Agenda item

Report to follow

Councillor Stevens, Chair of the Financial Scrutiny Task and Finish Group (T&F Group), summarised the key points in the published statement from Stage One of the Financial Task and Finish Group meetings.  The purpose of the statement he said was to assist members of the Scrutiny Commission to ask questions about the Capital Strategy and the Medium Term Financial Plan (MTFP).

The following points were highlighted by Cllr Stevens and discussed by all:

• The Capital Strategy is a set of rules to be approved by Full Council by which Capital Investment decisions are taken.
• Capital Strategy: the first one was completed last year.  This year is the first review of it.  It sets out the risks and provides a governance framework.  Some changes are being made to it this year, including the aims and how projects are prioritised.

• It was highlighted that there is a proposal to limit the long-term total of capital investment so that financing costs were held at or below 10% of the General Fund income. The effect of which needs to be better understood and if implemented could force quite rigorous prioritisation and tough decisions.
  • The Director of Finance responded to the point Cllr Stevens made about the 10% being attributed to the cost of financing and it not being intended to destabilise the programme i.e. it is the cost of borrowing.  She said it was a mixed and balance programme and is moving on the right trajectory.  Also, that officers had completed a benchmarked exercise against other local authority’s (LA) programmes on ‘invest to save’ initiatives and they varied greatly.  The national average is 4% but for Core Cities it is much higher.  For example Birmingham is 13% which makes it difficult to compare like for like.  However, it was highlighted that this was not intended to set the direction of travel as such.  Officers said that the 10% figure was a ‘guide’ which the Council are moving towards.  Officers were conscious the actual figure was gradually creeping up and they were keeping an eye on it. However it was reiterated that there is no right or wrong figure on this.

• Capital investment currently falls into three categories:
  • Investing for inclusive growth
  • Invest to save and to generate returns
  • Investment to improve and maintain Council assets

• SEND (Special Educational Needs and Disability): Direct Schools Grant (DSG) There is a ‘cap’ to stop any new borrowing within DSG funds.  It was agreed that this point should be discussed further at the forthcoming SEND - Scrutiny Evidence Gathering Session on 3^rd February 2020.  Officers reaffirmed the Councils 
• Members asked if the Investment Strategy included Bristol Energy.  Officers said no it did not. 
• (MTFP) The potential implications of the McCloud Local Government Pensions Scheme legal case.  This is a national issue and for all local authorities.  Estimations suggest this may potentially cost £13.9m.  A lot of work has been carried out on what the likely impact is to be for Bristol City Council. 
• Cllr Stevens said that when budget comes out Members will need to systematically consider about how the Council invests and how it can get the optimum amount from its finances.
• It was asked if the Social Care precept was only for one more year.  Officers yes and that is the case every year.
• Reserves: The Chair of the T&F Group said he did not think this had been very transparent in the past.  Officers said they intended to provide more clarity and for this to be more transparent going forward. The general reserves were now capped at £20m and figures have been incorporated into the MTFP where they are more visible. The Members agreed and the Task & Finish Group Chair said he had looked at the MTFP that day and had never seen so much transparency which was he applauded, and said was very good. 

Cllr Stevens offered to submit a statement to the next Cabinet meeting on behalf of the Commission.  He said it could be an update from either the Task and Finish Group or the Scrutiny Commission.  It was agreed that the Statement would come from the T&F Group. ACTION: Cllr Stevens to submit a statement to the next Cabinet Meeting on behalf of the Task and Finish group.