Policy and Co-ordination Committee Conference Rooms 2/3, Ground Floor, Fife House, North Street, Glenrothes Thursday, 13th September, 2018 - 10.00 a.m. ________________________________________________________________________ AGENDA Page Nos. 1. APOLOGIES FOR ABSENCE. 2. DECLARATIONS OF INTEREST - In terms of Section 5 of the Code of Conduct, members of the Committee are asked to declare any interest in particular items on the agenda and the nature of the interest(s) at this stage. 3. MINUTES – (i) Policy and Co-ordination Committee of 7th June, 2018. (ii) Appointments Sub-Committee of 4th June, 2018. (iii) Fife Partnership Board of 15th May and 14th August, 2018. (iv) Superannuation Fund and Pensions Sub-Committee of 11th June and 15th August, 2018. 3 – 5 6 7 – 15 16 - 22 POLICY AND STRATEGY 4. ANNUAL WORKFORCE REPORT 2017/18 – Report by the Head of Human Resources. 23 - 29 FINANCE 5. GENERAL FUND REVENUE BUDGET 2019-22 - Report by the Executive Director (Finance and Corporate Services). 30 - 43 6. CAPITAL STRATEGY 2019-29 - Report by the Executive Director (Finance and Corporate Services). 44 - 64 7. REVENUE BUDGET 2018-19 FINANCIAL MONITORING - Report by the Executive Director (Finance and Corporate Services). 65 - 80 8. CAPITAL INVESTMENT PLAN UPDATE – PROJECTED OUTTURN 2018-19 - Report by the Executive Director (Finance and Corporate Services). 81 - 89 9./ 1
2. DECLARATIONS OF INTEREST - In terms of Section 5 of the Codeof Conduct, members of the Committee are asked to declare anyinterest in particular items on the agenda and the nature of theinterest(s) at this stage.
3. MINUTES –
(i) Policy and Co-ordination Committee of 7th June, 2018.(ii) Appointments Sub-Committee of 4th June, 2018.(iii) Fife Partnership Board of 15th May and 14th August, 2018.(iv) Superannuation Fund and Pensions Sub-Committee of
11th June and 15th August, 2018.
3 – 5 6
7 – 15 16 - 22
POLICY AND STRATEGY
4. ANNUAL WORKFORCE REPORT 2017/18 – Report by the Head ofHuman Resources.
23 - 29
FINANCE
5. GENERAL FUND REVENUE BUDGET 2019-22 - Report by theExecutive Director (Finance and Corporate Services).
30 - 43
6. CAPITAL STRATEGY 2019-29 - Report by the Executive Director(Finance and Corporate Services).
44 - 64
7. REVENUE BUDGET 2018-19 FINANCIAL MONITORING - Reportby the Executive Director (Finance and Corporate Services).
65 - 80
8. CAPITAL INVESTMENT PLAN UPDATE – PROJECTEDOUTTURN 2018-19 - Report by the Executive Director (Finance andCorporate Services).
81 - 89
9./
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- 2 – Page Nos.
9. TRADING ARRANGEMENTS IN FIFE COUNCIL – 2018 UPDATE - Report by the Executive Director (Finance and Corporate Services).
90 - 95
SCRUTINY
10. REVENUE MONITOR 2017-18 (FINANCE AND CORPORATE
SERVICES) – PROVISIONAL OUTTURN - Report by the Executive Director (Finance and Corporate Services).
96 - 102
11. REVENUE MONITORING 2018-19 (FINANCE AND CORPORATE
SERVICES) - Report by the Executive Director (Finance and Corporate Services).
103 - 108
12. CAPITAL MONITOR 2017-18 (FINANCE AND CORPORATE
SERVICES) – PROVISIONAL OUTTURN - Report by the Executive Director (Finance and Corporate Services).
109 - 113
13. CAPITAL MONITORING 2018-19 (FINANCE AND CORPORATE
SERVICES) - Report by the Executive Director (Finance and Corporate Services).
114 - 118
14. GLENROTHES HEAT PROJECT – PROPOSED AMENDMENT TO
SERVITUDE AGREEMENT – Joint report by the Head of Economy, Planning and Employability Services and Head of Assets, Transportation and Environment.
119 - 121
ITEMS LIKELY TO BE CONSIDERED IN PRIVATE
15. GLENROTHES HEAT PROJECT – PROPOSED AMENDMENT TO
SERVITUDE AGREEMENT – Joint report by the Head of Economy, Planning and Employability Services and Head of Assets, Transportation and Environment.
122 – 125
16. MODERNISING PROCESSES FOR FINANCIAL AND PEOPLE
MANAGEMENT– Report by the Executive Director (Finance and Corporate Services).
126 - 167
17. POPPYVIEW FAMILY CENTRE – Report by the Executive Director
(Finance and Corporate Services). 168 - 171
Members are reminded that, should they have queries on the detail of a report, they should, where possible, contact the report authors in advance of the meeting to seek clarification.
Linda Bissett, Head of Democratic Services Fife House Glenrothes, Fife. KY7 5LT
6th September, 2018.
If telephoning, please ask for:- Michelle McDermott, Committee Administrator, Fife House, Glenrothes Telephone: 03451 555555 Ext. 442238 or email: [email protected] Agendas and papers for all Committee meetings can be accessed on www.fifedirect.org.uk/committees
THE FIFE COUNCIL – POLICY AND CO-ORDINATION COMMITTEE – GLENROTHES 7th June, 2018. 10.00 a.m. – 11.55 a.m. PRESENT: Councillors David Alexander (Convener), John Beare, Tim Brett,
Altany Craik, Neil Crooks, Dave Dempsey, Linda Erskine, David Graham, Judy Hamilton, Andy Heer, Linda Holt, Helen Law, Carol Lindsay, Karen Marjoram, Tony Miklinski, Fay Sinclair and Ross Vettraino.
ATTENDING: Steve Grimmond, Chief Executive; Eileen Rowand, Executive Director
(Finance and Corporate Services), Elaine Muir, Head of Finance, Laura Robertson, Finance Operations Manager, Vicki Greig, HR Lead Officer, Human Resources, Andrew Ferguson, Manager (Committee Services) and Michelle McDermott, Committee Administrator, Democratic Services, Finance and Corporate Services; Paul Vaughan, Head of Communities and Neighbourhoods Service and Zahida Ramzan, Policy Co-ordinator (Equalities), Communities and Neighbourhoods Service, Communities Directorate; Robin Presswood, Head of Economy, Planning and Employability Services and Ian McCrory, Lead Professional (Economic Regeneration), Economy and Employability Services.
APOLOGIES FOR ABSENCE: Councillors Donald Lothian, David Ross and Craig Walker. 77. DECLARATION OF INTEREST Councillor Tony Miklinski declared an interest at para. 81 – Annual Equalities Review
Report 2017-2018 – being a parent of a son with autism. 78. MINUTES
(a) Policy and Co-ordination Committee of 12th April, 2018 Decision
79. REVENUE BUDGET 2017-18 PROVISIONAL OUTTURN The Committee considered a report by the Executive Director (Finance and
Corporate Services) providing members with a strategic overview of Fife Council’s financial position on all revenue budgets for the 2017-18 financial year and detailing the projected level of balances held by the Council.
Decision The Committee:- (1) noted the financial position as detailed in the report; (2) noted that detailed provisional outturn reports would be submitted to the
Policy and Co-ordination Committee and relevant Strategic Committees; (3) approved the exclusion of Health and Social Care from the budget carry
forward scheme; (4) approved the budget carry forward as outlined in Appendix 4 of the report;
and (5) approved the allocation of the £1.000m Economic Development funding as
£0.250m each to Glenrothes, Cowdenbeath, Levenmouth and Kirkcaldy as outlined in paragraph 6.1.5 of the report and agreed that a report be submitted back to Committee in June, 2019 providing an update on how the £1.000m funding allocation was apportioned.
80. CAPITAL INVESTMENT PLAN UPDATE – PROVISIONAL OUTTURN 2017-18 The Committee considered a report by the Executive Director (Finance and
Corporate Services) providing members with a strategic overview of the Capital Investment Plan and detailing the provisional outturn for the 2017-18 financial year.
Decision The Committee approved the realignment of budgets no longer required as part of
the funding strategy for equal pay and noted:- (1) the key issues relating to the Capital Investment Plan; (2) the provisional outturn position for the major projects within the Capital
Investment Plan; (3) the risks identified on major projects within the Capital Investment Plan and
the mitigating actions associated with those risks; (4) the provisional outturn position for the 2017-18 Capital Investment Plan; (5)/
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(5) that detailed capital outturn reports for 2017-18 would be submitted to relevant Committees of the Council in accordance with financial reporting arrangements; and
(6) that budget variances would be managed by the Investment Strategy Group in
conjunction with the appropriate Directorate. 81. REGENERATION CAPITAL GRANT FUND IN FIFE The Committee considered a report by the Head of Economy, Planning and
Employability Services advising members on the key objectives of the Regeneration Capital Grant Fund (RCGF), the ways in which it had supported Fife-based projects in the past and the approach that Fife Council had taken for assessment and submission of applications.
Decision The Committee:- (1) noted Fife’s success in securing Regeneration Capital Grant Funding since
the fund first opened in 2012; (2) noted the key criteria set by the Scottish Government / COSLA governing the
fund; and (3) approved the approach taken in Fife to the identification and assessment of
potential project bids. 82. ANNUAL EQUALITIES REVIEW REPORT 2017-2018 The Committee considered a report by the Head of Communities and
Neighbourhoods Service providing members with an update on actions that had been taken under the Equality and Diversity Scheme along with examples of what had been achieved from April, 2017 to March, 2018.
Detailed discussion then took place with regard to the possibility of introducing
British Sign Language classes into schools and also the need for other areas of equality being highlighted, such as autism, which were not contained within the Equality and Diversity Annual Review Report.
Decision The Committee noted the progress made towards achieving the first year outcomes
THE FIFE COUNCIL – POLICY AND CO-ORDINATION COMMITTEE - APPOINTMENTS SUB-COMMITTEE - GLENROTHES. 4TH June 2018 10:00 a.m. – 11.30 a.m. PRESENT: Councillors Linda Erskine, Andy Heer, Alice McGarry and Fay
Anne-Marie Cardle, HR Service Manager. 06. APPOINTMENT OF CHAIR Decision It was agreed that Councillor Fay Sinclair be appointed Chair of the Sub-Committee. 07. EXCLUSION OF PUBLIC AND PRESS Decision That under Section 50(A)(4) of the Local Government (Scotland) Act 1973 the public
be excluded from the meeting for the following item of business on the grounds that it involved the likely disclosure of exempt information as defined in Paragraph 1 of Part I of Schedule 7A to the Act.
08. APPOINTMENT OF HEAD OF EDUCATION The Sub-Committee considered the relevant application form and supporting
information submitted for the applicant to be interviewed for the post of Temporary Head of Education – Senior Phase and Employability.
Decision The Sub-Committee agreed that the post of Temporary Head of Education – Senior
Phase and Employability be offered to Philip Black.
MINUTE OF MEETING HELD ON TUESDAY 15TH MAY, 2018FIFE HOUSE, NORTH STREET, GLENROTHES - 10.00 A.M. – 12.10 NOON
PRESENT: Councillors David Ross (Chair), David Alexander and Dave Dempsey;Steve Grimmond, Chief Executive, Fife Council; Tricia Marwick, NHS FifeBoard Chair; Dr. Margaret Hannah, Director of Public Health, NHS Fife;Chief Inspector Kevin Woods and Superintendent Derek McEwan, PoliceScotland; Danny Cusick, Senior Portfolio Director, Scottish Enterprise;Gordon MacDougall, Head of Operations (North East Scotland), SkillsDevelopment Scotland; Kenny Murphy, Chief Executive, Fife VoluntaryAction; Shirley Laing, Deputy Director (Social Justice & Regeneration),Scottish Government; and David Crawford DWP JCP IntegratedOperations Manager, Fife and Business Support, Department for Workand Pensions.
ATTENDING: Michael Enston, Executive Director Communities; Tim Kendrick,Community Manager (Development); Sharon Murphy, Policy Co-ordinator(Community Planning); Gregor Wilson, Designer, Communications &Customer Insight Team; Kevin Sayer, Community Manager(Cowdenbeath); Leah Levein, Local Development Officer; Sinead Hain,Policy Officer, Communities and Neighbourhoods (Kirkcaldy Area);Andrew Ferguson, Manager and Lesley Robb, Lead Officer, CommitteeServices; Rab Clark, Housing Professional Tenant Participation, HousingServices, Fife Council; Liz Bradley, Joan Hutton and David Whyte,Lindores and Katrine Tenants Residents Association and SharonReynolds, Dallas Drive Tenants and Residents Association.
College; George Eckton, Partnership Director, Jim Grieve, Head ofProgrammes, SEStran; Professor Brad Mackay, Vice-Principal, StAndrews University; and Michael Kellet, Director of Fife Health & SocialCare Partnership.
20. WELCOME/INTRODUCTORY REMARKS
The Chair welcomed members of the Board to Templehall Community Centre, Kirkcaldyfor the meeting of Fife Partnership Board where there would be an opportunity later tomeet with some local residents during an update of the Templehall NeighbourhoodPlan.
21./
Policy and Co-ordination Committee13th September, 2018.Agenda Item No. 3(iii)
7
21. MINUTES The Board considered the minute of meeting of the Fife Partnership Board of
21st November, 2017. Decision The minute was approved. 22. FIFE COMMUNITY AND VOLUNTARY SECTOR’S APPROACH TO TACKLING
INEQUALITY AND PROMOTING FAIRNESS IN FIFE – ACTION PLAN 2018/19. The Board considered a report detailing the strategic action plan for the Fife Community
and Voluntary Sector. The plan outlined the key tasks the group were looking to implement during 2018/19 in an effort to tackling inequality and promoting fairness in Fife.
Decision The Board noted the action plan. 23. PLAN FOR FIFE – UPDATE AND APPROVAL ON PLAN, PERFORMANCE
FRAMEWORK, GOVERNANCE AND IMPROVEMENT The Board received an update by the Executive Director, Communities Directorate, on
the Plan for Fife 2017 – 2027. The update had been produced following approval of the original plan at the Board’s previous meeting of 21st November, 2017 where it was agreed that the plan be updated to show management and governance arrangements clearly defined. The plan now sets out SMART objectives and a proposed performance framework.
Decision The Board considered and approved;
the updated Plan for Fife; the proposed performance framework; and the revised governance arrangements detailed in the plan.
24. LOCAL COMMUNITY PLANNING – UPDATE
The Board considered a report by the Executive Director, Communities Directorate providing an update on local community planning. The report gave an overview of the work carried out so far in developing local community plans and neighbourhood plans in each of the seven areas across Fife and detailed the work planned over the next six months to support further development. Decision/
8
Decision
The Board noted the report.
25. NEIGHBOURHOOD PLAN – PLAN FOR TEMPLEHALL – PRESENTATION –UPDATE
The members of Templehall Neighbourhood Development Group provided the Boardwith a very informative presentation on the work they have carried out to date indeveloping the Templehall Neighbourhood Plan. This included a brief overview of thecommunity engagement exercises that have taken place in the area while working ondeveloping the plan and the work that continues to be done to support plan goingforward.
Representatives from some of the local TRA groups were also present and were able todiscuss with board members the work being done within their local communities andhow the groups have been involved in helping council officials develop theirneighbourhood plan.
Decision
The Board thanked the officers and local representatives for their informativepresentation and noted the work carried out by the Kirkcaldy Area CommunityDevelopment Team in developing the Templehall Neighbourhood Plan.
26. PARTICIPATORY BUDGETING – UPDATE
The Board were provided with an update by the Community Manager (Cowdenbeath)on the use of participatory budgeting within Fife Council. The Board were provided withsome examples of how this has been used in some areas. How this has allowed localpeople to participate in deciding how some of the local budgets have been spent andthe plans Fife Council have to expand the use of this to further encourage localengagement. This update was supplemented with a background paper by CorynBarclay.
During the debate the Board discussed how participatory budgeting may be useful forsome of the partner organisations to adopt in order to include the local community indeciding how local funds are to be spent and that further discussions at a futuremeeting of this board or at a separate workshop would be useful.
Decision
The Board agreed; to note the contents of the report; and that further discussions on participatory budgeting, in the form of a workshop for
participants from all partner organisations should be considered.
27./
9
27. #OURFIFE COMMUNICATIONS STRATEGY FOR PLAN FOR FIFE –
PRESENTATION The Board considered a report by Communications and Customer Insight Manager, Fife
Council setting out Fife Council’s communications strategy for the Plan for Fife and how the vision for the Future Council will be communicated. The update included details on the challenges facing the organisation in continuing to connect with residents and communities and the communication aims, objectives and engagement tactics moving forward.
Decision The Board noted the report. 28. FAIRER SCOTLAND DUTY - IMPACT OF THE PLAN FOR FIFE The Board considered a report by the Community Investment Team, Communities
Directorate, Fife Council detailing how the Fairer Scotland Duty has been considered in relation to the Plan for Fife and highlights key actions in the plan in tackling inequalities of outcome.
Decision The Board noted the report. 29. FIFE PARTNERSHIP BOARD - FORWARD PLAN AND REPORTING TIMETABLE -
VERBAL UPDATE The Board were advised that a draft timetable for future meetings is being prepared and
would be presented at the next meeting. Updates on the Community Learning and Development Plan and the Community
Engagement framework would also be provided at the meeting in August, 2018. Members were asked that should they have any items they wished to be discussed at
future Fife Partnership Board meetings these should be forwarded to Sharon Murphy. Decision The Board noted the update. 30. NEXT MEETING The next meeting will take place on Tuesday 14th August, 2018 at 10:00 a.m.,
Police Scotland Offices, Detroit Road, Glenrothes.
________________________
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FIFE PARTNERSHIP BOARD
MINUTE OF MEETING HELD ON TUESDAY 14th AUGUST, 2018 Police Scotland Offices, Glenrothes - 10.00 A.M. – 12.00 NOON
PRESENT: Councillors David Alexander (Chair), David Ross and Dave Dempsey; Steve Grimmond, Chief Executive, Fife Council; Tricia Marwick, NHS Fife Board Chair; Paul Hawkins, Chief Executive, Dr. Margaret Hannah, Director of Public Health and Donna Milne, NHS Fife; Chief Superintendent Colin Gall and Superintendent Derek McEwan, Police Scotland; Elaine Morrison, Scottish Enterprise; Shirley Laing, Deputy Director (Social Justice & Regeneration), Scottish Government; Dr Kris Getchell, Assistant Principal Digital, Fife College; Iain Brocklebank, Station Manager, Scottish Fire and Rescue; Michael Kellet, Director of Fife Health & Social Care Partnership and David Crawford DWP JCP Integrated Operations Manager, Fife and Business Support, Department for Work and Pensions.
ATTENDING: Michael Enston, Executive Director Communities; Paul Vaughan, Head of Communities and Neighbourhoods; Tim Kendrick, Community Manager (Development); Sharon Murphy, Community Planning Manager; Morag Boyter, Team Manager, Corporate Development and Lesley Robb, Lead Officer, Committee Services.
APOLOGIES FOR ABSENCE: Gordon MacDougall, Head of Operations (North East Scotland), Skills
Development Scotland; Kenny Murphy, Chief Executive, Fife Voluntary Action; Hugh Hall, Principal, Fife College; Roddie Keith, Local Senior Officer and Calum Bruce, Group Manager (Deputy) Scottish Fire and Rescue; George Eckton, Partnership Director, Jim Grieve, Head of Programmes, SEStran and Professor Brad Mackay, Vice-Principal, St Andrews University.
31. WELCOME/INTRODUCTORY REMARKS
The Chair welcomed members of the Board to Police Scotland Offices, Glenrothes and noted that this would be Dr Margaret Hannah’s final meeting of the Fife PartnershipBoard. The Chair thanked Dr Hannah for her previous work and contribution to Fifethrough her work with both NHS Fife and the Fife Partnership Board. Donna Milne willreplace Dr Hannah at future meetings of the Board.
Chief Superintendent Colin Gall advised the Board that this would also be his finalmeeting with Fife Partnership due to his forthcoming retirement from Police Scotland.The Chair also thanked Colin for his contribution to the Board over the previous years.Superintendent Derek McEwan will attend future meetings of Fife Partnership Board inhis new role of Chief Superintendent.
The Board considered the minute of meeting of the Fife Partnership Board of 15TH May, 2018.
Decision
The Board:
• approved the minute; and• noted that a workshop to consider Participatory Budgeting within partner
organisations is still to be arranged.
33. PLAN FOR FIFE – THEME REPORTS – THRIVING PLACES AND COMMUNITY LEDSERVICES
The Board considered two themed reports submitted by the Executive Director,Communities, Fife Council on the Plan for Fife on the subjects of ‘Thriving Places’ and‘Community Led Services’. Plans were in place to submit these update reports to theboard on an annual basis. The Board was asked to consider the update reports as wellas the format of the reports for providing future updates.
Decision
The Board:
• noted the content of the two progress reports;• agreed that, in respect of the ‘Thriving Places’ theme, a future report on work
being done in the areas of shared assets and opportunities for better use ofassets/land of the Partnership organisations would be welcomed;
• agreed that Fife Council and DWP continue to work in close partnership, toensure all is being done locally to help minimise rent arrears for Fife residentsduring the continued roll out of Universal Credit;
• suggested that in future progress reports for Thriving Places, information on thenumber of refusals for property allocations and the number of vacant propertiesin Fife would be useful to provide an indication of the public perception of thestandard of available housing accommodation;
• suggested that the ongoing regeneration of Town Centre areas should lookbeyond these areas as simply being places to buy and consider what else theycould be provide for the local communities;
• acknowledged that in Community Led Services progress report there had beendifficulty in measuring progress in this area;
• recognised that despite it being difficult to measure progress there had still beenprogress made in respect of Community Led Services, for example Fife Council’sParticipatory Budgeting exercises and the setting up of local community hubssuch as The Well, Kennoway;
• recognised that the Partnership members need to consider how work can bedone collaboratively to measure the progress in the area of Community LedServices.
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34. LOCAL GOVERNANCE REVIEW The Board considered a report by Head of Communities and Neighbourhoods, Fife
Council to introduce the Local Governance Review.
Scottish Government and COSLA have jointly launched a review to explore how local communities can have more say about how public services in their area are run and to consider how powers, responsibilities and resources are shared across national and local spheres of government and with communities. The report identified some issues for the Board to consider in its response to the review. Decision
The Board considered the report and agreed the following points should be considered
in the response to the review:
• as the Partnership has now been in place for 18 years, a review of the current governance arrangements would be appropriate;
• regionalisation and nationalisation of the individual partners have made it difficult to keep track of incomes, costs and progress made within individual communities;
• the review would be an ideal opportunity to consider leadership skill sets for the future and the potential for cross training across partnerships;
• discussions should continue on whether or not the current levels of centralisation and regionalisation continue to be appropriate;
• there should be recognition that Fife, as a local authority area, has a diverse range of communities in comparison to Edinburgh and Glasgow;
• consideration needs to made on what should be happening collaboratively between the Partnership members;
• consider whether any reporting arrangements between Partnership members is overburdened, for example between NHS Fife and Fife Council in terms of Health and Social Care IJB;
• recognise the difficulties experienced in aligning the budgets of some Partnership members when required, for example NHS & Fife Council in terms of Health and Social Care IJB; and
• consider if there are any requests that need to be made of Central Government to enable more local accountability.
35. PUBLIC HEALTH REFORM: SCOTLAND’S PUBLIC HEALTH PRIORITIES The Board considered a report by the Director of Public Health, NHS Fife detailing a public health reform programme under way in Scotland. The first key milestone of the programme was to establish public health priorities for Scotland. Following engagement with a wide range of national and local stakeholders recommendations had been made on the final set of priorities being:
• Place/
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• Place and Community• Early Years• Mental health and Wellbeing• Harmful substances (including tobacco, alcohol and other drugs)• Poverty and inequality• Diet and Physical Activity
NHS Fife Board endorsed these priorities in July 2018 and committed to taking forwardcollaborative action with its partners. The Board was asked to endorse Scotland’s publichealth priorities and remit co-ordination of implementation to the relevant localpartnerships.
Decision
The Board;
• noted the report; and• agreed to endorse the priorities as detailed.
36. FIFE PARTNERSHIP BOARD – FORWARD WORK PROGRAMME ANDREPORTING TIMETABLE
The Board were provided with a work programme for future Fife Partnership Boardmeetings which detailed the scheduling of future themed reports to the Board. Anyitems that members wished to be included or considered should be submitted to SharonMurphy, Community Planning Manager, Fife Council in the first instance.
Decision
The board noted the update.
37. NEXT MEETING
The next meeting will take place on Tuesday 13th November, 2018 at 10:00 a.m., FifeCouncil, Fife House, Glenrothes.
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THE FIFE COUNCIL – POLICY AND CO-ORDINATION COMMITTEE – SUPERANNUATION FUND AND PENSIONS SUB-COMMITTEE - GLENROTHES
11th June, 2018. 9.30 a.m. – 12.20 p.m.
PRESENT: Sub-Committee: Councillors Dave Dempsey (Convener), Altany Craik, Colin Davidson, Kate Stewart and Jonny Tepp.
Fife Pension Board: Councillor Richard Watt, Robert Graham and John Ireland.
ATTENDING: Eileen Rowand, Executive Director (Finance and Corporate Services), Elaine Muir, Head of Finance, Laura Robertson, Finance Operations Manager, Anne Bence, Accountant, Fiona Clark, Pensions Specialist, Karen Balfour, Senior Banking and Investments Officer, Andrew Ferguson, Manager (Committee Services) and Michelle McDermott, Committee Administrator, Finance and Corporate Services.
ALSO Simon Jones, Hymans Robertson; Clare Scott, Lothian Pension ATTENDING: Fund (for para. 33 only); Hans-Christoph Hirt and Alice Musto,
APOLOGIES Sub-Committee - Councillors Bobby Clelland, Fiona Grant, FOR ABSENCE: Mino Manekshaw and Alistair Suttie.
Fife Pension Board – Councillor Ian Ferguson, Gordon Pryde, Colin Paterson and Vicki Wyse.
30. MINUTE
The minute of the meeting of the Superannuation Fund and PensionsSub-Committee of 28th February, 2018 was submitted.
Decision
The Sub-Committee noted the minute which had been approved by the Policyand Co-ordination Committee on 26th March, 2018.
31. LGPS ADVISORY BOARD ADVICE ON FIDUCIARY DUTY
The Sub-Committee considered a report by the Head of Democratic Servicesadvising members of the most current legal opinion sought by the SchemeAdvisory Board on the fiduciary duty of Pensions Committees as well as otherpublic and private law duties in the light of recent discussions onenvironmental, social and governance (ESG) considerations.
Decision
The Sub-Committee noted the advice contained in the report and Appendices.
The Sub-Committee agreed that under section 50(A)(4) of the Local Government (Scotland) Act 1973, the public be excluded from the meeting for the following items of business on the grounds that they involved the likely disclosure of exempt information as defined in paragraph 6 of Part 1 of Schedule 7A to the Act.
33. PENSIONS COLLABORATION The Sub-Committee considered a report by the Head of Finance providing
members with an update relating to the work that had been ongoing to progress the proposals for joint working with Lothian Pension Fund.
Decision The Sub-Committee:- (1) noted the progress made to date; (2) agreed that the Memorandum of Understanding appended to the report
be signed by both parties, subject to negotiation of any further refinements acceptable to the Head of Legal Services and Head of Finance, in order to progress the joint working as set out in earlier reports;
(3) agreed to delegate powers to the Head of Finance to implement the
collaborative arrangements set out in the report and the Memorandum of Understanding in line with those set out at Appendix 4 to the report;
(4) agreed the appointment of the Head of Finance to the Joint Investment
Strategy Panel in line with the Memorandum of Understanding; and (5) agreed that regular updates on progress by way of briefing notes, as
well as further reports to the Sub-Committee, would be given to members when required.
34. SUPERANNUATION FUND PERFORMANCE REVIEW – FIRST QUARTER
2018 The Sub-Committee considered a report by the Head of Finance providing an
overview of the Fund’s investment arrangements as at 31st March, 2018 and summarised investment activity over the last quarter.
It/
16
It was noted that the fund had outperformed its composite benchmark across all of the five most recent calendar quarters and across nine of the most recent twelve. Details of the performance by the various investment managers were outlined in the report.
Decision The Sub-Committee noted the report.
35. ANNUAL REPORT ON THE LOCAL GOVERNMENT PENSION SCHEME
The Sub-Committee considered a report by the Executive Director (Finance
and Corporate Services) providing members with an annual update on the Local Government Pension Scheme.
Decision The Sub-Committee noted the contents of the report. 36. PENSIONS ADMINISTRATION MONITORING REPORT The Sub-Committee considered a report by the Executive Director (Finance
and Corporate Services) providing members with monitoring information on the performance of the Pensions Team.
Decision The Sub-Committee noted the contents of the report. The Sub-Committee adjourned at 11.00 a.m. and reconvened at 11.10 a.m.
37. HERMES EQUITY OWNERSHIP SERVICES (EOS) The Sub-Committee heard presentations from Hans-Christoph Hirt and
Alice Musto, Hermes Equity Ownership Services (EOS) giving an overview of their services in implementing best practice stewardship through various activities.
The presentations detailed various services provided by Hermes EOS and
discussion took place on the following:-
• Engagement Plan themes for 2018-2020; • Corporate Engagement process; • Voting process and activity; • Climate Change engagements; and • Hermes EOS’ vision for 2020.
Decision The Sub-Committee thanked Hans-Christoph Hirt and Alice Musto for their
informative and detailed presentations. _____________________________________________
FOR/ 17
FOR INFORMATION
There were circulated, for the information of members, the following documents:-
1. Manager Mandate Summary as at 31st March, 20182. CBRE Global Investment Partners Quarterly report to 31st March, 20183. Janus Henderson Investors – Active Corporate Bond Portfolio - Report
31st March, 20184. Janus Henderson Investors – Government Bond Portfolio – Report 31st March,
20185. Hermes Voting Report for Fife Council – Q1 20186. Hermes Engagement Report for Fife Council – Q1 20187. Hermes EOS Public Engagement Report – Q1 20188. Lazard Asset Management – Portfolio Review Q1 20189. Lazard Asset Management – Global Thematic Equity Strategy Review Q1 201810. Northern Trust Sterling Cash Fund – 31st March, 201811. Partners Group Global Infrastructure 2009 – Capital account statement
31st March, 201812. Partners Group Direct Infrastructure 2011 – Capital account statement
31st March, 201813. Partners Group Global Infrastructure 2012 – Capital account statement
31st March, 201814. Partners Group Global Infrastructure 2015 – Capital account statement
31st March, 201815. Partners Group Direct Infrastructure 2015 – Capital account statement
31st March, 201816. State Street Quarterly Investment Report – 31st March, 201817. State Street Fundamental Index Global Equity Fund Factsheet 31st March,
201818. Western Asset Management Investment Report – March 2018
THE FIFE COUNCIL – POLICY AND CO-ORDINATION COMMITTEE – SUPERANNUATION FUND AND PENSIONS SUB-COMMITTEE - GLENROTHES
15th August, 2018. 9.30 a.m. – 11.50 a.m.
PRESENT: Sub-Committee: Councillors Dave Dempsey (Convener), Bobby Clelland, Colin Davidson, Fiona Grant, Mino Manekshaw, Kate Stewart, Alistair Suttie and Jonny Tepp.
Fife Pension Board: John Ireland, Gordon Pryde, John Wincott and Vicki Wyse.
ATTENDING: Elaine Muir, Head of Finance, Anne Bence, Accountant, Fiona Clark, Pensions Specialist, Karen Balfour, Senior Banking and Investments Officer, Andrew Ferguson, Manager (Committee Services) and Michelle McDermott, Committee Administrator, Finance and Corporate Services.
ALSO ATTENDING: Bruce Miller and Albert Chen, Lothian Pension Fund.
APOLOGIES Sub-Committee – Councillor Altany Craik. FOR ABSENCE: Fife Pension Board – Councillors Ian Ferguson and
Richard Watt, Robert Graham and Colin Paterson.
38. MINUTE
The minute of the meeting of the Superannuation Fund and PensionsSub-Committee of 11th June, 2018 was submitted.
Decision
The Sub-Committee:-
(1) agreed to approve the minute; and
(2) with regard to paragraph 31 – LGPS Advisory Board Advice onFiduciary Duty – agreed that further guidance on fiduciary duty wouldbe circulated as and when updates on the position were available.
39. CHANGES TO FIFE PENSION BOARD REPRESENTATION ONSUB-COMMITTEE
Decision
The Sub-Committee noted that John Wincott had replaced Carol Scott as therepresentative for Scheduled Bodies on the Fife Pension Board.
The Sub-Committee agreed that under section 50(A)(4) of the Local Government (Scotland) Act 1973, the public be excluded from the meeting for the following items of business on the grounds that they involved the likely disclosure of exempt information as defined in paragraph 6 of Part 1 of Schedule 7A to the Act.
41. PENSIONS ADMINISTRATION MONITORING REPORT The Sub-Committee considered a report by the Executive Director (Finance
and Corporate Services) providing members with monitoring information on the performance of the Pensions Team.
Decision The Sub-Committee noted the contents of the report. Councillor Clelland joined the meeting following consideration of the above item. 42. PENSION FUND BUDGETARY CONTROL The Sub-Committee considered a report by the Executive Director (Finance
and Corporate Services) providing members with details of the provisional outturn of the Pension Fund for 2017-18 and projected outturn for 2018-19.
Decision The Sub-Committee:- (1) noted the provisional outturn for 2017-18; (2) noted the projected outturn for 2018-19; (3) noted that further reports in relation to the financial position of the Fund
would be brought forward on a bi-annual basis. However, it was agreed that a further report be submitted to the meeting in November taking on board suggestions provided by members in improving the format and content of the report and also including the reporting of management expenses; and
(4) agreed that information provided within the report be reviewed on an
ongoing basis. The meeting adjourned at 10.10 a.m. and re-convened at 10.20 a.m. 43./
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43. SUPERANNUATION FUND – INVESTMENT UPDATE
The Sub-Committee considered a report by the Head of Finance providing anoverview of the Fund’s investment arrangements as at 30th June, 2018 andsummarised investment activity over the last quarter. Details of theperformance by the various investment managers were also outlined in thereport.
Albert Chen of Lothian Pension Board provided an update on investmentactivity and advised that Lothian Pension Board were currently in the processof reviewing all their management funds, which process was due to becompleted over the next few weeks.
Bruce Miller of Lothian Pension Board advised that he had attended ameeting of the Joint Investment Strategy Panel with Elaine Muir, Head ofFinance on 14th August, 2018 and provided an update on the collaborationprocess currently being undertaken.
Decision
The Sub-Committee:-
(1) noted the report; and
(2) agreed that briefing updates would be circulated to members advisingof progress taking place with the Joint Investment Strategy Panel.
Councillors Fiona Grant and Kate Stewart left the meeting during consideration of the above item.
_____________________________________________
FOR INFORMATION
There were circulated, for the information of members, the following documents:-
1. Manager Mandate Summary as at 30th June, 20182. CBRE Global Investment Partners Quarterly report to 30th June, 20183. Janus Henderson Investors – Active Corporate Bond Portfolio - Report
30th June, 20184. Janus Henderson Investors – Government Bond Portfolio – Report 30th June,
20185. Hermes Voting Report for Fife Council – Q2 20186. Hermes Engagement Report for Fife Council – Q2 20187. Hermes EOS Public Engagement Report – Q2 20188. Lazard Asset Management – Portfolio Review Q2 20189./
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9. Lazard Asset Management – Global Thematic Equity Strategy Review Q2 201810. Northern Trust Sterling Cash Fund – 30th June, 201811. Partners Group Global Infrastructure 2009 – Capital account statement
30th June, 201812. Partners Group Direct Infrastructure 2011 – Capital account statement
30th June, 201813. Partners Group Global Infrastructure 2012 – Capital account statement
30th June, 201814. Partners Group Global Infrastructure 2015 – Capital account statement
30th June, 201815. Partners Group Direct Infrastructure 2015 – Capital account statement
30th June, 201816. State Street Quarterly Investment Report – 30th June, 201817. State Street Fundamental Index Global Equity Fund Factsheet 30th June, 201818. Western Asset Management Investment Report – June 2018
Annual Workforce Report 2017/18 Report by: Sharon McKenzie, Head of Human Resources
Wards Affected: All
Purpose
The Annual Workforce Report 2017/18 presents information on the profile of the Council’s workforce during 2017/18, highlighting trend information where appropriate and useful.
Recommendation(s)
Members are asked to:
(i) Consider the workforce information contained within the annualworkforce report.
(ii) Agree if any further work or scrutiny is required, and the scope of thatreview.
Resource Implications
None.
Legal & Risk Implications
The report provides information about the profile of the workforce. Activities are in hand to manage any associated risks and, if necessary, further reports would be brought to this Committee.
Impact Assessment
An EqIA has not been completed and is not necessary because the report does not propose a change or revision to existing policies and practices.
Consultation
The report will be shared with the Trade Unions. Ongoing consultation with key stakeholders will continue to be a feature of the Council’s shared commitment to working together.
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1.0 Background 1.1 The Annual Workforce Report provides an overview of the Council’s workforce
during 2017/18. Where appropriate trend information and commentary is provided. If members agree that further information about a particular area is required, this will be collated and considered by the Scrutiny Committee on 5th December, 2018.
1.2 During 2017/18, the Council has continued to face financial pressures but there have been some key highlights including:
• Recognition from Audit Scotland that the Council is improving itsorganisational culture to ensure that it continues to improve the servicesit provides.
• There was also recognition from Audit Scotland that there is an effectiveworkforce strategy in place and steps are being taken to lower absencelevels.
• Selection as a finalist for the Family Friendly Working Scotland’s 2018Scottish Top Employers for Working Families Award.
• A shift towards more positive responses in the 2017 ‘Reality Check’during which about a quarter of the workforce gave their views.
• Workforce change was managed on a consensual basis across theCouncil with no compulsory redundancies.
1.3 Work continues to address workforce challenges, these include:
• Undertaking work to address recruitment difficulties being experiencedin Education and Children’s Services, Enterprise and Environment andHealth and Social Care.
• Exploring the workforce implications of Brexit.
• Addressing the impact of employee absence through the CorporateAbsence Project with a focus on positive interventions and wellbeing.
• Fully embracing digital learning as an efficient and cost effective way ofdeveloping our employees.
2.0 Issues/Options 2.1 Appendix 1 provides information about the Council’s workforce. Main points
of note across each of these areas is provided below.
Workforce Profile 2.2 The workforce profile across the Council has remained relatively static through
2017/18. Encouragingly there has been improvement in the two performance indicators: percentage of females in the top 5% of earners and the gender pay gap.
Further information about the workforce profile and pay practices is contained within the Equality and Diversity in Employment Reports available on fifeDirect.
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2.3 The percentage of employees on temporary contracts has increased slightly over the period. It should be noted that half of those employees in temporary posts hold permanent substantive posts within the Council.
Workforce Change 2.4 The Council’s workforce continues to reduce, however, there are some areas
(such as Early Years in Education and Children’s Services) where the workforce is expanding. Over the period 2017/18, the headcount of the workforce reduced by 0.4%, however, the full time equivalent (FTE) reduced by 0.5%. This reflects changes such as flexible working patterns and flexible retirements.
2.5 The most significant change was within the Finance and Corporate Services Directorate which reduced by 11.9% FTE. Over this period the Directorate reviewed its service operating model and refocussed service delivery. Greater use of technology has automated process and enabled self-serve which has allowed further process efficiencies. All change was managed on a consensual basis with no compulsory redundancies.
Resourcing 2.6 The level of recruitment activity has increased slightly when compared to the
same time period last year. Education and Children’s Services continue to account for about half of all recruitment.
2.7 The number of adverts that are unfilled has increased over the period. Through the HR Business Partners, HR work with Services to analyse recruitment activity, identify areas which are hard to fill and offer potential solutions such as different methods of advertising and wider use of social media channels.
Turnover 2.8 Turnover has slightly increased over the period, however, it remains lower
than the public sector average. Turnover allows movement into and out of the organisation and this rate does not reflect internal movement.
Attendance 2.9 In June, the Scrutiny Committee considered a report which provided an update
on the Corporate Absence Project. This report detailed the activity being undertaken, however, noted that coming at a time of major change and reduced management capacity, there is a risk that it may not be sufficient to make a significant impact on absence levels. The longer term nature of wellbeing programmes designed to lever a cultural shift will take time to effect improvements and a programme of reporting to CET and scrutiny is in place.
Youth Investment 2.10 The number of young people continues to steadily increase from 3.9% in 2013
and the Council is moving closer to its target that by 2020 young people will make up 5% of the workforce.
The Council is currently developing a young person’s network and a young person’s event will be held later this year. The focus of the event is to build confidence and assertiveness. HR also continues to work with the employability team to support care experienced young people.
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Learning and Development 2.11 There has been a significant decrease in the number of training sessions
delivered within the Corporate Skills Framework. The reduction in demand in these courses may indicate that Services are continuing to prioritise job specific and mandatory training. However, there has also been a channel shift in terms of how employees are accessing opportunities for development of softer skills. For example ‘MyToolkit’ provides a flexible online resource for all staff and the site continues to expand. There are 1,574 active users and over the year 6,229 resources were accessed.
2.12 Many courses continue to be provided through e-learning. Although there was a slight dip in the number of courses completed this year, this should be compared to the number of courses completed two years ago (9,443 in 2015/16). In 2016/17, mandatory training was introduced which would explain the peak in this year. As well as mandatory training such as Data Protection and Health and Safety, there is a range of other courses available. Embracing digital learning opportunities is an effective and cost efficient way of ensuring that our employees have the skills required to do their jobs.
HR Supported Cases 2.13 The challenges of reduced HR resource and the need to concentrate on higher
end added value HR activities linked to change and transformation has led to a reduction in the face to face support provided to managers through case management activity. Coupled with this is the continued development of manager self-serve resources and the provision of advice and assistance through more efficient channels. HR continue to provide face to face support in more complex case activity.
3.0 Conclusions 3.1 This report presents information about the profile of the Council’s workforce in
2017/18. If members agree that further information about a particular area is required, this will be collated and considered by the Scrutiny Committee on 5th December 2018.
List of Appendices: Appendix 1 – Information About Our Workforce
Report Contact: Sharon McKenzie Head of Human Resources Fife House Telephone: 03451 55 55 55, Ext 444265 Email – [email protected]
Information about our workforceAnnual Workforce Report 2017/18
Information about the Council’s workforce in 2017/18 is presented here, along with trend information where available. The Council produces a separate Equality and Diversity in Employment Report each year. These reports include information about our workforce profile, our employment practices and our pay gaps. They can be found on fifedirect.org.uk
Appendix 1
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Workforce Change
Redundancies Workforce Change (March 2017 – March 2018)
2016/17 2017/18 Directorate Headcount FTE
Voluntary (Headcount) 109 191 Chief Executive 0.0% 0.0%Compulsory (Headcount) 5 0 Communities -1.1% -0.7%Total (Headcount) 114 191 Education and Children’s Service +2.8% +2.8%Voluntary (FTE) 86.2 146.1 Enterprise & Environment -1.4% -1.6%Compulsory (FTE) 3.4 0 Finance & Corporate Services -11.2% -11.9%Total (FTE) 89.6 146.1 Health & Social Care -1.0% -0.5%
Whole Council -0.4% -0.5%
Workforce Profile2016/17 2017/18
Total Headcount 17,471 17,399
Percentage Female 72.0% 72.1%
Percentage Full Time 58.2% 58.5%
Percentage Permanent 84.9% 83.4%
Percentage Females in Top 5% Earners
51.3% 54.9%*
Gender Pay Gap 2.8% 1.6%**SPI figures not yet published by Improvement Service
Directorate Head Count Split – as at 31st March 2018
Headcount (HC) & Full Time Equivalent (FTE) by Directorate
Workforce reductions since 2010 (excluding the transfer of Police & Fire)
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Resourcing2016/17 2017/18
Applications received 35,084 38,441
Jobs advertised 2,978 2,989
Appointments made 2,563 2,960
New starts to the Council 1,309 1,473
New starts with permanent contract
45% 45%
Adverts unfilled 20% 29%
Turnover2016/17 2017/18
Turnover rate 8.4% 9.0 %
Employees left the Council 1,462 1,570
Public sector turnover rate 13.6% 13.3%
Number of Early Retirements 9 22
Most common reasons for leaving:resignation (41%), retirement (20%), end of temporary contract (10%), voluntary redundancy (10%)
HR Supported Cases2016/17 2017/18
Attendance Management cases 3,180 1,681
Disciplinary cases 229 175
Performance cases 28 9
Disciplinary/performance dismissals
9 15
Grievance cases 74 29
Grievances upheld/partially upheld
12 3
Attendance2016/17 2017/18
Average WDL per FTE 10.18 11.82*
Average WDL per FTE – Teachers 6.43 6.64*
Average WDL per FTE – other staff 11.27 13.44*
Percentage WDL to stress 19% 21%
Percentage WDL to musculoskeletal 28% 28%
Percentage WDL to long term 67% 68%
*SPI figures not yet published by Improvement Service
Development2016/17 2017/18
Corporate L&D spend £2m £2.3m
Training & briefing sessions run (Corporate & Directorate)
5,031 4,662
Corporate training sessions run 892 474
Number of attendances 39,691 36,390
Attendance Rate 66%* 65%*
Number completed e-learning courses
19,934 18,551
*Number attended compared to max spaces available.
Youth Investment2016/17 2017/18
Percentage of employees aged 24and under
4.3% 4.7%
Percentage of employees aged 29and under
11.1% 11.5%
Number of WYI bids 12 26
Number WYI programme new starts
41 49
WYI Leavers with positive destination
80% 84%*
*16% unknown
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Policy and Co-ordination Committee
13th September, 2018. Agenda Item No. 5
General Fund Revenue Budget 2019-22 Report by: Eileen Rowand, Executive Director (Finance and Corporate Services)
Wards Affected: All
Purpose
The purpose of this report is to outline the likely financial position of the Council in the medium term in order that this can inform the development of budget proposals.
Recommendation(s)
Members are asked to:-
a) note the report;b) use the information contained in the report as the basis for the development of
initial budget proposals for 2019-20 and beyond; andc) note that the figures are subject to change following the UK Autumn Budget and
the Scottish Government Spending Review.
Resource Implications
The report identifies significant resource implications that have to be considered in the determination of the budget for 2019-20 and future years.
Legal & Risk Implications
It is a statutory requirement for the Council to set a balanced budget and an appropriate level of Council Tax to finance the budget.
Impact Assessment
An EqIA has not been completed because the report does not involve any change in policy.
Consultation
None in relation to this report.
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1.0 Background 1.1 This report outlines the financial context and challenges in which the Council will set
its General Fund Revenue Budget. 1.2 The Accounts Commission’s Local Government in Scotland Performance and
Challenge Report 2018 highlights a number of challenges facing Local Government:
• continuing to deliver a wide range of services to local communities with reducingbudgets;
• increasing social care demands from an ageing population resulting in a higherproportion of council money being spent on social care services; and
• the significant uncertainty as well as increasing complexity around the changinglandscape in which councils operate arising from the UK’s decision to leave theEuropean Union.
1.3 The report recognises the difficulties such uncertainty and pressures bring to Councils and the added challenge these represent for medium and long-term financial planning, however, these uncertainties highlight the importance of planning. It is imperative that the Council has robust plans that set out how outcomes and priorities will be delivered and funded within reducing budgets. The sustainably of services is a key consideration that must be considered when developing these plans.
1.4 Driving forward the change agenda is increasingly important to Councils as they seek to improve local outcomes with less money. Successful change requires robust planning, clear and coherent leadership and suitably skilled staff. Councils will need to invest in the short term to save in the long term.
1.5 This report outlines the likely financial challenge the Council will face and proposes how the Council should respond, within the above context.
2.0 Financial Forecast 2.1 Councils continue to operate in a complex and changing environment that involves
increasing levels of uncertainty in relation to public sector resources. This includes items such as Brexit and public sector reform.
UK Forecast 2.2 The UK Government’s Spring Budget Statement 2018 published on 13th March, 2018
along with the latest Office for Budget Responsibility (OBR) Economic and Financial Outlook, highlighted that tax and spending changes will not be made until the (Autumn) Budget, likely to be in November.
From the OBR it is apparent that:-
• the UK economy (GDP) continues to grow, Forecast growth for 2018 has beenincreased after 2017 growth exceeded expectations;
• the UK Government’s fiscal targets are virtually unchanged from Novemberforecasts; and
• little change is forecast to the UK Governments borrowing, with a marginalforecast improvement to achieve the Government’s fiscal targets for 2020-21.
Scotland Forecast
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2.3 The Scottish Fiscal Commission downgraded key Scottish economic outcomes in its latest forecasts as at May 2018 (second revision).
2.4 The first forecasts for the Scottish economy were published in December, at which time the outlook for growth was subdued. This view remains broadly unchanged. The economy is growing but the rate of economic growth has been slower over the last decade than historic average rates, therefore it is the view of the Commission that this pattern of slow growth is likely to persist over the next 5 years.
2.5 Further risks to the Scottish economy include the UK’s changing relationship with the EU, a weakening outlook for global trade, Scotland’s industrial and demographic structure and weak onshore demand linked to activity in the oil and gas industry.
Some key headline economy forecasts are detailed below:-
2.6 The next Scottish Budget, which is likely to follow the UK Autumn Budget in November, will most likely be a one year budget. Following Brexit there is likely to be a revised UK Spending Review incorporating the funding and expenditure for areas such as Agriculture, Regional Assistance, etc., which are not currently fully devolved to the UK.
2.7 The Scottish Government published its first Medium Term Financial Strategy (MTFS) at the end of May, together with economic and fiscal forecasts of the Scottish Fiscal Commission (SFC). The Scottish Government’s MTFS is intended to set out expectations and broad financial plans/projections for a period of at least 5 years.
2.8 The MTFS outlines 3 different Resource funding scenarios, as show in the table:
Table 2 – Summary Outlook for the Scottish Resource Budget, to 2022-23, £billion - Cash Resource Budget Scenario 2018-19 2019-20 2020-21 2021-22 2022-23
Source: Table 6.4, Scottish Government ‘Scotland’s Fiscal Outlook’, 2018
2.9 A significant element of the increase seen in the Resource Budget is due to the on-going transfer of Social Security responsibilities and funding from the UK, to Scotland. Table 3 below excludes these:-
Table 3 – Summary Outlook for the Scottish Resource Budget, to 2022-23 – Excluding New Social Security Responsibilities, £billion - Cash Resource Budget Scenario 2018-19 2019-20 2020-21 2021-22 2022-23
The MTFS also identified the Scottish Government’s 6 spending priorities areas as:
• Health
• Police
• Early Learning and Childcare
• Attainment
• Higher Education and
• Social Security
Public Sector Forecast
2.10 The total resource budget utilised by the Scottish Government’s 6 priority areas is forecast to grow from 56% in 2019-20 to 64% in 2022-23. Due to these priority spending areas taking up a greater share of the overall resource budget, the Scottish Government’s ‘central scenario’ would alter to suggest there will be no cash terms increase in resource funding over the period 2018-19 to 2022-23. Furthermore, if the level of protection suggested is afforded, in the case of the “lower” scenario there could possibly be a cash reduction of around 2% each year.
2.11 The impact of this protection is that the settlement for Councils will be more challenging in comparison to other areas of the Scottish Public Sector and all areas of public sector will require to make significant savings.
2.12 In addition, the MTFS notes “It is, however, clear that even under the most optimistic scenario ‘upper’, if no reprioritisation or reform were agreed and no additional revenues generated, then efficiency savings of 5% per year could be required. While future efficiency targets (rightly) will be challenging, the decisions we take will ensure they are manageable.” What is less uncertain is whether this means all spending areas will need to find such savings or whether they will be concentrated to a few.
Local Government
2.13 The Scottish Government provides around 80% of Local Authority funding via a block grant. The remainder is funded from local taxation i.e. Council Tax. Funding from Scottish Government is broken down into 3 constituent parts; General Revenue Grant (GRG), Non- Domestic Rates Income and Specific Grants.
2.14 The amount of GRG which each local authority receives is based upon Grant Aided Expenditure (GAE) calculations and projections. GAE figures do not represent budgets, targets or expenditure guidelines but are simply a distribution method of determining each local authorities share of total revenue funding based on relative need.
2.15 GAE calculations are updated at each Spending Review. All needs based indicators, both revenue and capital and all other relevant issues that impact on the local government financial settlement will be updated and revised with the most relevant information for 2019-20. This will impact on the overall share of the grant that Fife will receive.
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2.16 In summary, as the above depicts it is difficult to forecast the level of funding that the Council will receive in grant given the level of uncertainty that exists both at UK, Scottish and local level.
3.0 Budget Gap
3.1 It is clear from Section 2 of this report that there is a high level of uncertainty regarding resources in the future and the Council will have a limited period of time in which to respond to the Local Government Settlement given that the settlement is likely to be announced in December 2018.
3.2 In response to this an estimated budget gap has been developed and sensitivity analysis has been used to illustrate the impact of the grant level after new burdens and pay inflation varying from the assumptions used. The assumptions are illustrated in Table 4:-
3.3 The high level assumptions have been informed by an independent Economic Advisor who is contracted to provide advice to all local authority Directors of Finance. Local assumptions are based on the Council’s previously approved Medium Term Financial Strategy and will form part of the final budget proposals.
3.4 The potential budget gap for 2019-20 is estimated at £9.4m rising to £32.1m by 2021-22 as outlined below.
Table 5 - Potential Budget Gap 2019-20
£m 2020-21
£m 2021-22
£m Net Expenditure – Spending Commitments 806.2 821.3 831.8
Net Funding - Resources 796.8 798.20 799.7
Estimated Budget Gap 9.4 23.1 32.1
3.5 The budget gap takes account of all previously approved savings. The gap has been updated since February 2018 to incorporate a full review of the cost of continuing which includes costs that are necessary to maintain the current level of service provision and are either directly associated with previous decisions of the Council or
34
result from external costs. This assumes that we continue to provide services as we do today.
3.6 In addition, the gap reflects the need to invest in ICT to enable the significant level of change within the Council. Revenue funding is required to facilitate the level of change and digital innovation.
3.7 Net Expenditure takes account of the cost of estimated borrowing resulting from the Council’s current approved and completed programme of investment. The current cost of borrowing is approximately 8% of Net Expenditure. This is likely to grow given that the Capital Investment Plan is front loaded and the Council needs to be mindful of how much can be committed to servicing the cost of debt in order to fund the Capital Programme.
3.8 Details of the Council’s Capital Strategy and capital finance arrangements for 2019-29 are included within a separate report on this agenda.
4.0 Sensitivity Analysis
4.1 The most volatile items of income and expenditure which are most likely to deviate from those projected in the budget gap are:-
4.2 Pay Award
During the Budget 2017, the Cabinet Secretary for Finance and Constitution, announced that the pay cap on public sector pay would be lifted. The Scottish Government pay policy proposes a hybrid % depending on current pay banding. Although no agreement has yet been reached on a pay award for 2018-19 an estimate based upon Scottish Government’s proposal has been incorporated into the Budget Model.
4.3 In recognition of current pay negotiations, sensitivity analysis has been used to forecast at +/- 0.5% movement with an upper limit pay award at 3.0% and a lower limit pay award at 2.0%. The outcome of these movements are demonstrated within Chart 1 below.
4.4 Government Grant
The other most prominent risk to these forecasts is the uncertainty around the level of grant awarded during the next Settlement. It has been assumed that Fife will receive a Grant reduction of 1.0% in cash terms as the most likely scenario. This assumption is based on analysis from the latest OBR and Scottish Fiscal Forecasts.
4.5 In recognition of the uncertainties around the estimated level of grant, sensitivity analysis has been used to predict a lower limit -3.5% reduction (-£16.0m) (worst case scenario) and an upper limit of flat cash (+£6.4m) (best case scenario). The thresholds used in the sensitivity analysis mirror those recommended by an independent Economic Advisor contracted to advise Directors of Finance. The outcome of these movements are demonstrated within Chart 1 below.
4.6 The aggregate risks associated with the most volatile assumptions within the budget gap indicate that the budget gap forecast for 2019-20 could range from £2.2m to £28.8m depending on movements in the aforementioned factors where sensitivity analysis has been used to test risk. The full range is demonstrated in Chart 1.
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Chart 1 – Estimated Budget Gap - Fluctuation
4.7 The Council may need to adapt quickly how it plans to respond to the budget challenge over the next 3 years. This is part of the reason the Council holds balances to respond to any short term shocks in funding.
5.0 Current Focus on Income and Expenditure
5.1 The Council’s income is generated from 3 main sources; General Revenue Grant (GRG), Non-Domestic Rates (NDR) and Council Tax Income. Chart 2 below demonstrates the contribution of each of these sources to the funding of the Council.
Chart 2 – Income Sources
* 2018-19 Budget
5.2 The above chart demonstrates that most of the Councils income is fixed. There is limited ability to raise Council Tax.
Chart 3 – Revenue Funding per Head
0
10
20
30
40
50
60
70
80
2017/18 2018/19 2019/20 2020/21 2020/21
Estim
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Ring Fenced Grants£19.4m
Non-Domestic Rate Income
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Council Tax (including prior years income) £154.6m
36
Source: Local Government Finance Circular No: 4/2018; and NRS mid-year population estimate for 2017
5.3 Chart 3 above demonstrates revenue funding per head of population by council area. The graphic illustrates that Fife is in the lower quartile of revenue funding per head in comparison to other local authorities. This is as a result of a culmination of an increasing population, decreasing funding and lower NDR receipts from the national pool. Again, this demonstrates the financial challenges faced in delivering current services.
5.4 When setting the budget, it is important that the Council focuses on what outcomes it wants to deliver in the context of the resources available rather than focusing on savings. This section of the report therefore focuses on where the Council currently directs its resources to.
5.5 Chart 4 shows that £406.7m (48%) of the 2018-19 budget is deployed within Education & Children’s Services, £143.3m (17%) is directed to Health & Social Care and £64.8m (8%) is required for loan charges. This means that the budget for the other areas is £229.7m (27%). If the Council was minded to offer a degree of protection to the first two areas, coupled with the fixed cost of loan charges, a far higher level of reduction would need to come from remaining Services.
Chart 4 - Service Expenditure
5.6 It is also important that the Council considers the type of expenditure that is incurred
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37
when setting the budget. Employee costs currently account for 48.3% of the gross expenditure.
6.0 Medium Term Financial Strategy
6.1 During the 2018-21 Budget Process, elected members endorsed the principles of a Medium Term Financial Strategy which set-out the foundation of a sustainable budget strategy.
6.2 The Medium Term Financial Strategy has been refined for the 2019-22 budget process. The main principles are:-
• The methodology adopted acknowledges previous savings and recognises thatopportunities via the Changing to Deliver Programme is likely to influence wherein the organisation opportunity is greater.
• Resource envelopes have been issued to all Services in order that proposals arebrought forward to address the budget gap whilst focusing on total spend.
• Prioritisation of resources has been reflected by the fact that Education andChildren’s Services are not expected to come forward with proposals to meet thecost of Teacher and PPP inflation. The scope for Changing to Deliver savingsalso reduces the level of reduction required in Education and Children’s Servicesin comparison to other Directorate.
• Demographic growth will not be funded given the scale of the financial challenge.All Services are expected to redesign services and work in partnership with otherbodies to meet the cost of additional pressures.
• A corporate ‘Changing to Deliver’ programme will support Directorates toredesign their services. Ownership of change plans will be held by Directoratesand assistance will be provided to progress initiatives that cover Operations,Income Generation, Procurement/Contract Management, Customer,Communities, Building Value and Demand & Analytics.
• The reduction of grant that the Council receives after providing for new burdenswill be shared by all Services including Health and Social Care.
• Council Tax will be increased by 3% over the next 3 years.
• In future Services will fund revenue consequences of capital and provision forthis should be incorporated into all business cases and services will also be ableto retain income generated from increasing fees and charges
6.3 The above framework provides for budget proposals to be brought forward over the next 3 years and considered by members. The degree of flexibility in considering proposals will be influenced by a number of factors including the level of grant after new burdens that will be received, growth and the consideration of member proposals to address the budget gap.
6.4 It is intended to share proposals with members in early October 2018 as part of the budget process. These will be in the form of Service Change Plans covering the next 3 years. These plans are influenced by the Changing to Deliver Programme, provide a level of detail and contain information on the impact of the proposals on the workforce and the dependencies on digital transformation.
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7.0 Risk and Reserves 7.1 The Council will not provide in reserves for financial risks in full, however will hold
sufficient reserves to provide adequate coverage. This reflects that not all risks will come to fruition and that action will be taken to mitigate risk and adjust the budget strategy in light of actual events. The Executive Director of Finance and Corporate Services will consider the level of reserves and the need for restoration as part of the updates on the revenue budget when reporting to Committee and the Council.
7.2 The risk register highlights the financial risks associated with the assumptions made in the budget model and the approach of the Medium Term Financial Strategy (Appendix 1). Examples of types of risks include financial impacts of non-achievement of savings and exceptional items of one-off expenditure. It should be noted that it is not anticipated that all of these risks will come to fruition, however, it is prudent to retain a level of reserves which can go some way to cover the risks whilst other mitigating factors are implemented.
7.3 At present the total level of risk associated with the financial strategy is in the region of £60.0m, with the projected level of uncommitted reserves estimated at £21.9m meaning approximately 36.5% of the risks can be covered. This is deemed to be an acceptable level of coverage by the Executive Directorate of Finance and Corporate Services and there is no plan to restore balances. The need to restore balances will be kept under review.
7.4 Although the estimated level of reserves held, £21.9m, may be viewed as substantial, it is relatively low in comparison to the total level of income. During 2016-17, Fife recorded the second lowest % of useable reserves as a % of income in comparison to all other Scottish authorities.
8.0 Conclusions 8.1 There is a level of uncertainty in relation to the future funding that Councils will receive
and it is likely that a one year financial settlement for Councils will be announced in December 2018. These two factors make it difficult for the Council to plan over the medium term, however, the Medium Term Financial Strategy provides a planning framework which allows the redesign of services within the financial environment. This strategy will need to adapt and change in response to events and new information being available. Sensitivity analysis has been used to demonstrate the potential impact of changes in assumptions on the budget gap.
8.2 A financial strategy has been outlined in this report that provides a basis for the Council to advance its budget process over the next few years. The strategy reflects the budget forecast in the medium and long term. A risk register has been developed that underpins the strategy. It is within this context that Services are developing change plans that will be considered by members in due course. The Changing to Deliver Programme is also a means to provide opportunities to close the budget gap.
List of Appendices Appendix 1 – Financial Risk Register
Report Contact Eileen Rowand Executive Director (Finance and Corporate Services) Fife House, North Street, Glenrothes, KY7 5LT Telephone – 03451 555555 ext 444120
Reduction in Government funding to Local Authorities in cash and real terms, is greater than anticipated.
Less funding from Government inhibits ability to deliver current level of service.
5 5 25 Long Term budget model is updated on an annual basis which estimates the impact of reducing resources over a 10 year period.
Y 16.0 3 3 9
2 RISK FIN MGT
Protection of Education All Services have been provided with Resource Envelopes which reflect a reduction in funding to achieve required savings. Education may not be able to deliver services within these constraints.
5 4 20 Directorates to comply with Medium Term Finance strategy.
Y 5.6 3 3 9
3 RISK FIN MGT
Children and Families Strategy Continued demand for C&F services, child placements exceeds supply.
5 4 20 The Directorate is required to meet any recurring revenue costs from their allocated Resource Envelopes.
Y 5.0 5 4 20
4 RISK FIN MGT
Health and Social Care - Grant Reduction
Health and Social Care resources are not reduced by the same % as per grant reduction received as previously agreed.
5 4 20 Reflected in the medium term finance strategy
Y 1.4 2 2 4
5 RISK FIN MGT
Local Government Pay Award Increased costs to the Council due to higher negotiated pay award than that planned.
4 4 16 Sensitivity analysis is used to forecast any potential increase in cost. Budget model is updated to reflect these costs beyond 2019/20..
Strain on budget. 4 4 16 Bellwin Scheme available , but only at significantly high levels and within certain criteria. Not available to cover lower costs of adverse winter weather. Earmarked balances of £1m to cover winter maintenance costs.
Y 1.0 4 3 12
7 RISK FIN MGT
Inability to increase income from Council Tax due to Scottish Government constraints - currently 3% maximum
Under recovery of CT Income.
5 3 15 A 3% increase has been assumed in the Medium Term Financial Strategy. Bad debt provision included.
Y 4.7 2 3 6
8 RISK FIN MGT
Debt Charges - Interest Rates rise at a faster rate than forecasted
Higher debt charges result in corporate overspend.
3 5 15 Effective Treasury Management Strategy.
N 1.0 3 3 9
9 RISK FIN MGT
Future demographics Additional revenue costs associated with increased demand from Services as a result of changing demographics.
5 3 15 Services are required to revise operating activities to absorb costs as per the Medium Term Financial Strategy.
Y 5.6 4 2 8
10 RISK FIN MGT
Revenue Consequences of Capital
Recurring revenue costs resulting from Capital Investment which are not properly resourced withing service budgets.
5 3 15 Services are required to meet any recurring revenue costs from their allocated Resource Envelopes, as per the Medium Term Financial Strategy.
Increase in scale of bad debts owed to the Council (AR, Council Tax, NDR)
Potential pressure on revenue budgets as greater amounts need to be written off. Debt recovery arrangements indicate this risk is being managed with significant improvement in recent years over debt management and recovery
5 3 15 Bad Debt provision in place, proved adequate for C/Tax and NDR historically. More robust policy framework now in place. Any debt written off is in line with policy.
Y tbc 3 2 6
12 RISK FIN MGT
Health and Social Care - Risk Share
IJB overspends and the Council is liable for 28% of total overspend.
5 3 15 3 year Financial Strategy. Robust revenue monitoring and regular reporting to IJB.
Y 2.5 4 2 8
13 RISK FIN MGT
Inability to achieve projected savings from previous years including Corporate Programmes e.g. Changing to Deliver, Procurement etc.
Increased risks due to savings not being met, may result in future reduced service provision as a consequence.
4 3 12 Robust Programme monitoring arrangements are in place.
Partial 1.0 3 3 9
14 RISK FIN MGT
Inability to achieve projected savings - Service specific.
Increased risks due to budget not being met, may result in future reduced service provision as a consequence.
4 3 12 Tracking through monitoring process. Monitoring indicates around 77% of savings are on target for delivery (Revenue Monitoring Report). Service are required to substitute savings to contain expenditure within budget. Carry Forward scheme means that any overspends are recovered from future years.
Development of Major Capital projects requiring Govt Support
Potential requirement to write off to revenue costs incurred developing capital schemes should Government support not be forthcoming. Further risk of need for project acceleration in response to current flood events
3 4 12 Robust Capital Strategy Y 1.0 3 3 9
16 RISK FIN MGT
Inflation costs due to economic factors
High inflationary increases resulting in increased service budget pressures
3 3 9 Limited non-pay inflationary costs included within budget model. Services to comply with Medium Term Finance strategy.
Partial 7.0 1 3 3
17 RISK FIN MGT
Future Equal Pay Claims Potential requirement to settle further Equal Pay claims
Currently under review - further information will be provided by HR in due course.
N tbc
Projected General Fund balance as at 31 March 2019 £21.9mRisk Per Risk Register £60.0m% of Risks per Risk Register covered by Unallocated Balances 36.5%
The purpose of this report is to present a new Capital Strategy to the Committee that sets out the key investment priorities for the Council in line with the Plan for Fife and for sustainable management of assets in the longer term. The report also looks to seek approval of the Capital Strategy for 2019-29.
Recommendations
The Policy and Co-ordination Committee is asked to:-
i) approve the Capital Strategy 2019-29; andii) note the next stage of the process will be to develop the biennial capital plan
review.
Resource Implications
None.
Legal & Risk Implications
None.
Impact Assessment
An EqIA is not required because the report does not propose a change or revision to existing policies and practices.
Consultation
There has been consultation with various stakeholders throughout the process of developing this strategy. This has included a wide range of contributors to the Plan for Fife as well as the Council Executive Team.
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1.0 Background
1.1 The CIPFA Prudential Code 2017 (the code) requires Councils to demonstrate that capital expenditure and investment decisions are taken in line with service objectives and take account of stewardship, value for money, prudence, sustainability and affordability.
1.2 The code recommends that Councils should have in place a Capital Strategy that sets out the long term context in which capital expenditure and investment decisions are made. The Capital Strategy should form a part of the authority’s integrated revenue, capital and balance sheet planning.
1.3 The Capital Strategy is intended to give a high level overview of how capital expenditure, capital financing and treasury management activity contribute to the overall priorities of the Council and to the provision of services.
2.0 Issues and Options
2.1 Capital Strategy 2.1.1 The Capital Strategy has been produced by a sub-group of the Investment Strategy
Group (ISG) with involvement from a wide number of relevant stakeholders.
2.1.2 In recognition of the Plan for Fife and the Council’s ambitions, the strategy outlines the key investment priorities aimed at meeting those ambitions. In addition, the strategy recognises that investment in existing assets are key to realising the ambitions in the Plan for Fife and continue providing Services in a sustainable and affordable manner.
2.1.3 The strategy recognises the need to balance investment in enhancing and improving the existing asset base against investment in acquisition and creation of new assets.
2.1.4 Consideration is also given to funding levels and phasing of capital expenditure within the strategy and sets out plans to ensure that any future capital investment is affordable, sustainable and prudent.
2.1.5 The document will be kept under review in the coming years and will be refreshed and updated in line with any changes to the Council’s overall priorities and objectives as set out in the Plan for Fife.
2.2 Biennial Capital Plan Review 2.2.1 Members will be aware that a review of the capital plan is undertaken every 2 years.
The next review is due to commence in Autumn of 2018 with a view to the 10 year Capital Investment Plan 2019-29 being approved alongside the Revenue Budget in February 2019.
2.2.2 The Capital Strategy will be used to inform and influence that review to ensure that all our capital investment will contribute to delivery of the key outcomes for Fife as contained within the strategy.
2.2.3 Once the Capital Strategy has been approved by members, work on the Capital Plan Review will begin to take place. Member Engagement in this process will take place in the coming months alongside the engagement on the Revenue Budget.
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2.2.4 A key element of the Capital Plan Review will be assessing the affordability of the plan and the potential impact on the Revenue Budget of the financing of capital investment. The long term phasing of the Capital Plan and expenditure profile is also of importance and this will be analysed as part of the overall assessment of long term affordability and sustainability.
2.2.5 It is important to note that the Capital Investment Plan must be contained within the resources available to support that investment.
3.0 Conclusions
3.1 The CIPFA Prudential Code 2017 requires all Councils to complete a Capital Strategy document which should be approved in February 2019.
3.2 The strategy should demonstrate that capital expenditure and investment decisions are taken in line with Service’s objectives and take account of stewardship, value for money, prudence and affordability.
3.3 The strategy has been drafted to recognise the Council’s ambitions in Service delivery over the next 10 years, as well as the need to consider the existing asset base and consider the future funding parameters.
3.4 The next stage will be to progress the Capital Plan Review.
List of Appendices 1. Fife Council –Capital Strategy 2019-29
Background Papers None
Report Contact Elaine Muir Head of Finance Finance and Corporate Services Fife House, North Street, Glenrothes Telephone: 03451 55 55 55 (Ext. 480237) Email:[email protected]
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Fife Council Capital Strategy2019-29
Appendix 1
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Fife Council Capital Strategy 2019-2029 | 2
Contents n Introduction
n The Plan for Fife
n Maintaining Our Assets
n Funding Strategy
n Governance
n Associated Strategies and Plans
ForewordFife is ambitious for the future; we want to improve the lives of everyone who lives here. This will not be easy at a time of significant challenge in terms of reducing resources, increasing demand, a growing and ageing population and economic uncertainty. Achieving our ambitions will require dedication and targeted investment in assets. Such investment drives strategic change while providing the context for communities to be involved in local improvement. Addressing the needs of our most deprived communities is a key aspect of achieving our ambition to make Fife a fair place where everyone has access to the same high quality of opportunity. The Plan for Fife seeks to provide a route map for how we do this, recognising the particular challenges in Mid Fife in relation to inequality and deprivation. This requires major strategic change if we are to effect improvement and how we invest capital and other assets is critical to this.
When planning to achieve major improvement it is also important to maintain and enhance existing infrastructure. For this reason, a large part of our capital investment involves maintaining and enhancing key existing infrastructure such as roads and schools. It is also important we make best use of investment opportunities across Fife arising from a variety of sources, most significantly, the Edinburgh and South East Scotland and Tay City Region Deals which Fife is part of.While we know it will be challenging to achieve our ambitions, we believe it is possible. Key to this is how we work in partnership across all Fife agencies and ensure that all activity is co-ordinated to give the maximum impact for our communities. This is the guiding principle in aligning our capital strategy with the Plan for Fife.
Steve Grimmond Chief Executive, Fife Council
Cllr David Alexander Co-leader, Fife Council
Cllr David Ross Co-leader, Fife Council 48
Fife Council Capital Strategy 2019-2029 | 3
IntroductionThe 3rd largest Council in Scotland, Fife Council has ambitious plans to continue to ensure that the services provided are fit for purpose and meet the needs and aspirations of its residents. The Council needs to balance increasing demand through demographic changes with pressure on both revenue and capital resources. Changes to how we do things and how we operate will require a level of investment in facilities to deliver sustainable services in the coming years.The Capital Strategy 2019-2029 outlines the Council’s corporate priorities and the considerations required relating to funding, governance and assessing affordability. There is recognition that there is a need to balance investment between maintaining and enhancing a significant size of existing infrastructure against the ambition for acquiring new assets. The Council currently has ambitious plans to deliver over £850m of investment in assets over a ten year period, including significant expenditure on schools, infrastructure and housing. The investment is considered vital in the provision of services and to achieve the Council’s ambitious outcomes detailed in the Plan for Fife. Key to the strategy is making the best use of the capital resources available to us. Operating within the CIPFA Prudential Code 2017 there is a need to demonstrate that capital expenditure and investment decisions are taken in line with corporate aims and objectives and take account of stewardship, value for money, prudence, sustainability and affordability. Phasing of expenditure is also a significant consideration to ensure the Council can maximise any grant funding made available.
2,437km of roads
32,035 Council houses
65,114 Streetlights
1,362 Public buildings
184 Educational
facilities
1,553 Fleet vehicles
66 Adult & Older
People’s facilities
443 Bridges
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Fife Council Capital Strategy 2019-2029 | 4
The Plan for FifeThe Plan for Fife is Fife’s Local Outcome Improvement Plan. It aims to deliver real improvements for the people of Fife. It doesn’t cover everything we aim to do over the next ten years, but it provides a clear focus for all our other plans. We also have seven local community plans – one for each of our local committee areas. The Plan for Fife sets out our vision for Fife and by 2027 we want Fife to be a place where all residents live good lives, make informed choices and have a sense of control so that they can reach their full potential, and where all children are safe, happy and healthy. We also want Fife to be a place where we make best use of our assets and facilities, while sustaining them for future generations. We are responding to the Fairness Matters’ challenge to be ambitious for Fife by putting a Fairer Fife at the heart of our new plan. We aim to reduce inequalities and to promote fairness in everything we do. This will involve a big effort by all our partners, including the Third Sector and the business community. All our partners recognise that having a Fairer Fife will benefit everyone.Within this overall vision, we have identified four priority themes to direct our work over the next ten years. These are:
•Opportunities for All
•Thriving Places
•Inclusive Growth and Jobs
•Community Led Services
Published April 2018 • Fife Partnership Creating a Fairer Fife
2017 - 2027Local Outcome Improvement Plan
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Fife Council Capital Strategy 2019-2029 | 5
The Plan for FifeOpportunities for All
Opportunities for All is about ensuring that no-one is left behind. We aim to ensure that every Fifer can access opportunities in education, training, jobs and wider society, and that all Fifers have equal access to the support and advice they might need to support a fulfilling and decent life.
Key investment priorities within this theme include:
• Early learning and childcare - additional capacity will be required acrossFife to deliver the increase in entitlement to Early Learning and Childcare.A programme of work to deliver against 1140 hour commitments has beendeveloped in line with Scottish Government expectations.
• Improving access to learning opportunities by improving the condition,sustainability and suitability of our school estate by ensuring that ourschools continue to meet the needs of learners and the communities weserve. Building on the recent delivery of the community campus models atWindmill and Waid, we will continue to develop the school estate as multiservice facilities, working in collaboration with other Council services as wellas our partners. We will also continue to work with developers and others toensure that as Fife continues to grow we will have sufficient capacity withinour schools, including the provision of new primary schools and additionalsecondary capacity to meet the needs of these new communities.
• Investing in technology to support people to live independently at home orin a homely setting in their community and where this is not practical, ensurewe have adequate community provision available across Fife.
• We will continue to invest in the delivery of integrated community basedsolutions to help Fifers live a fulfilling life in their communities.
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The Plan for FifeThriving Places
Thriving Places are safe, well designed and maintained places that promote wellbeing, where people are proud to be, and where they have access to the services and facilities they need at different stages of their lives.
Key investment priorities within this theme include
• Increasing the supply of housing, including social care housing, improving theconditions in the private rented sector and improving access to information andadvice on housing. This will include working with developers to unlock fundingto support transport and educational infrastructure, as well as the delivery of ourPhase III affordable housing programme of 3,500 houses.
• Investing in key town centres through a ‘town centre first’ principle. Towncentre capital investment will be used to attract external funding to improve theenvironment and built heritage. We will also promote investment in digital towns,including free public Wi-Fi.
• Facilitating new investment that’s consistent with FifePLAN and align publicsector capital investment to unlock developer funding for transport and educationinfrastructure.
• Investing in sport, leisure, cultural and learning activities.
• Targeting investment in Fife’s green and public spaces and promote sustainablemanagement solutions.
• Investing in climate change/flood alleviation. Improving the flooding resilienceof our communities is a key requirement of climate change adaptation. We havemade commitments to undertake the feasibility/design options for flood relatedprojects.
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Inclusive Growth and jobs
Growth in the local economy should benefit everyone, and shouldn’t pass people and places by. We will therefore focus on improving investment, growth and participation by businesses, people and communities, particularly in the mid-Fife area. We aim to support businesses to grow and to make sure that communities benefit from new business investment.
Key investment priorities within this theme include
•Investing in a modern business infrastructure and in developing national and international markets for Fife’s businesses. This work will be supported by Edinburgh and Tay City Region Deals.
•Investing in connectivity, particularly transport and digital and workforce mobility. This will include developing business cases for investment in transport infrastructure and an investment plan for Fife’s digital assets.
•Making more of Fife’s natural, cultural and historical assets to improve year round visitor opportunities and accelerate the growth of tourism in Fife.
The Plan for Fife
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Community Led Services
Community Led Services means putting communities and service users at the heart of how we design services, and building on the strengths and assets we have in our workforce and in our communities in order to deliver valued services.
Key investment priorities within this theme include
• Investing in community capacity to get involved and developconfidence to support Community Asset Transfer.
• Making better use of digital opportunities to improve serviceresponsiveness, support independent living and better connectcommunities and individuals.
• Integrating community facilities.The Plan for Fife prioritises improving the way that the Council and partners work with people and communities in delivery of Community Led Services. The design and build of new buildings requires communities to be engaged to support the delivery of outcomes. Communities also have views and ideas as to what is best for their communities. Approaches to the use of Participatory Budgeting with capital funding has already shown the benefits of allowing communities to directly influence and decide on priorities and this approach will be used more widely going forward.
The Plan for Fife
Underpinning delivery against and across these priorities will be our investment in new and improved digital solutions that will improve the quality of life for people who live in, work in or visit Fife. Over the next ten years, we have committed to putting people and communities at the heart of everything we do. Increasingly our service offer will include a large component of digital provision, catering for both direct needs and also to ensure we make the best of the knowledge and resources available to us.
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Maintaining Our AssetsIn order to maintain or improve service provision it is imperative that we recognise the need to invest in our significant existing assets to ensure they remain viable and sustainable. With this in mind, there are further key investment priorities as follows:
Property EstateFife Council has a strategic approach to property asset management. Over a number of years the Council has made significant changes to the way it works through its office rationalisation and mobile & flexible working programmes. Substantial investment has also been made in schools, care facilities, sport & leisure centres, and community facilities that support the delivery of council and partnership outcome priorities. Over the same period significant investment has been made in improving the condition and number of affordable homes in Fife. While much has been achieved, the Council still has a large and ageing estate and we need to continue to innovate and manage change in the way we develop new approaches to the governance, coordination and use of assets so that we make best use of our resources and support delivery of outcome priorities. To help meet these objectives a new Property Strategy was approved in January 2018 with the vision of:
“A future where we use our land and property assets to deliver better outcomes, empower communities and leverage economic stimulus.”
Our Property Strategy is underpinned by four strategic objectives:
•We will have a smaller network of modern fit for purpose, integrated community and operational facilities that are sustainable, energy efficient and maintained to a high standard.
•We will continue to invest in assets and facilities that support the delivery of our policy priorities, make it easier for our customers to access the services they need, and add value to our communities.
•We will make it easy for our customers to access the services they need and empower our staff to work more flexibly and efficiently in terms of frontline service delivery.
•We are looking at new ways of working and empowering our communities, that recognise demographic changes and evolving customer expectations as well as the need to better engage with our communities on the planning, design, delivery and co-production of services.
Changing planning and building control regulations alongside innovation in material and changing building design fashions will be included within the delivery of the strategy. These changes support environmental and safety concerns and can ensure that buildings are fit for future use. Likewise because the Council has a large and aging estate it is recognised that we need to continue to innovate and manage change in a way that develops new approaches to the governance and coordination of our assets so that we make best use of resources and support delivery of outcome priorities. For major expenditure, this could involve use of techniques like whole life costing that recognise the revenue and other implications of investment decisions.
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Fife Council Capital Strategy 2019-2029 | 10
Cemeteries & CrematoriaFife Council has a legal responsibility to provide and regulate cemeteries and make appropriate provision for the care and disposal of the deceased. Our investment priorities include:
• Ensuring that our cemeteries are safe, well looked after andprovide fitting places for remembrance and contemplation; and,
• Ensuring that we have adequate cemetery capacity and that ourwell-used crematoria remain fit for purpose.
TechnologyTechnology now pervades and underpins everything we do and demands have never been higher for reliable, usable, trusted and innovative digital public services and infrastructure.Our strategy and approaches to technology and digital investment seek to right-size and optimise our investments, through a continual focus on ensuring we can deliver the widest possible benefits, while also harnessing opportunities which deliver change at a local level.We will also invest to ensure that current digital infrastructure and services can be maintained, supported, upgraded and protected and that old or obsolescent technology can be retired or replaced.Our strategy recognises the need to remain adaptable to ensure that new opportunities from technological change can be quickly evaluated and harnessed where they can improve outcomes for those who visit, live, work or learn in Fife.
Fleet and EquipmentIn line with Scottish Government commitments, in Fife we are committed to the decarbonisation of our road transport fleet by 2050. All sales of new petrol and diesel cars will cease in Scotland by 2032 and 2040 in the UK. Over the last few years we have made significant changes to the size and management arrangements for our fleet of vehicles. We have also invested in new sustainable vehicles to include hydrogen, electric and hybrid powered vehicles. Our strategy for managing our Fleet going forward includes:
• We will have a smaller fleet of modern fit for purpose vehiclesthat are energy efficient and maintained to a high standard.
• We will maximise vehicle utilisation and promote environmentallyresponsible practices to reduce fuel consumption and carbonfootprint.
• We will continue to invest in low carbon vehicles and othertechnology that will make our fleet sustainable into the future.
The Council also owns and operates a significant amount of plant and equipment (some of which is high value) which requires to be maintained and replaced on a scheduled basis.
Maintaining Our Assets
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Fife Council Capital Strategy 2019-2029 | 11
Roads and TransportationFife’s roads & transportation infrastructure is critical to supporting the daily lives of our communities, delivering a thriving economy and contributing to Fife’s connectivity and built environment. Effective asset management and maintenance of this significant infrastructure is a statutory duty. Our asset management strategies support sustained capital investment in our roads & transportation infrastructure and continued funding is essential to preserve the sustainability of the transport infrastructure and enhance community safety. These cover the following key investment priorities:
• Roads Infrastructure: (maintenance of carriageways, footways& drainage) Projects to sustain network condition and preventgrowth of road defects.
• Structures Infrastructure: (maintenance of bridges & retainingwalls) Key replacement or strengthening projects on criticalelements of the transportation network.
• Street Lighting: (column replacement) Following a period ofinvestment, further investment is now required to replace out ofdate lighting columns.
• Traffic Management & Road Safety: Local road projectsimproving road safety, reducing congestion, tackling parkingproblems and reducing traffic speeds.
• Sustainable Transport: (new cycling infrastructure) It is both theScottish Government’s and Fife Council’s objective to move themodes of travel away from the car and towards cycling & walkingand support carbon reduction.
• Harbours & Piers: Maintenance of critical marine Infrastructuresupporting Fife’s tourism and fishing industries.
Maintaining Our Assets
Hydrogen powered waste collection vehilces added to fleet.
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Fife Council Capital Strategy 2019-2029 | 12
Funding StrategyThe level of investment that the Council will commit to going forward will be planned through the biennial Capital Investment Plan review and will be developed in line with the key investment priorities set out in this strategy, our Medium Term Financial Strategy and our Treasury Management Strategy. Consideration around eligibility, governance, affordability and sustainability will be incorporated into the review. Key elements of the review will include:
Capital ExpenditureThe Capital Investment Plan will contain planned capital investment relating to the acquisition and enhancement of significant Fife Council assets including land, buildings and equipment which will be used for more than one financial year and will contribute to outcomes referred to in this strategy.Investment will need to remain affordable and in this context will be prioritised to deliver the best possible outcomes in line with the strategy. Waid Community Campus
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Fife Council Capital Strategy 2019-2029 | 13
Funding the Capital Investment PlanWe will develop a funding strategy that will determine the affordable level of investment over the ten year period. The funding strategy will determine how the investment will be funded. The plan will continue to be subject to review on a biennial basis.There are a number of sources of funding which can contribute to financing the Capital Investment Plan. When preparing the ten year capital plan a number of assumptions will be made in relation to each of the possible funding streams:
• General and Specific Capital Grants from Scottish Government.
• Capital Receipts.
• Contributions from Revenue budgets.
• Borrowing.
• Other innovative funding sources including Tax IncrementalFinance and City Deal.
• Reserves.Each time the Capital Investment Plan is reviewed we will assess the level of funding available compared to the investment needs. The Capital Investment Plan must remain fully funded throughout its lifetime and be evidenced to be affordable and sustainable. In order to assess future affordability, the review will include long term analysis to ensure that the financial consequences of the plan are fully understood.
The associated borrowing requirement will be calculated and the impact will be reported in the Treasury Management Strategy alongside the prudential indicators annually. During the biennial Capital Investment Plan review, consideration will specifically be given to the overall affordability and costs of borrowing. This will be assessed in conjunction with the Council’s Medium Term Financial Strategy and the revenue budget process. Careful consideration of phasing and financing capital expenditure will be given during this process to ensure that the Council can continue to operate affordable levels of borrowing, maximise our grant levels and contain costs at a sustainable level. Controls around the level of borrowing will be assessed and agreed. We will also consider the impact on the Council’s balance sheet in relation to liquidity and sustainability.Currently, the cost of servicing outstanding debt represents 8% of the Council’s revenue income. This is predominantly a fixed cost, given the long term nature of borrowing, and needs to be understood in the context of reducing revenue resources and a financially challenging environment. The review will also consider the running costs associated with Capital Investment. The Council’s Medium Term Financial Strategy states that Services themselves must make budget provision for these costs. This will form part of the affordability assessment carried out as part of the review.
Funding Strategy
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Fife Council Capital Strategy 2019-2029 | 14
Changing Nature of FinancingIn recent years capital grant from the government has been reducing whilst external borrowing has been increasing. The continuation of this trend could place further burden on revenue costs at a time when revenue resources are also shrinking. This will be carefully managed and controlled. Capital funding for the Council comes from government grant, borrowing, capital receipts, contributions from revenue budgets and external funding. With limitations on available resources, other
innovative funding methods will continue to be considered and evaluated for the delivery of this strategy, examples to date would include Tax Incremental Financing, City Deal and some of our specific grant funding.There may also be commercial opportunities in the future that involve capital investment and these will be assessed on their own merit and in the context of this strategy. Any such investment will require a robust business case and be subject to the Council’s normal governance arrangements and must be proven to be affordable and sustainable.
Funding Strategy
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800
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200
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illion
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20
0
Percentage of Income
2011/12 2012/13 2013/14 2014/15 2015/16 2016/17
7 9 12 1116
19
Ranking of Scottish local authorities’ borrowing as a percentage of income (lowest as 1)
Council borrowing (£ million) Council borrowing as a proportion of council income (percentage)
Debt•Relative to income, the council’s level of borrowing has increased over 5 years
Source: Fife’s Best Value Assurance Report 2018 60
Fife Council Capital Strategy 2019-2029 | 15
RisksThere will be risks inherent in the Capital Investment Plan and we will assess these as part of the planning process. We will assess both strategic and financial risks including uncertainty of funding, inflation, interest rate risk, and exchange rate risk in uncertain economic times. This will ensure that future financial consequences are understood and risk is managed. Following our review of risk, a recommendation will be made in relation to the planned level of funding to provide for future risk.We will also factor in an assessment of future maintenance costs and liabilities associated with the assets currently in our control, namely around our property estate and roads and transportation infrastructure.
Funding Strategy
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Fife Council Capital Strategy 2019-2029 | 16
GovernanceFigure below summarises the arrangements through which the Capital Strategy will be governed.
The Capital Strategy will be reviewed in line with the timing of future updates to the Plan for Fife to ensure it remains aligned to Council priorities.
The information included in this publication can be made available in large print, braille, audio CD/tape and Gaelic on request by calling 03451 55 55 00.
Language lines
Arabic03451 55 55 77
Bengali03451 55 55 99
03451 55 55 88Polish Polskojezyczna linia telefoniczna:
Revenue Budget 2018-19 Financial Monitoring Report by: Eileen Rowand, Executive Director (Finance and Corporate Services)
Wards Affected: All
Purpose
The purpose of this report is to give members a strategic overview of Fife Council’s financial position on all revenue budgets for the 2018-19 financial year and to advise on the projected level of balances held by the Council.
Recommendations
It is recommended that members:-
(i) note the financial position as detailed in this report;
(ii) instruct all Services to contain expenditure within the approved budget provisionwith the exception of Health and Social Care; and
(iii) note that further monitoring reports will be submitted to the Policy andCo-ordination Committee and relevant Strategic Committees.
Resource Implications
There are no direct resource implications contained within this report.
Legal & Risk Implications
There are no direct legal implications arising from this report.
Impact Assessment
An EqIA is not required because the report does not propose a change or revision to existing policies and practices.
Consultation
None.
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1.0 Background
1.1 The report summarises the projected position for 2018-19 based on information as at June and provides an explanation of the main budget variances. The report also indicates the potential level of balances after commitments, arising from the budget carry forward scheme and other Council decisions.
1.2 Section 2 of the report provides a summary of the main budget variances. More detailed reports on the provisional outturn against budget will be presented to the relevant Strategic Committee as part of the Council’s wider scrutiny and performance management reporting arrangements.
1.3 Progress on Revenue Budget Savings is reported to the Policy & Co-ordination Committee on a quarterly basis and is included in Section 3. An update on the forecasted balances is contained in Section 4.
2.0 Issues
2.1 General Fund Services
Based on current information the provisional outturn position across all General Fund Services is a net deficit of £6.081m.The budget position is a planned contribution to balances of £0.020m, so the overspend on General Fund services is forecast to be £6.101m or 0.8%.
The service total expenditure budget, as shown in Appendix 1, has increased since the 2018-19 budget was approved in February 2018. The changes are summarised below.
Total Expenditure £m
Approved 2018-19 Budget 793.951 Distributed carry forward from 2017-18 (Out-turn report) 12.445 Children and Families Budget Strategy 1.803 Enhanced Funding for H&SC - Budget (Feb 2018) 1.000 Energy Management Revolving Fund -0.821
Current 2018-19 Budget (June) 808.378
The changes above have been agreed by Fife Council as part of the budget strategy or are as a result of the implementation of the Council’s carry forward policy.
Appendix 1 shows the forecast against budget across all General Fund Services. The following paragraphs provide a brief explanation of the main areas where there are variations (+/-£0.250m or 0.25% whichever is the greater) between planned and projected expenditure and income.
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2.1.1 Education and Children’s Services
Directorate position - Variance £1.092m overspend
The projected overspend of £1.092m relates to the projected position for the services within the Directorate and the significant variances for these services are:-
Devolved School Management (DSM) Budgets - Variance £2.634m underspend
Under the DSM Scheme, schools’ budgets are calculated and allocated with reference to a range of formulae based on appropriate data, for example school roll. The Scheme also recognises that schools require some flexibility to manage resource between financial years and, to assist in meeting this, a carry forward under/overspend of up to 2.5% of service managed budget is allowed. Schools have carried forward a £3.342m underspend into 2018-19 under this provision.
The provisional outturn currently reflects the impact of this carry forward, reduced for the amount of approved budget savings which are to be applied to the DSM in the current year. School budgets will be adjusted, in due course, to reflect the impact of school rolls from August 2018 and the budget required for teaching staff in post.
In addition to the core DSM budget, schools’ Pupil Equity Funding (PEF) was added to the devolved budgets. Any unspent PEF at 31 March 2018 was carried forward for schools. The schools’ PEF allocations for 2018-19 have also been applied to budgets. These amounts are £4.014m carried forward from 2017-18 and £10.101m for 2018/19. As PEF is a ring-fenced funding source, it has no impact on the variance within the service, as any under- or overspends are carried forward.
Non Devolved: - Variance £1.086m overspend
The projected overspend mainly relates to maternity pay and long term absence and overspends of £2.010m and £0.577m are included within the projection. These costs are in relation to teachers but are borne by the non-devolved central Education budget and not the DSM. These overspends are reduced by projected underspends in Early Years (EY) of £0.877m due to delayed EY projects and in Special Education of £0.360m due to projected underspends on staffing costs.
Children and Families/Criminal Justice Service - Variance £2.640m overspend
The projected position for the service reflects a current projected overspend for Children and Families Service due to an increase in the number of care placements since March 2018. The projected overspend on placement costs currently is £3.037m. This overspend reflects a significant rise in children remaining in their care placement through new Continuing Care provision. The projected overspend is partly offset by a projected underspend on employee costs of £0.303m due to recruitment lead in times. The service continues to implement the Children and Families Strategy, which aims to reduce the reliance on high cost care placements through early intervention and support to children and their families. Placement levels are carefully monitored by the service and further work is being undertaken to try to reduce current levels of demand and to return young people to family or wider kinship arrangements where it is safe to do so.
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2.1.2 Health and Social Care
Health and Social Care - Variance £4.250m overspend
The 2018/19 IJB budget included an agreed budget deficit of £4.529m. This was based on a 3 year financial strategy as opposed to a one year balanced budget. The agreed deficit was arrived at following discussion and agreement of savings and investment resulting in a budget gap of £4.529m. It was anticipated at that stage that the Health and Social Care deficit would be £2.165m for the Council.
The current forecast is an overspend of £4.250m, of which £2.165m relates to the agreed deficit. In addition to the £2.165m agreed deficit, there are other service overspends of £2.085m.
The additional service overspends include a total overspend on Home Care of £1.794m which is primarily due to continuing increased demand for external care packages, partly offset by underspends on staffing. Work is underway to recruit more Home Carers to work within the START service. Based on experience to date, it is anticipated this will further reduce levels of demand. The budget includes a saving of £1.4m for the START service, which is on course to be delivered.
There is a forecast overspend of £0.805m on adult placements as a result of continuing demand and increased risk.
Within Older People Local Authority home placements there is an overspend on employee costs of £0.911m mainly due to increasing levels of client dependencies and cover arrangements required to meet Care Inspectorate requirements. This is being offset by additional client income of £0.847m. Work is underway to look at realignment of these budgets.
These overspends have been partly offset by underspends on Supported Living of £0.940m. This is mainly due to staff turnover and reshaping of this service, an underspend of £1.619m, which is partly offset by a reduction in housing benefit income of £0.647m, as a result of service user changes and universal credit. There is an underspend on Older People Nursing and Residential purchased places of £0.178m due to continuing increased scrutiny and implementation of eligibility criteria. Social workers must demonstrate that community and enabling services have been considered and exhausted before long term care will be considered.
The council budget included savings of £7.386m for the IJB. There is expected to be a shortfall on these savings of £0.547m as a result of delays in implementation of enabling change projects and management restructures.
Impact of Risk Share
Health and Social Care after risk share – Variance 2.558m overspend
The risk share agreement means that the Council will be obligated to meet 28% of the overall IJB overspend. The overall projected position of the IJB is £8.644m. The terms of this agreement means a transfer would take place with an expected payment from Health of £1.692m reducing the projected variance to £2.558m, compared with the originally planned deficit of £1.268m.
The main overspends are within Environmental Operations £0.591m and Sustainability & Commercial Operations £0.503m.
Environmental Operations is mainly due to a £0.450m pressure for recyclates in relation to income from sales of paper. During 2017-18 the price that the Council receive for paper reduced drastically. Recyclates income is split between the Council and Fife Resource Solution (FRS), but is wholly managed by FRS who are investigating how this pressure can be mitigated. There is the potential that the current price could remain static for the whole of the financial year.
The Sustainability & Commercial Operations overspend is due to the continued increased residual municipal waste tonnage resulting in increased landfill tax of £0.503m. The increase in tonnage is linked to the increase in the number of households in Fife, resulting in an increase in household waste. This tonnage is not reflected in the management fee paid to FRS.
Communities & Neighbourhood Service - Variance £0.354m overspend
The main overspend is as a result of under recovery in income for Community Use and Community Resources Fife wide of £0.282m. A review of this historic under-recovery of income is being carried out by Communities and Neighbourhoods Service. The remaining overspend is due to the cumulative effect of small variances across the service.
Customer Service Improvement - Variance £0.650m overspend
The main overspend is within Customer Service Delivery on employee costs. Savings for Customer Service Delivery totalling £0.602m have been applied in 2018-19 and these have been partially achieved. Both Customer Service Improvement and the Changing to Deliver team are continuing work on a number of projects to fully achieve the savings in future years. In order to continue delivering services and maintain standards such as call answering levels, staffing levels are being maintained within Customer Service Delivery which is contributing to the overspend of £0.650m and delaying the service from keeping spend within budget.
2.1.5 Financing
Council Tax Income - Variance £0.286m greater than target
The projection for income is £156.254m which gives a favourable variance of £0.286m. This is due to the continued collection of council tax in respect of Long Term Empty homes and prior year income as well as council tax yield being marginally greater than anticipated.
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2.2 Housing Revenue Account
2.2.1 The provisional outturn for the Housing Revenue Account (HRA) is shown in Appendix 2 and indicates a breakeven position.
Supervision and Management - (£0.470m) underspend
The underspend relates to Central Support and other internal recharges, e.g. work carried out by other directorates for the HRA. As these services reduce their costs through savings, the cost borne by HRA also reduces. Employee Costs is projecting to be underspent by £0.095m, the HRA has achieved savings due to a management restructure which took place in 2018-19.
The overspend relates to CFCR which is the contribution from HRA revenue to HRA capital. Due to the projected underspend on Supervision & Management costs the HRA is currently projecting to make a higher contribution to the HRA capital programme than originally budgeted for.
3.0 2017-18 Revenue Budget Savings Progress
3.1 Appendix 3 provides details of the achievements against the approved revenue budget savings for 2018-19 by Directorate as at June. The Appendix shows a forecast of achievement of agreed savings for 2018-19.
3.2 The table demonstrates that overall the Council will achieve 77% of 2018-19 Budget Savings.
3.3 More detailed reports on the progress of savings are presented to the relevant Strategic Committees as part of the Council’s wider scrutiny and performance management reporting arrangements.
4.0 Balances
4.1 General Fund Services
4.1.1 Appendix 4 shows a forecast of the balances’ position for General Fund Services over a 3 year period. The figures are based on the level of approved commitments.
4.1.2 The General Fund balance brought forward at 1 April 2018, including earmarked balances, was £55.056m
4.1.3 To date £15.384m has been transferred to service budgets which, along with an overall budget variance of £6.101m in 2018-19, gives a projected balance at 31 March 2019 of £33.571m.
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4.1.4 Earmarked balances and other commitments against the General Fund balance include Energy Management Fund, Workforce Change, Change Fund and Fife Jobs Contract.
4.1.5 The projected uncommitted General Fund balance at 31 March 2019 is £21.932m.
4.1.6 In preparing the financial strategy, a financial risk register has been developed which highlights the potential cost of the risk associated with the assumptions made. Appendix 5 of this report provides a breakdown of these risks and the total cost being £60.0m. This means that approximately 36.5% of the risks are covered by the projected level of uncommitted balances at 31 March 2019. It is not anticipated that all risks will come to fruition as action will be taken to mitigate against risk and the financial strategy will be adapted for events and in response to new information that becomes available.
4.2 Housing Revenue Account
4.2.1 The Housing Revenue Account balance brought forward at 1 April 2018 was £2.005m as detailed in Appendix 4.
4.2.2 The Housing Revenue Account is projecting a breakeven position, leaving a balance at 31 March 2019 of £2.005m.
5.0 Conclusions
5.1 The projected outturn position for General Fund services in 2018-19 is a net deficit/surplus of £6.101m. The main area of overspend is within Health and Social Care at £2.558m.
5.2 Taking earmarked funds and other potential commitments into account, the projected uncommitted General Fund balance at 31 March 2019 is £21.932m. Whilst this is in excess of the Council’s policy minimum, it is important to recognise future pressures and risks that will necessitate the need to maintain sufficient balances to mitigate these risks.
5.3 The provisional balances position contained within the report is based on the assumption that Service overspends will be eliminated or recovered from 2018-19 budgets in terms of the budget carry forward scheme, with the exception of Health and Social Care.
5.4 The provisional outturn against the Council's Housing Revenue Account in 2018-19 is a break even position.
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List of Appendices 1. General Fund Revenue Summary 2017-182. Housing Revenue Account Summary 2017-183. Approved Savings 2018-194. Summary of Balances5. Financial Risk Register
Background Papers None.
Report Contact Laura Robertson Finance Operations Manager Finance and Corporate Services Fife House Glenrothes Telephone: 03451 555555 (Ext. 450552) Email: [email protected]
Estimated Balance at 31 March (33.571) (21.932) (18.565) (18.002)
Earmarked BalanceDevolved School Management 2.634Energy Management Fund 1.313Council Tax - Second Homes 4.394Children and Families Budget Strategy 0.000 1.803
8.341 1.803 0.000 0.000
(25.231) (20.129) (18.565) (18.002)Commitments against balance
Budget Carry Forward Scheme (6.313)Change Fund 1.643 1.064Workforce Change 4.000Fife Job Contract 0.500 0.500 0.563Contributions from Balances (Budget) 1.000Change to Deliver - BTS Investment 2.000Other Commitments 0.468
3.298 1.564 0.563 0.000
Estimated uncommitted balance at 31 March (21.932) (18.565) (18.002) (18.002)
BALANCE - HOUSING REVENUE ACCOUNT
2018-19 2019/20 2020/21Future Years
£M £M £M £MBalance at 1 April 2018 (2.005) (2.005) (2.005) (2.005)
Estimated uncommitted balance at 31 March (2.005) (2.005) (2.005) (2.005)
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Fife Council - Financial Risk Register 2019-20 to 2021-23 Appendix 5
Likeli-hood Impact
Risk Score
Likeli-hood Impact
Risk Score
1 RISK FIN MGT
Reduction in Government funding to Local Authorities in cash and real terms, is greater than anticipated.
Less funding from Government inhibits ability to deliver current level of service.
5 5 25 Long Term budget model is updated on an annual basis which estimates the impact of reducing resources over a 10 year period.
Y 16.0 3 3 9
2 RISK FIN MGT
Protection of Education All Services have been provided with Resource Envelopes which reflect a reduction in funding to achieve required savings. Education may not be able to deliver services within these constraints.
5 4 20 Directorates to comply with Medium Term Finance strategy.
Y 5.6 3 3 9
3 RISK FIN MGT
Children and Families Strategy Continued demand for C&F services, child placements exceeds supply.
5 4 20 The Directorate is required to meet any recurring revenue costs from their allocated Resource Envelopes.
Y 5.0 5 4 20
4 RISK FIN MGT
Health and Social Care - Grant Reduction
Health and Social Care resources are not reduced by the same % as per grant reduction received as previously agreed.
5 4 20 Reflected in the medium term finance strategy
Y 1.4 2 2 4
5 RISK FIN MGT
Local Government Pay Award Increased costs to the Council due to higher negotiated pay award than that planned.
4 4 16 Sensitivity analysis is used to forecast any potential increase in cost. Budget model is updated to reflect these costs beyond 2019/20..
Y 2.2 3 3 9
Are all Controls
Oper-ational?
Y/N/ Partial
Potential Financial
Risk - 2019-20
£m
Assessment of Residual Risk
(likelihood x impact) With Control
Measures
No.Risk
Category
RISKThreat to achievement of
business objectiveScope/potential
consequences of risk
Assessment of Risk(likelihood x impact)
Assume No Controls in Place
Risk Control Measures in Place
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Fife Council - Financial Risk Register 2019-20 to 2021-23 Appendix 5
Likeli-hood Impact
Risk Score
Likeli-hood Impact
Risk Score
Are all Controls
Oper-ational?
Y/N/ Partial
Potential Financial
Risk - 2019-20
£m
Assessment of Residual Risk
(likelihood x impact) With Control
Measures
No.Risk
Category
RISKThreat to achievement of
business objectiveScope/potential
consequences of risk
Assessment of Risk(likelihood x impact)
Assume No Controls in Place
Risk Control Measures in Place
6 RISK ASSET MGT
Weather - adverse weather conditions
Strain on budget. 4 4 16 Bellwin Scheme available , but only at significantly high levels and within certain criteria. Not available to cover lower costs of adverse winter weather. Earmarked balances of £1m to cover winter maintenance costs.
Y 1.0 4 3 12
7 RISK FIN MGT
Inability to increase income from Council Tax due to Scottish Government constraints - currently 3% maximum
Under recovery of CT Income.
5 3 15 A 3% increase has been assumed in the Medium Term Financial Strategy. Bad debt provision included.
Y 4.7 2 3 6
8 RISK FIN MGT
Debt Charges - Interest Rates rise at a faster rate than forecasted
Higher debt charges result in corporate overspend.
3 5 15 Effective Treasury Management Strategy.
N 1.0 3 3 9
9 RISK FIN MGT
Future demographics Additional revenue costs associated with increased demand from Services as a result of changing demographics.
5 3 15 Services are required to revise operating activities to absorb costs as per the Medium Term Financial Strategy.
Y 5.6 4 2 8
10 RISK FIN MGT
Revenue Consequences of Capital
Recurring revenue costs resulting from Capital Investment which are not properly resourced withing service budgets.
5 3 15 Services are required to meet any recurring revenue costs from their allocated Resource Envelopes, as per the Medium Term Financial Strategy.
Y 2.0 2 3 6
11 RISK FIN MGT
Increase in scale of bad debts owed to the Council (AR, Council Tax, NDR)
Potential pressure on revenue budgets as greater amounts need to be written off. Debt recovery arrangements indicate this risk is being managed with significant improvement in recent years over debt management and recovery
5 3 15 Bad Debt provision in place, proved adequate for C/Tax and NDR historically. More robust policy framework now in place. Any debt written off is in line with policy.
Y tbc 3 2 6
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Fife Council - Financial Risk Register 2019-20 to 2021-23 Appendix 5
Likeli-hood Impact
Risk Score
Likeli-hood Impact
Risk Score
Are all Controls
Oper-ational?
Y/N/ Partial
Potential Financial
Risk - 2019-20
£m
Assessment of Residual Risk
(likelihood x impact) With Control
Measures
No.Risk
Category
RISKThreat to achievement of
business objectiveScope/potential
consequences of risk
Assessment of Risk(likelihood x impact)
Assume No Controls in Place
Risk Control Measures in Place
12 RISK FIN MGT
Health and Social Care - Risk Share
IJB overspends and the Council is liable for 28% of total overspend.
5 3 15 3 year Financial Strategy. Robust revenue monitoring and regular reporting to IJB.
Y 2.5 4 2 8
13 RISK FIN MGT
Inability to achieve projected savings from previous years including Corporate Programmes e.g. Changing to Deliver, Procurement etc.
Increased risks due to savings not being met, may result in future reduced service provision as a consequence.
4 3 12 Robust Programme monitoring arrangements are in place.
Partial 1.0 3 3 9
14 RISK FIN MGT
Inability to achieve projected savings - Service specific.
Increased risks due to budget not being met, may result in future reduced service provision as a consequence.
4 3 12 Tracking through monitoring process. Monitoring indicates around 77% of savings are on target for delivery (Revenue Monitoring Report). Service are required to substitute savings to contain expenditure within budget. Carry Forward scheme means that any overspends are recovered from future years.
Y 4.0 3 3 9
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Fife Council - Financial Risk Register 2019-20 to 2021-23 Appendix 5
Likeli-hood Impact
Risk Score
Likeli-hood Impact
Risk Score
Are all Controls
Oper-ational?
Y/N/ Partial
Potential Financial
Risk - 2019-20
£m
Assessment of Residual Risk
(likelihood x impact) With Control
Measures
No.Risk
Category
RISKThreat to achievement of
business objectiveScope/potential
consequences of risk
Assessment of Risk(likelihood x impact)
Assume No Controls in Place
Risk Control Measures in Place
15 RISK PROJECT MGT
Development of Major Capital projects requiring Govt Support
Potential requirement to write off to revenue costs incurred developing capital schemes should Government support not be forthcoming. Further risk of need for project acceleration in response to current flood events
3 4 12 Robust Capital Strategy Y 1.0 3 3 9
16 RISK FIN MGT
Inflation costs due to economic factors
High inflationary increases resulting in increased service budget pressures
3 3 9 Limited non-pay inflationary costs included within budget model. Services to comply with Medium Term Finance strategy.
Partial 7.0 1 3 3
17 RISK FIN MGT
Future Equal Pay Claims Potential requirement to settle further Equal Pay claims
Currently under review - further information will be provided by HR in due course.
N tbc
Projected General Fund balance as at 31 March 2019 £21.9mRisk Per Risk Register £60.0m% of Risks per Risk Register covered by Unallocated Balances 36.5%
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Policy and Co-ordination Committee
13th September, 2018. Agenda Item No. 8
Capital Investment Plan Update – Projected Outturn 2018-19 Report by: Eileen Rowand, Executive Director, Finance & Corporate Services
Wards Affected: All
Purpose
The purpose of this report is to provide a strategic overview of the Capital Investment Plan, and to advise on the projected outturn for the 2018-19 financial year.
Recommendations
The Policy and Co-ordination Committee is asked to note:-
i) the key issues relating to the Capital Investment Plan;ii) the projected outturn position for the major projects within the Capital
Investment Plan;iii) the risks identified on major projects within the Capital Investment Plan and the
mitigating actions associated with those risks;iv) the projected outturn position for the 2018-19 Capital Investment Plan;v) that detailed capital outturn reports for 2018-19 will be submitted to relevant
Committees of the Council, in accordance with financial reportingarrangements;
vi) that budget variances will be managed by the Investment Strategy Group inconjunction with the appropriate Directorate; and
vii) approve the proposed Capital Investment Plan re-profiling in Appendix 3 to dealwith carry forward budgets from 2017-18 into later years of the plan.
Resource Implications
None.
Legal & Risk Implications
None.
Impact Assessment
An EqIA is not required because the report does not propose a change or revision to existing policies and practices.
Consultation
Financial projections are based on consultation with each Directorate around the expected progress of individual projects.
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1.0 Background
1.1 The purpose of this report is to advise members of the projected outturn position for the Council’s Capital Investment Plan (the Plan) for the financial year 2018-19 based on information as at June 2018, including the resources used to fund the Plan. The report also highlights the projected outturn position for major projects along with any potential risks associated with these projects. All capital projects over £5.000m will fall into this category and those where there is deemed to be a greater level of risk linked to the potential to overspend on budget, overrun on the original timescale or where the benefits may not be delivered in comparison to the original business case. The Plan covers capital expenditure on all Council Services including Housing, for which there is a separate programme.
2.0 Issues and Options
2.1 Key Issues No key issues have been reported at this time.
2.2 Major Projects 2.2.1 Appendix 1 provides a summary of the projected outturn for major projects within the
Plan. There are 18 projects in this category with an overall budget of £505.534m, it is anticipated that these will overspend by £1.354m, approximately 0.3% of budget.
2.3 Potential Risks Identified on Major Projects 2.3.1 The Future of Leisure project is projected to be overspent by £1.354m, the majority
of which is required to reach a settlement in relation to the Final Account and completion of outstanding remedial work. The service are currently preparing options to fund the forecast overspend.
2.3.2 In relation to the replacement of Madras College, a detailed planning application was submitted in February 2018, and in May 2018 this was supplemented by submission of a voluntary Environmental Impact Assessment. However, determination of this application is dependent upon the granting of Planning Permission in Principle for the Strategic Development Area. Planning permission was granted in March 2018 for the new access road, which will ‘inter alia’ provide access to the new school, and is expected to commence construction in September 2018. Construction of the new school is expected to take around two years following on from approval of planning permission.
2.3.3 A multi year funding package for Early Years has been announced by the Scottish Government to enable facilities to be developed and expanded to accommodate the requirements for 1140hrs provision. Funding has been allocated based on metrics identified by Scottish Futures Trust. These metrics are currently untested in the marketplace but assume that some economies of scale will arise from the size of the expansion programme. The funding allocated also has no allowance for contingencies such as non-standard ground conditions, site contamination etc. and therefore the programme of works around the expansion of Early Years provision will require careful planning to ensure that maximum benefit can be gained from this investment.
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2.4 Financial Performance – 2018-19 Projected Outturn 2.4.1 Appendix 2 provides a summary by Directorate and Service of projected outturn for
2018-19 showing the expenditure budget of £150.437m and projected outturn spend of £150.616m in the 2018-19 financial year, £0.179m over the available budget. Comparable expenditure for the previous 3 years was £140.253m (2017-18), £192.000m (2016-17) and £210.167m (2015-16).
2.4.2 The 2017-18 provisional net underspend of £30.478m has been carried forward into 2018-19. Services have reviewed expected spending patterns and have rephased expenditure into future years where appropriate to reflect a more realistic profile (see Appendix 3). The Provisional Budgets which are included within this report represent the re-profiled position.
2.4.3 As a result of the re-profiling, only minor variances are projected, the most significant being:
Area Services £1.545m
The Future of Leisure project is projected to be overspent by £1.354m, the majority of which is required to reach a settlement in relation to the Final Account and completion of outstanding remedial work. The service are currently preparing options to fund the forecast overspend.
Any variances at the end of the financial year will be carried forward to the later years of the plan and the full detail of material variances will be reported to the relevant committees of the council.
2.4.4 Capital expenditure is funded from a number of income sources, some of which contribute specifically to individual projects in the Capital Investment Plan. These income sources are Capital Financed from Current Revenue (CFCR), Scottish Government Specific Capital Grant and other grants and contributions (e.g. lottery funding). Appendix 2 shows projected outturn for these and also gives a net expenditure overview of the plan, showing net expenditure of £103.156m against a budget of £105.452m, a projected underspend of £2.296m.
2.4.5 Within the Funding section of Appendix 2, the other income such as General Capital Grant and Capital Receipts are not specifically related to any capital project but considered to be funding for the Capital Investment Plan as a whole. The balance of required funding in the year is met from borrowing through the Council’s Loans Fund.
2.4.6 The total and net expenditure budgets in 2018-19 have increased since the rephasing exercise. The changes are summarised below and include income from grant funding/other contributions and Capital Financed by Current Revenue (CFCR). All of the changes below have been agreed by the Investment Strategy Group.
Total Expenditure £m
Rephased Capital Plan 150.236 Increased Grant and Contribution Income 0.196 Capital Financed from Current Revenue (CFCR) 0.005
150.437
2.4.7 Also shown in Appendix 2 is the current Capital Investment Plan 2018-28.
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3.0 Conclusions
3.1 Against the current gross expenditure budget of £150.437m, the Council is showing projected spend of £150.616m in the financial year and an overspend variance of £0.179m.
3.2 This level of expenditure demonstrates progress on the delivery of a wide range of capital projects continuing the major capital investment made by Fife Council in recent years.
3.3 There are 18 projects within the Plan which have a value of £5.000m or greater. The overall budget for these projects is £505.534m, the Council is showing projected spend of £506.888m and an overspend variance of £1.354m.
3.4 Significant variances highlighted in section 2.4 require to be addressed, the Investment Strategy Group will consider options for these in conjunction with the appropriate Directorate.
3.5 Services have reviewed expected spending patterns and have rephased expenditure into future years where appropriate to reflect a more realistic profile.
List of Appendices 1. Major Capital Projects Total Cost Monitor2. Monitoring Report by Directorate/Service3. Capital Plan 2018-28 Project Re-Profiling
Trading Arrangements in Fife Council – 2018 Update Report by: Eileen Rowand, Executive Director (Finance and Corporate Services)
Wards Affected: All
Purpose
This report provides members with an updated position statement on the process used to evaluate which Council Services should become Significant Trading Operations (STOs).
Recommendation(s)
The committee is asked to:-
• approve the results from the evaluation process, which confirms Fife Councilhas no Significant Trading Operations for the financial year 2018-19; and
• approve that all Council Services continue to be monitored against theCouncil’s STO criteria, to reflect any changes in their operational environment,with an annual position statement being reported to the Policy and Co-ordination Committee, as appropriate.
Resource Implications
There are no direct resource implications.
Legal & Risk Implications
This report ensures compliance with the Local Government in Scotland Act 2003 and the subsequent Local Authority Scotland Accounts Advisory Committee (LASAAC) recommendations in terms of statutory trading accounts.
Impact Assessment
An EqIA is not required because the report does not propose a change or revision to existing policies and practices, for example, annual reports or monitoring reports.
Consultation
None.
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1.0 Background
1.1 The Local Government in Scotland Act 2003 sets out the requirement for statutory trading accounts to be maintained for “Significant Trading Operations” and that they should break even over a three year rolling period. It also sets out a statutory duty to publish performance reports and includes provision for the publication of trading accounts. There is no compulsion to maintain statutory trading accounts where a Council believes Best Value can be demonstrated without market testing or tendering and where users have no discretion to purchase the service externally. Trading accounts can, however, be maintained where Services consider this to be good practice in demonstrating best value.
1.2 The Chartered Institute of Public Finance & Accountancy (CIPFA) has published guidance – “A Best Value Approach to Trading Accounts” – which is helpful to Councils in, firstly, identifying trading operations and then identifying which of those should be considered significant. The guidance is not prescriptive. It allows individual Councils to apply their own criteria in deciding what an STO is. It is therefore unlikely that similar outcomes will result across all Councils in Scotland.
1.3 The Council has followed the CIPFA guidance and adopted the two stage process as well as its own criteria for both identifying trading operations and setting agreed corporate parameters for establishing significance. This is the process and criteria that was approved by Policy and Resources Committee in June 2004. The flow chart in Appendix 1 clearly illustrates the two stage process.
1.4 In June 2013, the Local Authority Scotland Accounts Advisory Committee (LASAAC) recommended that the test of trading to identify a Significant Trading Operation should focus only on those services or activities which are external to the Local Authority and which are not statutory in nature.
2.0 Issues and Options
2.1 To enable the Council to fulfil its statutory responsibilities, a full and transparent re-assessment of all of the Council’s income-generating Services was undertaken in August 2018.
2.2 The evaluation exercise used Fife’s approved criteria for firstly identifying trading operations and then identifying which of those should be considered significant. The exercise focussed on Council operations that charge for their services, having an annual external income greater than £100,000.
2.3 The results of the evaluation exercise are shown in the appendices to this report. From this analysis, 34 operations had annual income greater than £0.100m and 19 of these were assessed as trading operations (Appendix 2).
2.4 Using the revised test of trading as recommended by LASAAC, none of the Trading Operations were assessed to be Significant (Appendix 3).
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3.0 Conclusions
3.1 For 2018-19 complying with LASAAC recommended criteria, Fife Council has no trading activity designated a Significant Trading Operation under the terms of the Local Government in Scotland Act 2003.
3.2 The Council continues to develop its accounting arrangements as a matter of good practice and to facilitate the demonstration of Best Value, for example, by allocating overheads to an appropriate level that enables the full cost of services to be identified, for both trading and non-trading operations. Trading accounts will be used where it is felt such an approach would lead to a better assessment of Best Value.
List of Appendices Appendix 1 – The Two-stage Process to identify potential Significant Trading Operations Appendix 2 – Test of Trading 2018-19 Appendix 3 – Evaluation Criteria for determining Significant Trading Operations 2018-19
Background Papers None
Report Contact Laura Robertson Finance Operations Manager Finance & Corporate Services Fife House North Street Glenrothes Telephone: 03451 55 55 55 (Ext. 450552) Email: [email protected]
SOCIAL WORK4 Residential care 3.377 Yes Yes Yes5 Home Care - Community Alarms 0.635 No n/a No6 Home Care - Meals on Wheels 0.841 Yes No No
ENTERPRISE AND ENVIRONMENT7 Cemeteries & Crematoria 2.926 No n/a No8 Parks, Streets and Open Spaces (Grounds Maint & Recreation) 0.943 Yes Yes Yes9 Printing 0.250 Yes Yes Yes
10 Building Services 0.180 Yes Yes Yes11 Property Services 0.958 Yes Yes Yes12 Cleaning 0.530 Yes Yes Yes13 Catering - Staff Canteens 0.618 Yes Yes Yes14 Catering - Commercial 1.202 Yes Yes Yes15 Catering - School Meals 4.275 No n/a No16 Roads Administration 0.240 No n/a No17 Bus Stations 1.212 No n/a No18 Car Parking 3.665 Yes Yes Yes19 Public & Accessible Transport 0.144 No n/a No20 Harbours, Bridges, Coast and Flood 0.269 No n/a No21 Fleet Services 0.561 No n/a No22 Environmental Operations 0.755 Yes Yes Yes23 Protective Services 0.160 No n/a No24 Employability 0.410 Yes Yes Yes25 Business Property 2.698 Yes Yes Yes26 Economic Development 0.135 Yes Yes Yes27 Building Standards & Safety 1.916 No n/a No28 Planning 1.904 No n/a No
COMMUNITIES29 Community Resources (Letting of Halls etc) 0.734 Yes Yes Yes30 Community Use of Schools 1.804 Yes Yes Yes31 Safer Communities (incl Pest Control) 0.296 Yes Yes Yes32 Customer Service Delivery (incl Registration of BDM) 0.500 No n/a No
FINANCE AND CORPORATE SERVICES33 Legal Services (incl Licensing) 0.880 No n/a No34 Finance & Corporate Services 0.511 No n/a No
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Appendix 3EVALUATION CRITERIA FOR DETERMINING SIGNIFICANT TRADING OPERATIONS 2018-19
Financial Criteria Non Financial Criteria Conclusion
Trading Operation
External Income from
Fees & Charges
Is external income > 1% of the Council's net revenue budget
2018-19?
Is there a high risk of significant
financial loss to the authority ?
Is the authority exposed to the risk of service or
reputational loss in carrying out the operation?
Is the service likely to be of significant interest to
key stakeholders and their needs?
Is a trading account important in demonstrating service improvement and
1 Secondary Education (School Lets) 0.160 No No No No No No2 Music Service 0.582 No No No Yes No No3 Childcare Activities 2.793 No No Yes Yes No No4 Residential Care 3.377 No No Yes Yes No No5 Parks, Streets and Open Spaces (Grounds Maint & Recreation) 0.943 No No No No No No6 Printing 0.250 No No No No No No7 Building Services 0.180 No No No No No No8 Property Services 0.958 No No No No No No9 Cleaning 0.530 No No No No No No
10 Catering - Staff Canteens 0.618 No No No No No No11 Catering - Commercial 1.202 No No No No No No12 Car Parking 3.665 No No No No No No13 Environmental Operations 0.755 No No No No No No14 Employability 0.410 No No No No No No15 Business Property 2.698 No No No Yes No No16 Economic Development 0.135 No No No No No No17 Community Resources (Letting of Halls etc) 0.734 No No No No No No18 Community Use of Schools 1.804 No No No No No No19 Safer Communities (incl Pest Control) 0.296 No No No No No No
2018-19 Net Revenue Budget 791.614 (as per 2018-21 Financial Plans)
1% for STO significance test 7.916
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Policy and Co-ordination Committee
13th September, 2018. Agenda Item No. 10
Revenue Monitor 2017-18 (Finance and Corporate Services) – Provisional Outturn Report by: Eileen Rowand, Executive Director (Finance and Corporate Services)
Wards Affected: All
Purpose
The purpose of this report is to give members an update on the 2017-18 provisional outturn for the Finance and Corporate Services Directorate.
Recommendations
Committee is asked to consider the current financial performance and activity as detailed in this report.
Resource Implications
None.
Legal & Risk Implications
There are no direct legal implications arising from this report.
Impact Assessment
An EqIA has not been completed and is not necessary as the report does not propose a change or revision to existing policies and practices.
Consultation
None.
96
1.0 Background
The report summarises the provisional outturn position for 2017-18, taking into account the actual expenditure incurred and provides explanation of the main variances and, if applicable, significant movement in variances since the previous report at section 3.
2.0 Provisional Outturn
2.1 Based on current information for the Finance and Corporate Services Directorate, of a net expenditure budget of £56.382m, the position across all areas is an actual expenditure of £54.016m resulting in a provisional net underspend of £2.366m (4.2%), detailed in Appendices 1 and 2.
3.0 Major Variances
3.1 Housing Benefits - Variance (£1.527m) underspend, Movement (£0.850m) 3.1.1 The underspend relates to higher than anticipated Housing Benefit subsidy received
and an increase in the recovery of Housing Benefits overpayments. The actual subsidy received was higher than the mid-year claim that was submitted to the Department of Work and Pensions (DWP). The level of subsidy can vary as it is dependent on the type/use of accommodation.
Housing Benefits is a corporate item therefore it is outwith the service controllable budgets within the Finance and Corporate Services Directorate.
3.2 Miscellaneous Services: - Variance (£1.017m) underspend, Movement (£1.017m)
3.2.1 Following on-going review of ledger entries in relation to historic creditors’ balances, a number of items have been “written off” or credited to Miscellaneous Services as they do not represent outstanding liabilities. These entries are small value items which have been fully investigated and appropriate action taken. Miscellaneous Services is outwith the service controllable budgets within the Finance and Corporate Services Directorate.
This has resulted in both the underspend and the movement for Miscellaneous Services.
Miscellaneous Services is outwith the service controllable budgets within the Finance and Corporate Services Directorate.
3.3 Business Technology Solutions (BTS): - Variance (£0.126m) underspend, Movement (£0.518m)
3.3.1 Corporate funding was provided to ensure that capacity was retained to deliver on the extensive change programme. A conscious decision was taken to delay the advancement of savings in relation to staffing in order to retain capacity. This resulted in the movement in variance.
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4.0 Progress on Budget Savings 4.1 Appendix 3 provides details of revenue budget savings for the Finance and Corporate
Services Directorate detailing achievements against the current year approved budget savings as at Quarter 4. The format of the Appendix may be refined further for future reports. The Appendix details:
• the 3 year budget period for which the savings were approved
• the title of each saving
• the savings target relevant to the current financial year
• the value of saving forecast as deliverable for the financial year
• a Red/Amber Status by saving – Green status are reported by Service
• details of any substitute savings
4.2 All savings have been categorised using a Red/Amber/Green status and these are described as follows:
Green – No issues and saving is on track to be delivered Amber – There are minor issues or minor reduction in the value of saving, or
delivery of the saving is delayed Red – Major issues should be addressed before any saving can be realised
4.3 Where a saving is no longer deliverable in the current year, it is expected that substitute savings are identified to ensure that costs remain within budget overall. Where this is the case, the original saving will be categorised green and a substitute saving will be identified and will also be categorised as green. If no substitute has been identified, the original saving will then be categorised as red.
4.4 The areas in scope for the Finance and Corporate Services Directorate had a significant level of savings to manage within the financial year 2017-18. Overall, the savings to be delivered were £6.114m.
4.5 The full year saving amounts are detailed in Appendix 3.
4.6 The following paragraph provides a brief explanation for any savings where there are variations (+/-£0.250m) between the savings target and the actual saving being delivered within the current financial year.
4.7 The Structural Review within Revenue Services happened later in 2017-18 than expected, therefore the full saving was not achieved in 2017-18. This is a timing issue and these savings will be fully achieved in future years.
5.0 Conclusion5.1 The provisional outturn position for the Finance and Corporate Services Directorate is a
net underspend of £2.366m. Housing Benefits is a corporate item, as well as Miscellaneous Services, therefore these are outwith the controllable budgets within the Finance and Corporate Services Directorate. Action requires to be taken by Services to bring controllable spend in line with their Service budgets.
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List of Appendices
1-2 Provisional Outturn 2017-18 - Finance and Corporate Services3 Approved 2017-18 Savings Tracker - Finance and Corporate Services
Report Contact Audrey Valente Finance Business Partner Finance and Corporate Services Fife House Glenrothes
Revenue Monitoring 2018-19 (Finance and Corporate Services) Report by: Eileen Rowand, Executive Director (Finance and Corporate Services)
Wards Affected: All
Purpose
The purpose of this report is to give members an update on the forecast financial position for the 2018-19 financial year for the Finance and Corporate Services Directorate.
Recommendations
Committee is asked to consider the current financial performance and activity as detailed in this report.
Resource Implications
None.
Legal & Risk Implications
There are no direct legal implications arising from this report.
Impact Assessment
An EqIA has not been completed and is not necessary as no change or revision to existing policies and practices is proposed.
Consultation
None.
103
1.0 Background
The report summarises the forecast outturn position for 2018-19, taking into account the actual expenditure incurred, and provides a forecast and an explanation of the main budget variances at section 3.
2.0 Issues
2.1 Projected Outturn
2.1.1 Based on current information for the Finance & Corporate Services Directorate, of a net expenditure budget of £48.011m the position across all areas is a forecast expenditure of £48.483m resulting in a projected net overspend of £0.472m (0.98%).
3.0 Major Variances
3.1 There are currently no services with a projected variance of over £0.250m within the Finance and Corporate Services Directorate.
4.0 Progress on Budget Savings
4.1 Appendix 3 provides details of revenue budget savings for the areas falling under the scope of the Finance and Corporate Services Directorate, detailing achievements against the current year approved budget savings as at Quarter 1. The format of the appendix may be refined further for future reports. The appendix details:
• the 3 year budget period for which the savings were approved
• the title of each saving
• the savings target relevant to the current financial year
• the value of saving forecast as deliverable for the financial year
• a Red/Amber/Green Status for each saving
• details of any substitute savings
4.2 All savings have been categorised using a Red/Amber/Green status and these are described as follows:
Green – No issues and saving is on track to be delivered
Amber – There are minor issues or minor reduction in the value of saving, or delivery of the saving is delayed
Red – Major issues should be addressed before any saving can be realised
4.3 Where a saving is no longer deliverable in the current year, it is expected that substitute savings are identified to ensure that costs remain within budget overall. Where this is the case, the original saving will be categorised green and a substitute saving will be identified and will also be categorised as green. If no substitute has been identified, the original saving will then be categorised as red.
104
4.4 The areas in scope for the Finance and Corporate Services Directorate have a significant level of savings to manage within the financial year 2018-19. Overall, the savings to be delivered are £3.320m. Whilst the delivery of savings is becoming more challenging, the relevant areas are looking to minimise the financial impact of any amber or red savings by determining mitigating actions as soon as possible. Across all areas, £0.609m has been identified as Red status, with £0.050m identified as being Amber status.
4.5 The full year saving amounts are detailed along with annual forecast information detailed in Appendix 3. The following paragraphs provides a brief explanation of areas where there are variations at Service level (+/-£0.250m) between the Service savings target and the projected saving being delivered within the current financial year.
4.6 Revenue and Commercial Services are currently forecasting that they won’t achieve the proposed saving of £0.298m within Revenue Services in 2018-19. A delay in the implementation of Universal Credit has had a significant affect in achieving this saving in 2018-19. Options to mitigate this saving are being considered.
4.7 In respect of 2017-18 unachieved savings, there are some timing issues and the savings will be achieved in 2018-19. Where this is not achievable, Services are looking at options to mitigate these.
5.0 Conclusions
5.1 The provisional outturn position for the Finance & Corporate Services Directorate is a net overspend of £0.472m (0.98%).
SERVICE MANAGED NET EXPENDITURE 48.011 48.483 0.472 0.98%
INCOME (128.115) (128.986) (0.870) 0.68%
EXTERNAL INCOME (121.734) (122.169) (0.434) 0.36%
INTERNAL INCOME (6.381) (6.817) (0.436) 6.83%
EXPENDITURE 176.127 177.469 1.342 0.76%
EMPLOYEE COSTS 40.905 42.634 1.729 4.23%
PREMISES RELATED EXPENDITURE 0.163 0.200 0.037 22.66%
TRANSPORT RELATED EXPENDITURE 0.342 0.365 0.023 6.86%
SUPPLIES & SERVICES 13.946 13.470 (0.475) -3.41%
THIRD PARTY PAYMENTS 0.000 0.091 0.091 0.00%
TRANSFER PAYMENTS 120.769 120.705 (0.064) -0.05%
CAPITAL FINANCE & CHARGES 0.000 0.000 0.000 0.00%
SUPPORT SERVICES CHARGES 0.002 0.003 0.001 57.66%
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Appendix 3
Business Technology Solutions 2017-20 0.084 0.000 (0.084) Red
Democratic Services 2016-19 0.031 0.000 (0.031) Red
Finance 2016-19 0.052 0.000 (0.052) Red
Finance 2018-21 0.024 0.000 (0.024) Red
Revenue & Commercial Services 2018-21 0.298 0.000 (0.298) Red
Revenue & Commercial Services 2017-20 0.120 0.000 (0.120) Red
Finance 2018-21 0.052 0.026 (0.026) Amber
Finance 2018-21 0.047 0.023 (0.024) Amber
Assessor Service 2017-20 0.042 0.042 0.000 Green
Business Technology Solutions 2018-21 0.018 0.018 0.000 Green
Business Technology Solutions 2016-19 0.014 0.014 0.000 Green
Business Technology Solutions 2017-20 0.372 0.372 0.000 Green
Democratic Services 2018-21 0.033 0.033 0.000 Green
Democratic Services 2017-20 0.075 0.075 0.000 Green
Finance 2016-19 0.003 0.003 0.000 Green
Finance 2018-21 0.020 0.020 0.000 Green
Human Resources 2018-21 0.283 0.283 0.000 Green
Human Resources 2016-19 0.068 0.068 0.000 Green
Legal Services 2018-21 0.109 0.109 0.000 Green
Legal Services 2017-20 0.055 0.055 0.000 Green
Revenue & Commercial Services 2018-21 0.465 0.465 0.000 Green
Revenue & Commercial Services 2016-19 0.261 0.261 0.000 Green
Revenue & Commercial Services 2017-20 0.794 0.794 0.000 Green
3.320 2.661 (0.659)
Rag Status Key:-
Green 2.612 2.612 0.000
Amber 0.099 0.049 (0.050)
Red 0.609 0.000 (0.609)
Total 3.320 2.661 (0.659)
Organisation redesign
FIFE COUNCIL
TRACKING APPROVED 2018-19 SAVINGS
POLICY AND CO-ORDINATION COMMITTEE
AreaApproved
Budget Year Title of Savings Proposal
Savings
Target
£m
Overall
Forecast
£m
(Under)/
over
£m
Rag
Status
JUNE 2018
Reduce devices in offices
Supplies and services
Additional staffing savings resulting from
efficiencies
Reduce vacant posts
Amber - There are minor issues or minor reduction in the value of saving, or delivery of the saving is delayed
Red - Major issues should be addressed before any saving can be realised
Approved savings on track to be achieved
Approved savings on track to be achieved
Approved savings on track to be achieved
Approved savings on track to be achieved
Approved savings on track to be achieved
Approved savings on track to be achieved
Approved savings on track to be achieved
Grand Total
Green - No issues and saving is on track to be delivered
Approved savings on track to be achieved
Shared Service Centre
Review level of journals processed
Review of Banking and Investment processes
Approved savings on track to be achieved
Approved savings on track to be achieved
Approved savings on track to be achieved
Approved savings on track to be achieved
Approved savings on track to be achieved
Approved savings on track to be achieved
Approved savings on track to be achieved
Summary
Rag Status
Savings
Target
£m
Overall
Forecast
£m
(Under)/
over
£m
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Policy and Co-ordination Committee
13th September, 2018. Agenda Item No. 12
Capital Monitor 2017-18 (Finance and Corporate Services) – Provisional Outturn Report by: Eileen Rowand, Executive Director, Finance and Corporate Services
Wards Affected: All
Purpose
The purpose of this report is to provide an update on the Capital Investment Plan and advise on the financial position for the 2017-18 financial year.
Recommendation(s)
Committee is asked to consider the current performance and activity across the 2017-18 Financial Monitoring as detailed in this report.
Resource Implications
None.
Legal & Risk Implications
None.
Impact Assessment
An EqIA has not been completed and is not necessary as no change or revision to existing policies is proposed.
Consultation
Not Applicable.
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1.0 Background
1.1 Based on current information, this report summarises the provisional capital outturn for the Finance and Corporate Services Directorate for 2017-18. Provisional expenditure for the year is (£0.050m).
1.2 Appendix 1 shows an analysis of specific projects in the current capital investment plan which have a budget greater than £1m and analyses total project cost rather than only in year spend.
1.3 Appendix 2 details the provisional outturn expenditure against budget for each project. A brief explanation of any significant variances is provided at section 3 within this report.
2.0 Governance
2.1 On 21st June, 2016, the Executive Committee approved revised governance and scrutiny arrangements for major capital projects. At that meeting, the Committee agreed an enhanced level of reporting on capital projects through the quarterly capital expenditure monitoring report.
2.2 Major projects are defined as projects with a value of £5m and over. Projects with a value of less than £5m may also be subject to enhanced governance and scrutiny arrangements where there may be greater risk of overspend against budget, a risk of overrun on timescales or where expected benefits may not be delivered. The Investment Strategy Group is currently working to identify these projects as part of a review of the Capital Plan. Elected members will also be able to suggest when a particular project should be scrutinised in more detail.
3.0 Issues, Achievements & Financial Performance
3.1 Key Issues / Risks 3.1.1 Appendix 1 details the total cost forecast position for all capital projects within the areas
under the scope of the Committee with an overall value of £1m and over.
3.2 Major Projects – Potential Risks and Actions 3.2.1 There are no additional or new risks arising in the current reporting period from any of
the major projects being progressed within the Finance and Corporate Services Directorate. There is one major project, Flexible Work Styles, with a budget of over £5m for Finance and Corporate Services. The total budget for this is £6.097m with a budget of £0.350m in 2017-18. There was slippage of £0.309m but it is estimated that this will be spent in 2018-19.
3.3 Financial Performance – 2017-18 Projected Outturn 3.3.1 Appendix 2 provides a summary of the provisional outturn for each project for the
financial year 2017-18. The Appendix shows a provisional outturn of (£0.050m) against a Capital Investment plan of £2.864m.
3.3.2 The reasons for significant variances (+/-£0.500m) are detailed below.
110
3.3.3 Slippage is the term used to describe projects that are expected to spend less than the budget allocation in a particular year due to a delay in timing on the delivery of the project. This is not uncommon in the capital programme and the reasons for this can be wide and varied. Advancement is the term used to describe projects that are expected to spend more than the budget allocation in a particular year due to an acceleration of the budget from future years.
3.4 Significant Variances 3.4.1 There is slippage of £1.750m in respect of the Legacy Systems project, which relates
to the Replacement HR/Payroll system, which is currently at the options appraisal stage. A business case is currently being developed for this project. There are smaller areas of slippage across other BTS projects including Flexible Work Styles due to the timing of receipt of goods £0.308m, purchase of hardware due to a delay in specification £0.434m and delays on the Legacy Systems project £0.443m.
3.4.2 In respect of the Legacy Systems project, some costs, including spend from previous years, were transferred to Revenue that could not be capitalised.
4.0 Conclusions
4.1 The total 2017-18 approved programme for the Finance and Corporate Services Directorate is £2.864m. The provisional outturn level of expenditure is (£0.050m).
4.2 The management of capital resources require us to look across financial years, as well as within individual years. The current year performance is only a snapshot of the existing plan and the Directorate will adjust expenditure levels within future years of the plan to accommodate the advancement or slippage of projects.
List of Appendices 1. Project Cost Monitor2. Capital Plan 2017-18 Provisional Outturn
Report Contact Audrey Valente Finance Business Partner Finance and Corporate Services Fife House Glenrothes
Capital Monitoring 2018-19 (Finance and Corporate Services) Report by: Eileen Rowand, Executive Director (Finance and Corporate Services)
Wards Affected: All
Purpose
The purpose of this report is to provide an update on the Capital Investment Plan and advise on the financial position for the 2018-19 financial year.
Recommendation(s)
Committee is asked to consider the current performance and activity across the 2018-19 Financial Monitoring as detailed in this report.
Resource Implications
None.
Legal & Risk Implications
None.
Impact Assessment
An EqIA has not been completed and is not necessary as no change or revision to existing policies and practices is proposed.
Consultation
None.
114
1.0 Background
1.1 Based on current information, this report summarises the forecast capital outturn for the Finance and Corporate Services Directorate for 2018-19. At this stage, it is forecast that expenditure will be £5.035m, representing 93.6% of the approved capital programme for 2018-19.
1.2 Appendix 1 shows an analysis of specific projects in the current capital investment plan which have a budget greater than £1m and analyses total project cost rather than only in year spend.
1.3 Appendix 2 details the forecast expenditure against budget for each project. A brief explanation of any significant forecast variances is provided at section 3 within this report.
2.0 Governance
2.1 On 21st June, 2016, the Executive Committee approved revised governance and scrutiny arrangements for major capital projects. At that meeting, the Committee agreed an enhanced level of reporting on capital projects through the quarterly capital expenditure monitoring report.
2.2 Major projects are defined as projects with a value of £5m and over. Projects with a value of less than £5m may also be subject to enhanced governance and scrutiny arrangements where there may be greater risk of overspend against budget, a risk of overrun on timescales or where expected benefits may not be delivered. The Investment Strategy Group is currently working to identify these projects as part of a review of the Capital Plan. Elected members will also be able to suggest when a particular project should be scrutinised in more detail.
3.0 Issues, Achievements & Financial Performance
3.1 Key Issues / Risks 3.1.1 Appendix 1 details the total cost forecast position for all capital projects within the
areas under the scope of the Committee with an overall value of £1m and over. The key risks associated with the major projects are noted below.
3.2 Major Projects – Potential Risks and Actions 3.2.1 There are no additional or new risks arising in the current reporting period from any
of the major projects being progressed within the Finance and Corporate Services Directorate. There is one major project, Flexible Work Styles, with a budget of over £5m for Finance and Corporate Services. The total budget for this is £6.097m with a budget of £0.309m in 2018-19. The total projected spend will be on budget.
3.3.1 Appendix 2 provides a summary of the projected outturn for each project for the financial year 2018-19. The Appendix shows a forecast outturn of £5.035m against a Capital Investment plan of £5.381m, a spending level of 93.6%.
3.3.2 The reasons for significant variances (+/-£0.500m) are detailed below.
115
3.4 Significant Variances
3.4.1 There are no projects with a significant variance of (+/-£0.500m).
4.0 Conclusions
4.1 The total 2018-19 approved programme for the Finance and Corporate Services Directorate is £5.381m. The forecast level of expenditure is £5.035m, which represents 93.6% of the total programme, resulting in slippage of £0.347m.
4.2 The management of capital resources require us to look across financial years, as well as within individual years. The current year performance is only a snapshot of the existing plan and the Directorate will adjust expenditure levels within future years of the plan to accommodate the advancement or slippage of projects.
List of Appendices 1. Total Cost Monitor2. Capital Monitoring Report by Service
Report Contact Audrey Valente Finance Business Partner Finance & Corporate Services Fife House Glenrothes
Glenrothes Heat Project – Proposed Amendment to Servitude Agreement Report by: Robin Presswood, Head of Economy, Planning and Employability Services
Ken Gourlay, Head of Assets, Transportation and Environment
Purpose
The purpose of this report is to advise of a decision taken by the Chief Executive under emergency powers to amend an existing servitude agreement to facilitate the early delivery of a key section of the Glenrothes Heat project.
Recommendation(s)
It is recommended that Committee:
i. notes that a decision has been taken under emergency powers during recessby the Chief Executive to amend the terms of an existing servitude agreement,between the Council and a landowner, whereby the landowner will now appointits own contractor to undertake essential infrastructure works to facilitate theearly delivery of a key section of the Glenrothes Heat project; the cost of worksto be funded in the short-term are set out in the report with a guarantee providedby a major company which has a very low risk credit rating;
ii. notes that the proposal for the Council to incur the whole cost of works in theshort-term is not within the Council’s Investment Strategy and therefore thedecision taken under emergency powers has to be referred to Committee forinformation;
iii. notes that a revised legal agreement has now been concluded with effect from9th August, 2018 to enable commencement of the essential works to meet theCouncil’s programme requirements; and
iv. note that details are otherwise set out in a report to be considered later in privatein this Committee
Resource Implications
It is proposed that the Council will meet the costs incurred by the landowner as the infrastructure works are carried out, subject to a maximum sum. Full repayment of the landowner’s share will be based on a sum payable by 31st March 2019 and the balance being paid by no later than 30th September 2019. The landowner’s majority shareholder has provided a guarantee underwriting the financial liability.
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Legal & Risk Implications
The current servitude agreement has been amended to reflect the proposal that the landowner will appoint its own contractor with an undertaking that the Council will fund the cost of the infrastructure works in the short-term. The balance of the cost attributable to the landowner shall be paid once the landowner secures its servitude right of access over Council land but in any event a sum by 31st March 2019 and the balance payable by 30th September 2019. A guarantee has been provided by the landowner’s majority shareholder underwriting all obligations of the landowner, including its financial obligations. That company has significant assets and financial due diligence has been carried out by Finance Services which confirms that this company represents a very low risk.
Legal Services has taken advice from the Scottish Government’s State Aid unit which confirms that the proposal is unlikely to comprise State Aid.
The proposal to proceed on the basis that the landowner appoints its own contractor and will ensure that the essential infrastructure works are carried out to enable the delivery of the energy corridor and allow the Council to meet commissioning timescales.
Impact Assessment
An Equality Impact Assessment does not require to be carried out as this report does not propose any change to existing Council policies.
The Glenrothes Heat project helps the Council support its socio-economic duty and supports investment in sustainable place making.
Consultation
The Executive Director of Enterprise and Environment and the Executive Director of Finance and Corporate Services have been consulted in the preparation of this report.
1.0 Background
1.1 As part of the Glenrothes Heat project, an energy corridor is being created from the RWE Biomass Plant, Glenrothes to Flemington Road, Queensway, Glenrothes. Part of the route is through land owned by a third party. Fife Council owns the adjacent land over which the landowner requires access to build an access road, which will serve both the its development land and other development land owned by the Council.
1.2 The proposed route does require significant earthworks to be carried out as part of the provision of the base course to accommodate both the energy corridor and the future access road.
1.3 The Council and the landowner entered into a legal agreement in March 2018 in respect of which the Council has secured a servitude right to install and operate part of the Glenrothes Heat project on land owned by a third party. In turn, the landowner has secured an option to secure a servitude right to construct and use an access to its proposed development. The Council’s servitude provides for the construction of essential works to address level differences across the land owned by the landowner and the cost of such works would be apportioned on an equitable basis.
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2.0 Issues and Options
2.1 The landowner has tendered the civil engineering works on its site, including the delivery of the initial base course works and has now appointed a contractor. Following further recent discussions with the landowner, it has been concluded that there would be significant advantages in the landowner retaining control of the delivery of the base course works. In particular, the landowner would retain liability for the construction of the works and the management of its contractor. The landowner advised that it would be willing to appoint its contractor to carry out the works but as it does not require such works to be carried out at this time, the cost of undertaking the works would have to be met by the Council with reimbursement of the landowner’s share of costs due at a later date.
2.2 The landowner has secured competitive tenders for the proposed infrastructure works, which now includes additional drainage works, in respect of which the Council has been provided with a detailed tender analysis report. The Council has satisfied itself that the lowest tender is acceptable.
2.3 In order to proceed on the basis of this revised proposal, the previous legal agreement had to be amended urgently. The works can now commence on this section of the network in order to meet the timescales in the funding conditions. Whilst the full cost of the works will require to be met in the short-term by the Council, the majority of the costs will be reimbursed by the landowner once it draws down its servitude right of access over Council land but, in any event, the landowner will pay a minimum sum by 31st March 2019 and the balance of its share of cost by no later than 30th September, 2019. Furthermore, the balancing payment which will become due to the Council has been underwritten by a guarantee from the landowner’s majority shareholder whose latest financial accounts confirm that it has significant net assets and, following a credit check, is confirmed as having a very low risk rating.
3.0 Conclusions
3.1 Having regard to the preferred option recommended by officers, the Chief Executive was satisfied that the Council should proceed to conclude a revised legal agreement on the basis that the landowner will appoint its contractor but on the condition that the Council meets the cost of such works incurred in the short-term. An undertaking has been secured, together with a guarantee from its majority shareholder, that the landowner shall reimburse the Council with its share of costs once it has exercised its servitude right of access but in any event on the basis that its reimburse the Council with its share of costs comprising a minimum sum by 31st March 2019 and remaining balance by no later than 30th September 2019.
Background Papers None.
Report Contact Ronnie Hair Property Investment and Development Manager Kingdom House Glenrothes Tel. 03451 555555 Ext. 492200 Email: [email protected]
