Agenda and minutes

(Director of Governance) To declare interests in any item on this agenda.

(a)        Pursuant to the Council’s Member Code of Conduct, Councillor G Mohindra declared an interest in agenda item 6, Essex Pensions Fund Investment Strategy Statement – Consultation, by virtue of being on the Investment Steering Committee for the pension fund and his wife working for Aviva PLC. The Councillor had determined that his interest was non-pecuniary and would remain in the meeting for the consideration of the item.

To confirm the minutes of the last meeting of the Committee held on 30 March 2017 (attached).

RESOLVED:

That the minutes of the meeting held on 30 March 2017 be taken as read and signed by the Chairman as a correct record.

(Director of Resources) To consider the attached report (FPM-001-2017/18).

The Director of Resources presented a report on the outturn performance for the Key Performance Indicators adopted for 2016/17.

The Director of Resources advised that the Council was required to make arrangements to secure continuous improvement in the way in which its functions and services were exercised, having regard to a combination of economy, efficiency and effectiveness. As part of the duty to secure continuous improvement, a range of Key Performance Indicators (KPI) relevant to the Council’s service priorities and key objectives were adopted each year and the performance were reviewed on a quarterly basis.

Thirty-seven Key Performance Indicators (KPI) had been adopted for 2016/17 in March 2016 and the progress in respect to all of the KPIs was reviewed by Management Board and the Overview and Scrutiny Committees at the conclusion of each quarter. The service directors also reviewed the KPI performance with the relevant portfolio holder(s) on an on-going basis throughout the year and the Select Committees were each responsible for the review of quarterly performance against specific KPIs within their areas of responsibility.

The position with regard to the achievement of target performance for the KPIs at the end of the year (31 March 2017) was as follows:

(a)          28 (75%) indicators achieved the cumulative end of year target;

(b)          9 (25%) indicators did not achieve the cumulative end of year target; and

(c)          3 (8%) of these KPIs performed within the agreed tolerance for the indicator.

The outturn performance against the indicator set for this year was the same as last year when 27 (75%) of the 36 indicators achieved target.

RESOLVED:

(1)          That the Committee noted the Quarter 4 performance for the Key Performance Indicators adopted for 2016/17.

Reasons for Decision:

The KPIs provided an opportunity for the Council to focus attention on how specific areas for improvement would be addressed, and how opportunities would be exploited and better outcomes delivered. It was important that relevant performance management processes were in place to review and monitor performance against the key objectives, to ensure their continued achievability and relevance, and to identify proposals for appropriate corrective action in areas of slippage or under performance.

Other Options Considered and Rejected:

No other options were appropriate in this respect. Failure to review and monitor performance could mean that opportunities for improvement were lost and might of had negative implications for judgements made about the progress of the Council.

(Director of Resources) To consider the attached report (FPM-002-2017/18).

The Director of Resources presented a report on the consultation for the Essex Pension Fund Investment Strategy Statement.

The Essex County Council was the administering authority for the local government pension scheme for employers based in Essex. This function was discharged through a Pension Board, which in turn had delegated the responsibility for setting and monitoring the investment strategy to the Investment Steering Committee. The Investment Strategy Statement was reviewed every three years and as part of the review, stakeholders were consulted on the content of the Statement. The consultation period had been extended to allow formal consideration by Members.

The Director of Resources advised that the most significant changes in the draft strategy, compared to the current strategy, were that;

a)            The Government had instructed pension funds to work together to reduce the costs of administration and the fees paid to external fund managers. Essex was one of eleven funds participating in the ACCESS Pool (A Collaboration of Central, Eastern and Southern Shires), which would be put in place during 2017.

b)            The Local Government Pension Scheme Regulations 2016 had required an expansion of the section covering Environmental, Social and Governance Considerations including a new fiduciary duty of the fund; within the policy section a paragraph making it clear that investment decisions would be left to investment managers to take based on purely financial grounds; and that the Investment Steering Committee would not seek to restrict new investments or require investment managers to divest existing holdings

c)            The section on the exercise of voting rights had been expanded, with the first and third paragraphs being new. There was a new section on Engagement which set out the Fund’s expectations for the factors that investment managers would take into account in making their decisions. The section further emphasised the point that divesting should not be pursued as the Fund could more effectively influence the behaviour of big companies by remaining invested over the long term. The final addition was a section covering Ongoing Monitoring which set out how the ISC would monitor and challenge investment managers.

The Members were advised to bear in mind the effectiveness of the fund management and the most recent actuarial valuation of the fund as at March 2016 showed a funding level of 89% (89% of the liabilities were covered by the assets) which was a significant improvement from the 2013 position of an 80% funding level. The fund had also won several awards in recent years, including the Pension Administration Award in February 2017, the Public Sector Pension Scheme of the Year in September 2015 and the LGC Investment Award for Fund of the Year in February 2014.

Councillor Neville commented that he had concerns over the investments made with fossil fuel companies and that alternative sources should be considered. The Committee noted Councillor Neville comments but reflected that the main priority the scheme, was to ensure they met the funding requirements and that the Investment Steering Committee only reviewed the investment strategy, not  ...  view the full minutes text for item 4.

(Director of Resources) To consider the attached report (FPM-003-2017/18).

The Assistant Director (Accountancy) provided the Cabinet Committee with an overall summary of the revenue outturn for the financial year 2016/17.

The net expenditure (CSB) for 2016/17 totalled £14.039 million, which was £787,000 (5.9%) above the original estimate and £71,000 (0.5%) above the revised. Whilst the overspend compared to the revised appeared small there was in fact a sizeable underspend on ongoing activities and because of this it was proposed to provide an additional sum of £1 million for capital funding.

The funding position was less easy to establish since the part retention of business rates and the actual funding was down by £217,000 when compared to the revised position. There was an in year surplus on the business rates collection fund which had brought the overall deficit down from £1.514 million to £87,000. There was still a significant amount set aside for Business Rate appeals and a re-assessment of the level of the provision required was carried out during the final accounts process.

The medium term financial strategy had estimated that the Council’s portion of the deficit on the business rates collection fund would be £200,000 and on the council tax collection fund there would be a surplus of £210,000. In the event the business rates collection fund deficit at the end of March 2017 was lower at £35,000 which would need to be paid back over the next two years, the Council Tax collection fund showed a surplus of £209,000 which would be paid into the General Fund in future years. The combined net position was £164,000 better than was anticipated.

The Continuing Services Budget (CSB) expenditure was £215,000 below the original estimate and £929,000 below the revised. Variances had arisen on both the opening CSB and the in year figures. The opening CSB was £871,000 lower than the revised estimate and the in year figures, £58,000 lower than the revised estimate. When measured against the Original Budget, salaries were underspent by £529,000. Actual salary spending for the authority in total, including agency costs, was some £21.97 million compared against a original estimate of £22.499 million. About three quarters of this underspend fell on the General Fund with Resources and Neighbourhoods recording the highest values. When comparing to the Revised Estimate there was an underspend of £157,000, all of which fell on the General Fund, though some salary costs were DDF and this showed a small underspend.A contingency had been included in the General Fund of £150,000 for potential settlement agreements little of this had been spent in the end.

The addition to the General Fund Bad & Doubtful debts provision was £83,000 less than expected. Housing Benefit Overpayment debts had increased marginally and more than half of the Sundry Debts outstanding were less than a month old, therefore could be expected to be mostly paid. 

There were a number of other underspends such as Housing Benefits £133,000, additional income, mostly rents £112,000, various consultancy costs £103,000, business rates £32,000, Grounds Maintenance £29,000, and as always a lot  ...  view the full minutes text for item 5.

(Director of Resources) To consider the attached report (FPM-004-2017/18).

The Assistant Director (Accountancy) advised that the report sets out the Council’s capital programme for 2016/17, in terms of expenditure and financing, and compared the provisional outturn figures with the revised estimates. The revised estimates, which were based on the Capital Programme, represent those adopted by the Council on 21 February 2017.

The Council’s total investment on capital schemes and capital funded schemes in 2016/17 was £36,957,000 compared to a revised estimate of £43,077,000, which represented an underspend of 14%. With regard to the General Fund projects, there was an overall underspend of £1,675,000 or 9%.

Overspends totaled £248,000 on the General Fund and £388,000 on the HRA, while there were savings of £11,000 on the General Fund and £467,000 on the HRA. In terms of slippage, carry forwards were recommended for totals of £1,995,000, £3,288,000, £4,000 and £1,063,000 for the General Fund, HRA, loans and REFCuS respectively; and brought forwards were recommended for totals of £41,000 and £5,000 for the General Fund and HRA respectively. Other variations total of £42,000 on the General Fund, which represent additional expenditure funded from external and direct revenue sources and the other variations of £162,000 on the HRA were offset by an equivalent sum on REFCuS.

The Assistant Director (Accountancy) advised that the funds available to finance the capital programme include Government grants, other public sector grants, private contributions to capital schemes, capital receipts and direct revenue funding from the General Fund and HRA. Initially any specific grants and private contributions made for particular projects were used to finance the appropriate projects, taking into account any restrictions with regard to usage and time scales. Other sources of capital finance, which carried restrictions, were also applied at the earliest opportunity in order to avoid losing potential funds. This included the element of capital receipts generated from the sale of council houses, which was available solely for replacement affordable housing (often referred to as 1-4-1 receipts) and had to be used within three years of receipt and as a consequence, the maximum sum allowable had been applied to the 2016/17 HRA house building programme.

Another element of capital receipts available for capital funding known as ‘attributable’ or ‘allowable’ debt, allows the Council to use all, none or indeed a portion of this money to fund HRA expenditure. The Cabinet made a decision to use part of this sum for the new housebuilding programme, based on 30% of the ‘assumed’ debt of Council dwellings, calculated when the new self-financing regime was introduced in April 2012. In total, grants of £1,799,000 were used last year compared to an estimated sum of £1,466,000, representing an increase of £333,000, which resulted primarily from the increase in private funding made available by more section 106 monies having been received for funding the new housebuilding programme.

The generation of capital receipts was £1,041,000 higher in 2016/17 than had been anticipated, which was due to more council houses being sold than expected, following a dip in 2015/16 and the steep rise of  ...  view the full minutes text for item 6.

(Director of Resources) To consider the attached report (FPM-005-2017/18).

The Director of Resources presented a report regarding the Council’s Corporate Risk Register.

The Corporate Risk Register was considered by the Risk Management Group on 1 June 2017 and subsequently by Management Board. These reviews identified amendments to the Corporate Risk Register, which included the following;

(a)          Risk 1 Local Plan

The Existing Control/Actions had been updated to advise that a Memorandum of Understanding was being pursued with Natural England regarding the effect of development on Epping Forest. It was also intended that a Memorandum of Understanding for the Strategic Housing Market Assessment (SHMA) area would be extended to include neighbouring London Boroughs. The Effectiveness of controls/actions now confirmed that Essex County Council and Highways England regularly attend Co-op Member and Officer Meetings.

(b)          Risk 2 Strategic Sites

The Effectiveness of controls/actions had been amended to advise the updated position for the key sites. Work now neared completion at the Winston Churchill site and the Langston Road site would reach Practical Completion in Mid-June with most large unit leases now signed. A detailed planning application had been submitted for Waltham Abbey Leisure Centre.

(c)          Risk 5 Economic Development

The Action Plan had been updated to advise the current position. The Existing Controls/Actions now advised Members of the agreed key objectives to be delivered by the Economic Development Strategy and that work on the final strategy had  paused, pending the outcome of further evidence work being undertaken as part of the Local Plan. The Existing Controls/Actions also advise that the Economic Development Team was now fully staffed. The final new Existing Control/Action was to advise that the Employment Study for the Local Plan neared completion. The resulting report from the study would require consideration at Member workshops, this had been added as a Required Further Management Action.

RECOMMENDED:

1.            That the Effectiveness of controls/actions and Required further management action for Risk 1 be updated;

2.            That the updating of the Effectiveness of controls/actions and Required further management action for Risk 2 be updated;

3.            That the updating of the Effectiveness of controls/actions and Required further management action for Risk 5 be updated;

4.            That the amended Corporate Risk Register be recommended to Cabinet for approval.

Reasons for Decisions:

It was essential that the Corporate Risk Register was regularly reviewed and kept up to date.

Other Options Considered and Rejected:

Members may suggest new risks for inclusion or changes to the scoring of existing risks.