with allocated

Page 140 funding, from jointly preparing a Neighbourhood Plan. The Council would be required under the Neighbourhood Planning (General) Regulations 2012 7(2) to publish a document stating its reasons for the refusal. 7.0 NEXT STEPS 7.1 Under the Neighbourhood Planning (General) Regulations 2012, if the Council decides to designate Heversham and Hincaster Parishes together as a Neighbourhood Area, it will need to publish on its website and in any other ways it considers necessary to bring the designation to the attention of people who live, work or carry on business in the Neighbourhood Area; • the name of the Neighbourhood Area; • a map showing the area designated and; • the name of the body who applied for the designation This can be achieved within a very short time subject to the approval of Cabinet. 7.2 Following an approval, it would be up to Heversham and Hincaster Parishes to proceed with work on preparing a Neighbourhood Plan to their own timetable. Further reports will be submitted at relevant stages to inform Members of progress. 8.0 IMPLICATIONS 8.1 Financial and Resources 8.1.1 The Council would be required to fund the examination and referendum, once the final Neighbourhood Plan is submitted to the Council. The Council is also expected to offer basic advice to the community during the course of preparing a Neighbourhood Plan. Based on recent local experience, the examination could cost around £6,500, assuming no hearing is required and depending on the number of comments received about the plan. A referendum could cost circa £16,000, although this estimate is based on the referendum for an area of 17 parishes and thus may well be lower for a referendum covering 2 parishes. 8.1.2 The Council may make a claim to the government which would provide funding of £5000 once a Neighbourhood Area is designated to cover officer time likely to be taken up advising the community in taking forward a Neighbourhood Plan. A second payment of £5,000 would then be made when the local planning authority publicises the neighbourhood plan prior to examination. This will contribute towards the costs of the examination as well as other staff costs incurred at this stage. A third payment of £20,000 would then be made on successful completion of the neighbourhood planning examination. This is to cover costs for that examination and any other further steps that may be needed for the neighbourhood plan to come into legal force, including referendum (see Appendix 2). 8.2 Human Resources 8.2.1 Having consulted with the Human Resources Manager, it is considered that the proposal has no HR implications. 8.3 Legal 8.3.1 The Localism Act 2011 and the Neighbourhood Planning (General) Regulations 2012 have been fully considered in formulating this proposal.

Page 141 8.4 Social, Economic and Environmental Impact 8.4.1 A sustainability impact assessment been carried out in accordance with the Council’s Sustainability Impact Assessment guidance and form for committee reports (see Appendix 3). The neighbourhood plan itself would be subject to sustainability appraisal. 8.4.2 This proposal is considered to have a neutral impact on sustainability, as the decision to designate a Neighbourhood Area will not in itself impact upon many sustainability issues. However, the designation as a Neighbourhood Area would have a clear positive impact on supporting people to participate in their local community. 9.0 RISK ASSESSMENT Risk Consequence Controls required No Neighbourhood Area The Council will have the Approve the application is designated in challenge of justifying Heversham and why the area identified Hincaster and funded as a Neighbourhood Planning Pilot cannot be designated as a Neighbourhood Area and thus, cannot proceed to prepare a Neighbourhood Plan

10.0 EQUALITY AND DIVERSITY 10.1 An equality and diversity impact assessment has been carried out in accordance with the Council’s Equality Impact Assessment guidance and form for committee reports. It highlighted that the Neighbourhood Area application will not have any negative impacts in relation to equality matters (see Appendix 4)

11.0 LINKS TO THE COUNCIL PLAN AND PERFORMANCE INDICATORS 11.1 The proposal to designate the Neighbourhood Area will allow Heversham and Hincaster Parishes to proceed to prepare a Neighbourhood Plan. As such, it will help to ensure that people have a greater say in what happens in their areas (A Health and Wellbeing objective). Additionally, it will indirectly help to support Housing, Environment, Health and Wellbeing and Economy Council Plan objectives, although exactly how will depend on the scope and content of the resulting Neighbourhood Plan. 11.2 If approved by referendum, the adopted plan will form part of the Local Plan for the purpose of Development Management decision making either at committee or using delegated powers. It will guide decisions to reflect local opinion and contribute to the vision for 11% housing provision to be in smaller villages and hamlets as stated in the Core Strategy.

Page 142 12.0 CONCLUSION AND EXPECTED OUTCOMES 12.1 Heversham and Hincaster Parishes, an area identified as South Lakeland’s Neighbourhood Planning Pilot for which funding support has already been obtained, have applied for designation as a Neighbourhood Area in accordance with the relevant government regulations. The Council has undertaken the required consultation on the application and has received no objections. It is therefore recommended that the application be approved in order to enable Heversham and Hincaster parishes to proceed with the preparation of their Neighbourhood Plan. Assuming the Parishes do proceed, further reports will be submitted at appropriate stages to inform Members of progress and seek approval for certain steps as necessary.

APPENDICES ATTACHED TO THIS REPORT Appendix No. 1 Heversham and Hincaster Neighbourhood Area Application 2 Details of the funding provisions available to Councils in relation to Neighbourhood Plan preparation 3 Sustainability Impact Assessment 4 Equality Impact Assessment

CONTACT OFFICERS Lorayne Woodend, Strategic Systems and Delivery officer (Development Plans) 01539 717359 [email protected] OR Alastair McNeill, Development Plans Manager 01539 717352 [email protected]

BACKGROUND DOCUMENTS AVAILABLE None.

TRACKING Assistant Portfolio Solicitor to the SMT Scrutiny Director Holder Council Committee 05/06/13 06/06/13 04/06/13 04/07/13 Executive Committee Council Section 151 Monitoring (Cabinet) Officer Officer 24/07/2013 N/A N/A 04/06/13 Human Resource Services

Page 143 Manager 04/06/13

Page 144 HEVERSHAM AND HINCASTER APPLICATION FOR DESIGNATION AS A NEIGHBOURHOOD AREA – APPENDIX 1 PURPOSE OF APPENDIX 1 The purpose of this Appendix is to provide details of the Neighbourhood Area application received from Heversham and Hincaster Parishes.

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Page 152 HEVERSHAM AND HINCASTER APPLICATION FOR DESIGNATION AS A NEIGHBOURHOOD AREA – APPENDIX 2 PURPOSE OF APPENDIX 1 The purpose of this Appendix is to provide details of the funding provisions available to Councils in relation to Neighbourhood Plan preparation.

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Page 159 HEVERSHAM AND HINCASTER APPLICATION FOR DESIGNATION AS A NEIGHBOURHOOD AREA – APPENDIX 3 PURPOSE OF APPENDIX 1 The purpose of this Appendix is to provide details of the Sustainability Impact Assessment undertaken in relation to the proposal.

HEVERSHAM AND HINCASTER APPLICATION FOR DESIGNATION AS A NEIGHBOURHOOD AREA - SUSTAINABILITY IMPACT ASSESSMENT

Page 160 1) Does this project / service/ strategy etc. affect each of the impact areas (Q 1-9) 2) Consider whether the impact is positive, negative, neutral or not applicable for each question/ category below. 3) Use the sustainability impact assessment guidance (p3-4) to answer each question 4) The overall impact of the assessment (positive, negative, neutral, n/a) will be entered into the final line and used in the committee report.

Impact Area Summarise the Positive Summarise the Negative Summarise the Neutral N/A Impact Impact (and any mitigating Impact measures taken) It will enable and encourage Q1 Health and Well- people to become more being involved in their community Q2 Access By enabling the Parishes to be designated as a Neighbourhood Area and thus, to proceed to prepare a Neighbourhood Plan, it will help ensure that local issues of access are addressed at a

Page 161 local level in a way that is supported by local people Q3 Biodiversity By enabling the Parishes to be designated as a Neighbourhood Area and thus, to proceed to prepare a Neighbourhood Plan, it will help ensure that local biodiversity issues are addressed at a local level in a way that is supported by local people Q4 Built environment By enabling the Parishes to be designated as a

Neighbourhood Area and thus, to proceed to prepare a Neighbourhood Plan, it will help ensure that local issues of the built environment are addressed at a local level in a way that is supported by local people

Q5 Air , water, land By enabling the Parishes to and soil quality be designated as a Neighbourhood Area and thus, to proceed to prepare a Neighbourhood Plan, it will help ensure that local issues of air, water, land and soil quality are addressed at a Page 162 local level in a way that is supported by local people Q6 Greenhouse gas By enabling the Parishes to emissions, be designated as a energy efficiency, Neighbourhood Area and renewable energy thus, to proceed to prepare and adapting to a Neighbourhood Plan, it will future climate help ensure that local issues change impacts relating to energy and climate change are addressed at a local level in a way that is supported by local people Q7 Natural resources By enabling the Parishes to be designated as a Neighbourhood Area and thus, to proceed to prepare a Neighbourhood Plan, it will help ensure that local issues of resource use are addressed at a local level in a way that is supported by local people

Q8 Local economy By enabling the Parishes to be designated as a Neighbourhood Area and thus, to proceed to prepare a Neighbourhood Plan, it will help ensure that local economic issues are addressed at a local level in a way that is supported by

Page 163 local people Q9 Skills, education By enabling the Parishes to and training be designated as a Neighbourhood Area and thus, to proceed to prepare a Neighbourhood Plan, it will help ensure that local issues around education and training are addressed at a local level in a way that is supported by local people Overall Impact As the decision to designate a Neighbourhood Area will not in itself impact upon many of these issues, it is considered that there is a neutral impact, although the decision is a precursor for the preparation of a neighbourhood Plan, which should have a positive impact on many of these topics, subject to it’s scope and content. However, the designation as a Neighbourhood Area does have a clear positive impact on supporting people to participate in their local community.

HEVERSHAM AND HINCASTER APPLICATION FOR DESIGNATION AS A NEIGHBOURHOOD AREA – APPENDIX 4 PURPOSE OF APPENDIX 1 The purpose of this Appendix is to provide details of the Equality Impact Assessment undertaken in relation to the proposal.

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Page 168 Item No.14

PART I

South Lakeland District Council CABINET Meeting Date: 24 th July 2013 Report Author: Joanne Golton, Economic Development Manager Portfolio: Cllr Giles Archibald (Town Centres & Small Business) Cllr Sue Sanderson (Environment and People) Report from: David Sykes, Director (People and Places) Wards affected: Kendal Fell, Kendal Mintsfeet, Kendal Highgate, Kendal Romney, Kendal Kirkland and Kendal Nether Wards Key Decision: Not applicable Key Decision Not applicable Notice: KENDAL BUSINESS IMPROVEMENT DISTRICT 1.0 PURPOSE OF REPORT 1.1 This report is presented to consider the proposed Business Improvement District (BID) in Kendal. 2.0 RECOMMENDATIONS It is recommended that Cabinet:- (1) Supports the proposed establishment of the Business Improvement District proposed by Kendal Futures in respect of the Kendal BID area as identified and agrees that it meets the required regulatory requirements; (2) Agree that the Council shall meet the set up costs for a levy collection system as identified in Option C Appendix 3; (3) Instructs the Ballot Holder to formally manage the ballot process in accordance with the BID regulations and in liaison with the BID Co- ordinator; (4) Confirms that subject to a “Yes” vote at ballot by the business community the Council as the relevant local billing authority will manage the billing and collection of the additional levy, and its transfer to the BID Company in accordance with BID Regulations, and will recharge the BID company for the collection of the levy through a mechanism based on Option 4 in Appendix 3 ensuring all appropriate delegations;

Page 169 (5) Authorises the relevant Directors to negotiate and sign the baseline and operating agreements in respect of the BID (6) Authorises the Chief Executive or his designated Officer to exercise the Council’s vote in consultation with the Leader and relevant portfolio holders in relation to the District Council’s total of 14 votes in relation to the BID ballot; and (7) Requests the Director of Policy and Resources (Monitoring Officer) to make the appropriate amendments to the constitution to reflect the levy collection arrangements 3.0 BACKGROUND 3.1 At a Cabinet meeting on 16 November 2011 it was agreed that the Council plays an enabling role towards organisations proposing the development of Business Improvement Districts within South Lakeland. In 2012 £25,000 was sourced by Kendal Futures (the public/private regeneration partnership for Kendal) for Business Improvement District (BID) development from Kendal Town Council, South Lakeland Local Committee and the Council’s Economic Development Budget plus previous Section 106 monies (Cabinet Report - 22 nd Sept 2009) to pay for a consultancy to research, develop and deliver a Business Improvement District (BID) for Kendal. The monies include the cost of a ballot. 3.2 During the last 12 months the Council and elected members have been made aware of the Kendal Futures proposal for a Business Improvement District (BID) in the town centre area of Kendal. Since this time officers have had meetings and correspondence with the representatives of Kendal Futures Board and the BID co-ordinator to progress this project. 3.3 A Business Improvement District (BID) is a defined geographical area within which rate-paying business tenants pay a compulsory levy towards targeted projects and services which will improve the commercial areas that are identified in the project plan. The BID levy is additional to business rate payments. There are now 153 successful BIDs in the UK, which, over the next five years, will bring in almost £250 million to develop their areas and which are all developed and led by the private sector. 3.4 A Kendal BID steering group has been set up of local business rate payers and this is attended by an officer from the Council. The steering group is chaired by an independent chair, Martyn Nicholson who is the CBI representative on the Kendal Futures Board. The steering group have listened to the views of local businesses, and with the help of the consultant, have developed a business plan proposal which sets out the proposed levy and how it will be spent. By working together and investing in business led initiatives the BID, if successful could provide an economic boost to the area.

3.5 Following development work with the business community, Kendal Futures would like to progress the BID to the next stage and wrote to the Council to notify, as required by regulation 3(2) of The Business Improvement District (England) Regulations 2004 (“the BID Regulations), of the Kendal BID Group’s intention to submit a BID proposal to South Lakeland District Council for balloting purposes at least 84 days from the 30 May 2013.

Page 170 3.6 If the ballot is successful then the BID would require all relevant business ratepayers to pay an additional levy of 1% on the rateable value of their property. The BID would use this to finance local improvements that are additional to those currently provided by local government and other public service providers.

3.7 If established the Kendal BID will operate for 5 years. After this time a further vote would be sought to ascertain whether businesses wish to continue. If the necessary level of support is not achieved and the ballot is not successful then a BID cannot be established.

3.8 The Council’s responsibility following a successful ballot is to collect, administer and distribute to the BID the levy (which is collected separately from the business rates). A BID Company, which has yet to be established, will be responsible for the implementation of the BID proposals and will be accountable to the BID members through its constitution.

3.9 If the business community vote to support a Kendal BID it would raise circa £157,033 per annum over the 5 year period of the BID and will be used to deliver projects that have been identified by the private sector businesses, which are over and above what the Council delivers. These baseline services are set out by the BID in a service level agreement with the Council.

4.0 RESEARCH AND CONSULTATION 4.1 The Council has previously had experience of the BID process with the LA23 ballot. The learning from that process has been taken forward and departments are now working closely with the Kendal Futures co-ordinator. Officers have been involved in the BID steering group as the project has evolved. 4.2 This BID project is being supported by Ward Members, the Town Council, local organisations and businesses. The BID consultant is managed by Kendal Futures and has been based at the District Council’s offices in Kendal for 1-2 days per week during the last 10 months. The BID consultant has visited over 600 businesses for face-to-face meetings and also held a series of consultation workshops, public meetings and focus groups. This has helped prepare the Business Plan content and ensure that this proposal for a BID is well-informed by the businesses and organisations themselves. 4.3 When a BID is proposed for an area, the Council has a responsibility to ensure that: (1) The proposal contains the information as required in BID Regulations (2) The BID proposal does not conflict with any of its strategies and plans for that area (3) That the BID proposer has undertaken a satisfactory level of consultation with the relevant business community 4.4 The Local Government Act 2003 set out the operation of BIDs as a means of enabling businesses to invest in their local trading environment and fund works and/or initiatives through a supplementary levy based on Business Rate liabilities. Local businesses will agree to raise money to invest in their local area for the benefit of that area and trade in general. Whilst this is a narrow

Page 171 interpretation, the wider benefits for the business district can be significant in that a thriving trading environment generates greater interest and leads to increased prosperity in the area. 4.5 A summary of the consultation process undertaken with businesses by the Kendal BID Steering Group can be found at Appendix 2 . The Council must be satisfied that the proposers have undertaken a satisfactory level of consultation. 4.6 Kendal Futures and the Kendal BID steering group have launched a Twitter account to share the updates via social media and a Kendal BID website. The website was designed and is hosted by a local business and the website features updates, proposed projects and all the notes and minutes from BID steering groups, focus meetings and public meetings. 4.7 The Council have provided the BID steering group with Rateable Value details upon request and have drafted costs for BID levy collection. Baseline information for the BID proposal has been requested and information is being provided by the Council to the BID Consultant. 5.0 PROPOSAL 5.1 The Proposal: The BID business plan and proposal, as provided by the Kendal BID steering group can be found in Appendix 1. It is considered that the BID proposal meets the requirements as set out in Schedule 1 of the Regulations 2004.

5.2 Policy Implications: It is believed that the proposal does not conflict with any of the Council’s policies or plans that the Council has for the proposed BID area.

5.3 Baseline and Operating Agreements: The Council must agree the existing baseline services with the BID proposer, which sets out the standard services provided by the Council within the BID area. The Council is in the process of supplying the baseline information for the Kendal Town Centre area. The Council must also sign an operating agreement with the BID proposer which governs the process for collecting the levy.

5.4 Ballot: The Council is satisfied that all businesses in the Kendal BID area have been made aware of the BIDs proposal. It is proposed that the BID ballot will be conducted by Electoral Reform Services on behalf of the Ballot Holder. The Ballot Holder is defined by the BID Regulations as the Returning Officer for the purpose of elections of the Council, namely the Director of Policy and Resources (Monitoring Officer). The Council’s Procurement Standing Orders provide that contracts of low value (less than £2,500 do not require written quotations or a tender and, accordingly, a tendering exercise is not required for this purpose. The Kendal BID budget held by Kendal Futures has capacity to cover the cost of the ballot.

5.5 Bid Levy Collection and Cost: Under the Local Government Act 2003, the Council is responsible for collecting any BID levies. As this is a new scheme for the Council, it is necessary to amend the Scheme of Delegation in the Council’s Constitution in order to facilitate this. Cabinet will be requested to consider the Scheme of Delegation be amended to authorise the Assistant Director

Page 172 (Resources) and Section 151 Officer Head of Finance “to administer, bill, collect and enforce levies arising under a Business Improvement District scheme ”.

5.6 The Council has no budget for this additional function and is fully entitled to ensure that the cost of collecting and administering the scheme is at no cost to the Council and council tax payers. The Council has also previously invested in software which will enable a BIDS levy to be undertaken so an additional investment of circa £12,000 into appropriate software is not required.

5.7 The collection costs vary in line with the number of eligible hereditaments in a proposed BID area and indicative collection costs are estimated to be circa £8 per property per annum, although this will depend on final arrangements.

5.8 With regards to the costs for collecting the BID levy, indicative costs are shown in Appendix 3. The Council would seek to finalise a service level agreement with the BID proposer so everyone is clear of the costs and service provided. The Council will seek to keep the charges as low as possible and these would be kept under review. The recharge would be at basic cost with no profit element attached. It is also proposed that the set up costs be waivered by the Council, which is estimated to be £5,600 as this would be viewed favourably by the businesses and this system can be used for other towns.

5.9 BID levies payable by the Council: If the ballot is successful, all eligible businesses must pay a BID levy. The Council owned/occupied premises in the relevant BID area will also be subject to the BID levy and it is proposed that these be funded through relevant Portfolios in line with current arrangements. The Council would potentially have 14 votes available in a BID ballot and it will be recommended that the Chief Executive be authorised to exercise the Council’s vote at a ballot. The Council would be paying £7,299.50 through the levy.

5.10 Operating Agreement (Levy): The Kendal BID steering group will sign a Service Level Agreement (SLA) but may wish to novate the responsibility to the new BID Company after the ballot. Officers recommend that an SLA is prepared in draft to enable the process to proceed. Levy collection will not be transferred to the BID Company until it is fully incorporated and the SLA has been signed upon successful conclusion of the ballot.

6.0 ALTERNATIVE OPTIONS 6.1 To not proceed with the BID process. Some Councils have determined to take this course of action. It is not recommended as a well managed BID will provide additional income for an area. It is also a way of the private sector managing projects and improving services which the Council would not be able to do because of restrictions on its budget. 7.0 NEXT STEPS 7.1 That officers implement the decisions made by members in line with the proposals.

Page 173 8.0 IMPLICATIONS 8.1 Financial and Resources 8.1.1 The billing, collection and enforcement of BID levies will be undertaken using a module of the Revenues and Benefits system. The utilisation of a similar software arrangement ensures that the procedures used to successfully collect Business Rates are extended to cover the proposed BID scheme. The Council has already purchased the software that will be used to collect the BID Levy. Set up costs of around £5,600 will be required to set up the levy collection system. These are actual costs and not an apportionment of officer time. These include training cost on the new software, software changes for the cash receipting system and stationery. The funding for this will be from the Revenues and Benefits budget.

8.1.2. The Council will be required to set up a separate BID Revenue Account in accordance with Section 47 of the Local Government Act 2003. This account will allow ring fencing the receipts for specific purposes; namely the BID Company, so that they can use the monies to carry out their stated objectives.

8.1.3 The proposal is for the Council to collect the BID levies arising from the Kendal BID at operational cost to the BID Company. The Council will incur costs and indicative costings are shown in Appendix 3. In order to ensure that appropriate payments are made, the BID Company will be invoiced for this amount at point of levy virement.

8.2 Human Resources 8.2.1 The administration process for operating the BID scheme will be set out in an Operating Agreement that details the billing, collection and enforcement provisions as well as the arrangements for transmitting the BID receipts to the BID Company. It is essential to keep the arrangements to a realistic level so that the cost of delivering them is efficient. In the event that the BID Company demand a level of monitoring that is not proportionate to the scale of the BID scheme then the Council’s right to charge for such additional monitoring is reserved. 8.3 Legal 8.3.1 The proposal is for the Council to collect the BID levies arising from the Kendal BID and to recover the cost of this from the BID Company. The indicative costs are shown in Appendix 3. The BID Company will be invoiced after SLDC has completed the billing and started to collect income. 8.3.2 A BID scheme must be operated in accordance with the Local Government Act 2003 and the billing, collection and enforcement arrangements are governed by legislation and the BID Regulations. 8.3.3 There are statutory provisions under which the Council has a veto. This is generally where the BID proposed work programme is already being carried out or if the scheme is unworkable. Whilst the powers are available, it should be noted that they have not yet been tested by other Councils.

Page 174 8.3.4 The approval of the BID proposal enables the ballot to take place. In the event that the BID ballot is unsuccessful, then the scheme will fail.

8.3.5 In order to ensure that the legal arrangements are appropriately formulated, the Council will enter into a SLA with the BID Company.

8.4 Social, Economic and Environmental Impact 8.4.1 Has a sustainability impact assessment been carried out? No 8.4.2 This proposal is considered to have a neutral impact on sustainability. 9.0 RISK ASSESSMENT Risk Consequence Controls required Failure to agree/sign a • unbudgeted • Constitution Service Level Agreement expenditure • Financial • confusion as to Regulations responsibility • Operational • bad governance Agreement arrangements • Negotiations • poor stakeholder relations • audit criticism Ballot Fails BIDs will not succeed. Ensure appropriate consultation undertaken. Businesses consider that Reputational Kendal BID insert letter the additional cost is consequence for council into levy demand and being implemented and Council works with retained by council Kendal BID steering group to ensure that there is no misunderstanding amongst business. 10.0 EQUALITY AND DIVERSITY 10.1 There are no equality and diversity issues to raise 11.0 LINKS TO THE CORPORATE PLAN AND PERFORMANCE INDICATORS 11.1 Economy – creating opportunities for economic growth 12.0 CONCLUSION AND EXPECTED OUTCOMES 12.1 The initiative is a local initiative of Kendal Futures, a regeneration partnership supported by the Council. Kendal Futures and the Kendal BID steering group are seeking to improve the environment in which they trade, resulting in stronger prosperity for the locality. APPENDICES ATTACHED TO THIS REPORT Appendix No. 1 Kendal BID Business Plan Proposal

Page 175 2 Summary of Consultation Undertaken 3 Costing for Collecting the BID Levy CONTACT OFFICERS Joanne Golton, Economic Development Manager Tel 01539 793276 BACKGROUND DOCUMENTS AVAILABLE None TRACKING Assistant Portfolio Solicitor to the SMT Scrutiny Director Holder Council Committee 25/06/2013 25/06/2013 26/06/2013 Executive Committee Council Section 151 Monitoring (Cabinet) Officer Officer 25/06/2013 25/06/2013 Human Revenues and Resource Benefits Services Manager Manager 25/06/2013 26/06/2013

Page 176 KENDAL BUSINESS IMPROVEMENT DISTRICT – APPENDIX 1 PURPOSE OF APPENDIX 1 The purpose of this Appendix is to provide the Kendal BID Business Plan Proposal

KENDAL BUSINESS IMPROVEMENT DISTRICT BUSINESS PLAN 2014– 2019

FINAL DRAFT V7

REVISED 20 JUNE 2013

Page 177 Contents: 1. Executive summary

2. Foreword by Kendal Futures

3. Business Improvement District explained 3.1. What is a Business Improvement District? 3.2. Why do we need a BID in Kendal? 3.3. Where is the BID area? 3.4. Why should we vote yes? 3.5. What if we vote no?

4. Aims and objectives of the BID 4.1. Aim 4.2. Key objectives 4.3. Method and approach

5. Programme for improvement 5.1. Marketing & Promotion 5.2. Clean, Safe & Attractive 5.3. Convenient & Accessible 5.4. Enterprising & Competitive

6. Financial Plan 6.1. Income 6.2. Expenditure

7. Management arrangements 7.1. BID Development Group 7.2. BID Proposer 7.3. BID Management 7.4. Performance Monitoring and Evaluation

8. BID levy rules and management 8.1. Eligibility to vote 8.2. Who pays? 8.3. How long will it last? 8.4. How will funds be collected? 8.5. Who will be accountable for the BID funds?

9. An affordable BID 9.1. What will it cost each business?

10. Countdown to the vote

11. Risk assessment

Page 178 12. Contact details

1. Executive summary

WHAT IS IT? A Business Improvement District (BID) is a precisely defined geographical area of a town, city, or commercial district where business ratepayers are invited to vote to invest collectively in local improvements that are additional to those currently provided by local government. Business ratepayers are asked to vote on an additional levy to their rates bill that, if supported, will be collected in a ring-fenced account and then used to finance the delivery of projects, services and activities detailed in their own Business Plan. WHY DO WE NEED IT? BIDs are business-led initiatives taking advantage of government legislation that gives local businesses the power to raise their own funds to spend on their priorities in order to improve their trading environment. Kendal BID is an investment scheme where local businesses collectively agree on the priorities and how to invest their money to benefit themselves, their staff and their customers. Investment is needed to help the town centre to adapt to inevitable changes, for example, the increasing influence of supermarkets, the rapid growth in online retailing, and the increasingly well organised competition from neighbouring towns and cities. 1 For the businesses and organisations in Kendal’s town centre the BID proposal is an opportunity. It presents a choice: • a reactive and piecemeal approach reliant on the goodwill of a handful of individual businesses taking action ad hoc as time and resources allow, and where planned investments are almost entirely dependent on the availability of increasingly scarce public resources; or

• a proactive and cohesive approach involving the whole business community, where collaboration brings with it the benefits of shared experience, common objectives, and the pooling of resources brings the required economies of scale to have much more impact at lower per capita cost.

WHO WILL BE IN IT? All business ratepayers in properties located within Kendal’s town centre, as defined by the map of the BID area, with the exception of those with a Rateable Value of less than £3,000. WHAT WILL IT DO? The Kendal BID will deliver on 5 objectives. These are:

1 In 2012 businesses voted to set up Business Improvement Districts in both Lancaster and Penrith.

Page 179 1. To brand, market and promote Kendal as a centre for retail, services, leisure and tourism, including better use of digital and mobile technologies, and extending cultural activities, festivals and events. 2. To take pride in Kendal by creating a more attractive town centre for workers, residents and visitors. 3. To make it easier and more affordable to access Kendal town centre by introducing measures to incentivise car parking during quieter periods of the day, week or year, and, wherever possible, encourage alternatives to the car. 4. To invest in people and businesses to develop a more competitive Kendal that builds on its reputation for choice & customer service. 5. To build, through the BID, an effective partnership between the town’s businesses, organisations and local authorities for the benefit of Kendal businesses, residents and visitors. The Kendal BID will implement a Programme for Improvement that includes projects and activities designed to meet these five objectives. These can be summarised as: • Comprehensive marketing, promotion and events campaign for the town; • Improvement works designed to raise standards of appearance of the town centre; • Trial of new car parking initiatives in Kendal to test new ways to simplify access to the town centre; • Series of enterprising initiatives to make use of vacant premises, achieve better business networking and deliver cost savings for many of the individual businesses. These will be implemented as part of a new collaboration that forges new links between the town’s businesses and its elected representatives. HOW WILL IT WORK? The income required to deliver a 5 year programme of improvements within Kendal’s town centre BID will be mostly drawn from the BID Levy, collected on behalf of all the businesses involved by South Lakeland District Council - the billing authority and collection agency for the Non-Domestic Rates. Subject to a successful vote, a Kendal town centre BID will be managed by a new Kendal BID Company limited by guarantee, with its own ring-fenced accounts, and with membership open to nomination and election from all businesses, organisations and individuals contributing through the BID levy. This will ensure that the control, delivery and responsibility for the BID sit firmly with the business community itself. WHAT ARE THE BENEFITS? In short, the BID can deliver higher levels of awareness and confidence in the shops and services in the town and a well-maintained, attractive town centre that is easy to access should, in turn, generate higher volumes of shoppers and visitors and therefore expenditure within the town. We know that these benefits are possible through the experiences of towns with Business Improvement Districts established since 2005. The most striking illustration of

Page 180 this is the fact that 94% of the 48 BIDs that have now completed their first 5 year programmes have voted to continue with their respective BIDs. 2 HOW MUCH WILL IT COST? A 1% levy will be charged to each qualifying ratepayer using the most current Non- Domestic Ratings list to calculate the amount payable. The BID levy will be set by 1st February each year based on the most current Non-Domestic Ratings list. The Kendal BID area includes 696 hereditaments with a Rateable Value of £3,000 and over. Their combined Rateable Value (RV) is estimated to be £15,703,300 which will raise £157,033 gross per annum or £785,165 over the 5 years term of the Kendal BID. For more than 95% of businesses in the Kendal BID area the BID Levy will only be equivalent to, or in most cases much less than, the price of a daily cup of coffee 3. Refer to Section 6 of the Business Plan for details. WHO DECIDES? The Kendal BID includes a large number of business ratepayers eligible to vote for each of the 696 hereditaments with a Rateable Value of £3,000 and above. Each will be invited to vote on whether or not to establish a Business Improvement District in Kendal town centre. The ballot will be held in the autumn of 2013 and, for the proposal to be approved, two tests must be met: (i) A simple majority (more than 50%) of those voting in the ballot must be in favour; (ii) Those voting in favour must represent a majority (more than 50%) by aggregate rateable value of the hereditaments (or rateable properties) of those voting. WHO CAN I ASK ABOUT IT? If you require further information or have any queries relating to the content of this Business Plan please contact: Chris Kolek, Kendal BID Co-ordinator. Tel: 07900 608085 Twitter: @KendalBID Email: [email protected] Website: www.kendalbid.co.uk

2 Nationwide BID Survey, British BIDs 2012 3 For 95% of hereditaments the BID Levy will be less than £2.06 per day.

Page 181 2. Foreword by Kendal Futures

Should Kendal’s businesses choose to vote for the BID it will, from 1st February 2014, deliver a five year programme to increase visitors, footfall and spending through marketing, events and town improvements. It will be the first time that such a significant budget – £885,165 over 5 years – will have been created for businesses to spend on what really matters to them; improving Kendal and boosting business. This is the right time for Kendal to do this. There is undoubtedly a need for businesses to grasp the nettle and take their own initiative to make things better. Difficult economic conditions in recent years, coupled with the cuts to public services and funding, have made it extremely challenging to run any kind of business. Consumer behaviour is also changing, with more using the internet to access services and buy the goods they require, and the squeeze on household budgets means that there is ever increasing competition for their custom. The BID presents a valuable opportunity for businesses in the town to act collectively to improve Kendal town centre and to have a much greater influence over what happens in the future. It will be a partnership of businesses on a scale not seen before in Kendal - well over 600 working towards a common goal. The potential is obvious. None of this can happen unless we make it happen. I urge all those eligible to vote to support the BID and vote YES! Martyn Nicholson Chair, Kendal BID Development Group

Page 182 3. Business Improvement District explained 3.1 What is a Business Improvement District? The definition A Business Improvement District (BID) is a precisely defined geographical area of a town, city, or commercial district where business ratepayers are invited to vote to invest collectively in local improvements that are additional to those currently provided by local government. A BID can be established in any place where improvements, or services additional to those already provided, are desired by the local business community. BIDs can be located in town or city centres but also in industrial estates, business parks or anywhere else where businesses see the need. In the UK well over one hundred BIDs have now been established including several examples in market towns such as Skipton, Barnstaple, Taunton, Dorchester, Melton Mowbray and Stratford. More recent additions include Lancaster and Penrith. The regulations After many years of success in North America and a growing number of reports highlighting its potential to the UK, the Government in 2001 decided to introduce legislation to create BIDs funded by an additional charge on the business rates, to be agreed together by local businesses and councils. Consequently, Part 4 of the Local Government Act 2003 and the Business Improvement Districts (England) Regulations 2004 set out the detailed requirements for BIDs in England, including: persons who may propose a BID; what should be included in any proposals; how the funds can be collected; and how business ratepayers can make their decision. The ballot Unless otherwise stated, all Non-Domestic Ratepayers (Business Ratepayers) in the defined BID area can vote on the BID proposal through a ballot. For the proposal to be approved two tests must be met: (i) A simple majority (more than 50%) of those voting in the ballot must be in favour; (ii) Those voting in favour must represent a majority (more than 50%) by aggregate rateable value of the hereditaments (rateable properties) of those voting. If the result of the ballot is in favour, the proposed Business Plan will become active and all eligible businesses in the defined BID area would be obliged to contribute to the scheme. In Kendal, properties with a rateable value of less than £3,000 will be excluded from both the vote and the levy to ensure that the cost of collection and administration does not exceed the income raised. The BID Levy The BID proposals will be funded through a levy on the business rates. The Kendal BID will apply a levy of 1% of rateable value on all properties with a rateable value of £3,000 and over located within the defined BID area. The BID Levy will be applied using the latest available rateable values as provided by South Lakeland District Council. This will generate an estimated fund of £785,165 over the 5 year period of the Kendal BID, topped up with voluntary contributions, grants and sponsorship, to fund the projects identified in this Business Plan to deliver improvements to the trading environment of Kendal Town Centre.

Page 183 No significant alterations can be made to the BID proposals, for instance to the BID levy rate, without a further ballot and a majority vote in favour of the alterations. 3.2 Why do we need a BID in Kendal? First and foremost, the BID should be seen as a means by which local businesses and organisations have the power to raise their own funds that can be used to address their priorities with the aim of improving their trading environment. It is an investment scheme where local businesses can collectively agree on the priorities and how to invest their money to benefit themselves, their staff and their customers. The creation of a potentially sustainable source of revenue should certainly prove helpful in pursuit of a specific outcome. For Kendal town centre the desired outcome might, for instance, be a lively, dynamic and prosperous place that remains viable well into the future. To achieve this desired outcome will require action and investment to help the town centre to adapt to inevitable change, for example, the increasing influence of edge-of- town supermarkets, the growth in online retailing, and competition from neighbouring towns and cities. It will require investment in the infrastructure and other improvements to the trading environment to meet the expectations of today’s consumers and to attract increasing numbers of visitors to the town. For the businesses and organisations in Kendal’s town centre the BID proposal is an opportunity, but it also raises a stark choice: • to continue with a reactive and piecemeal approach reliant on the goodwill of a handful of individual businesses taking action ad hoc as time and resources allow, and where planned investments are almost entirely dependent on the availability of increasingly scarce public resources; or • to be bold and adopt a proactive and cohesive approach involving the whole business community, where collaboration brings with it the benefits of shared experience, common objectives, and where the pooling of resources brings the required economies of scale to have much more impact at lower per capita cost. In purely economic terms the potential benefits from businesses working collectively in this way to address common challenges may seem rather obvious but it will be dependent on a genuine will to collaborate. It will also assume that any actions to be taken to improve the trading environment are well considered, informed by good practice elsewhere, and most importantly, capable of generating a new found confidence in Kendal’s town centre. 3.3 Where is the BID area? The defined geographical area of the Kendal town centre BID includes all or part of the following streets inclusive of yards: Abbot Hall Castle Street (part) Low Fellside (part) Sand Aire House

Allhallows Lane Cross Lane Lowther Street Sandes Avenue

Beast Banks Dowkers Lane Market Hall South Road (part)

Beezon Road Elephant Yard Market Place Station Road (part) (part)

Page 184

Berry's Yard Finkle Street Maude Street Stramongate

Blackhall Road Gulfs Road Melrose Place Stramongate Bridge Blackhall Yard Highgate Milnthorpe Road Stricklandgate (part) Branthwaite Brow Kent Street New Road Westmorland Shopping Centre Bridge Mills Kent View New Shambles Wainwright's Yard

Busher Walk Kirkland Old Shambles Wildman Street (part)

Buttery Well Library Road Peppercorn Lane Woolpack Yard Road Captain French Lound Road (part) Riverside Place Lane (part)

Page 185 MAP OF KENDAL TOWN CENTRE BUSINESS IMPROVEMENT DISTRICT

Exemptions The following Non-Domestic Ratepayers are not required to pay the Kendal BID levy:

Page 186 • Where Rateable Value (RV) is less than £3,000

Number and Type of Hereditaments Excluding the above, the local authority supplied Rates List includes 696 eligible hereditaments (rateable properties) within the defined town centre Business Improvement District. The broad description or types of use can be summarised as follows: Shops/retailers 52% Banks/Building Societies 1% Offices 21% Clubs/Societies/Leisure 2% Public Houses 4% Merchants/warehouses 2% Restaurants/Coffee/Teashops 6% Garage/service stations 1% Hairdressers/Salons 4% Medical/Health 3% Hotels/B&Bs 2% Car parks 2%

3.4 Why should we vote ‘YES’?

Facing up to the challenges`

Kendal needs inspiration, energy and creativity, but above all else it needs businesses to work together much more effectively. The town centre currently faces some significant challenges, some of which are shared with many other towns but others which are more specific to Kendal.

The work to canvass businesses in Kendal - to test their appetite for a Business Improvement District (BID) in the town - began in the autumn of 2012. Visits to over 600 businesses in Kendal town centre (between September 2012 and January 2013) and their responses to a short questionnaire survey, together with points raised at a series of three consultation workshops and a brief review of the findings from previous studies, have all been used to identify and confirm the main issues and challenges facing the future of Kendal town centre. It is this information and the subsequent consultations held in March, April and May 2013 on the content of the Business Plan itself that ensures that this proposal for a BID is well-informed by the businesses and organisations themselves.

You told us what the main challenges are, what was good about Kendal, and what the priorities for action should be. The most common responses are summarised below using a small selection of the actual comments we received:

Page 187

The challenges The positives The priorities for action Poor perceptions & Service centre for large Establish a brand for negative attitudes. catchment area. Kendal. Lack of a clear identity Regular cultural events Collective marketing & “what it is and who it is & festivals. promotion of businesses & aimed at”. Beautiful location. services in Kendal. Attractive to tourists. Areas of town “looking Full of charm and Improve town centre tired”. character such as “the aesthetics. Yards”. Low crime, “safe place to live”. Historical market town. Costs of car parking. Some free parking at More accessible town Traffic system, road New Road. centre with “cheaper” works & congestion. Occasional “free and more free car Sundays”. parking options. Competition from retail Diverse range of shops Improve the viability of parks, supermarkets and & services, excellent businesses and be growth in internet specialist shops. creative to improve shopping. vitality of town centre.

The economic drivers of change feature prominently in considering the needs for a Business Improvement District (BID). Kendal has a long history of independent retailing and the town’s retail offer continues to include an impressive range of diverse “specialist” shops, despite the recent and rapid growth of ever larger, more powerful, retailers in Kendal. Consumers vote with their feet, often influenced by price and convenience (cheaper goods, free car parking, etc) but the apparent strength of loyalty to specialist shops in Kendal provides some optimism and presents an opportunity for investment through this BID. In past years, Kendal has on many occasions debated its competitive position in relation to neighbouring towns and cities, and the so-called “pull” of larger regional shopping centres within easy travel distance. Leakage of retail expenditure from Kendal has for many years been a concern. The activities of Kendal Futures, the Chamber of Commerce, the local authorities and others illustrate the efforts being made locally to attempt to redress the balance by raising footfall and spending levels in Kendal. A more recent challenge is the growth in the number of consumers using the internet for their shopping, financial services, and many other activities traditionally associated with the town centre. Indeed many businesses in Kendal have concerns about the lasting impact of growing online sales and the immediate threat this poses to the town centre as a trading environment.

3.5 What if we vote ‘NO’?

Page 188 More of the same

If the majority of businesses voting in Kendal say “No” to a BID, then what will they do instead? Or will it be possible to simply carry on as before? In 2011 the Prime Minister commissioned the Retail Consultant, Mary Portas, to conduct a review of the state of Britain’s high streets and town centres. In her report 4 she addresses the need to take action now. Mary Portas wrote, “I believe that our high streets have reached a crisis point. I believe that unless urgent action is taken much of Britain will lose, irretrievably, something that is fundamental to our society.” This report highlights a failure that is all too common in Britain’s town centres. She wrote, “When I started my work on the review, I ploughed through a huge pile of previous reports about high streets and town centres and found so many good ideas which have simply sat on the shelf. Pretty soon I realised why. What I discovered is the complexity and diversity of the problems faced by high streets. And I’ve learnt just how much of a complex web of interests and stakeholders are involved, many of whom have simply failed to collaborate or compromise. The end result in many cases is an asset we no longer respect, need, want or aspire to have.” For Kendal, this BID proposal seeks to address the key challenges identified by the businesses and organisations in the town centre. It rejects any suggestion that it is alright to do nothing by proposing a brand new collaboration that will deliver a series of practical projects designed to meet these challenges and give a good return on investment to the businesses and organisations involved. 4. Aim and Objectives of the BID

4.1 Aim

The principal aim of the Kendal BID is to promote, facilitate and advance the BID area as place to do business and to invest in, a place to be proud of, a place that is attractive to visitors and a place that is a safe and pleasant to live and work in.

The town centre BID will contribute to a shared vision 5 for Kendal, that is:

“An economically dynamic, culturally vibrant, contemporary market town with a thriving and distinctive town centre located in one of Europe’s greatest landscapes, achieving its potential to deliver sustainable wealth and well-being for all its residents and admired for its flourishing businesses, educational excellence, enterprise and ambition of its residents, the quality of its built heritage and low carbon economy.”

4.2 Key objectives

4 The Portas Review: An independent review into the future of our high streets, Report to the UK Government Dec 2011 5 Kendal Futures Board Vision and Strategy for 2012 and beyond.

Page 189 For the Kendal BID there are five key objectives, these are:

1. To brand, market and promote Kendal as a centre for retail, services, leisure and tourism, including better use of digital and mobile technologies, and extending cultural activities, festivals and events; 2. To take pride in Kendal by creating a more attractive town centre for workers, residents and visitors; 3. To make it easier and more affordable to access Kendal town centre by introducing measures to incentivise car parking during quieter periods of the day, week or year, and wherever possible, encourage alternatives to the car. 4. To invest in enterprising people and businesses to develop a more competitive Kendal that builds on its reputation for choice & customer service. 5. To build, through the BID, an effective partnership between the town’s businesses, organisations and local authorities for the benefit of Kendal businesses, residents and visitors.

4.3 Method & Approach

Delivery against these five objectives will require an approach that combines influencing and negotiating with direct financial support for some specific actions. The creation of a BID for Kendal’s town centre will establish a group of over 600 businesses and organisations. Their combined influence should not be overlooked, and their capacity to negotiate and influence on behalf of Kendal town centre will be just as vital to its success, by ensuring that businesses and organisations can thrive in a safe, clean environment without any unnecessary obstacles to their daily operation.

The local authorities commission a number of services in Kendal’s town centre on behalf of the local community and, as partners in this BID, all businesses and organisations should encourage their involvement and help them to achieve the very best value for money. It’s in everyone’s interest to work together to get the most out of every pound of investment going into the town centre.

Kendal BID will not replace or duplicate any of the statutory services already being delivered in the town centre through public service contracts. What Kendal BID will do is deliver a programme for improvement that adds value to the town centre. The funds raised through a BID levy will be used to lever in additional contributions from elsewhere, not just from local authorities and other public bodies, but also through voluntary contributions from businesses located outside of the BID area who share an interest in Kendal’s future success.

5. Programme for improvement

The objectives of the Kendal BID and the planned programme for improvement are a direct response to the priorities identified by the businesses and organisations in Kendal’s town centre. They focus on the challenges and opportunities that matter to most to them and reflect their overwhelming desire to see actions and not just words

Page 190 that will transform the town. Above all else, these priorities are an acknowledgement from the businesses and organisations in the town centre that Kendal has not done nearly enough to realise its potential.

The Kendal BID programme will deliver a set of projects and activities under four headings. They are: 1. Marketing & Promotion

2. Clean, Safe & Attractive

3. Convenient & Accessible

4. Enterprising & Competitive

5.1 Marketing & Promotion

What you told us

“I think the town needs to decide what it is, who it is aimed at...”

“Kendal is very historic, with a traditional market town aesthetic that should be maintained (and promoted) at all costs.”

“Its beauty, proximity to the National Park, people like it here and I am sure many more would love to live here…”

“Failure to act and modernise so as we can compete with other towns.”

“Need for collective marketing!”

Need for action

The need for, and the potential benefits of, a marketing & promotions campaign for Kendal town centre are extremely well-versed. A series of studies and strategies, including the Kendal Economic Regeneration Action Plan 6 have identified this need before. This highlighted the need for a focus on the town centre, and drew attention to the growing concerns being expressed by the town centre businesses over the economic health of the town.

More recent consultations with town centre businesses and organisations, as part of the BID development work, included several common themes. One of the most prominent of these was the lack of a clear identity or brand for the town, and the need to tailor a marketing strategy for Kendal through a series of promotion campaigns targeted at specific ‘segments’ or categories of Kendal’s ‘customers’.

6 Kendal Economic Regeneration Action Plan, Final Report to Cumbria County Council & SLDC, June 2007

Page 191 Today, there is an awareness in the town centre of the need to establish Kendal as a place of relevance to their customers: to residents and to visitors. Through the consultations it is also apparent that many acknowledge that Kendal needs to have a clearer identity in order to compete regionally, nationally, and even internationally.

Efforts have been made to capitalise on the town’s very impressive natural and built heritage. Some progress has been made, for instance with the recent introduction of distinctive new signage and interpretation boards around the town centre and some success with campaigns to promote Kendal as a visitor & shopping destination. There is, however, a need to join it all up, to become more effective and to maximise the benefits.

Digital media, the internet and mobile technology are changing the way consumers behave. The growth in the use of social media and the business opportunities these developments present have been largely overlooked or even ignored by businesses and organisations in Kendal. In such challenging economic times, and with these changes increasing choice for the consumer and competition for the town’s businesses and service providers, Kendal cannot afford to bury its head in the sand.

During the consultations there were comments that the town already had some marvellous festivals and events and more could be done along these lines. Recent festivals such as the established Kendal Mountain Festival, Mint Fest and the Food Festival are examples of what can and should be done to raise the profile of the town. Kendal’s streets can be filled by these events. Kendal has demonstrated the capacity to stage events and attract visitors to festivals from far afield. These have the potential to develop further and could help to draw people into the town, raising the profile of the town and achieving greater awareness of the goods and services available within it.

Objective

To market and promote Kendal as a centre for retail, leisure and tourism, including better use of digital and mobile technologies, and extending cultural activities, festivals and events to raise the profile of the town regionally and nationally.

Projects and activities

A comprehensive marketing, promotion and events campaign to ensure that the Kendal Town Centre offer translates into an improved brand identity and a positive perception of the town, with improved footfall, sales and an improved customer experience.

This can be delivered in three parts:

1) High quality marketing, promotion and PR campaign 2) Programme of high profile festivals & events 3) New media, new business campaign

1. High quality marketing, promotion and PR campaign

Page 192 Lead the development of a new coordinated approach to the branding and marketing of Kendal’s town centre, promoting what is offered both during the daytime and the evening by exploiting a variety of media. Through a 5 year marketing campaign Kendal BID will focus on: a) Establishing and promoting a new brand for Kendal by forging new and regular relationships with a variety of national and international media; b) Securing Kendal’s position as the key shopping destination and service centre for the sub-region of South Cumbria and the Lake District; c) Promoting Kendal as the leisure and entertainment destination for both UK and international tourists visiting the Lake District.

2. Programme of high profile festivals & events Working with local partners, to support new and existing town centre festivals and/or events each year for a period of five years where these contribute to marketing and promotion of the town centre’s businesses and services. This will include support for the outdoor market and street entertainment where appropriate.

3. New media, new business initiative Develop the use of new media and smart technologies to equip the town centre to meet the growing expectations of a new age of well-informed consumers, specifically: a) Create a new consumer website for Kendal with information on shopping, eating and drinking, events, attractions and activities; b) Complement this online resource with a free-to-download town centre ‘app’; and c) Extend the provision of WiFi or other easy to access services within the town centre.

Not only will these developments offer great potential to raise the profile of Kendal town centre, but they have the potential to generate new business by increasing interest and sales in the goods and services available.

Project Outputs

Implement 2 media campaigns utilising the new Kendal brand, specifically including: a) Promotions & incentives scheme aimed at communities across the South Lakeland catchment; and b) Targeted tourism & visitor campaign.

Sponsor and support the delivery of at least 3 festivals or events per year.

Involve minimum of 75 businesses in a ‘New media, new business’ initiative.

Performance Indicators

Key Performance Indicators from application of the AMT toolkit in Kendal are:

KPI 8: Footfall – information from annual count surveys – target 10% over 5 years

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KPI 10: Business confidence – postal survey – target 5% sales growth over 5 years

KPI 11: Town Centre Users Survey – progressive increase in positive impression of town and festivals

KPI 12: Shopper’s origin – shopper’s postcode survey – increase in visitors from outside LA district

Total Project Cost

£250,000 over 5 years

Impact

Overall increased footfall and turnover/sales improve financial viability of businesses/services. Raised profile and positive image of Kendal as ‘an economically dynamic, culturally vibrant, contemporary town with a thriving and distinctive town centre’.

5.2 Clean, Safe & Attractive

What you told us

“Town Centre is looking tired with many shops closed or charity/betting establishments”.

“Improvement in town centre aesthetics”.

“Town centre businesses are possibly suffering as a result of the poor perception that the public seem to have.”

“To develop the town centre appearance.”

Need for action

The need for investment in the public realm is a strategic priority, vital to the image and visitor perceptions of the town, and also a significant factor in influencing the civic pride of local businesses and residents. Small initiatives, as well as the larger infrastructure improvements, can make a real difference but there needs to be some consistency in the town’s fabric and greater stakeholder engagement in its future development.

Objective

To take pride in Kendal by looking after the whole of the town centre, investing time and resources where it is needed to enhance its appearance, and ensuring that an attractive, welcoming environment is maintained for workers, residents and visitors alike.

Description

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In partnership with the local authority, contribute to improvement works designed to raise standards of appearance and cleanliness of the town centre, specifically funding enhancements that secure a safer, more pleasant environment for workers, residents & visitors.

Kendal BID will also act as the key link between businesses and public agencies, ensuring that you are able to carry out your business as easily as possible.

This has 3 distinct elements:

1. A new partnership between businesses, community groups and the local authority will plan and deliver a joined up and consistent approach that adds value to the public realm in Kendal town centre.

2. Investing in the town centre public realm through support for community-led initiatives that add colour and brightness to the town centre, through the enhancement of existing and the introduction of new features.

3. Support for local initiatives that encourage businesses to work together to maintain the town centre as a safe environment throughout the day and evening.

Project Outputs

Clean and safe town centre managed by a cross-sector partnership.

A new civic pride initiative that brings forward a number of small projects that improve the fabric of the town centre and addresses the town centre’s “grot spots” (as highlighted by the Civic Society).

Performance Indicators

KPI 8 Footfall – annual survey

KPI 10 Business Confidence – postal survey

KPI 11 Town Centre Users Survey

Total Project Cost

£104,296 over 5 years

Impact • Rise in numbers of people using the town centre during the daytime and in the evenings.

• Civic pride initiative lifts business confidence.

Page 195 5.3 Convenient & Accessible

What you told us

“Keeping centre buoyant given difficulty of vehicular access & parking.”

“Reduce or incentivise parking costs like Booths.”

“Parking – [need for] close relations between Council and trade.”

“Improve access & parking.”

“Make it easier and cheaper for people to come to Kendal.”

“Too difficult for people to park.”

Need for action

Consultations revealed just how important car parking is to businesses and organisations in Kendal town centre. The overwhelming majority of businesses visited between September 2012 and January 2013 highlighted this specific concern and the need for action to address “Kendal’s problem”.

As with other historic market towns, Kendal’s problem is actually a combination of car parking and traffic management issues. For some it was the difficulty facing employees more than customers. For others it appeared to be some dissatisfaction or even confusion over the operation of the new ticket machines in the public car parks (subsequently addressed by South Lakeland District Council). The most common concern however was the perceived difficulty in finding cheap and convenient car parking in Kendal. This related to several issues including the scarcity of free on-street parking spaces, the cost of public car park tariffs, and unhappy experiences with the “one-way traffic system”.

Objective

To make it easy and affordable to park in Kendal by introducing measures to simplify access to the town centre for those in the car, as well as by alternative modes of transport.

Description

In partnership with South Lakeland District Council, the Kendal BID will contribute to specific free/discounted car parking promotions to make Kendal town centre more affordable and accessible to visitors, shoppers and town centre users generally.

The promotions will draw on the lessons learned from successful car parking initiatives tested elsewhere and the success of tried and tested promotions used previously in Kendal . For example, in Chester the promotion of free car parking after 3 pm resulted in a 23% increase in footfall in the city after 3 pm.

Project Outputs

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Extension of “free” or discounted car parking spaces in town during periods with most potential to increase footfall and spend in the town centre, for example after 3 pm on weekday afternoons or on Sundays.

Performance Indicators

• KPI 8 Footfall – annual survey figures – target 5% increase during promotion periods

• Occupancy rates in SLDC car parks – calculated from ticket sales.

Total Project Cost

£160,000 to cover estimated costs of specific promotions.

This is based on meeting the revenue costs of a “2 for 1” discounted car parking initiative 7 that will offer an extra hour for each hour paid for after 3 pm Monday to Saturday, and a “£1 Sundays” promotion 8. Impact

Changed perception of car parking and access to Kendal town centre. 5% increase in footfall during promotion periods. Increase in car parking tickets sold.

5.4 Enterprising & Competitive

What you told us

“Recognise we have a problem!”

“Deal with vacant frontages.”

“Acceptance that town centre needs to evolve/change/develop.”

“Lack of enterprise.”

“Stagnation. Do nothing attitude. Vacant shops/premises.”

“Loss of retail structure. Less shops less footfall more loss of retail.”

Need for action

To “do nothing “ is no longer a viable option for a market town that has the desire to function as a centre for trade, commerce, employment, entertainment and leisure. To be a market town fit for the

7 Budget estimate calculated on revenue costs for “2 for 1” on selected town centre Pay & Display car parks. 8 Budget estimate calculated on revenue costs of “£1 Sundays” at either selected Pay & Display or Westmorland Shopping Centre car parks.

Page 197 21 st Century requires change to adapt to the expectations of the local population and visitors to the town, but without sacrificing its wonderful culture or its unique built and natural heritage.

There is a growing sense that Kendal’s businesses “must do something”. For instance they can address concerns about empty shop units and vacant premises by sponsoring a new initiative to encourage budding entrepreneurs to ‘have a go’ at running an enterprise. This can combine the need to stimulate new entrepreneurial activity in the town centre with the need to change perceptions about the town’s future. Filling shops and offices with people who just need a helping hand to try out their ideas is an enterprising approach to revitalise Kendal town centre.

Informal networking arrangements are already showing tangible benefits to individual businesses, but these are most commonly a result of bi-lateral arrangements, for example between a beauty salon and a wine bar, each promoting the services of each other to their customers and reaping the benefits of increased custom. Kendal BID presents an opportunity to extend these benefits to a wider network of businesses.

The predominance of small businesses in Kendal town centre means that many are paying more than they need to for services and the costs of running their business are higher than they need to be. The problems are often lack of time and resources to research and find the most costs effective solution, and limited influence in negotiating a good price. Kendal BID again offers an opportunity to businesses to collaborate by sharing a resource to find the best deals, and through collective purchasing to secure a better price. The potential savings could be considerable.

Objective

To invest in people and businesses to create an enterprising and competitive Kendal where the creativity and ambition of entrepreneurs are positively encouraged contributing to a revitalised town centre. Description

A series of initiatives that will address the concerns raised by many businesses during our consultation by creating new enterprise, improving business networking and reducing the costs for individual businesses . This will be achieved through 3 key projects:

1. New Enterprise 2. Business Networking 3. Business Savings

1. A new initiative to encourage budding entrepreneurs to ‘have a go’ at running an enterprise combining the need to stimulate new entrepreneurial activity in the town centre with the need to change perceptions about the town’s future.

2. Business networking will be facilitated for all sectors to highlight local expertise and to encourage trading of knowledge and services within the Kendal BID area.

3. Kendal’s businesses can benefit through economies of scale by centrally negotiating better deals for some routine services resulting in reduced costs to businesses such as insurance, trade waste, recycling, utilities, etc.

Page 198 Project Outputs

Establish and implement 3 new schemes or initiatives to help Kendal’s businesses to be more competitive:

1. New enterprise initiative focusing on making better use of vacant shops and premises through use of pop-up shops and services, involving people of any age with opportunities to ‘have a go’ at running a commercial or non-commercial enterprise. 2. New extensive Kendal business network. 3. New group buying initiative.

Performance Indicators

• Vacant premises survey – target minimum 20% reduction in empty units in BID area over 5 years. • Number of businesses, organisations members of new business network •Number of businesses, organisations saving through collective buying.

Total Project Cost

£151,415 over 5 years

The total cost is based on the BID incentivising landlords to make their vacant premises available for the new enterprise initiative. It assumes that the BID will meet the annual Business Rates by targeting properties with a Rateable Value of up to £10,000. Budget provides for at least 5 business premises participating in the scheme at any one time (£23,100), and a one-off cost of “pop-up shop equipment” (£12,500). It assumes the business networking and collective buying initiative can be delivered with very modest financial support (c £20,000 over years 2 to 5 of the BID).

6. Financial Plan

6.1 Income

The BID Levy

The income required to deliver a 5 year programme of investment within Kendal’s town centre BID will be mostly drawn from the BID Levy, collected on behalf of all the businesses involved by South Lakeland District Council - the billing authority and collection agency for the Non-Domestic Rates.

The BID Levy will be fixed at one percent of the current Rateable Value (using latest available VOA survey data) for each property. There will be no annual inflation increase. Refer to Section 8 for more details of what this means to individual Non-Domestic Ratepayers in the BID.

The BID Levy will apply to all properties (hereditaments) within the defined BID area including all those in receipt of charitable relief, but excluding those with a Rateable Value of less than £3,000. For instance, charity shops will be charged the same because they are expected to benefit from marketing and improvements to the retail environment and play an equal role in the local business community.

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The Kendal BID area includes 696 hereditaments with a Rateable Value of £3,000 and over. Their combined Rateable Value (RV) is a calculation based on the existing RV survey information. The combined Rateable Value is £15,703,300.This should raise£157,033gross per annum or £785,165over the 5 years term of the Kendal BID.

None of the pre-ballot BID development work or ballot costs themselves will be recovered through the BID Levy, but South Lakeland District Council will make charges for setting up and administering the collection of the BID Levy on behalf of the Kendal BID. Refer to section 6.2 below for the itemised estimate of costs of collection.

Other funding

The Kendal BID will not be limited to income derived from the BID Levy and can expect to raise further funds from:

• voluntary contributions • grants • sponsorship & advertising revenue

The Kendal Futures Board and the proposed BID operating company will continue to seek funding contributions towards specific items or activities identified within the programme of projects to be implemented through this Business Plan. In particular, businesses within the town and surrounding district will be encouraged to support the implementation of the Kendal BID and its considerable potential to deliver wider benefits to the town and local area. Voluntary contributions can help to ensure that the benefits of activities such as marketing extend to areas beyond the defined BID area.

The Kendal BID creates a significant fund that has the potential to draw in further investment, including grant assistance from sources such as the National Lottery and other fund distributing bodies.

Some of the projects can also expect to attract sponsorship, again for specific items or activities that bring corporate benefits e.g. the sponsorship of the town’s festivals or online applications. This Business Plan assumes a relatively modest target for the above, of £20,000 per year or £100,000 over the 5 year programme.

The total income for the delivery of this 5 year programme based on income both from the BID Levy and from other contributions will be £885,165.

6.2 Expenditure

The programme budget assumes an upper limit of 20% of total income to be spent on programme administration and management, ensuring that resources focus on the project outputs and activities as described above.

Page 200 The costs of collection, are estimated by South Lakeland District Council to be £10,648 per annum with an additional one-off charge of £5,000 in year one to set up the necessary accounting and billing systems.

The forecast expenditure plan is summarised below:

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BID budget forecast for 5 year term

INCOME 2014 2015 2016 2017 2018 total BID Levy 157,033 157,033 157,033 157,033 157,033 785,165 Other 20,000 20,000 20,000 20,000 20,000 100,000 Funding TOTAL 177,033 177,033 177,033 177,033 177,033 885,165

EXPENDITURE 2014 2015 2016 2017 2018 total 1.Marketing & 30,000 50,000 50,000 60,000 60,000 250,000 Promotion 2. Clean, Safe 5,000 20,000 34,296 20,000 25,000 104,296 & Attractive 3.Convenient 30,000 50,000 30,000 26,000 24,000 160,000 & Accessible 4.Enterprising 35,600 32,000 30,000 28,000 25,815 151,415 & Competitive BID Running 33,000 33,990 35,009 36,059 37,141 175,199 Costs 20% Contingency 8,851 8.851 8,851 8,851 8,851 44,255 5% TOTAL 142,451 194,481 188,156 178,910 180,807 885,165

Budget Year 1: 2014 INCOME EXPENDITURE BID Levy 157,033 1.Marketing & Promotion 30,000 Voluntary contributions & grants 20,000 1) Marketing campaign 2) Festivals & events 3) New media campaign 2.Clean, Safe & Attractive 5,000 1) Community projects 3.Convenient & Accessible 30,000 1) Car Parking Promotions 4.Enterprising & 35,600 Competitive 1) New enterprise 2) Business networks 3) Business savings SUB -TOTAL PROJECT 100,600 COSTS Management overheads 20,000 Administration (Levy 10,725 collection) SUB -TOTAL RUNNING 30,725 COSTS Start-up costs 5,000 Contingency 8,851 Budget carried forward 31,857 TOTAL 177,033 TOTAL 177,033

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4) Management Arrangements

7.1 BID Development Group

The process to develop a BID Proposal for Kendal was initiated by the Kendal Futures Board, a cross-sector group set up in 2007. Funding and support secured from Kendal Town Council, South Lakeland District and Cumbria County Council enabled the appointment of a ‘BID Co-ordinator’ to assist the local partners with consultations and with the development of a Business Improvement District proposal for Kendal.

Since September 2012 the work has been led by a BID Development Group made up of a growing number of local business people and representatives of the local authorities, including:

Martyn Nicholson (Chairperson) Russell Armer & Kendal Futures Derek Armstrong Cumbria Chamber of Commerce Paul Foster Federation of Small Business (FSB) Ben Cross Booths supermarket Richard Moore Temple Heelis solicitors Jacqueline Ward Armstrong Ward retailer Graeme Hogarth Hogarth Jewellers David Harrison Specsavers opticians Louise Wilson Eds hairdressers John Elleray Indigo Furnishings Christian Hoyle TT’s Diner & takeaway Joanne Golton South Lakeland District Council Austen Robinson Kendal Town Council Paula Scott Kendal Futures

Activities including raising awareness of the potential for a BID in Kendal, consultations with business ratepayers, the consideration and assessment of the options, and the writing of the BID Proposal Documents have been delivered by the appointed BID Co-ordinator, Chris Kolek.

7.2 BID Proposer

Kendal Futures is the regeneration partnership for Kendal and seeks to facilitate and encourage investment in the local economy. The Kendal Futures Board contains a mixture of public and private sector representation. Through close partnership working, Kendal Futures has helped to deliver and facilitate a range of economic regeneration projects since its creation in 2007.

In compliance with Regulation 3 of the Business Improvement District (England) Regulations 2004, Kendal Futures is a membership body with objectives considered by the Board to be consistent with intentions to establish and manage a

Page 203 Business Improvement District in Kendal town centre. As such Kendal Futures is the ‘BID Proposer’.

7.3 BID Management

Subject to a successful vote, a Kendal town centre BID will be managed by the newly created Kendal BID Company, a not-for-profit company limited by guarantee, with its own ring-fenced accounts, and with membership open to nomination and election from all businesses, organisations and individuals contributing through the BID levy. This will ensure that the control, delivery and responsibility for the BID sit firmly with the business community itself. It is envisaged that the BID company will consist of 6-8 Directors who in turn will elect a Chairperson.

7.4 Monitoring performance and evaluation

The BID will monitor progress in partnership with South Lakeland District Council and Kendal Town Council using baseline information collected during the autumn of 2013 as part of a ‘benchmarking’ exercise to assist in monitoring the progress and impact of initiatives in the town. The use of a suitable set of Key Performance Indicators (KPIs) will provide the necessary clarity needed to monitor and measure the effectiveness of the projects delivered through the BID. This will provide vital quantitative information which can be used both to tailor the annual delivery of the five year programme implemented through the BID, and to provide suitable evidence of performance to enable all the businesses and organisations contributing to the programme to see for themselves the effects of their investments in the BID. The benchmarking will adopt the Action for Market Towns (AMT) set of performance indicators and methods of collection: Key Performance Indicator Data Collection Methodology KPI 1 Total number of commercial Visual Survey units KPI2 Retail by Visual Survey Comparison/Convenience KPI3 Key attractors/multiple trader Visual Survey KPI4 Number of Vacant units Visual Survey KPI5 Number of markets/traders Visual Survey KPI6 Prime Retail Property Yields Commercial agents KPI7 Zone A Retail units Valuation Office Agency KPI8 Footfall Footfall survey KPI9 Car Parking availability& Footfall survey usage KPI10 Business Confidence Survey Postal Survey KPI11 Town Centre Users Survey On line and face to face survey KPI12 Shoppers Origin Survey Shoppers Origin Postcode

Page 204 8 BID levy rules and management

8.1 Eligibility to vote

The ballot will be conducted through a confidential postal vote. Ballot papers will be sent to all persons entitled to vote, defined as Non-Domestic Ratepayers for hereditaments within the defined Business Improvement District (Section 3.3 refers), where the Rateable Value of the property is £3,000 and above, and who are ratepayers on the day of the ballot. Where a person has more than one hereditament within a BID area, that person will get a vote for each hereditament. A proxy vote is available and details will be sent out with ballot papers. Under Regulation 8 of the Business Improvement District (England) Regulations 2004 ‘Person’ means any legal person i.e. natural person, and company. Those responsible for unoccupied and part-occupied hereditaments will be liable for the full BID levy. The BID levy will not be affected by the small business rate relief scheme and businesses who already pay service charges to landlords will not receive any discount. Where a hereditament is vacant, undergoing refurbishment or being demolished, the registered business ratepayer will be entitled to vote and also obliged to pay the BID levy with no void period. 8.2 Who pays?

A 1% levy will be charged to each qualifying ratepayer using the most current Non- Domestic Ratings list to calculate the amount payable. The BID levy will be set by 1st February each year based on the most current Non-Domestic Ratings list. It will be updated for any changes in ratepayer, appeals, additions or removals. The BID levy will have to be paid by any new ratepayer occupying any existing hereditaments within the BID area up until the end of the five year term, even though they did not vote on the initial proposal. Likewise, any new rateable property created during the lifetime of the BID will be obliged to pay the levy provided they are within the BID boundary. If a business ratepayer occupies premises for less than one year, the amount of BID levy payable will be calculated on a daily basis. 8.3 How long will it last and how will funds be collected? The Kendal Business Improvement District will start in March 2014 and will last for a period of 5 years. Kendal Futures and the Kendal BID operating company will endeavour to secure additional voluntary contributions to supplement the levy throughout the five year lifetime of the BID. Under the Business Improvement District (England) Regulations 2004, South Lakeland District Council will be responsible for collection of the levy on behalf of the Kendal BID Company. The levy income will be kept in a separate ring-fenced account and transferred to the Kendal BID Company on an agreed regular basis. Collection and enforcement arrangements will be similar to those for the collection and enforcement of Non-Domestic Business Rates with the Board of the Kendal BID Company responsible for any debt write off. To keep collection costs to a minimum each hereditament will be billed annually.

Page 205 8.4 Who will be accountable for the BID funds? Once elected, the Kendal BID Company Board of Directors will meet regularly. Every levy-paying business will be eligible to be a member of the BID and vote at Annual General Meetings on the activities of the Kendal BID. The Board will appoint a person to manage operations and work with businesses and the appropriate agencies to oversee the delivery of the programme of projects. The Kendal town centre BID area and the levy percentage cannot be altered without an alteration ballot. However, the BID projects, costs and timescales can be altered subject to the Kendal BID Company Board of Director’s approval and providing that changes fall within the income of the BID. 9 An Affordable BID

9.1 What will it cost each business?

The costs to each business should be both proportionate and affordable. The introduction of a levy calculated as 1% of the property’s Rateable Value ensures the contribution of each business is proportionate to their size and their capacity to pay. For the overwhelming majority of businesses (90%) this means that their financial contribution to Kendal’s Business Improvement District will only incur a daily cost equivalent to or even less than the purchase of a small snack bar. For over 95% of businesses in Kendal, their contribution will be equivalent to, or in most cases much less than, the price of a daily cup of coffee. It is an illustration of simple economics. One of the significant benefits that the BID’s formal arrangement has over other less formal arrangements is the requirement for all to contribute, so the financial burden is shared and is much more affordable as a result.

Page 206 Rateable Value Annual cost @ 1% Weekly cost Daily cost < £3,000 Nil Nil Nil £3,000 £30 58p 8p £5,000 £50 96p 14p £8,000 £80 £1.54 22p £10,000 £100 £1.92 27p £15,000 £150 £2.88 41p £25,000 £250 £4.81 69p £30,000 £300 £5.77 82p £50,000 £500 £9.62 £1.37 £75,000 £750 £14.42 £2.06 £100,000 £1000 £19.23 £2.75 £1,000,000 £10,000 £192.31 £27.47

For simplicity and to keep administration costs to a minimum, the 1% levy will NOT rise according to an annual inflation-based uplift, but may rise in line with periodic revisions to the Rateable Values as set by the Valuation Office Agency (VOA) 9. 10. Countdown to the vote

Proposed Timetable

6 months to ballot Revisions to BID April – May 2013 Proposal BID Business Plan is finalised to incorporate feedback from consultations. 5 months BID Development Group 31 May 2013 sign-off Board assess progress and decide whether to take proposal to the vote. 5 months Formal approval of 6 June 2013 – 29 August Council 2013 Council consider the BID Proposer and Business Plan and decide whether or not to give approval for a ballot to be held. 5 months Notification to Secretary 6 June 2013 of State and Billing Authority of intention to hold ballot.

9 VOA Revaluation of Rateable Values for Non-Domestic properties anticipated in April 2015.

Page 207 84 days in advance of the Notice of Ballot. 3-4 months BID Campaign August 2013 Door-to-door canvassing and promotional events. 42 days to Ballot Notice of Ballot 13 September 2013 South Lakeland District Council publishes notice of ballot to all eligible ratepayers. Final BID proposal documents available to all. 28 days to Ballot Ballot Papers issued 27 September 2013 South Lakeland District Council issues ballot papers to all BID Levy payers with instructions for the ballot. Ballot Day 25 October 2013 Final date for submission of votes. As soon as Announcement of Ballot October/November 2013 reasonably practical Result after Ballot. IF YES VOTE BID Levy bills sent out January 2014 BID Start Date 1 March 2014 5 Year Programme 28 February 2019 concludes

11. Risk assessment

Risks Mitigation measures

Lack of leadership from within the Make effort to ensure ‘leadership’ is not business community threatens the dependent on one individual by recruiting campaign for a yes vote. “BID advocates” throughout the process up to ballot. Lack of support for a BID from the Take initiative to build support and put business community threatens a together a team of volunteers to ensure low turnout for the ballot. every ratepayer is aware of what a BID could do for them and able to reach a decision. Businesses with high Rateable Take initiative to engage small number of Value (RV) not supportive of the businesses with the highest RV and BID and threaten to vote no or not explain how proposals can match their vote at all. company’s policy goals. Failing to build a partnership with Make effort to recruit people with real the strength and commitment to interest in the future of the town and in it

Page 208 deliver the BID. beyond the short-term of the campaign. Plan for some training as part of this. Failing to secure the funding Place emphasis on funds from the BID package to deliver the BID Levy as the most reliable source of business plan. funding over the 5 year programme. Be prepared to prioritise the projects and stagger their start dates. BID delivery is jeopardised through Ensure the BID management board have lack of project and financial access to the required skills and management skills. expertise. Expectations are unrealistically Ensure an effective communications plan high in the business community. keeps everybody up to date and a clear understanding of timescales. Include at least one “quick win”. The BID fails to progress. Make efforts to put in place less formal partnerships arrangements so that key elements of the BID proposal can still progress and benefits Kendal’s town centre.

12. Contact details

If you require further information or have any queries relating to the content of this Business Plan please contact: Chris Kolek Kendal BID Co-ordinator Tel: 07900 608085 Email: [email protected] Twitter: @KendalBID

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KENDAL BUSINESS IMPROVEMENT DISTRICT – APPENDIX 2 PURPOSE OF APPENDIX 1 The purpose of this Appendix is to provide a summary of the consultation

Under the Business Improvement Districts (England) Regulations 2004 where the BID proposer decides to seek approval of BID proposals it is required to send a billing authority (amongst other things) a summary of the consultation it has undertaken with those persons who are to be liable for the proposed BID levy. The below provides a summary of the information provided by the BID Development Group Consultation Summary of Kendal BID to date 1. Implementation of a planned, multi-channel approach to canvassing that used a variety of techniques and methods, over a period of 8 months, to raise awareness, gather intelligence and consult on the formulation of the Kendal BID proposal. 2. Established a BID Development Group made up of 12 local business people representing a range of sectors and the geography of the town centre - Terms of Reference for Group refers – to advocate the needs and ideas of the town’s business ratepayers, ensuring that the perspectives of all key business and non-commercial sectors are represented and to inform the development of the proposal. 3. Over 600 businesses and organisations, responsible for 696 hereditaments, and identified as potential BID Levy payers, each individually visited ‘door-to-door’ by the BID Co-ordinator over a period of 12 weeks between mid-September and December 2012, to discuss and explain the BID concept face-to-face, address any initial questions and gather their opinions on the town’s priorities from their perspective. 4. Distribution by hand of BID leaflet to over 600 businesses between mid-September and December 2012 between mid-September and December 2012. Leaflet designed to raise awareness of what BIDs are, as well as seeking feedback through a questionnaire to draw out the main concerns and priorities from the business ratepayers’ perspective. A total of 31 written responses were received back from this. Not unexpectedly, this was a less productive than the visits and conversations held individually with owners, managers and partners but, importantly, it provided an alternative channel for businesses to have their say. 5. Website www.kendalbid.co.uk established and questionnaire survey made available online and publicised through leaflets as an alternative to the above. 6. Leaflet provided contact details including telephone, email, twitter and website address for the BID Co-ordinator and offered further visits to any business or organisation by appointment. 7. Distribution by hand to over 600 businesses of a flyer advertising a series of Public Consultation Meetings, kindly sponsored by Riverside Hotel, held on different days and times to accommodate as many businesses as possible: • 21 November 2012 at 12 noon at Riverside Hotel • 29 November 2012 at 6 pm at Shakespeare Centre • 5 December 2012 at 6 pm at Riverside Hotel • A total of 41 attended these three meetings.

Page 211 • Events also publicised through the Westmorland Gazette, Cumbria Chamber of Commerce business networking events, O2 business networking event and SLDC’s newsletters. 8. Use of regional newspaper the Westmorland Gazette to raise awareness of the BID development in Kendal through press releases, articles and online discussion for a, including: a. ‘Traders get chance to boost business’ article in 20 September 2012 edition. b. ‘Kendal businesses ponder payments for town improvements’ article and online debate/discussion forum on 20 November 2012. 9. Use of social media to develop interest and awareness of Kendal BID development including @KendalBID twitter feeds being followed by 82 local businesses to date. 10. Second stage consultations started in January 2013 and included the BID Development Group workshop to consider the findings of first stage consultations and to consider the emerging priorities and identifying possible responses. 11. Second stage consultations continued with two Focus Group meetings, a method used to inform the development of the Kendal town centre BID proposal by testing the emerging priorities and six project proposals with a pre-selected cross-section of businesses and organisations that included representatives from: a. Regional supermarket b. Specialist local confectionary retailer c. Land and property agency d. Solicitors firm e. Graphic design & printers f. Chartered accountants g. National pharmacy retailer h. National fashions retailer i. Local café/diner j. Specialist local goods retailers k. Local government/public services l. Chamber of Commerce 12. The Focus Groups were held on 6 & 11 March 2013 attended by 21 people. 13. A series of individual stakeholder meetings have been held with local representatives of Cumbria Chamber of Commerce and the Federation of Small Business, the local MP, and meetings held with representatives of properties with high Rateable Value such as Marks & Spencer, Booths, Beales, Brewery Arts Centre, Peacocks, Elephant’s Yard Shopping Centre, Westmorland Shopping Centre, K Village, Homebase, Boots, Riverside Hotel and South Lakeland District Council, as well as several businesses now outside of the defined BID area including Gilkes’ and Mealbank Estates. 14. Distribution by hand to over 600 businesses of flyers advertising a Public Consultation Meeting on 23 May 2013 to consider the outline proposal for a Kendal Town Centre BID. Details were also distributed by email to over 300 businesses and organisations within the BID area. Around 50 people attended and up to 100 people took the opportunity to converse with the BID Co-ordinator in the process of distributing the flyers. 15. Use of regional media including interview with BBC Radio Cumbria and further articles and an online discussion forum in the Westmorland Gazette to encourage participation in the consultations and specifically to refer to the public consultation meeting on 23 May 2013, including:

Page 212 a. ‘Kendal firms to discuss creation of a Business Improvement District’ 2 May 2013; b. ‘Major meeting to discuss £1m initiative to “revitalise” Kendal town centre’ 16 May 2013; and c. ‘Improvement plan could “brand” town’ 6 June 2013 16. BID Factsheet produced as a progress bulletin and distributed at public consultation meeting in May 2013 and by email to over 300 businesses. 17. Members of the BID Development Group have increasingly engaged with local business people, for instance Jacqueline Ward, co-owner of independent retailer Armstrong-Ward visited every business in Wainwright’s Yard to champion the BID proposal. 18. The feedback from the consultation process has been increasingly positive and several changes have been made to the Kendal BID Proposal as a result including a reduction in the number and the focus of the proposed projects. Following an iterative process of preparation, the BID Proposal was agreed by the BID Development Group in May and submitted to SLDC.

Page 213

Page 214

KENDAL BUSINESS IMPROVEMENT DISTRICT – APPENDIX 3 PURPOSE OF APPENDIX 1 The purpose of this Appendix is to provide details of the costing for the collecting of the BID levy

Page 215

Page 216 Item No.15

PART I

South Lakeland District Council CABINET Meeting Date: 24 July 2013 Report Author: Simon McVey – Assistant Director Policy & Performance Portfolio: Cllr Janet Willis – Innovation and Improvement Report from: Simon McVey – Assistant Director Policy & Performance Wards affected: All Key Decision: Not Applicable Key Decision Notice: Not Applicable Community Energy Collective Switching 1.0 PURPOSE OF REPORT 1.1 This report provides an update on the Community Energy Collective Switching project and seeks agreement to run a third auction in October 2013. This will give those residents who missed the second auction a further opportunity to register for collective switching. 2.0 RECOMMENDATIONS It is recommended that Cabinet :- (1) Agree to a third collective switching auction to be held on or about 16 th October 2013; (2) Approve a 6 month extension to the existing iChoosr contract; (3) Request a review of the pilot project upon completion of the third auction to determine future arrangements and establish how the income will be distributed.

3.0 BACKGROUND 3.1 On 27 th June 2012, Cabinet agreed to take forward a collective switching scheme as a pilot project and approved the principle that the Council’s share of any income arising from the contract be used by the Council to help combat fuel poverty within the District. 3.2 At the time of that decision, no other local authorities in the UK had run such a scheme and so it was recommended that specialist switching firm iChoosr was appointed on a contract for 1 year to run three auctions.

Page 217 3.3 This auction resulted in 1,554 householders registering for the scheme which equated to 3% of households in South Lakeland and a further 115 households from outside the district. 3.4 From this first auction a total of 430 households actually switched suppliers and this is still the highest conversion rate experienced nationally. 3.5 On 28th November 2012, Cabinet agreed to be part of a second auction being held on 9 th April 2013. This was part of a nationwide auction involving approximately 100 other local authorities and in total attracted over 160,000 registrants of which 2,245 registered through the SLDC scheme. This resulted in 281 SLDC households switching although the final figure is not yet known. 3.6 It is important to note that of the total registrants, 20% registered either in person at one of the Council offices or over the telephone with the contact centre. This was a new concept as very often switching opportunities are only available online. 3.7 The results from the first auction exceeded iChoosr’s expectations for a first auction and the campaign generated a huge amount of national interest and publicity.

4.0 RESEARCH AND CONSULTATION 4.1 iChoosr are a Belgian company that has pioneered collective switching for utility services on the European mainland. Since its conception in 2008 its operations have now extended to the Netherlands and it is now operating in the UK. In the Netherlands and Belgium more than half a million consumers registered for its collective switching programmes for gas, electricity and heating oil. 4.2 Since making the original decision, iChoosr are now working with a number of UK local authorities and other large organisations. Following the first auction there has been a huge amount of national interest and many thousands of properties throughout the UK have been part of energy switching auctions being run by their local authorities. 4.3 The Council’s Procurement and Legal teams have been involved throughout the process.

5.0 PROPOSAL 5.1 It is proposed that the registration for the collective purchasing pilot project is reopened and marketing for the scheme takes place in preparation for an auction to take place on 16 th October 2013. 5.2 There is a currently a waiting list of people who wish to be informed when the scheme re-opens. The profile of the scheme is currently high in the district and this will be an opportunity for the Council to build on the success of the first two auctions. It will also be an opportunity for those that switched following the first auction to check the competitiveness of the energy prices they are currently being charged. 5.3 A number of important lessons have been learned to date and these will be used to ensure resources are targeted in the most appropriate way with particular emphasis on encouraging participation from harder to reach groups.

Page 218 6.0 ALTERNATIVE OPTIONS 6.1 Not to run a community energy collective switching auction. 7.0 NEXT STEPS 7.1 If participation in the next auction is approved registration for residents will re- open on 5 th August 2013 and the auction will take place on or around 16th October. This will tie in with the next edition of South Lakeland News and the auction will be publicised during various consultation events and roadshows being planned between now and October. 8.0 IMPLICATIONS 8.1 Financial and Resources 8.1.1 There are no current financial implications in order to run a third auction as any IT implications have been met through existing systems in the Contact Centre or by iChoosr. However the success of the project is dependant on customer take up therefore any costs with regards to marketing will be met from within existing budgets. 8.1.3 There will be a financial income from this project which will be earned as a percentage of the switching fee. It has already been agreed that this will be ring- fenced by the Council for the sole purpose of helping to combat fuel poverty within the District. A future report will be brought to Cabinet with proposals to use this ring-fenced income which is estimated to be in the region of £10k. 8.2 Human Resources 8.2.1 There are no specific human resources implications. A working group has already been established to implement and deliver the work of this project. The working group is chaired by the Assistant Director Policy & Performance. Various officers report to the group on progress of their actions as this project involves numerous teams across the Council. The Project Manager will update the Energy Efficiency Management Board and also the Senior Management Team. 8.3 Legal 8.3.1 The current contract with iChoosr expires on 5 th August 2013 and has covered two auctions. The proposal is to enter into a new contract with iChoosr for a further 6 months to enable them to cover the next auction and the period following the auction when the actual switching of energy providers takes place. 8.3.2 iChoosr are experts in the collective switching field and now work with over 100 local authorities. In addition to running SLDC’s two previous auctions, they are now able to schedule them with other Councils and so gain the advantage of having many thousands of other properties included in the same auction. A contract extension will also provide SLDC officers time to evaluate the results and provide recommendations to members on a suitable way forward in regard to SLDC’s involvement in future collective switching auctions. 8.3.3 Typically, the EU procurement rules apply where a contracting authority directly purchases works, goods or services. This is not such a case. This project can be treated as the extension of a service concession. A service concession exists when the operator bears some of the risks involved in establishing and exploiting

Page 219 the service, just as iChoosr takes the bulk of the risk in this project, in return for a payment from ‘switchers’. 8.3.4 There are EU Treaty obligations which dictate that the grant or extension of service concessions are subject to the key principles of equality of treatment, transparency and a duty to give reasons for any decisions In this case, by reason of iChoosr’s dominant position in the market and the modest proposed extension to the contract, the proposals in this report are legally robust. 8.3.5 If proposals in this report are approved, Legal Services will negotiate the precise terms of the extension of the contract with iChoosr. 8.4 Social, Economic and Environmental Impact 8.4.1 There will be a positive impact economically for those residents who sign up to the scheme and receive a more competitive, lower price for their energy. The social impact will also be that those residents who switch will be indirectly supporting those residents in fuel poverty through the share of the switching fee received by the Council. 9.0 RISK ASSESSMENT

Risk Consequence Controls required The registration for the Negotiations with the Other authorities will be scheme is under energy suppliers may not participating in the same subscribed. be able to take place. auction so the risk is reduced. The Council’s reputation The Council receives Promotional material suffers as a negative publicity from needs to be clear in consequence of this the residents and media. explaining the project project. and the role of the Council. That third party The project is delayed Adherence to the legal companies challenge and the council has to already obtained will through legal action the bear legal costs, reduce the risk of award of a contract including those of the challenge. claimant company in the event that they succeed. 10.0 EQUALITY AND DIVERSITY 10.1 This project will be accessible to all groups regardless of race, religion, gender, sexuality or age. Provision will be made for those residents who cannot register for the scheme by using a computer. These residents will be able to register for the scheme by post or telephone. When necessary, written information can be provided in larger print, braille or a different language. All promotional material will be written in Plain English and promoted through a cross section of media. An Equality Impact Assessment has been carried out and was appended to the original report in June 2012. 11.0 LINKS TO THE COUNCIL PLAN AND PERFORMANCE INDICATORS 11.1 This pilot project links to 2 key priorities in the Council Plan, Environment and Culture & Wellbeing and also links to the Innovative community energy projects objective.

Page 220 12.0 CONCLUSION AND EXPECTED OUTCOMES 12.1 The previous two collective switching schemes have been successful with a good number of residents signing up to the scheme and extensive positive national media coverage. Other councils have copied our model to replicate this scheme in their own areas. The project has manageable risks and the benefits to the community and reputation of the council continue to be very significant. 12.2 This project gives residents the opportunity to access cheaper energy tariffs, particularly those without online access and the project is generating funds which have been specifically earmarked to help those in fuel poverty. CONTACT OFFICERS Simon McVey Assistant Director – [email protected] TRACKING Assistant Portfolio Solicitor to the SMT Scrutiny Director Holder Council Committee 05/07/2013 08/07/2013 05/07/2013 11/07/2013 n/a Executive HR Services Council Section 151 Monitoring (Cabinet) Manager Officer Officer 24/17/2013 n/a 08/07/2013 08/07/2013

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Page 222 Item No.16

PART I

South Lakeland District Council CABINET Meeting Date: 24 July 2013 Report Author: Dawn Bousfield, Payroll Officer June Lee , Financial Services Officer Portfolio: Councillor David Evans Finance Portfolio Report from: Shelagh McGregor, Assistant Director (Resources) & Section 151 Officer Wards affected: All Key Decision: Not applicable Key Decision Not applicable Notice: MEMBERS ALLOWANCES 2012/13 1.0 PURPOSE OF REPORT 1.1 This report is presented to provide details of allowances paid to Members and co-optees in the financial year 2012/13 prior to their publication in the press. 2.0 RECOMMENDATIONS It is recommended that Cabinet receive the report. 3.0 BACKGROUND 3.1 The Local Authorities (Members’ Allowances) (England) Regulations 2003 requires Local Authorities each year to publicise within the Council’s area details of the allowances paid to Members and Co-optees. 4.0 RESEARCH AND CONSULTATION 4.1 Not Applicable 5.0 PROPOSAL 5.1 Members are asked to consider the details attached at Appendix 1 of allowances paid to Members prior to their publication in the press. 6.0 ALTERNATIVE OPTIONS 6.1 None.

Page 223 7.0 NEXT STEPS 7.1 Officers will arrange to place a notice in the Westmorland Gazette and on the Council’s website based on the contents of the appendix together with some short explanatory notes. 8.0 IMPLICATIONS 8.1 Financial and Resources 8.1 The revenue cost in 2012/13 was £291,430 compared to £288,221 in 2011/12. 8.2 Human Resources 8.2.1 None 8.3 Legal 8.3.1 None 8.4 Social, Economic and Environmental Impact 8.4.1 Has a sustainability impact assessment been carried out? No 8.4.2 This proposal is considered to have a neutral impact on sustainability. 9.0 RISK ASSESSMENT Risk Consequence Controls required Non Publication of details Failure to meet Ensure publication in of allowances legislative requirement press

10.0 EQUALITY AND DIVERSITY 10.1 State whether or not an equality and diversity impact assessment has been carried out – N/A. 11.0 LINKS TO THE COUNCIL PLAN AND PERFORMANCE INDICATORS 11.1 The payments to Members enables them in their role, which includes to contribute to the priorities in the Council Plan being delivered. 12.0 CONCLUSION AND EXPECTED OUTCOMES 12.1 The payments of allowances to Members will be publicised, as required by the The Local Authorities (Members’ Allowances) (England) Regulations 2003 APPENDICES ATTACHED TO THIS REPORT Appendix No. 1 Members Allowances 2012/13

CONTACT OFFICERS June Lee Financial Services Officer 01539 793152 Dawn Bousfield Payroll Officer 01539 793294 [email protected] BACKGROUND DOCUMENTS AVAILABLE N/A

Page 224 TRACKING Assistant Portfolio Solicitor to the SMT Scrutiny Director Holder Council Committee 27/6/2013 N/A N/A 27/6/2013 N/A Executive Committee Council Sectio n 151 Monitoring (Cabinet) Officer Officer N/A 24/7/2013 N/A 27/6/2013 27/6/2013 Human Resource Services Manager N/A

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Page 226 APPENDIX 1

The purpose of this appendix is to detail Councillors’ Allowances for 2012/2013. The following amounts were paid to Councillors and co-optees during the financial year ended 31 March 2013.

Special Dependant Travel and Co-optees Basic Total Responsibilities Carers Subsistence Allowance

£ £ £ £ £ £ Airey James 3,879.96 2,484.00 6,363.96 Airey Caroline 3,879.96 3,879.96 Archibald Giles 0.00 0.00 Baverstock Alan 406.77 406.77 Berry Ben 3,879.96 441.16 127.35 4,448.47 Bingham Roger 3,879.96 504.96 399.60 4,784.52 Bishop-Rowe Norman 406.77 117.00 523.77 Boden Robert 3,879.96 27.00 3,906.96 Brook Jonathan 3,879.96 5,529.73 243.45 9,653.14 Clough John 3,483.62 787.50 4,271.12 Coleman Stephen 3,879.96 1,863.00 5,742.96 Collins Stanley 3,879.96 49.80 3,929.76 Cooper Brian 3,879.96 584.10 4,464.06 Cotton Nicholas 3,483.62 451.80 3,935.42 Curwen Joss 3,879.96 1,004.08 4,884.04 Davies Edward 406.77 404.55 811.32 Dawson Julie 3,879.96 3,879.96 Dixon Philip 3,879.96 3,879.96 Eccles Sheila 3,879.96 1,863.00 367.20 6,110.16 Emmott Sylvia 3,879.96 1,863.00 82.64 5,825.60 Evans David 3,879.96 5,294.35 9.45 9,183.76 Feeney-Johnson Clare 3,879.96 7,030.60 843.91 11,754.47 Fletcher David 3,483.62 3,483.62 Gardiner Andrew 3,879.96 202.50 4,082.46 Gardner Gillian 3,879.96 575.55 4,455.51 Graham Clive 3,879.96 3,879.96 Gray Brenda 3,879.96 1,404.45 293.40 5,577.81 Hall Anne 3,879.96 3,879.96 HallIiday Heidi 3,879.96 3,879.96 Harvey Tom 3,879.96 504.96 408.00 4,792.92 Holland Christopher 3,879.96 3,879.96 Holmes John 3,879.96 441.16 1,017.45 5,338.57 Irving Helen 3,483.62 646.60 4,130.22 Jenkinson Janette 3,879.96 504.96 1,657.80 6,042.72 Jupe Pru 3,879.96 3,879.96 Lancaster Kevin 406.77 52.94 459.71 Lawson Sonia 3,879.96 3,879.96 McPherson Ian 3,879.96 1,863.00 708.45 6,451.41 Orr Mary 3,879.96 67.50 3,947.46

Page 227 Special Dependant Travel and Co-optees Basic Total Responsibilities Carers Subsistence Allowance

Rajan Bharath 3,483.62 806.40 4,290.02 Rees Vivienne 3,879.96 450.44 4,330.40 Rigg Amanda 3,483.62 326.20 3,809.82 Ryder David 3,483.62 3,483.62 Samson James 406.77 406.77 Sanderson Susan 3,483.62 843.30 4,326.92 Shine Andy 3,879.96 1,627.62 5,507.58 Stephenson Hilary 3,879.96 2,533.63 240.00 156.60 6,810.19 Stephenson Jo 3,879.96 1,627.62 280.00 1,027.70 6,815.28 Stewart Ian 3,879.96 6,060.00 965.95 10,905.91 Thornton Peter 3,879.96 12,442.06 2,889.19 19,211.21 Vincent Graham 3,879.96 6,060.00 163.75 10,103.71 Walsh Edward 406.77 406.77 Westwood Evelyn 3,879.96 811.66 690.75 5,382.37 Wilkinson Brian 406.77 406.77 Williams David 3,879.96 504.96 379.80 4,764.72 Willis Janet 3,879.96 5,294.35 2,050.35 11,224.66 Wilson Mark 3,879.96 325.00 517.50 4,722.46 Wilson Mary 3,879.96 1,863.00 868.90 6,611.86 Co- optee’s 0.00 Atkinson Kathleen 30.15 36.16 66.31 Borer Jennifer 108.48 108.48 Bradshaw Elwyn 77.00 216.96 293.96 Ford Patricia 93.78 80.55 144.64 318.97 Henderson Penelope 24.30 108.48 132.78 Legge Adrian 36.00 144.64 180.64 Martakies Robin 234.67 506.24 740.91 Morrison James 465.75 465.75 Smith William 30.80 108.48 139.28 Thomas David 27.00 72.32 99.32 Tweddle David 187.47 329.89 517.36 Westworth Colin 4.50 72.32 76.82 Willacy David 13.50 72.32 85.82 Total 193,674.67 71,542.17 520.00 24,101.87 1,591.04 291,429.75

Councillors are paid an annual basic allowance to recognise the duties and responsibilities of their office, including attendance at Council meetings. Special Responsibility allowances are paid to Councillors holding particular positions with extra responsibilities. These allowances are subject to deduction of Income Tax and National Insurance; the amounts shown are gross payments prior to these deductions being made. Councillors are reimbursed their reasonable travel and subsistence expenses incurred in attending meetings and carrying out other approved duties.

Shelagh McGregor Assistant Director Resources & Section 151 Officer

Page 228 Item No.17

PART I

South Lakeland District Council CABINET Meeting Date: 24th July 2013 Report Author: Matthew Neal, Solicitor to the Council Portfolio: Councillor Sue Sanderson, Environment & People Report from : Director of Policy and Resources (Monitoring Officer) Wards affected: Not applicable Key Decision: Not applicable Notice of Key Not applicable Decision:

Regulation of Investigatory Powers Act 2000-Annual Review

1.0 PURPOSE OF REPORT 1.1 It is a requirement that the operation of the Council’s surveillance policies and practices under the Regulation of Investigatory Powers Act 2000 (“RIPA”) is reviewed on an annual basis. The purpose of this report is to bring the review before Members.

2.0 RECOMMENDATION That Cabinet review the operation of the Council’s policies and procedures as regards RIPA for the year 2012/13 and agree that no changes are required to the Council’s current policies.

3.0 BACKGROUND 3.1 RIPA regulates covert investigations by a number of bodies, including local authorities. It was introduced to ensure that individuals’ rights are protected while also ensuring that public authorities have the powers they need to do the job effectively. The Council is included within the RIPA framework with regard to the authorisation of both Directed Surveillance and of the use of Covert Human Intelligence Sources and has adopted a Surveillance Policy. 3.2 RIPA requires that when the Council undertakes Covert Surveillance for the purposes of a specific investigation in a manner that is likely to lead to the obtaining of private information about a person, a specific internal authorisation is required from a designated council officer. The surveillance contemplated in these circumstances is defined as Directed Surveillance.

Page 229

3.3 RIPA requires that when the Council arranges for a person to form a relationship with a person for the covert purpose of obtaining and disclosing information about that person, a specific internal authorisation is required from a designated council officer. The surveillance contemplated in these circumstances is defined as use of a Covert Human Intelligence Source. 3.4 Since 1 November 2012 the Protection of Freedoms Act 2012 has additionally required that authorisations for both Directed Surveillance and Covert Human Intelligence Sources need be approved by the Magistrates Court before they take effect. In order to give such approval the Magistrates have to be satisfied that: • There were reasonable grounds for the Authorising Officer approving the application to believe that the Directed Surveillance or deployment of a Covert Human Intelligence Source was necessary and proportionate and that there remain reasonable grounds for believing so; and • The Authorising Officer was of the correct seniority; and • The granting of the authorisation was for the prescribed purpose that is preventing or detecting crime. 3.5 This report is presented, amongst other matters, to enable an annual review of the operation of the Council’s policies for the period between 1 April 2012 and 31 March 2013. During that period there has been just one recorded application for an authorisation for Directed Surveillance, and this was formally cancelled in accordance with legal requirements. The surveillance provided sufficient information to justify an interview under caution taking place. All such steps took place before 1 November 2012 so no involvement of the Magistrates Court in approving the authorisation was necessary. At the date of this report there are no live authorisations. 3.6 The Office of Surveillance Commissioners advises that authorities should provide levels of training appropriate to the needs of users. On 17 April 2012 training was provided on RIPA by James Button and Co Solicitors. 21 officers attended of whom one was an Authorising Officer and the other was the Senior Responsible Officer (the Director of Policy and Resources (Monitoring Officer)). The training dealt, amongst other matters, with the prospective changes to the law as set out in the Protection of Freedoms Act 2012. In the circumstances and given the fact that only one authorisation has been required in the last year it is considered appropriate for training to be on a bi-annual basis, and arrangements will be made for further training in 2014/15. The Council’s procedures are available on the website and the Solicitor to the Council is available to provide advice to officers on compliance with RIPA. Therefore it is considered that this frequency of training will be sufficient.

3.7 The Office of Surveillance Commissioners is required to carry out periodic reviews of all the Council’s regulated surveillance activities. The Assistant Surveillance Commissioner inspected the Council’s Surveillance Policy (and associated practices) in October 2011 and the policy that was extant at that time was considered by him to be of good quality. It is anticipated that there will be a further inspection by the Officer of Surveillance Commissioner of the Council’s Surveillance Policy, and associated practices, some time in mid-2014. 3.8 The current Council Surveillance policy, which was last amended with effect from 1 November 2012, is attached to this report as Appendix 1. No changes to this document are proposed.

Page 230

4.0 REARCH AND CONSULTATION 4.1 As from 1 November 2012 in addition to the requirement for approval to be sought from the Magistrates Court there have also been regulations made under the Protection of Freedoms Act 2012. These impose further restrictions on the use of Surveillance. From that date an authorisation cannot be granted unless it is for the purpose of preventing or detecting a criminal offence and the criminal offence which is sought to be prevented or detected is punishable, by a maximum term of at least six months’ imprisonment. There is an exception to this in relation to offences involving the sale of tobacco and alcohol to underage children. Such offences can still be the subject of an authorisation even if the offence does not lead to a maximum of 6 months imprisonment. Also Surveillance for the purposes of tackling anti-social behaviour can no longer be authorised, unless the behaviour constitutes a criminal offence carrying a maximum prison term of six months or more. 4.2 As of 1 November 2012 in accordance with delegated authority given by Cabinet on 29 August 2012 the Council’s policy was amended to take into account the new Act, associated regulations and guidance. It was also placed on the Council’s intranet and web site.

4.3 The Portfolio Holder has been consulted and is content with the proposals set out in this report. 5.0 PROPOSAL 5.1 The proposal is to note the review and that there are no changes arising. 6.0 ALTERNATIVE OPTIONS 6.1 No changes have been suggested to the current Surveillance Policy, given that the current version has only been in force since 1 November 2012. 6.2 Members could suggest changes to the policy. Save for minor textual changes any significant changes would need to be considered against the legal and policy background. 7. NEXT STEPS 7.1 Any subsequent authorisation requests are to be dealt with in accordance with the Council’s Surveillance Policy 8.1 Financial and Resources 8.1.1 There are no significant financial implications. 8.2 Human Resources 8.2.1 There are no human resources implications save for the need to ensure that appropriate staff are given sufficient training in this area of law and practice. 8.3 Legal 8.3.1 The legal implications are as set out in the report. 8.4 Social, Economic and Environmental Impact 8.4.1 A sustainability impact assessment not been carried out. This proposal is considered to have a neutral impact on sustainability.

Page 231 9. RISK ASSESSMENT Risk Consequence Controls required Failure to comply with Criminal enforcement action Compliance with the Act, the terms of the by the Council would be at training and regular reviews. legislation. risk of failure due to challenges to the evidence.

10.0 EQUALITY AND DIVERSITY 10.1 An equality and diversity impact assessment has not been carried out. Obtaining authorisation protects the Council and its officers from complaints of interference with the rights protected by Article 8(1) of the European Convention of Human Rights. Provided activities undertaken are reasonable and proportionate they will not be in contravention of Human Rights legislation. The satisfaction of such tests should ensure no breach of the Equality Act 2010. 11.0 LINKS TO THE COUNCIL PLAN AND PERFORMANCE INDICATORS 11.1 The proposals links into the Council’s Plan values of Valuing People, Excellence and Openness. The proposals will also ensure that the Council is equipped to provide the best and most cost effective services. 12.0 CONCLUSION AND EXPECTED OUTCOMES 12.1 This report should enable members to consider and review the Council’s practices and procedures as regards RIPA. APPENDICES ATTACHED TO THIS REPORT 1. Current Council Surveillance Policy CONTACT OFFICERS Solicitor to the Council Tel: 01539 793305 email – [email protected] BACKGROUND DOCUMENTS AVAILABLE N/a TRACKING Assistant Portfolio Holder Solicitor to the SMT Scrutiny Director Council Committee 24 June 2013 1 July 2013 Report author 4 July 2013 N/a Executive Committee Council Section 151 Monitoring (Cabinet) Officer Officer 24 July 2013 N/a N/a 24 June 2013 24 June 2013

Page 232 APPENDIX 1 PURPOSE OF APPENDIX The purpose of this Appendix is to provide additional information by setting out the current Council policy on Surveillance pursuant to the Regulation of Investigatory Powers Act 2000

Page 233 SOUTH LAKELAND DISTRICT COUNCIL

GUIDANCE ON SURVEILLANCE UNDER THE REGULATION OF INVESTIGATORY POWERS ACT 2000

November 2012

Page 234 CONTENTS 1. Introduction 2. Directed Surveillance 3. Covert use of Human Intelligence Source (CHIS) 4. Authorisation, Renewals, Duration and Cancellation 5. Central Register of Authorisations 6. Codes of Practice 7. Benefits of Obtaining Authorisation under the 2000 Act 8. CCTV 9. Scrutiny and Tribunal Appendix 1-Procedure for Applying for Authorisations Appendix 2 Standard Forms and associated Index

Page 235 1. INTRODUCTION

1.1 The Regulation of Investigatory Power Act 2000 (the 2000 Act) regulates covert investigations by a number of bodies, including local authorities. It was introduced to ensure that individuals’ rights are protected while also ensuring that law enforcement and security agencies have the powers they need to do job their effectively.

1.2 South Lakeland District Council (“the Council”) is therefore included within the 2000 Act framework with regard to the authorisation of both Directed Surveillance and of the use of Covert Human Intelligence Sources.

1.3 The purpose of this guidance is to explain the scope of the 2000 Act and the circumstances where it applies and provide guidance on the authorisation procedures to be followed.

1.4 The Council has had regard to the Codes of Practice produced by the Home Office in preparing this guidance and Legal Services have copies to which staff can refer. The relevant codes of practice and associated guidance that relate to authorised Council activity are: (a) Home Office Code of Practice – Covert Surveillance; (b) Home Office Code of Practice – Covert Human Intelligence Sources (c) Guidance from the Office of Surveillance Commissioners (d) Protection of Freedoms Act 2012-changes to provisions under the Regulation of Investigatory Power Act 2000 Home Office Guidance for Magistrates’ Courts in England and Wales for a local authority application seeking an order approving the grant or renewal of a RIPA authorisation or notice

1.5 In summary the 2000 Act requires that when the Council undertakes directed surveillance or uses “covert human intelligence source” these activities must only be authorised by an officer with delegated powers when the relevant criteria are satisfied. The 2000 Act states that if authorisation confers entitlement to engage in a certain conduct and the conduct is in accordance with the authorisation, then it should be “lawful for all purposes”. The Council has nominated officers who can grant authorisations. They are as follows:

The Chief Executive, the Corporate Director People and Places, and all Assistant Directors.

1.6 Chapter 2 of Part 2 of the Protection of Freedoms Act 2012 (“the 2012 Act”) amends the 2000 Act so as to require the Council to obtain judicial approval for the use of covert investigatory techniques available to them under the 2000 Act. Prior to the 2012 Act authorisations for the use of these techniques were granted internally by an Authorised Officer and were not subject to any independent approval mechanism.

1.7 Part 2 of the 2012 Act specifies the grounds for which authorisations can be granted for carrying out both Directed Surveillance and of the use of Covert Human Intelligence Sources. Furthermore the 2012 Act provides that use of the 2000 Act to authorise directed surveillance will have to be confined to cases where the offence under investigation carries a maximum custodial sentence of 6 months or more, save in cases in relation to the sale of alcohol and tobacco to minors where the new threshold would not apply. 1.8 The Council will have to apply to the magistrates’ court for an order under approving the use of the authorisation. 1.9 Subject to the need for approval from the Magistrates Court as referred to above, authorisation under the 2000 Act gives lawful authority to carry out surveillance and the Page 236 use of a source. Obtaining authorisation helps to protect the council and its officers from complaints of interference with the rights protected by Article 8(1) of the European Convention of Human Rights, which is now enshrined in English law through the Human Rights Act 1998. This is because the interference with the private life of citizens will be “in accordance with the law”, provided activities undertaken are also “reasonable and proportionate” they will not be in contravention of Human Rights legislation.

1.10 There are two types of surveillance:

Directed Surveillance – This is surveillance undertaken for the purpose of a specific operation and in a manner which is likely to result in the obtaining of private information about a person (whether or not that person is the target of the investigation or operation); and is carried out in a planned manner and not by way of an immediate response; and

Intrusive Surveillance – This is surveillance that takes place on residential premises or any private vehicle and involves the presence of an individual on the premises or in the car, or by the use of a surveillance device that although not in the car/premises, provides data as though it was.

1.11 In no circumstances does the 2000 Act authorise the carrying out of any form of intrusive surveillance by local authorities. It should be noted that the Council cannot authorise “Intrusive Surveillance”.

1.12 Deciding when an authorisation is required involves making a judgment. For example, environmental health officers might covertly observe and then visit a shop as part of their enforcement functions. Such observations may involve the use of equipment to merely reinforce normal sensory perception, such as binoculars, or the use of cameras. Where this does not involve systematic surveillance of an individual, it forms a part of the everyday functions of law enforcement authorities or other public bodies. This low-level activity will not usually be regulated under the provisions of the 2000 Act.

1.13 Conversely where systematic covert surveillance is undertaken then an authorisation will be required. Neither the provisions of the 2000 Act or of the Codes of Practice cover the use of overt CCTV surveillance systems. Members of the public are aware that such systems are in use around the town centre and car parks in order to prevent crime. However use of CCTV cameras to target a person, his/her property or a building would require an Authorisation and this is dealt with in Section 5 of the document. If you are in doubt, seek the advice of an Authorising Officer, if they are in doubt they will seek advice from the Legal Services Section.

2. DIRECTED SURVEILLANCE

2.1 Surveillance is ‘Directed’ for the purposes of the 2000 Act if it is covert, but not intrusive and is undertaken:

(a) for the purposes of a specific investigation or a specific operation;

(b) in such a manner as is likely to result in the obtaining of private information about a person (whether or not one is specifically identified for the purposes of the investigation or operation); and

(c) otherwise than by way of an immediate response to events or circumstances the nature of which is such that it would not be reasonably practicable for an authorisation to be sought for the carrying out of the surveillance.

Page 237 2.2 Before any officer of the Council undertakes any surveillance of any individual or individuals they need to assess whether the activity comes within the 2000 Act. In order to do this the following key questions need to be asked:

(a) Is the surveillance covert? Covert surveillance is that carried out in a manner calculated to ensure that subjects of it are unaware it is or may be taking place. If activities are open and not hidden from the subjects of an investigation, the 2000 Act framework does not apply;

(b) Is it for the purposes of a specific investigation or a specific operation e.g. are town centre and car park CCTV cameras which are readily visible to anyone walking around the area covered? The answer is not if their usage is to monitor the general activities of what is happening in the vicinity. If that usage, however, changes, the 2000 Act may apply. If the CCTV cameras are targeting a particular known individual, and are being used in monitoring his activities, that has turned into a specific operation which will require authorisation.

(c) Is it in such a manner that is likely to result in the obtaining of private information about a person e.g. if part of an investigation is to observe a person’s home to determine their comings and goings then that would be covered. If it is likely that observations will not result in the obtaining of private information about a person, then it is outside the 2000 Act framework. However, the use of ‘test purchasers’ may involve the use of covert human intelligence sources. If in doubt, it is safer to get authorisation;

(d) Is it by way of an immediate response to events or circumstances? The Home Office gives the example of anything happening as an immediate response to something occurring during the course of an observer’s work which is unforeseeable. If so it is likely that an authorisation is not required. However, if as a result of an immediate response, a specific investigation subsequently takes place, that brings it within the 2000 Act framework.

3. COVERT USE OF HUMAN INTELLIGENCE SOURCE

3.1 A person is a Covert Human Intelligence Source (“a CHIS”) if he/she establishes or maintains a personal or other relationship with a person for the covert purpose of using such a relationship either to obtain information or provide access to information about another person. A relationship is covert, if it is conducted in a manner that is calculated to ensure that one of the parties to the relationship is unaware of that purpose.

3.2 The above clearly covers the use of professional witnesses to obtain information and evidence. It can also cover “entrapment” cases.

3.3 Special safeguards apply to the granting of authorisations where the CHIS would be a juvenile (under 18 years of age). Authorisations cannot be granted unless the provisions within The Regulation of Investigatory Powers (Juveniles) Order 2000 are satisfied. Only the Chief Executive (or in his absence, the Corporate Director People and Places) can authorise the use of a juvenile CHIS. If any Council officer intends to use juvenile CHIS, advice and guidance should be sought from Legal Services before any steps are taken.

4. AUTHORISATIONS, RENEWALS, DURATION AND CANCELLATION

4.1 For directed surveillance no officer shall grant an authorisation for the carrying out of directed surveillance unless he/she believes that an authorisation is necessary and proportionate to what is sought to be achieved by carrying it out.

Page 238 4.2 The 2012 Act provides that an authorisation is necessary only if it is for the purpose of preventing or detecting crime. The onus is therefore on the person authorising such surveillance to satisfy themselves it fulfils this criteria.

4.3 In order to ensure that authorising officers have sufficient information in order to make an informed decision and so that a sound case is presented when seeking the approval of the Magistrates Court, it is important that detailed records are maintained. As such the standard forms in the Appendix 2 are to be completed where relevant. It is also sensible to make any authorisation sufficiently wide enough to cover all the means required as well as being able to prove effective monitoring of what is done against that is authorised.

4.4 For urgent grants or renewal, oral authorisations are acceptable. In all other cases, authorisations must be in writing using the appropriate standard form RIPA 1 (Directed Surveillance) or RIPA 5 (CHIS). Appendix 2 to this guidance contains copies of all the standard forms which are to be used by all Council Directorates.

4.5 Although it is possible to combine two authorisations in one , the Council’s practice is for separate forms to be completed to maintain the distinction between Directed Surveillance and the use of a CHIS.

4.6 Authorisations lapse, if not renewed (a) within 72 hours if either granted or renewed orally, (or by a person whose authorisation was confirmed to urgent cases) beginning with the time of the last grant or renewal; or (b) 12 months, if in writing/non-urgent , from date of last renewal if it is for the conduct of use of a covert human intelligence source; or (c) in the case of Directed Surveillance 3 months from the date of their grant or latest renewal.

4.7 Furthermore, as is the case with an Authorisation, renewal needs the approval of the Magistrates Court.

4.8 Forms RIPA 2 (Directed Surveillance) and RIPA 7 (CHIS) must be used for all renewals. The following should also be noted:-

(a) All authorisations must be reviewed every 4 weeks and Forms RIPA 3 (Directed Surveillance) or RIPA 7 (CHIS) completed;

(b) When an authorisation is cancelled a Form RIPA 4 (Directed Surveillance) or RIPA 8 (CHIS) must be completed.

4.9 An authorisation can be renewed using the Renewal Form RIPA 2 (directed surveillance) or RIPA 6 (CHIS) at any time before it ceases to have effect by any person entitled to grant a new authorisation in the same terms. In the case of a CHIS, a person should not renew (using form RIPA 6) unless a review has been carried out (using form RIPA 7) and that person has considered the results of the review when deciding to renew or not. A review must cover what use has been made of the CHIS, the tasks given to them and information obtained.

4.10 Authorising Officers are responsible for ensuring that authorisations undergo timely reviews for which a RIPA 3 (Directed Surveillance) or RIPA 7 (CHIS) form must be completed. Also that they are cancelled promptly if the Directed Surveillance activity (using form RIPA 5) or use of a CHIS (using form RIPA 8) is no longer necessary.

Page 239 4.11 Cancellation of the authorisation and completion of Form RIPA 4 (Directed Surveillance) or RIPA 8 (CHIS) must be carried out in all cases as soon as the actual surveillance activity for which authorisation was specifically granted ceases. Authorisations must not be allowed to continue in force until they reach the stated expiry date without cancellation if the surveillance activity or use of a source is no longer in operation. However should this occur formal cancellation must be carried out and evidenced by the completion of Form RIPA 4 (Directed Surveillance) or RIPA 8 (CHIS) as soon as this is detected even though this will result in a cancellation date after the expiry date.

4.12 Cancellation should wherever possible be carried out by the same person that granted the original request or renewal. If that person is no longer available to do this then it should be completed by the person appointed to replace them or by one of the other authorised officers.

4.13 A copy of the Form RIPA 4 (Directed Surveillance) or RIPA 8 (CHIS) completed to evidence the cancellation must be sent to the Legal Services Section to be recorded on the central register and the original held securely within the originating unit.

4.14 Any person giving an authorisation should give particular consideration to collateral intrusion i.e. interference with the privacy of persons other than the subject(s) of surveillance. Such collateral intrusion or interference would be a matter of greater concern in cases where there are special sensitivities, for example in cases of premises used by lawyers or for any form of medical or professional counselling or therapy.

4.15 An application for an authorisation should include an assessment of the risk of any collateral intrusion or interference. This will be taken into account by the authorising officer, particularly when considering the proportionality of the surveillance.

4.16 Those carrying out the covert surveillance should inform the authorising officer if the operation/investigation unexpectedly interferes with the privacy of individuals who are not the original subjects of the investigation or covered by the authorisation in some other way. In some cases the original authorisation may not be sufficient and consideration should be given to whether a separate authorisation is required.

4.17 Any person giving an authorisation will also need to be aware of particular sensitivities in the local community where the surveillance is taking place or of similar activities being undertaken by other public authorities which could impact on the development of the surveillance.

4.18 No operations will be undertaken in circumstances where investigators believe that surveillance will lead to them to intrude on spiritual counselling between a Minister and a member of his/her faith. In this respect, spiritual counselling is defined as conversations with a Minister of Religion acting in his/her official capacity where the person being counselled is seeking or the Minister is imparting forgiveness, or absolution of conscience.

4.19 The 2000 Act refers to ‘confidential material’ namely:

(a) matters subject to legal privilege;

(b) confidential personal information; or

Page 240 4.20 The Act does not provide any special protection for ‘confidential material’. Nevertheless, such material is particularly sensitive, and is subject to additional safeguards under this code. In cases where the likely consequence of the conduct of a source would be for any person to acquire knowledge of confidential material, the deployment of the source should be subject to special authorisation. In such circumstances only the Chief Executive or in his absence the Director–People and Places can grant an authorisation.

4.21 In general, any application for an authorisation which is likely to result in the acquisition of confidential material should include an assessment of how likely it is that confidential material will be acquired. Special care should be taken where the target of the investigation is likely to be involved in handling confidential material. Such applications should only be considered in exceptional and compelling circumstances with full regard to the proportionality issues this raises.

4.22 The following general principles apply to the acquisition of confidential material:

(a) Confidential material should not be retained or copied unless it is necessary for a specified purpose;

(b) Confidential material should be disseminated only where an appropriate officer is satisfied that it is necessary for a specific purpose;

(c) The retention or dissemination of such information should be accompanied by a clear warning of its confidential nature; and appropriate safeguards as to its security must be implemented;

(d) Confidential material should be destroyed as soon as it is no longer necessary to retain it for a specified purpose.

4.23 In cases of joint working, for example, with other agencies on the same operation only one authorisation is required. Duplication of authorisations does not affect the lawfulness of the activities to be conducted, but may create an unnecessary administrative burden on the agencies.

4.24 Authorising Officers are responsible for ensuring that authorisations undergo timely reviews and a RIPA 3 (Directed Surveillance) or RIPA 7 (CHIS) form completed. Also that they are cancelled promptly after Directed Surveillance activity or the use of a source is no longer necessary, and a RIPA 4 (directed surveillance) or RIPA 8 (CHIS) form completed.

4.25 Applications for Directed Surveillance or the use of a source are to be retained by the Authorised Officer, for a period of 5 years. Where it is believed that the records could be relevant to pending or future criminal proceedings, they should be retained for a suitable further period commensurate to any subsequent review.

4.26 Authorising Officers must ensure compliance with the appropriate data protection requirements and the relevant codes of practice in the handling and storage of material. Where material is obtained by surveillance, which is wholly unrelated to a criminal or other investigation not to any person who is the subject of the investigation, and there is no reason to believe it will be relevant to future civil or criminal proceedings, it should be destroyed immediately. Consideration of whether or not unrelated material should be destroyed is the responsibility of the Authorising Officer.

4.27 There is nothing in the 2000 Act that prevents material obtained through the proper use of the authorisation procedures from being used in other investigations. However, the use

Page 241 outside the authority that authorised surveillance, of any material obtained by means of covert surveillance and, other than in pursuance of the grounds on which it was obtained, should be authorised only in the most exceptional circumstances.

4.28 The Council will not use an external or professional source for the purpose of obtaining information. It is not the Council’s general practice to seek, cultivate or develop a relationship with a potential external or professional source. It is possible, though highly unlikely, that the role of a Council employee may be that of a source, for example in ‘entrapment cases’

4.29 The Authorising Officer must consider the safety and welfare of an employee acting as a source, and the foreseeable consequences to others of the tasks they are asked to carry out. A risk assessment should be carried out before authorisation is given. Consideration from the start for the safety and welfare of the employee, even after cancellation of the authorisation, should also be considered.

4.30 The Council’s practice is not to use an employee acting as a source to infiltrate existing criminal activity, or to be a party to the commission of criminal offences, even where this is within the limits recognised by law.

4.31 Further details about the Council’s Procedures for seeking authorisations are set out in Appendix 1.

5. CCTV

5.1 Use of the Council owned or operated CCTV cameras to target a person, his/her property or a building would be directed surveillance. Before an officer of the Council undertakes such activity, an Authorisation is required in accordance with the procedures set out in this document. The only exception that applies is where an emergency situation applies and there are good reasons why an urgent application could not be made. The reasons for the operation and its emergency nature should be noted by the CCTV operator and a RIPA application made as soon as possible.

5.2 When there is use of the Council owned or operated CCTV cameras by an external organisation to target a person, his/her property or a building it is for that organisation to obtain their own RIPA authorisation. A copy of this Authorisation must be passed to the appropriate responsible Council officer before such activity can be carried out. If in the judgement of the CCTV operator the request is urgent they can authorise the use of the Council’s CCTV cameras but only upon receiving a written assurance from an officer of the organisations that authorisation will be obtained. Details of the request should be then be recorded by the operator and a copy of the authorisation sought as soon as is reasonably practicable.

6. CENTRAL REGISTER OF AUTHORISATIONS

6.1 The 2000 Act requires a central register of all authorisations to be maintained. The Solicitor to the Council maintains this register.

6.2 Whenever an authorisation is granted the Authorising Officer must arrange for a copy of the authorisation to be forwarded to the Legal Services Section. In addition copies of any other forms completed, as listed in Appendix 2, must also be so forwarded. Copies of the orders of the Magistrates Court approving or refusing the grant or renewal of an authorisation will also be placed on the Central Register of Authorisations.

Page 242 6.3 It is the responsibility of each Directorate to arrange for the secure retention of all authorisations that are generated by them. Authorisation should only be held for as long as it is necessary. Once the investigation is closed (bearing in mind cases may be lodged some time after the initial work) the records held by the Directorate should be disposed of in an appropriate manner (e.g. shredded).

7. CODES OF PRACTICE

7.1 There are Home Office Codes of Practice referred to in paragraph 1.4 above, that expand on this guidance. The codes do not have the force of statute, but are admissible in evidence in any criminal and civil proceedings.

8. BENEFITS OF OBTAINING AUTHORISATION UNDER THE 2000 ACT

8.1 The Home Office Codes of Practice say councils should appoint a Senior Responsible Officer. This person is responsible for the integrity of the surveillance process, ensuring the Council complies with RIPA and relevant legislation, and also engaging with the Inspectors when they conduct their inspections. The Council’s Senior Responsible Officer is the Director of Policy and Resources (Monitoring Officer)

8.2 The Codes of Practice also say elected members should review the Council’s use of the 2000 Act and set the policy once a year. In addition to this, internal quarterly reports on the use of the 2000 Act should be considered to ensure that the consistency and compliance with Policy. These quarterly reports are submitted to the Cabinet Member for Central Services. Consideration should also be given to appropriate liaison with the Local Magistrates Court with a view to reviewing consistency of approach and any training needs of the court clerks and magistrates.

9. SCRUTINY AND TRIBUNAL

9.1 To effectively “police” RIPA Commissioners have been appointed to regulate conduct carried out under the 2000 Act. The Chief Surveillance Commissioner will keep under review, among others, the exercise and performance by the persons on whom are conferred or imposed, the powers and duties under the Act. This includes authorising directed surveillance and the use of covert human intelligence sources.

9.2 A tribunal has been established to consider and determine complaints made under the 2000 Act. Complaints can be made by persons aggrieved by surveillance. The forum hears application on a judicial review basis. Claims should be brought within one year unless it is just and equitable to extend that.

9.3 The tribunal can order, among other things, the quashing or cancellation of any warrant or authorisation and can order destruction of any records or information obtained by using a warrant or authorisation, and records of information held by any public authority in relation to any person.

Page 243 APPENDIX 1-PROCEDURE FOR APPLYING FOR AUTHORISATIONS

Applications 1. Except in urgent circumstances, applications for authorisation to carry out directed surveillance must be made in writing and should describe any conduct to be authorised and the purpose of the investigation or operation. The application should also include:-

• The reasons why the authorisation is necessary in the particular case and on the relevant ground-this is for the purpose of preventing or detecting crime or of preventing disorder;

• The reasons why the surveillance is considered proportionate to what it seeks to achieve;

• The nature of the surveillance;

• The identities where known, of those to be the subject of the surveillance;

• An explanation of the information which it is desired to obtain as a result of the surveillance;

• The details of any potential collateral intrusion and why the intrusion is justified;

• The details of any confidential information that is likely to be obtained as a consequence of the surveillance;

• The level of authority required (or recommended where that is different) for the surveillance; and

• A subsequent record of whether authority was given or refused, by whom and the time and date

Urgent Cases 2. In urgent cases the authorisation should record (as may be):-

• The reasons why the authorising officer or the officer entitled to act in urgent cases considered the case so urgent that an oral instead of a written authorisation was given; and/or

• The reasons why it was not reasonably practicable for the application to be considered by the authorising officer.

3. Where the authorisation is oral, the detail referred to above should be recorded in writing by the applicant as soon as reasonably practicable.

Renewals 4. Applications for renewal should record the above information together with details of:-

• Whether this is the first renewal or every occasion on which the authorisation has been renewed previously;

• Any significant changes to the information previously provided;

• The reason why it is necessary to continue with the directed surveillance;

Page 244

• The content and value to the investigation or operation of the information so far obtained by the surveillance;

• The result of regular reviews of the investigation or operation.

Covert Human Intelligence Source Records 5. The following information is included in records relating to each covert human intelligence source:- (a) the identify of the source; (b) the identify, where known, used by the source; (c) any relevant investigating authority other than the authority maintaining the records; (d) the means by which the source is referred to within each relevant investigating authority; (e) any other significant information connected with the security and welfare of the source; (f) any confirmation made by a person granting or renewing an authorisation for the conduct or use of a source that the information in paragraph (d) has been considered and that any identified risks to the security and welfare of the source have where appropriate been properly explained to and understood by the source; (g) the date when, and the circumstances, in which the source was recruited; (h) the identities of all persons who, in relation to the source, are discharging or have discharged the functions mentioned in section 29(5)(a) to (c) or in any order made by the Secretary of State; (i) the periods during which those persons have discharged those responsibilities; (j) the tasks given to the source and the demands made of him in relation to his activities as a source; (k) all contacts or communication between the source and a person acting on behalf of any relevant investigating authority; (l) the information obtained by each relevant investigatory authority by the conduct or use of the source; (m) any dissemination by that authority of information obtained in that way; and (n) in the case of a source who is not an undercover operative, every payment, benefit or reward and every offer of a payment, benefit or reward that is made or provided by or on behalf of any relevant investigating authority in respect of the source’s activities for the benefit of that or any other relevant investigating authority.

Covert Human Intelligence Source Applications 6. Applications for authorisation for the use or conduct of a source should be in writing and record the information laid down within the relevant code of practice. Applications for renewal of covert human intelligence sources should record:-

• whether this is the first renewal or every occasion on which the authorisation has been renewed previously; • any significant changes to the information previously provided;

• the reasons why it is necessary to continue the use of the source;

• the use made of the source in the period since the grant, or, as the case may be, latest renewal of the authorisation;

Page 245 • the tasks give to the source during that period and the information obtained from the conduct or use of the source;

• the result of regular reviews of the use of the source

Duration and Cancellation of Authorisations

7. For Direct surveillance the written authorisation will cease to have effect (unless renewed) at the end of a period of three months beginning with the day on which it took effect. Urgent Oral authorisations will, unless renewed cease to have effect after 72 hours beginning with the time when the grant or renewal was approved by the Magistrates Court..

8. In a case in which the authorisation is for the conduct of a covert human intelligence source, the authorisation shall cease to have effect after the period of 12 months beginning with the day on which the grant takes effect.

9. A person shall not renew an authorisation for a covert human intelligence source unless a review has been carried out as to the use made of the source, and tasks given during that period, and considered the same.

10. Authorisations should be cancelled if the criteria for the authorisation is no longer met. A separate authorisation is required for each investigation.

11. Reviews should be undertaken following any significant occurrence and the results of a review should be recorded on the central register of authorisations.

Magistrates Court

12. No authorisation or renewal relating to Directed Surveillance or CHIS can be acted upon unless approval is given by the Magistrates Court. An application for such approval will be made by a representative of Legal Service accompanied by the Authorising Officer and the applicant.

Page 246 APPENDIX 2

Standard forms to be used in connection with applications to authorise surveillance under the Regulation of Investigatory Powers Act 2000

The standard forms are also published on the Intranet.

1 Form RIPA 1 Authorisation Directed Surveillance

2 Form RIPA 2 Renewal of a Directed Surveillance authorisation

3 Form RIPA 3 Review of a Directed Surveillance authorisation

5 Form RIPA 4 Cancellation of a Directed Surveillance authorisation

6 Form RIPA 5 Application for authorisation of the conduct or use of a Covert Human Intelligence Source (CHIS)

7 Form RIPA 6 Application for renewal of a Covert Human Intelligence Source (CHIS) Authorisation

8 Form RIPA 7 Review of a Covert Human Intelligence Source (CHIS) Authorisation

9 Form RIPA 8 Cancellation of authorisation for the use or conduct of a Covert Human Intelligence Source (CHIS)

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