Cabinet Date: Monday 27 January 2014 Time: 10.30 am Venue: Edwards Room, County Hall Persons attending the meeting are requested to turn off mobile phones. Membership Mr G. Nobbs (Chairman) Mr M. Castle Education and Schools Mr D. Harrison Environment, Transport, Development and Waste Mr J. Joyce Safeguarding Mr S. Morphew Finance, Corporate and Personnel Mr D. Roper Public Protection Mrs C Walker Economic Development Ms S. Whitaker Adult Social Services Mrs M. Wilkinson Communities For further details and general enquiries about this Agenda Please contact: Sonya Blythe on 01603 223029 or email [email protected]1
Transcript
Cabinet Date: Monday 27 January 2014 Time: 10.30 am Venue: Edwards Room, County Hall Persons attending the meeting are requested to turn off mobile phones. Membership Mr G. Nobbs (Chairman) Mr M. Castle Education and Schools Mr D. Harrison Environment, Transport, Development and Waste Mr J. Joyce Safeguarding Mr S. Morphew Finance, Corporate and Personnel Mr D. Roper Public Protection Mrs C Walker Economic Development Ms S. Whitaker Adult Social Services Mrs M. Wilkinson Communities
For further details and general enquiries about this Agenda Please contact:
A g e n d a 1. To receive apologies and details of any substitute members
attending
2. Minutes
To confirm the minutes of the additional meeting held on 29 October 2013. To confirm the minutes of the meeting held on 6 January 2014
(Page 5)
(Page 11)
3. Members to Declare any Interests
If you have a Disclosable Pecuniary Interest in a matter to be considered at the meeting and that interest is on your Register of Interests you must not speak or vote on the matter. If you have a Disclosable Pecuniary Interest in a matter to be considered at the meeting and that interest is not on your Register of Interests you must declare that interest at the meeting and not speak or vote on the matter. In either case you may remain in the room where the meeting is taking place. If you consider that it would be inappropriate in the circumstances to remain in the room, you may leave the room while the matter is dealt with. If you do not have a Disclosable Pecuniary Interest you may nevertheless have an Other Interest in a matter to be discussed if it affects: - your well being or financial position - that of your family or close friends - that of a club or society in which you have a management role - that of another public body of which you are a member to a greater extent than others in your ward. If that is the case then you must declare such an interest but can speak and vote on the matter.
4. To receive any items of business which the Chairman decides should be considered as a matter of urgency
5. Public Question Time
15 minutes for questions from members of the public of which due notice has been given.
Please note that all questions must be received by 5pm Wednesday 22 January 2014. Please submit your question(s) to the person named on the front of this agenda. For guidance on submitting public questions, please use the link:
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Cabinet – 27 January 2014
www.norfolk.gov.uk/cabinetquestions
6. Local Member Issues/Member Questions
15 minutes for Local Members to raise issues of concern of which due notice has been given. For attendance and speaking rights of members at Cabinet meetings please see Appendix 11 of the Norfolk County Council Constitution.
Please note that all questions must be received by 5pm Wednesday 22 January 2014. Please submit your question(s) to the person named on the front of this agenda or to [email protected]
7. Overview and Scrutiny Panel Issues
Opportunity for Cabinet Members to bring forward matters from their respective Overview and Scrutiny Panels.
8. 2013-14 Revenue Finance Monitoring Report Month 9 (Page 27) To note the forecast overspend at the end of December 2013; to note
the projected overspend can be contained within general balances; to approve the creation of a Children’s Services Improvement Reserve; to note the latest estimated costs of the recent tidal surge and flooding in Norfolk
9. Capital Monitoring Report Month 9 (Page 59) To consider progress to date against the Council’s Capital
Programme
10. Consideration of Revenue and Capital Budget for 2014-17.
To consider the following reports.
10.1 Findings from the Putting People First Consultation and the outcome of the Equality Impact Assessments of budget proposals
(to follow)
10.2 Leader’s Statement (to follow)
10.3 Revenue Budget 2014-17 (to follow)
10.4 Adequacy of Reserves and Provisions 2014-17 (to follow)
10.5 Robustness of Estimates 2014-17 (to follow)
10.6 Capital Strategy and Programme 2014-17 (to follow)
10.7 Medium Term Financial Strategy 2014-17
(to follow)
11.
Annual Investment and Treasury Strategy 2014-15 (Page 75)
To recommended the Annual Investment and Treasury Strategy to County Council:
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Cabinet – 27 January 2014
12. Update on the Strategic Economic Plan for Norfolk and Suffolk and the Norfolk Growth Prospectus
(Page 99)
To note progress on the Strategic Economic Plan and Norfolk Growth Prospectus.
To delegate authority to the Interim Director of ETD, in consultation with the Leader of the Council and the Cabinet Member for Economic Development to approve the New Anglia Strategic Economic Plan.
13. Fuel Poverty in Norfolk (Page 115)
To agree the recommendations.
14 Appointments to Committees etc. (Standing Item)
15. Exclusion of the Public The committee may be asked to consider excluding the public from the meeting under section 100A of the Local Government Act 1972 for consideration of an item on the grounds that it involves the likely disclosure of exempt information as defined by a Paragraph 3 of Part 1 of Schedule 12A to the Act, and that the public interest in maintaining the exemption outweighs the public interest in disclosing the information. The committee will be presented with the conclusion of the public interest test carried out by the report author and is recommended to confirm the exclusion.
16. The future model for mental health social care and arrangements for delivery of mental health social care services for adults of 18-65 years from April 2014
(Page 121)
To agree the exempt recommendations.
Date Agenda Published: Friday 17 January 2014 All enquiries to: Sonya Blythe Norfolk County Council, Democratic Services, County Hall, Martineau Lane, Norwich, NR1 2DH Tel. 01603 223029 Fax. 01603 224377 Email [email protected]
If you need this document in large print, audio, Braille, alternative format or in a different language please contact 0344 800 8020 or 0344 800 8011 (textphone) and we will do our best to help.
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CABINET
MINUTES OF THE MEETING HELD ON 29 OCTOBER 2013
AT 9.00AM IN THE EDWARDS ROOM, COUNTY HALL.
Present: Mr G. Nobbs (Chairman) Economic Development Mr M Castle Schools Mr D. Harrison Environment, Transport, Development and Waste Mr J. Joyce Safeguarding
Ms S. Whitaker Adult Social Services Mrs M. Wilkinson Communities Members Also Present: Mr R Coke Dr M Strong Mr C Jordan Mrs C Walker Mr J Mooney Mr B Watkins Mr R Smith Mr W Wilby Mrs M Somerville Officers/ Others Present: Mr M Allen Assistant Director Environment and Waste Mrs A Gibson Acting Managing Director Mr J Hull Project Director - Residual Waste Services Mr T McCabe Interim Director of Environment, Transport and Development Ms V McNeill Practice Director, NP Law. Peter Timmins Interim Head of Finance
1. Apologies Prior to apologies being received, the Managing Director confirmed that this was an additional meeting of the Cabinet, being held to consider the residual waste treatment contract revised project plan and the outcome of the Full Council meeting held the previous day. Apologies were received from the Cabinet Member for Public Protection and the Cabinet Member for Finance, Corporate and Personnel.
2. Declarations of Interest
The Cabinet Member for Schools declared an interest as a representative on the East of England Energy Group and the Norfolk and Suffolk Energy Alliance.
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3. Residual Waste Treatment Contract - Revised Project Plan The Cabinet received a report (item 3), which considered whether to accept or reject the Revised Project Plan for the Energy from Waste contract which Full Council had voted to accept the previous day. The Interim Director of Environment, Transport and Development introduced the report. He advised that a revised plan was required due to the delay which the project had already experienced. The changes in the plan related to cost and dates – the process remained the same. The revised project plan would still offer value for money even without the withdrawn PFI credits. If the County Council was to withdraw from its contract with Cory Wheelabrator the compensation cost would be £25.9m. In addition the County Council would still have to find a way to dispose of its waste which would incur additional procurement costs. The Chairman noted that the revised plan had been debated fully at a meeting of the Full Council on 28 October and that Council had advised Cabinet to accept the plan. He invited the Interim Head of Finance to discuss the financial aspects of the revised project plan. The Interim Head of Finance clarified that, further to reported comments, the County Council had not received financial advice from the Department of Communities and Local Government (DCLG). The DCLG would not be in a position to make an up to date judgment of the County Council’s finances as the latest information it held was from April 2013. The financial situation of the County Council had changed considerably since that time, through no fault of its own, and had no room to manoeuvre financially. He advised that, as the County Council’s Section 151 Officer, the decision over whether to issue a Section 114 notice upon the County Council would be his entirely. A Section 114 notice could be issued when the Section 151 Officer was unclear how a decision which had been made by Members would be funded. This gave a 21 day review period in order to consider the consequences to services and the local community of the decision. If the County Council choose to withdraw from the current contract, such a notice would be issued. Advice had been taken from various people on this - a QC, the External Auditor, the deputy S151 officer and the Monitoring Officer - and was also consistent with the previous Head of Finance’s opinion. Finally the Interim Head of Finance recognised that local MP’s had suggested that the County Council should consider capital borrowing from the DCLG. This could only happen in a certain set of circumstances though, which the County Council did not fulfill and so was not possible. The Cabinet Member for Safeguarding noted that the minimum reserves the County Council held had increased from £14m to £16m in January 2013, whilst the level of reserves was now was now £20.8m. However, in the case of a catastrophic event, only £4.8m was not earmarked and available for use. The Interim Head of Finance confirmed that this was correct. The Cabinet Member for Schools asked the Interim Head of Finance to confirm when the compensation would have to be paid. He confirmed that it would have to be dealt with within 35 working days of termination of the current financial year, meaning that there was very little time in which to find the money required.
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The Cabinet Member for Schools then asked for clarification around capital borrowing from the DCLG. He was informed that the criteria to receive help was firstly, that the expenditure was avoidable, which it was. Secondly, that costs had to be above a minimum of £37m, which the County Council would not meet, as the compensation figure was £25.9m. In addition, the full amount would not be received as many councils would be bidding for a share of the available funds, and the County Council would not find out if it had been successful in receiving a share until after the date that it needed to pay Cory Wheelabrator. The Chairman asked whether the level of minimum reserves could be lowered to below £16m. The Interim Head of Finance responded that the level of balance held in Norfolk was below the level held in other County Councils of a similar size. In order to change this full Council would have to agree the change under recommendation of the S151 officer.
The Cabinet Member for Environment, Transport, Development and Waste asked what the
outcome would be if the Secretary of State terminated the project at a later date. He was advised that termination at a later date meant that the risks could be considered in advance and contingency arrangements put in place.
The Chairman thanked the officers for their advice and stated that he was appalled by recent attacks on officers in the press and by some Members.
The Cabinet Member for Safeguarding confirmed that the Full Council meeting the previous day had allowed a full discussion to take place. He was not pro-incinerator but understood the consequences of cancelling the contracts.
The Cabinet Member for Schools noted that the County Council faced huge financial cuts within the next three years and it would not be appropriate to add another large debt to this. The Chairman recognised that long term, the revised project plan offered good value for money, though not as good as it had before the waste PFI credits had been withdrawn. The loss of the £169m grant was appalling for Norfolk residents. He hoped that people would be satisfied with the final decision as a full debate had now been held, the planning application had been called in by the Secretary of State, and independent reports had been written which agreed with officer reports. The Cabinet Member for Adult Social Services advised that she had received an email from the Cabinet Member for Finance, Corporate and Personnel who agreed with the decision made at Full Council. She noted that Members had a responsibility to run the County Council and to provide services for residents and, now that a democratic decision had been made, this should be focused on. The Cabinet Member for Safeguarding advised that he had received an email from the Cabinet Member for Public Protection who supported the recommendations within the revised project plan.
4. Exclusion of the Public
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The Cabinet was advised that, with regard to item 5 - Residual Waste Treatment Contract - Revised Project Plan – Part 2, the Cabinet would need to consider whether to exclude the public for the consideration of the report. The Interim Director of Environment, Transport and Development presented the public interest test, as required by the 2006 Access to Information Regulations for the consideration of the Cabinet as follows: “This confidential paper is submitted to Cabinet Members in order that they have a detailed understanding of the Revised Project Plan submitted by the contractor for the Residual Waste Treatment Contract and therefore to enable Members to reach a decision on whether to accept or reject the Plan with sufficient information about it. The report contains the commercial details of the Plan. Financial and contract issues are outlined in detail for Members to consider. This information is considered to be exempt under Paragraph 3 of Part 1 of Schedule 12A to Local Government Act 1972 (as amended 01 March 2006), (‘Information relating to the financial or business affairs of any particular person (including the authority holding that information)’). Through the terms of the Residual Waste Treatment Contract the County Council also has contractual obligations to treat certain information pertaining to the contract as confidential. Regulation 43(1) of the Public Contracts Regulations 2006 requires that the County Council shall not disclose information which a contractor has reasonably designated as confidential. The public interest in disclosing these issues is outweighed by the public interest in non-disclosure. Disclosing sensitive business and financial information may impact on the Authority attaining best value in future negotiations”.
RESOLVED that the public be excluded whilst the report and recommendations were discussed.
5. Residual Waste Treatment Contract - Revised Project Plan – Part 2
SUMMARY OF MINUTE EXCLUDED FROM PUBLIC DEPOSIT The Cabinet received the exempt report (item 5 of the agenda).
6. Residual Waste Treatment Contract - Revised Project Plan
At 9.50am the public were invited back into the meeting. The Chairman gave his understanding that the location of a previous incinerator proposed for Costessey had only failed due to land ownership issues; therefore it was incorrect to suggest that Members based in Norwich had tried to move the incinerator away from them as they had accepted this earlier location. It was also unfeasible to say that it should be
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turned down due to health concerns; the fact that some Members had suggested that the incinerator be moved to Great Yarmouth demonstrated that there were no genuine health concerns. He noted that all officer reports had been read and a democratic free vote had now been held. Finally he advised that the County Council had engaged a QC to ascertain whether it could seek a judicial review of the decision to withdraw the PFI credits. Offers to meet with DEFRA would be taken up, although they had clearly stated that there was no money available. Decision RESOLVED that:- 1. The Revised Project Plan for the Residual Waste Treatment Contract be accepted
and to proceed with the project notwithstanding the decision by Defra to withdraw the Waste Infrastructure Grant.
2. The Director be authorised to enter into a Deed of Variation and any other
necessary instruments to give effect to the Revised Project Plan. 3. The provision of an indemnity be authorised to the Practice Director of nplaw and
Acting Head of Finance or another appropriate officer who will sign the Local Government (Contracts) Act 1997 certificate as to the County Council’s vires to accept the Revised Project Plan.
4. The previous affordability approval made by Cabinet on 07 March 2011 be
confirmed as relevant to the delivery of the Revised Project Plan. 5. All portfolio responsibilities for waste services and decisions relating to the waste
service, including the responsibility of delegated decisions in relation to the Residual Waste Treatment Contract are the responsibility of the Cabinet Member for Environment, Transport, Development and Waste and that this passes to any future Cabinet Member with responsibility for the waste service within their portfolio.
6. Confirmation be approved that, in relation to the role of Director of Environment,
Transport and Development in the delegated decision making process, the responsibility be fulfilled by the Director or in the absence of a Director the Assistant Director, with the responsibility for the waste service.
Alternative Options: Refer to the Cabinet report. Reason for Decision The contractor provided a draft Plan on 30 April 2013. This had been subject to negotiation to improve the price and ensure the County Council’s liabilities did not increase on termination. The Plan could be either accepted or rejected. ‘No response’ was deemed equivalent to rejection. The contract had been taken to mean this must be concluded by 29 October 2013.
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The Plan delivered savings estimated at over £20 million compared to landfill over the life of the contract starting with £1.2 million in 2016/17. There was potential for additional income, such as from electricity sales, to increase these savings further by some £2 million per year and for commercial positions in the contract to be revisited to generate improved value for money. The cost of rejection had been calculated at around £25.9 million which would have to be payable by mid-December 2013. This was a contractual requirement and the provisions would have to be made in the year the liability was incurred. These costs were in excess of the County Council’s ability to pay.
The meeting closed at 10.00am.
CHAIRMAN
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CABINET
MINUTES OF THE MEETING HELD ON 6 JANUARY 2014 AT 10.30AM IN THE HETHEL ENGINEERING CENTRE.
Present: Mr G. Nobbs (Chairman) Mr M Castle Schools Mr D Harrison Environment, Transport, Development and Waste.
Mr J. Joyce Safeguarding
Mr S Morphew Finance, Corporate and Personnel.
Mr D Roper Community Protection Mrs C Walker Economic Development Ms S. Whitaker Adult Social Services Mrs M. Wilkinson Communities
Members Also Present: Mr B Borrett Mrs M Somerville Mr J Dobson Mr B Spratt Ms A Kemp Mr M Wilby Mrs J Leggett Officers/ Others Present: Mr M Allen Assistant Director Environment and Waste Mr M Britch Managing Director - Norse Mr H Bullen Head of Budgeting and Financial Management Mr C Hey Head of Place Planning and Organisation Mrs A Gibson Acting Chief Executive Ms T Jessop Assistant Director Travel and Transport Services Ms S Lock Interim Director of Children's Services Ms A Mawbey SEN Commissioner Mr T McCabe Interim Director of Environment, Transport and Development Mrs F McDiarmid Assistant Director Economic Development & Strategy Mr M Ogden Programme Co-ordinator Mr P Timmins Interim Head of Finance In opening the meeting the Chairman advised that this meeting had been held at Hethel Engineering Centre on this occasion in order to celebrate the outstanding success of the centre. A large expansion was currently being built at the site of which 50% of the space had already been let. The achievements of the centre were the envy of most other local authorities. The Chairman also noted that item 19, Norwich: Former Unthank Centre, 3, 3a & 5 Unthank Road, had been withdrawn from the agenda.
1. Apologies
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No apologies were received.
2. Minutes The minutes of the meeting held on 2 December 2013 were agreed and signed by the Chairman.
3. Declarations of Interest
The following declarations of interest were made:- Mr Castle and Mrs Walker in respect of item 13, Great Yarmouth Borough Surface Water Management Plan and in respect of item 15, Great Yarmouth VA High School Partnership Proposal for the Provision of Accessible Playing Fields, as Members of Great Yarmouth Borough Council. In addition, in respect of item 13, Mr Castle was Chairman of the North Yarmouth Resilience Group, and in respect of item 15 was a local authority governor.
4. Matters of Urgent Business The Chairman advised that the PwC and Queen’s Counsel reports regarding the Waste Incinerator would be considered under this item. It had always been the intention to consider the reports together; however the PwC report did not arrive until after the Cabinet agenda had been published. Both reports had been published openly and circulated to all Members and in view of that there was no need to wait until the next meeting of Cabinet to discuss them. The Cabinet Member for Environment, Transport, Development and Waste welcomed the reports. Officers had received a large amount of criticism in the past but the report had concluded that no undue risk had been taken by officers and that Cabinet had not exceeded its authority in awarding the contract. The Cabinet Member for Public Protection endorsed the reports. He noted that they had been independently commissioned and that, had they not been favourable, Cabinet would have accepted any lessons that could have been learned from them. The Chairman concluded that he hoped that Members and the public would accept the reports conclusions. Resolved that the reports be noted.
5. Public Questions
5.1 Appendix A to these minutes sets out the public questions and replies received for this meeting.
6. Local Member Issues/Member Questions
6.1 Appendix B to these minutes sets out the Member questions and replies received for this meeting.
.
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7. Overview and Scrutiny Panel Issues
The Cabinet Member for Adult Social Services advised that she had recently attended the topping out ceremony for a new care home in Gorleston. In addition, a planning application had been submitted for new housing with care homes in Bowthorpe. The Cabinet Member noted that she had attended a Norfolk Independent Care conference which had been very successful and that in February the first Norfolk Independent Care awards would be held, which had had been sponsored by the County Council. She noted that the three acute hospitals in the region were very busy and that Social Services were working towards seven day a week working in order to carry out assessments where necessary to help to prevent bed blocking. Finally the Cabinet Member passed her thanks to emergency staff that had worked over the Christmas period, during which 115 calls had been received. The Cabinet Member for Environment, Transport, Development and Waste advised that a report on the Postwick Hub junction was due within the next week. The Northern Distributor Route report had also been completed and a response from the Planning Inspectorate would be expected within a month. The Cabinet Member would meet with Government Ministers in February 2014 in order to discuss the A47 which was not currently fit for purpose. The Cabinet Member for Finance, Corporate and Personnel stated that the Digital Norfolk Ambition contract had been signed and a launch had been held. Partners had already commenced carrying out initial assessments. The Cabinet Member passed his thanks to officers for their hard work on bringing this to fruition. The Cabinet Member for Economic Development noted that there were many good news stories within her remit; City Deals was now producing significant opportunities, the Enterprise Zone in Great Yarmouth was growing and the NORA project would produce at least 56 new houses initially. The Cabinet Member for Communities advised that the Millennium Library was the most visited library in the United Kingdom for the 7th year running. In addition the library service as a whole had the highest issue figure per head of population of any County Council library service. The Cabinet Member announced that the Customer Service Centre had undergone a quality of service assessment and had been awarded the Cabinet Office Centre of Excellence for Customer Service Standards, which was a commendable achievement. Finally she reported that attendance at Norfolk’s museums had increased by 7%. The Cabinet Member for Public Protection thanked all staff and volunteers who had undertaken to deal with flooding caused by recent storm and tidal surges, in many cases working all hours to ensure that communities received help. This included a team of volunteers from Fire and Rescue Service across the country who assisted in Walcott. Members had been invited to a briefing on the event on 15 January at County Hall. Also, in relation to flooding, one of the Service’s water rescue teams had been deployed to the south west of the country to give assistance.
The Cabinet Member continued that there had been several periods of industrial action by Fire Service officers since the last meeting. As on previous occasions, cover of approximately 50% had been maintained. On New Year’s Eve a local agreement had
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been invoked when a fire started at the Great Hospital in Norwich, and fire fighters had left their picket lines and attended the incident. Finally, the Cabinet Member noted that he had attended the first meeting of the new Rehabilitation Board which had been organised by the Police and Crime Commissioner. The Cabinet Member for Schools advised that further to receiving a petition at the previous meeting on the proposal to remove the post-16 transport subsidy he had visited the East Norfolk Sixth Form College. He had also, with the Cabinet Member for Safeguarding, met with Brandon Lewis MP who had advised that no discretionary funds would be made available for this. The Cabinet Member for Safeguarding reported that the expected improvement notice had been received from the Department for Education. This had to be met within six months, with the first stage due in two months. An Improvement Board meeting would be held on January 7th to move this forward. The Chairman passed congratulations to all residents of Norfolk and Suffolk who had received honours in the New Year’s Honours list.
8. Norfolk County Council 2013-14 Revenue Finance Monitoring Report Month 8 The Cabinet received a report (item 8) which gave details of the latest monitoring position for the 2013-14 revenue budget, the general balances forecast at 31 March 2014 and forecast the Council’s Reserves at 31 March 2014. The Interim Director of Finance advised that there had been two main changes since the report in December 2013; an £11m earmarked reserve had been created in case planning permission was denied for the residual waste treatment contract and extra costs with regard to recycling and the park and ride service had been incorporated. General balances were now at the set level of £16m meaning that there was no room for manoeuvre in 2013-14. The Cabinet Member for Adult Social Services noted that the County Council’s debt analysis of debt 31-60 days old showed an increase from £3.099 at 31 October 2013 to £6.072 at 30 November 2013. The Head of Budgeting and Financial Management explained that this was due to the creation of Clinical Commission Groups and the collection of debt from the NHS. He was aware of the issue, it was being closely managed and he would update the Cabinet Member. Decision RESOLVED that:-
1. The forecast overspend at the end of November 2013 of £0.132m be noted
2. The creation of the £11m Residual Waste Treatment Contract reserve as set out in paragraph 2 of the Cabinet report be noted.
3. The extent to which actual growth has compared with budget assumptions as set out in paragraph 4.4 of the Cabinet report be noted.
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Alternative Options: Refer to the Cabinet report. Reason for Decision Having set a budget at the start of the financial year, the Council needed to ensure its delivery within allocated and available resources which in turn underpinned the financial stability of the Council. Consequently there was a requirement to regularly monitor progress so that corrective action could be taken when required.
9 Norfolk County Council Capital Monitoring Report Month 8 The Cabinet received a report (item 9), which presented the progress to date against the Council’s Capital Programme at the end of November 2013 on a service by service basis.
The Interim Head of Finance noted that the movement of the capital programme across
the year had been disappointing and that work was being carried out on ensuring that the capital programme would be better controlled in future. Unsupported capital expenditure had now been analysed between spend to save schemes and economic regeneration. Overall the capital programme was proceeding and would spend around £130m in 2013-14.
The Chairman noted that problems created in the past were now being rectified but that it
would take time to completely turn things around. A new commercial approach had commenced which would be reflected shortly in the capital programme.
The Cabinet Member for Finance, Corporate and Personnel advised that the County
Council had in the past specified what needed to be achieved but had not supplied the resources necessary to obtain results and so outcomes had not been as expected. The new format of the report gave a lot more information and demonstrated why changes had been required. This would inform the quality of the decisions made when budget setting was in process. Decision
RESOLVED that:-
1. The re-profiling between 2013/14 and 2014/15 and other adjustments to the programme totalling £35.309m as summarised in Table 2 and detailed in Appendix 3 of the Cabinet report be agreed.
2. The reduction in schemes shown in Table 3 of the cabinet report, demonstrating the improved profiling of existing schemes between years, be noted.
3. The associated changes to funding in the programme summarised in Table 4 of the
Cabinet report be agreed.
4. The details of savings and benefits to be generated from spend-to-save schemes as set out in Appendix 2 of the Cabinet report and the alternative ways of funding these projects be noted.
Alternative Options: Refer to the Cabinet report.
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Reason for Decision Having set a capital budget and programme at the start of the financial year, the Council needed to ensure its delivery within allocated and available resources. Consequently, there was a requirement to regularly monitor the status of the programme including re-profiling, amendments and additions, and the on-going funding of the programme.
10. Provisional Local Government Finance Settlement 2014-15 The Cabinet received a report (item 10), which set out the key announcements and
changes to the Council’s funding forecasts based on the provisional finance settlement. In relation to the County Council’s plans, the funding settlement was £0.295m higher than expected in 2014-15 and £0.464m less in 2015-16.
The Interim Head of Finance advised that there were still a great number of uncertainties
regarding the financial settlement for the forthcoming year due to changes in grants, settlements, business rates and capital receipts. Assumptions had been made in relation to the financial settlement, but until a final grant and the outcome of the planning enquiry into the residual waste treatment contract were received, two planning scenarios had been made. If planning permission for the site was denied then the County Council would be faced with additional costs.
The Cabinet Member for Finance, Corporate and Personnel confirmed that two scenarios
had been planned for but that in either case the Authority would not win financially as both short term and longer term difficult decisions would have to be faced. If planning permission was granted there would be some scope available though.
The Cabinet Member for Schools stated that if planning permission was obtained he would
like to look at reinstating the post 16 transport subsidy as the public consultation had demonstrated there was still a great need for this.
The Cabinet Member for Adult Social Services and Cabinet Member for Safeguarding both
confirmed that if planning permission was granted and some leeway was found within the budget they also had areas in the Putting People First consultation which they would like to reconsider, such as personal budgets and children in care respectively.
Finally the Cabinet Member for Public Protection agreed that these were difficult times but
that Cabinet was united in putting people facing services first where possible. These were difficult times though and there would be no room for manoeuvre if the Secretary of State did not grant planning permission. Decision
RESOLVED to note the changes to funding announced within the Provisional Local Government Finance Settlement, that these changes will be reported to Overview and Scrutiny Panels as part of the service and budget planning process, and that the Council will respond to the consultation. Alternative Options: Refer to the Cabinet report.
11. Discretionary Bus Passes and Available Walking Routes
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The Cabinet received a report (item 11), which outlined the financial and non-financial implications of any change to the policy across Norfolk of withdrawing free bus provisions for children living less than three miles from their school. This followed a motion put to full Council on 16 September 2013 to reverse this decision. The Cabinet Member for Schools noted that the report set out very clearly that, as walkways were made fit for purpose, the provision of free transport would be removed. This policy was consistent across the county. The Cabinet Member for Public Protection asked whether officers were assured that route assessments were consistent and met all necessary criteria. The Assistant Director – Travel and Transport confirmed that there was a consistency and equality along all routes and that criteria was rigorously applied. Free transport would only be removed when the walking route was up to standard and parents would always be given at least a terms notice and would also be offered travel advice. In many cases the transport was still available and parents could opt to pay for it. Decision RESOLVED that:-
1. The financial impacts of changing the school transport policy and method of implementation be noted.
2. The current school transport policy is fit for purpose and that the County Council
continue the on-going programme of route reviews and capital investment so that more children can walk or cycle to school.
Alternative Options: Refer to the Cabinet report. Reason for Decision The Council had a funding gap of £189m over the next 3 years and a continuation of the policy of reviewing unavailable walking routes, improving routes where necessary and withdrawing free school transport would contribute towards the Council’s savings target.
12. Joint Core Strategy for Broadland, Norwich and South Norfolk The Cabinet received a report (Item 12) which reported on progress on the Joint Core Strategy (JCS) for Broadland, Norwich and South Norfolk and asked Cabinet to endorse the strategy. The Cabinet Member for Public Protection noted that as a district councillor he had not supported the joint core strategy but as a county councillor he endorsed it. The Cabinet Member for Safeguarding, also a district councillor, supported this view. The Cabinet Member for Corporate, Finance and Personnel stated that this was a great achievement and congratulated the officers who had been involved. He noted that the local community had been extensively consulted, the process had been fully scrutinised, and that the strategy should be celebrated.
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The Cabinet Member for Environment, Transport, Development and Waste advised that he had had doubts about the strategy but was now happy to endorse it. The Cabinet Member for Economic Development supported the comments from the Cabinet Member for Corporate, Finance and Personnel and confirmed that she was happy to support this. Decision
RESOLVED that progress on the Joint Core Strategy for Broadland, Norwich and South
Norfolk be welcomed and that the district councils’ decisions to adopt the part JCS be endorsed. Reason for Decision Positive engagement in partnership working and in the decisions on the JCS demonstrated co-operation across the area, aiding both the planning process and the investment decisions that flowed from it. The adoption of the part JCS would provide full strategic plan coverage across the Greater Norwich area providing for sustainable development and bringing welcome certainty for economic development, investment decisions and infrastructure delivery
13 Great Yarmouth Borough Surface Water Management Plan
The Cabinet received a report (item 13), which provided a summary of the process and findings of the Great Yarmouth Borough Surface Water Management Plan (SWMP). Officers advised that this was the third plan produced for Norfolk, having already written one for Norwich and King’s Lynn. Although the plan did not consider the affect of coastal flooding, the mapping had proven useful when managing the response to the recent storm surges. The Cabinet Member for Schools supported the plan. He was pleased to note that it involved all agencies and councils as this would increase the chances of staving off the effects of flooding. The Cabinet Member for Economic Development also supported the plan. As a Borough Councillor in Great Yarmouth she noted that drainage was a problem in Great Yarmouth, especially in rural areas, and that dealing with this would help to manage surface water effectively. Decision RESOLVED that the Great Yarmouth Borough Surface Water Management plan be adopted. Alternative Options: Refer to the Cabinet report. Reason for Decision To support continued engagement with communities involved in the development of the SWMP.
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To support funding bids for flood mitigation measures and property protection To keep momentum of SWMP with partners and Risk Management Authorities
14 Exemption to Contract Standing Orders for Compass Provision The Cabinet received a report (item 14), which advised that an exemption to Contract Standing Orders to extend the Compass contract for a period of 12 months has been granted from the Assistant Head of Procurement and Head of Law. The Compass Centres provided full-time educational provision for children and young people at Key Stages 2 and 3 who have severe and challenging behavioural and mental health difficulties. Officers advised that this would go out to open tender in the future. However as this was managed in partnership with the health service it would not be sensible to do this until changes to joint commissioning arrangements had been completed in September 2014. Decision
RESOLVED to note the report. Alternative Options: Refer to the Cabinet report.
15 Great Yarmouth VA High School Partnership proposal for the provision of accessible playing fields The Cabinet received a report (item 15), which sought Cabinet approval for the County Council to work with Great Yarmouth Borough Council and the school to mitigate the lack of immediately accessible playing fields for school use. This would involve an initial programme of activity between the partners to assess the viability of a scheme to develop a public recreational area near the school, enabling the school to cease use of its own, more distant playing field. The Cabinet Member for Schools advised that currently the school had a capacity of less than 1000. This would have to be increased to 1400 in order to meet expected demand and this work would allow for that to happen. The field would be kept in trust so would still be available for the public to use. In addition the scheme would create an additional playing field in Great Yarmouth North, which currently did not have one. Finally he noted that the County Council was not directly involved with the procurement of land but had to ensure that adequate educational places were available. The Cabinet Member for Economic Development supported the recommendation. Decision
RESOLVED that the proposals for further investigations (set out in para 2.4 and 2.5 of the Cabinet report) be approved and that its support be offered to the partners. Alternative Options: Refer to the Cabinet report. Reason for Decision
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To create synergy between partners to seek a positive resolution of the site, playing field and accommodation restrictions at Great Yarmouth VA High School.
16 Norse Group Update 2013-14
The Cabinet received a report (item 16), which outlined the results of the Norse Group Ltd for the first half of the financial year 2013-14. The Managing Director of Norse reported that the cash balances showed an increase of £5.8m. In 2014-15 Norse would be spending £40m on new capital investment, the majority of which would be in Norfolk. Work was currently proceeding to start a joint venture with Newport Council; this would be the first venture in Wales for Norse. It was expected that there would be 120 apprenticeships offered across the Norse group in 2014-15, 40% of them from the NEET (not in education, employment or training) sector. The outlook was positive and a 10% growth in business was expected within the next year. The Cabinet Member for Adult Social Services asked whether Norse, when bidding, looked at expanding in new areas or whether they looked to grow further in areas which they were already established in. In addition she asked whether Norse would dilute its strengths by branching out into new areas. The Managing Director responded that the company was wary of over stretching itself but that a 10% growth was not excessive in one year. He noted that it could be challenging to manage other areas from Norfolk but that this was an accepted situation and was managed well. Finally he stated that Norse only accepted business that it was familiar with generally but that it would diversify on a small scale when necessary, to reduce the risk of failure. Finally the Chairman congratulated Norse on its successes. Decision
RESOLVED that the on-going growth in the business and the benefits the Company continues to bring to the Norfolk economy be noted. Alternative Options: Refer to the Cabinet report.
17 Appointments to Committees (Standing Item) There were no changes made.
The meeting closed at 11.45am.
CHAIRMAN
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Appendix A 5 PUBLIC QUESTIONS
5.1 Two questions from Mr John Martin
a) In his letter of 30 November 2013 to the Communities Secretary, the Leader referred to a
funding plan being in place that accounted for the withdrawal of the waste infrastructure credits by Defra. Can the Leader explain exactly what that funding plan is? Response by Mr George Nobbs, Leader of the Council Very simply the only way in which the gap left by the loss of the waste infrastructure credits can be filled is by the Norfolk Council Tax Payer. In February Full Council will have to decide whether to meet that gap by increasing Council Tax by 2% or by cutting an extra £6 million from services that are already desperately stretched. Either way Norfolk Council Tax payers need to know that the actions of DEFRA, following strong lobbying from the likes of Henry Bellingham MP, Elizabeth Truss MP, KLWIN and others such as yourself have cost every Norfolk Council Tax Payer 2% of their current Council Tax Bill every year for the next 25 years.
b) I refer to the letter written on 11 October 2013 by Mark Allen to Defra. Has NCC since asked Defra whether it would pay compensation to NCC for sunk commissioning costs in the event of NCC now abandoning the waste incinerator contract?
Response by Mr David Harrison, Cabinet Member for Environment, Transport, Development and Waste.
Defra has confirmed that it has no plans to compensate Norfolk County Council following the decision announced on 18 October.
5.2 Two questions from Mrs Carolyn Martin
a) Is any individual NCC officer who, himself or herself, owns and/or controls a company paid by NCC for his or her services through the medium of that company rather than directly and so subject to deduction of income tax and national insurance contributions?
Response by Mr Steve Morphew, Cabinet Member for Finance, Corporate and Personnel.
No County Council employee is paid without the requisite deductions of tax and NI being made. However, those undertaking interim roles may be paid in the way you describe. In those circumstances, there is no contract of employment between the County Council and the individuals. The County Council makes payments to the agency or company through whom the services have been procured. Any tax or other liabilities are a matter for the company and not the County Council.
b) If so, please identify all such individuals.
Response by Mr Steve Morphew, Cabinet Member for Finance, Corporate and Personnel. There are no employees paid in the way you describe.
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5.3 Two questions from Mr Ron Cornell
a) Why did the Cabinet keep quiet about the offer of £9.9m from Hans House/Artemis rather than seeking professional advice on it and then debating it in a Cabinet meeting open to the public?
Response by Mrs Colleen Walker, Cabinet Member for Economic Development. It did not. Coltishall was not purchased by the previous administration simply to be resold. However, in order to clarify this matter, NCC has only ever received an informal offer via an email from Artemis/Hans House in which they outlined their offer to purchase a 150-year leasehold interest in the site for £9.985M. However, they would require NCC to rent back the land only at £650,000 per year for 25 years, which would equate to NCC paying £16.250M over that period. In addition, Artemis/Hans House would require £2.075M of capital from NCC to promote the site and repair the buildings, but Artemis/Hans House would receive all the income from leasing the buildings. The offer was, therefore, not as it has been portrayed and was not the basis for any serious consideration. As stated above, Coltishall was not purchased by the previous Administration simply in order to be re-sold. I refer you to statements made by the then Leader of the Council, Derrick Murphy, and the then Cabinet member, Cliff Jordan. If the Council was minded to dispose of its interest in the former RAF Coltishall, it would be required to offer it on the open market rather than negotiate with a single purchaser. The decision to consider selling the site could be openly debated at Cabinet but not individual offers, the details of which would be commercially sensitive and, therefore, confidential.
b) Has the Cabinet considered the impact on local residents of eighteen months of aggregate extraction, even if planning permission for that operation is granted?
Response by Mrs Colleen Walker, Cabinet Member for Economic Development.
Yes, as I’m sure our predecessors in the previous Administration did at that time.
5.4 Two questions from Miss Jenny Perryman
a) NCC website claims “Norfolk’s waste strategy has been very successful. Just over 44% of Norfolk’s household rubbish was recycled in 2012/13 (an increase from 35% in 2005/06).” Despite claiming “waste management and recycling is a top priority for Norfolk,” predictions are merely to achieve the minimum 50% requirement for 2020. Suffolk exceeded this with 53.78% during 2010/11 and set a target to achieve 60% by 2015. The Environment & Waste Service Plan for 2013-14 does not even mention recycling targets for Norfolk. Why is NCC content to lag way behind the better performing counties, lacking any purposeful drive or ambition to increase recycling rates in Norfolk?
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Response by Mr David Harrison, Cabinet Member for Environment, Transport, Development and Waste
Reduction in collected waste is at the heart of Norfolk’s strategy and, according to Government figures, 435kg/person was collected in 2012/13. This compares favourably with Suffolk’s 454kg. The challenge then is to recycle what we can from what is collected. The 44% recycling and composting rate achieved in 2012/13 (Suffolk was 52%) is an amalgamation of that achieved by Norfolk’s seven waste collection authorities, the County Council at its 20 recycling centres and also any third party (charities, parish councils, voluntary organisations etc) recycling that takes place on which the County Council pays recycling credits. Whilst Government no longer place statutory recycling targets on local authorities, the eight Norfolk authorities are always looking for ways in which recycling performance can be improved, whilst at the same time being mindful of the costs to the Council Tax payer of doing so. Since the 2012/13 figures were released King’s Lynn and West Norfolk Borough Council has introduced food waste collections and Broadland have extended their existing scheme to incorporate extra households. Additionally, new kerbside arrangements for dry recycling are due to be introduced in October 2014. All of which is expected to increase Norfolk’s countywide recycling rate to above 50%.
b) According to NCC’s website “Council taxpayers had to find £13m just for the county’s landfill tax bill in April 2012.” Given they are looking for savings to be made and landfill decreased, why are NCC not committed to saving money in landfill costs by having plans in place for all Councils to follow the waste hierarchy, when over 35,000 tonnes of food waste across the whole county could be separated and composted?
Response by Mr David Harrison, Cabinet Member for Environment, Transport, Development and Waste
The County Council is always looking for financial savings and decreasing landfill. However recycling is largely at the discretion of Norfolk’s seven waste collection authorities through their kerbside collection services. The County Council provides financial support to these services through its Recycling Credit scheme, of which approaching £7m is expected to be paid in 2013/14. With regard to kitchen waste collections, Norwich City and King’s Lynn Councils already have schemes in place, as have Broadland for part of their area. You may be interested to know that these 3 councils are expected to collect around 8,400 tonnes in total of kitchen waste this year.
5.5 Two questions from Mrs Christine Hall
a) On Radio Norfolk on June 28th, in reference to the QC’s reports and the distrust and ill-feeling felt by the people of West Norfolk towards NCC, the newly elected Leader said: “if it will convince people, that people have been telling the truth, that’s money well spent” and “if it costs £100,000 to convince them that that’s not happening that’s money well spent,” which rather implied a forgone conclusion. Since officials would hardly risk commissioning a report that would implicate themselves, thereby keeping to a very narrow remit, have NCC simply attempted to go through a very expensive and appeasing PR exercise?
Response by Mr George Nobbs, Leader of the Council
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I do not for one second accept the premise of your question. However, may I refer you to the QC’s report, where he clearly states (Section 144) that: “I have been careful to engage as little as possible with my Instructing Solicitors. Equally, my Instructing Solicitors have been careful to do no more than to answer my questions and to leave me to form my own view on the material which has been provided to me. He concludes that: “I can find nothing to lead me to conclude that any undue risk was taken. I can identify no areas in which I can see potential scope for the holding to account of Officers. I have seen nothing which would enable me to conclude that the Cabinet exceeded its authority in authorising the Contract.”
b) During that broadcast Cllr Nobbs also spoke of the need to restore trust in Norfolk and the feeling that the councillors had not been straight, yet less than a month after being elected as Leader of NCC, and despite his Labour Party Manifesto, he had already written to Owen Patterson and the CLG over the potential withdrawal of the PFI, pledging Norfolk’s commitment to the incinerator proposal. The close RPP vote showed that opposition is no longer contained in the West and this issue is now effectively shattering Norfolk. In what way does Cllr Nobbs believe his actions since becoming Leader have improved the trust, ill-feeling and chaos?
Response by Mr George Nobbs, Leader of the Council
In the 7 months since my election my Administration has been transparent in our actions. We have openly and honestly consulted with the public through the “Putting People First” consultation around services and the budget. We have openly tackled issues around the quality of care delivered to residents because at one point the service offered was not acceptable. We have committed significant resource to ensuring that Norfolk starts to adequately care for children at risk, and have committed to a comprehensive programme to seek to raise educational standards. We have opened up to independent scrutiny the process whereby our predecessors entered into the Willows contract, and the huge immediate costs of scrapping that contract. As if that were not enough, we have ensured there has been a full debate on the specific issue of the Cory Wheelabrator contract in which there was a free vote for every councillor. I believe that our approach is markedly different from our predecessors and I think that residents in Norfolk now have more confidence in Norfolk County Council because of that approach.
Finally, may I refer you yet again to the conclusions of the QC’s report.
6. MEMBER QUESTIONS
6.1 One question from Cllr Martin Wilby
a) When will NCC start to see a return on it’s investment from the Coltishall Airfield Site? Response by Mrs Colleen Walker, Cabinet Member for Economic Development Planning applications are being prepared and in some cases have already been submitted. The outline five year business plan envisaged the recovery of the capital costs of purchase within that period mainly through housing land sales and sale of recovered
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aggregate. Detailed preparatory work is on-going in both these regards and it is expected that the first capital receipts will be received in 2014/15. Work is on-going to develop new business and employment opportunities on the site. The business plan will continue to be reviewed to set out projections for future revenue incomes. Mr Wilby, as his supplementary question, noted that he was pleased to have been advised of what was happening, and asked that Members and the public be kept updated with any significant developments. The Cabinet Member for Economic Development confirmed that she could give her assurance that this would happen.
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Report to Cabinet 27 January 2014
Item No 8
Norfolk County Council 2013-14 Revenue Finance Monitoring Report Month 9
Report by the Head of Finance (Interim)
Summary This report gives details of the latest monitoring position for the 2013-14 Revenue Budget, General Balances forecast at 31 March 2014 and forecasts for the Council’s Reserves at 31 March 2014. Recommendations Cabinet is recommended to:
• note the forecast overspend at the end of December 2013 of £0.434m;
• note that the projected overspend can be contained within general balances above the minimum level and does not impact on the 2014-15 budget proposals;
• approve the creation of a Children’s Services Improvement Reserve as set out in paragraph 5.2;
• note the latest estimated costs of the recent tidal surge and flooding in Norfolk as set out in paragraph 2.10.
1 Summary of financial monitoring position
1.1 At the end of November:
• Revenue expenditure is forecast to overspend by £0.434m on a net budget of £302.587m. The chart below shows the month by month trend.
Chart 1: forecast revenue outturn 2013-14, by month to month 9
• General Balances are forecast to be £16.811m at 31 March 2014, before taking into account the forecast overspend of £0.434m.
• The Council has Reserves which are forecast, at 31 March 2014, to be £65.790m, plus the new Residual Waste Treatment Contract Reserve of £11m. The Reserves include a new £1.5m Children’s Services Improvement Reserve as described in paragraph 5.2. The Council separately holds Reserves in respect of Schools which are forecast to be £38.232m at 31 March 2014.
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2 Agreed budget, changes and variations 2.1 The 2013-14 budget was agreed by Council on 18 February 2013 and is
summarised in Appendix 1. The budget is monitored in accordance with the timetable at Appendix 2.
Table 1: 2013-14 original and revised net budget by service
2.2 The only change to net service budgets shown above is the result of a final
adjustment relating to the Cabinet decision on 2 December 2013 to create an earmarked reserve. There were no other changes to net service budgets during December 2013.
2.3 Significant new in-year revenue grants over £100,000 are listed in Appendix 3. 2.4 Chief Officers have responsibility for managing their budgets within the amounts
approved by County Council. They have been charged with reviewing all of their cost centres to ensure that, where an overspend is identified, action is taken to ensure that a balanced budget is achieved for the year.
2.5 Based on the position at the end of December the latest projection for the 2013-14
revenue budget shows a net projected overall overspend of £0.434m. 2.6 The revenue projections in Table 2 below show an increase in the projected
overspend, compared with a projected overspend of £0.132m last month. The increase is shared between Children’s Services and Environment, Transport and Development, and are the net effect of a number of forecast changes which are listed towards the end of Appendix 4.
2.7 Details of all projected under and over spends for each service, together of areas
where mitigating action is being taken, are shown in Appendix 4, and are summarised in the following table:
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Table 2: 2013-14 projected budget variations by service
Service Revised Budget
£m
Projected outturn
£m
Projected (under)/
over spend £m
%
Projected (under)/
over spend previous month
£m
RAG
Children’s Services 176.873 177.981 +1.108 +0.63 +0.934 A Community Services 273.226 273.226 0 0.00 0.000 G Environment, Transport and Development
115.922 117.619
+1.697 +1.46 +1.535 A
Fire and Rescue Service 29.156 29.156 0 0.00 0.000 G Resources 47.464 47.779 +0.315 +0.66 +0.315 G Finance General -340.054 -342.706 -2.686 n/a -2.652 G Totals 302.587 303.055 +0.434 +0.14 +0.132
2.8 The following chart shows service outturn projections reported to Cabinet by month:
Chart 2: service revenue outturn projections 2013-14, by month to month 9
2.9 The projected outturn in Table 2 above does not take into account unavoidable costs
associated with the recent flooding in Norfolk. 2.10 Additional service costs incurred by the Council as a result of the tidal surge and
flooding are currently estimated at approximately £252,000, as set out in the following table:
Table 3: Additional service costs associated with the recent tidal surge and flooding
Service Total estimated costs £m
Environment, Transport and Development – clearing highways, pavements and footpaths of tree branches and other obstructions, unblocking and clearing debris from drains and watercourses, erection and maintenance of road closures and inspection of bridges.
0.102
Fire and Rescue Service – provisions, fuel and accommodation to support combined emergency services in affected areas. Costs include overtime and retained fire fighters’ turnout fees.
0.150
Totals 0.252
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2.11 The “Bellwin scheme” is a response to incidents such as abnormally bad weather and covers expenditure, within 2 months, in connection with the taking of immediate action to safeguard life or property, or to prevent suffering or severe inconvenience.
2.12 The scheme is administered by the DCLG to give emergency financial assistance to
local authorities although there is no automatic entitlement. Payments are 85% of eligible expenditure above a published threshold, the threshold for Norfolk County Council being £2.1m.
2.13 Although the Council’s eligible expenditure is not likely to exceed the threshold,
officers have asked the DCLG for support below the threshold, and will be supporting combined action by local authorities.
2.14 The figures in the table above are subject to on-going collation and analysis, and will
be reported in more detail to the March Cabinet.
3 Control of growth and external cost pressures 3.1 The key planning assumptions made during the preparation of the 2013-14 budget
are shown in Appendix 5 along with a narrative showing outcomes in each of these areas.
3.2 In the majority of cases the planning assumptions have been, or are expected to be
realised. Looked After Children, and Waste and Recycling remain areas of budgetary pressure and these are reflected as a projected overspend in Appendix 4. The latest forecast for Purchase of Care for people with Learning Difficulties has shown that the additional provision was not required, and the current year’s underspend indicates a reduction to the estimated provision for future years. This is reflected in the proposed 2014-15 Budget.
4 Treasury management, payment performance and debt collection 4.1 Treasury management: the corporate treasury management function ensures the
efficient management of all the authority’s cash balances. A detailed update, including the latest position regarding Icelandic bank accounts, is included as Appendix 6.
4.2 Payment performance: approximately 450,000 invoices are paid annually. In
December 2013, 97.7% were paid within a target of 30 days from receipt against a target of 90%. An analysis is shown in Appendix 7.
4.3 Outstanding debt: the value of outstanding debt is continuously monitored and
recovery procedures are in place to ensure that action is taken to recover all money due to Norfolk County Council. An analysis of the amounts due to the Council, including average debtor days, is included at Appendix 8.
4.4 For the period since 1 April 2013, 661 debts less than £10,000 have been written off
following approval from the Head of Finance. These debts totalled £232,012.60. Three debts over £10,000 have been written off following Cabinet approval. These debts totalled £34,337.10.
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5 Resource implications 5.1 On 18 February 2013 Council agreed the recommendation from the Head of Finance
that a minimum level of General Balances of £16m be held in 2013-14. As at 31 October 2013, General Balance levels at 31 March 2014 are estimated as follows.
Table 4: forecast general balances
£m Actual General Balances at 31 March 2013 22.694 Less 2012-13 underspend to be used in 2013-14 as approved by County Council 18 February 2013
-1.159
Transfer from forecast 2012-13 underspend on Finance General in respect of County Council elections in May 2013
-0.650
2011-12 underspend to be used in 2013-14 in respect of Norfolk Citizenship approved by County Council 13 February 2012
-0.074
Transferred to Waste Contingency Planning earmarked reserve
-4.000
Latest forecast General Balances at 31 March 2014 16.811
The forecast does not take into account the projected overspend of £0.434m.
5.2 A new £1.5m Children’s Services Improvement Reserve has been created. This
relates to the Cabinet decision on 5 August 2013 to approve a package of additional finance to support frontline services for children and young people. The package of support is for strengthening safeguarding services and school improvement, and the full amount of the reserve is forecast to be spent in 2014-15.
5.3 This new reserve is included in the totals in Table 5 below. The creation of this
reserve does not affect the net service budgets reported above.
5.4 A reserve is an amount set aside for a specific purpose in one financial year and carried forward to meet expenditure in future years. The Council carries a number of reserves with totals as follows:
5.5 The forecast indicates a significant use of reserves in 2013-14 and has been
adjusted for the creation of the £1.5m Children’s Services Improvement reserve described above.
5.6 Non schools reserves are forecast to decrease due to significant forecast reductions
in the majority of large reserves.
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5.7 The decrease in forecast schools’ reserves is accounted for by a reduction in LMS balances due primarily to anticipated academy conversions and forecast use of balances in-year, plus a reduction of £2m in Schools Contingency to fund provision of Special Education Needs.
5.8 A full list of reserves can be found in Appendix 9. This appendix also lists the
Council’s accounting provisions, which are amounts put aside to fund future liabilities or losses which are certain or very likely to occur, but where the amounts or dates when they will arise are uncertain.
6 Equality impact assessment 6.1 This report is not directly relevant to equality, in that it is not making proposals that
will have a direct impact on equality of access or outcomes for diverse groups.
7 Section 17 Crime and Disorder Act 7.1 There are no specific implications for crime and disorder reduction. However, many
of the indicators included in this report have indirect implications for crime and disorder reduction.
8 Alternative options 8.1 Cabinet may wish to review and amend the approved budget.
9 Reasons for decision 9.1 Having set a budget at the start of the financial year, the Council needs to ensure its
delivery within allocated and available resources which in turn underpins the financial stability of the Council. Consequently there is a requirement to regularly monitor progress so that corrective action can be taken when required.
10 Risks 10.1 The Prudential Code requires regular monitoring to be undertaken in-year against
key indicators. Monitoring of the 2013-14 approved Prudential Indicators has highlighted no significant deviation from expectations.
11 Environmental implications 11.1 There are no environmental implications.
12 Recommendations
Cabinet is recommended to:
• note the forecast overspend at the end of December 2013 of £0.434m;
• note that the projected overspend can be contained within general balances above the minimum level and does not impact on the 2014-15 budget proposals;
• approve the creation of a Children’s Services Improvement Reserve as set out in paragraph 5.2;
• note the latest estimated costs of the recent tidal surge and flooding in Norfolk as set out in paragraph 2.10.
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Officer Contact If you have any questions about the matters contained in this paper please get in touch with: Name Telephone Number Email address Peter Timmins 01603 222400 [email protected] Harvey Bullen 01603 223330 [email protected]
If you need this report in large print, audio, Braille, alternative format or in a different language please contact Howard Jones on 01603 222832 or textphone 0344 8008011 and we will do our best to help.
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Appendices
Appendix 1: Approved budget Appendix 2: Monthly timetable Appendix 3: Changes to budget Appendix 4: Projected outturn for each service Appendix 5: Planning assumptions Appendix 6: Treasury management Appendix 7: Payment performance Appendix 8: Debt collection Appendix 9: Reserves and provisions
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Appendix 1
Approved budget 2013-14
Agreed by Council 18 February 2013
Approved budget Analysis by service £m
Children’s Services 176.637 Community Services - Adult 257.454
Community Services - Cultural 16.980 Environment, Transport and Development 116.609 Fire and Rescue Service 29.556
Resources 48.933
Finance General -343.582 Total net expenditure 302.587 Funded by Council tax precept -300.205 Council tax surplus on collection -2.382
Total -302.587
Subjective analysis Expenditure
Employees - teachers 241.911
Employees - others 349.047
Repairs and maintenance 19.110
Energy costs 7.417
Premises other 33.404
Transport Related Expenses 55.804
Equipment, furniture and materials 23.253
Other Supplies and Services 94.530
Third Party Payments 470.731
Transfer Payments 6.242
Support Services 43.243
Capital Financing 124.116
Contribution to Reserves 4.738
Total Expenditure 1,473.545
Income
National Non Domestic Rates -338.980
Government Grants -517.674
Other Grants, Reimbursements etc. -85.643
Customer & Client Receipts -102.001
Interest Receipts -1.784
Other Income -124.876
Total Income -1,170.958
Net expenditure 302.587
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Appendix 2
Budget monitoring timetable 2013-14
Accounting
Period Accounting Month
Period End Report to
Chief Officers for comments
MEMBERS & PUBLIC circulation
CABINET meeting
April 30-Apr
May 31-May
June 30-Jun 19-Jul 26-Jul 05-Aug
July 31-Jul 16-Aug 23-Aug 02-Sep
August 31-Aug 20-Sep 27-Sep 07-Oct
September 30-Sep 18-Oct 25-Oct 04-Nov
October 31-Oct 15-Nov 22-Nov 02-Dec
November 30-Nov 17-Dec 24-Dec 06-Jan
December 31-Dec 10-Jan 17-Jan 27-Jan
January 31-Jan 14-Feb 21-Feb 03-Mar
February 28-Feb 14-Mar 21-Mar 07-Apr
March 31-Mar 25-Apr 02-May 12-May
Outturn 22-May 30-May 10-Jun
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Appendix 3
In-year Grant Funding No new grants over £100,000 have been announced in December 2013. The following table summarises revenue grants greater than £100,000 announced and due to be received in 2013-14
Table A3: New grant funding > £100,000 since 1 April 2013
New Grant Funding
Details £m
DfE Lacseg refund for school support
Repayment of sums previously top-sliced from authorities.
2.287
Troubled Families Grant
Allocation from a national programme to address the needs of families experiencing multiple problems.
1.303
Adoption Reform Grant
One off grant is to provide support to local authorities towards expenditure on adoption services.
2.410
Social Enterprise Investment Fund (SEIF)
Conditional Social Enterprise Investment Fund grant to support the setting up of social enterprises.
0.190
Bus Service Operators Grant
Grants previously paid direct to bus operators will, from January 2014, be paid to the local authority.
0.266
PE and Sports Unconditional new grant for improvement of PE and sports in schools: £1.866m. The grant is to fund improvements to the provision of PE and sport, for the benefit of pupils aged 5-11, in the 2013 to 2014 academic year so that all pupils develop healthy lifestyles
1.866
Total in-year grants > £100,000 8.322
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Appendix 4
Projected revenue budget outturn by service 1 Revenue Expenditure Monitoring
1.1 Chief Officers monitor their cash limited budgets throughout the year and report the
position to the Head of Finance. Chief Officers also monitor performance information for their service, which is reported to Chief Officer Group on a monthly basis and Cabinet on a quarterly basis.
2 Latest Revenue Projections 2.1 Based on the position at the end of November the latest projection for the 2013-14
revenue budget shows a net projected overall underspend analysed as follows:
Table A4: projected revenue over and (under) spends by service
Service Revised Budget
£m
Service total
projected overs
spend £m
Service total
projected (under) spend
Net total over /
(under) spend
%
Children’s Services 176.873 +9.536 -8.428 1.108 +0.63 Community Services 273.226 +6.260 -6.260 0 0.00 Environment, Transport and Development
115.922 2.303 -0.606 1.697 +1.46
Fire and Rescue Service 29.156 +0.561 -0.561 0 0.00 Resources 47.464 +0.315 0.000 0.315 +0.66 Finance General -340.054 +4.200 -6.886 -2.686 n/a Totals current month 302.587 23.175 -22.741 0.434 0.14
Previous month 302.587 21.947 -21.815 0.132 +0.04
2.2 Although the overall forecast net overspend is relatively small in relation to the
overall budget, the range of underlying forecast over and underspends is greater than last month and continues to be subject to detailed monitoring.
2.3 Chief Officers have responsibility for managing their budgets within the amounts
approved by County Council. They have been charged with reviewing all of their cost centres to ensure that, where an overspend is identified, action is taken to ensure that a balanced budget is achieved for the year. The projections for services are summarised below in terms of cumulative changes to and changes since last Cabinet.
38
Appendix 4 continued
Projected revenue budget outturn by service
Projected over
spend
Projected under spend
Change this
month
£m £m £m
Children's Services
Additional Looked After Children Agency costs 2.950 -0.064
Reduced Looked After Children Transport costs -0.165
Additional residence orders and kinship costs 0.500
Reduced social care legal costs -0.430
Delay in recruitment to the MASH project -0.105
Additional Special Education Needs Home to School transport costs
1.201 0.183
Reduced school redundancy costs -0.559 0.100
Reduced business support costs -0.340
Reduced cost of Early Years Services -0.900
Reduced cost of School Crossing Patrol staff -0.100 -0.010
Reduced cost of Integrated Advice and Guidance Services
-0.207
Reduced cost of school sports facilities -0.035
Additional homelessness costs as a result of Southwark judgement
0.110
School Psychologist training subscription no longer required
-0.041
Clinical Commissioning Team - Delay in recruitment and reduced running costs and reduced therapy costs
-0.520 -0.120
Reduced cost of Childrens Centres support -0.204
Savings on Targeted Support Team salary costs -0.240
Reduced costs of social worker training -0.065 -0.065
Additional cost of foster caring 0.800
Additional DSG contribution to Early Years -0.750 -0.250
Additional no OFSTED regulated accommodation for 16/17 year olds
0.400
Savings on computing costs -0.100
Saving from the deletion of education management posts
-0.092
Cost of joint protocol with Community Services to support families with disabilities
0.400 0.400
Use of unconditional grants and contributions reserve -0.400
Dedicated Schools Grant
Reduced cost of school staff maternity -0.080
Additional cost of non-maintained schools education 0.287
Additional cost of Early Years 1-2-1 Special Educational Needs
0.146
Additional cost of school staff redeployments 0.061
Reduced cost of early Years 2 year old infrastructure cost
-0.900
39
Reduced number of Early Years 2 year old places -1.100
Reduced cost of school carbon credits -0.440
Reduced running costs of the Minority Achievement and Attainment Service
-0.100 -0.100
Additional post 16 high needs funding -0.555 -0.555
Contribution to schools contingency fund as a result of the above
2.681 0.655
Forecast outturn for Children’s Services 9.536 -8.428 0.174
1.108
Projected over
spend
Projected under spend
Change this
month
Community Services £m £m £m
Adult Social Services
Director, Finance and Transformation -4.803 0
Commissioning, including Supporting People 1.522 0
Central Services – Business Development -0.076 0
Human Resources, Training and Organisational Development
-0.138 0
Safeguarding -1.095 -0.017
Prevention 1.538 0.017
Income from Service users 3.200 0
Forecast subtotal for Adult Social Services (excluding Community Safety) 6.260 -6.112 0.000
0.148
Community Safety
Underspend due to reduction in posts in the department. -0.148 0.000
Forecast outturn for Community Safety -0.148 0.000
Cultural Services 0.000 0.000
0.000 0.000
Forecast outturn for Community Services 6.260 -6.260 0.000
0.000 0.000
40
Further details for Community Services are as follows: As at the end of period nine (December) the forecast revenue outturn position for Community Services for the financial year 2013-14 is a balanced budget. There are financial pressures in Adult Social Care particularly in Purchase of Care (the purchase of packages of care from the independent sector) and service user contributions towards the cost of their care. This is always closely monitored as it could potentially cause an overspend. The pressures are being offset by the additional income received from Health for Continuing Health Care, underspends and the use of reserves. The expected amount needed to be used from reserves has been reduced over the year as the overall forecast departmental position has improved. In 2013-14 Adult Social Care are making a one-off budget contribution of £1.2m and Cultural Services are making a one-off budget contribution of £0.100m towards the residual waste treatment contract reserve. Director, Finance and Transformation The increase for 2013-14 in Additional NHS funding for Social Care (-£3.332m) is being held here and will be allocated to the appropriate service areas in line with the s256 with NHS England when it is finalised. The forecast includes the following that it is expected to be used from reserves in 2013-14: £-0.340m from the Legal Liabilities reserve, to offset the purchase of care costs from funding aftercare under s117 of the Mental Health act; and £-1.000m from the Prevention reserve, to mitigate the risks in delivering the prevention savings, particularly in service level agreements. Commissioning, including Supporting People Based on expenditure to date there is a forecast overspend on aids and adaptations (the Integrated Community Equipment Service) of +£1.578m. Work is being undertaken to identify why this is and what mitigating actions should be taken. There is a forecast overspend on Service Level Agreements of +£1.197m: the estimated shortfall on savings. Work is ongoing to identify further savings. The above is partly offset by a forecast Supporting People underspend of -£0.720m. The Supporting People underspend represents an earlier achievement than originally budgeted for of the 12% expenditure reduction over the three financial years 2011-14 and includes savings on Mental Health contracts. Central Services – Business Development There is a forecast underspend in Business Support where vacancies are being held whilst the restructuring takes place. This is largely offset by the premises savings target. Human Resources, Training and Organisational Development Forecast underspend on recruitment and advertising and learning and development. Safeguarding This includes all of the Purchase of Care expenditure budgets, the budgets used to buy packages of care from the independent sector for: Older People; People with Learning Difficulties; People with Physical Disabilities; People with Mental Health problems; and Drug and Alcohol. It also includes the Hired Transport budgets, Care and Assessment budgets and Continuing Health Care income budgets.
41
There is a forecast net underspend on Purchase of Care of -£0.706m and hired transport of -£0.350m There are financial pressures in Purchase of Care and this is always closely monitored as it could potentially cause an overspend in Adult Social Care. Prevention Forecast overspend due to:
- Savings budgeted for Assistive Technology/Assisted Living are not being forecast as achieved: the estimated overspend is +£0.739m. A new service was set up in early 2013 to sell the services to people who fund their own care and the budgeted savings were -£0.748m.
- forecast overspend in the Personal and Community Support Service (Independence Matters) of +£0.353m, due to a reduction in Supported People funding and staff costs.
- Meals saving(+£0.291m) not being achieved - Forecast salaries overspend in Emergency Duty Team (EDT) of +£0.098m.
Income from Service Users There is a forecast under-recovery of income from service users contributions towards the cost of their social care of +£3.200m, based on the 2012-13 year end position and including the budgeted increase in income, due to growth in number of service users, in 2013-14 of £1.108m.
42
Projected
over spend
Projected under spend
Change this month
£m £m £m
Environment Transportation & Development Highways Maintenance 0.000 0.200 Highways Network 0.048 Highways Major Projects -0.091 Transport Programmes 0.368 Public Protection – Assistant Director and Admin -0.020 0.006 Business operations – Trading Standards -0.082 -0.031 Consumer Operations – Trading Standards 0.122 0.010 Planning Services 0.086 0.013 Corporate Resilience -0.006 -0.006 Travel & Transport Services – Assistant Director and Admin
0.062 -
Client Services -0.007 - Developer Services -0.123 - Passenger Transport Operations 0.465 - Travel Network -0.023 - Climate Change and Flood Water Management -0.030 -0.030 Landscape and Biodiversity 0.041 - Environment Management -0.005 - Access Development -0.025 - Residual Waste Services 1.095 - Strategic Waste 0.016 - Environment Transport and Development – Business support
-0.194 -
Forecast out-turn for ETD 2.303 -0.606 0.162 1.697 Further Details for Environment Transport and Development are as follow: Highways The Highways services is currently forecasting a net overspend of £0.325m mainly due to the under recovery of expected income, including the expected income from the Traffic Permitting scheme where the implementation of the scheme has been delayed due to government legislation. This has been offset by additional income elsewhere in the service. Public Protection Public Protection are currently forecasting a net overspend of £0.100m due to forecast additional costs with in Consumer Operations – trading standards, due to additional staff and legal costs for pending cases and additional costs within planning services due to additional work required for the Willow planning enquiry.
43
Travel and Transport Services Travel and Transport service are forecasting a net overspend of £0.374m. This is primarily due to under provision of inflation for Transport Contracts and a hike in business rates at Park and Ride sites. The cost pressures are being partially offset by additional income from developer contributions. Environment and Waste The significant pressure within Environment and Waste relates to higher than budgeted waste tonnages. The original budget was based on previous planning assumptions of a continued reduction of residual waste tonnages. However we have seen a plateau of tonnages higher than expected leading to a forecast cost increase of £1.1m. This prediction is calculated using historic trend data based on the mid-point of our current waste data. There remains a risk that tonnages could continue at a higher level which could lead to an increase in the forecast overspend. Business development and support The forecast underspend within Business Development Support is due to the management of vacancies and the control of overheads relating to the department.
Unforeseen repairs to safety tower, and additional spend on Carrow training building off-set by forecast underspends in other building alteration budgets
0.014 -
Increased forecast of commercial training income 0.007 -0.017
Increased forecast ICT hardware charges offset by reduction in direct training costs
-0.017 +0.020
Forecast underspend on legal/medical fees -0.032 -
Increased forecast fire prevention income -0.007 -
Communications – new pressures relating to contractual price increases
0.146
-
Increased forecast vehicle insurance costs offset by increased income from servicing and reduction in fuel costs
-0.065 +0.003
Planned savings on utilities 0.005 +0.005
Forecast underspend in leasing budget offset by other invest to save budgets
0.107
-0.023
Increases in equipment maintenance contract 0.066 +0.010
Community Safety – saving on budget for smoke detector purchase
-0.008 +0.006
Youth Development – shortfall in chargeable income due to a course not running earlier in the year
0.012
-
Additional forecast pressure on expenditure from Grants
0.204
+0.039
Forecast outturn for Fire and Rescue Service 0.561 -0.561 0.000
0.000
44
Projected over
spend
Projected under spend
Change this
month
Resources £m £m £m
Democratic Services - mainly overspend on elections partly offset by underspend on Registrars
Dividend received from Eastern Shires Purchasing Organisation
-0.341
Government refund of 2012-13 amount deducted from formula grant for schools converting to academies
-2.287
Savings on debt repayment due to slippage on the capital programme
-1.240
Investment in Children’s Services announced at Cabinet 5 August 2013 (details below)
4.200
Members Allowances – savings on basic and special responsibility allowance and travel expenses
-0.200
Net forecast outturn for Resources 4.515 -6.886 -0.034
-2.371
Further Details for Finance General are as follow: Interest payable/receivable The 2013-14 interest payable/receivable budget was prepared on the basis that borrowing to support capital expenditure would be undertaken on 1 April 2013. This assumption was made due to the uncertainty/volatility in the financial markets at that time, and to ensure that, in accordance with the treasury management code of practice, treasury management activities are not impacted by short-term budget considerations. Owing to the deferral of borrowing a net interest saving of £6.028m is anticipated. This is as a result of reduced borrowing costs offset by lower interest earned on investments. As a result of a decision at 2 December 2013 Cabinet, £2 m was been transferred to the new Residual Waste Treatment Contract reserve, with a further transfer of £1.210m from 2013-14 savings, resulting in a net forecast underspend of £2.818m. The actual under or overspend within this budget will depend upon the Council’s cash flow requirements and movements on short and long term interest rates.
Investment in Children’s Services announced at Cabinet 5 August 2013
The Investment in Children’s Services announced at Cabinet 5 August 2013 comprised:
• £2.700m to provide 40 frontline agency social workers for six months.
• £1.500m to support school improvement to include the appointment of additional Intervention Officers and Improvement Advisers.
45
Appendix 4 continued
Projected revenue budget outturn by service – details of changes A reconciliation between the underspend previously reported and the current position is set out below:
Addition to over spend/ reduction in
under spend
£m
Addition to under
spend / reduction in over spend
£m
Forecast outturn reported to Cabinet on 6 January 2014 +0.132 Children’s Services Reduced additional Looked After Children Agency costs -0.064 Additional Special Education Needs Home to School transport costs
0.183
Clinical Commissioning Team - reduced therapy costs -0.120 Cost of the joint protocol with Community Services to support families with Disabilities
0.400
Additional reduced cost of Early Years Services -0.250 Lower reduced school redundancy costs 0.100 Reduced cost of social worker training -0.065
Reduced cost of School Crossing Patrol staff -0.010
Dedicated Schools Grant Additional post-16 dsg High Needs funding -0.555 Reduced running costs of the Minority Achievement and Attainment Service
-0.100
Contribution to schools contingency fund as a result of the above
0.655
1.338 -1.164 Net 0.174 Community Services Adult Social Services Safeguarding – increased forecast of income from Health for Continuing Health Care
-0.017
Prevention – additional costs 0.017 +0.017 -0.017 Net 0.000 Environment, Transport and Development Highways Maintenance +0.200
Highways Network
Highways Major Projects
Transport Programmes
Public Protection – Assistant Director and Admin +0.006
46
Business operations – Trading Standards -0.031
Consumer Operations – Trading Standards +0.010
Planning Services +0.013
Corporate Resilience -0.006
Climate Change and Flood Water Management -0.030
+0.229 -0.067 Net +0.162
Fire and Rescue Service Salaries and pensions – mainly adjustment for turn out fees
-0.043
Commercial Training – increase in forecast training income
-0.017
Training and Development – confirmation of ICT hardware costs at training centre
+0.020
Fleet – additional maintenance expenditure +0.003 Supplies – small increase in expenditure +0.005 Finance – confirmed reductions -0.023 Technical Services –increase in equipment costs +0.010 Community Safety – small increase in expenditure +0.006 Grants – additional forecast expenditure on vehicle repair costs
+0.039
+0.083 -0.083 Net 0.000 Resources and Finance General Interest payable / receivable forecast adjustment -0.034
-0.034 Net -0.034 Forecast outturn +0.434
47
Appendix 5
Financial Plan – 2013-14 planning assumptions
In preparing the 2013-14 financial plan, the following key risk areas have been taken into account. Table A7: key financial planning assumptions 2013-14
Planning assumption 2013-14 Financial impact
Latest position
£m Council Tax Freeze Grant 3.478 Reduction as forecast Reduction in Formula Grant 13.700 Reduction as forecast NHS Social Care Grant allocation 14.956 Allocation as forecast Inflation Pay awards 1%
1.998 1% pay rise confirmed for all teachers, and all staff graded A-O.
Price inflation 2% general 4% transport
9.650 Year to November 2013: Consumer prices index (CPI) 2.1% (Oct 2.2%) Retail price index (RPI) 2.6% (Oct 2.6%) CPI travel and transport 3.6% (Oct 3.1%) (Source ONS.gov.uk)
Employer Pension contributions 0.848 Impact as per actuarial valuation Demand and Demographics Older People 3.615 The additional provision has been required. See
Note 1 below. People with Learning Difficulties 4.520 The additional provision has not been required.
See Note 2 below People with Physical Disabilities 0.308 The additional provision has been required. See
Note 3 below. Looked after Children 2.081 Looked After Children remains to be an area of
budgetary pressure. See Note 4 below. Legislative Changes Waste & Recycling 2.475 The costs of dealing with residual waste remain
challenging over and above the planned cost pressures – see Note 5 below. A forecast overspend is reported in Appendix 4.
NHS Complaints Advocacy 0.247 This service has been commissioned as planned, generating an underspend of £0.012m which is reported in Appendix 4
Local Healthwatch for Norfolk 0.412 Under the Health and Social Care Act 2012 NCC has been required to commission a local Healthwatch organisation
Other Support reduction in Early Intervention Grant Funding
3.500 The Early Intervention Grant has reduced as expected.
Increase in borrowing costs 1.011 This projected budget increase has not been needed due to deferral of borrowing. The resulting underspend is reported as part of the Finance General underspend in Appendix 4.
48
Note 1: Older People Financial pressures in respect of Purchase of Care for Older People continue. The additional provision was therefore required and the current year forecast overspend indicates a growing need for increasing provision for Older People. Note 2: People with Learning Difficulties The latest forecast for Purchase of care for people with Learning Difficulties is an underspend. The additional provision was therefore not required and this has been reflected in the budget planning assumptions. Note 3: People with Physical Difficulties The latest forecast for the Purchase of Care for People with Physical Difficulties is an overspend. The additional provision was therefore required and the current year overspend indicates a growing need for increasing provision for People with Physical Disabilities. Note 4: Looked After Children: The cost pressure relates to increased residential and foster care agency provision for Looked After Children. The planning assumption was based on the number of Looked after Children being 1100 by the end of the financial year and this was calculated from the growth rate in previous years (for comparison the number of Looked after Children was 835 at the end of 2006/07. By the end of October 2013 the number of Looked after Children had risen to 1144. The Ofsted inspection of Looked After Children found no incidences of a child being taken into care where this was not the right decision, however it highlighted that sufficient resource had not been directed into intervening at an earlier stage. Looked After Children remains to be an area of budgetary pressure and given the current improvement journey there is a high level of scrutiny over the Looked After Children population, with an aim to reduce it, as there is a better long term outcome for a child if they can be returned to a stable family environment. Note 5: Waste & Recycling: The cost pressures relate to landfill tax increases, above inflation increases at Household Waste Recycling Centres and additional recycling costs including kitchen waste. The cost pressures have or are forecast to be realised. In addition, the costs of dealing with residual waste remain challenging due to increased tonnages, and a forecast overspend is reported in Appendix 4.
49
Appendix 6
A6 Treasury Management Performance Monitoring
A6.1 Cash Flow Management A6.1.1 The corporate treasury management function ensures the efficient management of
cash balances across all 580 bank accounts by aggregating and investing surplus cash balances on a daily basis. For the period 1st April 2013 to 31st December 2013 the total average balance across all these accounts was £0.011m in-hand. This is within the overall tolerance limit of plus/minus £0.025m across all accounts.
A6.1.2 Year to date, income received amounts to £1,189m, while payments (including debt
repayment) total £1,191m, resulting in an overall decrease in cash balances of £2m. Cash balances available for investment have therefore decreased from £213m at 1st April 2013 to £211m at the 31st December 2013.
Cash Balance Invested 13/14 (£M)
150
200
250
300
350
400
Mar-
13
Apr-
13
May-
13
Jun-
13
Jul-
13
Aug-
13
Sep-
13
Oct-
13
Nov-
13
Dec-
13
A6.2 Interest Earned on Cash Balances A6.2.1 All monies invested by the County Council in the money markets are placed with
institutions on the Council’s Authorised Lending List.
50
Interest Rate YTD 2013/14
0.00%
0.30%
0.60%
0.90%
1.20%
1.50%
Apr-
13
May-
13
Jun-
13
Jul-
13
Aug-
13
Sep-
13
Oct-
13
Nov-
13
Dec-
13
Interest Rate YTD (In
Year Performance)
Interest Rate YTD
(Total Performance)
YTD 7 Day LIBID
Benchmark
A6.2.2 Gross interest earned for the period 1st April 2013 to 31st December 2013 is £2.111m.
A6.3 Long Term Borrowing A6.3.1 In accordance with the approved 2013-14 Investment Strategy, the County Council
continues to delay new borrowing for capital purposes, using cash balances on a temporary basis to avoid the cost of ‘carrying’ debt in the short term. Delaying borrowing and running down the level of investment balances also reduces the County Council’s exposure to investment counterparty risk.
A6.3.2 The Council’s debt portfolio is currently £504m.
Debt Maturity Profile (£M)
0
10
20
30
40
50
2013/1
4
2016/1
7
2019/2
0
2022/2
3
2025/2
6
2028/2
9
2031/3
2
2034/3
5
2037/3
8
2040/4
1
2043/4
4
2046/4
7
2049/5
0
2052/5
3
2055/5
6
51
A6.4 Icelandic Banks
Icelandic Bank Recovery
£7.59M
24%
£1.73M
5%
£23.10M
71%
Received
Escrow
Recoverable
Icelandic Bank Recovery Value (£M)
95%80%
53%
1%5%
20%
46%
£0
£2
£4
£6
£8
£10
£12
£14
£16
£18
Landsbanki Glitnir KSF
Recoverable
Escrow
Received
A6.4.1 The recovery process continues to be monitored by the Treasury Management
Panel. The latest projected cash recovery from all 3 banks is £32.428m against our claim of £34.251m.
Realised foreign exchange losses currently total £431k.
52
Appendix 7
Payment Best Value Performance Indicator
This BVPI is a measure of our timely payment of invoices – specifically, the percentage of invoices for commercial goods and services that were paid by the authority within 30 days of such invoices being received by the authority. The target is 90%. Some 450,000 invoices are paid annually. 97.7% were paid on time in December 2013.
The figures include an allowance for disputes/exclusions.
53
Appendix 8
Analysis of Outstanding Debt 31 December 2013 1. The value of outstanding debt is continuously monitored and recovery procedures are
in place to ensure that action is taken to recover all money due to Norfolk County Council. In the 12 months to 31 March 2013 the County Council raised 127,651 invoices of which 102,747 were for services provided to customers of Community Services.
2. The table below shows an analysis of the County Council’s outstanding debt at 31 December 2013 compared with the outstanding debt at 30 November 2013.
NCC Debt Analysis
NCC Debt 31/12/2013
NCC Debt 30/11/2013
£m £m
Total Unsecured Debt 25.626 29.944 Aged Debts (days): - 1- 30 6.662 9.484 31- 60 3.563 6.072 61- 90 3.430 2.544 91-180 4.865 5.861 181+ Referred to NP Law 0.179 0.180 181+ Awaiting estate finalisation 1.789 1.736 181+ On hold pending investigation 0.00 0.00 181+ Instalments and other debt 5.138 4.067
Total Secured Debt 7.965 8.006 Awaiting estate finalisation 1.772 1.891 Residential care 6.193 6.115 Total Debt 33.59 37.95
3. Customers of Community Services have certain rights when it comes to paying for
residential care. If they declare an interest in a property they can elect to defer payment (all or part) until the property is sold. If the client defers payment the debt is secured by a deferred payment agreement and it may be some time before the debt can be collected. Secured debts amount to £7.965m at 31 December 2013. Within this total £1.772m relates to estate finalisation where the client has died and the County Council is in the hands of the executors.
4. Approximately £0.880m of the unsecured debt aged 181+ days that Credit Control is
collecting and managing is being paid off by regular instalments. Of the balance the most material amounts relate to invoices due to the Council from the NHS, these total £1.616m and continue to be actively chased.
54
5. In accordance with Financial Regulation and Financial Procedures, Cabinet is required
to approve the write-off of debts over £10,000. The Head of Finance approves the write off of all debts up to £10,000. This value is reviewed regularly and adjusted in line with inflation, as appropriate.
6. Before writing off any debt all appropriate credit control procedures are followed.
Where economically practical the County Council’s legal position is protected by court proceedings being issued and judgment being entered. For a variety of reasons, such as being unable to locate the debtor, it is sometimes not appropriate to commence legal action.
7. For the period 1 December 2013 to 31 December 2013, 75 debts less than £10,000 were written off following approval from the Head of Finance. These debts totalled £20,892.15.
8. For the period since 1 April 2013, 661 debts less than £10,000 have been written off
following approval from the Head of Finance. These debts totalled £232,012.60. Three debts over £10,000 have been written off following Cabinet approval. These debts totalled £34,337.10.
9. Given the above factors the level of outstanding debt is considered reasonable.
55
Appendix 9 Reserves and provisions
Balances at 1.4.13
Forecast Balances
at
Forecast Balances
at 31.3.14
Reported 6.1.14
31.3.14
Reserves £m £m £m
Adult Education Income Reserve 0.018 0.018 0.018 Adult Social Services Residential Review 3.594 2.023 2.023 Adult Social Care Legal Liabilities 3.594 3.253 3.253 Archive Centre Sinking Fund 0.216 0.264 0.264 Building Maintenance 1.071 1.186 1.186 Car Lease Scheme surplus 1.155 0.598 0.598 Children’s Services Improvement Reserve 1.500 Community Construction Fund 0.072 0.000 - Strategic Partnership 0.486 0.016 0.016 Economic Development 4.609 4.353 4.353 Fire Operational Equipment Reserve 1.018 0.998 0.998 Fire Pensions Reserve 0.348 0.348 0.348 Fire Operational Reserve 0.542 0.542 0.377 Highways Maintenance 4.644 3.810 3.179 Historic Buildings 0.229 0.208 0.178 Icelandic Banks Reserve 5.735 2.235 2.235 Industrial Estate Dilapidations 0.010 0.010 0.010 Information Technology Reserve 9.471 7.026 6.769 Insurance 0.017 0.017 0.017 Modern Reward Strategy Reserve 6.210 4.359 4.359 Museums Income Reserve 0.079 0.079 0.024 NDR Reserve 2.500 2.500 2.500 Norfolk Infrastructure Fund 2.378 2.130 2.130 nplaw Operational Reserve 0.245 0.245 0.306 Organisational Change and Redundancy Reserve
7.277 6.318 6.318
P & T Bus De-registration 0.082 0.082 0.082 P & T Demand Responsive Transport 0.561 0.311 0.311 P & T Park & Ride 0.107 0.012 0.012 P & T Road Safety Reserve 0.197 0.000 - P & T Street Lighting Sinking Fund 7.789 6.695 6.695 ETD – Reprocurement Strategic Partnership 0.236 0.035 0.035 Prevention Fund 4.068 2.319 2.319 Public Transport Commuted Sums 0.016 0.016 0.016 Repairs and Renewals Fund 5.783 2.892 3.558 Residual Insurance and Lottery Bids 0.368 0.315 0.315 Strategic Ambitions Reserve 1.279 1.138 1.219 Unspent Grants and Contributions 12.255 6.289 6.951 Usable Capital Receipts 1.587 0.836 0.878 Waste Management Partnership Fund 1.075 0.440 0.440
Building Maintenance Non-Partnership Pool 1.523 1.273 1.061 Building Maintenance Partnership Pool 0.322 0.322 0.322 Children’s Services Equalisation 0.690 0.249 0.249 LMS Balances 33.022 21.994 21.631 Norwich Schools PFI Sinking Fund 1.711 1.711 1.711 Schools Contingency 10.030 10.056 10.711 Schools non-teaching activities 1.010 1.010 1.010 Schools Playing Field Surface Sinking Fund 0.409 0.409 0.409 Schools Sickness Insurance Reserve 1.428 1.128 1.128
Schools Total 50.145 38.152 38.232
The main changes between 31 March 2013 and the estimated position at 31 March 2014 are:
• Creation of a Children’s Services Improvement Reserve as noted in paragraph 5.2 of the report
• Following approval of a recommendation at 2 December Cabinet an earmarked Residual Waste Treatment Contract Reserve has been created
• Reduction in Adult Social Services Residential Review reserve to meet costs associated with the Building Better Futures transformation project
• Reduction in Adult Social Care Legal Liabilities to fund aftercare under section 116 of the Mental Health Act
• Reduction in Economic Development reserve due mainly to expected release of apprenticeship scheme funds
• Amounts released from Highways Repairs and Renewals reserve and the Highways Maintenance reserve to fund general Highways expenditure
• Use of £4.250m from the Icelandic Banks reserve and the Car Lease Scheme Surplus reserve approved by County Council 18 February 2013
• Reduction in the Information Technology Reserve to support the investment in Digital Norfolk Ambition.
• Use of £1.851m Modern Reward Strategy Reserve for the purchase of equipment and vehicles at 19 Main Household Waste Recycling Centres approved by Cabinet 4 November 2013
• Reduction in Organisational Change and Redundancy Reserve due to change initiatives including WorkStyle and other projects resulting from the Norfolk “Big Conversation” in 2011
• Net £1.094m released from Street Lighting sinking fund to fund planned expenditure
• Reduction in Prevention Fund reserve to meet expected expenditure on Living Well in the Community and other schemes
• Reduction in Unspent Grants and Contributions Reserve, reflecting the expected use of grants and contributions in 2013-14
• Reduction in LMS balances due primarily to anticipated academy conversions plus NCC schools' forecast use of balances in-year
• Reduction of £2m in Schools Contingency to fund provision of Special Education Needs
57
The Council’s provisions are as follows:
Balances at 1.4.13
Forecast Balances
at
Forecast Balances
at 31.3.14
Reported 6.1.14
31.3.14
£m £m £m Provisions
Adult Social Services Doubtful Debts 1.055 0.951 0.951 Closed landfill long term impairment provision
(see note below) 9.244 8.802 9.189
ETD Doubtful Debts 0.046 0.050 0.050 Insurance 12.394 12.394 12.394 Potential pension liability arising from the transfer of staff to the Norfolk & Waveney Mental Health NHS Foundation Trust
1.270 1.270 1.270
Redundancy 5.268 5.152 5.152 Retained Firefighters and Part-time Workers (Prevention of Less Favourable Treatment) Regulations
Closed landfill long term impairment provision: Following discussions with the Council’s external auditors, and in accordance with recognised accounting practices, a closed landfill long term impairment provision was recognised in the Council’s Statement of Accounts as at 31 March 2013. The provision represents the discounted cost of making adequate provision for the monitoring and maintenance of closed landfill sites. The increase in forecast this period is due to an accounting adjustment relating to the discounted value of future year’s obligations.
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Report to Cabinet 27 January 2014
Item No: 9
Norfolk County Council Capital Monitoring Report Month 9
Report by the Head of Finance (Interim)
Summary
This report presents the progress to date against the Council’s Capital Programme at on a service by service basis. At the end of December:
• The revised Capital programme for the Council is £131.246m (Month 8: £130.779m) for 2013-14.
• The forecast prudential borrowing requirement for the Council to support the 2013-14 programme is £25.999m. (Month 8: £24.927m)
• The Council is expected to generate capital receipts of £6.257m (including County Farms capital receipts). (Month 8: £6.982m)
Cabinet is recommended to:
1. agree the re-profiling between 2013/14 and 2014/15+ and other adjustments to the programme totalling £0.467m as summarised in Table 2 and detailed in Table 3;
2. note the reduction in schemes shown as amber in Table 4, demonstrating the improved profiling of existing schemes between years;
3. agree the associated changes to funding in the programme summarised in Table 5;
4. agree the additional spend to save scheme identified in Appendix 2.
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1 Revised Capital Programme
1.1 The 2013-14 Capital Programme was approved by the County Council on 18 February 2013 and is published in the Council’s 2013-14 Financial Strategy and Medium Term Financial Plan.
1.2 The latest revised programme totals £359.979m, made up of:
Table 1: Revised capital programme
2013-14 2014-16
£m £m
New schemes approved February 2013-14 95.738 114.270
Previously approved schemes 64.018 6.031 Totals in Medium Term Financial Plan 159.756 120.301 Re-profiling at financial year end 25.629 0.200 Additional DfE grant allocations 2.000 28.600 Better Broadband - DCMS Grant 5.062 10.378 Re-profiling previously reported -56.987 56.987
Other items previously reported -4.681 6.976 Totals previous period 130.779 223.442 Re-profiling this period -0.400 0.400 Other movements to be approved 0.867 4.891 Revised capital programme 131.246 228.733 Total 359.979
1.3 This table highlights a reduction of £0.400m in the 2013-14 capital programme as a result of reprofiling schemes to later years.
1.4 A further £0.867m increase in the forecast availability of capital funding for 2013-14 and £4.891m in 2014-16 has been identified.
1.5 This is the result of the inclusion of £2.430m of revenue contributions for Special Educational Needs projects agreed by Cabinet in November and corrections to previously reported estimates for Devolved Formula Capital funding and the NDR profile of expenditure.
1.6 The following chart identifies the cumulative effect of the changes to date on the capital programme.
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Chart 1: Capital Programme changes to date 2013-14 at Period 9
0
40
80
120
160
200
0 1 2 3 4 5 6 7 8 9 10 11 12 13
Month
Pro
gra
mm
e (
£M
)
CapitalProgramme
Current Year
(£M)
1.7 The arrow at Month 9 shows the latest position.
1.8 The table below summarises the revised capital programme by service and sets out changes awaiting approval
Table 2: Revised capital programme by service 2013-16 (increase of £5.758m since Month 8)
Service
Original Programme
2013-14
Cumulative Changes To Date
Re-profiling to later
years to be approved
Other movements
to be approved
Revised 2013-14 Capital
Programme
Revised Future Years
Capital Programme
2014-16
£m £m £m £m £m £m
Children's Services 18.562 23.581 -0.374 0.867 42.663 98.188 Adult Social Care 2.747 1.971 4.718 9.060 Cultural Services 0.000 0.853 -0.056 0.797 0.516 ETD Highways 52.722 -2.903 49.819 61.941
ETD Other 1.000 8.834 0.003 9.837 10.023 Fire & Rescue Service 1.413 1.498 2.911 4.352
Resources 19.294 1.207 20.501 44.652
Total 95.738 35.041 -0.400 0.867 131.246 228.733
130.779 0.467 359.979
Table 3: Changes to capital programme since last Cabinet, requiring approval
Service Project Funding Type Change
£m Reason
Current year
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Children's Services
Children’s Centres and Extended Schools
Borrowing – Deferred from prior years - see Appendix 1(v)
0.748 Reprofile
Basic Need External -1.180 Reprofile
Modernisation External/Borrowing 1.105 Reprofile
School Based Projects
External 0.248 Reprofile
Social Care Borrowing – Deferred from prior years - see Appendix 1(v)
-0.860 Reprofile
2013-2014 Funding
External -0.455 Reprofile
Cultural Services
Libraries External -0.056 Reprofiling of various minor Libraries schemes
Other minor changes
0.050 Minor Reprofiling
Reprofiling -0.400
Other Changes:
Children’s Services
School Based Projects
External 0.867
Adjustment to DFC Grant not allocated in prior periods.
Other Budget Changes
0.867
Total 2013-14 0.467
Future years: £m Reprofiling As per above table 0.400 Other Changes: Children's Services
School Based Projects
External 1.398 Adjustment to DFC Grant not allocated in prior periods.
2013-2014 Funding
External 2.430 Capital funding of £2.430M released from the Dedicated Schools Grant to support children with special educational needs (SEN) per Cabinet report 04.11.2013
ETD Highways Major Schemes
External/Borrowing 1.063 Adjustment to future year’s schemes in line with expected Northern Distributor Road profile
Other Budget Changes
4.891
Total 2014-16 5.291
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1.9 A summary of the changes to the capital programme’s financing as a result of the above changes can be found in Section 3.
1.10 A full list of capital schemes making up the 2013-14 capital programme was appended to the period 8 report presented to 6 January 2014 Cabinet. The changes to the programme above have resulted in no material changes to the list of schemes.
2 Actual Spend on Capital Programme
2.1 Progress on the overall capital programme is as follows:
Chart 2: Capital programme 2013-14 and cumulative actual expenditure
0
50
100
150
200
250
0 1 2 3 4 5 6 7 8 9 10 11 12
Period
Capita
l Expenditu
re
(£m
)
Actuals To Date Capital Programme Line of Best Fit
2.2 Capital projects by their nature do not lend themselves to evenly profiled expenditure. A number of reasons may result in higher expenditure during certain parts of the year. In particular, major construction and infrastructure projects would expect to incur greater expenditure during the summer and autumn. There may be other reasons for delays in projects such as difficulties in obtaining planning permission.
2.3 If expenditure were evenly profiled throughout the year, progress against the programme to Period 9 would be 75%. The graph above suggests that a small amount of future slippage and re-profiling of expenditure into future year’s programmes will still occur unless there is an increase in the rate of expenditure. The difference between profile and actual at Month 8 was -13.3%; at Month 9 it is -7.4%.
2.4 Progress towards the completion of the capital programme by each service is as
follows:
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Table 4: Comparison of capital programme, by service, and expenditure to date
Service Capital
Programme Expenditure
To Date
% Capital Expenditure
Incurred
RAG
£m £m
Children's Services 42.663 33.384 78.3% G
Adult Social Care 4.718 1.581 33.5% A
Cultural Services 0.797 0.285 35.8% A
Highways 49.819 35.317 70.9% G
ETD Other 9.837 8.126 82.6% G
Fire & Rescue Service 2.911 2.751 94.5% G
Resources 20.501 7.232 35.3% A
Total 131.246 88.677 67.6% A
2.5 This shows an increase of £18.861m since the Month 8 Capital Monitoring
report.
2.6 There has been an increase in the expenditure to date recognised due to the inclusion of expenditure incurred by wholly owned companies which will be reimbursed through a loan from Norfolk County Council. These loans, accounted for within ETD Other, total £5.846m and are expected to be finalised prior to the end of the financial year.
2.7 Furthermore, milestone payments to BT for the Better Broadband contract have been included in Resources. These payments have not yet been billed to Norfolk County Council but the Council is now liable for the expenditure.
2.8 Items flagged as amber or red bring a moderate or high chance that projects will be re-profiled into future year’s capital programmes. The capital programmes within services are continually reviewed and any future re-profiling reported to Cabinet.
2.9 Reasons for expenditure being below an evenly distributed budget profile are as follows:
• Adult Social Care (ASC) (Month 9 gap: £3.137m)
£0.435m of expenditure currently in revenue but will be capitalised prior to end of 2013-14. £0.500m of programme relates to new funding which will be undertaken prior to April. A further £0.485m is contingent on the authority signing a variation to its contract with Norsecare – this is expected to happen prior to the end of the financial year.
• Cultural Services (Month 9 gap: £0.512m)
Delays in procurement of new museum stock system and tendering for Gressenhall eco-buildings work. The tender on the stock system is now underway and awaiting a decision on the preferred supplier; system to go live at start of next financial year. Gressenhall works have now commenced following tenders. The libraries programme includes a number of projects only recently approved and therefore no expenditure has been incurred on these currently.
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• Resources (Month 9 gap: £13.269m)
Early expenditure on County Hall maintenance programme did not accelerate as rapidly as anticipated with only £3.288m of expenditure incurred to the end of December against a budget of £11.762m for 2013-14. However, the project is now fully underway and it is anticipated that costs will be in line with the November CROSP report. Milestone contract payments for which Norfolk County Council are liable have now been included in actuals against the £5.854m Better Broadband budget.
3 Financing The Programme
3.1 The Council uses a number of sources of funding to support its capital programme.
3.2 Funding comes primarily from grants and contributions provided by central government. These are augmented by capital receipts, developer contributions, prudential borrowing, and contributions from revenue budgets and reserves.
3.3 The below table identifies the planned funding of the revised capital programme:
Table 5: Comparison of capital programme, by service, and expenditure to date
3.4 The table above shows forecast prudential borrowing requirement for the Council to support the 2013-14 programme of £25.999m. The revenue consequences of borrowing are shown in Appendix 1. The key issues continue to be:
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•••• To evidence that spend-to-save schemes generate savings to fund their costs; and
•••• That unsupported borrowing schemes are reviewed to identify alternative revenue funding.
Further details of spend-to-save schemes and other schemes largely funded through borrowing are shown in Appendices 1 and 2.
4 Capital Receipts
4.1 The Council works closely with NPS Property Consultants to ensure that properties are prepared and marketed to maximise the benefits of their disposal. This may be through the generation of a capital receipt or by otherwise contributing to a strategic goal.
4.2 At 1 April 2013 the Council owned surplus assets with a gross book value of £7.546m on its balance sheet. Since 1 April, 11 properties valued at £6.715m have been categorised as surplus. The Council is currently expecting to generate £4.891m of capital receipts from sales of non-County Farms properties in 2013-14, before leasing adjustments.
Chart 3: Forecast Capital Receipts from property sales 2013-14
0
1
2
3
4
5
6
7
1 2 3 4 5 6 7 8 9 10 11 12
Period
Gro
ss V
alu
e (
£m
)
Seeking PlanningPermission
AwaitingInstructions To
MarketOn Market
Legal in Progress
ContractsExchanged
Receipts
4.3 There has been a reduction of £0.767m in the expected capital receipts to be generated in 2013-14. This is primarily due to the removal of a property from the 2013-14 disposal schedule pending reconsideration of its future.
4.4 Where capital receipts are generated the Council uses these to support its general capital programme. Any unused capital receipts are retained in the capital receipts reserve to fund future projects. The below table identifies expected movements on the capital receipts reserve:
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Table 6: Capital receipts reserve forecast 2013-14
General Financial Packages
County Farms
Total
£m £m £m £m
Opening Balance 0.062 1.587 0.000 1.649
Forecast receipts from sales of properties
4.492 0.399 1.186 6.077
Receipts from sales of assets to leasing companies
0.180 0.000 0.000 0.180
Other capital receipts 0.000 0.000 0.000 0.000
Forecast receipts generated in year
4.672 0.399 1.186 6.257
Sales expenses -0.161 0.000 -0.022 -0.183
Receipts repayable to third parties
0.000 -0.051 0.000 -0.051
Forecast net receipts available for funding
4.573 1.935 1.164 7.672
Forecast use to fund programme and reduce borrowing
-4.573 -1.408 -0.814 -6.795
Forecast Closing Balance 0.000 0.527 0.350 0.877
4.5 The opening balance of general receipts relates to deposits for disposals previously received to be undertaken in 2013-14. These are only available for use once the sale is completed.
4.6 Financial packages exist where the Council has agreed to link receipts from the sale of an asset with the funding of a specific project. Balances on financial packages exist where these projects remain incomplete.
5 New capital scheme proposals requiring borrowing
5.1 One new spend to save scheme has been identified for addition to the programme. Details of the scheme may be found in Appendix 2.
5.2 The additional £1.072m of borrowing to be approved in 2013-14 relates to £0.305m of net reprofiling from 2014-15 and a funding adjustment of £0.767m related to the reduction in capital receipts in 4.3 rather than new borrowing.
5.3 Net reprofiling in the month is as follows:
Scheme Net reprofiling of borrowing and capital receipts (£m)
Reason
Early Years Capacity Development
0.734 Further schemes to be funded from Early Years Capacity Development funding in 2013-14 have now been approved, increasing expenditure in the year. Furthermore, earlier reprofiling
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on existing schemes did not properly reflect expenditure to be incurred in 2013-14.
Kings Lynn and Thetford Academies
0.335 Expenditure has been brought forward in line with the most recent construction profiles from the contractor.
Looked After Children (0.800) Plans for post-16 accommodation have been pushed back after an initial proposal has been aborted. Children’s Services are looking at the residential market for an alternative acquisition.
Other Minor Reprofiling
0.036
Total 0.305
6 Spend to Save schemes
6.1 An analysis of spend-to-save schemes, Economic Development schemes, and schemes funded through the Norfolk Infrastructure Fund is set out in Appendix 2.
7 Resource Implications
7.1 Other than those identified above, there are no finance, staff, property or IT implications arising from this report.
8 Other Implications
8.1 There are no legal, human rights, and communication implications arising from this report. The contents of this report do not directly impact on equality, in that it is not making proposals that will have an impact on equality of access or outcomes for diverse groups.
9 Risks
9.1 This capital finance monitoring report is being developed and will increasingly highlight activity and risks associated with the capital programme, and links with the Asset Management Plans and Property Client functions which are designed to mitigate those risks.
10 Equality impact assessment
10.1 This report is not directly relevant to equality, in that it is not making proposals that will have a direct impact on equality of access or outcomes for diverse groups.
11 Environmental implications
11.1 There are no environmental implications.
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12 Section 17 Crime and Disorder Act
12.1 There are no direct implications of this report for the Crime and Disorder Act.
13 Alternative options
13.1 Cabinet may wish to review and amend the capital programme.
14 Reasons For Decisions
14.1 Having set a capital budget and programme at the start of the financial year, the Council needs to ensure its delivery within allocated and available resources. Consequently there is a requirement to regularly monitor the status of the programme including re-profiling, amendments and additions, and the on-going funding of the programme.
15 Conclusions
15.1 Overall progress on the programme remains broadly in line with expectations.
16 Recommendations
Cabinet is recommended to:
1. agree the re-profiling between 2013/14 and 2014/15+ and other adjustments to the programme totalling £0.467m as summarised in Table 2 and detailed in Table 3;
2. note the reduction in schemes shown as amber in Table 4, demonstrating the improved profiling of existing schemes between years;
3. agree the associated changes to funding in the programme summarised in Table 5;
4. agree the additional spend to save scheme identified in Appendix 2.
Officer Contact If you have any questions about matters in this paper please get in touch with: Name Telephone Number Email address Peter Timmins 01603 222400 [email protected] Howard Jones 01603 222832 [email protected]
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If you need this statement in large print, audio, Braille, alternative format or in a different language please contact Sam Jarrett on 01603 222828 or textphone 0344 800 8011 and we will do our best to help.
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Appendix 1
Appendix 1: Revenue Consequences of Borrowing
i. The Council is required to set aside an amount of money annually to service its debt and ensure that its actions do not impair the ability of the Council to borrow to support its capital requirements in the future. This is known as the Minimum Revenue Provision (MRP).
ii. Additional borrowing results in an increase in the amount of interest the Council must pay each year and an increase in the MRP it must make. The table below shows the incremental effect of the current programme of unsupported borrowing on future revenue budgets:
Table A1a: Analysis of unsupported borrowing required to support the capital programme
2013-14 2014-15 2015-16 2016-17
£m £m £m £m
Forecast additional borrowing required in year
25.999 35.953 19.180
Cumulative additional borrowing
25.999 61.952 81.132 81.132
Interest 1.235 3.033 4.087
MRP 1.040 2.478 3.245
Total annual revenue impact of borrowing (cumulative)
2.275 5.511 7.333
iii. The figures are based on interest rates for borrowing of 4.75%, 5.00% and 5.50% for 2013-14, 2014-15 and 2015-16 respectively. MRP is calculated on the basis of accounting for 1/25 of capital expenditure per year, which is consistent with expenditure on buildings; where expenditure is incurred on other types of asset, MRP figures will vary from those shown above.
iv. Unsupported borrowing, as shown in the above table, can be divided into that which results in an identifiable revenue saving or income stream in the future (“spend to save”) and that which will result in an increase in the Council’s overall revenue costs.
Table A1b: Analysis of unsupported borrowing
2013-14 2014-15 2015-16
£m £m £m
Spend to save (Appendix 2) 12.914 10.824 6.300 Economic Development & NIF Funded Schemes (Appendix 2) 10.191 14.708 14.797 Unsupported schemes 0.459 1.352 0.730
Deferred borrowing 7.822 12.069 0.353 Capital receipts available to reduce unsupported and deferred borrowing -5.387 -3.000 -3.000 Total 25.999 35.953 19.180
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v. Deferred borrowing represents 2013-16 capital schemes that are nominally funded from revenue and reserves, but which are now being funded from borrowing as reserves were used in previous years to minimise the revenue costs of borrowing.
vi. During 2013-14, the Council will be repaying loans of £8.525m, resulting in a reduction of £0.418m in interest costs. As a result, there will be a reduction of £0.898m in minimum revenue payments due to a reduction in the capital financing requirement for supported borrowing.
vii. The following table identifies the breakdown of those schemes which are identified as being unsupported in the current programme:
Table A1c: Analysis of Unsupported Schemes
Scheme 2013-14 2014-15 2015-16 2016-17
£m £m £m £m
Corporate Minor Works (CMW) Future years before transfers to County Hall as sent to CROSP November 2013 0.188 0.600 0.600 Alterations to Offices to Comply with Disability Discrimination Act (where not funded through CMW) 0.000 0.132 0.130
Total annual revenue impact of borrowing 0.040 0.163 0.241
viii. The schemes identified in Table A1c represent corporate programmes intended to maintain Norfolk County Council assets and ensure that the Council complies with legislation
ix. To fund or reduce the Council’s unsupported borrowing detailed above, there are three options:
a. Amend the future capital programme to reduce the funding available to support these schemes, including an ongoing review of the Corporate Minor Works programme
b. Identify revenue budget to fund the capital expenditure directly.
c. Identify a suitable reserve from which to draw down the funding for the schemes.
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Appendix 2
Appendix 2: Analysis of Spend to Save and Economic Development & NIF Funded Schemes
i. The total for “spend to save” schemes in Appendix 1 Table A1b in can be analysed as follows, with details of the benefits to be realised for each project.
Table A2a: Analysis of “spend to save” capital schemes 2013-16 (No change on Month 8)
Scheme Financing 2013-14 2014-15 2015-16 £m £m £m
Carbon Energy Reduction Fund (CERF)
Energy cost savings
1.888 1.100
County Hall Carbon Energy Reduction Fund
1.450 0.535 0.770
County Hall Better Ways of Working
Office closures rent saving
0.788 1.226 1.274
County Hall Strategic Maintenance
8.788 7.963 4.256
Current Spend To Save Schemes
12.914 10.824 6.300
North Norfolk Office Reorganisation
See Below 0.046 0.000 0.000
Total Proposed Spend To Save Schemes
12.960 10.824 6.300
ii. New Spend To Save Scheme – North Norfolk Office Reorganisation
The reorganisation of office accommodation in the North Walsham, area in order to drive down costs, has been under way for some time. The education Offices in North Walsham have been closed and the premises sold to Paston College for £120,000 in 2012 and staff have been moved out of the Holt offices, providing a revenue saving.
Proposals were considered to improve the Council's New Road premises in North Walsham, which had been used as a Youth & Community centre and convert these into offices for all staff and a capital budget of £300,000 was approved for this by Cabinet in January 2013. However, the cost of this conversion was greater than anticipated and negotiations were started with North Norfolk District Council to lease part of its head office in Cromer.
These negotiations have now been successful and lease terms have been provisionally agreed to allow 80 to 90 staff to be based there. This will be done on a 7 to 10 ratio with 54 desks.
A significantly reduced capital budget of £46,000 is now required, £38,000 for the desking and £8,000 for the IT and phone infrastructure. This means that the New Road premises in North Walsham is surplus and can now be sold, producing a further capital receipt in 2014.
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iii. The following table analyses Economic Development & NIF Funded schemes funded through borrowing and /or supported by the Norfolk Infrastructure Fund. The Norfolk Infrastucture Fund (NIF) is a fund using second homes council tax income.
Table A2b: Analysis of Economic Development and Norfolk Infrastructure funded capital Schemes 2013-16 (£3.6m slipped from 2014-15 to 2015-16 since Month 8)
Loan Repayments From renewable energy incomes generated by a wholly owned company
0.003 4.147 3.600
Loan to Hethel Innovation Loan Repayments From rental income generated by a wholly owned company
3.770
Loan to Great Yarmouth Development Company
Loan Repayments From property sales generated by a joint venture with Great Yarmouth Borough Council
2.076
Total Economic Development and NIF funded projects
10.191 14.708 14.797
iv. Further details of each project were included in the 6 January 2014 Capital Monitoring Cabinet Report
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Report to Cabinet
27th January 2014 Item no. 11
Annual Investment and Treasury Strategy 2014-15
Report by Head of Finance (Interim)
Executive Summary
In accordance with regulatory requirements, this report presents the Council’s investment and borrowing strategies for 2014-15, including the criteria for choosing investment counterparties. Despite an improvement in general economic and financial indicators, the environment in which the Council’s treasury activity operates remains challenging. Interest rates remain at historic lows and investment opportunities are focused upon a small group of UK counterparties. As long term borrowing rates continue to rise, the “cost of carrying” debt in the short term increases. Longer term borrowing rates must be closely monitored and a flexible approach to borrowing adopted. While the proposed 2014-15 Strategy is largely unchanged from that approved for 2013-14; the strategy incorporates a more diversified pool of high quality counterparties, including a number of non-UK banks. The maximum deposit duration remains unchanged at two years.
1. Introduction 1.1 The Chartered Institute of Public Finance and Accountancy’s (CIPFA’s)
Code of Practice for Treasury Management in the Public Services (the Code) requires local authorities to produce a treasury management strategy for the year ahead. The County Council is required to comply with the Code through regulations issued under the Local Government Act 2003.
1.2 CIPFA’s latest version of the Code was released in November 2011. The
County Council has adopted specific clauses and policy statements from the Code as part of its Financial Regulations.
1.3 Complementary to the CIPFA Code is the Department for Communities and
Local Government’s (DCLG’s) Investment Guidance, which requires local authorities to produce an Annual Investment Strategy.
1.4 This report combines the reporting requirements of both the CIPFA Code
and DCLG’s Investment Guidance.
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1.5 The County Council is required to receive and approve, as a minimum, three main Treasury reports each year, which include a variety of policies, estimates and actuals. They are:
• Annual Investment and Treasury Strategy
• Mid Year Treasury Management Report
• Annual Treasury Management Report. 1.6 The economic and financial environment in which the County Council
undertakes its treasury operations remains challenging. Interest rates remain at historic lows and concerns over the security of some financial institutions continue. The primary objectives of the Council’s Investment Strategy are to safeguard the timely repayment of principal and interest, whilst ensuring adequate liquidity for cash flow and the generation of investment yield. A flexible approach to borrowing for capital purposes will be maintained which avoids the ‘cost of carrying debt’ in the short term. This strategy is prudent while investment returns are low and counterparty risk (the other party involved in a financial transaction, typically a bank or building society) remains relatively high.
2. The Treasury Management Function 2.1 The CIPFA Code defines treasury management activities as “the
management of the Council’s cash flows, its banking, money market and capital market transactions; the effective management of the risks associated with those activities; and the pursuit of optimum performance consistent with those risks.”
2.2 The Council is required to operate a balanced budget, which broadly means
that cash raised during the year will meet its cash expenditure. Part of the treasury management operations ensures this cash flow is adequately planned, with cash being available when it is needed. Surplus monies are invested in low risk counterparties, providing adequate liquidity before considering investment return.
2.3 The second function of the treasury management service is funding of the
Council’s capital plans. These capital plans provide a guide to the borrowing requirement of the Council, essentially the longer term cash flow planning, typically 30 years plus, to ensure the Council can meet its capital spending obligations. This management of longer term cash may involve arranging long or short term loans, or using internal cash balances on a temporary basis. Debt previously borrowed may be restructured to meet Council risk or cost objectives.
2.4 The County Council has delegated responsibility for the implementation of
its treasury management policies and practices to the Council’s Cabinet. Day to day execution and administration of treasury management decisions has been delegated to the Head of Finance. The cross party Treasury Management Panel has specific responsibilities, which were approved by Cabinet in December 2008, regarding the monitoring of treasury management activities.
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2.5 External treasury management services are provided by Capita Asset Services (formerly known as Sector). Capita Asset Services provides a range of services which include:
• Technical support on treasury matters and capital finance issues.
• Economic and interest rate analysis.
• Debt services which includes advice on the timing of long term borrowing.
• Debt rescheduling advice surrounding the existing portfolio.
• Generic investment advice on interest rates, timing and investment instruments.
• Credit ratings/market information service for the three main credit rating agencies (Fitch, Moody’s and Standard & Poors).
2.6 Whilst Capita Asset Services provides support to the treasury function,
under market rules and in accordance with the CIPFA Code of Practice, the final decision on treasury matters remains with the County Council.
2.7 The Council also receives information and guidance from a number of professional sources operating in the financial markets, such as money brokers and investment managers. The Council’s finance staff regularly participate in practitioner networks and organisations which share treasury management information and best practice. The Council’s Chief Investment Manager is a member of CIPFA’s Treasury Management Network Advisory Panel.
2.8 The increased Member consideration of treasury management matters and
the need to ensure that officers dealing with treasury management are trained and kept up to date, requires a suitable training process for both Members and officers. The County Council has addressed this important issue by:
• Providing training presentations to Members of the Treasury Management Panel as part of the meeting agenda.
• Providing treasury related briefings to Members on specific issues.
• Providing treasury management induction training for all new staff and refresher training for existing staff.
• Supporting treasury management related Continued Professional Development targets as part of the annual appraisal process.
• Maintaining a training log within the Treasury Management Practices manual.
2.9 In accordance with the Code of Practice on Treasury Management,
performance will continue to be monitored and reported to Cabinet as part of the Finance Monitoring Report and quarterly to the Treasury Management Panel.
2.10 The Council’s treasury management and debt management performance is also benchmarked externally against other local authorities as part of the Council’s membership of CIPFA’s benchmarking clubs. Through the active participation in treasury management networking groups, the Council is also able to benchmark its investment strategy with other local authorities. The Council’s current strategy is closely aligned with its peers.
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3. Capita Asset Services Economic Forecast
3.1 Economic Overview
3.1.1 Until 2013, the economic recovery in the UK since 2008 had been the worst and slowest recovery in recent history. However, growth rebounded in quarter 1 and 2 of 2013 to surpass all expectations. Growth prospects remain strong looking forward, not only in the UK economy as a whole, but in all three main sectors, services, manufacturing and construction. However, growth is at a lower level than in previous recoveries and there is concern as to how robust it is. One downside is that wage inflation continues to remain significantly below CPI inflation so disposable income and living standards are under pressure, although income tax cuts have improved this to some extent.
3.1.2 A rebalancing of the economy towards exports has started but as 40% of
UK exports go to the Eurozone, the difficulties in this area are likely to continue to dampen UK growth. The US, the main world economy, faces similar debt problems to the UK, but thanks to reasonable growth, cuts in government expenditure and tax rises, the annual Government deficit has been halved from its peak without appearing to do too much damage to growth.
3.2 Capita Asset Services forward view 3.2.1 The current economic outlook and structure of market interest rates and
government debt yields have several key treasury mangement implications:
• Although Eurozone concerns have subsided in 2013, Eurozone sovereign debt difficulties have not gone away and there are major concerns as to how these will be managed over the next few years as levels of Government debt, in some countries, continue to rise to levels that compound already existing concerns. Counterparty risks therefore remain elevated. This continues to suggest the use of higher quality counterparties for shorter time periods;
• Investment returns are likely to remain relatively low during 2014/15 and beyond;
• Borrowing interest rates have risen significantly during 2013 and are on a rising trend. The policy of avoiding new borrowing by running down spare cash balances has served local authorities well over the last few years. However, as borrowing rates continue to rise, the policy of internal borrowing needs to be carfully monitored in order to avoid incurring even higher borrowing costs in future.
• There will remain a cost of carry on any new borrowing and this will incur a revenue loss between borrowing costs and investment returns.
3.2.2 The following table gives Capita Asset Services central view of UK Base
Rate and Public Works Loan Board (PWLB) borrowing rates:
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Quarter Ending
Base Rate (%)
PWLB Borrowing Rates (%) 5 year 25 year 50 year
Dec 2013 0.50 2.50 4.40 4.40 Mar 2014 0.50 2.50 4.40 4.40 June 2014 0.50 2.60 4.40 4.40 Sept 2014 0.50 2.70 4.50 4.50 Dec 2014 0.50 2.70 4.50 4.60 Mar 2015 0.50 2.80 4.60 4.70
June 2015 0.50 2.80 4.70 4.80 Sept 2015 0.50 2.90 4.80 4.90 Dec 2015 0.50 3.00 4.90 5.00 Mar 2016 0.50 3.20 5.00 5.10 June 2016 0.75 3.30 5.10 5.20 Sep 2016 1.00 3.50 5.10 5.20
Dec 2016 1.00 3.60 5.10 5.20 Mar 2017 1.25 3.70 5.20 5.30 Increase over the 3 year period
+0.75
+1.20
+0.80
+0.90
3.2.3 A more detailed economic commentary and interest rate view is given in
Appendix 1.
4. Investment Strategy 2014-15
4.1 Forecasts of short-term interest rates, on which investment decisions are based, suggest that the 0.5% Bank Rate will remain unchanged until the second quarter of 2016.
4.2 If economic growth remains strong and unemployment falls faster than
expected, then the Bank Rate could be increased sooner. However, should the pace of growth slow, then rates are likely to remain unchanged for sometime, particularly if the Bank of England forecasts for the rate of fall in unemployment prove to be too optimistic.
4.3 The investment earnings rates which most closely matches our average
deposit profile is the 6 month LIBID (London Intra Bank Bid rate for money market trades) forecast. The suggested budgeted interest rates for the following 3 financial years are as follows:
Financial Year Budgeted Interest Earnings
2014-15 0.60%
2015-16 0.60%
2016-17 0.925%
4.4 The 2014-15 County Council gross budget provision (before adjusting for
internal interest earning accounts) for interest receivable is approximately £1.5M.
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4.5 There are 3 key considerations to the treasury management investment process. CLG’s Investment Guidance ranks these in the following order of importance:
• security of principal invested,
• liquidity for cash flow, and
• investment return (yield). Each investment is considered in the context of these 3 factors, in that order.
4.6 CLG‘s Investment Guidance requires local authorities to invest prudently and give priority to security and liquidity before yield, as described above. In order to facilitate this objective, the Guidance requires the County Council to have regard to CIPFA’s Code of Practice for Treasury Management in the Public Sector.
4.7 The key requirements of both the Code and the Investment Guidance are to
produce an Annual Investment and Treasury Strategy covering the following:
• Guidelines for choosing and placing investments – Counterparty Criteria (Section 5).
• Details of Specified and Non-Specified investment types (Section 6).
• Identification of the maximum period for which funds can be committed – Counterparty Monetary & Time Limits (Section 7).
5.1 The Council works closely with its external treasury advisors to determine the criteria for high quality institutions. The minimum rating criteria uses the ‘lowest common denominator’ method of selecting counterparties and applying lending limits to those counterparties (see Section 7). This means that the application of the Council’s minimum criteria will apply to the lowest available rating for any institution. For example, if an institution is rated by all three credit rating agencies, two meet the Council’s criteria, the other does not, the institution will fall outside the lending criteria. This is in compliance with the CIPFA Treasury Management Code of Practice.
5.2 The criteria for providing a pool of high quality investment counterparties for
inclusion on the Council’s ‘Approved Authorised Counterparty List’ is provided below. The respective Fitch, Standard and Poors and Moody’s short and long term ratings are detailed in Appendix 2.
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• Banks
(i) UK Banks which have as a minimum, the following Fitch, Standard and Poors and Moody’s credit ratings:
(ii) Non-UK Banks domiciled in a country which has a minimum sovereign rating of AAA and as a minimum, the following Fitch, Standard and Poors and Moody’s credit ratings:
• Part Nationalised UK Banks – Lloyds Banking Group and Royal Bank of Scotland Group. These banks are included while they continue to be part nationalised or they meet the ratings for UK Banks above.
• Building Societies – The County Council will use Building Societies which meet the ratings for UK Banks outlined above.
• Money Market Funds (MMFs) – which are rated AAA by all three major rating agencies. MMF’s are ‘pooled funds’ investing in high-quality, high-liquidity, short-term securities such as treasury bills, repurchase agreements and certificate of deposit. Funds offer a high degree of counterparty diversification that include both UK and Overseas Banks.
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• UK Government – including the Debt Management Account Deposit Facility & Sterling Treasury Bills. Sterling Treasury Bills are short-term (up to six months) ‘paper’ issued by the UK Government. In the same way that the Government issues Gilts to meet long term funding requirements, Treasury Bills are used by Government to meet short term revenue obligations. They have the security of being issued by the UK Government.
• Local Authorities, Parish Councils etc. – Includes those in England and Wales (as defined in Section 23 of the Local Government Act 2003) or a similar body in Scotland or Northern Ireland.
5.3 The credit ratings of the County Council’s Corporate Banker (Co-operative
Bank) are currently below the minimum criteria for UK Banks above. Cash balances held with the Co-operative Bank are for account operation purposes only. Balances will be minimised in both monetary size and time. As part of its plans to re-capitalize and simplify its business, the Co-operative Bank has announced its intention to withdraw from providing banking services to local authorities. As a result the Co-operative Bank will not be seeking to renew its banking relationship with the County Council when the current banking contract expires in 2016. The County Council will consider bringing forward its timetable for seeking formal banking tenders.
5.4 The Head of Finance is responsible for maintaining the Approved
Authorised Counterparty List in accordance with the above criteria. Credit rating information is supplied by our external treasury advisors on all active counterparties that comply with the above criteria. Any rating changes, rating watches (notification of a likely change) and rating outlooks (notification of a possible longer term change) are provided by our external treasury advisors immediately they occur. The List is therefore actively managed on a day-to-day basis and when an institution no longer meets the criteria outlined above, it is immediately removed. The County Council also proactively reacts to negative rating watches, immediately suspending an institution from the List until clarification of the rating watch is obtained or the rating is either re-affirmed or changed. The List is reviewed at least once a year for any possible additions. An indicative list, reflecting the ratings above is attached (Appendix 3).
5.5 All cash invested by the County Council in 2014-15 will be either Sterling
deposits (including certificates of deposit) or Sterling Treasury Bills invested with banks and other institutions in accordance with the Approved Authorised Counterparty List.
5.6 The Code of Practice requires local authorities to supplement credit rating
information. Whilst the above criteria relies primarily on the application of credit ratings to provide a pool of appropriate counterparties for use, additional market information will be used to inform investment decisions. This additional market information includes, for example, Credit Default Swap rates and equity prices in order to compare the relative security of counterparties.
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6. Investment Strategy 2014-15 – Specified & Non-Specified Investments 6.1 As determined by CLG’s Investment Guidance, Specified Investments offer
“high security and high liquidity”. They are Sterling denominated and have a maturity of less than one year. Institutions of “high” credit quality are deemed to be Specified Investments. From the pool of high quality investment counterparties identified in Section 5, the following are deemed to be Specified Investments where the period of deposit is 364 days or less:
• Banks: UK and Non-UK;
• Part Nationalised UK Banks;
• Building Societies (which meet the minimum ratings criteria for Banks);
• Money Market Funds;
• UK Government;
• Local Authorities, Parish Councils etc. 6.2 Non-Specified Investments are those investments that do not meet the
criteria of Specified Investments. From the pool of counterparties identified in Section 5, they include:
• The County Council’s Corporate Banker (Co-operative Bank);
• Any investment greater than 364 days. 6.3 The categorisation of ‘Non-Specified’ does not in anyway detract from the
credit quality of these institutions, but is merely a requirement of the Government’s guidance.
6.4 The Council’s proposed Strategy for 2014-15 therefore includes both
Specified and Non-Specified Investment institutions. 7. Investment Strategy 2014-15 - Counterparty Monetary & Time Limits 7.1 The level of cash balances represents money received in advance of it
being required to meet the cost of County Council services. Balances are also required to support the Council’s cash backed reserves and provisions which are held for specific purposes. Cash balances fluctuate on a daily basis as the receipt of this income does not exactly match the timing of the expenditure. Whilst the average level of daily cash balances is forecast to be around £250M in 2014-15, the timing of receipts over payments could increase this to nearer £350M on occasions.
7.2 The County Council also provides treasury management services to other
bodies (Police and Crime Commissioner for Norfolk, the Norse Group, Norfolk & Suffolk Probation Trust, Independence Matters and the Norfolk Pension Fund). The average daily cash balance of these other bodies is expected to total £60M.
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7.3 Lending limits have been calculated to accommodate forecast cash
balances and to achieve diversification of counterparty. Separate lending limits have been determined for the County Council and the other bodies and assigned to each counterparty on the Approved Authorised Counterparty List.
• In addition to individual institutional lending limits, ‘Group Limits’ are used whereby the collective investment exposure of individual banks within the same banking group is restricted to a group total lending limit. For example, in the case of Lloyds TSB and Bank of Scotland, the group lending limit for the Lloyds Banking Group is £80M.
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• Deposits beyond 364 days may only be made with UK Banks which have a long-term credit rating of AA- (or equivalent). Deposits may be placed with UK Part Nationalised Banks and Local Authorities for periods up to 2 years.
• The Council will only use non-UK banks from countries with a minimum sovereign rating of AAA. No more than £35M will be placed with any individual non-UK country at any time.
• For each of the five other bodies (Police and Crime Commissioner for Norfolk, the Norse Group, Independence Matters, Norfolk & Suffolk Probation Trust and the Norfolk Pension Fund) a lending limit of no more than 50% of cash balances is to be deposited with any one single counterparty, up to a maximum monetary limit of £10m per counterparty.
7.4 It is estimated that in 2014-15, the maximum level of Council funds invested
for periods greater than 364 days (and therefore categorised as a non-specified investment – see Section 6) will be no more than £100M based on current projected cash balances.
8. Borrowing Strategy 2014-15
8.1 Capital expenditure can be paid for immediately by applying capital receipts, capital grants or revenue contributions. Capital expenditure in excess of available capital resources or revenue contributions will add to the Council’s borrowing requirement. The Council’s need to borrow is measured by the Capital Financial Requirement, which simply represents the total outstanding capital expenditure, which has not yet been paid for from either capital or revenue resources.
8.2 For the County Council, borrowing principally relates to long term loans (i.e.
loans in excess of 364 days). The borrowing strategy includes decisions on the timing of when further monies should be borrowed.
8.3 The main source of long term loans is the Public Works Loan Board
(PWLB), which is part of the UK Debt Management Office (DMO). The maximum period for which loans can be advanced by the PWLB is 50 years.
8.4 In accordance with the approved 2013-14 Investment and Treasury
Strategy, the County Council has postponed any new borrowing for capital purposes, using cash balances on a temporary basis to avoid the cost of ‘carrying’ debt in the short term. “Cost of carry” is the difference between interest paid and interest earned on borrowed monies while temporarily held as cash balances until used to fund capital expenditure. Delaying borrowing and running down the level of investment balances also reduces the County Council’s exposure to investment counterparty risk. The option of continuing to postpone borrowing into 2014-15 will be considered as part of the on-going management of the 2014-15 borrowing strategy.
8.5 The Council has not undertaken any new borrowing since 2008-09 when the
level of debt outstanding was £602M. The Council’s debt portfolio is currently £505M. The profile of debt maturities is shown in the table below. A further £24M of debt is scheduled for repayment over the next 3 years.
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Debt Maturity Profile (£M)
0
10
20
30
40
50
2013/1
4
2016/1
7
2019/2
0
2022/2
3
2025/2
6
2028/2
9
2031/3
2
2034/3
5
2037/3
8
2040/4
1
2043/4
4
2046/4
7
2049/5
0
2052/5
3
2055/5
6
8.6 The Council is currently maintaining an under-borrowed position of
approximately £126M. This means that the capital borrowing need (the Capital Financing Requirement), has not been fully funded with loan debt as cash supporting the Council’s reserves, balances and day to day cash flow has been used as a temporary internal source of borrowing. This strategy is prudent as investment returns are low and counterparty risk is relatively high. As long term borrowing rates continue to rise, the “cost of carrying” debt in the short term increases. By avoiding the “cost of carrying” debt the County Council is currently saving over £4M pa (assuming a net interest rate differential of 3.5%). Short and long term interest rates must be closely monitored to ensure that delaying any new borrowing to avoid the “cost of carrying” debt remains prudent, sustainable and affordable in current and future years.
8.7 The challenging and uncertain economic outlook outlined by Capita Asset
Services in Section 3, together with managing the cost of “carrying debt” requires a flexible approach to borrowing. The Head of Finance, under delegated powers, will take the most appropriate form of borrowing depending on the prevailing interest rates at the time, taking into account the risks identified in Capita Asset Services economic overview.
8.8 The level of outstanding debt and composition of debt, in terms of individual
loans, is kept under review. The PWLB provides a facility to allow the restructure of debt, including premature repayment of loans, and encourages local authorities to do so when circumstances permit. This can result in net savings in overall interest charges. The Head of Finance and Capita Asset Services will monitor prevailing rates for any opportunities during the year.
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8.9 The County Council has flexibility to borrow funds in the current year for use
in future years. For example, the Head of Finance may do so under delegated powers where a sharp rise in interest rates is expected and so borrowing early at fixed interest rates may be economically beneficial or meet budgetary constraints. Whilst the Head of Finance will adopt a cautious approach to any such borrowing, where there is a clear business case for doing so borrowing will be undertaken to fund the approved capital programme. Risks associated with any advance borrowing will be subject to appraisal in advance and subsequent reporting through the established reporting process.
8.10 PWLB borrowing has become less attractive in recent years, due to its
policy decision to increase the margin payable over interest rates (Gilts). In response, the Local Government Association is exploring the creation of a “bond market” to maintain costs. Developments will be reported back, as they occur.
9. Treasury Management Prudential Indicators
9.1 There are four treasury related Prudential Indicators. The purpose of the
indicators is to restrict the activity of the treasury function to within certain limits, thereby managing risk and reducing the impact of an adverse movement in interest rates. However, if these indicators are too restrictive, they will impair the opportunities to reduce costs/improve performance. The Indicators are:
• Upper Limits on Variable Interest Rate Exposure – This identifies a maximum limit for variable interest rates based upon the debt position net of investments. It is recommended that the County Council set an upper limit on its variable interest rate exposures for 2014-15, 2015-16 and 2016-17 of 30% of its net outstanding principal sums. This is consistent with policy followed in previous years.
• Upper Limits on Fixed Interest Rate Exposure – Similar to the previous indicator, this covers a maximum limit on fixed interest rates. It is recommended that the County Council set an upper limit on its fixed interest rate exposures for 2014-15, 2015-2016 and 2016-2017 of 100% of its net outstanding principal sums.
• Maturity Structures of Borrowing – These gross limits are set to reduce the County Council’s exposure to large fixed rate sums falling due for refinancing and require upper and lower limits. It is recommended that the County Council sets the following limits for the maturity structures of its borrowing. These limits follow existing treasury management policy and are unchanged from 2013-2014:
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Lower
Limit Upper Limit
Under 12 months
0% 15%
12 months and within 24 months
0% 15%
24 months and within 5 years
0% 45%
5 years and within 10 years
0% 75%
10 years and above
0% 100%
• Total Principal Funds Invested for Greater than 364 Days – This limit is set with regard to the County Council’s liquidity requirements. As stated in para. 7.4 above, it is estimated that in 2014-15, the maximum level of Council funds invested for periods greater than 364 days will be no more than £100M.
10. Leasing 10.1 It is anticipated that leasing facilities totaling £5M will be drawn-down in
2014-15, relating to a variety of vehicles and general equipment. In recent years there have been significant changes in the regulations affecting leasing in the public sector, resulting in more freedom and flexibility. As a consequence, the Council's leasing policy has been replaced with comprehensive leasing guidance reflecting industry best practice. External leasing advice continues to be provided by Capita Asset Services.
11. Equality Impact Assessment 11.1 This report is not directly relevant to equality, in that it is not making
proposals that will have a direct impact on equality of access or outcomes for diverse groups.
12. Environmental Implications 12.1 The recommendation contained in this report is not considered to have any
environmental impact. 13. Section 17 Crime and Disorder Act 13.1 There are no implications for crime and disorder.
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14. Risk Implementations 14.1 The County Council’s treasury management activities provide for “the
effective management of risk while pursuing optimum performance consistent with those risks.” The Annual Investment & Treasury Strategy 2014-15 describes the parameters for risk management. Operationally, a risk register is maintained to monitor risks and control measures.
14.2 The Council’s budget for interest payable on external borrowing to support
capital expenditure is constructed on the basis of borrowing at the beginning of the financial year. In recent years in order to achieve the most advantageous borrowing and investment position, borrowing has been deferred which has led to an underspend on this budget (para 8.6). For 2014-15 the Council could choose to change its risk appetite in relation to this budget and not make full budget provision on the basis that borrowing will continue to be deferred. In practice, the financial markets can be volatile and if this budget is reduced the council may need to find additional resources later in the financial year or in subsequent years to enable borrowing to be undertaken.
15. Alternative Options
15.1 The investment and borrowing strategy presented in this report for approval form an important part of the overall financial management of the Council’s affairs. They have been produced in accordance with best practice and guidance and in consultation with the Council’s external treasury advisors. Alternative options have been considered during the drafting of this strategy, with the optimum approach in current market conditions being presented for consideration.
16. Conclusion
16.1 The treasury management strategy presented in this report details the Council’s criteria for choosing investment counterparties and limiting exposure to the risk of loss. The report also outlines the proposed borrowing strategy for 2014-15.
17. Recommendations
17.1 It is recommended that Cabinet endorse and recommend to County Council:
• the Annual Investment and Treasury Strategy for 2014-15, including the treasury management Prudential Indicators detailed in Section 9.
If you need this report in large print, audio, Braille, alternative format
or in a different language please contact Glenn Cossey on 01603
228978 or Textphone 0844 8008011 and we will do our best to help.
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Appendix 1
Capita Asset Services Detailed Economic Commentary The Global Economy The Eurozone. The sovereign debt crisis has eased during 2013 which has been a year of comparative calm after the hiatus of the Cyprus bailout in the spring. The EZ finally escaped from seven quarters of recession in quarter 2 of 2013 but growth is likely to remain weak and so will dampen UK growth. The ECB’s pledge to buy unlimited amounts of bonds of countries which ask for a bail out, has provided heavily indebted countries with a strong defence against market forces. This has bought them time to make progress with their economies to return to growth or to reduce the degree of recession. However, debt to GDP ratios (2012 figures) of 176% Greece, Italy 131%, Portugal 124%, Ireland 123% and Cyprus 110%, remain a cause of concern, especially as many of these countries are experiencing continuing rates of increase in debt in excess of their rate of economic growth i.e. these debt ratios are continuing to deteriorate. Any sharp downturn in economic growth would make these countries particularly vulnerable to a new bout of sovereign debt crisis. It should also be noted that Italy has the third biggest debt mountain in the world behind Japan and the US. Greece remains particularly vulnerable and continues to struggle to meet EZ targets for fiscal correction. Many commentators still view a Greek exit from the Euro as inevitable and there are concerns that austerity measures in Cyprus could also end up in forcing an exit. The question remains as to how much damage an exit by one country would do and whether contagion would spread to other countries. However, the longer a Greek exit is delayed, the less are likely to be the repercussions beyond Greece on other countries and on EU banks. Sentiment in financial markets has improved considerably during 2013 as a result of firm Eurozone commitment to support struggling countries and to keep the Eurozone intact. However, the foundations to this current “solution” to the Eurozone debt crisis are still weak and events could easily conspire to put this into reverse. There are particular concerns as to whether democratically elected governments will lose the support of electorates suffering under EZ imposed austerity programmes, especially in countries like Greece and Spain which have unemployment rates of over 26% and unemployment among younger people of over 50%. The Italian political situation is also fraught with difficulties in getting a viable coalition which will implement an EZ imposed austerity programme and undertake overdue reforms to government and the economy.
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USA. The economy has managed to return to reasonable growth in Q2 2013 of 2.5% y/y in spite of the fiscal cliff induced sharp cuts in federal expenditure that kicked in on 1 March, and increases in taxation. The Federal Reserve has continued to provide huge stimulus to the economy through its $85bn per month asset purchases programme of quantitative easing. However, it is expected that this level of support will start to be tapered down by the end of 2013. It has also pledged not to increase the central rate until unemployment falls to 6.5%; this is probably unlikely to happen until early 2015. Consumer, investor and business confidence levels have improved markedly in 2013. The housing market has turned a corner and house sales and increases in house prices have returned to healthy levels. Many house owners have therefore been helped to escape from negative equity and banks have also largely repaired their damaged balance sheets so that they can resume healthy levels of lending. All this portends well for a reasonable growth rate looking forward. China. Concerns that Chinese growth could be heading downwards have been allayed by recent stronger statistics. There are still concerns around an unbalanced economy which is heavily dependent on new investment expenditure, and for a potential bubble in the property sector to burst, as it did in Japan in the 1990s, with its consequent impact on the financial health of the banking sector. There are also increasing concerns around the potential size, and dubious creditworthiness, of some bank lending to local government organisations and major corporates. This primarily occurred during the government promoted expansion of credit, which was aimed at protecting the overall rate of growth in the economy after the Lehmans crisis. Japan. The initial euphoria generated by “Abenomics”, the huge QE operation instituted by the Japanese government to buy Japanese debt, has tempered as the follow through of measures to reform the financial system and introduce other economic reforms, appears to have stalled. However, at long last, Japan has seen strong growth of 4% in the first two quarters of 2013 which portends well for the hopes that Japan can escape from the bog of stagnation and help support world growth. The fiscal challenges though are huge; the gross debt to GDP ratio is about 245% in 2013 while the government is currently running an annual fiscal deficit of around 50% of total government expenditure. Within two years, the central bank will end up purchasing about Y190 trillion (£1,200 billion) of government debt. In addition, the population is ageing due to a low birth rate and will fall from 128m to 100m by 2050.
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The UK Economy Economic growth. Until 2013, the economic recovery in the UK since 2008 had been the worst and slowest recovery in recent history. However, growth rebounded in quarter 1 (+0.3%) and 2 (+0.7%) of 2013 to surpass all expectations as all three main sectors, services, manufacturing and construction contributed to this strong upturn. The August 2013 Bank of England Inflation Report consequently upgraded growth forecasts for 2013 from 1.2% to 1.4% and for 2014 from 1.7% to 2.5%. However, Bank Governor Mark Carney put this into perspective by describing this welcome increase as not yet being “escape velocity” to ensure we return to strong AND sustainable growth. So very encouraging - yes, but, still a long way to go! However, growth is expected to be strong for the immediate future. One downside is that wage inflation continues to remain significantly below CPI inflation so disposable income and living standards are under pressure, although income tax cuts have improved this to some extent. A rebalancing of the economy towards exports has started but as 40% of UK exports go to the Eurozone, the difficulties in this area are likely to continue to dampen UK growth. Forward guidance. The Bank of England also issued forward guidance with this Inflation Report which said that the Bank will not start to consider raising interest rates until the jobless rate (Labour Force Survey / ILO i.e. not the claimant count measure) has fallen to 7% or below. This would require the creation of about 750,000 jobs and was forecast to take three years. The UK unemployment rate currently stands at 2.5 million i.e. 7.7 % on the LFS / ILO measure. The Bank's guidance is subject to three provisos, mainly around inflation; breaching any of them would sever the link between interest rates and unemployment levels. This actually makes forecasting Bank Rate much more complex given the lack of available reliable forecasts by economists over a three year plus horizon. The recession since 2007 was notable for how unemployment did NOT rise to the levels that would normally be expected in a major recession and the latest Inflation Report noted that productivity had sunk to 2005 levels. There has therefore been a significant level of retention of labour, which will mean that a significant amount of GDP growth can be accommodated without a major reduction in unemployment. The forecast in this report for Bank Rate not to start increasing until quarter 2 of 2016 is based on a slow reduction of unemployment, (in line with the Bank of England’s forecast), and contrary to the prevalent market view where rates are indicating that Bank Rate is expected to start going up in early 2015. Credit conditions. While Bank Rate has remained unchanged at 0.5% and quantitative easing has remained unchanged at £375bn in 2013, the Funding for Lending Scheme (FLS), aimed at encouraging banks to expand lending to small and medium size enterprises, has been extended. The FLS certainly seems to be having a positive effect in terms of encouraging house purchases (though levels are still far below the pre-crisis level), FLS is also due to be bolstered by the second phase of Help to Buy aimed to support purchasing of second hand properties, which is now due to start in October 2013. While there have been concerns that these schemes are creating a bubble in the housing market, the housing market remains weak outside of London and the south-east with a significant increase in house prices either being entirely absent or minimal. However, bank lending to small and medium enterprises continues to remain weak and inhibited by banks still repairing their balance sheets and anticipating tightening of regulatory requirements.
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Inflation. Inflation has fallen from a peak of 3.1% in June 2013 to 2.2% in October. It is expected to fall back to reach the 2% target level within the two year horizon. AAA rating. The UK has lost its AAA rating from Fitch and Moody’s but that caused little market reaction. Capita Asset Services forward view Economic forecasting remains difficult with so many external influences weighing on the UK. Major volatility in bond yields is likely during the remainder of 2013/14 as investor fears and confidence ebb and flow between favouring more risky assets i.e. equities, and safer bonds. Near-term, there is some residual risk of further QE - if there is a dip in strong growth or if the MPC takes action to do more QE in order to reverse the rapid increase in market rates, especially in gilt yields and interest rates up to 10 years. This could cause shorter-dated gilt yields and PWLB rates over the next year or two to significantly undershoot the forecasts. The failure in the US, (at the time of writing), over passing a Federal budget for the new financial year starting on 1 October, and the expected tension over raising the debt ceiling in mid October, could also see bond yields temporarily dip until any binding agreement is reached between the opposing Republican and Democrat sides. Conversely, the eventual start of tapering by the Fed could cause bond yields to rise. The longer run trend is for gilt yields and PWLB rates to rise, due to the high volume of gilt issuance in the UK, and of bond issuance in other major western countries. Increasing investor confidence in economic recovery is also likely to compound this effect as a continuation of recovery will further encourage investors to switch back from bonds to equities. The overall balance of risks to economic recovery in the UK is currently weighted to the upside after five months of robust good news on the economy. However, only time will tell just how long this period of strong economic growth will last; it also remains exposed to vulnerabilities in a number of key areas. Downside risks currently include:
• The conflict in the UK between market expectations of how quickly unemployment will fall as opposed to the Bank of England’s forecasts
• Prolonged political disagreement over the US Federal Budget and raising the debt ceiling
• A return to weak economic growth in the US, UK and China causing major disappointment to investor and market expectations.
• The potential for a significant increase in negative reactions of populaces in Eurozone countries against austerity programmes, especially in countries with very high unemployment rates e.g. Greece and Spain, which face huge challenges in engineering economic growth to correct their budget deficits on a sustainable basis.
• The Italian political situation is frail and unstable.
• Problems in other Eurozone heavily indebted countries (e.g. Cyprus and Portugal) which could also generate safe haven flows into UK gilts.
• Monetary policy action failing to stimulate sustainable growth in western economies, especially the Eurozone and Japan.
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• Weak growth or recession in the UK’s main trading partners - the EU and US, depressing economic recovery in the UK.
• Geopolitical risks e.g. Syria, Iran, North Korea, which could trigger safe haven flows back into bonds
The potential for upside risks to UK gilt yields and PWLB rates, especially for longer term PWLB rates include:
• A sharp upturn in investor confidence that sustainable robust world economic growth is firmly expected, causing a surge in the flow of funds out of bonds into equities.
• A reversal of Sterling’s safe-haven status on a sustainable improvement in financial stresses in the Eurozone.
• Further downgrading by credit rating agencies of the creditworthiness and credit rating of UK Government debt, consequent upon repeated failure to achieve fiscal correction targets and sustained recovery of economic growth which could result in the ratio of total government debt to GDP to rise to levels that undermine investor confidence in the UK and UK debt.
• UK inflation being significantly higher than in the wider EU and US, causing an increase in the inflation premium inherent to gilt yields.
• In the longer term – an earlier than currently expected reversal of QE in the UK; this could initially be implemented by allowing gilts held by the Bank to mature without reinvesting in new purchases, followed later by outright sale of gilts currently held.
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Appendix 2
Moody's S&P Fitch
Long-term Short-term
Long-term Short-term
Long-term Short-term
Aaa
P-1
AAA
A-1+
AAA
F1+
Prime
Aa1 AA+ AA+
High grade Aa2 AA AA
Aa3 AA- AA-
A1 A+ A-1
A+ F1 Upper
medium grade
A2 A A
A3 P-2
A- A-2
A- F2
Baa1 BBB+ BBB+ Lower
medium grade
Baa2 P-3
BBB A-3
BBB F3
Baa3 BBB- BBB-
Ba1
Not prime
BB+
B
BB+
B
Non-investment
grade
Ba2 BB BB speculative
Ba3 BB- BB-
B1 B+ B+ Highly
speculative B2 B B
B3 B- B-
Caa1 CCC+
C CCC C
Substantial risks
Caa2 CCC Extremely
speculative
Caa3 CCC- In default with
little
Ca CC
prospect for recovery
C
C
D /
DDD
/ In default / DD
/ D
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Appendix 3
Indicative List of Approved Counterparties for Lending
UK Banks
Barclays Bank
HSBC Bank Group
Santander UK
Standard Chartered
Non-UK Banks
Australia:
Australia & New Zealand Banking Group
Commonwealth Bank of Australia
National Australia Bank Limited
Westpac Banking Corporation
Canada:
Royal Bank of Canada
Toronto-Dominion Bank
Finland:
Nordea Bank of Finland
Germany:
KfW
Landwirtschaftliche Rentenbank
Luxembourg:
Banque et Caisse d’Epargne de l’Etat
Clearstream Banking
Singapore:
DBS Bank Ltd
Oversea-Chinese Banking Corp
United Overseas Bank Limited
Sweden:
Svenska Handelsbanken
Part Nationalised UK Banks
Lloyds TSB Bank(*)
Bank of Scotland Plc(*)
Royal Bank of Scotland(#)
National Westminster(#)
UK Building Societies
Nationwide BS
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UK Government
Debt Management Account Deposit Facility
Sterling Treasury Bills
Local Authorities, Parish Councils
Other
The Norse Group
Note: (*) (#) A ‘Group Limit is operated whereby the collective investment
exposure of individual banks within the same banking group is restricted to a group
total.
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Cabinet 27 January 2014
Item No.12
Update on the Strategic Economic Plan for Norfolk and Suffolk and the Norfolk Growth Prospectus
Report by the Interim Director of Environment, Transport and Development
Summary
This report provides an overview of the New Anglia Strategic Economic Plan and the Norfolk Growth Prospectus, governance arrangements for their delivery, progress to date, the timeline for delivery and proposed sign off procedures. To set these in the current economic context, the report also gives an overview of economic development activity since the elections in May in Appendix A.
Government recently requested that Local Enterprise Partnerships (LEPs) produce a Strategic Economic Plan (SEP) for their area, which will be used to negotiate a six year ‘Growth Deal’. The Deal will give access to a Local Growth Fund, worth £2bn nationally, which is designed to contribute to financing economic growth priorities. The Fund is not new money – it is made up from existing Government funding streams. Most of the money is capital for transport, housing and further education infrastructure.
Norfolk Chief Executives and Norfolk Leaders agreed during the summer that their input to the SEP would be framed into a Norfolk Growth Prospectus (NGP). The NGP will not replace district councils’ strategies and development plans, but will bring together high level priorities that will produce a step change in job numbers (especially higher value ones) and wealth creation. However, it will replace the County Council’s current economic growth strategy, a refresh of which was already planned for the end of 2013/14. We would anticipate that district councils and other partners would adopt the NGP and endorse the SEP.
Development of the NGP and Norfolk’s input to the SEP is being coordinated by a Norfolk Growth Group, comprising district council Directors/Heads of Service, the Assistant Director for Economic Development & Strategy and the New Anglia LEP Programme Director. This is the same model as operates in Suffolk.
The first draft of the SEP was required to be submitted to Government by 19 December. (A copy is available on the New Anglia website, with a hard copy in the Members’ Room). The final version is due by 31 March 2014. Formal feedback on the December 19 version of the SEP will not be received from Government until early February, so Cabinet is therefore requested to grant delegated authority to the Interim Director of ETD, in consultation with the Leader of the Council and the Cabinet Members for Economic Development and Environment, Transport & Waste to sign off the March submission. The final growth deal will be reviewed in the spring and brought to the appropriate Committee in May 2014 for consideration.
Recommendation / Action Required
Cabinet is asked to:
(i) Note progress on the Strategic Economic Plan and Norfolk Growth Prospectus
(ii) Delegate authority to the Interim Director of ETD, in consultation with the Leader of the Council and the Cabinet Members for Economic Development and Environment, Transport & Waste to approve the New Anglia Strategic Economic Plan, to be submitted to Government by 31 March 2014.
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1. Background
This report provides an overview of the New Anglia Strategic Economic Plan and the Norfolk Growth Prospectus, governance arrangements for their delivery, progress to date, timeline for delivery and proposed sign off procedures.
To set these in the current economic context, the report also gives an overview of economic development activity since the elections in May in Appendix A.
1.1. New Anglia Strategic Economic Plan
The Government created Local Enterprise Partnerships (LEPs), as public/private partnerships between business, local authorities and academia to drive local growth, and is increasingly transferring powers to them, including establishing Local Transport Bodies covering LEP areas. New Anglia LEP (NALEP) is the partnership for Norfolk and Suffolk and covers both counties in their entirety. King’s Lynn and West Norfolk is also in the Greater Cambridgeshire, Greater Peterborough LEP.
Government recently requested that LEPs produce a Strategic Economic Plan (SEP) for their area, which will be used to negotiate a six year ‘Growth Deal’, giving access to a Local Growth Fund (LGF), which is designed to contribute to financing economic growth priorities. Government guidance indicates that Deals will be signed off by the end of July 2014.
1.2. Norfolk Growth Prospectus.
Norfolk Chief Executives and Norfolk Leaders have agreed that their input to the SEP would be framed into a county-specific document, a Norfolk Growth Prospectus (NGP). The rationale for this is that we have a rapidly growing (and ageing) population and while we have some world class research and companies with global reputations, our economy is largely low skill, low waged.
The NGP will not replace district councils’ strategies and development plans. Rather, it will bring together only those high level priorities that will produce a step change in job numbers (especially higher value jobs), with a focus on removing barriers to growth, especially in the areas of infrastructure, enterprise and skills.
However, it will replace the County Council’s own economic growth strategy, a refresh of which was already planned. The latest progress report to Cabinet (August 2013) indicated that:
‘There have been significant policy developments recently, including
Government giving greater responsibilities to Local Enterprise Partnerships,
the Heseltine Growth Review and June 2013 Spending Review. The Council
is also reshaping itself through its transformation programme. The ramifications
of these changes for Norfolk and the Council’s work will unfold during 2013/14.
It is therefore proposed to… bring back to members a refresh of the Economic
Growth Strategy by the year end’.
The approach to the NGP, agreed with Norfolk Leaders and Chief Executives is to:
• Paint a picture of the Norfolk economy.
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• Identify those sectors that have the potential to lead to a step change in growth of higher value jobs and GVA (gross value added, a measure of wealth creation).
The prospectus will be an evidence-based picture of the strengths and opportunities we can maximise, given the right conditions for growth. This is based on national projections (eg Government’s Industrial Strategy) coupled with local intelligence on the sectors that are forecast to grow (eg agri-tech) and those that are mature and should be maintained/retained (eg financial services). The NGP’s priority is to support enterprise in emerging and growth sectors, as it will be through innovation and development in these - by existing and new businesses - that we will achieve a step change in growth and prosperity.
• Identify the locations where the growth in jobs and housing is projected to take place, based on district plans, so that we can lever advantages for all communities in Norfolk.
• Examine the enablers of growth that are needed – road, rail, housing and telecoms infrastructure, as well as cross-cutting skills.
• Describe what we are already doing - including the interventions in the City Deal for Greater Norwich - to address these challenges and grow key sectors.
• Propose interventions to build on this existing activity, using a range of funding streams.
2. What funds are available for delivery of these Plans?
2.1. Local Growth Fund. The main purpose of the SEP is to provide the basis for negotiating a ‘Growth Deal’ with Government, which gives access to a share of the £2bn LGF. The LGF comes into force in April 2015, with an element allocated to the local area, but a further element bid for competitively. Details of the make up of the LGF in 2015/16 can be found in Appendix B.
For the first year, the Fund is virtually all capital, largely coming from the Department for Transport (DfT). While the LGF is described by Government as being unringfenced, in practice DfT will expect the funds they put into the pot to emerge in the Plan in the form of transport and infrastructure-related projects. This is therefore the approach that New Anglia is taking. There is virtually no revenue money in the Fund. A full breakdown of the submission can be found here. The table below summarises the funding bid for in the initial 19 December submission, for the six years from 2015/16 to 2020/21:
Description Amount
Six-year transport programme £265m
Capital skills investment £72m
Enterprise and innovation offer £46.5m
EU structural and investment strategy (match funding of £5m per annum for the SIF, overleaf)
£30m
TOTAL £413.5m
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2.2. EU Structural and Investment Fund (SIF). Government is devolving EU funds for the EU programme period 2014-20 down to LEPs. In practice, Government is still retaining control of their management, but LEPs are being given notional allocations, based on population and are able to recommend how the funds should be allocated across a range of EU thematic spending priorities.
New Anglia’s share is £81m over the seven year period. The Fund is roughly half ERDF (European Regional Development Fund) and half ESF (European Social Fund). ERDF funds contribute to economic growth, particularly low carbon, while ESF targets education, skills and employment:
New Anglia has consulted widely on the allocation of these funds between the thematic priorities, which are outlined in more detail in Appendix C.
A key priority of the NGP is to ensure that Norfolk draws down as much of the SIF as possible and the Prospectus will be updated regularly to show how this is being achieved.
2.3. Business Rates. Norfolk Leaders entered into a formal agreement to create a £790,000 Joint Investment Fund, from Business Rates revenues (with £300,000 retained to cover fluctuations in business rates achieved, giving a net investment fund of £490,000), on the basis of the following principles:
“a) The purpose of the Norfolk business rates pool is to make strategic investments designed to support Norfolk priorities within the Local Enterprise Partnership Strategic Economic Plan and support Norfolk’s Economic Growth Strategy.
b) Priority will be given to schemes which:
• Lever funding from LEP growth and European funds
• Support projects which will lead to:
o Job creation
o Further business rates growth
o Housing growth
o Improved skills and qualifications
o New business creation/expansion
These schemes should be ready to start on site and have all relevant permissions, licences, land ownership arrangements in place”.
In due course, both the SEP and the NGP will describe how this Joint Investment Fund is being used to deliver the above outcomes for Norfolk.
2.4. Other funds. Other funds to support the SEP and the NGP may come from a variety of sources, such as the private sector, local authorities, other EU funds and other Government funds, such as the Growing Places Fund, being administered by the LEP.
A key aim of both the SEP and the NGP is to build on the City Deal for Greater Norwich, which was signed in December 2013. The Deal already has its own funding package in place, including the facility to borrow at preferential rates.
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A summary of the City Deal can be found in Appendix D.
3. Progress to date and next steps
3.1 Governance. Norfolk Leaders tasked the Chief Executives Group with overseeing Norfolk’s input to the SEP and development of the NGP. The Chief Executives therefore established a Norfolk Growth Group, comprising District Council Directors or Heads of Service, the County Council’s Assistant Director for Economic Development & Strategy and the New Anglia LEP Programme Director. This is the same model as operates in Suffolk. The Terms of Reference for the Group can be found in Appendix E.
3.2 Timings.
EU SEP. The first draft of the SEP was required to be submitted to Government on 19 December 2013. A copy is available on the New Anglia website, with a hard copy in the Members’ Room.
All district councils and both county councils in Norfolk and Suffolk had the opportunity to comment on the draft, but due to the very tight timescales, consultation was not able to go wider. Further timings are:
• End January/early February 2014: Government feedback on draft plan due
• January - February: stakeholder consultation/engagement on the Plan and proposed interventions
• 31 March 2014: New Anglia submits final version of Strategic Economic Plan
• April 2014: Government starts assessing plans and negotiating with LEPs – advice to ministers by June
• July 2014: Single Local Growth Fund offers made to LEPs
• April 2015: Growth Deals implemented
In terms of County Council endorsement, formal feedback on the December 19 version of the SEP will not be received from Government until February, so it is unlikely to be able to have papers drafted in time for publication for the Cabinet meeting on March 3rd.
Cabinet is therefore requested to grant delegated authority to the Interim Director of ETD, in consultation with the Leader of the Council and the Cabinet Member for Economic Development to sign off the March submission. As can be seen from the above timetable, this is only the start of negotiations between the LEP and Government, with the Growth Deal only due to be approved by the end of July 2014.
As the Council will, by then, have adopted the Committee system, sign off procedures for the final Growth Deal will be reviewed in May 2014.
NGP. Development of the NGP will mirror that of the SEP, with consultation and further development taking place in January/February 2014. As the evolution of the SEP will also influence the NGP, it is proposed to adopt it after the Growth Deal is agreed in July, to ensure the two documents are aligned. Again, the sign off processes will be determined by the new committee
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structure post May 2014.
4. Resource Implications
4.1. Finance: This paper does not make any recommendations or commit any Council resources to specific activities. These will be covered in the final submission to Government.
4.2. Staff: The Council’s Economic Development and Strategy team is leading on development of the NGP and is heavily involved in development the SEP. Current resources can accommodate the formulation of these Plans, however, resources will need to be reviewed when it comes to delivery, particularly the significant programme of transport schemes that we hope to receive funding for.
4.3. Property: This paper does not make any recommendations or commit any Council resources to specific activities. These will be covered in the final submission to Government, or in the project delivery plans for individual interventions agreed.
4.4. IT: As above, for Property.
5. Other Implications
5.1. Legal Implications: Norfolk Leaders signed a formal legal agreement committing a proportion of the Business Rates to support the delivery of economic activity in the SEP. Nplaw have also been involved in the development of the City Deal for Greater Norwich.
5.2. Human Rights: None
5.3. Equality Impact Assessment (EqIA): Both the SEP and the NGP will be subject to an EqIA assessment. It should also be noted that 20% of the c.£40m of ESF funding allocation to New Anglia needs to be spent on social inclusion activities.
5.4. Communications: Stakeholder consultation will take place between the initial submission of the draft SEP on 19 December and the agreement of the Growth Deal in July 2014. Consultation will also take place on the NGP to this timetable.
5.5. Health and Safety Implications: None
5.6. Environmental Implications: The LEP’s ‘Green Pathfinder’ status is a key feature of the SEP and the market for low carbon environmental goods and services is a key sector for development in both Norfolk and the wider New Anglia area. Government guidance also requires that the SEP makes reference to the issue of flood risk and discussions have taken place with the Environment Agency (EA). There is no money in the LGF for flood risk measures, so the section in the SEP will be more about what we expect the EA to do in Norfolk and Suffolk.
5.7. Any other implications: Officers have considered all the implications which members should be aware of. Apart from those listed in the report (above), there are no other implications to take into account.
6. Section 17 – Crime and Disorder Act
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6.1. None.
7. Risk Implications/Assessment
7.1. Individual projects within both plans will be subject to a risk assessment and have their own risk register, such as the Greater Norwich City Deal, which also has its own Growth Board for governance purposes.
8. Overview and Scrutiny Panel Comments
8.1. Due to time constraints for this paper, it has not been to Overview and Scrutiny Panel. They will receive at least one update on the SEP and the NGP before the Growth Deal is concluded in July 2014.
9. Alternative Options
9.1. We could choose not to develop a Strategic Economic Plan, but we would then not have access to Norfolk and Suffolk’s share of the £2.2bn LGF or the £81m notional allocation of EU strategic investment funds. We could also decide not to have a Norfolk Growth Prospectus, but our County Council economic growth strategy is now out of date and, as the economy is central to the authority’s refreshed corporate objectives, we need a clear focus for our limited resources in this area. The NGP will also provide more detail than the SEP, outlining specifically how we plan to deploy EU and Business Rates funding to deliver economic growth for Norfolk.
10. Reason for Decision
10.1. The decision to grant delegated authority to the Leader of the Council to sign off the March submission of the SEP is due to the deadline being incompatible with the Council’s committee timetable. As stated earlier, this is the start of negotiations with Government and processes will be reviewed in May, when the Council is subject to the committee system, to ensure that the Deal can be signed off appropriately by 31 July 2014.
Recommendation / Action Required
Cabinet is asked to:
(i) Note the progress on development of the New Anglia Strategic Economic Plan and Norfolk Growth Prospectus
(ii) Delegate authority to Interim Director of ETD in consultation with the Leader of the Council and the Cabinet Members for Economic Development and Environment, Transport & Waste to approve the New Anglia Strategic Economic Plan, to be submitted to Government by 31 March 2014
Background Papers
Economic Growth Strategy, April 2012 and Progress Update, August 2013 (Cabinet agenda pages 61-72)
Officer Contact
If you have any questions about matters contained in this paper please get in touch with:
If you need this report in large print, audio, Braille, alternative format or in a different language please contact 0344 800 8020 and ask for Jo Middleton or textphone 0344 800 8011 and we will do our best to help.
Appendix A:
The paragraphs below summarise economic development activity since the local government elections in May 2013.
Economic Strategy and Partnerships
• Work is underway on refreshing the Council’s economic growth strategy, which is being developed in parallel with the Strategic Economic Plan for Norfolk and Suffolk.
• The Council, in conjunction with a number of partners, launched the Norfolk Rural Development Strategy, which will be used to secure EU and rural development funding between 2014 and 2020 as well as shape location interventions.
• A refresh of the Norfolk Skills Strategy was produced and has fed into New Anglia’s Skills Manifesto for Norfolk and Suffolk.
• In terms of the Joint Core Strategy for Greater Norwich, produced by the Greater Norwich Development Partnership (comprising the County Council and the district councils for Broadland, Norwich and South Norfolk), the Examination in Public took place and, in December, the Inspector’s Report was received and the Strategy found to be sound.
• In December Government signed off the City Deal for Greater Norwich.
Apprenticeships Norfolk
• In December we achieved our overall target of 441 apprenticeship starts, some 9 months early.
• 15 of the target 40 care leavers have secured apprenticeships and a successful marketing campaign – which has won two regional awards – has been launched.
• The Council has recruited 30 extra apprentices and supported the development of a range of initiatives to increase the flexibility of apprenticeship recruitment for employers.
• We have delivered Choose Your Future, our largest and most comprehensive student convention. Embracing 62 businesses from the construction, engineering, manufacturing and energy sectors, the event attracted 1724 students from 35 schools who brought 125 teachers; it was very highly rated by all participants.
Enterprise Norfolk
• Our Enterprise Norfolk business start up programme, jointly funded by the County Council and district councils, has exceeded its first year target of supporting at least 150 new business starts. Over 500 people have attended three-day workshops designed to help develop business ideas and 350 have attended one-to-one sessions with bespoke advice and support.
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Inward Investment / Investor Development
• Pasta Foods, having outgrown their Great Yarmouth premises were seeking additional premises and we worked successfully with the company, South Norfolk Council, and the LEP to assist them with finding and then acquiring a site in Norwich. This will lead to at least 50 new jobs.
• We are working closely with colleagues from Visit East Anglia, Essex and Suffolk to attract large number of tourists from China through engaging with the main China based tour operators.
• Through the Great Yarmouth Development Company we have been active in Great Yarmouth:
o Delivering 19 high quality dwellings (Royal Britannia Crescent).
o Launching the Gt Yarmouth Energy Park on the South Denes, with sites already available to let/for sale
• Developing the concept with KLM UK Engineering, and Norwich International Airport, of the Norwich International Aviation Academy which we will continue to promote and support over the coming months.
• We have produced a Development Vision for the former RAF Coltishall and we are now moving into the implementation of this
• In partnership with others, we have continued to put a great deal of effort into supporting the energy sector in Gt Yarmouth, including the Enterprise Zone sites:
o There are 226 jobs in the EZ to date (21 of these are construction jobs and 202 are in the Companies themselves
o The total floor-space is 7358 m2, of which 4078 m
2 is new floor-space and
3280 m2 is refurbished floor-space
o There has been £8.5M private capital investment to date.
o Feedback from Government over the way we are all working together to manage this, and deliver the outputs is consistently positive.
• Again, in partnership with Gt Yarmouth Borough Council, Suffolk County, Waveney and North Norfolk District Councils, we continue to invest significantly in the promotion of the two counties, to attract new business, especially in relation to offshore wind and the recent announcement by Statkraft to establish a base in the Gt Yarmouth is testament to our collective efforts
• Substantial case made for Gt Yarmouth (and Lowestoft) to be considered for inclusion in the 2014-2020 Assisted Area Map. This has resulted in the town being successfully included in the DRAFT map published just before Christmas. If successfully retained, it means businesses investing in the towns will be eligible to bid for significantly higher levels of external funding, as and when opportunities emerge.
Securing and managing external funding
• Norfolk County Council beat off stiff competition in its successful bid to run the France (Channel) – England Cross Border programme for the 2014-20 period - worth
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€350m over 7 years. Being the managing authority will enable us to shape the priorities of the programme and raise Norfolk’s profile in Whitehall/Europe, as well as with potential partners to produce funding bids. The team that worked on the bid, from a number of County Council services, won a ‘Working Together’ OSCA for their efforts.
• Norfolk and Cambridgeshire County Councils successfully bid for over £3m of Regional Growth Fund monies to assist agri-tech business start ups. The Norfolk/Cambridgeshire Agri-tech Partnership was launched in Cambridge by Lord Sainsbury in October.
Expansion of Hethel Engineering Centre
• Work is on course to deliver the Advanced Manufacturing Centre early in 2014. This will provide an extra 40,000m
2 of space for existing tenant companies to expand and
new ones to locate to Hethel.
• 4 new tenants moved into Hethel Engineering Centre and HEC expanded its offering to start-up businesses through hot-desking. The offering has been highly successful with the need for more capacity already identified. This new tenancy option will allow virtual tenants to set up operations at HEC, with prospective office and workshop incubation lined up as their businesses develop.
• Hethel Innovation, through its ERDF funding, has so far supported 116 businesses, with a variety of assistance – eg new products, services, processes
Infrastructure
• In view of the new Local Enterprise Arrangements, a Local Transport Body for Norfolk and Suffolk was established, replacing the former body for Norfolk alone. £26m was allocated by the Department for Transport to 14 schemes in both counties. .
• Building on our Prospectus and campaign to raise the profile of the A47 as a strategic route for the county, the Minister for Transport drove the length of the A47 and agreed to launch a feasibility study into key improvements.
• From a bid produced by Norfolk County Council and Norwich City Council, in August the Prime Minister announced a funding package for 8 cities, including Norwich. Norwich’s £3.7m allocation (matched by £1.8m local contribution) aims to double cycling in the next 10 years, generating economic growth by connecting an eight mile cross-city route linking population centres to the locations of 51,500 existing and 12,500 planned jobs.
• Better Broadband for Norfolk, the Council’s programme to improve broadband speeds and access across Norfolk, especially in rural areas is rolling out to agreed budget and timescales, with improved services already available in many areas.
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Appendix B: Make up of the Local Growth Fund, 2015/16
The table below shows the national composition of the Local Growth Fund (LGF), following the 2013 Autumn Statement. This is the breakdown for 2015/16 only. Ministers recognise the importance of a fund that is flexible enough to meet local growth priorities and the ambition is to reflect this in the future composition of LGF, which will be determined, at least in part, at the next Spending Review. Ministers will also be placing significant emphasis on the wider 'Growth Deals' that LEPs will be negotiating off the back of their Strategic Economic Plans.
Funding source Amount (£m) Notes
Local Major Transport Funding 819 1
Further Education Capital 330 2
Integrated Transport Block 200 3
European Social Fund Match 170 4
Housing Revenue Borrowing Increase 150 5
Local Sustainable Transport Fund 100 6
New Homes Bonus 70 7
Regional Growth Fund – Rounds 1-4 63 8
Regional Growth Fund – Round 5 50 9
Large housing site developments 50 10
TOTAL £2002m
It is calculated that New Anglia’s share of the Fund could be up to £60m a year for the 6 years of the Plan. While the funds are technically unringfenced, as the bulk of them are transport capital, the Department for Transport will be expecting to see transport/infrastructure schemes as a key element of plans.
Notes
1 - 3. Capital
4. Revenue. 20% of the ESF element must be used for social inclusion
5. The increased borrowing ability will be available to Local Authorities and must be spent on housing. However only those local authorities with housing stock will be eligible to bid and so only those LEPs with LAs in their geography that have stock will benefit from the funding being made available.
6. Capital
7. Specifically allocated to London and was kept in the LGF at their request. All other NHB is going directly to local authorities, following the Autumn Statement of 5 December 2013.
8. Rounds 1-4 projects - already allocated
9. Conditions apply that make it unlikely NALEP could access this funding
10. 'Large sites' funding. Details of how this funding will work in practice have yet to be finalised, but below is a summary of current expectations about parameters:
• This is an investment programme for LEP priority housing schemes below the scale of Local Infrastructure Fund (i.e. below 1,500+ units).
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• The funding is focussed on recoverable loans plus state aid compliant interest charge, and there may be potential for equity investment.
• The purpose of the investment should be for development finance or infrastructure costs of housing schemes, and investment is available only to private sector bidders.
• Security for investment will be required, and repayment terms will be based on the characteristics of the scheme.
• The programme will be managed by the Homes and Communities Agency
Appendix C: EU Strategic Investment Fund (SIF)
The SIF has been consulted on extensively by New Anglia, and was signed off by the Norfolk Chief Executives at their meeting 19 December (in the absence of a Growth Group meeting at that time, as the final proposal needs to be received by Government by the end of January 2014).
The consultation has focussed on how the £81m of funding is allocated between the EU thematic objectives, or spending priorities. The table below shows the final breakdown. ERDF funds contribute to economic growth, particularly low carbon, while ESF targets education, skills and employment:
Thematic Objective
ERDF ESF % spend
£ spend (m)
TO3 SME competitiveness � 45% 18.20
TO1 Innovation � 30% 12.14
TO4 Low carbon economy � 20% 8.09
TO5 Climate change � 5% 2.02
40.45
TO10 Education, skills � 50% 20.23
TO8 Employment & labour mobility � 30% 12.14
TO9 Social inclusion � 20% 8.09
40.46
NB: 20% of the ESF fund is required to be spent on social inclusion.
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Appendix D: Greater Norwich City Deal
To achieve a step change in jobs growth across Greater Norwich the proposal - put together by the local authorities for Broadland, Norwich, South Norfolk and the County Council - seeks to create 300 new businesses and 3,000 high value jobs across the LEP area by 2015, securing £100m additional private sector investment to support business growth. The Deal seeks to support a number of key sectors:
• An agri-tech and environmental sciences super-cluster, based around the University of East Anglia, Institute of Food Research, Sainsbury Centre, John Innes Centre, the Genome Analysis Centre and the Norwich and Norfolk University Hospital.
The Norwich Research Park (NRP) can play a leading role in the delivery of the Government’s recently published strategy for Agri-Tech. The park has 55 hectares of land available for development, with planning consent, and it has the physical resources to accommodate the whole enterprise journey.
The Government and the Department for Business Industry and Skills (BIS) have already invested £26m, through Project 26, to stimulate enterprise, create start up and incubation space and install key research facilities. A major ‘Centrum’ building will be completed by early 2014. Private sector interests at the park (Bullens) have confirmed their commitment to invest in green field development (102 hectares) – current cost plans are estimated at £14m to provide serviced plots on part of the site.
• Digital creative cluster based around Norwich University of the Arts, the EPIC television production studios and the fast-growing cluster of digital creative businesses
• Norwich Aeropark - aviation cluster based around Norwich Airport and key businesses KLM UK Engineering and Air Livery, with the support of the University of East Anglia and Norwich University Technical College. This will support the growth in the overhaul, maintenance and repair of aircraft.
The City Deal for Greater Norwich will deliver: 13,000 additional jobs above our existing ambitious target of 27,000 new jobs
• 7,000 life sciences and agri-tech
• 5,000 advanced engineering/ green tech
• 1,000 digital creative
• Plus 6000 construction jobs, supporting the whole economy. Interventions
Agri-Tech and life-sciences cluster at Norwich Research Park
Infrastructure requirement:
• A47 junction improvements at Thickthorn and Longwater
• LEP Innovation voucher scheme to link business needs with academic excellence of UEA.
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Aviation Cluster at Norwich International Airport
Infrastructure requirement:
• Link to Northern Distributor Road
• Provision of serviced sites for new business
Skills offer:
• KLM new skills academy (serving all airlines)
• 100 Graduate level engineering apprenticeships by 2015
• Growth plans for graduate and other apprenticeships 2016/17+
• KLM aligned to University of East Anglia & Norwich UTC
Digital Creative Cluster - Norwich City
Enterprise & Innovation opportunity:
• New incubation and grow-on facilities developed by NUA and private sector closely linked to growth hub and enterprise support, including hot desk facilities for growth co-ordinators
• 1,000 job growth potential, at least 150 by 2015/16
• Job/supply chain growth and inward investment accelerated by higher education (HE) innovation vouchers (consultancy, internships etc) and risk growth capital generating minimum 3:1 private sector leverage
Infrastructure requirement:
• increasing public transport, walking and cycling accessibility to a growing city
• Accelerated rollout of superfast Broadband in city centre
Skills offer:
• Closer alignment of HE and further education digital education offer to local sector opportunities
• Increase in digital sector apprenticeships and internships
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Appendix E: Norfolk Growth Group Terms of Reference
Government has requested that Local Enterprise Partnerships (LEPs) produce a Strategic Economic Plan (SEP) for their area, which will be used to negotiate a ‘Growth Deal’, giving access across the LEP area to a Local Growth Fund, to contribute to financing growth priorities in both counties.
Norfolk Chief Executives and Leaders agreed that their input to the SEP would also be framed into a county-specific document, a ‘Norfolk Growth Prospectus’. The Prospectus may also include some county-level initiatives which do not make it into the SEP, which is aimed at high level ‘asks’ of and ‘offers’ to Government.
In response to these requirements, Norfolk Leaders gave the responsibility to Norfolk Chief Executives to take the lead on this. It was agreed to establish a sub-set of the Norfolk Chief Executives, to form a ‘Norfolk Growth Group’. The aim of the Group is to develop a coordinated approach to the key growth issues within the county.
Terms of Reference:
• To provide a coordinated voice for Norfolk growth, to feed into New Anglia and its SEP
• To oversee delivery of the production and implementation of the NGP, updating the Norfolk Leaders’ Group, as needed
• To evaluate project proposals for inclusion in the NGP/SEP, appointing task and finish groups, as necessary
• To gain political buy in to the SEP and NGP from their respective authorities
• To coordinate the economic, planning and housing considerations to enable growth in Norfolk (to include transport and infrastructure)
• To commission studies or assistance from local authority partners or third parties to support the county’s growth agenda.
• Ensure alignment of resources across the county to deliver the outcomes agreed in the SEP and NGP
Key Documents:
• Norfolk Local Economic Assessment and district profiles
• District Local Development Frameworks and Investment Plans
• Norfolk Growth Prospectus and Implementation Plan
• New Anglia Strategic Economic Plan
• Infrastructure: Norfolk Infrastructure Plan; strategic housing market assessments, New Anglia Local Transport Body Priorities for Norfolk and the Norfolk Local Transport Plan
• GNDP Joint Core Strategy
• City Deal Plans for Greater Norwich and Ipswich
• Skills strategies for Norfolk and Suffolk
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Meeting Frequency
Monthly while the NGP and SEP are being produced, bi-monthly thereafter
Membership
• Chair: Sandra Dinneen, District Council Network Economic Development Lead
• District and Borough Councils – Chief Executive, Director or Head of Service
• Norfolk County Council – Assistant Director, Economic Development Strategy
• New Anglia LEP Programme Director
Secretariat: Norfolk County Council
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Report to Cabinet 27 January 2014
Item No 13
Fuel Poverty in Norfolk
Report by the Head of Democratic Services
Summary On 7 January 2014 Community Services Overview and Scrutiny Panel received a report from a scrutiny working group which it had established to review fuel poverty in Norfolk. Two of the fourteen recommendations in the report were for the consideration of members of Norfolk County Council:- 1. That Norfolk County Council takes up the issue of roll-out of mains gas connections with National Grid. 2. That Norfolk County Council expresses support for the Energy Bill Revolution which is calling for the Government to spend its carbon tax revenue, approximately £4 billion per year, on making homes more energy efficient. Community Services Overview and Scrutiny Panel supported the recommendations and agreed to forward them. Recommendation Cabinet is asked to agree each of the recommendations.
1. Introduction
1.1 In July 2013 Community Services Overview and Scrutiny Panel set up
the Fuel Poverty group to examine:-
• The reasons why Norfolk has the highest level of fuel poverty in East Anglia
• Services currently working to alleviate fuel poverty
• What more could be done by the County Council or other organisations and agencies to alleviate fuel poverty.
1.2 The group consisted of six county councillors, including five members
of Community Services Overview and Scrutiny Panel, and a co-opted member from Healthwatch Norfolk. The members of the group came from four different political parties but there was complete consensus on the conclusions and recommendations of its report. Community Services Overview and Scrutiny Panel supported all the
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recommendations.
2. Background to the recommendations
2.1 The background to the two recommendations that Cabinet is being asked to agree is as follows:-
2.2 Recommendation 1: That Norfolk County Council takes up the issue
of roll-out of mains gas connections with National Grid.
The group learned that approximately 80% of properties in Norfolk are not connected to mains gas and that householders who are ‘off grid’ tend to pay significantly more for their heating fuel. This is covered in section 7.3 of the report, which is available in the Community Services Overview and Scrutiny Panel papers on the County Council website:- http://www.norfolk.gov.uk/Council_and_democracy/Your_Council/Committees/DisplayResultsSection/Papers/index.htm?Committee=Community Services Overview and Scrutiny Panel A map of gas connections in Norfolk is attached at Appendix B. Norfolk has a major gas terminal at Bacton, where gas comes onshore from the North Sea gas fields and through two interconnectors that link Great Britain to continental Europe. Bacton is one of the three terminals which together account for 75% of the country’s gas import capacity. The Chairman of the group wrote to National Grid, who manage gas connections, on 14 October and 22 November asking for up-to-date information and for their comments on Norfolk’s situation. No response was received. The group therefore made its recommendation that Norfolk County Council takes up the issue with National Grid.
2.3 Recommendation 2: That Norfolk County Council expresses support
for the Energy Bill Revolution which is calling for the Government to
spend its carbon tax revenue, approximately £4 billion per year, on
making homes more energy efficient.
During the review the group heard from the Federation of Master Builders about the Energy Bill Revolution, which is a public campaign run by an alliance of organisations calling for the Government to spend its carbon tax revenue, approximately £4 billion per year, on making homes more energy efficient. Details about the campaign can be viewed on their website:- http://www.energybillrevolution.org/ The group believed that Norfolk County Council should add its support
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to the campaign.
3. Resource implications
There are no resource implications to the County Council from this report.
4. Other implications
4.1 Equality Impact Assessment There are no equality implications as a direct result of this report.
4.2 Environmental Implications There are no environmental implications as a direct result of this report.
4.3 Section 17 – Crime and Disorder Act There are no crime and disorder implications as a result of this report.
4.4 Risk Implications / Assessment There are no risk implications as a result of this report.
5. Overview and Scrutiny Panel Comments
5.1 Community Services Overview and Scrutiny Panel supports the recommendations of the Fuel Poverty in Norfolk report.
6. Alternative Options
6.1 Cabinet could decide not to agree one or both of the recommendations. In that case the recommendations would be ‘not accepted’ by Norfolk County Council and no further action would be taken. Community Services Overview and Scrutiny Panel would be informed of this decision at its next meeting.
7. Reason for decision
7.1 Community Services Overview and Scrutiny Panel has forwarded the fourteen recommendations of the Fuel Poverty scrutiny group to the various organisations to which they were directed. The Fuel Poverty scrutiny group made these recommendations following a six month period of scrutiny. It believed that all of its recommendations, including these two for members of Norfolk County Council, would be helpful to the ongoing efforts to tackle fuel poverty in Norfolk.
8. Recommendation
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8.1 That Cabinet agrees the recommendations of the Fuel Poverty
scrutiny group:- 1. That Norfolk County Council takes up the issue of roll-out of mains gas connections with National Grid. 2. That Norfolk County Council expresses support for the Energy Bill Revolution which is calling for the Government to spend its carbon tax revenue, approximately £4 billion per year, on making homes more energy efficient.
8.2 If Cabinet agrees the first recommendation, it may wish to approve the draft letter attached at Appendix A.
Background Papers Fuel Poverty in Norfolk – report to 7 January 2014 Community Services Overview and Scrutiny Panel.
Officer Contact If you have any questions about matters contained in this paper please get in touch with: Maureen Orr, Scrutiny Support Manager (Health) Tel No: 01603 228912 [email protected]
If you need this Agenda in large print, audio, Braille, alternative format or in a different language please contact Maureen Orr 0344 800 8020 or 0344 800 8011 (textphone) and we will do our best to help.
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Mr S Holliday Chief Executive National Grid National Grid House Warwick Technology Park Gallows Hill Warwick CV34 6DA
Date 2014 Dear Mr Holliday Fuel poverty in Norfolk A member of this Council wrote to you on 22 November 2013 in her capacity as chairman of a group of councillors tasked with a scrutiny review of fuel poverty in Norfolk. The review ran from July to December 2013. I enclose a copy of the letter and a previous letter dated 14 October 2013, which was sent to a different address for National Grid. The scrutiny group has finished its work and presented its report to Community Services Overview and Scrutiny Panel on 7 January 2014. The report is available on our website (item 10 on 7/1/14 agenda):- http://www.norfolk.gov.uk/Council_and_democracy/Your_Council/Committees/DisplayResultsSection/Papers/index.htm?Committee=Community Services Overview and Scrutiny Panel The group receive no response from National Grid to either of its letters and recommended the County Council to take up the issue with you. Its research found that approximately 80% of properties in Norfolk are not connected to mains gas and that this is a major contributor to the high level of fuel poverty in the county. I would be interested to know about plans for improving the rate of mains gas connections to residential properties in Norfolk and hope that you will respond to this letter. Yours sincerely Councillor George Nobbs Leader of Norfolk County Council
