Agenda and minutes

Apologies were received from County Councillors Hasina Khan and Lorraine Beavers and Councillor Simon Blackburn.

Members are asked to consider any pecuniary and non-pecuniary interests they may have to disclose to the meeting in relation to matters under consideration on the agenda.

None received.

RESOLVED: - That the Minutes of the last meeting held on 25 September 2019 be confirmed as a correct record and signed by the Chairman.

In accordance with the CIPFA Treasury Management Code of Practice and to strengthen Members’ oversight of the Authority’s treasury management activities, the Resources Committee received a treasury management mid-year report and a final outturn report. Reports on treasury activity were discussed on a quarterly basis with Lancashire County Council Treasury Management Team and the Authority’s Director of Corporate Services and were used as a basis for this report to the Committee.

Economic Overview

The economic situation continued to be dominated by the uncertainty arising from the unknown impact of the UK's withdrawal from the European Union and the trade dispute between the worlds' two largest economies namely the USA and China. Despite this, the first quarter of 2019 showed relatively strong growth of 0.5% (1.8% year on year). However, it was considered that this was partly due to stockpiling ahead of the expected date for leaving the European Union and was followed by a contraction of 0.2% in the second quarter.

Outlook for Interest Rates

Arlinglose, Lancashire County Council's treasury advisers, were forecasting no change in the Bank Rate for the foreseeable future. However, there were risks to this forecast which could see rates moving in either direction. 

Treasury Management Position and Policy

The underlying need to borrow for capital purposes was measured by the Capital Financing Requirement (CFR); while usable reserves and working capital were the underlying resources available for investment. The treasury management activity was influenced both by the position at the beginning of the year and the plans in year. The position at the start of the financial year was summarised in the report as now considered, this showed that the Authority had a net borrowing requirement of £197k, which was below its actual borrowing of £2.0m, and reflected the additional voluntary MRP contributions that the Authority had made in order to generate cash to repay loans either on maturity or as an early repayment.  Members considered the proposed further voluntary MRP contribution of £187k, in addition to the planned £10k which would reduce the borrowing requirement to zero, fully providing for existing loan repayment or to offset future loan drawdowns.  (It was noted that the Authority was not anticipating in year capital expenditure being funded from borrowing, but this depended on the agreed 5 year programme currently being developed and some borrowing may be required in future years).  In terms of investments it was anticipated that there may be some reduction in the level of reserves held, dependent upon the level of in-year capital expenditure which, given slippage in the programme this looked less likely at the present time.

Borrowing

There had been no new borrowing in the first six months of the financial year. This was consistent with the position that the current borrowing was already above the CFR and that the capital programme did not include any expenditure to be financed from borrowing.

The long term debt outstanding of £2m was from the Public Works Loan Board. Consideration was given to the early  ...  view the full minutes text for item 66/19

Revenue Budget

The overall position as at the end of September showed an underspend of £0.4m.   Trends were being monitored to ensure that they were reflected in future year’s budgets, as well as being reported to Resources Committee. 

We previously reported that there was a potential shortfall of £273k in Section 31 grant in relation to Business Rates Relief for 2019/20.  Although we had still not had confirmation, we believed that we met the criteria as set out by MHCLG in order for them to pay a one off grant of £273k.  As such, we did not reduce the budgeted grant income for 2019/20.

In addition, since the last meeting we have received the balance of the Section 31 grant funding in relation to the Winter Hill incident of 2018.  We had anticipated claiming this under the Bellwin scheme, which had an element of self-funding (circa £109k), however as it was paid under Section 31 grant we have been reimbursed for the full costs, leaving a surplus of £109k in year.

In terms of the year end forecast we had anticipated an underspend of approx. £0.3m due in the main to the additional grant for Winter Hill, for USAR and the adjustment to the council tax collection figure (as previously reported). As outlined in the Treasury Management Mid-Year Update report we were proposing making an additional voluntary Minimum Revenue Provision (MRP) payment of £187k, in order to reduce the borrowing requirement to zero, fully providing for existing loan repayment or to offset future loan drawdowns. After allowing for this the current year end forecast showed a £0.1m underspend.

It was noted that in line with recent court/ombudsman rulings in respect of the pensionability of allowances a review of all our allowances was being undertaken to determine which were pensionable and which were not. Whilst the review was on-going it was clear that if any allowances were made pensionable then this would impact on the revenue budget, however at this early stage we had not reflected this in the forecast as presented. We would update the forecasts as the position became clearer, and provide an updated report to members at the appropriate time.

The year to date positions within individual departments were set out in the report with major variances relating to non-pay spends and variances on the pay budget being shown separately in the table below: -

The report set out details of the Government’s latest consultation document relating to 2020/21 Local Government Finance Settlement.  The Local Government Finance Settlement was the basis by which the Government allocated out funding to individual authorities, as part of the Local Government Finance Settlement.

The Ministry of Housing, Communities and Local Government issued a consultation document titled “Local Government Finance Settlement 2020/21 – Technical Consultation” on 3 October, with a deadline for a response of 31 October. The proposed 2020/21 settlement was framed in the context of the overall Spending Review package, and set out more detail on the Government’s plans for allocating these resources to local authorities.

As part of the work on the Spending Review the Government had heard the concerns of local authorities about the need for certainty and stability to enable budget planning for the next financial year. Reflecting this, the one-year Spending Round and the plans for a more substantial Spending Review exercise in time for 2021-22, they proposed to implement a ‘roll-forward’ settlement for 2020-21, which would provide stability for the majority of funding sources for local government.

The Government remains committed to reforming local government finance. In 2020 the Government plans to carry out a multi-year Spending Review, which would lay the groundwork for reforms. They would continue to work towards their aim to implement these reforms in 2021-22, including a full reset of business rates retention baselines.

Whilst the document talked about the increased specific funding allocated to authorities, such as the Better Care Fund and New Homes Bonus, this did not affect Fire and Rescue Authorities. As such the only significant area which we felt warranted comment related to council tax referendum principles.

The document outlined the following council tax referendum principles for 2020/21:-

·        a core principle of up to 2% (this was 3% for 2018/19 and 2019/20)

·        an adult social care precept for local authorities with responsibility for adult social care of 2% on top of the core principle;

·        no referendum principles for Mayoral Combined Authorities or town and parish councils.

This meant that Fire would be limited by the general principle i.e. a council tax increase of up to 2%.

Question 3: Do you think that there should be a separate council tax referendum principle of 2% or £5, whichever is greater, for shire district councils in 2020-21?

Question 4: Do you have views on the proposed package of council tax referendum principles for 2020-21?

Response Submitted

“Whilst the Spending Review provided a boost across the public sector in general, there was no detail about the impact on Fire Authorities. Without this it is hard to know how much funding will need to be raised via council tax and therefore hard to provide an informed response.

However regardless of the eventual funding we do not believe the 2% threshold will be sufficient and can see no logical reason for reducing this from its current 3%. We have argued for many years that greater flexibility should be provided to all  ...  view the full minutes text for item 68/19

The published 2019 valuation showed a marked improvement to the scheme as a whole, assets had grown significantly more than liabilities, hence the scheme as a whole had moved from a 90% funded scheme to 100% funded. This meant that for the scheme as a whole any deficit recovery costs would be significantly reduced, although it was recognised that the position would vary for each Authority.

The valuation had also identified that future service rates needed to increase by an average of 2.5%, recognising changes to scheme benefits and also changes in future assumptions such as mortality and investment returns.  The overall valuation was extremely volatile, linked to investment returns and changing assumptions.

It was noted that the Government had consulted on moving from the current three year valuation cycle to a four year cycle from 2024. If this was agreed the next valuation, effective from 2023, would only set rates for two years to 2025, with the four year cycle commencing thereafter. As part of the process consideration was being given to the ability to undertake interim valuations or for administering authorities to amend employer contributions rates in between valuations, both of which would incur significant additional administrative costs.

Lancashire Fire Authority Fund

At the time of the last tri-annual valuation of the Local Government Pension Scheme the Fire Authority had a funding surplus of £4.3m, which was being drawn down over the agreed 16 year recovery period, £336k per annum.

The latest valuation showed a marked increase in the surplus, now standing at £9.7m, a funding level of 120%. The recovery period over which this was drawn down had also shortened to 13 years (in theory it reduced by 3 years each valuation). As a result the in-year draw down would increase to £745k in 2020/21 rising to £804k in 2022/23.

Offsetting this was the increase in future service rate, which had increased from 14.7% to 17.1%, an increase of 2.4% which, based on the current projected payroll equated to £135k additional cost.  The profile of anticipated employer contributions for future service costs and draw down of the surplus was detailed in the report.  No allowance has been made for the potential impact of the McCloud pension ruling, which has previously been reported to Members.

The Service had an option to pre-pay these amounts, either at the start of each year or as a one-off covering all three years, and receive a discount for doing so. Pre-paying this at the start of each year resulted in an overall saving of £11k, whilst pre-paying all three years in April 2020 resulted in a saving of £36k, this equated to a return of approx. 3.8% per annum, and as such it was recommended that the Authority took advantage of the one-off prepayment covering all three years.  Any variation between actual costs due and the amount pre-paid would be actioned at the end of the valuation period.

RESOLVED: that the position be noted and the pre-payment of contributions, net of the  ...  view the full minutes text for item 69/19

At a recent Combined Fire Authority meeting the question was posed by a Member as to what the Service had done in respect of eliminating single use plastics. This issue remained under review, and options to reduce use remained under consideration. The steps undertaken so far were noted as:-

Hydration

The most significant action undertaken so far; in addition to educating staff in respect of environmental concerns, was the issue of a reusable water bottle to each employee in March 2019 (both operational and support staff), to encourage individuals to remain hydrated and it was intended that this would significantly reduce the need for single use bottles (either purchased by the individual or utilised at incidents during the working day). The issue of the water bottle has been well received and favourably commented on, but as an emergency service involved in strenuous activity in hot conditions, (sometimes for extended periods) situations would continue to exist that required the provision of small water bottles.

Purchasing

In provision of consumables the issue of single use plastic was considered, alongside other relevant decision making factors – inevitably it was a compromise between cost, availability and practicality of provision, whether the item purchased was for use on the fire ground or other areas such as in the Service Training Centre canteen facilities. This area was being kept under review. Alterations to our arrangements would normally have a negative financial impact during any tendering process and this aspect was considered in setting any qualification requirements.

Promotion   

The Service had undertaken promotional work in respect of single use plastic as detailed in the report which also included some examples of the posters used.  The SHE department and local Environmental champions were seen as the mechanism to advance the Service’s position together with open consideration of alternative approaches where single use plastic was involved.  

RESOLVED: - That the current position be noted.

The next scheduled meeting of the Committee has been agreed for 10:00 hours on 25 March 2020 in the Main Conference Room, at Lancashire Fire & Rescue Service Headquarters, Fulwood.

Further meetings are:           scheduled for 20 May 2020 and 23 September 2020

                                                proposed for  25 November 2020

The next meeting of the Committee would be held on 25 March 2020 at 1000 hours in the Main Conference Room at Lancashire Fire and Rescue Service Headquarters, Fulwood.

Further meeting dates were noted for 20 May 2020 and 23 September 2020 and agreed for 25 November 2020.

The Committee is asked to consider whether, under Section 100A(4) of the Local Government Act 1972, they consider that the public should be excluded from the meeting during consideration of the following items of business on the grounds that there would be a likely disclosure of exempt information as defined in the appropriate paragraph of Part 1 of Schedule 12A to the Local Government Act 1972, indicated under the heading to the item.

RESOLVED: - That the press and members of the public be excluded from the meeting during consideration of the following items of business on the grounds that there would be a likely disclosure of exempt information as defined in the appropriate paragraph of Part 1 of Schedule 12A to the Local Government Act 1972, indicated under the heading to the item.

(Paragraph 3)

Members considered a report that provided an update on all contracts for one-off purchases valued in excess of £100,000 and high value procurement projects in excess of £100,000 including: new contract awards, progress of ongoing projects and details of new projects.

RESOLVED:  That the Committee noted and endorsed the report.

(Paragraph 1)

Members further considered the Internal Disputes Resolution Procedure – Stage 2 application discussed at the last meeting including the independent advice which had been requested.

RESOLVED: - The Committee declined the request.

An item of business may only be considered under this heading where, by reason of special circumstances to be recorded in the Minutes, the Chairman of the meeting is of the opinion that the item should be considered as a matter of urgency.  Wherever possible, the Clerk should be given advance warning of any Member’s intention to raise a matter under this heading.

(Paragraph 1)

RESOLVED: - That the Committee approved the request on the specific facts.