Agenda and minutes

Budget / Council Tax, Cabinet
Tuesday, 25th February, 2020 10.00 am

Venue: Committee Room 3 - Council House. View directions

Contact: Lara Knight / Michelle Salmon, Governance Services,  Tel: 024 7697 2642 / 2643, Email:  lara.knight@coventry.gov.uk /  michelle.salmon@coventry.gov.uk

Items
No. Item

84.

Declarations of Interest

Minutes:

There were no disclosable pecuniary interests.

85.

Exclusion of Press And Public

To consider whether to exclude the press and public for the item(s) of private business for the reasons shown in the report.

Minutes:

RESOLVED that the Cabinet agrees to exclude the press and public under Sections 100(A)(4) of the Local Government Act 1972 relating to the private report in Minute 91 below headed “Acquisition of a Commercial Asset” on the grounds that the report involves the likely disclosure of information as defined in Paragraph 3 of Schedule 12A of the Act, as it contains information relating to the financial affairs of a particular person (including the authority holding that information) and in all circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

86.

Council Acting as Charitable Trustees for War Memorial Park pdf icon PDF 97 KB

Report of the Deputy Chief Executive (Place)

Additional documents:

Minutes:

The Cabinet considered a report of the Deputy Chief Executive (Place) that sought the in principal agreement of the Cabinet, sitting as the Charitable Trustees for the War Memorial Park, to the introduction of parking charges in the area of the War Memorial Park.

 

The report indicated that by virtue of a conveyance dated 27th January 1921, the War Memorial Park is held on trust by the Council and therefore any decisions relating to it must be made on the basis of and acting in capacity as sole charitable trustee and what is in the best interests of the charity alone.  Where the local authority is the sole trustee it is the corporate body (“authority itself”) which is the trustee and, as such, guidance from the Charity Commission states that responsibility for decision making and oversight rests with Councillors.  In exercising the obligation as charity trustee, the decision makers must ensure that their decisions are only taken on the basis of what is in the interest of the charity and not what is in the best interest of the local authority.

 

The Cabinet noted that it had become apparent that the car park at the War Memorial Park was being used by persons who were not particularly visiting the park for the purposes of recreational activities, which is the basis upon which the park is held.  This therefore presented an opportunity in the best interests of the War Memorial Park, for charges to be introduced to be applied to those persons who utilise the availability of parking spaces for purposes contrary to which the land is held.  A plan of the parking areas affected was set out in an Appendix to the report.

 

The introduction of the car parking charges would not affect the ability of the Council acting in their capacity as Charitable Trustees to comply with the objectives stated in the Conveyance, as the charges would only seek to regulate the use of the car parks and not the use of the park itself.  Furthermore, any consideration received as part of the introduction of the car parking charges from the War Memorial Park would be spent on furthering the objectives to which the land was entrusted to the Council, pursuant to the conveyance referred to above.

 

RESOLVED that, the cabinet in its role as Charitable Trustee of the War Memorial Park:

 

1.  Agrees in principle to the introduction of parking charges in the area of the War Memorial Park identified in Appendix A of the report submitted.

 

2.  Delegate authority to the Director of Streetscene and Regulatory Services, following consultation with the Cabinet Member for Equalities and Policing, to finalise the charging structure which shall include undertaking the appropriate due diligence and completion of any necessary legal processes.

87.

Council Tax Setting Report 2020/21 pdf icon PDF 103 KB

Report of the Director of Finance and Corporate Services

Minutes:

The Cabinet considered a report of the Deputy Chief Executive (Place) which calculated the Council Tax level for 2020/21 and made appropriate recommendations to Council, consistent with the Budget Report 2020/21. 

 

The report indicated that some of the figures and information set out within the report were identified as provisional, as the Police and Crime Commissioner and the Fire and Rescue Authority precepts had not been confirmed at the time of publication.  The Cabinet were advised by the Deputy Chief Executive (Place) that confirmation had now been received in relation to these precepts and that the figures within the report were all confirmed as accurate.

 

The report incorporated the impact of the Council’s gross expenditure and the level of income it would receive through Business Rates, grants, fees and charges.  This resulted in a Council Tax requirement, as the amount that its expenditure exceeds all other sources of income.

 

The report included a calculation of the Band D Council Tax that would be needed to generate this Council Tax requirement, based on the City’s approved Council Tax base.  The 2020/21 Band D Council Tax that was calculated through this process had increased by £63.93 from the 2019/20 level.

 

Each year the Government determined the maximum Council Tax increase that local authorities could set without triggering a referendum.  For 2020/21 the Secretary of State had published a report which proposed that the rise in Coventry City Council’s Council Tax must be below 3% in 2020/21 to avoid triggering a referendum, comprising a 2% precept for expenditure on adult social care and a maximum of 2% for other expenditure.  At the time of writing, the Secretary of State’s report was subject to parliamentary approval.  The recommendations within the Budget Report 2020/21 were based on a proposed increase in Council Tax of 3.9%, including a 2% Adult Social Care Precept.

 

It was noted that the recommendations followed the structure of resolutions drawn up by the Chartered Institute of Public Finance and Accountancy, to ensure that legal requirements were fully adhered to in setting the tax.  As a consequence the wording of the proposed resolutions was necessarily complex.

 

RESOLVED that, the Cabinet recommend that Council:

 

1.  Note the following Council Tax base amounts for the year 2020/21, as approved by Cabinet on 7th January 2020, in accordance with Regulations made under Section 31B of the Local Government Finance Act 1992 (“the Act”):

 

a)  83,905.5 being the amount calculated by the Council as its Council Tax base for the year for the whole Council area;

 

b)  Allesley   337.6

Finham  1,552.2

Keresley  239.7

 

  being the amounts calculated by the Council as its Council Tax base for the year for dwellings in those parts of its area to which one or more special items relate.

 

2.  That the following amounts be now calculated by the Council for the year 2020/21 in accordance with Sections 31A, 31B and 34 to 36 of the Act:

 

(a)  £744,281,523  being the aggregate of the amounts that the Council estimates for  ...  view the full minutes text for item 87.

88.

Budget Report 2020/21 pdf icon PDF 264 KB

Report of the Director of Finance and Corporate Services

Additional documents:

Minutes:

The Cabinet considered a report of the Deputy Chief Executive (Place), which set out the proposals for the Council’s final revenue and capital budget for 2020/21.

 

The report followed on from the Pre-Budget Report approved by Cabinet on 19th November 2019 which had since been subject to a period of public consultation.  The proposals within the report now formed the basis of the Council's final revenue and capital budget for 2020/21 incorporating the following details:

 

  Gross budgeted spend of £744m (no change from 2019/20).

  Net budgeted spend of £239m (£7m and 3% higher than 2019/20) funded from Council Tax and Business Rates less a tariff payment of £19.9m due to Government.

  A Council Tax Requirement of £141.4m (£6.2m and 4.6% higher than 2019/20), reflecting a City Council Tax increase of 3.9% detailed in the separate Council Tax Setting report on today’s agenda.

  A number of new expenditure pressures, savings and income generation proposals within Council services.

  A Capital Strategy including a Capital Programme of £232.7m  including expenditure funded by Prudential Borrowing of £33.1m.

  An updated Treasury Management Strategy, Capital Strategy and a Commercial Investments Strategy.

 

The financial position set out in the Budget Report was based on the Final 2020/21 Local Government Finance Settlement and incorporated a funding position which broadly matched that of 2019/20. This position contained significant uncertainty for the period after 2020/21 which would be subject to medium-term spending decisions by the new Government.  Decisions were awaited on whether this would include a revised allocation model within the Local Government sector and a new national Business Rates retention model. As a result it was impossible to provide a robust financial forecast at this stage and the Council had included some prudent planning figures.  Initial assumptions indicated the likelihood that there will be a substantial gap for the period following 2020/21.  The view of the Council’s Director of Finance and Corporate Services was that the Council should be planning for such a position.

 

2020/21 would see the Council continue, along with the other 6 West Midlands councils, to participate in a 100% Business Rates Pilot scheme.  This would enable the Council to retain 99% of Business Rates income including any growth against an historic baseline which would otherwise have been returned to the Government.  The financial model and assumptions that support the Pilot had been incorporated within the financial position included in the report.

 

The Pre-Budget Report was based on an increase in Council Tax of 3.9% and this position had been maintained for the final proposals in the report now submitted.  This incorporated an increase of 1.9%, which was within the Government’s limit of 2% and above which a referendum would need to be held, plus a further 2% relating to the Adult Social Care Precept.  This proposed increase would be the equivalent of around 90p a week for a typical Coventry household.

 

In broad terms the Government Settlement had maintained the level of resources available to the Council to support  ...  view the full minutes text for item 88.

89.

Acquisition of a Commercial Asset pdf icon PDF 107 KB

Report of the Deputy Chief Executive (Place)

Minutes:

The Cabinet considered a report of the Deputy Chief Executive (Place) which set out proposals for the acquisition of a commercial asset.

 

A corresponding private report was also submitted to the meeting setting out the commercially confidential matters of the proposals. (Minute 91 below refers.)

 

The report indicated that officers had been exploring the commercial and financial viability of acquiring a commercial asset.  The Council had entered into an exclusivity and confidentiality agreement to undertake due diligence to assess the commercial opportunities and business risks associated with acquiring the business. 

 

The proposed acquisition presented several opportunities to add value to an internal service that could only be delivered from acquiring these shares.  The current owners had expressed a preference to complete the transaction by the end of the financial year (10th March 2020).  The estimated acquisition price would be adjusted for net debt within the business and working capital.  The final value would not be known until the legal documents had been agreed and due diligence completed on the management accounts for the current financial year. 

 

A share acquisition could only be financed over a maximum period of 20 years, which meant the capital financing costs for the business were higher than if it had been possible to spread this over a longer term.  The current profit (2018/19 for group) was sufficient to service this level of investment costs and deliver dividends that could be attributed to the medium term financial strategy.  Based on this performance, it would be possible to extract dividends over and above the capital financing costs without jeopardising the day to day operation of the business.  There had been growth for the current financial year, which had shown an increase in profit for the first 6 months of the year (April to September 2019), strengthening this financial position.

 

As part of the due diligence, costs had been incurred with the Council’s external financial advisors for financial due diligence, external legal advisors for legal due diligence and external environmental advisors for an environmental survey and due diligence.  There would also be costs incurred to complete the transaction as part of the Sale and Purchase Agreement.  Approval was being requested to incur these fees retrospectively for the due diligence work and going forward to enable the shares to be acquired within the company.  Flexibility was requested to utilise the approved financial envelope to meet the acquisition costs and any transaction costs to complete the deal.

 

Environmental advisors were instructed to undertake an environmental survey for the sites operated by the commercial asset.  The survey concluded there were a number of operational and environmental risks that could be mitigated through the Share Purchase Agreement and actions by the Company pre completion. 

 

Proposed governance arrangements were set out within the report to manage this commercial investment:  Creation of a Member Shareholder Panel with overall responsibly for the investment, approval of the business plan and the financial parameters within which the Board of Directors and Management team could take forward decisions.  ...  view the full minutes text for item 89.

90.

Any other items of public business which the Chair decides to take as a matter of urgency because of the special circumstances involved.

Minutes:

There were no other items of public business.

91.

Acquisition of a Commercial Asset

Report of the Deputy Chief Executive (Place)

 

(Listing Officer: A Walster, tel: 024 7697 2335)

Minutes:

Further to Minute 89 above, the Cabinet considered a private report of the Deputy Chief Executive (Place), setting out the commercially confidential matters relating to the proposed acquisition of a commercial asset.

 

RESOLVED that, the Cabinet recommend that the Council:

 

1.  Approve the use of its powers under Section 12 of Local Government Act 2003 and Section 1 of the Localism Act 2011 to acquire the shares in the company as a commercial investment for the maximum value set out within the report submitted (including transaction costs), subject to any adjustments detailed in the report.

 

2.  Approve the addition of up to the sum set out within the report (or other figure as agreed under delegated authority) to the capital programme.

 

3.  Delegate authority to the Director of Streetscene and Regulatory Services, Director of Finance and Corporate Services and City Solicitor and Monitoring Officer to agree detailed terms of the transaction with the Company indicated within the report.

 

4.  Delegate authority to the Director of Streetscene and Regulatory Services, Director of Finance and Corporate Services and City Solicitor and Monitoring Officer to enter into the relevant legal agreements and associated documents necessary to complete the transaction.

 

5.  Approve the implementation of the governance structure and associated terms of reference for the Shareholder Panel and Board of Directors, as detailed in section 2.22 of the report

 

6.  Delegate authority to the Leader of the Council to approve the appointment of three Members onto the Shareholders Panel to represent the Council as sole shareholder of the Company.

92.

Any other items of private business which the Chair decides to take as a matter of urgency because of the special circumstances involved.

Minutes:

There were no other items of private business.