Finance and Performance Scrutiny Sub-Committee Minutes

Date:
Monday, 17th January, 2011
Time:
7.30pm
Place:
Committee Room 1, Council Offices, Gernon Road, Letchworth Garden City
 
 

Attendance Details

Present:
Councillor Michael Paterson (Chairman), Councillor J.M. Cunningham (Vice - Chairman), Councillor S.K. Jarvis, Councillor David Kearns and Councillor Lawrence Oliver.
In attendance:
John Campbell - Chief Executive
John Robinson - Strategic Director of Customer Services
Andy Cavanagh - Head of Finance, Performance and Asset Management
Lynn Saville - Head of Community and Cultural Services
David Martins - Hesp - Careline Manager
Steve Crowley - Contracts and Project Manager
Nigel Schofield - Committee and Member Services Officer
Item Description/Decision
PART I
37 APOLOGIES FOR ABSENCE
An apology for absence was received from Councillor Alan Bardett.
38 MINUTES
RESOLVED: That the Minutes of the Meeting held on 29 November 2010 be approved as a true record of the proceedings and be signed by the Chairman.
Minute 32 - Second Quarter Capital Programme Monitoring 2010 - 2011 (Paragraph 4).
The Head of Finance, Performance and Asset Management agreed to provide a copy of the rules for prudential borrowing to Members as soon as possible.
Minute 33 (2) - Corporate Business Planning Draft Budget 2011 - 2012
The Head of Finance, Performance and Asset Management advised the Chairman that unfortunately the budget papers were not available at this meeting and would be presented to PLB prior to the meeting of Cabinet on 25 January 2011.
39 NOTIFICATION OF OTHER BUSINESS
The Chairman confirmed that there were no other items of business.
40 CHAIRMAN'S ANNOUNCEMENTS
The Chairman welcomed the Chief Executive, Councillors Brindley and Lovewell and officers to the meeting. The Chairman reminded Members that, in line with the Code of Conduct, any Declarations of Interest should be declared immediately prior to the item in question.
41 PUBLIC PARTICIPATION
The Chairman confirmed that there was no public participation.
42 NHDC CHALLENGE BOARD
The Chief Executive (CE) thanked the Chairman for the invitation to make a presentation on the processes used by the NHDC Challenge Board following the meeting of this Sub-Committee held on 20 September 2010 (Minute 17 refers).

The CE advised the Sub - Committee that there was ample opportunity to ‘challenge’ vis. Area Committees, Portfolio Holders, Cabinet, Overview and Scrutiny, this Committee and Council. The CE confirmed that the only meeting that was not in the NHDC Constitution was the Political Liaison Board which must meet in private to consider political direction but had no formal decision making powers.

The Challenge Board itself consisted of senior officers chaired by the Chief Executive which discussed the budget proposals and was held on the same day as the Corporate Management Team and included attendance by Heads of Service. Regarding attendance and the involvement of Members it was a question where ‘to draw the line’ and what could be regarded as essential. There were many opportunities for Member involvement and to note the views of Portfolio Holder for Finance and Cabinet. The CE advised that at the moment there were no plans to change the process. The CE advised that the Challenge Board had achieved £4M in efficiency savings since 2006-2007, there were another £6.2M of efficiencies still to be achieved and the Challenge Board would continue to meet the challenges ahead.

The Chairman invited questions from the Committee which began with a Member expressing a view that there was obviously a lot of discussions at Head of Service level and above but was the initial challenge process opaque? was there a guide or Terms of Reference for the approach to discussions that the Challenge Board followed? Also that there was no evidence of a full list of items to be discussed by the Heads of Service, and which suggestions had been deleted. The CE explained that there were extensive discussions on all proposed efficiencies and investment to save with Heads of Service and it would be impracticable to provide a full list of items to Members and a lot of concentrated effort took place to refine the list into a much more suitable document for consideration by Members. There was no infinite range of items and for example previous experience had shown that Members would not wish to see the closure of outdoor swimming pools in North Herts, although such a closure would save money and conversely would be very expensive to close. And another example would be an increase across the board of 100 per cent in all NHDC Car Parks that would be expected to provide much income but was not considered. Regarding Strategy the CE clarified that the Corporate Plan detailed Strategy and in response to another question the CE agreed that it might be to appropriate to revisit the Corporate Plan to assess whether all the current objectives and priorities could be met following setting of the budget for 2011-2012.

Regarding Strategy the CE clarified that the Corporate Plan detailed Strategy and in response to another question the CE agreed that it might be to appropriate to revisit the Corporate Plan if the implementation of efficiencies in balancing the 2011-2012 budget it might not be possible to complete in full or maintain the Councils three Strategic Priorities, there would be no additional items and some items might be removed. The CE also confirmed that there were very few options left to reduce costs as in previous years and that it would not be practicable to have a value for money review of all services and every budget line. Resources would have to managed better, there may be some services that cannot be provided, and the most critical problem remained of setting a balanced budget in time for Council to agree the level of Council Tax and be sent to residents in March.

In response to another question the CE advised that it was not possible to start a review of costs at base level as there were many statutory duties, improvements were required in all departments, there would be staff reductions, there should be a review of discretionary services e.g. public conveniences but it was very unusual to actually cancel services but nevertheless as Councillors were elected it would be Members who took the final decisions.

Another Member commented that as there had been major efficiencies in 2010 -2011 how had the Challenge Board been able continue with such reduction for 2011-2012? If savings were to made to balance the budget this year why were they not considered previously The CE confirmed that costs could be saved by increased shared services working in partnership with other local authorities e.g. HCC, East Herts, Welwyn and Hatfield which could reduce back office support costs and allow front line services to be maintained. Another factor to take into account was the political views of the Administration against proposals made by officers, there were few changes to the previous year but a fundamental change to the provision of services may well be considered for 2012-2013 and Members would be consulted on such proposals. However, there was a gap between income and expenditure and savings would have to be followed by changes to service provision and the ever present requirement to set a balanced budget.

Another Member queried whether zero budgeting was considered for each service area and that restructuring was very important, more clarity was required, and that the full budget book should be available for inspection by Members and confirmation what was Discretionary and what was Mandatory, full employment costs should be known, do we rank well with adjacent local authorities? The CE agreed that NHDC pay grades and salaries were not higher than these authorities and advised that although confirmation had yet to be received a nearby authority would make 40 full time equivalent redundancies.

The issue of ‘Challenge’ was raised by another Member and that he considered that Challenge was about doing things differently and that NHDC did not do this. The CE advised that he had yet to receive a revolutionary proposal for change but there had been many ‘challenges’ via Fundamental Service Review, Parking Reviews, NHDC had initiated the change to Meals on Wheels which was now a Community Enterprise activity, a good service was maintained and was a better financial arrangement for NHDC. The CE also confirmed that the Challenge Board was creative and innovative and did review rigorously all items put forward and that Challenge Board would endeavour how to provide services differently.

The Chairman thanked the Chief Executive for his presentation and his responses to Members’ questions. From the lengthy discussions it appeared that there was still some disagreement and questioning on the workings and strengths of the Challenge Board between some Members and the Chief Executive. It was noted that there would be a Shared Services Task and Finish Group set up soon.

RESOLVED:

(1)That the Chief Executive be thanked for the presentation;

(2)That the information on the processes and strategy used by the Challenge Board be noted.
43 NHDC PARKING SERVICES - FOUR YEAR BUSINESS PLAN
The Portfolio Holder for Transport, Planning and Enterprise thanked the Chairman for the opportunity to address the Sub-Committee following the invitation made at the meeting held on 29 November 2010 (Minute 31 refers)

The Portfolio Holder advised the Sub- Committee that the estimated income from car parking was based on a financial model in use for the last five years and that there was currently very little data available from ticket machines which in turn made assumptions about future usage difficult. In recent years reduced tickets sales (up to 10 per cent for each car park) had occurred when ticket prices were increased. The Portfolio Holder confirmed that the overall downturn at the recent increase was 11.6 per cent across the District.

The Portfolio Holder presented 10 reasons why the income from car parking ticket sales were below forecast: 1. The economic downturn has had a direct effect on town centre and car park usage. 2. The impact of the increased charges was harder to predict due to rounding up of greater than 10 pence. 3. There is now no benefit from surplus monies from ticket sales (no change given previously) A £1 ticket provides £1 income whereas previously income was artificially high. 4. Competition from other subsidised car parks e.g. Letchworth where certain tariffs were not increased has drawn vehicle owners away from NHDC car parks. 5. Also 1 hour tariffs in Letchworth were reduced by 10 pence and this had an effect on income. 6. In Royston the ‘free after three’ car parking had proved to be very popular and as this represented some 30 per cent of the chargeable day the impact on income had been marked. 7. There had been a reduced number of Penalty Charge Notices Issued, giving less income. 8. Sunday trading and no charge for car parking may have had an impact on sales. 9. Anecdotal evidence suggests that town centre visitors were parking for shorter periods, giving less income and perhaps higher turnover on street free parking contributed to less income. 10. There were also recorded complaints of increased parking in residential areas without restrictions close to town centres which could have an effect on income from town centre car parks. In addition the income from Pay By Phone continued to grow but was a small percentage of overall income.

With regard to improving the forecasting of future income the Portfolio Holder advised that the introduction of new Pay and Display Ticket machines would offer ‘live’ information on usage, more secure for cash storage and the Sub - Committee noted that the Capital Programme within the overall Parking Strategy allowed for new machines.

The Portfolio Holder confirmed that the next car parking reviews would take place in Baldock and Hitchin, consideration would be given to charges for Sunday Parking and on - street parking, the introduction of parking permits for commuters and that there would be lift refurbishment and resurfacing in car parks.

The Portfolio Holder concluded his presentation with an update on Enforcement Officer recruitment and that finding suitable candidates had proved to be difficult and four recruitment phases had taken place with the final appointment expected soon after references and medical clearance.

The Chairman thanked the Portfolio Holder for the presentation and invited comments and questions from the Sub - Committee.

Concern was expressed about the introduction of Sunday Charging as Sunday had become the seventh shopping day and would also be inconvenient for church attendees. A Member questioned why year on year forecasting had been lower than estimate and the Portfolio Holder suggested that the economic downturn had been longer and deeper than expected in the last three years. With regard to on street parking charges it was requested at the next estimate round that the effect on income against the loss of town centre shoppers and visitors should be reviewed. The Portfolio Holder advised that this would be part of the Parking Reviews, there would be improved signage, signs would be lit, review of other car park providers, and possibly offering a free 30 minutes. Charging for evening parking would also be considered.

The Portfolio Holder confirmed that commuter parking would be to specific parking zones and for example 100 spaces would allow 80 spaces for residents and 20 for commuters and it was agreed that enforcement was critical if this proposal was to succeed. In response to another question the Portfolio Holder confirmed that there was a risk factor within the computer model, the objective was to improve the model not change it, there would be no radical changes to car parking charges, no increase to charges proposed for 2012-2013 and that the recent VAT increase would be absorbed.

Another Member emphasised the need for more accurate income forecasting as the income was very important to NHDC and the current volatility of forecasting must be improved and the Chairman commented that we must be very aware of the competition for car parking ‘customers’ - would this type of information be used in the computer model?

The Portfolio Holder confirmed that modelling was specific to each individual car park, town by town and all competition was taken into account.

RESOLVED:

(1)That the Portfolio Holder for Transport, Planning and Enterprise be thanked for the presentation;

(2)That the information provided on the procedures to forecast income from NHDC car parks, the computer model, reasons for shortfall and the future strategy be noted.
44 CARELINE - BUSINESS PLAN
The Portfolio Holder for Housing and Environmental (PH) thanked the Chairman for the opportunity to address the Sub - Committee following the invitation made at the meeting of the Sub - Committee held on 29 November 2011 (Minute 31 refers) and referred the Sub - Committee to the comprehensive report prepared by the Head of Community and Cultural Services.

The PH provided a brief description to the background and development of Careline which was an NHDC trading account and sought to meet all costs and recharges. There had been a surplus of some £88K in 2009-2010 but had worsened to a deficit of some £54K with an increase in overhead charges. As well as risk such as the recent loss of a major contract there were many opportunities to develop the service. Enquiries were in hand to reduce costs by working with other Hertfordshire local authority centre and NHDC currently provided Careline services to other Hertfordshire authorities.

The Head of Community and Cultural Services (HCS) confirmed that this service was a 24 hour per day, seven days a week, 365 days a year service and that staff costs were a major item in the balance sheet. Consideration was being given to the removal of overlapping shift patterns to continue with cost savings for this excellent and important service and that there would be changes to conditions of services to meet the need to reduce staff costs in order to meet the challenges ahead. In response to an enquiry on equipment the HCS advised that the specialist monitoring equipment was reviewed every four to five years and recharged over this period. New alarm equipment was bought through a buying consortium operated by NHDC.

The Chairman thanked the PL and HCS for the informative report and the encouraging comments made on the way forward for Careline. It was agreed that no service should exist solely as a contributor to overheads, but Careline added positively to the Quality of Life for North Herts Residents. The Chairman questioned whether the apportioning of the recharge was fair and transparent. It was also agreed that one of the most positive aspects of Careline was the conscientious approach by staff to their duties and the flexibility they showed with regards to the proposed structure changes which should be recognised.

RESOLVED:

(1)That the Portfolio Holder for Housing and Environmental Health be thanked for the presentation;

(2)That the information and actions proposed to address the short term loss of income be noted;

(3)That the contribution to NHDC overheads by Careline be welcomed.

REASON FOR DECISION:
For the Finance and Performance Scrutiny Sub - Committee to be aware of the strategy that would allow Careline to continue as an NHDC commercial trading service.
45 CORPORATE BUSINESS PLANNING 2011 - 2012 - BUDGET SETTING
The Head of Finance, Performance and Asset Management (HF) made an oral presentation to the Sub-Committee and apologised for the lack of a formal budget report.

The HF advised the Sub - Committee that the budget would be balanced for the forthcoming financial year but that the actual paper work was not ready for distribution, but would be available to the Political Liaison Boar prior to presentation to Cabinet on 25 January 2011. The reason for delay was the worse than worst case scenario for the settlement of grant from central government which gave a 16.8 per cent reduction in grant against a forecast of 14.2 per cent.

The HF confirmed that all items presented as part of the provisional budget papers in December 2010 and marked as ‘to be confirmed’ had now been completed. Additional income had been estimated from the New Homes Bonus but, as this was currently out for consultation, it was regarded as a high risk area and so 50 per cent (£275,000) of the projected income was added to the risk allowance. Local setting of planning fees was also estimated to provide an additional £50,000. There was the possibility to use some set aside receipts from the housing stock transfer (value £37M, held against debt of £3M) as capital funding. The HF confirmed that NHDC were working with other local authorities to explore the release of such funds but that any such drawdown would have an effect on investment income.

The Sub - Committee noted that there would be a major effort towards more shared services and that another £6M had to be saved in the next four years and that there were no easy options left for efficiencies.

The Chairman thanked the Head of Finance, Performance and Asset Management for the update on the availability of the budget papers but questioned the lack of availability of budget papers for scrutiny prior to the meeting of Cabinet on 25 January 2011. Following a short discussion it was agreed to request that the Overview and Scrutiny Committee should include on the agenda at the meeting to be held on 8 February 2011 the Corporate Business Planning 2011-2012 Budget Setting Report.

RESOLVED:

(1)That the Head of Finance, Performance and Asset Management be thanked for the update on the budget setting process;

(2)That the reasons for the delay to the final preparation of the budget papers for 2011 - 2012 be noted.

RECOMMENDED TO THE OVERVIEW AND SCRUTINY COMMITTEE:

(1)That the Overview and Scrutiny Committee be requested to add to the agenda for the meeting scheduled for 8 February 2011 the Corporate Business Planning 2011-2012 Budget Setting Report.

(2)That the Overview and Scrutiny Committee be requested to fully scrutinise this budget report and forward to Cabinet the findings of such scrutiny.

REASON FOR DECISION:
To ensure that a rigorous scrutiny of the budget proposals for 2011 - 2012 be completed in time for the setting of the Council Tax for 2011 - 2012.

46 CAPITAL PROGRAMME 2010 - 2011 ONWARDS
The Head of Finance, Performance and Asset Management (HF) made an oral presentation to the Sub-Committee and apologised for the lack of a formal capital programme report.

The Sub - Committee noted the reason for the delay as the Capital Programme for 2010- 2012 was intrinsically linked to the budget setting process.

There ensued a short debate which reconfirmed comments made previously on income from Housing Stock Transfer Set Aside, New Homes Bonus Scheme and noted that any income could be used to reduce prudential borrowing but offset against lost interest income and less loan interest.

The Chairman thanked the Head of Finance, Performance and Asset Management for the update on the availability of the capital programme papers but questioned the lack of availability of these papers for scrutiny prior to the meeting of Cabinet on 25 January 2011. Following a short discussion it was agreed to request that the Overview and Scrutiny Committee should include on the agenda at the meeting to be held on 8 February 2011 the Capital Programme for 2011 - 2012.

RESOLVED:

(1)That the Head of Finance, Performance and Asset Management be thanked for the update on the capital programme for 2011 - 2012;

(2)That the reasons for the delay to the final preparation of the capital programme papers for 2011 - 2012 be noted.

RECOMMENDED TO THE OVERVIEW AND SCRUTINY COMMITTEE:

(1)That the Overview and Scrutiny Committee be requested to add to the agenda for the meeting scheduled for 8 February 2011 the Corporate Business Planning -Capital Programme Report;

(2)That the Overview and Scrutiny Committee be requested to fully scrutinise this Capital Programme report and forward to Cabinet the findings of such scrutiny.

REASON FOR DECISION:
To ensure that a rigorous scrutiny of the Capital Programme proposals for 2011 -2012 be completed before the commencement of the next financial year.
47 TREASURY MANAGEMENT STRATEGY
The Head of Finance, Performance and Asset Management (HF) presented the report of the Strategic Director of Finance, Policy and Governance (which was the report to Cabinet on 25 January 2011) and advised that all aspects of Treasury Management were reviewed every 12 months and that the latest review had resulted in no change to strategy.

The HF advised the Sub - Committee with reference to Minutes 45 and 46 above that there might be additional funds available for investment purposes from housing set aside or as an alternative to offset against prudential borrowing. The HF referred the Committee to Appendices A, B and C - Transport Management Policy Statement, Treasury Management Practices and Treasury Strategy Statement respectively.

Of particular concern to the Sub - Committee was the need to maximise investment income as much as possible due to some low and variable interest rates as listed at Paragraph 2.2 in Appendix C and to funds deposited with Cash Managers as described at Paragraph 3.6. Specific comment was made as to the current limit of £15M allocated for a period of greater than 364 days and whether the limit could be raised to increase higher long term interest rates. Following a short discussion the sub-committee agreed that an increase to £20M should be recommended to Cabinet through the Overview and Scrutiny Committee in order to maximise greater investment flexibility. The HF confirmed that all long term investments were made in consultation with officers and were dependent on market conditions and cash flow at NHDC.

The Chairman thanked the HF for the update and the Sub - Committee noted the recommendations to Cabinet.

RESOLVED:

(1)That the details of the Treasury Management Strategy for 2011 - 2012 as presented in the report to Cabinet be noted;

(2)That the Treasury Limits for 2011-2012 as presented in the report to Cabinet be noted;

(3)That with regard to Total Principal Sums Invested for Periods Longer than 364 days currently set at £15M in total be increased to £20M in order to secure more investment income.

RECOMMENDED TO THE OVERVIEW AND SCRUTINY COMMITTEE:

(1)That the Overview and Scrutiny Committee be requested to consider the proposal to increase the Total Principal Sums Invested for Periods Longer than 364 days to £20M;

(2)That subject to the agreement of the Overview and Scrutiny Committee Cabinet be requested to give serious consideration to an increase of £5M to £20M for increased investment income.

REASON FOR DECISION:
To ensure that investment income is maximised as much as possible.










48 UPDATED CONTRACT PROCUREMENT RULES
The Head of Finance, Performance and Asset Management advised the Sub - Committee that this report would be presented to Cabinet on 25 January and accordingly invited comments from Members on any aspect of the report or the General Procurement Rules 2011 presented at Appendix A.

The HF confirmed that there were three notable changes to the document: 1. A precise distinction between works contracts and goods and services contracts due to the changes in EU threshold were different for each category and the NHDC rules also had different thresholds. 2. Guidance on extensions and variations to contracts and 3. Increasing transparency via E - tender which would be ‘live’ soon and more regular and accurate publicity on the NHDC website. The objectives of the changes were intended to be of positive assistance to officers and to process tenders in a more consistent way.

The Sub - Committee reviewed the Contract Procurement Rules as presented at Appendix A and made comments as follows:
Part B, Paragraph 2.1 - Include Careline to come under the NHDC Procurement rules.
Part B, Paragraph 2.4 - Remove ‘contracts with other local authorities or Central Government.
Part D, Paragraph 15.13 - That more control should be identified in writing to confirm control measures for scoring and quality assessment.
Part D, Paragraph 16.5 - That a time scale as in number of days should be included for contract award notices.

The Chairman thanked the HF for the updates on changes to Contract Procurement Rules and that the recommendations to Cabinet be noted.

RESOLVED:

(1)That the changes to the Contract Procurement Rules as described at Paragraph 4 to the report and as presented at Appendix A in the report to Cabinet be noted;

(2)That the Head of Finance, Performance and Asset Management be requested to consider some changes at Part B, Paragraphs 2.1and 2.4, Part D, Paragraphs 15.13 and 16.5.

REASON FOR DECISION:
To ensure that any revision of Contract Procurement rules are examined for clarity and avoidance of ambiguity.

At the closure of the meeting the Chairman confirmed that this was the last meeting in the Civic Year 2010-2011 and wished to place on record his thanks to Members and Officers for their support to the Sub - Committee.
Published on Monday, 14th February, 2011