Society of District Council Treasurers

Society of District Council Treasurers
Minutes of the Executive Committee held on 8th September 2017 
At the Capita Offices, Gresham Street, London 
SDCT Website:

In Attendance: Jill Penn (President), Nick Eveleigh (VP), Simone Hines (2nd VP), Angela George (Secretary), Bob Palmer, Alan Peach, Peter Stuart, Kevin Jaquest, Sal Khan, Paul Deal, Frank Wilson, William Jacobs, Mark Dickenson, Steve Hearse, Ian Knowles, Adrian Rowbotham.
Welcome: The Executive welcomed Shelagh McGregor (South Lakeland) and Jenny Poole (Cotswold) to their first meeting of the Executive.
Goodbye: Norma Atlay has now formally relinquished the Presidents role and has retired from her authority due to family illness. In addition Frank Wilson advised that he is moving to a new position and is relinquishing the CFO role and so is resigning from the SDCT. The Executive expressed their thanks to both Norma and Frank for their significant contribution to the work of the SDCT over a number of years.

Also in attendance: Bevis Ingram (LGA), Guy Clifton(Grant Thornton), Lisa Quinn (Capita), Cliff Dalton (CIPFA), Sally Marshall (DCEN), Michael Hutchison (Zurich), David Aldous (NAO), Katy Baldwin (DCLG), Steve Mair, Peter Worth and Jake Bacchus (Westminster- for item 4)

1. Apologies:
Apologies were received from – Chris Brewer, Jason Vaughan, Jo Wagstaffe, Simon Freeman, Homira Javadi.
Also: Aileen Murphie (NAO), Nicola Morton (LGA), Jon Hayes (PSAA).

2. Presidential Handover
The presidential handover was partly completed at the SDCT Workshop on 12th July at CIPFA Conference when Norma passed over the President’s chain badge to Nick Eveleigh (in Jill Penn’s absence). Nick completed the handover by passing the chain to Jill and wished her well for her period in office.
Nick Eveleigh is now Vice President and Simone Hines has been elected to Second Vice President.

3. Minutes of Previous Meeting and matters arising
The draft minutes of the previous meeting of 16th June (on the SDCT website) were agreed.
Actions have either been completed or picked up elsewhere on the agenda.

4. Simplified Accounts Presentation
Steve Mair, Jake Bacchus and Peter Worth from Westminster City Council attended the SDCT meeting to inform the Executive of the work that they had been undertaking to simplify the Accounts. The presentation (on the SDCT website) highlights the key areas of review required by Local Authorities, CIPFA and DCLG.
Cliff Dalton updated on the CIPFA position and stated that they are looking at how the Accounting Code of Practice can evolve to support the simplified accounts initiative. CIPFA are currently consulting on the 2018/19 COP with a deadline for responses of 6th October - it was highlighted that responses do not have to be limited to the questions asked. CIPFA recognises the need to make the accounts more fit for purpose (for interpretation by different stakeholders) and is keen to support any suitable proposals from authorities / practitioners.
It was noted that the DCLG will be consulting on the Accounts and Audit Regulations shortly with a view to implementation of amendments for 2018/19.
The Executive welcomed the work that had been achieved to date and thanked Westminster for their presentation. They stressed the importance of individual Audit firms, DCLG and CIPFA acceptance of any simplification changes, in order to avoid unnecessary discussion and resulting impact on resources for individual authorities during the audit process.

Action – Simone Hines to act as lead advisor on the work as it progresses.

5. CIPFA Prudential Code and Treasury Code Consultations
Cliff Dalton reported that CIPFA were keen to ensure that Local Government maintains its current role of self-regulation on capital investment and borrowing arrangements. The consultations were a key part of achieving this and authorities were encouraged to take an active part in commenting on the ITC questions. The consultation deadline is 30th September 2017.
The Executive discussed the current government nervousness around the LG sector borrowing to fund commercial activity. More authorities are now undertaking commercial investments in an attempt to plug continued government funding reductions. Katy Baldwin stressed that DCLG were interested in proportionality, affordability and long term impact in terms of any borrowing undertaken.
The importance of Business Cases and Due Diligence work was stressed to enable minimisation of any risk involved. There is a proposal that the Capital Strategy bring together all capital plans and the risk / reward into one report to ensure capital expenditure is prudent, affordable and sustainable, and the CFO should report explicitly on the risks associated with the capital strategy. There was a query about how this significantly differs from current reporting arrangements?

Action – Kevin Jaquest to finalise the draft SDCT response for circulation to the Executive and submission by the deadline of 30th September.

6. Business Rate Retention

Jill Penn and Bevis Ingram reported on a recent meeting with the LGA to ascertain the sectors view on the BRR programme going forward. There was a view that the initiative was still supported. There would be a meeting of the BRR Steering Group with DCLG on 3rd October to look at the optimal way to deliver reform without immediate primary legislation. Jill asked for any comments to be fed to her in advance of that meeting.
The Executive discussed the various funding split options but ultimately agreed this would be for further discussion further into the process.
Bevis Ingram reported that the LGA view was now that they did not support any further transfer of responsibilities and will be lobbying for full retention on the basis that the extra rates retained should be used to plug the gap in local government funding in 2020 rather than be used for new responsibilities. The New Service Responsibilities group would therefore cease.
Nick reported that there was a meeting to discuss Fair Funding on 29th September with the DCLG. One of the issues to be discussed was the Area Cost Adjustment and Deprivation and how these issues could be achieved whilst also achieving simplification of the current system. There was also a question as to whether individual authority income should be taken into account.

Action – Any comments to feed back to Jill or Nick before the relevant meeting dates

BRR – Pilots 2018/19
The Government has recently published a prospectus which invites all LA’s to apply to become 100% Business Rate Retention pilots in 2018/19. The aim of the pilots is to ‘give the Government the opportunity to consider the operation of business rates pools and encourage local councils to work more effectively together to share business rates income and growth’. Following discussion during which it was noted that the ‘no detriment’ clause would not apply to the new pilots, there were a number of queries to which Katy Baldwin (DCLG) has provided the following answers:
Q - Can existing pilots expand?
Yes – they can apply, and would need to be considered on their merits.

Q - Does the new tier split apply to all, or only the additional rates income?
Because of the way that we set the pilot up in legislation, it is all one and the same. Take as an example the case of a current two-tier county where the shares, currently are:
Central Government 50%
County Council 10%
District Councils 40%

Imagine that they choose to “retain” the existing shares and simply allocate central government’s 50% on a new split; instead of 80:20, let’s say 50:50. Overall therefore, the shares will be:
County Council 35%
District Councils 65%
And which is how it will be described in the legislation.
Q - Do areas have to retain new pooling arrangements in 19-20 even if the pilots last only a year?
If the authorities ask us to revoke the pool for 19-20, we are obliged by the legislation to revoke it. If the authorities wanted to revert to a previous pooling arrangement, they would need to reapply to re-designate the previous pool and Ministers would need to consider it on its merits.

VOA Engagement Workshop

The VOA is seeking to improve its engagement strategy with Local Authorities in the light of increased needs and expectations from LA’s not just with regards to Business Rates but also Council Tax and Benefit work. To this end a workshop has been arranged for 21st September. The Revenues Manager from Nuneaton and Bedworth has agreed to attend and Steve Hearse also offered to attend on behalf of the Executive.
Members expressed concern over the continued negative impact that lack of VOA resources was having on both BR Appeals and also Council Tax Bandings for new properties which was impacting on the New Homes Bonus. Katy Baldwin from DCLG agreed to take back the issue for appropriate colleagues at DCLG to look at the issue of potentially amending the CTB1 to allow ‘estimates’ for the purpose of calculating NHB. Bevis Ingram reported that the LGA were still lobbying on the issue of VOA resources.

Action – Steve to feed back to the Executive.

Business Rates Reliefs
Bevis reported that there is a concern that the Government will be briefing that the delay in implementation and take up is down to Councils. The Chairman of the LGA has written to Council Leaders requesting evidence to the contrary. An SDCT member reported that take up in her authority had been extremely slow despite their best efforts to publicise the availability of the scheme.

7. Capita Asset Services - Presentation
Lisa Quinn from Capita Asset Services gave a presentation on MiFID II and other topical issues.
In terms of MiFID II the start date is 3rd January 2018. Simple term deposits are not covered but MMF’s, Investment Funds and negotiable instruments such as CD’s and corporate bonds are. The minimum investment level to be considered for professional status is now £10m (previously £15m). There are both Qualitative and Quantitative criteria (which must be met at the point of application to opt up). It was recognised that opting up to professional status would increase the work burden (each firm might present slightly different forms for completion) and responsibilities for CFO’s and Lisa stressed the importance of having the necessary delegated authority to act. It was also noted that if an authority wanted to opt up it should do so as quickly as possible.
Bevis Ingram reported that the LGA were working with the sector to try to simplify the process as much as possible for authorities.

Lisa also gave an update on other current Treasury and Accounting issues.

8. Audit Update
Bob Palmers Audit update note (on the SDCT website) was considered with the main issues detailed below.
8.1 National Audit Office
Following discussion on the current audit process, David Aldous indicated he would be interested in hearing any audit ‘interpretation’ issues.
He also indicated that there would be a study on Homelessness published next week and the 3rd study on financial sustainability was due shortly.
8.2 PSAA Ltd
The main issue highlighted is that authorities have until 22nd September to either confirm that they are satisfied with the proposed audit appointment or object (setting out reasons for the objection). PSAA will respond to any objections by 16th October and final decisions will be made by 21st December.
Colleagues have previously raised concerns over the reduction in fees of 18% and whether this would have an adverse impact on audit resourcing. Impacts were already being felt by some authorities with audit firms being unable to complete the audit to the required timescale.

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

9. Advisor Reports
9.1 CFO / DWP liaison (Jill Penn)
Paper circulated (on the SDCT website)
9.2 Accounting update (Simone Hines)
Paper circulated. The deadline for responses on the 2018/19 COP is 6th October (on the SDCT website)

10. Reports from External Bodies / Sponsors:
10.1 LGA
Bevis Ingram reported on a number of additional items not already discussed including:
- Budget Submission – The deadline for getting any points to the LGA for inclusion in the submission is 22nd September.
- Pay Spine and National Living wage – the Sounding Board met on 7th September.
- Land Charges –
Update on proposed transfer of Local Land Charges Register to HM Land registry to create a single digitised register:
1. At the request of its members the LGA has been working with HMLR over a number of months to clarify work that LA’s will be required to undertake pre and post transfer and the assessment of New Burdens (NB) funding.
2. The NB heads of payment and criteria for making payments prepared by HMLR has been reviewed commented and imputed on by a New Burdens Working Group which included HM LR the LGA, representatives from 6 LA’s and Local Land Charges Institute, is nearing finalisation and out for comments to the Working Group.
3. Formal consultation on the NB’s final proposal with the LGA as required by the New Burdens Principles will take place following sign-off by HMLA Project Board.
4. LA’s will enter into a MoU with HMLR. The draft will be reviewed by the LGA in consultation with LA’s
5. HMLR are still waiting for cross government sign off of their plans which is expected in September 2017.
6. Work on the transfers of registers (in phases) will commence in 2018 and completed in 2023.
7. The LGA will in, consultation with councils, negotiate terms including payment under a Service level Agreement for registering charges on the digitised register post transfer. The LGA made clear to HMLR from the outset that as this will no longer be a statutory duty on Councils it is a service which HMLR will have to pay for.

- Planning Fees – Awaiting further announcements.

10.2 CIPFA
Cliff Dalton informed the group of CIPFA’s current plans regarding two key issues that the Institute has identified in addition to items discussed earlier on the agenda:
Housing Developments:
Cliff informed the group that Housing is seen as a key policy area by CIPFA for 2017 and as such is keen to support the sector as much as possible. Following the White Paper (Fixing Our Broken Housing Market) the Institute has made significant efforts to work closely with DCLG and other key partners, including the CiH, NHF & House-Mark to look for ways to increase housing supply for the sector, a key outcome of the White Paper.
CIPFA has organized a Round Table event on 20th September at which key sector leads, academics and practitioners will look in more detail at what now needs to change to best support social housing providers. This is likely to include a review of current borrowing and RTB arrangements as long as options to improve the mix of social housing options (buy, rent, assisted purchase etc.). CIPFA remains keen to keep key organisations involved in this area of work and Cliff asked the group to play an active part in linking in with future papers, updates and consultations. Regular updates will therefore be routed through SDCT.

Action – Alan Peach / Mark Dickenson / Simon Freeman to lead from the SDCT.

CIPFA Training / ‘Essentials’ Initiative:
Recent research from the Institute has found that local government is facing a typical churn rate amongst staff of over 30% p.a. This means that practitioners move posts or are appointed to a new post roughly every 3 years. Very often such moves will mean that relatively inexperienced staff are appointed to substantive posts and the Institute has seen a significant increase in training requests to help practitioners better understand their new work area. As a result of this, CIPFA launched (at its Annual Conference in July 2017) a new staff training initiative called ‘Essential’s’. This is an ‘Introduction to…’ Play-Book that offers practitioners the chance to be more formally introduced to the key reporting and operational requirements of many posts within an authority. Cliff provided an update of these events to members of SDCT as a support option for any staff across District Councils. More detail on this can be found at:

10.3 DCEN
Sally Marshall provided an update on the DCN submission to the Autumn Budget (a draft of which has now been shared).

10.4 Grant Thornton
Guy Clifton provided an update on some of the key GT reports published recently including:
• Blueprint for the UK
• Women in Business
• Social Enterprises – How to guide for local government
• NHS Companies
• The Board – protecting and creating value.
Links have been provided to each of the publications.

10.5 Zurich

Michael Hutchison provided an update on key issues including:
• Ogden – Michael provided an update on the previous day’s news that the government has announced draft legislation following consultation on the setting of the discount rate (Ogden). It is expected that once agreed later this year the Ogden rate may move back up to a more reasonable level 0%-1%. This will primarily have an impact on the reserving position (a downward movement) of high value injury claims. The rate will still be lower than the position before March this year when it was at 2.5%. Since March this year some insurers are treating the Ogden rate movement as an industry wide issue and therefore terms can be adjusted within the current LTA. There is not universal agreement on this across the industry and as such it probably represents a breach of LTA. As a result of Ogden movements it would be wise to review limits of indemnity that are being requested on insurance programmes.
• Statute of Limitation - The time bar (3 years) for abuse claims has been lifted in Scotland this year. Although in the rest of the UK a claimant could always apply to have the time limit extended, it is not guaranteed and just reasons for not bringing the claim any earlier have to be argued to a judge. The change in Scotland may make it a step from the same happening in the rest of the UK.
• A report by the Social Market Foundation titled Local Public Services 2040 was a report that Zurich Municipal sponsored this year and sets out to understand the drivers of change over the next 20 years and what the shape of local government could be to deal with it. Link is
• There is a Zurich Grenfell Tower Micro site which Zurich are using to update customers on issues resulting from the tragic incident here in June. Link is
10.6 DCLG
The issues from DCLG have been dealt with previously on the Agenda. Katy stated that she is particularly interested in the Commercial Agenda discussions going forward. The Executive felt that Katy’s presence had been beneficial to the meeting and an invitation would be extended to future meetings.

11 Any Other Business: None
Date of Next Meeting – 20th October 2017 at 10am at the Goring Hotel followed by the Presidents Lunch

12 Part B – Private Executive Business:

12.1 Membership Changes – Advisor Areas update
Final amendments to the advisor areas were agreed to incorporate recent changes and new members. A new area of Digital / Technology was proposed.
There are currently 4 vacancies to the Executive.

Action – Angela George to circulate the advisor areas for final approval and publication.

12.2 Financial and Business Update
Frank Wilson circulated the audited accounts for 2016-17 (on the SDCT website).The current financial position was discussed including any income and expenditure commitments and whether some funds could be used to assist with additional Technical work and website and communication support. Jenny Poole will take over the role of SDCT Treasurer following Frank’s resignation and it was noted that the signatory arrangements would need to be updated.

Action – Frank / Jenny to update banking signatory arrangements
Action – proposals for income and expenditure commitments to be discussed further.

12.3 Website and Communications with Members
Peter Stuart has offered to take on the Website and Communications role and following discussion will expand on the issues highlighted in the paper recently circulated for discussion at a future meeting.

Action – Peter to progress