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Feb 28, 2017 - This report asks the Council to approve the Revenue Budget for. 2017-18. C/17/09. (Pages 31 .... site and

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HERTSMERE BOROUGH COUNCIL

MEETING OF THE COUNCIL TUESDAY, 28 FEBRUARY 2017 7.30 PM COUNCIL CHAMBER, CIVIC OFFICES, ELSTREE WAY, BOREHAMWOOD AGENDA

Please note: YOU CAN LOOK AT A PAPER COPY OF THE NON-CONFIDENTIAL COMMITTEE AGENDA AND REPORTS OF OFFICERS AT LEAST FIVE WORKING DAYS BEFORE THE MEETING AT: The Civic Offices, Elstree Way, Borehamwood. YOU CAN LOOK AT AN ELECTRONIC VERSION OF THE NON-CONFIDENTIAL COMMITTEE AGENDA AND REPORTS OF OFFICERS AT LEAST FIVE WORKING DAYS BEFORE THE MEETING AT: The Council’s Area Office at Bushey Centre, High Street, Bushey, The Council’s Area Office at The Wyllyotts Centre, Darkes Lane, Potters Bar, Aldenham Parish Council Offices, Aldenham Avenue, Radlett; and all County Council libraries in Hertsmere. Background papers used to prepare reports can be inspected at the Civic Offices, on request. The unconfirmed Minutes of meetings are usually available to look at seven working days after the meeting. Please note that apart from the formal webcasting of meetings, no part of any meeting of the Council, its committees or other bodies shall be filmed, sound recorded or broadcast, nor shall unauthorised electronic devises be used at those meetings, without express permission. Application for any such permission must be submitted to the Chief Executive or Head of Legal and Democratic Services not less than five working days before the meeting. FOR DIRECTIONS TO THE MEETING VENUE, PLEASE VISIT www5.hertsmere.gov.uk/democracy OR CONTACT DEMOCRATIC SERVICES ON 020 8207 7806 or 020 8207 7483

CONTACT DEMOCRATIC SERVICES ON (020) 8207 7578 OR (020) 8207 7484 FOR ANY FURTHER ADVICE.

Chief Executive Civic Offices Elstree Way Borehamwood Herts WD6 1WA

20th February 2017

COUNCIL AGENDA TUESDAY, 28 FEBRUARY 2017

1.

2.

COMMUNICATIONS AND APOLOGIES FOR ABSENCE (a)

Communications by the Mayor (if any) relating to business on the agenda.

(b)

Apologies for absence.

(c)

Any motions by Members relating to the order of business on the agenda.

DECLARATIONS OF INTEREST (IF ANY) Members are required to declare any Disclosable Pecuniary Interests they or their spouse/partner have in any matter which is to be considered at this meeting. Members must also declare any other pecuniary or non-pecuniary interests they have in any matter to be considered at this meeting. The responsibility for declaring an interest rests solely with the member concerned. Members must clearly state to the meeting the existence and nature of any Disclosable Pecuniary Interest, other pecuniary interest or non-pecuniary interest and the agenda item(s) to which it/they apply. Disclosable Pecuniary Interests are prescribed by the Relevant Authorities (Disclosable Pecuniary Interests) Regulations 2012 as follows: a. Employment, office, trade, profession or vocation Any employment, office, trade, profession or vocation carried on for profit or gain. b. Sponsorship Any payment or provision of any other financial benefit (other than from the relevant authority) made or provided within the relevant period in respect of any expenses incurred by a member in carrying out duties as a member, or towards your election expenses. This includes any payment or financial benefit from a trade union within the meaning of the Trade Union and Labour Relations (Consolidation) Act 1992. c. Contracts Any contract which is made between the relevant person (or a body in which the relevant person has a beneficial interest) and the relevant authority— (a) under which goods or services are to

be provided or works are to be executed; and (b) which has not been fully discharged. d. Land Any beneficial interest in land which is within the area of the relevant authority. e. Licences Any beneficial interest in land which is within the area of the relevant authority. f. Corporate tenancies Any tenancy where (to the member’s knowledge) - (a) the landlord is the relevant authority; and (b) the tenant is a body in which the relevant person has a beneficial interest. g. Securities Any beneficial interest in securities of a body where – (a) that body (to the member’s knowledge) has a place of business or land in the area of the relevant authority; and (b) either (i) the total nominal value of the securities exceeds £25,000 or one hundredth of the total issued share capital of that body; or (ii) if the share capital of that body is of more than one class, the total nominal value of the shares of any one class in which the relevant person has a beneficial interest exceeds one hundredth of the total issued share capital of that class. In cases of Disclosable Pecuniary Interest, Members must withdraw from the meeting room while the matter is being considered. 3.

MINUTES To confirm and sign the minutes of the Council meetings on ATTACHED 18 January 2017. (Pages 9 - 28) In accordance with the Constitution no discussion shall take place upon the minutes, except upon their accuracy.

4.

ANNOUNCEMENTS BY THE MAYOR To receive such announcements as the Mayor may decide to make to the Council.

5.

QUESTIONS FROM MEMBERS OF THE PUBLIC Three questions have been received from members of the public ATTACHED

in accordance with Council Procedure Rule 10. 6.

(Pages 29 - 30)

SETTING THE REVENUE BUDGET 2017-18 This report asks the Council to approve the Revenue Budget for C/17/09 2017-18. (Pages 31 - 106)

7.

SETTING THE CAPITAL BUDGET 2017-18 This report asks the Council to approve the Capital Budget for C/17/10 2017-18. (Pages 107 114)

8.

COUNCIL TAX AND COLLECTION FUND LEVIES 2017-18 The Council is asked to approve the Council Tax Setting and C/17/12 Collection Fund Levies 2017/18. (Pages 115 124)

9.

COUNCIL TAX SETTING 2017-18 In view of the timing of the setting of the precept by Hertfordshire C/17/13 County Council and the Police and Crime Commissioner, this TO FOLLOW report has been marked “To Follow”. Members should note, however, that this report is for calculation purposes only and will consolidate the Borough’s own council tax (as set out in C/17/12) with the precepts to be approved by Hertfordshire County Council and the Police Commissioner i.e. the report will not contain any new information on which members will be required to make a decision.

10.

URGENT DECISIONS EXEMPT FROM CALL-IN No decisions have been taken with the approval of the Mayor as matters of urgency in accordance with the provisions of the Constitution – Overview and Scrutiny Procedure Rule 14(j).

11.

SPECIAL URGENCY DECISIONS QUARTERLY REPORT The Leader reports that, in the last quarter, no key decisions have been taken in circumstances of Special Urgency, as set out in Rule 16 of the Constitution’s Access to Information rules.

12.

REPORT OF THE LEADER OF THE COUNCIL AND OTHER COMMITTEE CHAIRMEN

The Leader and other Committee Chairmen will make an oral ATTACHED report on the list of items enclosed. The Constitution provides for (Pages 125 a maximum of 45 minutes debate after the Leader has completed 126) his report. Members are requested to bring their copies of the minutes of the Executive meeting on which the Leader will report – 8th February 2017.

13.

REPORT OF THE CHAIRMAN OF THE OPERATIONS REVIEW COMMITTEE A Vice Chairman of the Operations Review Committee will make ATTACHED an oral report on the list of items enclosed. The Constitution (Pages 127 provides for a maximum of 30 minutes debate after he has 128) completed his report.

14.

TREASURY MANAGEMENT STRATEGY 2017-18 PRUDENTIAL INDICATORS 2017-18 TO 2019-20

AND

The Council is asked to approve the Treasury Management C/17/11 Strategy 2017-2018, together with the Prudential Code Indicators (Pages 129 for 2017-18 to 2019-20. 184) 15.

PAY POLICY STATEMENT 2016-17 To comply with Section 38 of the Localism Act 2011, this C/17/08 Authority has to publish a Pay Policy Statement containing details (Pages 185 of the pay and benefits payable to staff in Chief and Deputy Chief 198) Officer positions. A proposed Statement is attached at Appendix A to this report. The report is as submitted to the Personnel Committee on 21st February 2017, and the recommendation of that Committee on this matter will be reported to Council.

16.

UPDATES FROM OUTSIDE BODIES Updates are to be provided by Members representatives on the following outside bodies:

serving

Borehamwood Seniors Citizens Advice Bureau CPRE – The Hertfordshire Society Hertfordshire Society Hertfordshire Building Preservation Trust

as

17.

QUESTIONS FROM MEMBERS OF THE COUNCIL Questions received from Members in accordance with Council ATTACHED Procedure Rule 11. (Pages 199 200)

18.

NOTICES OF MOTION A notice of Motion has been received from Members in ATTACHED accordance with Council Procedure Rule 12. (Pages 201 202)

19.

ANY OTHER URGENT BUSINESS To consider such matters (if any) which, by reason of special circumstances (to be specified in the minutes of the meeting), the Mayor (or in his absence, the Chair) is of the opinion should be considered at this meeting as a matter of urgency (LGA 1972 S100B(4)(b).

20.

DATE OF NEXT MEETING The next scheduled meeting of the Council will take place on Wednesday, 26th April 2017 at the Civic Offices, Elstree Way, Borehamwood.

CHIEF EXECUTIVE

Civic Offices Elstree Way Borehamwood Herts, WD6 1WA

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HERTSMERE BOROUGH COUNCIL

MEETING OF THE COUNCIL HELD IN THE COUNCIL CHAMBER CIVIC OFFICES, ELSTREE WAY, BOREHAMWOOD

18 January 2017 Present: Councillors Rutledge (Mayor), Goldstein (Deputy Mayor), Barker, Batten, Bright, Butler, Choudhury, Clapper, Dr Cohen, Davis, Donne, Eni, Graham, Heywood, P Hodgson-Jones, Keates, Kelly, Knell, Lambert, Lyon, Merchant, Morris, Plancey, Quilty, A Sachdev, M Sachdev, L Silver, Spencer, Swerling, Turner, Vince, Wayne, West and Worster Officers: D Graham S Bijle H Patterson P Hughes 381.

Chief Executive Director of Resources Head of Legal and Democratic Services Democratic Services Manager

PRAYERS Church Warden Richard Osbourne said prayers.

382.

COMMUNICATIONS AND APOLOGIES FOR ABSENCE Apologies for absence had been received from Councillors Ash, Brown, Burcombe and G Silver.

383.

DECLARATIONS OF INTEREST (IF ANY) No Member had an interest declare under any of the items of business on the agenda.

384.

MINUTES RESOLVED that the minutes of the Council meeting held on 23 November 2016 were approved and signed as a correct record.

385.

ANNOUNCEMENTS BY THE MAYOR The Mayor advised Councillors of two important dates for their diaries. The first was Thursday, 26 January when the Borough would mark Holocaust Memorial Day. This event would begin at 6 p.m. with a candle lit parade from the car park at Radlett Train station to the Radlett

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Centre, where a ceremony would take place at 6.30 p.m. Entrance to the ceremony was by guest list only and the Mayor asked those interested in attending to contact the Mayor’s Secretary to reserve a place. The Mayor then spoke to those with an interest in TV quiz programmes, and suggested they put their intellect to the test for real. On 15 February he would hold his charity quiz night and looked forward to seeing many Councillors at that event.

386.

QUESTIONS FROM MEMBERS OF THE PUBLIC The Council had received the following questions from Mr Hewitt of Borehamwood: “How much did you spend on council buffets, lunch and refreshments last year? What is the individual cost of per buffet provided for both last planning and full council meetings?” The Finance, Property and Economic Development Portfolio Holder, Councillor Graham, thanked Master Hewitt for his question and pointed out that this question was the third he had submitted in as many meetings. Councillor Graham said the cost of refreshments for last year was £3,732 for all Council and other Committee meetings and that there had been many meetings. For the Planning Committee on 8 th December 2016 the cost was £66.30 and the Council meeting on 23 November 2016 the cost was £121.70 Councillor Graham said that if there had been around 40 people including councillors at the Council meeting, the cost per person was approximately £3 per person. He then asked the meeting to imagine what they could purchase for £3. He said he had not been to MacDonald’s recently but was told that £3 was less than the cost of a happy meal. The Portfolio Holder then asked Master Hewitt if he had eaten before he came to the meeting and noted that he had. He then said that some Councillors did eat before a meeting but many, including him until he retired, worked during the day and came to the Civic Offices for meetings. He pointed out that the Planning Committee started at 6 p.m. and the Council at 7.30 p.m. and that he had had a meeting immediately before this meeting. Many councillors came to meetings after a long days’ work and had no time to eat first. At meetings councillors had serious decisions to make, not least at the Planning Committee where meetings go on to 9 p.m. or 10 p.m. at night. When councillors had been working hard, he wondered if it was right that they should make hard decisions on an empty stomach. Or was it right to give councillors some food and drink to keep them going. It all cost less than a happy meal and the Portfolio Holder did not want Members to

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suffer when they were making important decisions for residents. The cost of refreshments was kept low, less than a cheap take away meal. In a supplemental question Mr Hewitt asked if the Leader Councillor Morris Bright thought free buffets were a good idea when so many local people were financially forced to use food banks. If councillors could not carry a packed lunch would it not be a good idea for them to bring in a contribution for the food bank? Councillor Graham replied that the point he had made earlier was that councillors were not getting a free meal. They were working during the time they were here and that the buffet was not available for them to drop into and eat at any time. It was provided because members of the Planning Committee and the Council were here to transact business for the people of the Borough. He then pointed out that this Council, along with the LSP, had set up the food bank so the Council had acknowledged the need. He concluded by saying that this was not an unreasonable thing for councillors to be involved in. The Mayor advised that a written response to the question would be sent to Mr Hewitt. 387.

URGENT DECISIONS EXEMPT FROM CALL-IN Noted that no decisions had been taken with the approval of the Mayor as matters of urgency in accordance with the provisions of the Constitution.

388.

SPECIAL URGENCY DECISIONS QUARTERLY REPORT The Leader reported that, in the last quarter, no key decisions had been taken in circumstances of Special Urgency, as set out in the Constitution’s Access to Information rules.

389.

REPORT OF THE LEADER OF THE COUNCIL AND OTHER COMMITTEE CHAIRMAN Leader’s Report The Leader spoke on the following list of topics, which had been circulated to Members prior to the meeting. One item was covered separately in the agenda and was discussed under that item. Discussion ensued on the other items and the Leader and Executive Members responded to Members’ questions. ●

Executive

The Leader said the Executive had met twice since his last Leader’s report. The major areas discussed were as follows:

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Executive - 14th December 2016 Replacement Water Play Feature – King George Recreation Ground, Bushey Following a procurement process, the Executive had agreed to appoint Ustigate Limited as the Council’s design, build and maintenance contractor for a new water play feature (swimming pool) at the King George recreation ground, Bushey. There had been an increasing number of technical problems recently with the existing pool which had caused frequent closures. The replacement would not only resolve those issues but would also reduce overall running and maintenance costs due to the technology advances which came with the new facility. Provision of Accommodation for Homeless Households – Feasibility Study Approval The Executive had agreed one-off funding of £25,000 from the current year’s contingency fund to carry out a feasibility study into redeveloping some land in Allum Lane, Elstree. The aim was to procure the construction of affordable off-site temporary accommodation on the site for homeless households in the Borough. If the scheme came to fruition, it would provide 10 family homes on the site and help to reduce, by the end of the year, the number of homeless persons having to be housed outside the Borough. This in turn would offset the rising cost to this Council of temporary accommodation, help discharge our statutory housing functions and provide a rental income stream to the Council. The Executive had welcomed this scheme as an excellent use of this particular spot which was a Council-owned former caravan site located within reasonable distance of local amenities, such as shops and schools, and therefore maximised the positive social impact whilst making costs savings. Bad Debt Write-Offs The Executive agreed to write-off a number of debts with funding to be taken from the Council’s earmarked bad debt provision. In accordance with normal practice, the debts detailed in the report were no longer collectable as all reasonable steps to recover them had been taken over a number of years. Members noted, however, that, should circumstances change and the Council found itself in a position of being able to collect any of the debts, then they would be written back. Senior Management Structure This item was to be considered later in Part II of the agenda.

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11th January 2017 Budget Setting 2016/17 As part of the budget setting process, the Executive had recommended the Council’s draft revenue budget 2017/18 and draft capital budget 2017/18 to 2019/20 for consultation by the Operations Review and Policy Review Committees, all Members and stakeholders. The overview and scrutiny committees would consider the draft budget at their joint meeting on Monday, 23 January. Business Transformation Permanent Staffing Resource Requirements The Executive noted the Personnel Committee’s decision to establish a permanent staffing structure for debt recovery, web and digital management and the management of housing benefit fraud prevention and agreed the financial implications. These would be included in the Council’s ongoing revenue base budget to be considered by the Council in February 2017. Unauthorised Deposit of Waste (Fixed Penalties) Regulations 2016 The Executive had recognised the importance of taking action to deal with fly-tipping and identified partnership working as the way forward. The meeting therefore agreed the recommendations of a report and to look at other measures, including improving local signage especially in Hertsmere car parks, promoting the use of CCTV and possibly publicising local waste removal companies. Formation of Companies for the Ownership and Management of Market Rented Accommodation and Affordable Housing Proposals to establish companies for managing market rented accommodation and affordable housing respectively were approved by the Executive. The main purpose of the companies were to maximise tax efficient revenue generation and to improve the supply of affordable housing in the Borough. Members were assured that, whilst the process for setting up these companies was not quick, the Council was taking full advantage of any opportunities that arose in the meantime. Once the new companies were established, any such opportunities would be transferred across to them. Financial System Enhancements and Compliance Upgrades The Executive considered a report and approved proposals to enhance and upgrade the Council’s financial systems i.e. the income receipting system including telephony software and a paperless direct debit facility. The purpose of the decision was to ensure the Council was payment card industry (PCI) compliant and this would protect against

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potential significant financial penalty and reputational damage to the Council in the event of any of its data being compromised. ●

Local Strategic Partnership 13th December 2016

The LSP, Hertsmere Together, represented the public, private, voluntary and community sectors within Hertsmere. The last meeting of the LSP was held on 13th December 2016 and received presentations and updates about the following. You Can (Adults with Complex Needs) The Adults with Complex Needs project was being piloted across Hertsmere and Three Rivers had been called the YOU CAN Project where District areas work with frequent users of high cost public services. These individuals had multiple problems and were engaged with many different agencies but their lives were not improving. The project aimed to provide a consistent trusted adult for these individuals to help them to negotiate their lives and improve their situation, whilst also leading to cost savings for the public purse. Big Local Partnership The Leecliffe Big Local Community Plan 2016-2018 had been endorsed by the Local Trust and was launched at an event in December. The key themes of the plans were: Community; Environment & Green Spaces; Work, Skills & Training; Poverty & Deprivation and Communications Neighbourhood Plans Peter Evans from Aldenham Parish Council spoke about the Neighbourhood Development Plan, which the parish council had decided to proceed with in spring 2014 and launched at an event in November 2014. As part of the Localism Act 2011, localities had the right to make a Neighbourhood Plan as a supplement to the District/Borough Council Local Plan. Neighbourhood Plans must be consistent with the Local Plan and national planning requirements. Once ‘made’ the Neighbourhood Plan must be considered in evaluating planning applications. The plans will be in force for 15 years, with periodic review and amendments. Hertsmere Leisure Update The meeting noted that new Chief Executive of Hertsmere Leisure, David Brame, had been in post since March 2016, and so far this financial year there had been over one million visits to the centres in Hertsmere. Hertsmere Leisure was working with the council to develop

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an investment programme for the centres to improve their facilities and activities. Other Business The LSP heard several items of any other business including a Refugee Update, an update on the Hertsmere Corporate Plan and Review of the Current Community Strategy, the Police & Crime Commissioner’s Emergency Services Collaboration plans, the PCC’s Safety Grants, a Dementia Friends session and changes to the LSP Board. The Leader said he was grateful to councillors who attend the LSP meetings for information. He hoped they found them interesting and encouraged other councillors to pop in from time to time ●

Australian Bush Animal Is Firm Favourite

The Leader reported that a blue-tongued skink was among the unusual star attractions on display at the Environmental Christmas fair. More than 500 children from schools across Borehamwood attended the fair at the Civic Offices on 1st December. The fair, which had been running for 20 years, taught children about the impact of noise pollution and the importance of recycling, exercise and healthy eating through interactive displays. It was also fantastic opportunity for children to find out about what our Environmental Health staff did and the impact their work had on their day-to-day lives. Other organisations who attended were Hertfordshire Fire and Rescue, Hertfordshire Police and Hertsmere Leisure. ●

Christmas Help for Hertsmere Women’s Refuge

A bumper load of toiletry essentials had been donated to help women and children who are affected by domestic abuse. Generous staff at Hertsmere Borough Council, social housing landlord Affinity Sutton and Hertfordshire Police gave hundreds of hygiene products and other items to the St Albans and Hertsmere Women’s Refuge following an appeal organised by the Council’s community safety team. The appeal tied in with, 16 Days of Action against Domestic Violence, a national campaign aimed at encouraging businesses to take action on this issue. With Christmas being a difficult time of year for those who stay at the refuge, it was hoped that this donation helped in some way. Christmas was an exciting and joyful for some - for women, men and children experiencing domestic abuse, it was a misery. The victims who go to the refuge often did not remember to pick up essentials and so they are very appreciative of such donations. ● Council Staff Show Support for Struggling Families

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The Leader reported that staff at Hertsmere had donated hundreds of items of groceries to a local Foodbank to aid families struggling on the breadline over Christmas. The Council’s three Chief Officers pushed festive trolleys around the building to collect staff donations. Staff had been keen to support Foodbank and donated a staggering amount of food to the foodbank. The Leader said they were a credit to the Council and that the food donations would go some way to help those people in real need at Christmas. ●

Christmas Party In the Park!

It was reported that many residents had headed down to Meadow Park in Borehamwood at Christmas for a festive dance off. The interactive dance arch, which tracked movements and tested dance skills on a motion camera, had been set to play Christmas music to dance. The Christmas songs proved really popular and were well used in the cold weather. The equipment was installed as a new and innovative way to encourage people of all ages to get outside, move, play, socialize and enjoy the parks, as well as tackle childhood obesity in the area. ●

Christmas Waste Collections

The Leader reported that all Christmas waste collections went well and were made according to the revised schedule. He took the opportunity to thank all Hertsmere’s waste operatives for their excellent work throughout the year but especially in winter and at Christmas time in collecting waste and refuse from across the Borough. ●

Newberries Car Park development

The Leader reported that a meeting was due to take place last Friday between a group campaigning against the council’s proposal for the development of the Newberries Car Park site in Radlett along with local members and officers which the Leader had offered to host. At the last minute the meeting had been postponed due to an issue around attendance at that meeting. The Leader confirmed that he and Councillor Graham would be meeting the heads of that campaign on Monday to see what could be done to iron out the issues so the meeting can be rescheduled and the issues of concern discussed. During debate a number of members reminded the meeting that the Council had, last year, unanimously agreed to the business case for the development of Newberries Car Park. It was also stated that councillors had a responsibility to represent their Ward within the Borough and not to interfere in Wards represented by other councillors. The meeting was reminded that politics should play no part in the determination of an application made to the Planning Committee.

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SIMALTO Participatory Budgeting Exercise

All members, said the Leader, had had the opportunity this week to sit in on a presentation on the findings of the participatory budgeting exercise in which Hertsmere wished to know where residents felt services should expand or contract to better meet their needs. This followed similar exercises carried out in 2010 and 2013. Hertsmere Borough Council, like most local authorities was facing a reduction in government funding in the future. Having already made substantial savings, Hertsmere had undertaken this exercise to help its forward planning to prepare for no government grant funding from 2019/20 onwards. The report from SIMALTO was very detailed but the headlines were clear: Hertsmere residents did not want the Council to touch the Police Community Support Officers service, they wanted the Council to leave the community transport alone and not reduce funding, and they did not want to pay to have green bins collected. In exchange residents were prepared to see car parking charges rise. The Leader said the Council would listen to its residents. Additionally residents did not want a referendum as to whether or not council tax could be raised above the 2% or £5 per year limit imposed by central government. The Leader said that the most gratifying thing for this council, both members and officers alike, was the continuing low level of dissatisfaction expressed across the Borough. He said residents continued to have high levels of satisfaction in Hertsmere. The Leader reported that Councillor Graham and Council officers would use the information from residents to assist in bringing together next year’s budget. A joint meeting with scrutiny, executive and officers on the budget was scheduled for next Monday, and the Leader hoped all members would attend to see what work had already taken place to produce a budget that looks after the needs of this council and its people. ●

Elstree Studios

The Leader of the Council, Councillor Bright declared an interest as a council appointed director to the Board of the Elstree Studios. At the last Council meeting the Leader had stated that the council had undertaken a soft market testing exercise to see if there was interest from the industry to fund new facilities at the Studios such as a new stage at the front. He now reported that there had been expressions of interest received from the industry and officers, in conjunction with the

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Portfolio Holder for Finance, Property and Economic Development, Councillor Graham, and the management of the Studios were looking at how this could be taken forward. The Leader undertook to keep members informed as matters progressed. The Leader said he was sure all members would feel rightly proud that in the first awards ceremony of the year, the Golden Globes in the United States, the new Netflix drama about the royal family, The Crown which was based and filmed at Elstree had won two awards – for best actress and best drama series. The Leader said this further enhanced the reputation of the Studios as a place of film and television production excellence. 390.

REPORT OF THE CHAIRMAN OF THE OPERATION REVIEW COMMITTEE The Chairman of the Overview and Performance Committee gave an oral report on the work of the Operations Review and Policy Review Committees The Policy Review Committee met on 12 December and considered the Empty Homes Policy. He said there were various types of empty homes, which Officers identified through different routes for example reports from neighbours; Council Tax Fraud investigators, or notification from the property owners themselves. The number of empty properties had stayed fairly constant over the years, at about 2% of the Borough’s housing stock. Identifying such properties was an important activity as they could blight a residential street scene and encourage crime and disorder. Additionally there was a national housing shortage. The Council’s PLACE scheme encouraged owners to bring empty properties back into use by lending money on a 5 year interest free loan to make repairs. The money could be used to renovate the property and then sell it or rent it out. These funds could also be used for empty commercial properties, if they were being converted into residential units. The Council’s investment was protected via a charge against the property. The Chairman pointed out that it should not be assumed that all empty properties were abandoned properties. The Operations Review Committee had met on 15 December, and received an annual report on the Police Community Support Officer service, which detailed what the Council received for part funding 9 Community Officers. The Committee received details of the positive work being undertaken and the Chief Inspector suggested that Councillors contact him about local incidents that were concerning them, as he may be able to provide additional information unless it was operationally sensitive. The Chairman said that residents appreciated the PCOSs funded by the Council. There were two further annual updates: firstly, the Council Tax Support Discretionary Fund, which had successfully covered the changeover

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from the Council Tax Benefit system to the new Reduction Scheme, was no longer required. Secondly, the Community Safety & Performance Portfolio Holder gave his annual report on his work area. Highlights included a well-attended conference on Domestic Abuse; a successful anti fly-tipping initiative which led to an offending vehicle being seized and crushed; the Council’s performance indicators streamlined to remove any indicators for which the Council was not directly responsible such as crime statistics or which were redundant; the procurement of a telephony system; the cyber security training of all staff; the forthcoming implementation of Office 365; key posts in Planning, Revenues and Housing had been filled; a roof garden had been created for staff as part of the Wellbeing Programme and the Apprenticeship Levy was being actively pursued with Senior Managers. The Committee then received its quarterly Performance Monitoring Report, which showed an overall increase in green indicators and a reduction in reds and ambers. The Committee also received its biannual report on the Hertsmere Leisure contract, which focused particularly on Fifty Plus and Park Events which had passed to Hertsmere Leisure to manage in 2012. This decision had proved successful given that Government grants had subsequently reduced and those services would have come under pressure due to their discretionary status. Instead, those services had grown and developed at Hertsmere Leisure. Lastly, the Committee approved the brief for the Fly-tipping Scrutiny Review. Councillor Vince pointed out that the Council was now exercising its powers to take possession of empty properties that could be used to house homeless families. She asked the Portfolio Holder how many properties might it be possible to bring back into use within the next few years? The Mayor said that the Portfolio Holder would reply to that question in a written response. 391.

SETTING THE COUNCIL TAX BASE 2017/18 Report C/17/03 detailed the calculations made to arrive at the Council's Tax Base to be used in determining the level of council tax for 2017/18. Under the council tax legislation it was necessary to resolve this prior to the budget setting to ensure that parish or town council precepts and any special expenses were charged over only that part of the borough to which they relate. RESOLVED that the calculation of the Council’s tax base for the year 2017/18, as set out in report C/17/03 and its appendices, be approved

392.

LOCAL COUNCIL TAX SUPPORT SCHEME

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All Local Authorities in England and Wales had been informed by the Department of Communities and Local Government that the national Council Tax Benefit scheme would cease on 31 March 2013 and billing authorities, like Hertsmere, in consultation with the major precepting authorities, like Hertfordshire County Council and the Police and Crime Commissioner for Hertfordshire, were required to introduce their own local Council Tax Benefit scheme. Hertsmere Borough Council had agreed and implemented the present local scheme which came into effect on 1 April 2013. Officers had recommended that the current local scheme continue subject to changes to reflect uprating, base legislation and prescribed requirements. RESOLVED that (1) the continuation of the current Council Tax Support Scheme, which has been amended to reflect uprating, base legislation and prescribed requirements , be approved and be effective from April 2017, and (2) a review of the current Council Tax Support Scheme be undertaken prior to 2018/19. 393.

HERTSMERE POLLING STATIONS The meeting was informed that legislation stated that the Council must approve changes to the locations of polling stations. Report C/17/04 proposed a change to the new polling district CD (Shenley Road South) in Borehamwood Brookmeadow Ward which was created by the Hertfordshire County Council electoral review. The report also recommended that Holy Trinity School replace the flooded Highwood School as the polling station for polling district HA (Bushey Mill) in Bushey North Ward. These changes were being made ahead of the Hertfordshire County elections on 4th May 2017. RESOLVED that (1) Aberford Park Community Centre be designated as the polling station for the new polling district CD (Shenley Road South) in Borehamwood Brookmeadow ward, created as a result of the Hertfordshire County Council electoral review, and (2) Holy Trinity Church replace Highwood School, which is unavailable due to flood damage, as the polling station for polling district HA (Bushey Mill) in Bushey North ward.

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394.

SCHEDULE OF HERTSMERE MEETINGS 2017/18 The Council was asked to approve the draft Schedule of Meetings for the period August 2017 to July 2018. Following the usual procedure, Officers had drafted a schedule of meetings for the forthcoming municipal year (2017/18), and taken account of the requirements of each Committee’s workload, and any relevant legislative requirements. Consideration had also been given to bodies that interrelate to ensure that items could be referred on with the minimum of delay. The programme had been approved by members of the Constitution & Member Development Panel and other Committee Chairmen. RESOLVED that (1) the non-Executive meeting dates shown in the draft schedule of meetings 2017/18, attached as an appendix to report C/17/02, be approved. (2) the Executive meeting dates shown in the draft schedule of meetings 2017/18, attached as an appendix to report C/17/02, be noted, and (3) the changes to the 2016/17 schedule of meetings, detailed in paragraphs 2.3.1 to 2.3.4 of Report C/17/02, be approved.

395.

UPDATES FROM OUTSIDE BODIES The following Members, appointed as representatives of the Council on outside bodies, made a report on the activities of their respective organisations: Big Local Partnership Advisory Panel

Councillor Cohen

Borehamwood & Elstree Town Twinning Association

Councillor Turner

Bushey Museum Management Committee Clayton Centre Jones

Councillor Batten Councillor Hodgson-

No report was made on Borehamwood Seniors as the Councillor representative was unwell and not at the meeting. RESOLVED that the information on the activities of the outside bodies listed above, as reported by the Councillors appointed to represent the Council on those bodies, be noted.

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396.

QUESTIONS FROM MEMBERS OF THE COUNCIL Five questions had been received in accordance with Council Procedure Rule 11 as follows: 1) From Councillor Butler to the Environment and Transport Portfolio Holder, Councillor Quilty:“Given the situation at Baker Court where the paper bin has not been emptied in spite of contamination being removed and Hertsmere informed; how many other paper bins at flats have not been emptied in the last two years. In fact in the last two years what is the total of green bin waste and brown bin waste that has actually been collect from flats? What discussions has this Council had with Clarion (Affinity Sutton) to resolve the problem that no-one appears to be taking any responsibility for these communal bins if contamination occurs which are being left un-emptied for months.” The Portfolio Holder replied that the Council had in place a procedure whereby a registered social landlord (RSL) was notified when a recycling bin was not emptied due to contamination. The RSL can then remove the contamination and advise the Council of its wish to pay for a crew to return to the site to empty the bin. Or it could remove the contamination and leave the bin to be emptied at the next scheduled collection date. Other RSL do this but Affinity Sutton/Circle 33 had never asked the Council for a return visit. The Portfolio Holder said that the RSL can inspect their bins and remove any contamination, this practice would ensure that the bins were emptied on the scheduled day of collection. It was not be possible to calculate the actual tonnage for an individual block of flats, however the Council’s records showed that of the last ten collections, three were not completed due to contamination issues, the last of which was on 5 th December 2016. The Council continued to notify the RSL when a bin was not collected due to contamination. In this case the responsibility to place the correct material in the right containers rested with the RSL. Councillor Butler asked what else the Council could do to rectify this situation and the Portfolio Holder undertook to ask officers to write to the Chief Executives of all RSL in the Borough to remind them of their responsibility to ensure that bins were put out and that they were not contaminated. 2) From Councillor Butler to the Housing Portfolio Holder, Councillor Heywood:-

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“At the last Council meeting the portfolio holder announced that she would be attending an Affinity Sutton scrutiny meeting in December. Could she please give the Council a report from the meeting and tell us if anything was announced as to the future status of this scrutiny committee going forward under Clarion?” The Portfolio Holder said that she had attended the last scrutiny meeting and said that the new merged Housing Association would be known as Clarion. However Circle 33 and Affinity Sutton were not yet formally merged and Affinity Sutton was still trading as such. The merger was signed in late November and it was noted that completion of this process could take up to two years as both Associations were large. The Scrutiny meetings would continue in the short term and the next meeting was scheduled for March. It was noted that Hertsmere was presently a member of the London area scrutiny meeting and the Portfolio Holder reported that she had asked for Hertsmere to be moved to the Hertfordshire grouping. 3) From Councillor Vince to the Planning and Localism Portfolio Holder, Councillor Cohen:“Could the portfolio holder give a report on the progress off the consultation on the local plan? How many responses has the Council had to date? How many of these have been from local residents, how many from local business, how many from developers?” The Portfolio Holder replied that, a four page booklet 'Planning for Growth' had been sent out to all residents in December with their copy of Hertsmere News. This represented the first step in Hertsmere’s engagement with the local community on the review of the Local Plan. Responses were invited through an online survey but rather than a consultation on a set of policy options, this was an exercise to understand what local residents and businesses considered to be the planning priorities over the next 15-20 years. To date around 50 responses had been received from local residents, and meetings had been held with a number of local groups and organisations including our Parish and Town Councils. Engagement with businesses and developers continued to be focussed through a call for sites and series of business and developer engagement events. The first such meeting in Borehamwood was held in November and was attended by 30 representatives from local companies and a second business engagement event was planned for Potters Bar later this year. A separate developer and agents meeting was taking place February to which over 50 developers, architects and agents had been invited. The responses received will be reviewed by officers and the Planning Panel and this will inform the Issues and Options report, which was

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scheduled to be considered by the Council's Executive in May of this year. The Issues and Options report will set out what were considered to be the key planning issues facing the borough over the next 15-20 years and will propose a series of options for how and when growth can be accommodated. The Portfolio Holder said that the Council was also planning a series of road shows across the Borough in May, June and July this year. Further consultation on these options would take place, before a draft Local Plan could be published by the Council. 4) From Councillor Vince to the Leader of the Council, Councillor Bright:“Burglaries seem to be extremely high at present. Is there a correlation between the time of burglaries and the time streetlights are turned off? Or the areas with no lighting? Would the Leader Councillor Morris Bright also a county councillor support our request to county for street lighting not to be dimmed and not to be turned off at midnight? Has the Leader seen the many residents on Facebook asking for street lights to left on during hours of darkness? What are his thoughts?” The Leader replied that there were around 115,000 street lights in the county and the County Council spent roughly £3.4m a year on energy and £2.8m on maintenance. In 2010, some 6 years ago now, the County Council had taken the decision to switch some of the street lights off between midnight and 6 a.m. to save some £1.3m of public money annually on energy costs, as well as reduce carbon emissions. Following the implementation of part-night lighting, a report was commissioned by the Police Authority in the spring 2012 which concluded that “there is no discernible evidence that crime has increased by the strategy to reduce street lighting between midnight and 6 a.m.”. The Constabulary had, the Leader said, recently advised that no further review work had been completed or was planned specifically on partial street lighting and have further advised that the national position was that “there was no evidence base to demonstrate an increase in crime where lights are turned off”. To provide reassurance the Hertsmere Chief Inspector Steve O’Keefe had said that he chaired daily local performance meetings to review and interpret crime patterns. This was over lapped with seasonal issues, organisational memory, prison release information and current intelligence. He was sighted on the main priority crime types of theft from motor vehicles, robbery and dwelling burglary and “cannot not link or express concern around street lighting as a factor”. Indeed the main burglary crime prevention advice for this season was to double lock front UPVC doors and remove car keys from accessible locations within the hallway. When the weather got warmer the threat moved to windows left open overnight for ventilation as a possible point of entry.

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In addition the Constabulary further reviewed performance at an operational and strategic level across the local policing command every two weeks to pick up trends and to quality check local Community Safety Partnership activity. This was chaired at Chief Superintendent and Assistant Chief Constable level due to its importance to the Constabulary’s performance. The Leader then pointed out that Hertsmere’s priority crime figures for the period 1st April 2016 to 12th January 2017 showed that the number of burglaries had in fact dropped in the current financial year compared to the same period last year by some 15.6%; from 334 to 282 burglaries. The reduction in crime locally had been achieved through a range of crime prevention events and partnership working, as well as focussing on key offenders utilising a range of policing tactics and intelligence. The Leader said it was important to note that the Chief Inspector had said that the main threat in relation to burglary was from travelling criminals who saw Hertsmere as a prosperous location. The local police position was that they recognised the pressures on local councils to save money in the reduction of street lighting provision. There was still a local ability for the Constabulary and the County Council to discuss local long term issues in crime hot spots and request a temporary increase in street lighting provision, “however at this time there was no evidence base to make any recommendation to increase street lighting provision”. The Chief Inspector had written to all Councillors following his appointment inviting them to meet with him and to contact him directly if they had any issues of concern. He reiterated that invitation when he made a presentation to the Operations Review Committee in December. The Leader encouraged all members to liaise with the Chief Inspector in the first instance if they had a local concern regarding crime and policing. Replying to the invitation to support a request to the County Council for the street lighting to be left on after midnight, the Leader said that research would have shown his position on this matter. Six year ago he had specifically asked that both Borehamwood and Potters Bar, places with large commuter numbers with many arriving home after 11.30 p.m., would have benefitted from street lights in those areas being left on until 1 a.m. In a supplemental question Councillor Vince asked if the Leader thought that it would be better for the elderly to have the street lights left on. The Leader said his position was very clear, six years ago he was in favour of keeping the lights on longer. Now he did not have a problem with the lights being turned off as he felt it had been proved that there was no

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increase in crime. The police had said that and also work by the University of London showed that, at a time when local authorities needed to make spending cuts, by carefully assessing risk street lighting could be reduced without an increase in crime or car crashes. The Leader said that it was up to elected members in receipt of relevant information on lighting to make sure that that information was made available to residents. He said that all Members had a responsibility to tell residents what the view of the police was. The Leader said that what was being experienced by residents was the fear of crime, rather than crime itself. The fear of crime was measured at around 40%, while actual crime was about 2%. He said the police were of the view that the roads where the lights were left on were in more danger than those with the lights off. Criminals found it difficult in the dark and better lit areas suffered more crime. He reiterated that it was the responsibility of all members to tell residents that the view of the police was that turning off street lights did not encourage crime. The Leader added that if there was a specific problem in a certain area then the local County Councillor could make a request to the County Council to have the lights left on in that area. In the past he had done that for part of Borehamwood and was sure that the present County Councillors for Borehamwood would make application if there was a particular issue that would be benefit from leaving the street light on. 5) From Councillor Vince to the Finance, Property and Economic Development Portfolio Holder, Councillor Graham:“Is Hertsmere Borough Council looking to build another asset in Radlett? A Travelodge this time, having already built Daisy in the park! I understand former Leader of Hertsmere, and now Leader of Aldenham Parish Council Neil Payne supports this investment. Was it Neil Payne as Leader of Hertsmere Borough Council that cancelled the build of the civic centre? Radlett has the Radlett Centre, Potters Bar the Wyllyotts, when is Borehamwood going to have its own centre? If Hertsmere has money to spend why are the residents of Borehamwood still waiting 18 years on? Borehamwood's population is growing with ever increasing building does Borehamwood not deserve an investment. The Ark Theatre is not a replacement for the civic centre. It seems a new building Is going up on every corner when does the Leader of the council feel he will be able to grant Borehamwood its own centre not as an annexe to a school but the equivalent of what was taken.” The Portfolio Holder replied that the first part of the question concerned the development at Radlett and, as the meeting had spent long enough on that matter already, said the answer was yes. He replied to the second part of the question by saying that it was not Neil Payne who was Leader of the Council. In reply to the third question, Councillor Graham said that 20 years ago Borehamwood did have its own centre and if it was not for the actions of the Labour administration at that time,

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it would still have one. In 1997 Hertsmere spent £3m building the Allum Lane Community Centre and the Labour administration transferred the asset, without requiring any consideration, to an independent local trust which was headed by senior figures from the Borehamwood Labour Party. That transaction was structured so that Hertsmere lost control over the facility. The Portfolio Holder then compared that situation with the Radlett Centre which was built around the same time. There the centre was handed over to a Trust to run but that Trust was structured in a way that saw the Parish Council maintained overall control. He said that was why Radlett had the Radlett Centre and Borehamwood had an expensive facility run by a third party. Councillor Graham said that was why Borehamwood residents were still waiting 18 years on because their asset was given away in 1997. The Portfolio Holder then said that over the past 20 years, the Council had invested around £27m into community assets in Borehamwood, and this figure excluded investment in Elstree Film Studios as that was regarded as an asset of the whole Borough. He said that £20m had been spent on the Venue, £4.7m on community centre and £2.2m on the Ark Theatre. Looking at what had happened in the rest of the Borough, that figure was 50% more than was spent in the whole of the rest of the Borough combined. He concluded by saying that given that level of investment and the loss of the Borehamwood Centre, he was at a loss to know why Councillor Vince was now asking for more. In a supplemental question Councillor Vince said her question was not about the Allum Lane Centre and she wanted to know who the Leader of the Council was when the civic centre project was cancelled. The Portfolio Holder said the proposal for Borehamwood 20 years ago was for the construction of a theatre, not a civic centre. The people of Borehamwood were asked if they would attend a theatre and none said they would. The theatre had been modelled on one developed in Durham and that theatre was closed two years after opening. Councillor Graham said it was former Councillor Stuart Nagler who cancelled it because it was a white elephant. Former Councillor Nagler did support the funding of the Threeways Community Centre and at that time the Leader of the Labour Group was very keen on that Community Centre. The Council had also invested in the Ark Theatre to provide the theatre capacity that Borehamwood required. 397.

NOTICES OF MOTION No notices of motion had been received.

398.

DATE OF NEXT MEETING Noted that the next meeting of the Council would take place at 7.30 p.m. on Tuesday, 28 February 2017.

399.

EXCLUSION OF PRESS AND PUBLIC

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RESOLVED that, under Section 100A(4) of the Local Government Act 1972, the public be excluded from the meeting for the following items of business on the grounds that they involve the likely disclosure of exempt information as defined in Part I, Schedule 12A to the said Act:-

400.

Part II Agenda Item

Paragraphs in Schedule 12A

Senior Management Structure

1, 2, 3 & 4

SENIOR MANAGEMENT STRUCTURE The Council received an exempt report from the Chief Executive and Head of Human Resources detailing a review of the senior management structure. The Personnel Committee had considered a more detailed report about the review on 7 December 2016 and the Executive on 14 December 2016 had agreed the financial implications of the review. RESOLVED that the changes to the senior management structure, detailed in report C/17/05, be agreed.

CLOSURE: 11.00 pm

MAYOR

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HERTSMERE BOROUGH COUNCIL Council meeting – 28 February 2017 Agenda item 5

Questions from members of the public Three questions have been received from members of the public, in accordance with Council Procedure Rule 10.

The first question is from Mrs Smith of Borehamwood and concerns a Hertsmere Councillor, as follows: "It is a matter of public record that a sitting Hertsmere Borough Councillor has been convicted of a sex offence and is currently engaged in a protracted appeal process. Please outline any special measures/circumstances that are now applicable to that Councillor's interaction in his capacity as a Councillor with fellow councillors, staff, officers and members of the public. Please also set out your own view as to whether or not, under the circumstances, this individual is able to function properly as a Councillor representing his constituents? Finally given that both political groups have called for his resignation, do you feel that the Local Government Act is deficient in that it provides no means for the Council to act despite this consensus, and if so will you raise the matter with the Secretary of State for Communities and Local Government?" _______ The second question is from Mr Morris of Borehamwood and concerns a closure of Brook Road, as follows: “Please explain why Brook Road was closed with no work being undertaken, for a 24 hour period on 23rd January 2017. I understand Affinity Water had a permit to put in a half road closure, but is it acceptable for roads to be closed a day before work commencing, and if not what addition fines are imposed on top of the general cost for the permit?” _______ The third question is from Mr Stack of Borehamwood and concerns shop rents, as follows: "If the Council is capped at 2% by Government (e.g. Band D £5 this year in Hertsmere). What is the percentage cap on Hertsmere Borough Council shop rents? Is it set by Government or Hertsmere Borough Council?" _______

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HERTSMERE BOROUGH COUNCIL PART I Agenda Item No. Document Reference No.

COUNCIL DATE OF MEETING:

6 C/17/09

28 February 2017

SETTING THE REVENUE BUDGET FOR 2017/18 PORTFOLIO HOLDER – COUNCILLOR JOHN GRAHAM

1.

ACTION RECOMMENDED

1.1 That the Council considers and approves the proposed revenue budget for the financial year 2017/18 of £11,478k as set out in appendix B. 1.2 That the Council in approving the proposed revenue budget as per 1.1 above is approving £161k to establish a permanent staffing structure for debt recovery, web and digital management and the management of housing benefit fraud prevention as recommended by the Executive on 8 February (EX/17/13). 1.3 That the Council notes the recommendation of the Policy Review Committee following consultation with the Committee (jointly with the Operations Review Committee and all members) at their meeting on 23 January 2017 on the draft budget proposals. 1.4 That the Council notes the advice of the Chief Finance Officer including the adequacy of reserves as set out in section 10. 1.5 That the Council approves one-off spend of £500k from the pension reserve to the pension fund in order to stabilise pension contributions until 2020/21 and alleviate any further pressure on the General Fund, paragraph 10.5. 1.6 That the Council approves schedules of attached fees and charges as set out in Appendix D as part of the annual revenue budget process.

2

EXECUTIVE SUMMARY

2.1 The budget process and strategy links closely to the Corporate Plan and enables the delivery of the Council’s goals and objectives. The new Corporate Plan, “Hertsmere’s 2020 Vision” which covers the period 2016 to 2020, identifies three Corporate Goals, each of which have a number of outcome-based objectives that support the development of priorities for action, namely:

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Being an enterprising Council



Planning for the future



Supporting our communities

2.2 The Council’s current Financial Strategy covers the period 2016/17 to 2019/20 and the overall aims of the Council’s Financial Strategy are: 

To set out how the Council wants to structure and manage its finances (typically for 3-5 years) and to ensure that this fits with and supports the Council’s objectives as per the Council’s Corporate Plan. The strategy should provide a framework, overall direction and parameters for resourcing of the Council’s service delivery, and ensure that the financial plans are achievable and sustainable.



To continue to deliver the Council’s vital services within the financial constraints.



To ensure that the Council’s finances are resilient in order to face future challenges such as ongoing austerity measures and the global economic impact.



To assist in the realisation of the core values of the Council, and in particular, to ensure resources are allocated in line with corporate and service priorities, after taking full account of the financial implications of all policies, statutory duties and any long term issues and implications.



To optimise use of the Council’s assets in land, property and liquid resources so that appropriate reserves can be maintained in order to achieve the Council’s overall financial and corporate objectives and to achieve the efficiency gains required to deliver a balanced and sustainable budget. This will be reviewed by the Council’s external auditors as part of the annual audit, which includes forming an opinion on the Councils financial resilience and value for money.

2.3 The Financial Strategy is reviewed annually and is updated as required to take into account changing priorities, current economic conditions, government funding and other external influences. The current Financial Strategy, which covers the period 2016/17 to 2019/20, was approved at full Council in July 2016. This was later than usual mainly due to the announcement of a four-year financial settlement by the Chancellor. Whilst this four-year settlement showed a reducing level of grant funding over the period, with the Revenue Support Grant (RSG) reduced to zero by 2019/20, it did also provide greater certainty on funding which could then be reflected in the Financial Strategy. The latest review of the medium term financial plan (MTFP) is underway and the Financial Strategy will be updated to reflect the MTFP period 2017/18 to 2020/21. 2.4 The budget process for 2017/18 began in the summer with officers identifying budgetary and funding variances from the current 2016/17 budget. In early to midOctober Chief Officers challenged all service budgets including pressures, efficiencies and additional income proposals then an initial overview of the budget position was presented to the Budget Panel in October, highlighting potential pressures, efficiencies and opportunities. 2.5 Recommendations of the Budget Panel were factored into the 2017/18 budget as appropriate and the updated budget position re-presented to the Panel in December 32 CX-17-01

2

2016 prior to the draft budget being presented to the Executive in January 2017. The Executive then recommended the draft budget to Policy Review Committee and all members for consultation. 2.6 The four-year settlement had to be accepted by 14 October 2016 and in accepting this (Executive report EX/16/19), local authorities were required to produce an Efficiency Plan setting out the measures they intended to make over the medium term to manage their finances and deliver a balanced budget. Hertsmere accepted the fouryear settlement by 14 October 2016. 2.7 Setting a balanced budget for the year ahead is a statutory requirement for the Council. 2.8 This report sets out the major factors that influence the budget, namely:

3



2017/18 Budget Summary



Economic Forecast



Government Policy and Funding



Other Factors Impacting the Budget



Financial Strategy and Medium Term Financial Plan (MTFP)



Draft 2017/18 Revenue Budget



Assumptions, Uncertainties and Risks



Statement of the S151 Officer

2017/18 BUDGET SUMMARY

3.1 The draft budget for 2017/18 shows a net budget requirement of £11,478k, which represents a reduction of £462k against the 2016/17 net budget requirement of £11,940k. This net budget requirement is balanced by an equivalent level of funding. 3.2 The main influences and assumptions affecting the budget requirement and funding levels are set out in detail throughout this report, some of the most significant influences and assumptions are as follows: 

Four-year financial settlement – whilst the four-year financial settlement shows a significant reduction in government funding over the period 2016/17 to 2019/20 it does provide certainty that enables more effective budget planning.



Revenue Support Grant (RSG) – the Settlement Funding Assessment (Table 1, para 5.6) shows that the RSG for 2017/18 (£613k) has reduced by £640k (51%) since 2016/17 (£1,253k) and is set to reduce to zero by 2019/20.



Council Tax – A £5 annual Council Tax increase, the maximum annual increase allowed for Hertsmere until 2019/20, has been included in the current Financial Strategy 2016/17 to 2019/20. This aligns with the Department for Communities and Local Government (CLG) spending power assumptions in the four-year financial settlement that assumes all District Councils will apply the maximum allowable increase annually until 2019/20. Whilst factored into the Financial Strategy the £5 increase for 2017/18 is still subject to approval by the 33

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full Council on 28 February 2017. The £5 increase will generate additional ongoing revenues annually of £201k. 

Income - Income from fees and charges is set to rise from £10.3m in 2016/17 to £11.0m in 2017/18. However whilst the proposed fees and charges for 2017/18 are included in the net budget requirement they are subject to approval and are attached at appendix D. Total income including investment income and specific grants amounts to £13.0m which equates to 53% of gross expenditure.



Pay Award – A 1.5% staff and member pay award has been budgeted for, this is in line with current economic conditions.



Budgetary Pressures – Budgetary pressures such as those arising from changes in legislation i.e. Pension Auto Enrolment (£96k) and the Apprenticeship Levy (£54k) or increases in service demand such as Homelessness have been included in the budget.



Inflation – Contract inflation has been included within relevant service budgets in accordance with contractual terms. There is no provision for general inflation although where services have identified inflationary pressures or market cost changes then these have been scrutinized by senior managers and where agreed have been budgeted for.

3.3 Whilst the draft budget shows a balanced position, it is still subject to approval of the Council Tax increase and the schedule of fees and charges.

4

ECONOMIC FORECAST

4.1 The strong economic growth experienced from 2013 to 2015 fell away during 2016 and is set to continue on this downward trend over the next year. The UK GDP growth announced in the Autumn Statement now shows a significantly lower level for growth in 2017/18 of just 1.3% compared to the previous year’s forecast of 2.4%. Forecasts for growth over the next three years are now also slightly lower than had been the case a year ago. With growth forecast now considerably lower than had previously been the case it was not surprising that the Chancellor also announced changes to fiscal policy in particular that a budget surplus was no longer a target for this Parliament. Figure 1 below depicts the latest Government’s growth forecasts for the next four years, directly compared against previous forecasts. Figure 1 – GDP Growth Forecasts

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4.2 CPI inflation has been consistently below the Government’s target rate of 2% for some considerable time but is now on a rising trend, currently around 1.2% and forecast to exceed the 2% target during 2017/18 and peaking at around 2.5% before falling back towards the target rate during 2019/20. The current CPI inflation forecast is depicted below against previous forecasts: Figure 2 – CPI Inflation Forecasts

4.3 The UK base rate hit an historic low in August 2016, falling to just 0.25%, and at that time the Monetary Policy Committee (MPC) had indicated that the rate could be cut still further by the end of this financial year. However, this view has since changed and the MPC decision in November to hold the rate at its current level came as no surprise to the markets. The view of our Treasury Advisors, Capita Asset Services (as at December 2016) is for the base rate to remain at 0.25% until the first quarter of 2019/20 then rising to 0.75% by the end of that financial year. As a result, short-term investment returns will remain low. 4.4 Economic forecasting continues to be difficult; the usually strong correlation between the US and the UK is expected to see a growing decoupling with the Fed Rate likely to go up more quickly and more strongly than the Bank Rate in the UK. The overall balance of risks to economic recovery in the UK remains to the downside, particularly with the current uncertainty over the final terms of Brexit.

5

GOVERNMENT POLICY AND FUNDING Autumn Statement 2016

5.1 The Chancellor made his Autumn Statement to the House of Commons on 23 November 2016, in which he announced that the government has abandoned its commitment to reduce public sector net borrowing to a surplus by the end of this Parliament. However, this is unlikely to impact on funding for Local Government as he also announced that the government is committed to the overall plans for departmental resource spending until 2019/20, which were set out at Spending Review 2015. Departmental resource spending will however grow with inflation in 2020/21 and 2021/22.

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5.2 The Chancellor announced that he was publishing a new draft Charter for Budget Responsibility, with three new fiscal rules: 

Borrowing should be below 2% by the end of this Parliament;



Public sector net debt as a share of GDP must be falling by the end of this Parliament;



Welfare spending must be within a cap, set by the government and monitored by the Office for Budget Responsibility (OBR).

5.3 The new fiscal framework is intended to provide the opportunity for additional investment in the productive capacity of the UK economy. 5.4 The main announcements directly affecting local government are set out below: 

Business Rates – there are a number of changes to business rates. The main changes being: - From April 2017, there will be 100% business rates relief on investment in new telecom fibre optics; - From April 2017, rural rate relief will be increased to 100%; - It was confirmed that the transitional relief cap under business rates revaluation will be lowered. The government has not stated whether local authorities will be provided with additional (s31) grant to compensate for the rate relief reforms; however, on the basis of past decisions, it would be expected that they would do so.



Regions – a number of measures relating to the regions were announced, including: - The government will award £1.8bn to Local Enterprise Partnerships (LEPs) across England through a third round of Growth Deals. £151m will be awarded to the East of England. - The government will consult on lending local authorities up to £1bn at a new local infrastructure rate of gilts + 60 basis points for three years, to support infrastructure projects that are high value for money.



Housing. The government announced: - A Housing Infrastructure Fund – a new Housing Infrastructure Fund of £2.3bn by 2020-21, funded by the Northern Powerhouse Investment Fund (NPIF) and allocated to local government on a competitive basis. It is intended that this will deliver up to 100,000 new homes; - Affordable homes – the government will relax restrictions on grant funding to allow providers to deliver a mix of homes for affordable rent and low cost ownership. The NPIF will provide an additional £1.4bn to deliver an additional 40,000 housing starts by 2020-21; - Right to Buy – The government will fund a large-scale regional pilot of the Right to Buy for housing association tenants. Over 3,000 tenants will be able to buy their own home with Right to Buy discounts under the pilot.



The government will increase the National Living Wage (NLW) by 4.2% from £7.20 to £7.50 from April 2017. 36

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This will be the last Autumn Statement. There will be no Autumn Statement in 2017 and beyond.

Settlement Funding Assessment (SFA) 5.5 The Settlement Funding Assessment is the general grant funding (or Finance Settlement) awarded to Local Authorities each year and is made up of two main elements, the Revenue Support Grant (RSG) and Business Rates (NNDR) baseline need funding. 5.6 The provisional Finance Settlement for 2017/18 announced on 15 December 2016 confirmed the four-year financial settlement to 2019/20, albeit slightly inflated, these figures are set out in Table 1 below and are not expected to change in the final settlement which is now expected in late February after publication of this report: Table 1 – Settlement Funding Assessment (SFA) 2016/17 to 2019/20 Actual SFA 2016/17

Provisional SFA 2017/18

Provisional SFA 2018/19

Provisional SFA 2019/20

£000’s

£000’s

£000’s

£000’s

RSG

1,253

613

221

0

NNDR Baseline

2,492

2,543

2,625

2,718

Top-up/Tariff Adj.

Total

(217)

3,745

3,156

2,846

2,501

5.7 In the 2016/17 financial settlement, the Chancellor made the offer of a four-year settlement to Local Authorities to provide more certainty around funding which Local Authorities had been calling for. This offer was subject to Local Authorities formal acceptance by 14 October 2016 and in accepting this offer (Executive report EX/16/19), local authorities were required to produce an Efficiency Plan setting out the measures they intended to make over the medium term to manage their finances and deliver a balanced budget. The four-year settlement would be the minimum that Local Authorities could expect to receive, barring exceptional circumstances, by way of SFA. Hertsmere, along with 97% of all Local Authorities, accepted the four-year settlement by 14 October 2016. 5.8 Table 1 above shows the complete phasing out of RSG by 2019/20, although for some Local Authorities RSG will be phased out even earlier than this. For 2017/18 Hertsmere’s RSG has reduced by £640k, a year on year reduction of 51%. Some transitional funding was made available to those authorities most affected by funding reductions, for 2017/18 Hertsmere will receive £40k, although it is not expected it will receive anything beyond then. 5.9 In further recognition of the significant impact of funding reductions, a late change in the 2016/17 financial settlement enabled all District Council’s to be allowed to raise Council Tax by no more than £5 a year (or 2% where this is greater), over the period of the four year settlement, without triggering a referendum. Previously Hertsmere had

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been restricted to no more than a 2% increase whereas a £5 increase equates to 3.09%, around £201k per annum. The Governments spending power projections over the same period assume that Councils will take up the option of the higher of the £5 or 2% increase. An annual £5 Council Tax increase was factored into Hertsmere’s Financial Strategy until 2019/20, which was approved by Council in July 2016, raising much-needed additional levies. This is a more sustainable approach to resourcing the Council’s services for now and in the future instead of being reliant on reserves and the New Homes Bonus grant. 5.10 Table 2 below shows the continued decline in general government funding, which since the Comprehensive Spending Review 2010 (CSR10) has for Hertsmere resulted in a total reduction in general government grant of £4.3m or 49% and general Government funding now represents just 31% of Hertsmere’s overall funding compared to 54% in 2010/11. This means that the cost of providing the Council’s services is falling increasingly on council tax payers. This is evident with 58% of the Net Budget Requirement in 2017/18 to be funded from Council Tax compared to 40% in 2010/11. Table 2 – Provisional Settlement Funding Assessment (SFA)

2014/15 2015/16 2016/17 2017,18 £’000 £’000 £’000 £’000

Grant Settlement 2014/15 Revenue Support Grant (RSG) NNDR Grant Total Grant Settlement 14/15 Grant Settlement 2015/16 Revenue Support Grant (RSG) NNDR Grant Total Grant Settlement 15/16 Reduction on 2014/15 Base Grant Settlement 2016/17 Revenue Support Grant (RSG) NNDR Baseline Grant Total Grant Settlement 16/17 Reduction on 2015/16 Base Grant Settlement 2017/18 (provisional)

Changes Fav/(Adv)

£’000

2,850* 2,425 5,275 2,058* 2,471 4,529 (746) 1,253* 2,492 3,745 (784)

Revenue Support Grant (RSG) NNDR Baseline Grant Total Grant Settlement 17/18 Reduction on 2016/17 Base %

613* 2,543 3,156

(640) 51 (589) (16%)

N.B. – The above figures are shown Gross i.e. inclusive of the rolled in Council Tax Support funding, Council Tax Freeze Grant and Homelessness Grant funding elements, see paragraphs 5.24 – 5.28 below. In prior year budgets, these grant figures had been netted off by these funding elements.

5.11 With the RSG set to be phased out by 2019/20, funding that had previously been rolled into the RSG base grant including the Council Tax Freeze Grant, Council Tax Support funding and Homelessness funding will also be phased out meaning an additional burden to local taxpayers. To demonstrate this Table 3 below shows the 38 CX-17-01

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rolled-in funding streams as at 2015/16. At that time the funding elements rolled into RSG amounted to around £796k however for 2017/18 RSG is just £613k so Hertsmere’s RSG is essentially already negative to the tune of £183k. The remaining elements of these funding streams that form part of the NNDR baseline need funding are also set out below for information: Table 3 – Funding Streams Rolled into base RSG 2015/16

Funding Stream

Council Tax Support Council Tax Freeze Grant Homelessness funding Total Rolled-In Funding

Included in RSG £ 461,706 294,693 40,237 796,636

Included in NNDR Baseline Need £ 307,161 68,338 29,497 404,996

Total £ 768,867 363,031 69,734 1,201,632

Business Rates 5.12 From 2013/14 the Government changed the business rates element of the settlement moving from a redistribution of business rates (NNDR) from a central pool to a system that enabled Local Authorities to retain a proportion of the rates that they raise, thereby providing an incentive to authorities to promote business growth in their areas. Government set an initial “baseline” so that all councils initially received funding broadly equivalent to their 2012/13 Formula Grant, whilst ensuring the overall level of Government funding for local government in England does not exceed the estimate set out in the 2010 Spending Review. A system of tariffs and top-ups was built into the system to protect authorities from these changes. At the time, the Chancellor indicated that there would be an extensive review of the business rates system. 5.13 As shown in table 1 the 2017/18 SFA includes the Revenue Support Grant (RSG) element of £0.613m, which is a guaranteed fixed sum, and the Business Rates Retention element (or Baseline Need) of £2.543m. The baseline has initially been set at a sum determined by expected levels of collection of business rates but will ultimately be determined by the actual collection levels for the year. This will be increased by growth in business activity in the borough but decreased by contractions in activity for example through successful appeals to reduce rateable values or failing businesses leaving vacant premises. 5.14 The Council benefit by the retention of an element of any excess receipts over the baseline need caused by growth but will suffer loss through successful appeals or failed businesses. However, there is protection built into the system known as the “Safety Net” so should the rateable value fall substantially there is a minimum level of grant that will be received, for 2017/18 the “safety net” is £2.352m. To mitigate any potential loss and to strategically utilise any retained growth an earmarked reserve was established in 2013/14 into which any initial surpluses are paid, in order to equalise the effects of uncertainty and losses in future years for example due to successful appeals and lower collection rates. 5.15 Last year the Chancellor announced further changes to Business Rates retention, which will mean that by 2020 Local Government will retain 100% of Business Rates. 39 CX-17-01

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This will however come with additional responsibilities for Local Government to be met within the funding envelope of Business Rates. Following the initial consultation a steering group including representatives of Local and Central Government are working through how this will work in practice and further consultations will take place prior to the new scheme being implemented potentially from 2020/21. To avoid significant funding disparities across the nation there will almost certainly still be top-up and tariff arrangements and most likely there will be a resetting of the baseline. Business Rates – 2017 Revaluation 5.16 The new 2017 Rating List comes into effect from April 2017. A draft list was issued in November 2016 and a further draft in January 2017, the overall change in Rateable Value (RV) for Hertsmere is an increase of 6%. The impact to NNDR yields of a new Revaluation, however, are intended to be cost neutral, so the 2017-18 multiplier has been reduced accordingly and a Transitional Relief scheme will taper large increases and decreases to ratepayer bills. 5.17 Whilst the Rates Revaluation is intended to be cost neutral there are inevitably winners and losers so in anticipation of appeals against new valuations a buffer of approximately 4.7% has been built into the multiplier by DCLG which is intended to provide for potential appeal losses by local authorities against the 2017 Rating List. 5.18 In addition to the impact on the overall rates that Hertsmere collects the Council are liable for the Business Rates on its own properties, most significantly the Civic Offices and Car Parks. The rateable value for Hertsmere properties as a whole is set to rise by 27%, which equates to annual increased charge of around £100k, after transitional relief the additional cost to Hertsmere in 2017/18 is £79k. The Council can of course consider whether to appeal the new rateable value, as such this increased cost will initially be funded from reserves until a decision has been made whether or not to appeal. That way unnecessary pressure is not put on other services should an appeal be entered and prove to be successful. Business Rates – New Appeals Process 5.19 The government’s reform of the business rates appeals system in England is now at the point where regulations are being finalised. The aim of the new three-stage process, ‘Check, Challenge, Appeal’, is to provide a system that is easier to navigate with the emphasis on early engagement by the parties to reach a swift resolution of cases. The new system is due to come into effect in April 2017 and is given practical effect firstly by means of a ‘check’ stage, in which facts concerning the property are agreed between the Valuation Office Agency (VOA) and the ratepayer. This, according to the VOA, is intended to be both swift and to lead to an agreed position for the great majority of cases. On successful completion of a check, the next step is the ‘challenge’ stage, where additional information has to be submitted, including a valuation, evidence to support the proposed reduction and other relevant information to support the challenge. Thirdly, and finally, an ‘appeal’ stage provides for when agreement cannot be reached. Fees charged for making an appeal is a new feature of the reformed system. 5.20 Whilst this new process is set to be implemented from April 2017, there are still a significant number of current appeals, dating back to 2010 that are outstanding. This is already causing significant uncertainty in forecasting Rateable Value with differing

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expert views on the level of successful appeals and calculation of the appeals provision. This will be further complicated by the introduction of a new system. Business Rate Pooling 5.21 In 2015/16, the Council carefully reviewed a proposal to join a Business Rates pool with Hertfordshire County Council and other Hertfordshire districts. Such pooling arrangements can yield benefits over and above the entitlement of an individual authority to retain an element of growth in rates. However, at the time it was determined that the anticipated benefits from membership of the Pool in 2015/16 were not sufficient to justify the potential risk to the Council of any unprotected losses. One of the significant concerns at the time was the potential level of rating appeals, which resulted in Hertsmere having a significant appeals provision. A change in legislation restricted any new appeals being backdated prior to April 2015, which substantially reduced the risk of appeals and reduced Hertsmere’s provision. In November 2015 the Executive were therefore requested to reconsider Hertsmere’s position on Pooling and it was agreed that Hertsmere could join a Business Rates Pool in 2016/17 with Hertfordshire County Council and other Hertfordshire Districts. 5.22 In October 2016, it was reported to the Executive (EX/16/69) that the forecast gain from the 2016/17 Pool was almost £2.6 million of which Hertsmere’s share would be £413k (position at 31st July 2016). 5.23 In light of the uncertainties surrounding the 2017 revaluation, in particular some large changes in rateable value for some of the Pool members, also with the new appeals process coming in, a unanimous decision was taken by all Pool members to disband the Pool for 2017/18. Council Tax Support (CTS) 5.24 The Government abolished the national council tax benefits subsidy (CTBS) in March 2013 and it was replaced by a localised Council Tax Support (CTS) scheme. Funding for the local scheme was cash limited and represented a 10% reduction in the funding previously received through CTBS, from 2013/14. It also meant that the risk of increased claims passed to the Council. In recognition of this, funding of £763k was identified within Hertsmere’s finance settlement for 2013/14 and was included as part of the overall SFA. 5.25 The CTS funding was initially split between RSG and NNDR baseline funding albeit it is no longer separately identified (refer to table 3 above). As such the element included within the RSG, £462k, will also be phased out as RSG funding disappears thereby increasing the burden on local tax payers. 5.26 As required following the abolition of CTBS the Council devised a local CTS scheme and also made technical reforms to the Council tax (reducing discounts for uninhabitable properties and increasing premiums for unoccupied properties) in order to mitigate the impact of the grant reduction on the Council tax thereby making the Localisation of Council Tax Support self-financing. The local CTS scheme needs to be approved on an annual basis even if no changes are proposed. The CTS scheme will continue in its current guise for 2017/18 following Council approving a no change position in January 2017. Homelessness Prevention Funding 41 CX-17-01

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5.27 Also identified within the SFA is the Homelessness Prevention funding which used to be a specific grant but has since been rolled into the overall SFA and is therefore no longer ring-fenced for Homelessness Prevention. Ultimately the element of this funding which forms part of RSG, £40k (refer to table 3 above) is set to be phased out as the RSG diminishes. Universal Credit (UC) 5.28 Universal Credit (UC) is now being rolled out across the country, but initially only for new cases and only for single adults. UC was rolled out in Hertsmere in September 2015 and the Council have entered into an agreement with the Department for Work and Pensions (DWP) to provide support for those applying for Universal Credit by providing access to the online application process and support with personal budgeting advice. To date there has been no real impact on Hertsmere’s benefit caseload. As UC continues to be rolled out over the next 2-3 years and the caseload is migrated to the DWP there will be both financial and staffing implications for Hertsmere, which will be reported on as more detail is available. Council Tax 5.29 Council Tax increases are currently subject to the 2% cap, beyond which a local referendum would be required to agree an increase of more than 2%. However a late announcement as part of the 2016/17 Financial Settlement allowed all District Councils to raise Council Tax by the higher of up to £5 (approximately 3.04% for Hertsmere) or 2% for the duration of the four-year financial settlement to 2019/20. An additional 2% precept for social care was also announced as part of the spending review 2015; this is only applicable to authorities who are responsible for provision of social care such as Hertfordshire County Council. The social care precept is set to continue over three years to 2019/20 albeit responsible Councils will be able to raise a total social care precept of up to 6% over the period and could opt for two increases of 3% or three increases of 2%. New Homes Bonus (NHB) 5.30 In addition to the SFA, Local Authorities also receive funding known as the New Homes Bonus (NHB). This funding is an incentive to encourage Local Authorities to build or support house building in their area and is determined by the annual change in the total number of properties on the council tax list in the October. This applies to both new housing and empty properties brought back in to use. The calculated figure is then shared 20% to the County Council and 80% to the district, with the amount being payable for six years. 5.31 The NHB is not ring-fenced and can therefore be used to fund the revenue budget; however, the future of the NHB is itself uncertain so it would not be prudent to rely entirely on this grant to balance the revenue budget in the medium to long term. 5.32 The CSR15 confirmed that the NHB was to continue indefinitely however there would be changes to the scheme and the available funding would be reduced by £800m to pay for social care through the Better Care Fund. Following a consultation in early 2016 changes to the scheme were finally announced in the 2017/18 provisional financial settlement. This confirmed a reduction in the payment of NHB from six years to four years on a stepped change over two years, the introduction of a threshold for 42 CX-17-01

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housing growth of 0.4% below which no NHB would be payable and that NHB would not be payable in respect of development that had been refused Planning Permission by the Local Authority. 5.33 Hertsmere’s provisional allocation for 2017/18 amounts to £2,023k a significant reduction from the 2016/17 grant due to the first stepped reduction in NHB from six years to five. With a further stepped change to four years due in 2018/19 combined with the other changes referred to, also impacting future years NHB, it is advised that Hertsmere should not fully rely on this funding to support its General Fund as this would only create a budget gap in the future. Any surplus in 2017/18, as in previous years, would instead be set aside to fund innovative one-off projects that can generate efficiencies or future additional revenues. The forecast for Hertsmere’s NHB allocation is for it to reduce to around £1.48m by 2019/20, it is therefore proposed to keep NHB funding of the General Fund to a similar level to previous years, around £1.2m. The provisional allocation of NHB for 2017/18 is set out in Table 4 below: Table 4 – New Homes Bonus

NHB Grant Received NHB Grant Allocated Homelessness Revenue Funding Planning Computer System Budget Funding

2011/12 to 2012/13 Actual £’000 876

2013/14 Actual

2014/15 Actual

2015/16 Actual

2016/17 Actual

2017/18 Provisional

£’000 940

£’000 1,321

£’000 1,927

£’000 2,360

£’000 2,023

940

1,148

1,148

1,173

1,200

100 200 0

Total Forecast Financing 5.34 The total forecast financing for 2017/18 is £11.478m as set out in Table 5 below. The Government grant is based on the four-year settlement, Council Tax assumptions built into the current Financial Strategy, use of the New Homes Bonus as set out above and the latest forecast for business rates growth.

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Table 5 – Total Forecast Financing 2017/18

Revenue Support Grant Transitional Funding NNDR Baseline Grant New Homes Bonus Total of Government Grants NNDR Growth Council Tax Total Financing

6

2016/17 £000’s 1,250 40 2,492 1,173 4,955 575 6,410 11,940

2017/18 £000’s 613 40 2,543 1,200 4,396 373 6,709 11,478

OTHER FACTORS IMPACTING THE BUDGET Investment Income

6.1 As discussed in section 4 above the UK Bank Rate is at an all-time low of 0.25% and it is not forecast to increase until 2019, as such, short-term investment rates remain low. There is also still much uncertainty in the financial markets and therefore the emphasis remains on reducing risk, particularly in relation to the Council’s investments by protecting the return of capital sums, whilst continuing to gain a reasonable return on investments. 6.2 After taking into account anticipated capital spend and other cash flows, it has been estimated that the Council will hold an average investment balance of £41.6m during 2017/18, made up of £26.4m core investments and £15.2m surplus cash flow from operating activities. 6.3 Based on advice from our Treasury Advisors, Capita Asset Services, their current interest rate forecast, and current market conditions, investment returns of 0.57% and 0.32% have been estimated for the Council’s core and non-core investments respectively. Based on the projected investment levels, the forecast return on investments for 2017/18 has been estimated to be £200k as detailed in table 6 below: Table 6 – Investment Income Budget

Core Investments Non-Core Investments Total / Average

7

Average Balance £m 26.4 15.2 41.6

Estimated Return % 0.57% 0.32% 0.48%

Budget Investment Income £ 152,000 48,000 200,000

FINANCIAL STRATEGY AND MEDIUM TERM FINANCIAL PLAN (MTFP)

7.1 Hertsmere’s Financial Strategy, approved by Council in July 2016, covers the period 2016/17 to 2019/20, the same period as the four-year Financial Settlement. The Medium Term Financial Plan included within the Financial Strategy sets out the budget 44 CX-17-01

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and funding forecast over the same period and at the time identified a budgetary gap of £953k over the next three years, which is summarised in table 7 below: Table 7 – Summary MTFP 2016/17 to 2019/20

Net Budget Requirement Total Funding Budgetary Gap *

2016/17 £m 11.940 11.940 -

2017/18 £m 12.149 11.555 (0.594)

2018/19 £m 11.624 11.401 (0.223)

2019/20 £m 11.385 11.249 (0.136)

* Table 7 above shows a summary of the MTFP as approved by Council in July 2016. The budgetary gap shown in each year is incremental and dependant on the gap in prior years having been met. The 2017/18 budget gap has been met through this years’ budget process and a balanced budget for 2017/18 is presented in this report. The MTFP is reviewed regularly to take account of changes in funding, the economy, emerging budgetary pressures and efficiencies. The MTFP will be reviewed along with the Financial Strategy early in 2017/18.

7.2 Also set out in the Financial Strategy was Hertsmere’s Efficiency Plan, which outlines the steps the Council agreed to take to identify how it would meet this budgetary gap. Since July 2016 work has been ongoing to identify efficiencies and with officers identifying budgetary and funding variances from the current 2016/17 budget. In early to mid-October Chief Officers challenged all service budgets including pressures, efficiencies and additional income proposals then an initial overview of the budget position was presented to the Budget Panel in October, highlighting potential pressures, efficiencies and opportunities. 7.3 Budgetary assumptions in respect of inflation and known pressures such as Pension Auto Enrolment and the Apprenticeship Levy have also been factored into the budget for 2017/18 and beyond as well as budgetary implications of Executive and Council decisions made during 2016/17. Participatory Budgeting 7.4 The Council have recently undertaken a tri-annual Participatory Budgeting exercise, conducting a series of face-to-face interviews with a representative sample of the Borough’s residents to assess their service priorities in the context of the financial pressures the Council is facing. The survey was also made available online for residents, staff, members and other stakeholders to complete. The results of this exercise were presented to senior officers and members during December and this valuable feedback will be used to support the Council’s budget planning for 2017/18 and over the medium term. 7.5 As a result of this exercise, changes to fees and charges will contribute further income of £191k from 2017/18. Efficiencies of £10k have also been included in the budget from 2017/18 and a further £150k from 2018/19.

8

DRAFT 2017/18 BUDGET

8.1 Having taken into account all of the identified pressures and efficiencies the current net budget requirement (NBR) for 2017/18 is £11,478k as summarised in table 8 below, a service-by-service summary is shown in Appendix B.

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Table 8 – Net Budget Requirement Funding 2016/17 £000’s Net Service Expenditure Corporate Budgets (E.g. investment income, corporate pressures not yet allocated to services – pay award, pension auto enrolment, apprenticeship levy etc.)

Net Budget Requirement

2017/18 £000’s

11,589

10,802

351

676

11,940

11,478

8.2 Table 9 below sets out the key factors and variances impacting on the 2017/18 budget requirement. This shows a year on year reduction of £462k, being the net effect of budgetary pressures, service improvements, reduction in income and grants and a reduced reliance on reserve funding mostly offset by increases in income, budget efficiencies and savings. More detailed changes to the budgets for each individual service are discussed further in Appendix C. Table 9 – Key Factors and variances impacting the 2017/18 Budget:

Increased employee costs Pay award 1.5% Business transformation posts (EX/17/13) Pension auto enrolment Revenues restructure (EX/16/34) Apprenticeship levy Contractual & other increments Service improvements & increments Dry recycling contractor costs Net increase in homelessness Vehicle maintenance contract increments Other service increments Software enhancements Grounds maintenance contract increase Other expenditure Decrease in income Vehicle licensing income Investment income

£’000 (adv) fav

(210) (161) (96) (76) (54) (54) (651) (78) (36) (31) (35) (24) (16) (10) (230) (25) (20) (45)

Total Budget Pressures

(926)

£’000

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Increase in income Parking income Elstree Studios Additional Income – Participatory budgeting Asset Management properties Recycling income Planning income Building Control Service support Housing licence income Garage income Other income

Budget savings & efficiencies: Organisational review Reduced contribution to reserves Service efficiencies – participatory budgeting DFG realignment Changes to Youth Services provision Vehicle insurance savings LEP loan interest New telephone system Other savings & efficiencies

Total Savings, Efficiencies and Additional Income Changes to Reserve and Grant Funding Homelessness reserve funding Housing Benefit grant Universal Credit funding Other funding changes

Decrease in net budget requirement

(adv) fav

230 200 191 202 86 71 51 35 25 13 1,104

120 103 10 40 15 15 12 10 37 362 1,466

(44) 13 (17) (30) (78)

462

Please Note: For detailed explanations see Appendix C.

8.3 The 2017/18 draft budget set out in appendix B is presented in the “Direct Cost” format, with 2016/17 budget and 2015/16 actuals for comparative purposes. -

The “Direct Cost” format set out in Appendix B is presented in order to establish responsibility and accountability for any growth or movements within the budget directly under the control of the budget holders concerned. The “Direct Cost” format excludes any support services cost and any recharges between the services including accommodation and depreciation costs of assets.

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-

9

In addition, in order to adhere to statutory requirements, an all-inclusive budget in total cost format i.e. including apportioned overheads is set out in Appendix B1.

ASSUMPTIONS, UNCERTAINTIES AND RISKS

9.1 The following are the key assumptions, risks and uncertainties used in the preparation of the budget: 1) Staff Pay and Members Allowance Increase: Provision has been included within the proposed budget for a 1.5% pay award, with effect from 1 April 2017. Since opting out of the NJC pay scheme some years ago, the Council determines its pay awards locally. Member allowances are updated in accordance with any local pay awards agreed by the Council in line with a recommendation from an Independent Remuneration Review Panel. In proposing a pay award consideration is usually given to how the local award compares with the National Agreement, although the current economic conditions are also considered. Whilst the Government’s public sector pay proposals are for an average pay award of 1% inflation currently stands at 1.2% and is set to rise above the Government’s 2% target over the next year. Elsewhere on this agenda, there is a report seeking approval in principle for a draft Pay Policy Statement for 2017/18, incorporating the proposed 1.5% pay award subject to the approval of the Personnel Committee on 21 February. 2) Economic Impact: The pace of economic growth has slowed considerably since the start of 2016 as such the Government has revised fiscal policy and is no longer planning to be in surplus by the end of this Parliament. Inflation is on a rising trend, which will impact the cost of services and with the UK Bank Rate at an all-time low of just 0.25% investment returns are low. However, longer-term investments are higher risk as there is still a great deal of uncertainty in the markets as referred to in section 4 above. Whilst this puts further pressure on the revenue budget, every effort will be made in order to maintain the same level of service. 3) Council Tax and Council Tax Support (CTS): Ongoing pressure on household income may result in a possible reduction in the collection rate, which would reduce income received. Currently the collection rate is on target albeit slightly behind the previous year’s collection rate which exceeded target. Also as already discussed in section 5 above the phasing out of the RSG by 2019/20 will mean that funding that has been previously been rolled into RSG such as Council Tax Support funding, £462k, and Council Tax Freeze Grant, £295k, will also be phased out increasing the burden on local taxpayers. 4) Recovery of income: a delay in recovering outstanding council tax and other income owing, would lead to an increase in the level of bad debts. 5) Benefit Overpayments: following the introduction of real time information in October 2014, Housing Benefit overpayment values increased substantially. Hertsmere continue to receive approximately 50 to 60 referrals each month; although the quality of many of these referrals has fallen with around 50% being rejected or the referrals are in respect of low value changes. There is however still the risk of large overpayments accruing through unreported changes being referred to Hertsmere. 48 CX-17-01

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To mitigate future overpayment risk preventative measures are being taken with a focus on medium/high risk claimants who have not reported any changes for some time. Additional resource to support the focus on overpayment prevention has been included in this budget, subject to Council approval. However, as a result of this activity inevitably further overpayments will be identified so the likelihood is that there will be a further spike in overpayments raised. Where overpayment is due to fraudulent activity or claimant error 60% of the cost falls to Hertsmere and whilst overpayments may be recovered from on-going benefit entitlement the recovery amounts are prescribed by the Department for Works and Pensions and are relatively low compared to debts raised and can take many years to recover. Where a claimant has moved out of benefit the debt can be recovered as a sundry debt although there is a significant risk that there is not the ability to repay, the result being a significant increase in bad debts. The Department for works and pensions are implementing the wider use of real time information allowing benefit assessment officers to access claimants earnings information via a link to HMRC, this will help reduce administration times and overpayments entering the system. 6) Investments: income generated will remain relatively low with interest rate forecasts predicting only small increases in bank rate over the next few years. There is also a small risk that some financial institutions may default in honouring their contractual obligations i.e. repayment of capital and /or interest. 7) Housing issues: Housing demand and homelessness is on a rising trend putting pressure on the Temporary Accommodation budget, there is also outward pressure on Hertsmere’s housing from neighbouring London Borough’s placing tenants within the borough. This fuels the local housing market and after threeyears these tenants become Hertsmere’s responsibility along with the adverse budgetary implications. Also as already discussed in section 4 above the phasing out of the RSG by 2019/20 will mean that homelessness funding of £40k that has been previously been rolled into RSG will also be phased out increasing the burden on local taxpayers. 8) Grant aid: the voluntary sector relies heavily on the Council regarding grant funding. Government and other funding reductions coupled with slow economic recovery could lead to a greater demand for these services and could lead to this sector calling for increased council assistance. 9) Costs & Retail Price Index: Non-pay related costs might be higher than the rate of inflation e.g. diesel, gas, electricity, these have been factored in the budget already. 10) Pension Fund: any future contributions depend largely on the value of the stock market, property prices and interest rates. These factors are considered and forecast by the Pension Fund’s Actuary who is currently undertaking their triennial review of the fund, which will determine contribution rates over the next 3 years. 11) Fraud: As the economy is recovering there is still the risk of fraudulent claims such as housing benefits and council tax support and avoidance of business rates.

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12) Income: The majority of income budgets are subject to external factors, such as supply and demand, market forces and the general state of the economy. Income targets for planning fee income may therefore fluctuate. It has been assumed that the level of activity in 2017/18 will be the same as the current year. 13) New Homes Bonus (NHB): The amount of NHB payable for a year is determined by the annual change in the total number of properties on the council tax list in the October. This applies to both new housing and empty properties brought back in to use. The calculated figure is then shared 20% to the county council and 80% to the district, with the amount being payable for six years, this was until the current year. However, land is an exhaustive resource so a trend of new properties cannot be sustained in the long-term also changes to the scheme from April 2017 will mean a reduction in the level of NHB received, these were announced in the provisional 2017/18 financial settlement and are explained in paragraphs 5.30 to 5.33 and table 4 above. The provisional 2017/18 allocation for HBC amounts to £2,023k as detailed in paragraph 5.33. 14) Recycling Income: The recycling market is very volatile. Fluctuations in demand for recyclables such as paper and plastics affect the price paid per tonne thereby affecting the income receivable by the Council. 15) Pension Costs and Auto Enrolment: No budget provision is generally made for employees who do not belong to the pension scheme, however under new Government legislation, all new employees are subject to “auto enrolment” into a pension scheme so there is a potential cost where new employees replace employees who were not in the scheme. The scheme to auto enrol existing employees has been deferred until September 2017 and the potential cost of this has been factored into the proposed 2017/18 budget. 16) Business Rates Retention: the risks identified with this are set out in detail at paragraphs 5.12 to 5.23 above. 17) Elstree Studios is a company wholly owned by the Council and the Council’s general fund benefits from a significant annual rental income, £1.4m budgeted in 2017/18. Hertsmere have also made significant capital investments into the Studios of around £3m for which the Studios are also making a contribution of £250k per annum. There are as such, significant risks to Hertsmere both to its revenue and capital position if the Studios were to experience financial difficulties and were unable to service its debts. 18) Contingency: The uncertainties listed above have been partially addressed by retaining the £300k budget contingency which equates to around 2.6% of the budget requirement

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10

STATEMENT OF THE CHIEF FINANCE OFFICER AND KEY BUDGET RISKS

10.1 The Local Government Act 2003, Part II, sections 25, 26, 27 and 28, has placed onerous requirements on the Chief Finance Officer (CFO). The Council currently fulfils these requirements including budget calculations the setting of minimum financial revenue reserve levels, financial monitoring and budget reviews during the year. 10.2 Section 25 requires the CFO to give assurances to the Members on the robustness of the estimates and the adequacy of the reserves. 10.3 Known and as far as possible anticipated risks have been taken into account in this and all of the financial reports contained in the Council agenda. However, Members will appreciate that the world economy is experiencing dramatic changes, from which no local authority is insulated. 10.4 As far, as can reasonably be assumed in these circumstances and in the judgment of the CFO the budget is realistic and the reserves are adequate as set out in paragraph 10.5, 10.6 and table 10, below. 10.5 Section 26 requires the CFO to present a reserves position statement as at 1 April each year and to identify any significant movements. The only significant movement currently forecast for 2016/17 is in respect of the pension reserve. The pension fund is currently undergoing its triennial actuarial review, which will determine contribution levels for the three-year period from April 2018. Whilst the fund has performed well and the deficit has reduced, in order to stabilise contribution levels at their current rate until 2020/21and alleviate any additional pressure to the general fund it is proposed to make a one-off contribution of up to £500k to the Pension Fund. The pension reserve balance currently stands at £1m, which was set aside for this purpose. 10.6 Table 10 below sets out the reserve position as at 1 April 2016 and the anticipated position as at 31 March 2017: Table 10 – Adequacy of Reserves

Actual as at Estimated as at 1 April 2016 31 March 2017 £’000 £’000 Revenue Reserves General Fund Usable Reserve

7,698

7,798

16,859

16,942

6,267 925

5,707 1,017

31,749

31,464

(includes Collection Fund Adjustment Account)

Earmarked Capital Reserves Usable capital receipts Capital Grants Total useable reserves

Note: Total Usable Capital receipts of £2.788m have been committed or earmarked for specific projects for the period up to March 2020.

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10.7 The CFO is obliged to present a budget that is believed to be achievable and with this in mind, the 2017/18 budget presents the Service Heads’ with challenging but achievable financial targets for the year. However, there is an inherent risk in this estimation process that the targets may not actually be met due to changing circumstances beyond the Council’s control. Therefore, it is requested that members note the key assumptions and uncertainties (section 8 above). 10.8 The 2017/18 draft budget shows a balanced position with the net budget requirement being balanced by an equivalent level of funding. This includes utilising close to £1.2m of New Homes Bonus, which may not be sustainable in the future, not only due to changes to the scheme but also in recognition that land is a finite resource. Business Rates 10.9 Business Rates and in particular Business Rates growth is an area of real concern. With Business Rates currently going through a number of significant changes as described in some detail in section 5, paragraphs 5.12 to 5.20 above, there is currently a high degree of uncertainty and hence this is an area of significant risk. 10.10 The Council is currently able to retain 50% of growth in its Business Rates (above the baseline grant), which provides much needed funding (£373k for 2017/18) to the general fund, however any decline in Business Rates will immediately impact on this additional funding. 10.11 The new valuation list, 2017, takes effect from 1 April at the same time as which a new appeals process, “Check, Challenge, Appeal” is being introduced, however, a significant number of appeals dating back to the previous 2010 list are yet to be decided. Whilst the Council have made prudent provision for upheld appeals, there is significant uncertainty surrounding them. 10.12 The move to 100% business rates retention is still in the very early stages and it is not yet clear when this will come into effect or what the additional responsibilities will be. 10.13 Furthermore, Hertsmere is proving to be popular with residential developers, which means residential development is taking place at the expense of or in place of business development. The Sustainability of the Budget 10.14 External Auditors continue to compliment the Council for its sound and prudent financial management as confirmed by the Annual Audit Inspection letter. There are effective systems of control to ensure accounting systems produce reliable information. There is an effective framework to monitor key organisational risks. 10.15 In light of the ongoing reductions in Government funding and other pressures on the budget, going forward, there is no alternative but for Hertsmere to look to achieve selfsustainability. The ability to raise additional income however will be extremely challenging due to statutory fees and other restrictions on charging limiting Hertsmere’s ability to raise additional income from fees and charges. Hertsmere therefore needs to continue its innovative and commercial approach to income generation by expanding on its successes such as Elstree Studios and Newberries car park. 52 CX-17-01

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11

RECOMMENDATIONS OF THE POLICY REVIEW COMMITTEE & THE EXECUTIVE

11.1 The draft Revenue Budget was circulated to all members of the Council for consultation and a presentation of the draft budget was made to the Policy Review Committee at its meeting on 23 January 2017. On this occasion, the invitation to this meeting extended to members of the Operations Review Committee and to nonCommittee members, all of whom were encouraged by the Chair to contribute to the discussion. The joint Committee meeting enjoyed a robust and challenging discussion on the draft budget and the Policy Review Committee concluded that:  The Executive should recommend the draft budget to full Council for approval 11.2 A draft of this report was presented to the Executive on 8 February 2017 for consultation, the portfolio holder will provide a verbal update on maters arising at the meeting.

12

REASON(S) FOR RECOMMENDATION

12.1 The Authority is required by law to set a balanced budget i.e. the anticipated ongoing costs of providing services should be equal to anticipated funding resources. Further, it is vital that the budget is sustainable over the long term while achieving the Council’s corporate goals. 12.2 It is critical that the revenue budget is set in such a way as to ensure that the Council allocates its limited available resources effectively and efficiently, in order to continue providing value for money services and meet both its statutory obligations and its aims and objectives as outlined in the Community Strategy and Corporate Plan. 13

ALTERNATIVE OPTIONS

13.1 The Local Government Act 1992, Section 32 requires that all known and anticipated revenue budgetary requirements of the Authority for the forthcoming year be calculated prior to setting the Council Tax. This must be done no later than 11th March in the preceding financial year. Therefore, there are no alternatives other than to agree a balanced budget by the statutory deadline.

14

PLANNED TIMETABLE FOR IMPLEMENTATION

14.1 The Council’s constitution and best working practice requires that the Policy Review Committee and Members of the Council be consulted on the Revenue Budget prior to the Executive recommending that Council adopt the budget. The timetable for the adoption of the 2017/18 Revenue Budget is set out in Table 9 below:

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Table 9 – 2017/18 Revenue Budget Timetable Draft budget to Executive to recommend for consultation Draft budget to Policy Review Committee for consultation Final budget to Executive for recommendation to Council Final budget to Full Council for Approval

15

11 January 2017 23 January 2017 8 February 2017 28 February 2017

DELEGATION

15.1 This is a decision that is to be taken by the Council as a whole.

16

FINANCIAL AND BUDGET FRAMEWORK

16.1 As explained in the main body of the report.

17

LEGAL POWERS RELIED ON, IMPLICATIONS AND ADVICE

17.1 The legislation places, on a statutory footing, the advice of the Chief Finance Officer to elected members by requiring a report on:   

The robustness of the estimates; and the adequacy of the financial reserves Members are required to have regard to the Chief Finance Officer’s report when making decisions about budget requirements. Extract from Hansard

(House of Commons Standing Committee A January 30 2003 col 242) “We have sought to put in place a proper relationship that recognises …that the councillors are democratically elected and should ultimately carry responsibility and take the final decision. We recognise that. However, they should be properly advised and the Chief Finance Officer should have not only the power to make representations but the ability to do so and a clear statutory obligation to make a report…”

18

EFFICIENCY GAINS AND VALUE FOR MONEY

18.1 There is no longer a direct requirement for authorities to monitor and report on value for money however, the external auditors, Ernst & Young, still provide a value for money opinion in their Annual Audit Inspection letter. Officers remain committed to achieve on going efficiencies to deliver a required balanced budget. 18.2 The Council remains committed to providing value for money services and this has formed part of the organisation review and budgetary process. Hence, the Council will monitor all the initiatives mentioned within this report in order to ensure that planned benefits are realised. 18.3 The Council has published a Value for Money and Efficiency Strategy as part of its overall Financial Strategy, which now also includes the Council’s Efficiency Plan, which was a requirement of accepting the four-year financial settlement. This sets out 54 CX-17-01

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the Council’s approach to value for money and delivering efficiencies and shows the efficiency savings the Council have delivered year on year.

19

RISK MANAGEMENT IMPLICATIONS

19.1 The Revenue Budget is a tool that allows officers and members to manage the risk that the cost of services does not exceed the financial resources available to the Council. Therefore, in considering the revenue budget and allowing consultation, officers and members are taking the first steps to ensure that 2017/18, revenue expenditure is well managed. 19.2 There are various factors that influence the budget which are discussed throughout this report, Government Funding being one of the major factors. Some of the other key assumptions, uncertainties and risks are also set out in section 9 of this report. 19.3 There is a general risk that the Revenue Budget is set at an unachievable level, or that unforeseen costs or areas of expenditure arise after the budget is set. This is an inherent risk in the process of setting any budget and thus a contingency sum is included in the budget. This risk is being further addressed by close communication between finance officers and budget holders in order to ensure that the budgets, whilst challenging, are achievable. 19.4 The Financial Monitoring Panel meets on a monthly basis throughout the year to review actual financial performance compared to budget. It reports regularly to the Operations Review Committee and the Panel report any matters that require further investigations to that Committee. Corrective measures are taken where there are significant variances.

20

PERSONNEL IMPLICATIONS

20.1 These are set out within the body of the report.

21

CORPORATE PLAN & POLICY FRAMEWORK

21.1 The budget virement and monitoring will be as per 4.3 – 4.6 of the Council Constitution.

22

ASSET MANAGEMENT PLAN IMPLICATIONS

22.1 None

23

HEALTH AND SAFETY IMPLICATIONS

23.1 Provision has been made within the draft budget for all Health & Safety expenditure that is legally required, under the various directives applying, to enable the proper provision of all services.

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24

APPENDICES ATTACHED.

24.1 Appendix A: 2017/18 Revenue Budget in Direct Cost Format (Gross requirement). 24.2 Appendix B: 2017/18 Revenue Budget in Direct Cost Format (Net requirement). Only the summary page is attached. Two copies of the detailed budget will be provided at the meeting. Prior to the meeting, a detailed breakdown is available on the Internet under ‘official publications guides and policies’ or a hard copy can be obtained from the Finance Unit on request.

24.3 Appendix B1: 2017/18 Revenue Budget in Total Cost Format Only the summary page is attached full details available on request from the Finance Unit.

24.4 Appendix C: Breakdown by service of movements in the 2017/18 revenue budget compared to the 2016/17 approved budget. 24.5 Appendix D: Schedule of Fees & Charges 2017/18

25

BACKGROUND PAPERS USED IN PREPARATION OF THIS REPORT

25.1 Autumn Statement, November 2016 2016/17 Four Year Finance Settlement 2017/18 Provisional Finance Settlement 2016/17 Budget Book

26

AUTHORS Sajida Bijle, Director of Resources Ex 5000 [email protected] Matthew Bunyon, Head of Finance & Business Services Ex 5320 [email protected] The Authors would also like to recognise the valuable contributions made by budget holders throughout the organisation

27

CONTRIBUTORY AUTHORS Mike Hatton, Senior Business Accountant Ex 3140 [email protected] Sarah Peacefull, Business Accountant Ex 3100 [email protected]

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APPENDIX A

GENERAL FUND BUDGET SUMMARY 2017/18 2017/18 DRAFT EXPEND BUDGET

PLANNING & ECONOMIC DEVELOPMENT HOUSING SERVICES ENVIRONMENTAL HEALTH STREET SCENE SERVICES ENGINEERING SERVICES ASSET MANAGEMENT PARTNERSHIPS & COMMUNITY ENGAGEMENT FINANCE & BUSINESS SERVICES LEGAL & DEMOCRATIC SERVICES HUMAN RESOURCES & CUSTOMER SERVICES EXECUTIVE DIRECTORS AUDIT & ASSURANCE GROSS REQUIREMENT CORPORATE EXPENDITURE STAFF PAY AND MEMBER ALLOWANCE INCREASE PENSION AUTO ENROLMENT CENTRAL CONTINGENCY AUDIT FEES, BANK CHARGES NOT RECHARGED GENERAL EXPENSES INVESTMENT INCOME APPRENTICESHIP LEVY TOTAL NET REQUIREMENT BEFORE GOVERNMENT GRANTS

2017/18 DRAFT INCOME BUDGET

2017/18 DRAFT NET BUDGET

£'000 1,769 1,737 1,830 7,924 112 2,084 1,413 3,216 1,607 1,330 495 111

£'000 693 971 829 3,797 91 4,822 253 897 285 243 -

£'000 1,076 766 1,000 4,127 21 (2737) 1,160 2,318 1,323 1,087 495 111

23,629

12,882

10,747

210 96 300 139 132 54

200 -

210 96 300 139 132 (200) 54

24,560

13,082

11,478

RSG TRANSITIONAL FUNDING NNDR BASELINE GRANT NEW HOMES BONUS

613 40 2,543 1,200

TOTAL OF GOVERNMENT GRANTS

4,396

NNDR GROWTH INCOME

COUNCIL TAX REQUIREMENT

373

6,709

57

This page is intentionally left blank

APPENDIX B

WITHOUT RECHARGES

GENERAL FUND BUDGET SUMMARY 2017/18 2015/16 ACTUAL

2016/17 APPROVED BUDGET

2017/18 DRAFT BUDGET

£'000 961 665 868 4,260 46 (2063) 1,385 2,049 1,210 1,071 636 111

PLANNING & ECONOMIC DEVELOPMENT HOUSING SERVICES ENVIRONMENTAL HEALTH STREET SCENE SERVICES ENGINEERING SERVICES ASSET MANAGEMENT PARTNERSHIPS & COMMUNITY ENGAGEMENT FINANCE & BUSINESS SERVICES LEGAL & DEMOCRATIC SERVICES HUMAN RESOURCES & CUSTOMER SERVICES EXECUTIVE DIRECTORS AUDIT & ASSURANCE

£'000 1,101 711 1,031 4,319 19 (2275) 1,389 2,199 1,242 1,100 646 108

£'000 1,076 766 1,000 4,127 21 (2737) 1,160 2,318 1,323 1,087 495 111

11,198

NET SERVICE EXPENDITURE

11,589

10,747

0 0 300 139 132 (220) 0 0

210 96 300 139 132 (200) 54 0

11,940

11,478

0

0

11,940

11,478

0 0 191 114 120 (106) 0 40 11,557 338

11,895

CORPORATE EXPENDITURE STAFF PAY AND MEMBER ALLOWANCE INCREASE PENSION AUTO ENROLMENT CENTRAL CONTINGENCY AUDIT FEES, BANK CHARGES NOT RECHARGED GENERAL EXPENSES INVESTMENT INCOME APPRENTICESHIP LEVY PAY STRATEGY GROSS REQUIREMENT YEAR END ADJUSTMENTS

TOTAL NET REQUIREMENT BEFORE GOVERNMENT GRANTS

1,758 0 2,471 67 1,148

RSG TRANSITIONAL FUNDING NNDR BASELINE GRANT COUNCIL TAX FREEZE GRANT NEW HOMES BONUS

1,251 40 2,492 0 1,173

613 40 2,543 0 1,200

5,445

TOTAL OF GOVERNMENT GRANTS

4,955

4,396

575

373

6,410

6,709

320

6,131

NNDR GROWTH INCOME

COUNCIL TAX REQUIREMENT

1

59

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APPENDIX B1

GENERAL FUND BUDGET SUMMARY 2017/18 2016/17 APPROVED BUDGET

2015/16 ACTUAL

£'000 1,470 849 1,089 5,224 64 (1245) 2,210 698 1,857 856 804 111 13,987

191 114 (106) 40

14,226 338 2,669

11,895

PLANNING & ECONOMIC DEVELOPMENT HOUSING SERVICES ENVIRONMENTAL HEALTH STREET SCENE SERVICES ENGINEERING SERVICES ASSET MANAGEMENT PARTNERSHIPS & COMMUNITY ENGAGEMENT FINANCE & BUSINESS SERVICES LEGAL & DEMOCRATIC SERVICES HUMAN RESOURCES & CUSTOMER SERVICES CORPORATE MANAGEMENT AUDIT & ASSURANCE NET SERVICE EXPENDITURE CORPORATE EXPENDITURE STAFF PAY AND MEMBER ALLOW ANCE INCREASE PENSION AUTO ENROLMENT CENTRAL CONTINGENCY AUDIT FEES, BANK CHARGES NOT RECHARGED INVESTMENT INCOME APPRENTICESHIP LEVY PAY STRATEGY

GROSS REQUIREMENT YEAR END ADJUSTMENTS LESS DEPRECIATION

TOTAL NET REQUIREMENT BEFORE GOVERNMENT GRANTS

2017/18 DRAFT BUDGET

£'000 1,511 914 1,245 5,471 108 (1938) 2,209 763 1,839 926 815 108

£'000 1,492 945 1,230 5,231 39 (2216) 1,903 912 1,749 948 788 111

13,971

13,133

300 139 (220) -

210 96 300 139 (200) 54 -

14,189

13,732

0

0

2,250

2,254

11,940

11,478

1,758 2,471 67 1,148

RSG TRANSITIONAL FUNDING NNDR BASELINE GRANT COUNCIL TAX FREEZE GRANT NEW HOMES BONUS

1,251 40 2,492 1,173

613 40 2,543 1,200

5,445

TOTAL OF GOVERNMENT GRANTS

4,955

4,396

575

373

6,410

6,709

320

6,131

NNDR GROW TH INCOME

COUNCIL TAX REQUIREMENT

1

61

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APPENDIX C BREAKDOWN BY SERVICE OF MOVEMENTS IN THE 2017/18 BUDGET REQUIREMENT The detailed reasons for the movement between the 2016/17 approved and 2017/18 draft net budget requirements (as shown in Appendix B) are as follows: 1

Planning & Building Control (Pages 2-4) Portfolio Holder(s): Cllr. Dr H Cohen (planning & building control), Cllr S Quilty (community shopper- transport), Cllr J Graham (economic development) Budget Holder: Christine Lyons (Head of Planning & Economic Development)

Planning Policy Development Management Building Control Economic Development Total

1.1

2017/18 Draft Budget £’000 407 602 52 15 1,076

Fav/(Adv) Variance £ 23 2 0 0 25

Planning Policy (Page 3) The proposed budget for this service has decreased by £23K. Fav (Adv) £’000 (8) 31 23

1.2

2016/17 Approved Budget £’000 430 604 52 15 1,101

Reason for Variance Employee expenses (costs) have increased due to contractual increments. Following the introduction of the Community Infrastructure Levy (CIL), Hertsmere can retain 5% of CIL receipts towards administration costs. Total for Planning Policy

Development Management (Page 4) The proposed budget for this service has decreased by £2K. Fav (Adv) £’000 (38) 40 2

Reason for Variance Employee expenses (costs) have increased due to contractual increments. Increase in income for pre-application advice and planning performance agreements. Total for Development Management

Appendix C to Exec C-17-06

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APPENDIX C

2

Housing Services (Pages 5- 6) Portfolio Holder: Cllr. J Heywood (housing) Budget Holder: Kim Harwood (Housing Services Manager)

Housing Services Total 2.1

2017/18 Draft Budget £’000 766 766

Fav/(Adv) Variance £’000 (55) (55)

Housing Services (Page 6) The cost of this service has increased by £55K. Fav (Adv) £’000 (120) 84 (46) 36 35

3

2016/17 Approved Budget £’000 711 711

Reason for Variance The net homelessness budget has been increased by £36K to reflect the current levels of expenditure in this area. Employee expenses have increased primarily due to the appointment of a homeless prevention officer on a fixed term contract. This post is being funded from the homelessness initiatives reserve. Additional income is expected following the introduction of new legislation on the licensing of houses in multiple occupancy as well as new charges for static home sites and enforcement of smoke alarms.

(44)

Homeless reserve funding has been removed.

(55)

Total for Housing Services

Environmental Health (Pages 7-10) Portfolio Holder: Cllr. S Quilty (environmental health) Budget Holder: Chris Gascoine (Chief Environmental Health Officer)

Miscellaneous Services Community Toilet Scheme Emergency Planning Environmental Health Unit Disabled Facility Grants Total

Appendix C to Exec C-17-06

2016/17 Approved Budget £’000 (200) 12 33 1,046 140 1,031

2

2017/18 Draft Budget £’000 (230) 12 33 1,085 100 1,000

Fav/(Adv) Variance £’000 30 0 0 (39) 40 31

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APPENDIX C 3.1

Miscellaneous Services (Page 8) has a decrease of £30K. Fav (Adv) £’000 (25) 50 5 30

3.2

Vehicle licensing income has been reduced to reflect the changes to operator licences which will now be renewable after 5 years. The food safety contractors budget has been reduced following the proposal to replace with a full time food safety inspection officer (see below) The contaminated land budget has been reduced to reflect costs in this area. Total for Miscellaneous Services

Environmental Health Unit (Page 10) has an increase of £39K. Fav (Adv) £’000 (39) (39)

3.3

Reason for Variance

Reason for Variance Employee expenses have increased to cover the proposed appointment of an additional food safety inspection officer instead of contractor. Total for Environmental Health Unit

Disabled Facilities Grants (DFG’S) has a decrease of £40K. Fav (Adv) £’000

Reason for Variance

40

Disabled facilities grants have been realigned with 2016/17 expenditure

40

Total for Disabled Facilities Grants

Appendix C to Exec C-17-06

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APPENDIX C 4

Street Scene Services (Pages 11-16) Portfolio Holder: Cllr. S Quilty (waste, trade refuse, recycling, cleansing, parks cleansing & maintenance, grounds maintenance, street scene), Cllr H Cohen (parking) Cllr B Batten (parks, allotments, cemetery) Budget Holder: S Burton (Head of Street Scene) The detailed budgets for Street Scene Services are as follows: 2016/17 Approved Budget £’000

2017/18 Draft Budget £’000

Fav/(Adv) Variance £’000

1,147 1,571 (206) 1,011 1,087 4 57 (352) 4,319

1,166 1,570 (206) 1,009 1,081 4 58 (555) 4,127

(19) 1 0 2 6 0 (1) 203 192

Waste & Street Scene Unit Waste Services Trade Refuse Cleansing Services Parks & Amenity Areas Allotments Allum Lane Cemetery Parking TOTAL 4.1

Waste & Street Scene Unit (Page 12) shows an increase of £19K. Fav (Adv) £’000 (17) (2) (19)

Reason for Variance Employee expenses (costs) have increased due to both contractual increments and a new member of staff joining the pension scheme. Other minor budget re-alignments Total for Waste & Street Scene Unit

Appendix C to Exec C-17-06

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APPENDIX C 4.2

Waste Services (Page 12) has a decrease of £1K. Fav (Adv) £’000 (4)

The agency staff budget has been increased to reflect an increase in the minimum/living wage due to temporary staff.

(16)

Transport costs have risen as a result of increased contractual vehicle maintenance costs due to the age of the refuse fleet. This has been partially offset by reduced insurance costs due to an improved claims history.

13 (78)

86 1

4.3

Due to the level of reserves, the bin replacement funding has been removed from the revenue budget. Following a drop in the market price for mixed dry recyclables, Hertsmere is now paying a £15 a tonne handling fee to the recycling contractor. The recycling income budget has been increased following the decision to enter into a consortium agreement for the sale of paper recycling at a fixed price of £120 a tonne. Total for Waste Services

Cleansing Services (Page 13) has an overall service decrease of £2K. Fav (Adv) £’000 2 2

4.4

Reason for Variance

Reason for Variance Transport costs have risen as a result of increased contractual vehicle maintenance costs. However this has been more than offset by reduced insurance costs due to an improved claims history. Total for Cleansing Services

Parks & Amenity Areas (Page 14) has a decrease of £6K. Fav (Adv) £’000 (14) 20 6

Reason for Variance The grounds maintenance contract payments have been increased in line with inflation. Due to the level of reserves, the parks play equipment replacement funding has been removed from the revenue budget. Total for Parks & Amenity Areas

Appendix C to Exec C-17-06

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APPENDIX C 4.5

Cemeteries (Page 15) have a small increase of £1K. Favourable (Adverse) £’000 (1) (1)

4.6

Reason for Variance The grounds maintenance contract payments have been increased in line with inflation. Total for Cemeteries

Parking Services (Page 16) This service has decreased by £203K. Please note this does not include any support costs or recharges. Favourable (Adverse) £’000 (11) (4) 50 116 50 64 (253) 191 203

Reason for Variance Employee expenses have increased due to contractual increments and two post regrades. Supplies and services have increased due to increased debt recovery costs. Due to the level of reserves, the parking repairs and renewals funding has been reduced. Permit income has increased, predominantly on business permits due to additional parking permits for the BBC while they are redeveloping their site. Penalty Charge Notice income (fines) has been increased to reflect the current trend in this area. Pay and display income budget has been increased to reflect additional income received from off street car parks. Income from parking will be used to fund the following services: PCSOs; CCTV & Community Transport. Proposals have been made as part of the participatory budgeting exercise to increase parking and permit fees. Total for Parking Services

Appendix C to Exec C-17-06

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APPENDIX C 5

Engineering Services (Pages 17-19) Portfolio Holder: Cllr. S Quilty (drainage, residual highways, road safety) Cllr J Graham (street markets) Budget Holder: S Payton (Head of Engineering) The detailed budgets for Engineering Services are as follows:

Highway Related Items Drainage Services TOTAL

5.1

2017/18 Draft Budget £’000 (30) 51 21

Fav/(Adv) Variance £’000 (2) 0 (2)

Highways Related Items (Page 18) has an overall service cost increase of £2K. Fav (Adv) £’000 (2) (2)

6

2016/17 Approved Budget £’000 (32) 51 19

Reason for Variance The street name and numbering budget has been increased to cover the cost of new signs incorporating the Hertsmere coat of arms. Total for Highways Related Items

Asset Management (Pages 20-24) Portfolio Holder: Cllr. J Graham (property/asset management) Cllr Bright Elstree Studios) Budget Holder: S Payton (Head of Engineering)

Civic Offices Depot Sites Residential Residual Properties Commercial Properties Garages Leisure & Community Buildings Building Maintenance Programme Asset Management Unit Total

Appendix C to Exec C-17-06

7

2016/17 Approved Budget £’000

2017/18 Draft Budget £’000

Fav/(Adv) Variance £’000

339 15 (527) (2,671) (606) 353 416 406 (2,275)

314 15 (612) (2,993) (631) 353 416 401 (2,737)

25 0 85 322 25 0 0 5 462

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APPENDIX C 6.1

Civic Offices (Page 21) The net cost of this service has reduced by £25K. Fav (Adv) £’000

6.2

25

Income from third floor rent for the Hertfordshire Building Control office.

25

Total for Civic Offices

Residual Residential Properties (Page 22) The net cost of this service has reduced by £85K. Fav (Adv) £’000 85 85

6.3

Reason for Variance Rental property income has been realigned with 2016/17 income levels. There is also additional income from the newly built properties at Buckingham Road & Hackney Close Total for Residual Residential Properties

Commercial Properties (Page 22) The net cost of this service has reduced by £322K. Fav (Adv) £’000

Reason for Variance

200

Increased rental income from Elstree Studios

10 107

Income from access across Council owned land Increased income from rent reviews

12

Interest on LEP loan (Elstree Studios) no longer applicable

(7)

Increased building insurance costs

322

6.4

Reason for Variance

Total for Commercial Properties

Garages (Page 23) The net cost of this service has reduced by £25K. Fav (Adv) £’000 25 25

Reason for Variance Garage income has been increased by 5% in line with the Council’s financial strategy. Total for Garages

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APPENDIX C 6.5 Asset Management Unit (Page 23) The net cost of this service has reduced by £5K. Fav (Adv) £’000

7.

Reason for Variance

5

Training and Supplies & Services budgets have ben realigned with 2016/17 expenditure levels.

5

Total for Asset Management Unit

Partnerships & Community Engagement (P&CE) (Pages 25-30) Portfolio Holders: Cllr. P Choudhury (corporate performance and efficiency, community safety and CCTV), Cllr. B Batten (cultural strategy, museums, grant applications, youth issues, services for the elderly), Cllr. M Bright (community strategy, communications). Budget Holder: H Shade (Head on Partnerships and Community)

P & C E Unit Corporate Communications Youth Services Sports Development Community Development Community Safety CCTV Voluntary Sector Grant Aid Total

7.1

2016/17 Approved Budget £’000 598 91 20 13 14 136 105 412 1,389

2017/18 Draft Budget £’000 640 78 5 13 14 8 0 402 1,160

Fav/(Adv) Variance £’000 (43) 13 15 0 0 128 105 10 228

Partnerships & Community Engagement Unit (Page 26) the overall budget has increased by £43K. Fav (Adv) £’000 (17) (41) 14 1 (43)

Reason for Variance Employee costs have been increased by £17K following a restructure of this department in 2016/17. In addition costs of £41K have incurred following the proposed appointment of a Digital Business Transformation Manager (EX/17/13). The changes to the above structure have been partially offset by reserve funding for the Community Safety Intervention Officer. Minor budget re-alignments in line with current expenditure levels. Total for Partnerships & Community Engagement Unit

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APPENDIX C 7.2

Corporate Communications (Page 27) the overall budget has decreased by £13K. Fav (Adv) £’000 13 13

7.3

15 15

Reason for Variance Following changes in service provision in 2016-17, this budget has been reduced. Total for Youth Services

Community Safety & CCTV shows a budget reduction of £233K. Fav (Adv) £’000 233 233

7.5

Due to the level of reserves, the residents consultation funding has been removed from the revenue budget. Total for Corporate Communications

Youth Services (Page 28) has a decrease of £15K. Fav (Adv) £’000

7.4

Reason for Variance

Reason for Variance Income from Parking Services has been used to fund PCSOs £128K & CCTV £105K. Total for Community Safety & CCTV

Voluntary Sector Grants has a decrease of £10K. Fav (Adv) £’000 10 10

Reason for Variance Proposals have been made as part of the participatory budgeting exercise to reduce voluntary sector grants. Total for Voluntary Sector Grants

Appendix C to Exec C-17-06

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APPENDIX C 8

Finance & Business Services (pages 31-37) Portfolio Holders: Cllr. J Graham (finance, benefits), Cllr. P Choudhury (EGovernment and ICT, procurement) Budget Holder: M Bunyon (Head of Finance & Business Services) Overall, this Unit’s budget shows an increase of £119K. The draft budgets for the individual services are shown below:

NNDR Collection Costs Council Tax Collection Benefits Administration Rent Allowances Housing Benefit (Local Schemes) Shared Anti-Fraude Service Procurement Finance Unit Revenues Section Benefits Section Information Digital Services Unit Civic Offices Telephones Total

8.1

2017/18 Draft Budget £’000 (158) (155) (410) 0 8 77 27 875 577 524 925 28 2,318

Fav/(Adv) Variance £’000 0 0 (5) 0 0 0 0 (19) (75) (36) 6 10 (119)

Benefits Administration (Page 33) has a budget increase of £5K. Fav (Adv) £’000

8.2

2016/17 Approved Budget £’000 (158) (155) (415) 0 8 77 27 856 502 488 931 38 2,199

Reason for Variance

(5)

Universal Credit grant from Central Government has been reduced.

(5)

Total for Benefits Administration

Finance & Business Services Unit (Page 36) has a budget increase of £19K. Fav (Adv) £’000

Reason for Variance

(24)

System enhancements to the income receipting software

5 (19)

£3k saving from publishing the statement of accounts on the internet plus £2k increased income from external payroll provision. Total for Finance & Business Services Unit

Appendix C to Exec C-17-06

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APPENDIX C 8.3

Revenues Section (Page 36) has an increase of £75. Fav (Adv) £’000 (75) (75)

8.4

(36) (36)

Reason for Variance Employees’ costs have increased as a Benefits Overpayments Officer has been added to the establishment, to enable the Council to reduce the amount of overpayments made.(EX/17/13) Total for Benefits Section

Information Digital Services Unit (Page 36) has a decrease of £6K. Fav (Adv) £’000 (9) (18) 7 26 6

8.6

Employees costs have increased following a reorganisation of the Revenues Section approved by the Personnel Committee in May 2016 (EX/16/34) Total for Revenues Section

Benefits Section (Page 36) has an increase of £36K. Fav (Adv) £’000

8.5

Reason for Variance

Reason for Variance Employee expenses have increased due to contractual increments. This contribution to the infrastructure renewal reserve was previously budgeted in Legal & Democratic Services. Agency & Contracted costs have reduced following a change in supplier. Increased income from the provision of support services to the Hertfordshire Building Control Company Total for Information Digital Services

Telephones (Page 36) has a reduction of £10K. Fav (Adv) £’000 10 10

Reason for Variance There are savings following the procurement of a new telephony system. Total for Telephones

Appendix C to Exec C-17-06

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APPENDIX C 9

Legal & Democratic Services (Pages 38-42) Portfolio Holders: Cllr. J Graham (Legal Services, Land Charges,) Cllr. M Bright (Democratic Services, Electoral Services) Budget Holder: H Patterson (Head of Legal & Democratic Services) Overall, this Unit’s budget shows an increase in costs of £80K. The draft budgets for the individual services are shown below. 2016/17 2017/18 Approved Draft Fav/(Adv) Budget Budget Variance £’000 £’000 £’000 Local Land Charges (54) (52) (2) Electoral Registration 170 178 (8) Local Elections 14 14 0 Legal Services Unit 371 457 (86) Civic Expenses 45 44 1 Surgeries 1 1 0 Members Allowances 361 361 0 Meetings/Members Costs 95 77 18 Democratic Services Unit 239 243 (4) Total 1,242 1,323 (81)

9.1

Land Charges (Page 39) The cost of this service has increased by £2K. Fav (Adv) £’000 (2) (2)

9.2

Reason for Variance Employee expenses (costs) have increased due to contractual increments. Total for Land Charges

Electoral Registration (Page 39) The cost of this service has increased by £8K. Fav (Adv) £’000 2 (10) (8)

Reason for Variance Employee expenses (costs) have reduced as a new appointment is on a salary which is less than was previously budgeted. Reserve funding for postal expenses is no longer applicable. Total for Electoral Registration

Appendix C to Exec C-17-06

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APPENDIX C 9.3

Legal Services Unit (Page 40) The cost of this service has increased by £86K. Fav (Adv) £’000 (86) (86)

9.4

Reason for Variance

1

This contribution to reserve is no longer applicable

1

Total for Civic Expenses

Meetings/Members Costs (Page 40) The cost of this service has reduced by £18K. Fav (Adv) £’000 18 18

9.6

Employees’ costs have increased as two debt recovery officers have been added to the establishment, to enable the recovery of outstanding debt. Total for Legal Services Unit

Civic Expenses (Page 40) The cost of this service has reduced by £1K. Fav (Adv) £’000

9.5

Reason for Variance

Reason for Variance This was a contribution to infrastructure renewal reserve that is now budgeted in Information Digital Services. Total for Meetings/Members Costs

Democratic Services Unit (Page 42) The cost of this service has increased by £4K. Fav (Adv) £’000 (4) (4)

Reason for Variance Employee expenses (costs) have increased due to contractual increments. Total for Democratic Services Unit

Appendix C to Exec C-17-06

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APPENDIX C 10

Human Resources & Customer Services (Pages 43-47) Portfolio Holders: Cllr. C Choudhury (Human Resources, Customer Services, equality & diversity, print services) Cllr B Batten (Health & Safety) Budget Holder: J Fear (Head of HR & Customer Services) Overall, this Unit’s budget shows a decrease increase in costs of £13K. The draft budgets for the individual services are shown below.

Human Resources Unit Customer Relationship Man’ Civic Office Keepers Corporate Admin Resource Design & Print Services Civic Offices Refreshments Health & Safety Strategic Training Total

10.1

2017/18 Draft Budget £’000 342 639 87 0 (17) 3 3 30 1,087

Fav/(Adv) Variance £’000 5 10 0 9 (14) 3 0 0 13

Human Resources Unit (Page 44) This service has a decrease of £5K Fav (Adv) £’000

10.2

2016/17 Approved Budget £’000 347 649 87 9 (31) 6 3 30 1,100

Reason for Variance

5

Employee costs are reduced following a minor restructure.

5

Total for Human Resources Unit

Customer Relationship Management (Page 44) This service has a decrease of £10K Fav (Adv) £’000

Reason for Variance

10

Income has increased following partnership working with another Council

10

Total for Customer Relationship Management

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10.3

APPENDIX C Corporate Admin Resource (Page 46) This service has a reduction of £9K Fav (Adv) £’000 9 9

10.4

(4) (10) (14)

3 3

Employees’ costs have increased following the transfer of budget from Corporate Admin Resource. Reduced income following the change in provision of the confidential shredding service. Total for Design & Print Services

Reason for Variance There will be a £3k saving following the replacement of the Civic Offices vending machines in 2016/17 Total for Civic Office refreshments

Executive Directors (Page 48) shows a reduction of £150K. Fav (Adv) £’000 30 120 150

12

Reason for Variance

Civic Office Refreshments (Page 47) has a reduction of £3K Fav (Adv) £’000

11

The employees costs for this service have been reallocated between Print Services and Planning. Total for Corporate Admin resource

Design & Print Services (Page 47) has an increase of £14K Fav (Adv) £’000

10.5

Reason for Variance

Reason for Variance Employee costs are reduced following a departmental restructure. Following an organisational structure review, additional savings of £120K have been realised. Total for Executive Directors

Audit & Assurance (page 50) shows an increase of £3K. Fav (Adv) £’000 (6) 3 (3)

Reason for Variance Increases costs for SIAS Reduced costs for Risk Management Total for Audit & Assurance

Appendix C to Exec C-17-06

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APPENDIX C 13

Miscellaneous

13.1

Staff Pay and Member Allowance Increase - Provision has been made for an increase of £210k. This comprises £145K salaries, £45K pension and £20K national insurance.

13.2

Investment income for 2017/18 is budgeted at £200K.

13.3

Pension Auto Enrolment – a provision has been made for £96K.

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This page is intentionally left blank

     

 

He ertsmerre   Bo orou ugh   Co ounccil

R GISSTEER OFF  REG FEEESS A AND D C CHAR RGESS 20 0177‐2 201 18 

   

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CONTENTS  PAGE    Planning & Economic Development                                       3‐6    Housing Services                                                                         7‐8    Environmental Health                                                             9‐12    Street Scene Services                                                             13‐19    Asset Management                                                                    20    Legal and Democratic Services                                            21‐24    Human Resources & Customer Services                                 25 

   

   

2

82

 

 

 

 

Planning & Building Control 

Planning Policy   Paper copy

Electronic copy 

Tree Preservation Orders*

£11

£5.50 

Exempt

Article 4 Directions* 

£11

£5.50 

Exempt

Listed Building Register extract* 

£11

£5.50 

Exempt

Conservation Area map* 

£11

£5.50 

Exempt

Traffic Regulation Orders 

£11

£5.50 

Exempt

Local Organisations

Commercial  Organisations 

VAT

£50

£100 

Exempt

Item 

Road Closure  Temporary Road Closure for  Large Event under TPCA Act  (Admin Fee)  Listed Buildings and Tree Pre‐ application Advice 

VAT 

Initial cost  Charge for  Charge per  including   any site visit  additional meeting  written advice  undertaken  and meeting 

Charge per  additional  written  advice 

Category I (VAT included)

£160

£70

£70 

£30

Category H (VAT included)

£85

£40

£40 

£20

Disabled Parking Bay  (admin fee – Incl VAT) 

  £10 

  Publications 

Cost to local residents and  local groups 

Cost to  professionals and  non‐local residents 

VAT 

£22 + £3.50 p&p

£33 + £3.50 p&p 

Exempt

Hertsmere Core Strategy 2013 

£11.50 + £2.50 p&p

£11.20 + £2.50 p&p  

Exempt

Elstree Way Corridor AAP 2015 

£15 + £2.50 p&p

£20 + £2.50 p&p 

Exempt 

£15

£20 + £2.50 p&p 

Exempt 

Parking Management Strategy 

£22 + £3.50 p&p

£33 + £3.50 p&p 

Exempt

SW Herts Economy Study 

£22 + £3.50 p&p

£33 + £3.50 p&p 

Exempt

Strategic Housing Land  Availability Assessment 

£22 + £3.50 p&p

£33 + £3.50 p&p 

Exempt

SW Herts Strategic Housing  Market Assessment 

£22 + £3.50 p&p

£33 + £3.50 p&p 

Exempt

Hertsmere Local Plan 2003

Site Allocations and  Development Management  Policies Plan 

Gypsies and Traveller  Accommodation Assessment  Other Technical Studies   

 

  £22 + £3.50 p&p 

£33 + £3.50 p&p 

Exempt 

£22 + £3.50 p&p

£33 + £3.50 p&p 

Exempt

   

3

83

 

Cost to local residents and  local groups 

Cost to  professionals and  non‐local residents 

VAT 

Watling Chase Community  Forest SPG 

£2.50

£2.50 

Exempt

Warren Estate (Bushey Heath)  Design Guide SPG  Elstree Village Conservation  Area Appraisal  Bushey Heath High Road  Conservation Area Appraisal   Bushey High Street (Village)  Conservation Area Appraisal  Radlett North Conservation  Area Appraisal  Radlett South Conservation  Area Appraisal    Shenley Conservation Area  Appraisal    Royds Conservation Area  Appraisal  Royds Design Guide 

£2.50

£5.50 + £1.50 p&p 

Exempt

£2.50

£5.50 + £1.50 p&p 

Exempt

£2.50

£5.50 + £1.50 p&p 

Exempt

£2.50

£5.50 + £1.50 p&p 

Exempt

£2.50

£5.50 + £1.50 p&p 

Exempt

£2.50

£5.50 + £1.50 p&p 

Exempt

£2.50

£5.50 + £1.50 p&p 

Exempt

£2.50

£5.50 + £1.50 p&p 

Exempt

£2.50

£5.50 + £1.50 p&p 

Exempt

Affordable Housing SPD 

£3.50 + £1.50 p&p

£5.50 + £1.50 p&p 

Exempt

Car parking Standards SPD

£3.50 + £1.50 p&p

£5.50 + £1.50 p&p 

Exempt

Bhaktivendanta Manor Planning  Brief SPD  Radlett Key Sites Planning Brief  SPD  Biodiversity and Trees SPD           (Parts A‐D) 

£3.50 + £1.50 p&p

£5.50 + £1.50 p&p 

Exempt

£3.50 + £1.50 p&p

£5.50 + £1.50 p&p 

Exempt

£11 + £2.50 p&p     £3.50 + £1.50 p&p 

£15 + £2.50 p&p      £5.50 + £1.50 p&p   

Exempt      Exempt 

Whole document 

£11.50 + £2.50 p&p 

£15 + £2.50 p&p 

Exempt 

Parts B and E  Statement of Community  Involvement  Core Strategy  

£3.50 + £1.50 p&p  £5.50 + £2.50 p&p

£5.50 + £1.50 p&p  £5.50 + £2.50 p&p 

Exempt

Free 

Exempt

Annual Authority Monitoring  Reports 

£5.50 + £2.50 p&p

£11 + £2.50 p&p 

Exempt

Publications 

Individual Parts  Planning and Design Guide 

   

 

   

4

84

Development Management   Item 

Paper copy

Electronic copy

VAT 

£2

£2

Included

   £0.20

   £0.20

Included

General photocopying*  Plus for each subsequent sheet 

Note ‐ Residents are charged half of the above for general photocopying only  Plans larger than A3*  £22 £11

Included

Planning decision notice*

£11

£5.50

Exempt 

Appeal decisions* 

£11

£5.50

Exempt 

Delegated or Committee Report* 

£11

£5.50

Exempt 

    £16.50

£11

Exempt 

Enforcement Notices* 

£11

£5.50

Exempt 

Research (each ½ hour or part  thereof) 

£44

£44

Included

If site visit required add 

£44

£44

Included

Weekly list (by post) 

£235

£65

Included

Section 106 Agreements*

Planning Performance Agreements (PPA) Categories  Set up, Planning  Performance  Agreement and  Project  Timeframes  More than 20 residential units or  more than 2000sq.m of  commercial floor space (inc.  change of use)  10 to 20 residential units and up  to 1,999sq.m of commercial floor  space (inc. change of use)  More than 20 residential units or  more than 2000sq.m of  commercial floor space (inc.  change of use) 

Meetings will  be charged at: 

Charge for additional written  advice/review  

£4,000 + VAT 

£2,000 +VAT 

£1,200+VAT 

 £4,800 

£2,400 

£1,440 

£2,600 + VAT  

 £1,200+VAT 

£800+VAT 

£3,120 

£1,440 

£960 

£4,000 + VAT 

£2,000 +VAT 

 £4,800 

£2,400 

   

   

5

85

  Pre Application Discussions  Category A   £4,800 VAT Included  Category B   £3,600 VAT Included  Category C   £2,400 VAT Included  Category D   £1,800 VAT Included  Category E  £900 VAT Included  Category F  £600 VAT Included  Householder Applications  £144 VAT Included  Follow up charges  £48  VAT Included  Historic Asset Advice    ‐ No meeting  £240  VAT Included  ‐ With site meeting  £435  VAT Included  Follow up charges  £312  VAT Included  Additional charges for meeting and follow up and charge for additional written advice:  Category’s A‐E ‐ £600+VAT  Category F ‐ £350+VAT  Householder ‐ £40+VAT  Note: Planning application fees set by Central Government A breakdown of all categories for PPAs, planning applications and planning, trees and listed building  pre‐applications and any other charges can be found on the Hertsmere website.    *Note: charges include the administration cost of providing the requested information.   

 

   

6

 

86

Housing Services  Houses in Multiple Occupancy  HMO Mandatory Licence Application 

Fees  £542 up to 5 people Plus £66 per additional person  £115  £542 

Variation of HMO Licence Renew HMO Licence   

Mobile Homes   Table 1   Number of  pitches  

Band  Z  

Formula  

1‐6  

1  

=((A1+B1)/60) x C  (reduced by half) 

7‐57  58‐108  109‐159   160+  

2   3   4   5  

=((A2+B2)/60) x C   =((A3+B3)/60) x C   =((A4+B4)/60) x C   =((A5+B5)/60) x C  

A   (Admin  time  mins)   120 

B  (Inspection  time mins)  

Option 

Fee  approx.. 

120 

£130.00  or free  

120  180  180  180  

150  200   250   300 

Officers  discretion &  excluding  non‐  commercial  sites         

£261.00  £367.00  £415.00  £435.00 

  New Site Licence Application  Transfers and amendments fees.    Band 5  Band 4  Band 3  Band 2  Band 1  Table 2   More than  100 – 199  25 – 99  6 – 24  1 – 5  200 pitches  pitches  pitches  pitches  pitches    £  £  £  £  £  New site licence application ‐ fee charges    Charge to  1,120  930  775  620  545  site owner  Application to transfer a site licence – fee charges    Charge to  290  290  290  290  290  site owner  Application to amend a site licence – fee charges    Charge to  290  290  290  290  290  site owner      Smoke and Carbon Monoxide Alarm Regulations  The penalty charge of £5,000 was agreed. It is proposed to charge the full amount with a 50%  reduction if paid within 14 days.       

7

87

Enforcement Notices    Housing Act 2004  • Improvement/Suspended Improvement £350 Notice (S11/12)  • Prohibition/Suspended Prohibition Order £350 (S20/21)  • Emergency Remedial Action (S40)  £350 • Emergency Prohibition Order (S41)  £350   Service of second and subsequent Statutory Notice under the Housing Act 2004 (at the same time)  • Improvement/Suspended Improvement £75 Notice (S11/12)  • Prohibition/Suspended Prohibition Order £75 (S20/21)  • Emergency Remedial Action (S40)  £75 • Emergency Prohibition Order (S41)  £75   Review of suspended Statutory Notices under the Housing Act 2004  • Suspended Improvement Notices  £75   (S11/12)  • Suspended Prohibition Orders (S20/21) £75   £74 for each Notice reviewed    Immigration Inspections  First application  £225.00  Hourly rate re‐visits or advice  

£82.00 

Second visit (over 12 weeks) 

£225.00 

Hourly rate re‐visits or advice (over 12 weeks) 

£82.00 

  NB licence fees are not subject to VAT   

 

   

8

88

Environmental Health    Note: All Licence fees are not subject to VAT 

Charges  Stray Dogs 

Environmental Search  Basic Food Hygiene Level  2 Course 

From 1st April 2016 £25 (statutory) Seizure fee £30 transport/admin  £15 per night kennelling  £75 per enquiry £55 per candidate

From 1st April 2017  £25 (statutory) Seizure fee  £30 transport/admin  £15 per night kennelling  £75 per enquiry    £58 per candidate 

 

Miscellaneous Licences

Fee from 1st April 2016

Fee from 1st April 2017 

 Fee Riding Establishment Act  £385 + veterinary fees  1964 and 1970 

£385 + veterinary fees  

Dangerous Wild Animals Act  1976 

£850 Commercial + veterinary fees

£850 Commercial +  veterinary fees  £150 Domestic + veterinary  fees 

Zoo Licensing Act 1981   

Initial (4 year) £4,300 + vet  fees  Renewal (6 years) £2,000 +  vet fees 

  £150 Domestic + veterinary fees  Initial (4 year) £4,300 + vet fees Renewal (6 years) £2,000 + vet fees Transfer £600 

*Where dispensations have  been granted reduced fees  may be levied 

Transfer £600 

Pet Animals Act 1951 

£195 

£195 

Animal Boarding  Establishments Act 1960 

£195  (£50 domestic)

£195  (£50 domestic)  

Breeding of Dogs Act 1973 

£195 

£195 

Scrap Metal Dealer 

£350 Site

£350 Site

£260 Collector 

£260 Collector 

Sex Shops   

£750 application fee

£750 application fee 

 

£3,250 licensing fee  

£3,250 licensing fee 

 

Sexual Entertainment venues  £2,500 

£2,500 

   

9

89

  Licence  Lotteries  and Gaming  Gaming  machines  Skin  Piercing 

Type 

Fee from 1st April 2016

Fee from 1st April 2017

New application  Renewal   

£40 on application £20 renewal statutory  £50 valid for 3 years  statutory  £185 £185  £75 

£40 on application  £20 renewal statutory  £50 valid for 3 years statutory

Premises  Operatives  Variation 

  Licencing Act 2003   Band*    Non domestic rateable value    Conversion (inc  variation); new    application;  Premises  Licence &  variation  Conversion +  Club  Variation  Premises  Certificate  Annual Charge   New Licence  Future Variation  Personal Licence 

£185  £185   £75  

  A 







None‐  £4,300 

£4,301 ‐  £33,000 

£33,001 ‐  £87,000 

£87,001 ‐  £125,000 

125,001 + 

£100 

£190 

£315 

£450* 

£635* 

£20 

£60 

£80 

£100 

£120 

£70  £180 £295 £320*  £100  £190 £315 £450*  £100  £190 £315 £450*  £37  Temporary event notice *There will be a separate scale for large scale events (5,000+ people)

  E 

£350* £635* £635* £21

  Taxi Licencing 

Fee from 1st April 2016

Fee from 1st April 2017

Driver 

£95 1 year £225 3 years  £230 £175  £300 £30 per vehicle 

£95 1 year     £225 3 years   £230    £175  £300 £30 per vehicle 

Transfer 

 

£55

Replacement Badges 

£25

£25

Replacement Vehicle Licence Plate 

£55

£55

Knowledge Test 

£40/£20 non geo

£40/£20 non geo 

Photocopying/paperwork

£10 (each)

£10 (each) 

Vehicle  Low emission  Operator 

   

10

90

Gambling Licences  Classes  Conversion  Non‐conversion application  application fee for  Premise  fee for non‐ in respect  licence  fast track  provisional  application  statement  premises  Regional  Casino   Large Casino   Small Casino   Converted  Casino   Bingo   Adult gaming  centre   Betting (track)   Family  entertainment  centre   Betting  (other)   Copy of  licence  Change of  circumstances   Fast Track  applications 

Non‐conversion  application fee for  in respect to other  premises 

Annual  fee 

Fee for  application  to vary  licence 

Fee for  application to  transfer a  premise licence

Fee for  application for  reinstatement  of a licence 

Fee for  application for  provisional  statement 

 

£8,000  £4,400 £2,900

£15,000  £8,400 £7,300

£15,000  £8,420 £4,200

£7,500  £4,400 £3,675

£6,500  £2,100 £1,575

£6,500  £2,100 £1,575

£15,000  £8,500  £7,300 

£2,000  £1,600

  1,100

  £3,200

£3,000  £975

£2,000  £1,565

£1,350  £1,100

£1,350  £1,100

  £3,200 

£925  £1,150

£1,150  £915

£1,925  £2,300

£975  £945

£975  £1,155

£1,150  £915

£1,150  £915

£1,925  £2,300 

£945 

£915 

£1,925 

£730 

£945 

£915 

£915 

£1,925 

£1,400 

£1,125 

£2,800 

£575 

£1,400 

£1,125 

£1,125 

£2,925   

£20 

   

£40  £300 

 

   

91

11

  Private Water Supplies (including VAT)    Statutory Activity  Maximum Fee      Risk Assessment   £500  (each assessment)  

Sampling Visit   (each visit)(ii)   Investigation   (each investigation)     Granting of an  authorisation (each  authorisation)    Analysis of a sample  taken under Regulation  10    Analysis of a sample  taken during Check  Monitoring  

£100    £100    £100 

Hertsmere Borough  Council   Hourly rate (i) x   officer time  

Hourly rate (i) x  officer time  Hourly rate (i) x  officer time   Hourly rate (i) x  officer time 

  £25 

  £100 

 

  £500  Analysis of a sample  taken during Audit  Monitoring  

£25 

Recover full analysis  cost up to the  statutory maximum 

Recover full analysis  cost up to the  statutory maximum.  

 

Comments  Will cover the time spent  at the site, completion of  a risk assessment and a  final report sent to the  owner.  Charge for per sampling  visit.  Visit carried out in the  event of a test failure.  Application by the owner  of the supply for  temporary permission to  breach a standard.  Where a domestic supply  provides  £15m 364 days

2018/19 £15m

2019/20 £15m

16

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Hertsmere Borough Council Treasury Management Strategy and Prudential Indicators

6.

APPENDIX 1

Current Portfolio Position

6.1. The weighted average investment portfolio from April 2016 to November 2016 is £45.9m with an average return of 0.67%. Listed below are the average investment balances and the rate of return for the financial year 2016/2017 up to November 2016 together with a comparison of the position at 2016/17 year end. Table 10 – Average return on investments

Investment Portfolio

01 April 15 to 31 March 16

01 April 16 to 30 Nov 2016

Average Balance Average rate of return

£36.5m 0.81%

£45.9m 0.67%

6.2. As detailed below the current year forecast predicts a favourable variance of £50k by year end. (March 2017) Table 11 – Investment income forecast Investment Average balance

Interest

Rate

£’000

£’000

%

Budget

28,500

220

0.77%

Forecast to 31/03/17

43,600

270

0.62%

Forecast favourable / (adverse) variance

15,100

50

-0.15%

Forecast:

6.3. The forecast interest surplus has arisen as a result of having greater than anticipated balances available to invest throughout 2016/17. This has arisen in part due to: 

Prudent and conservative budgeting of investment income.



Delayed or re-profiled capital spend.



Provisions in final accounts which have yet to materialise in cash terms.

6.4. The investment portfolio is expected to reduce from approximately £54.2m at the end of November to £43.8m by the 31st March 2017 inclusive of approx. £8.8m of Section 106 and Community Infrastructure balances. This is due to the cash flow requirements of the councils such as Council tax and Business rates income being paid over the first ten months of the year thus reducing investment balances in the final two months of the year.

17

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Hertsmere Borough Council Treasury Management Strategy and Prudential Indicators

7. 7.1.

APPENDIX 1

Annual Investment Strategy Investment Policy

7.1.1. The Council’s investment policy has regard to the CLG’s Guidance on Local Government Investments (“the Guidance”) and the revised CIPFA Treasury Management in Public Services Code of Practice and Cross Sectoral Guidance Notes (“the CIPFA TM Code”). The Council’s investment priorities will be: (a) the Security of capital; (b) the Liquidity of its investments; and (c) the Yield. 7.1.2. The Council will aim to achieve the optimum return on its investments commensurate with proper levels of security and liquidity. The risk appetite of this Council is low in order to give priority to security of its investments. 7.1.3. The risk of default remains a concern; if 10% of the Councils portfolio of £36.5m as at 31 March 2015 were to default then the potential loss could be £3m – £4m. The Council has managed the risk by only investing in financial institutions with good credit ratings and those part owned by the UK Government. 7.2.

Interest rate expectations

7.2.1. Bank Rate is currently forecast to stay flat at 0.25% until quarter 2 2019, then rising to 0.5% with no further increase forecast until quarter 1 2020. Bank Rate forecasts for financial year ends (31 March) are:    

2016/17 2017/18 2018/19 2019/20

0.25% 0.25% 0.25% 0.50%

7.2.2. The overall balance of risks to these forecasts is currently probably slightly skewed to the downside in view of the uncertainty over the final terms of Brexit. If growth expectations disappoint and inflationary pressures are minimal, the start of increases in Bank Rate could be pushed back. On the other hand, should the pace of growth quicken and / or forecasts for increases in inflation rise, there could be an upside risk i.e. Bank Rate increases occur earlier and / or at a quicker pace.

18

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Hertsmere Borough Council Treasury Management Strategy and Prudential Indicators

7.3.

APPENDIX 1

Types of Investments

7.3.1. As detailed in the Treasury Code of practice “Local authorities are not constrained by law in the types of investments they may make or the investment instruments they may use”. However in practice they are constrained by DCLG guidance which stresses “the prudent investment strategy of security, liquidity and yield”. Investment regulations and DCLG guidance also “distinguish between ‘specified’ and ‘nonspecified’ investments, the latter requiring greater scrutiny by local authorities”. 7.3.2. Investment instruments identified for use in the financial year are listed below under the ‘specified’ and ‘non-specified’ investment categories. 7.3.3. Specified Investments - The Council will invest in “specified” investments that meet the criteria of a “specified” investment as detailed in the DCLG guidance. These will be those that will have high security and high liquidity, denominated in sterling and not a long term investment i.e. maturity date of no more than 12 months. The investment is not defined as capital expenditure. The specified investments in which the Council can invest in are:      

The UK Government Debt Management Office Accounts UK Local Authorities and Parish Councils Term deposits with institutions or investment schemes with a credit rating that meets the criteria detailed in section 8. Money Market funds with AAA rating Enhanced Money market funds with AAA rating

7.3.4. Non-specified Investments - The Council’s policy is to invest in non-specified investments, which meet all the criteria of the specified investments above. This includes but is not limited to term deposits and Certificates of deposit issued by banks or building societies and deposits beyond 12 months which meet the criteria as set out in the investment strategy below. 7.3.5. The Council will place deposits in accordance with the Capita Asset Service matrix recommended colour durations, and where possible spread the amounts and dates of maturing investments as evenly as possible over this period. This avoids an excess of investments maturing in any one particular time and helps towards a more stable rate of return.

19

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Hertsmere Borough Council Treasury Management Strategy and Prudential Indicators

7.4.

APPENDIX 1

Creditworthiness policy

7.4.1. This Council uses the creditworthiness service provided by Treasury consultants; Capita Asset Services. This service has been progressively enhanced over recent years and now uses a sophisticated modelling approach with credit ratings from all three rating agencies - Fitch, Moodys and Standard and Poors, forming the core element. However, it does not rely solely on the current credit ratings of counterparties but also uses the following as overlays:   

credit watches and credit outlooks from credit rating agencies CDS spreads to give early warning of likely changes in credit ratings sovereign ratings to select counterparties from only the most creditworthy countries

7.4.2. This modelling approach combines credit ratings, credit watches and credit outlooks in a weighted scoring system which is then combined with an overlay of CDS spreads for which the end product is a series of colour code bands which indicate the relative creditworthiness of counterparties. These colour codes are also used by the Council to determine the duration for investments and are therefore referred to as durational bands. The Council is satisfied that this service gives a much improved level of security for its investments. It is also a service which the Council would not be able to replicate using in house resources. 7.4.3. The Council will therefore use counterparties within the following durational bands:       

Yellow Purple Blue Orange Red Green No Colour

5 years 2 years 1 year (applies to nationalised or semi nationalised UK Banks) 1 year 6 months 100 days not to be used

7.4.4. All credit ratings will be monitored regularly. The Council is alerted to changes to ratings of all three agencies through its use of the Capita Asset Service creditworthiness service. 

if a downgrade results in the counterparty/investment scheme no longer meeting the Council’s minimum criteria, its further use as a new investment will be withdrawn immediately. Consideration will also be given to terminating existing investments where appropriate.



in addition to the use of Credit Ratings the Council will be advised of information in movements in Credit Default Swap against the iTraxx benchmark and other market data on a weekly basis. Extreme market

20

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Hertsmere Borough Council Treasury Management Strategy and Prudential Indicators

APPENDIX 1

movements may result in downgrade of an institution or removal from the Council’s lending list. 7.4.5. Sole reliance will not be placed on the use of this external service. In addition the Council will also use market data and market information from credible sources such as financial times, information on government support for banks and the credit ratings of that government support.

21

155

Hertsmere Borough Council Treasury Management Strategy and Prudential Indicators

7.5.

APPENDIX 1

Counterparty and Group Limits

7.5.1. As well as using the Capita Asset Service matrix, the Council will limit its exposure to any one particular Institution or group of banks, for example the Lloyds Group and Santander Group. The Council will adopt a tiered exposure using Fitch long term (or equivalent from other agencies if Fitch does not provide) to determine the amount of funds placed with each institution. The DMO account, UK Government and Local Authorities and UK part nationalised banks will have a separate limit of £10m. Money market funds will have a credit limit of £8m per fund. 7.6.

Time and monetary limits applying to investments.

7.6.1. The time and monetary limits for institutions on the Council’s counterparty list are as follows (these will cover both specified and non-specified investments): Table 12 – Investment limits Fitch Long term Rating

Money and/or %

Time

Limit

Limit

£8m

As per Capita recommended duration.

£4m

As per Capita recommended duration.

£6m

As per Capita recommended duration.

N/A

£10m

As per Capita recommended duration – Currently 1yr

XXX

£5m

Daily limit

DMADF

AAA

unlimited

5yrs

Local authorities

N/A

£10m

5yrs

Money market funds

AAA

£8m

liquid

Enhanced Money market funds

AAA

£8m

liquid

(or equivalent) Higher Quality Rated Banks

AAA AA+ AA, AA-

Medium Quality Rated Banks

A+ A

UK Medium Banks

Quality

Rated

A+ A

Part nationalised* (Currently only RBS/Natwest fall into this category) Barclays banker.

Bank



Council’s

7.6.2. The council will endeavour to diversify its investment portfolio by country, group and institution. However, the Council may decide to limit counterparty diversification by

22

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Hertsmere Borough Council Treasury Management Strategy and Prudential Indicators

APPENDIX 1

investing in Countries such as the UK, Canada and Australia where there is greater understanding about economy and Government intention such as desire to support institutions from defaulting. 7.7.

Sovereign limits

7.7.1. The Council has determined that it will only use approved counterparties from countries with a minimum sovereign credit rating of AAA (or equivalent from other agencies if Fitch does not provide). This list will be added to, or deducted from; by officers should ratings change in accordance with this policy. However this does not extend to the UK which is currently rated AA+ by Fitch. 7.8.

Current AAA Rated Countries by Fitch:        

Australia Canada Denmark Germany Netherlands Singapore Sweden Switzerland

No more than 30% of the total portfolio is to be invested in any one country, except the UK. 7.9.

Money Market Funds (MMF)

7.9.1. Money market funds are mutual funds that invest in short-term debt instruments. They provide the benefits of pooled investment, as investors can participate in a more diverse and high-quality portfolio than they otherwise could individually. Like other mutual funds, each investor who invests in a money market fund is considered a shareholder of the investment pool, a part owner of the fund. Money market funds are actively managed within rigid and transparent guidelines to offer safety of principal, liquidity and competitive sector-related returns. 7.10. Enhanced Money Market Funds 7.10.1. These are similar to Money market funds in that they use pooled cash to invest into various products and counterparties. In order to be classified and rated as a MMF the fund is required to adhere to strict rules regarding the investment types and average days until maturity of the portfolio. Enhanced funds can vary but will generally be slightly longer dated which means they lose their MMF categorisation. The rating of the funds can vary as they are not constrained by the MMF classification however the council will only use enhanced money market funds which are AAA rated. Although these fund are highly liquid as funds can be redeemed within 2-3 days they are designed to be invested for 6 to 12 months as there can be some volatility in the yield.

23

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Hertsmere Borough Council Treasury Management Strategy and Prudential Indicators

APPENDIX 1

7.11. Main Bankers - Barclays 7.11.1. Currently the council utilises Money Market funds for short term liquidity purposes, however each payment transaction is subject to a chaps charge (bank charge). It is therefore proposed that in addition to the limits set under the main investment strategy, Barclays as our main banker will be further utilised for liquidity purposes. This will involve having balances of up to £5m held in the council business premium account through the use of the banks sweeping system thus avoiding bank charges. 7.11.2. The Local Authority Mortgage Scheme (LAMS) – The Council is currently participating in the cash backed mortgage scheme which requires the Council to place a matching five year deposit to the life of the indemnity. This investment is an integral part of the policy initiative and is outside the criteria above.

8.

Alternative approach

8.1. The investment strategy approach set out in section 7 above is a risk adverse strategy that the Council have chosen to adopt in recent years following the banking crisis. The current strategy utilises only the highest credit rated investments with the emphasis on the security and liquidity of investments. The Council could potentially achieve higher yield levels by investing in the following investments but this would involve the Council taking additional levels of risk:  Bond Funds  Gilt Funds  Unrated/Lower rated building societies  Property Funds  Share Capital in corporate body (Deemed capital expenditure) 8.2. As these types of investments would be considered “non-specified” they would require a greater level of scrutiny to ensure that the appropriateness and associated risks are fully understood. 8.3. The Audit Committee were requested to consider whether the current risk averse approach is still appropriate or whether alternative, higher risk, investments should also now be included in the Council’s Annual Investment Strategy. The Committee have recommended that the Council approve the Annual Investment Strategy set out in section 7. 8.4. The Audit Committee have however requested that further consideration be given to the use of unrated/lower rated Building Societies and further information on these will be presented to the Committee at their next meeting in May 2017. It is therefore recommended that authority be delegated to the Audit Committee to decide whether or not to include the use of unrated/lower rated Building Societies in the Treasury Management Strategy 2017/18.

24

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Hertsmere Borough Council Treasury Management Strategy and Prudential Indicators

9.

APPENDIX 1

Risk Implications

9.1. Monitoring 9.2. On a Quarterly basis Officers will report to Financial Monitoring Panel providing details of new investments, rate of returns and highlighting changes to sovereign rating, group limits and any other relevant treasury issues that may arise.

25

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Hertsmere Borough Council Treasury Management Strategy and Prudential Indicators

APPENDIX 1

10. Treasury Management scheme of delegation (i) Full Council 

receiving and reviewing reports on Treasury Management strategy and policy



approval of annual strategy.



approval of/amendments to the organisation’s adopted clauses, and treasury management practices



approval of the division of responsibilities

(iii). Audit Committee 

scrutiny of/amendments to the organisation’s adopted clauses, and treasury management practices



scrutiny of the division of responsibilities

(iv) Financial Monitoring Panel 

Scrutiny of Treasury Management Performance



receiving and reviewing regular monitoring reports and scrutinising on-going Treasury Management performance.

(v) Director of Resources 

reviewing the treasury management policy and procedures and making recommendations to the responsible body.

11. The Treasury Management role of the section 151 officer The S151 (responsible) officer 

recommending clauses, treasury management policy/practices for approval, reviewing the same regularly, and monitoring compliance



submitting regular treasury management policy reports



submitting budgets and budget variations



receiving and reviewing management information reports



reviewing the performance of the treasury management function



ensuring the adequacy of treasury management resources and skills, and the effective division of responsibilities within the treasury management function



ensuring the adequacy of internal audit, and liaising with external audit recommending the appointment of external service providers.

26

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Hertsmere Borough Council Treasury Management Mid-Year Review 2016-2017

Appendix 2

Treasury Management Strategy Statement and Prudential Indicators Mid-year Review Report 2016/17

1

161

Hertsmere Borough Council Treasury Management Mid-Year Review 2016-2017 1.

Appendix 2

Introduction and Background

1.1. The Council operates a balanced budget, which broadly means cash raised during the year will meet its cash expenditure. Part of the treasury management operations ensure this cash flow is adequately planned, with surplus monies being invested in low risk counterparties, providing adequate liquidity initially before considering optimising investment return. 1.2. As part of the Treasury Management Strategy the Council is required to receive a mid-year review of its Treasury Management Strategy and investments. 1.3. The purpose of this report is to meet one of the requirements of the CIPFA Code, namely the Treasury Management Strategy Statement and Annual Investment Strategy – Mid-year review for the period 01 April 2016 to 30 Sept 2016. 1.4. This mid-year report has been prepared in compliance with CIPFA’s Code of Practice on Treasury Management, and covers the following: 

Economic update o Economic update o Outlook for second half of 2016/17 o Interest rate forecast



Treasury Management Strategy update



Investment portfolio review o Investment portfolio overview o Bank credit ratings overview o Summary of investments held o Budget update



Prudential Indicators 2016 o Capital expenditure o Capital financing requirement o External debt/borrowing o Ratio of financing cost to net revenue stream o Interest rate exposure

2

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Hertsmere Borough Council Treasury Management Mid-Year Review 2016-2017 2.

Appendix 2

Economic Update

2.1. Economic overview 2.1.1. UK GDP growth rates in 2013 of 2.2% and 2.9% in 2014 were strong but 2015 was disappointing at 1.8%, though it still remained one of the leading rates among the G7 countries. During most of 2015, the economy had faced headwinds for exporters from the appreciation during the year of sterling against the Euro, and weak growth in the EU, China and emerging markets, plus the dampening effect of the Government’s continuing austerity programme. 2.1.2. The referendum vote for Brexit in June this year delivered an immediate shock fall in confidence indicators and business surveys, pointing to an impending sharp slowdown in the economy. However, subsequent surveys have shown a recovery in confidence and business surveys, though it is generally expected that although the economy will now avoid flat lining, growth will be weak through the second half of 2016 and in 2017. 2.1.3. The Bank of England meeting on August 4th addressed this expected slowdown in growth by a package of measures including a cut in Bank Rate from 0.50% to 0.25%. The Inflation Report included an unchanged forecast for growth for 2016 of 2.0% but cut the forecast for 2017 from 2.3% to just 0.8%. The Governor of the Bank of England, Mark Carney, had warned that a vote for Brexit would be likely to cause a slowing in growth, particularly from a reduction in business investment, due to the uncertainty of whether the UK would have continuing full access, (i.e. without tariffs), to the EU single market. 2.2. Outlook for next 6 months of 2016/17 2.2.1. There is a high degree of volatility in the global markets. The initial downside pressures resulting from the UK Brexit decision reverted back recently due to the potential inflation threat building in the UK economy. Interest rate expectations have been similarly affected, first pushing lower in anticipation of a near-term rate cut, to more recently, where there is no expectation of any change in either direction for some while to come. 2.2.2. Increasingly markets have priced in no change in Bank Rate for the foreseeable future. However, less than a month ago, it was pricing in a near certainty of a rate cut before year end. Such volatility in expectations will persist. This volatility could remain in situ for some time to come, certainly until there is greater clarity surrounding the consequences for the economy of the vote, and the deal that can be negotiated around a withdrawal. 2.3. Interest Rate Forecasts 2.3.1. Economic forecasting remains difficult with so many external influences weighing on the UK. The MPC meeting of 3 November left Bank Rate unchanged at 0.25% and other monetary policy measures also remained unaltered. This was in line with market expectations, but a major change from the previous quarterly inflation report MPC meeting of 4 August, which had given a strong steer in its forward guidance

3

163

Hertsmere Borough Council Treasury Management Mid-Year Review 2016-2017

Appendix 2

that it was likely to cut Bank Rate again, probably by the end of the year if economic data turned out as forecast by the Bank. The latest MPC decision included a forward view that Bank Rate could go either up or down depending on how economic data evolve in the coming months. Capita’s view is that Bank Rate will remain unchanged at 0.25% until the first increase to 0.50% in June 2019. 2.3.2. The Council’s treasury advisor, Capita Asset Services, has provided the following forecast: Table 1 – Capita’s Bank forecast

3.

Treasury Management Strategy update

3.1. The Treasury Management Strategy Statement (TMSS) for 2016/17 was approved by this Council on 24 Feb 2016. There are no policy changes to the TMSS; the details in this report update the position in the light of the updated economic position and budgetary changes already approved. 4.

Investment portfolio 2016/2017

4.1. Investment overview 4.1.1. In accordance with the Code, it is the Council’s priority to ensure security of capital and liquidity, and to obtain an appropriate level of return which is consistent with the Council’s risk appetite. 4.1.2. The investment market remains difficult in terms of earning the level of interest rates commonly seen in previous decades as rates are very low in line with the 0.25% base rate. The continuing volatility in the markets prompts a low risk strategy with investments rates likely to remain low. 4.2. Bank credit Ratings overview 4.2.1. Following the EU Referendum at the end of June the three credit agencies were quick to review the UK sovereign rating resulting in the following: Moodys – Affirmed at “Aa1 Placed on Negative outlook Fitch – Downgraded to AA from AA+ and placed n negative outlook S&P – Downgraded to AA from AAA and placed on negative outlook

4

164

Hertsmere Borough Council Treasury Management Mid-Year Review 2016-2017

Appendix 2

4.2.2. This also had an impact on a number of UK banks which were also put on a negative outlook by Moody’s in order to reflect their view that a prolonged period of uncertainty would have a negative impact on UK banks. They were concerned with the impact of any future trade agreements which could have an effect on the global investment banking operations of UK banks. 4.3. Investments Held 4.3.1. Table 2 below shows a summary of investments held as at the 30th September 2016: Table 2 – Average investment returns Investments

1st April 2016

Average Rate of Return

Money market, HLT, EFS and fixed term deposits

£41.1m

0.81%

Investments

30th September 2016

Average Rate of Return

Money market, HLT, EFS and fixed term deposits

£51.3m

0.61%

4.3.2. The average level of funds available for investment purposes in the first six months of 2016/17 was £44.5m. These funds were available on a temporary basis, and the level of funds available was mainly dependent on the timing of precept payments, receipt of grants and progress on the capital programme. The average balance to date is considerably higher than budgeted as a result of: - Prudent and conservative budgeting of investment income. - Delayed or re-profiled capital spend - Provisions in final accounts which have yet to materialise in cash terms 4.3.3. As illustrated below (Table 4) the Council’s budgeted investment yield for 2016/17 is 0.77%, however the average to September is 0.68%. This is as a result of interest rates falling further following the June referendum and August reduction to bank rate. Table 3 below illustrates the change in rates which has occurred over the last few months. Table 3 – Interest rate comparison post Brexit Counterparty

Pre Brexit rate

Local Authority – 1 year Nationwide - 6 months Commonwealth Bank Australia – 1 year

0.65% 0.66% 0.96%

Post Brexit 30 Sept. 16 0.40% 0.42% 0.47%

5

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Hertsmere Borough Council Treasury Management Mid-Year Review 2016-2017

Appendix 2

4.4. Budget Update 4.4.1. Despite the reduction in interest rates there is a favourable variance to date on investment income of £43k against the original budget for 2016/17. However the forecast is for a lower favourable variance of £15k by year end as when investment are renewed they will be at lower rates reducing the return in the second half of 2016/17. Table 4 – Investment overview Investment (Ave) £’000 To Date: Budget Average Actual balance to date* Actual favourable / (adverse) Variance *excludes S106 balances held Forecast: Budget Forecast to 31/03/17 Forecast favourable / (adverse) variance

Current Investments at 30 September 2016** Fixed Term Deposits Money Market Funds & Cash Deposits Total investments** **Includes S106 Balances of approx. £7.9m

Income

Rate

£’000

%

28,500 44,500 16,000

110 0.77% 153 0.68% 43 (0.09%)

28,500 39,388 10,888

220 0.77% 235 0.53% 15 (0.24%)

Actual

Ave Rate

44,548 6,797 51,381

0.66% 0.33% 0.61%

6

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Hertsmere Borough Council Treasury Management Mid-Year Review 2016-2017 5.

Appendix 2

Prudential Indicators 2016/2017

5.1. The Council’s capital expenditure plans are the key driver of treasury management activity. The output of the capital expenditure plans is reflected in the prudential indicators, which are designed to assist member’s scrutiny and overview to confirm our capital expenditure plans.

5.2. Capital Expenditure 5.2.1. This prudential shows the revised estimates for capital expenditure and the changes since the capital programme was agreed at the Budget. Table 5 - Capital Expenditure – 2016/17 Original Budget 2016/17 £’000

Revised Budget 2016/17* £’000

Actual 30th Sept 2016 £000

Asset Management

2,309

2,309

733

Engineering Services

5

5

-

Planning & Building Control

29

29

0

Environmental Health

369

380

267

Partnership & Community Engagement

36

36

-

Street Scene

701

701

42

Finance and Business Services

281

218

1

Housing Services

-

-

-

Human Resources

6

6

-

Total Capital Expenditure

3,673

3,684

1,043

*Includes new schemes approved in year.

7

167

Hertsmere Borough Council Treasury Management Mid-Year Review 2016-2017

Appendix 2

5.3. Capital Financing Requirements and net borrowing 5.3.1. The Capital Financing Requirement shows the Council’s underlying need to borrow for Capital investment. Net borrowing refers to borrowing net of investments. 5.3.2. Net Borrowing and the Capital Financing Requirement ensure that over the medium term net borrowing will only be for a capital purpose. Under The Code, the Council will have to ensure that net external borrowing does not, except in the short term, exceed the total capital financing requirement in the preceding year plus estimates of any additional capital financing requirement for the current and next two financial years. Table 6 - Capital Financing Requirements: 2016/17 Original Budget £’000

Total Capital Expenditure Financed by: Capital Receipts Capital Grants Revenue Borrowing

3,673

2016/17 Revised Budget £’000 3,684

1,813 560 1,300 0

1,813 560 1,311 0

Table 7 Net (Borrowings) / Investments

Net (Borrowings) / Investments* *as at 30th September 2016

2016/17 Budget

2016/17 Actual

£’M 28,000

£’000 51,300

8

168

Hertsmere Borough Council Treasury Management Mid-Year Review 2016-2017

Appendix 2

5.4. Treasury indicators: Limits to borrowing activity 5.4.1. The operational boundary. This is the limit beyond which external debt is not normally expected to exceed. In most cases, this would be a similar figure to the CFR, but may be lower or higher depending on the levels of actual debt. 5.4.2. The authorised limit for external debt. A further key prudential indicator represents a control on the maximum level of borrowing. This represents a limit beyond which external debt is prohibited, and this limit needs to be set or revised by the full Council. It reflects the level of external debt which, while not desired, could be afforded in the short term, but is not sustainable in the longer term. Table 8 - External Debt limit 2016/17 Limit Forecast £’m £’m

a) Authorised Limit to External Debt b) Total Probable Debt: Operational Boundary

Sept 2016/17 Actual

£’m

30

0

0

28

0

0

5.4.3. Both the Authorised Limit and the Operational Boundary are consistent with the Council’s plans for capital expenditure and financing treasury management policy and practices. 5.4.4. The Council does not associate borrowings with particular type of expenditure i.e. capital or revenue as it uses integrated treasury management for its day-to-day cash flow management. Hence, it manages its borrowings and investments in accordance with best practice and external borrowings do not simply arise as a result of capital spending. 5.4.5. After the year-end, the Council will have to compute the actual external debt as at the balance sheet date. This will not be directly comparable with Authorised and / or Operational Limit as it reflects the actual position at one point in time.

9

169

Hertsmere Borough Council Treasury Management Mid-Year Review 2016-2017

Appendix 2

5.5. Affordability prudential indicators 5.5.1. These indicators ensure that the level of investment in capital assets proposed by the Council remains within sustainable limits and is affordable – determined by a judgement about acceptable levels of Council Tax after having taken into account all the resources currently available to it/estimated for the future, together with the totality of its capital plans, revenue income and revenue expenditure forecasts for the forthcoming year and the following two years. 5.5.2. Financing costs are negative as the Council currently has no borrowing and hence the investment income is greater than the interest payable. The net revenue stream is the estimate of the amounts to be met from government and local taxpayers. Table 9 - Affordability indicator Ratio of financing Costs to Net revenue Stream:

2016/17 Budget

Affordability Year on Year (Project life)

% (1.62%)

2016/17 Forecast %

(1.94%)

10

170

Hertsmere Borough Council Treasury Management Mid-Year Review 2016-2017

Appendix 2

5.6. Treasury management: Interest rate exposure calculated with reference to net outstanding principal debt 5.6.1. Treasury management covers the borrowing and investment activities of the Council. Under the Prudential regime the Council has to set both upper and lower limits for its variable and fixed rate exposures. a. Variable rate exposures represent borrowing that is variable rates less Investments that are at variable rate. b. Fixed rate exposure represents borrowings at times in excess of 12 months that is fixed rates less investments that are fixed rate investments at times in excess of 12 months. Table 10 – Interest rate exposure limits Upper and Lower Limits Upper Limits – fixed Rates Upper Limits – Variable Rates

2016/17

Actual as at 30th September 2016

100%

79%

75%

21%

Effective ranges within which interest exposures will be managed: Fixed rates: 0% to 100% Variable rates: 0% to 75%

11

171

Hertsmere Borough Council Treasury Management Mid-Year Review 2016-2017

Appendix 2

5.7. Treasury management: Maturity structure of borrowings 5.7.1. This indicator sets the gross maturity limits for borrowing in order to reduce the Council’s exposure to large fixed rate sums falling due for refinancing in a particular year. As of the 31st September there were no outstanding loans. Table 11- Maturity Structure of Borrowings

Maturity Under 12 months Maturity 12 months and within 24 months Maturity 24 months and within 5 years Maturity 5 years and within 10 years Maturity 10 years and above

Upper Limit 100% 100%

Lower Limit 0% 0%

Actual

100%

0%

N/A

100%

0%

N/A

100%

0%

N/A

N/A N/A

5.8. Treasury management: Principal sums invested and maturity 5.8.1. This indicator shows the maximum the Council expects to invest for periods longer than 365 days at any point in time and the maturity structure of those investments. It shows the Council’s exposure to the possibility of loss that might arise as a result of it having to seek early repayment or redemption of principal sums invested. However, the Council’s investment policy is to ensure safety and liquidity by investing with high credit rating institutions in accordance with the code. Table 12 - Investments greater than 1 year As at 30th September 2016 Long Term Investments (> 365 days)* Current Investments (< 365 days) Total Investments * HLT Loan.

£’000 158 51,223 51,381

12

172

Hertsmere Borough Council Treasury Management Outturn Report 2015-2016

Appendix 3

Treasury Management Annual Outturn Report And Actual Prudential indicators 2015/2016

1|P a g e

173

Hertsmere Borough Council Treasury Management Outturn Report 2015-2016

1.

Appendix 3

Introduction

1.1. This Council is required by regulations issued under the Local Government Act 2003 to produce an annual treasury management review of activities and the actual prudential and treasury indicators for the year ended 2015/16. 1.2. The purpose of this report is to meet one of the requirements of the CIPFA Code, namely the annual review report of treasury management activities, for the financial year 2015/16. 1.3. The regulations place responsibility on members for the review and scrutiny of treasury management policy and activities. This report is, therefore, important in that respect, as it provides details of the outturn position for treasury activities and highlights compliance with the Council’s policies previously approved by members. 1.4. From financial year 2016/17 onwards the Audit Committee is the nominated body responsible for ensuring effective scrutiny of the treasury management strategy and policies and will receive reports as set out in table 1, paragraph 1.6 below. 1.5. In order to facilitate this change in reporting requirements members of the Audit Committee, along with all other members, have been offered Treasury training in order to support their scrutiny role. 1.6. This Council has adopted the following reporting arrangements in accordance with the requirements of the revised Code: Table 1 Report

Committee

Frequency

Audit Committee - Scrutiny

annually before the start of the financial year

Full Council - Approval

annually before the start of the financial year

Audit Committee - Scrutiny

annually by the 31 December each year

Full Council - Approval

annually with TMS

Audit Committee - Scrutiny

annually by the 30 September after each year end

Full Council - Approval

annually with TMS

Financial Monitoring Panel

monthly

Treasury Management Strategy (TMS)

Treasury Management Midyear review

Annual Treasury Outturn Review

Treasury Management Monitoring Reports

2|P a g e

174

Hertsmere Borough Council Treasury Management Outturn Report 2015-2016

Appendix 3

1.7. This Treasury management annual outturn report covers:

2.



the Council’s treasury position as at 31 March 2016;



performance measurement;



compliance with treasury limits;



Update of Icelandic Bank Default



Actual Prudential indicators for 2015/2016

The Economy and Interest Rates (Based on Capita advice, April 16)

2.1. The financial year 2015/16 continued in a similar fashion to recent years with a challenging investment environment, and low investment returns. 2.2. Market expectations for the first increase in Bank Rate moved considerably during 2015/16, starting at quarter 3 2015 but soon moving back to quarter 1 2016. However, by the end of the year, market expectations had moved back radically to quarter 2 2018 due to many factors including concerns that China’s economic growth could be heading towards a hard landing; the potential destabilisation of some emerging market countries particularly exposed to the Chinese economic slowdown; and the continuation of the collapse in oil prices during 2015 together with continuing Eurozone growth uncertainties. 2.3. These concerns caused sharp market volatility in equity prices during the year with corresponding impacts on bond prices and bond yields due to safe haven flows. Bank of England Base rate, therefore, remained unchanged at 0.5% for the seventh successive year. Economic growth (GDP) in 2015/16 has been disappointing with growth falling steadily from an annual rate of 2.9% in quarter 1 2015 to 2.1% in quarter 4. 3.

Overall Treasury Position as at 31 March 2016

3.1. At the beginning and the end of 2015/16 the Council‘s treasury position was as follows Table 2 31 March 2015 Principal Total debt

£1m

Rate/ Average Return Life yrs 1.30%

5

31 March 2016 Rate/ Return Principal £0.8m

CFR

£9.9m

£5.9m

Over / (under) borrowing

(£8.9m)

(£5.1m)

Total investments

£36.5m

Net debt

£35.5m

0.74%

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