Agenda and draft minutes

Corporate Governance & Audit Committee - Monday 25 October 2021 2.00 pm

Contact: Democratic Services  Email:  democraticservices@chichester.gov.uk

Items
No. Item

107.

Chairman's Announcements

Any apologies for absence that have been received will be noted at this point.

 

Minutes:

There were no apologies received.

108.

Approval of Minutes pdf icon PDF 237 KB

The committee is requested to approve the minutes of its special meeting on 27 September 2021.

 

Minutes:

The minutes of the meeting held on 27 September 2021 were agreed as a correct record.

109.

Urgent items

The chairman will announce any urgent items that due to special circumstances are to be dealt with under the Late Items agenda item.

Minutes:

There were no urgent items.

110.

Declarations of Interest

These are to be made by members of the Corporate Governance and Audit Committee or other Chichester District Council members present in respect of matters on the agenda for this meeting.

 

Minutes:

There were no declarations of interest made.

111.

Public Question Time

The procedure for submitting public questions in writing by no later than noon 2 working days before the meetingis available here or from the Democratic Services Officer (whose contact details appear on the front page of this agenda).

Minutes:

There were no public questions.

112.

Progress Report - Update on Audit Plan 2021/22 pdf icon PDF 222 KB

The Committee is requested to note the performance against the Audit Plan for 2021/22.

Additional documents:

Minutes:

Mr James presented his report to members and the Committee noted the performance against the audit plan for 2021/22.

113.

2021-2022 Treasury Management half-yearly update pdf icon PDF 509 KB

The Committee is requested to consider the Treasury activity summarised in the report and provide comments to the Cabinet as necessary.

 

Additional documents:

Minutes:

Mr Catlow provided members with an overview of the report as well as providing a verbal update regarding the liquidity figures (Appendix B). A summary of key points highlighted is below;

 

  • The balance’s in table one remain high, this is due to the temporary liquidity provided from the government related to the Covid pandemic and will start to be repaid at the beginning 2022.
  • Section 4 of the report, there are no reportable exceptions for the period. Because of the increase in funds the Council are using money market funds to a much greater extent. During the last 6 months the Council have implemented the ‘comply or explain’ approach to ESG investing. In July 2021 there was a significant fair value loss, however since then the markets have continued to recover and continued to recover until the end of August. Market sentiment has turned against some of the sectors from September on fears of inflation and interest rate rises. Overall, the long-term trend is to recover the fair value losses related to the pandemic over the medium term.
  • Section 5, non-treasury activity this specifically relates to the Council’s direct investments in properties.
  • Section 6 compliance report, paragraph 7 sets out the area that is likely to change the most year on year, there is a focus on credential borrowing and the purposes that local authorities use it for. CIPFA will address this in the new code they are consulting on, which is due to be completed in November 2021.
  • The update on the liquidity table figures from 31 September are, 7-day liquidity 49% against a benchmark of 48%, 100-day liquidity is 62% against a benchmark of 65% and the maturity is now 29 days against a benchmark of 32 days

 

The Chairman then invited questions from members, a summary of those asked are below;

 

  • What was the upper financial limit that the Council could invest in strategic investments, £34million currently in invested? The limit was confirmed as £40million.
  • Appendix C, regarding the compliance report it was asked why the Council have a time limit on investments. It was explained that this was to do with risk horizon.
  • Paragraph 7.4 CIPFA policy changes, it was queried what principal changes were expected? It was advised that the changes were expected to be wide ranging. Highlighting one area Mr Catlow explained that the Council will need to focus its attention on the risks of borrowing to fund investment properties and non-treasury investments.
  • It was queried what was the update from CIPFA on the ESG investments? It was confirmed that a consultation update from CIPFA last week stated that, CIPFA are expecting Council’s to set out their approach in terms of assessing risk for ESG as part of future arrangements. A further update on this would be delivered to members after the consultation had been completed.

 

Cllr Palmer arrived at the meeting.

 

·Concerns were raised regarding CIPFA to require the Council to recognise capital losses and gains through the income and expenditure account.

·A  ...  view the full minutes text for item 113.

114.

S106 and CIL Annual Monitoring Report pdf icon PDF 267 KB

The Committee is requested to note the income and expenditure between 1 April 2020 and 31 March 2021 in respect of S106 contributions and from CIL, the information on S106 agreements within 2 years of the expenditure target date as set out in Appendix 1, the details of non-financial S106 obligations set out in Appendix 2 and the CIL monitoring information as set out in Appendix 3.

Additional documents:

Minutes:

Mr Davies provided members with a detailed overview of his report. He reminded members that the annual report was a requirement of the Council’s s106 and CIL protocol. He then drew members attention to a number of highlights within his report, of which have been summarised below;

 

  • There were 112 new s106 agreements signed in the last year. That secured a total of £333,975.00. 96 of these were unilateral undertakings providing mitigation contributions for Pagham Harbour and Chichester & Langstone Harbours.
  • The expected trend in the reduction of s106 contributions since the implementation of CIL and highlighted in table one on page 24 of the agenda.
  • s106 agreements are now used for onsite provision such as, open space, play areas, affordable housing and contributions to A27 mitigation where appropriate
  • The value of contributions received in the year was £429,488.00 and these are detailed in appendix 5.
  • Table 2 provides a summary of the funds that are held by each service as at 31 March 2021, along a summary of the funds still to be received. Appendix 6 provides an update on the status of the s106 the Council are holding.
  •  Contributions that are within 2 years of their expenditure date needs additional focus a copy of the latest report produced for SLT is shown at appendix 1.
  • No monies have had to be returned to developers in the last year
  • The total value of CIL contributions collected was £2,624,868.00 and the expenditure on projects was £53,372.00. During the last year we passed over £263,000.00 to local Council’s to spend on their priorities.
  • There was an amendment to the CIL regulations in September 2019 and the Council are now required to publish an annual infrastructure funding statement, the latest statement can be found in appendix 3.
  • He reminded members that the most update to date developer contributions are always available on the public facings module that can be found on the Council’s website.

 

The Chairman then invited questions from the Committee as there were no members with questions at that time, Cllr Oakley was invited to receive answers to the questions he had circulated to officers and members prior to the meeting. In response to his questions Mr Davies stated:

 

  • that funds held by National Highways for A27 junction improvements at Chichester our understanding is that as at 31 August 2021 this amounted to £1.1M but they have undertaken to check that figure and report back.
  • With regards to funds from Arun DC they have confirmed that they do not hold any funds, but that s106 agreements in respect of their Pagham strategic sites should provide £888,250 to improve capacity at Whyke junction. It is understood that similar arrangements are, or will be in place for their Land West of Bersted strategic site for improvements to the Bognor Road junction. Monies will be collected by National Highways.
  • In response to a question regarding a specific contribution from Land East of Barton Way site, our legal advice is that this money should be  ...  view the full minutes text for item 114.

115.

Financial Strategy and Plan 2022-23 to 2026-27 pdf icon PDF 192 KB

This report provides an update to the Council’s Financial Strategy and the 5 year Financial Model, which underpins the Council’s financial planning for the medium term forecasts, in preparation for the forthcoming financial year’s budget.

Additional documents:

Minutes:

The Chairman drew members attention to a proposed amendment to the recommendations that had been circulated by Cllr Brown shortly before the start of the meeting, stating he wanted to ensure that the Committee had enough time to properly reflect on any implications there may be in considering this amendment.

 

Mr Ward presented the report to members where he advised it contained the strategy to underpin the Budget for the next financial year. As a result of the financial impacts of the pandemic, the current year’s (2021/22) budget was set for the first time using the General Fund reserves to help balance the budget, just over £2miliion was used for this purpose. The use of the future services framework is intended to gradually bring this back to a balanced position over the medium term but was likely the Council would be using the reserves over the next couple of years. To help the Council cope with the financial impact of Covid, he reminded members of the report taken to Council last July (2020), which approved the release of £8million form the reserves. At the current time only £2milion of this has been used.

 

Drawing members attention to appendix 1 where the strategy is set out including the guiding principles which are fundamental to the Council’s resilience. The confidential appendix (appendix 2) has been updated to reflect the current assumptions, however he stressed to members that there was a huge amount of uncertainty within those assumptions. He explained that the Government had deferred the Fair Funding Review and was still waiting for the Annual Spending Assessment, the distribution of finances would be impacted after that review. There was a lot of cost growth within the model, the two big ticket items, members should be aware of are, separate food waste collection service and a potential to have to make the green waste collection service free of charge, the cost pressures of these alone could add over £1.5million to the Council’s annual revenue budget. In summing up he confirmed that it was expected that it will be necessary to use reserves to balance the budget for next year (2022/23) and the year after (2023/24), whilst the efficiency review is concluded. This year (2021/22) is the first year of the three-year efficiency saving period, of which we are expected to over deliver on this first year’s target. However, current projections indicate, even with the efficiency review the Council will still have a residual deficit in the budget at the end of the 5-year period, if, all of the projections within the model are implemented and impact on the Council’s financial position.

 

Moving to appendix 3, Mr Ward confirmed there was an inaccuracy within paragraph 6.12 he confirmed that the capital receipts had been excluded so the figures in appendix 3 were the actual cashable amounts of investment available to use regardless of whether asset sales proceed or not. He addressed that long term use of the reserves would be contrary to the financial  ...  view the full minutes text for item 115.

116.

Update on the Strategic Risk Register pdf icon PDF 235 KB

The Committee is asked to note the updated Strategic Risk Register and the internal controls in place, plus any associated action plans to manage those risks, and raises any issues or concerns.

 

Additional documents:

Minutes:

Mr Ward was invited to present the report to members, where he advised that the Strategic Risk Group (SRG) met on 14 October 2021 and the report contained the latest update. He advised members that the Council’s insurance contract was progressing well, and the new providers are due to commence their contract next week. He then referred members to sections 6.2 in the report where it showed 3 risks in the red area, financial resilience, Southern Gateway and Changing use of the Highstreet and rural towns.

 

There are 13 strategic risks, 7 of which are deemed as under control and the remaining 6 have controls pending. This quarter saw the following risks status change;

·         Risk 178 – Covid 19, reduced from 6 to 3,

·         Risk 189 – Crouchlands Lagoon reduced to 3, the SRG requested that the responsible officers attend today’s meeting to provide an update to the committee on this risk.

·         Risk 148 also saw a request for the responsible officer to attend today’s meeting and provide members with an update.

 

Cllr Brown advised the Committee that the view of the SRG for risk 189 - Crouchlands Lagoon was that if something should happen, the impact of this would be significant and therefore the group was surprised that the risks had, had its risk level reduced. Mrs Stevens clarified she wanted to correct a point at paragraph 6.4 in the report, where it read that “the score decreased from 9 as the likelihood reduced from probable to possible as a result of the recent monitoring on 9 September”. She advised that this wasn’t the reason for the change in likelihood, this rose from the planning element, the non-compliance in terms of pollution of the site had been very stable since the Council had been monitoring it and there had been no change on the likelihood of a pollution occurring. As a result of this officers have decided that we need to give greater clarification to the description in the risk table, to explain that the risk arises from both a planning and a pollution factor, the Council would incur significant costs, throughout works in default or a possible clear up and recovery if a pollution incident occurred. The risk from a planning perspective was from a non-compliance notice. 

 

The Committee noted the updated Strategic Risk Register and the internal controls in place, including associated action plans to manage those risks.

 

117.

Exclusion of the Press and Public

The Committee is asked to consider in respect of the following item(s) whether the public, including the press, should be excluded from the meeting on the grounds of exemption under Parts I to 7 of Schedule 12A of the Local Government Act 1972, as indicated against the item and because, in all the circumstances of the case, the public interest in maintaining the exemption of that information outweighs the public interest in disclosing the information.

 

The reports dealt with under this part of the agenda are attached for members of the Corporate Governance & Audit Committee and senior officers only (salmon paper).

 

Minutes:

There was no need to move into Part 2.

118.

Late items

The committee will consider any late items as follows:

a)          Items added to the agenda papers and made available for public inspection

b)          Items that the chairman has agreed should be taken as a matter of urgency by reason of special circumstances to be reported at the meeting

Minutes:

There were no late items.