Executive Committee Meeting 21 April 2017

Society of District Council Treasurers

Society of District Council Treasurers
Minutes of the Executive Committee held on 21st April 2017
At the Grant Thornton Offices, Finsbury Square, London

In Attendance: Norma Atlay (President), Angela George (Secretary), Bob Palmer, Nick Eveleigh, Jo Wagstaffe, Jill Penn, Jason Vaughan, Frank Wilson, Simone Hines,
Welcome: The Executive welcomed Paul Deal from Mendip DC to his first meeting of the Executive.
Also in attendance: Nicola Morton, Alan Finch and Helen Seechurn (LGA), Guy Clifton and Rob Turner (Grant Thornton), David Chefneux (Capita), Sally Marshall (DCEN), Michael Hutchison (Zurich), Jon Hayes (PSAA), Sean Nolan (CIPFA).

1. Apologies:

Apologies were received from – William Jacobs, Kevin Jaquest, Sal Khan, Chris Brewer, Peter Stuart, Alan Peach.
Also: Aileen Murphie and David Aldous (NAO).

Goodbyes: Resignations from the Executive have been received from Steve Richardson who is leaving Wycombe DC to join Milton Keynes Council and Shirlene Adam who is stepping away from the CFO role at Taunton Deane to fully focus on their transformation programme. The Executive extended their thanks to Steve and Shirlene for their individual contributions to the SDCT and wished them the very best for the future.

2. Minutes of Previous Meeting and matters arising

The draft minutes of the previous meeting of 3rd March 2017 were agreed and will be published on the website.
Actions have either been completed or picked up elsewhere on the agenda.

3. Business Rate Retention
Nicola Morton advised that due to the decision to hold a general election on the 8 June DCLG had advised that Purdah will start on 22 April and Parliament will be dissolved on 3 May. The priorities of the new government will be established after the general election. Until then, in common with other aspects of government policy development, work on the Fair Funding Review and 100% Business Rates Retention will be on hold. Planned engagement with the local government sector, including through technical working group and steering group meetings, will cease until after the election in line with the formal rules for the purdah period. The purdah guidance from the LGA will be circulated shortly.
The current consultation - “100% business rates retention: further consultation on the design of the reformed system” – will remain open until 3 May and will close in the normal way. Local authorities are encouraged to continue to submit their views on the proposals in the consultation for consideration by the new government.
Action – Alan Peach to finalise and submit the SDCT response.
The Executive discussed the implications of the delay on the overall implementation timetable.
NB: All papers from the various Business Rates working groups to date are available on the LGA website (www.local.gov.uk/business-rates ; e- mail: businessrates@local.gov.uk)

In addition it was reported that the Local Government Finance Bill is still too early in its passage through Parliament to be considered for the customary ‘wash-up’ before the dissolution of Parliament. It will therefore be for a new government to decide whether or not to reintroduce the Bill at the start of the new session.

4. Audit Update

4.1 National Audit Office
Bob reported on the recent report from the NAO on Business Rates. Whilst the report was generally welcomed and supported, it was disappointing that there was no direct recommendation to address the problems with the VOA, and that a relatively small increase in efficiency of the VOA appeals service could help reduce the £2.8 billion being held in provisions. It remains the view of the SDCT that a key part of planning for the new Business Rate changes should be to ensure the VOA are adequately resourced to deal with both the backlog of work and their ongoing responsibilities. In particular It was difficult to see how the new CCA (Check, Challenge, Appeal) system introduced by the VOA from 1st April could be effective without additional resources.

Action – Bob Palmer to contact the NAO on this point.
Postscript - Aileen Murphie has subsequently responded on the above point and explained that it is not within the NAO remit to recommend an increase in resources for VOA, even with the concomitant issue of increasing revenue. However the NAO will include the facts as set out in the report in the briefing for the PAC session (currently delayed due to the general election) who may make an appropriate recommendation.

4.2 PSAA Ltd
Jon Hayes presented an update on the current position (Slides on the website).
With regards to the Opt-in position, 200 out of the 201 districts had opted into the PSAA service.
The procurement and auditor appointment process and timetable was highlighted together with the fee setting process. Following consultation, the fees will be notified to authorities by 31st March 2018 (which will therefore require authorities to make estimations in their 2018/19 budgets)
Jon assured the Executive that the Audit quality process would be taken seriously and he would maintain the relationship with SDCT to obtain views.

There is still a concern amongst the Executive about the Housing Benefit Subsidy audit work – Jon reconfirmed that PSAA cannot be involved in resolving the issue.

Action – Bob Palmer to continue to update on audit issues.

5. Developments in Local Government Finance Improvements

Alan Finch and Helen Seechurn from the LGA updated the Executive on developments in the Sector Led Improvement Finance offer from the LGA (slides on the website).
With regards to the Corporate Peer Challenge and Financial Review, there is a target for each authority to have one every 4 to 5 years, but it was noted that some authorities still had not undertaken the process. There is an increasing demand for Finance Peers and anyone interested in becoming a Peer Reviewer should contact the LGA.
In terms of Leadership Development, a 2 day residential course is available to develop high level skills and is designed to assist CFO’s career paths into Chief Executive roles.
Helen advised that she was one of four Finance Improvement and Sustainability Advisors and would be concentrating on the Northern areas. The role of the FISA is still emerging and the role will be complementary to the support that already exists from other providers such as CIPFA. The role of the FISA is to provide supportive challenge to the council and the application of the “art” of financial management in practice thereby giving added insight for the Council and assurance for the CFO.

It was also noted that CIPFA are undertaking a review of their Ethics guidance to assist CFO’s in dealing with difficult professional judgements, and this will be ‘launched’ at the CIPFA Conference. Angela George attends the CIPFA Ethics Working Group on behalf of the SDCT.

6. Vibrant Economy Index
Guy Clifton and Rob Turner presented the Grant Thornton report (slides on website). The index measured 6 different indicators and Grant Thornton were keen to obtain feedback as to whether these indicators were considered to be the correct ones, which are namely:
- Prosperity
- Dynamism and Opportunity
- Inclusion and Equality
- Health, Well-Being and Happiness
- Resilience and Sustainability
- Community trust and belonging

The conclusions following the study were that:
- While city prosperity and dynamism scores may be high, health and inclusion tend to be significantly lower
- Travel to work patterns were important
- Need to look beyond GDP
- The challenges faced by those responsible for place shaping
- Creating a vibrant economy isn’t easy.

The Executive discussed the findings and were in agreement that a vibrant economy was about more than financial prosperity which is where the focus has tended to lie until now. There was a question about whether the challenges for young people had been given enough focus.

7. Advisor Reports
7.1 There were no reports from advisors.

8. Reports from External Bodies / Sponsors:

8.1 LGA
Nicola Morton advised on the Business Rate Relief scheme which had been announced in the budget and which was currently being consulted on. It was anticipated that there would be no announcement until after the election. There was a risk in implementing the SBRR scheme without the final details being known.

She also outlined the potential impact of the current election on some of the Bills progressing through Parliament and updates on:
- Impact of review of pay spines
- Mifid 2
- Pensions
- Waste Vehicles – potential overcharging

8.2 DCEN
Sally Marshall updated the Executive on current issues particularly on the issues surrounding Business Rates and Housing.

8.3 Capita Asset Services
David Chefneux provided an update on the latest treasury management and capital financing issues. Key issues included the recent consultation undertaken by CIPFA on both the Prudential Code and Treasury Management Code of Practice. The consultation period closes today (21st April), with any subsequent changes to the Code likely to be announced in the Autumn of 2017. Any changes will have an impact on the preparation of treasury management strategies for 2018/19 and the calculation of prudential indicators. The focus of the consultation process was around recent structural changes to local government (Mayoral Combined Authorities) and the recent developments in the commercialism agenda. Responses were requested on how these changes might impact upon treasury management risks and the associated reporting. Capita Asset Services also highlighted that their response to CIPFA had incorporated issues around internal borrowing and the potential reporting of risks around these issues.

From a market perspective, it was noted that has been limited movement in PWLB borrowing rates in recent months, following a brief period of volatility following the US Presidential Elections in late-2017. Although long-term borrowing rates had risen, following the election of Donald Trump, rates had now fallen back and were therefore supporting the internal borrowing approach being adopted by many authorities.

8.4 Zurich
Michael Hutchison gave an update on a number of issues including the changes to the insurance discount rates which had been announced and the potential impact particularly on premiums.
He also raised an issue regarding tender evaluation of insurance contracts and whether financial security should be a more significant factor in the evaluation criteria.
Zurich is developing a Revenue Dependency Model and Michael asked if any District would be willing to volunteer to help test and develop the model. Bob Palmer volunteered to assist.

Sean Nolan gave an update on a number of CIPFA initiatives including:
- Financial Resilience
- Treasury Management and Prudential Codes
- Commercialisation – he reported in particular that there is some concern building up at the DCLG regarding LA’s borrowing to buy commercial property.
- Statement of Accounts – what can CIPFA do to help with the ‘simplification’?

9 CIPFA Conference – Agenda
As the meeting had over-run, it was agreed that the Conference agenda would be finalised via e mail.
Action – Angela George

10 Any Other Business:
Angela suggested that name badges should be produced for the Executive. Jo Wagstaffe suggested that her PA would be able to assist.
Action – Angela / Jo to liaise on production of name badges

11 Date of Next Meeting – revised to 16th June 2017 (changed from 9th June because of the General Election impact). The date of the SDCT lunch was changed to 20th October 2017.

12 Part B – Private Executive Business:

12.1 Appointment of Second Vice President
Following an election process, Nick Eveleigh has been appointed second vice president. Congratulations were extended to Nick.

12.2 Appointment of New Members / Recruitment Campaign
A targeted approach to recruiting new members has been undertaken and a number of new members are in the process of being appointed, particularly from areas of the Country that are currently under-represented.

Action – Angela to progress

12.3 Location of Meetings
Bob advised on a request he had received from some of the northern authorities to consider holding some of the Executive meetings in the North. Following discussion it was considered that this would currently prove to be impractical due to the number of advisors from London who attended on a regular basis and the number of Executive members currently from the South. However consideration would be given to further one-off meetings being held for members in the North and other regional areas.

Action – to be considered further.

12.4 Website and Communications with Members
The distribution list is currently being updated and this will need to be regularly updated to ensure that the communications are effective. The use of Mailchimp was discussed and Angela suggested doing a ‘test’ to members of the Executive to ensure it would be effective before developing it any further. Paul Deal advised on the website that the County network has – it was acknowledged that the County network has a team of 3.6 FTE’s to support the website, provide advice, support and communications with members.

Action – Angela to progress