Agenda, decisions and minutes

Resolved: that the minutes of the meeting held on 27 September 2017 be agreed as an accurate record.

1.1      Resolved: that the minutes of the meeting held on 27 September 2017 be agreed as an accurate record.

2.1       There were none.

·         Income generation

·         Final out-turn 2016-17

Resolved: that the response from Mayor and Cabinet be noted.

3.1      David Austin (Head of Corporate Resources) Janet Senior (Executive Director for Resources and Regeneration) and Selwyn Thompson (Head of Financial Services) responded to questions from the Committee, the following key points were noted:

·         School balances were treated as part of the Council’s cash balances but they were held for schools

·         The internal advert for the new procurement and commercial services post had been published

·         A meeting had been held with the Association of Public Service Excellence, further work would be carried out to determine how best the Council might make use of the organisation’s services.

3.2       Resolved: that the response from Mayor and Cabinet be noted.

Resolved: that the report be noted. The Committee also agreed to thank officers for their work.

4.1       David Austin introduced the report, the following key points were noted:

·         The Council was on a journey of austerity, which began in 2010. This would last until 2020 and most likely it would continue into the mid-2020s because of the current direction being pursued by the Government.

·         Not only was the financial position difficult, there was also a high level of uncertainty around policy, as noted in the medium term financial strategy in July.

·         The potential uncertainties and pressures included: the Government’s intention that local government should become self-financing; variations around the level of council tax funding and funding for adult social care as well as changes to the improved Better Care Fund and the risk of retrospective adjustments to the New Homes Bonus.

·         Information was awaited about the plans for fair funding.

·         There was a major programme of health and social care integration, which was liable to change rapidly.

·         There were also restraints around borrowing, which might constrain some of what the Council could do.

·         The ongoing welfare reforms and the roll out of universal credit also presented potential future issues.

·         At the regional level there was the uncertainty around business rates pooling as well as the possible implications for London’s economy of the UK’s exit from the European Union as well as future changes to London’s demographics.

·         The savings target for 2018-19 was £22m and based on the projections in the medium term financial strategy the estimation was that £10m a year would be required after that.

·         If savings were not made in one year, the Council had to use reserves to meet the gap, however – the savings still needed to be made in the following year.

·         It was predicted that there would be a £13m overspend at the end of 2017-18 of which £7m was unachieved savings.

·         Adding new savings proposals to an overspend and to unachieved savings was not feasible. The current plan was to consolidate the Council’s position and to achieve the savings that had already been put forward in previous years.

4.2      David Austin, Janet Senior and Selwyn Thompson responded to questions from the Committee, the following key points were noted:

·         The Council had used reserves to set a balanced budget for three years.

·         There were a number of factors which would affect how long the Council could sustain itself whilst using reserves.

·         The majority of the Council’s existing reserves were allocated to specific commitments and projects. The Council should make it through next year using the reserves but beyond that it would become increasingly challenging.

·         There might be difficult decisions to be made about the level of services that could be delivered.

·         The current focus was on delivering the savings proposals that had been put forward and balancing the budget, however, the level of risks, uncertainties and pressures (as set out previously) remained and each could have a significant impact.

·         Management attention remained focused on delivering savings.

·         There were a number of reasons that savings proposals were not being achieved, in  ...  view the full minutes text for item 4.

The most recent management report is available online here: https://tinyurl.com/yb56umtx

Resolved: that the report be noted.

5.1      Barrie Neal (Head of Corporate Policy and Governance) introduced the management report and directed members to areas for management attention and the key sections of the report. In response to questions from the Committee, the following point was noted:

·         Information would be available over time about the impact of the changes to waste and recycling services.

5.2       Resolved: that the report be noted.

Resolved: that the report be noted.

6.1      Selwyn Thompson introduced the report, the following key points were noted:

·         The report presented the Council’s financial position to September 2017, which was six months into the financial year.

·         There was a significant budget pressure in children and young people’s services.

·         The costs of placements for looked after children were high as were salary related costs for children’s social workers.

·         There were pressures in adult services, environment and technology & change.

·         The delay in the roll out of new arrangements for waste and recycling, as well as spending on fleet vehicles had created a budget pressure that should be managed down as the new arrangements and vehicles came in to service.

·         It was hoped that savings could still be made from the expansion of the shared IT service.

·         The Regeneration and Place division was overspending due to the underachievement of an income stream related to charges for utility companies for opening up highways.

6.2      Dave Richards (Group Finance Manager, Children and Young People), Janet Senior and Selwyn Thompson responded to questions from the Committee, the following key points were noted:

·         There might be scope to increase the number of councils in the shared service but as the service became larger the governance arrangements might become more difficult. There might also be challenges for capacity and skills of the officers involved in the service.

·         Lewisham was in an unusual position compared to other local authorities because majority of secondary schools in many other authorities had become academies. This was why Lewisham’s figures for school deficits looked out of line with other authorities.

·         Improved disaster recovery provisions were included in the new arrangements for IT. The new technology being used by the Council made the system more robust.

·         The numbers of agency staff were being reduced because they were more expensive than full-time staff. Work was ongoing to recruit fulltime staff to vacant positions.

·         The methodology used to set aside the risk provision in the budget was based on a regular review of pressures in directorate spending.

·         An amount to fund budget pressures was also held corporately.

Resolved: that the report be noted.

Resolved: that the report be noted.

7.1      David Austin introduced the report, the following key points were noted:

·         The current treasury strategy was compliant and no changes were proposed.

·         The benchmarking information from the Council’s advisors on its investments indicated that it was in line with the London average.

·         Interest rates remained low, which meant securing return on investment was difficult.

·         There was a variation in the Council’s borrowing figures related to borrowing for Lewisham Homes to ease temporary accommodation pressures. Otherwise, the Council’s borrowing was where it was expected to be.

·         There had also be a restructuring of a LOBO (Lender Option, Borrower Option) loan.

·         Fifty percent of the Council’s borrowing was made up of public and private sources the other half was made up of borrowing for private finance initiatives.

·         Some of the capital spending programme was behind schedule, in particular there had been some delay in spending housing revenue account capital funds. This money had been allocated so it would still be spent.

·         Treasury management practices in local government were being reviewed by CIPFA  (Chartered Institute of Public Finance and Accountancy), which set the prudential code, as well as by the Department for Communities and Local Government, which was carrying out a consultation that closed in December- on the reporting of treasury decisions.

·         Some authorities had been challenged on the level of borrowing they had undertaken for commercial schemes.

·         The European MiFID2 (the second Markets in Financial Instruments Directive) would also have a regulatory impact.

·         The purpose of the directive was to clarify whether investors were retailers or professionals. The Council would default to a retail position, which would limit the products that could be accessed and create new burdens. Therefore, the Council would opt for professional status and officers were currently following the process for gaining approval.

7.2      David Austin and Janet Senior responded to questions from the Committee, the following key points were noted:

·         Both budgets and reserves were means for the Council to spend.

·         The treasury was the money that the Council held to back up spending through its budgets and reserves.

·         The treasury was made up of investment of reserves and borrowing as well as the money that came in to the Council from council tax and revenue support grant from the government.

·         The Council’s cash balances could not evenly be equated with borrowing and investing because there was money held by the Council that had been committed and that which had been paid by suppliers.

·         The Council adhered to the CIPFA financial code for investments, which prioritised investments in order of security, liquidity and return on investment.

·         LOBO borrowing allowed lenders to vary the rates of interest being charged for loans, with options for borrowers to accept or reject the proposed revised rate of interest by repaying the entire loan.

·         Some LOBOs had been referred to as ‘toxic’ because other variables had been built into the loans (including interest rates in derivatives). In some LOBOs lenders had exposed borrowers to the derivative risk. Lewisham did not have any  ...  view the full minutes text for item 7.

Resolved: that the report be noted and the work programme for the Committee meeting on 20 December be agreed.

8.1      The Committee discussed the work programme for the meeting on 20 December, the following key points were noted:

·         Councillors sometimes had difficulty navigating the Council’s website and contacting officers by telephone. It would be helpful if there was a section in the complaints report about the difficulties people faced contacting the Council.

·         There would be a single meeting focus on household budgets – reviewing data about households on middle incomes and the challenges they face as well as the potential implications for income generation and Council policy.

·         It was also agreed that items on PFIs and asset management would be considered at the meeting.

8.2      Resolved: that the report be noted and the work programme for the Committee meeting on 20 December be agreed.

9.1       There were none.