Agenda and minutes

The Democratic Services Officer read out the procedure.

RESOLVED that a Vice-Chair was not required on this occasion. 

Apologies were receive from Councillor Andrew Furse, for whom Councillor Nicholas Coombes substituted, and from Councillor Dave Laming.

At this point in the meeting declarations of interest are received from Members in any of the agenda items under consideration at the meeting. Members are asked to indicate:

(a) The agenda item number in which they have an interest to declare.

(b) The nature of their interest.

(c) Whether their interest is a disclosable pecuniary interest or an other interest,  (as defined in Part 2, A and B of the Code of Conduct and Rules for Registration of Interests)

Any Member who needs to clarify any matters relating to the declaration of interests is recommended to seek advice from the Council’s Monitoring Officer before the meeting to expedite dealing with the item during the meeting.

There were none.

The Chair announced that there would be an additional item on the restructuring of the Council’s debt, which would be taken as the last item of business.

There were none.

There were none.

These were approved as a correct record, subject to two amendments:

item 10, page 7, end of the third paragraph, “implanted” should be “implemented”.

item 12, top of page 10, Newbridge Park and Ride scheme, amend “complicated by a number of local factors and that it that it really did not merit inclusion in the list” to “complicated by a number of local factors. It did merit inclusion in the list”.

The Strategic Director of Resources presented the report. He presented the apologies of the Divisional Director – Risk and Assurance, who was unwell. He said that it was intended to do further work on the third option (the co-sourced model). Appendix 1 showed the scorings for the four options considered. The partnership model had achieved the highest score. The report referred to two existing partnerships, the Devon Partnership and the South West Audit Partnership (SWAP). He believed that a partnership would be able to deal with the complexity of the world in which local authorities now operated, while offering improved value for money. He noted the presence of Internal Audit staff in the public gallery, and acknowledged their apprehensions about restructuring. He believed that a partnership could allow the skills and experience of local staff to be used, while also allowing greater flexibility in the deployment of specialist staff. Value for money and resilience were two key issues.

He said that the present report summarised the first stage of the project, on which the Committee was invited to comment. It was important to have the right model in place for the next financial year. Cabinet would decide the level of financial resources to be allocated to the internal audit function, but would take into account the views of the Committee. SWAP used to be led by South Somerset District Council, but is now a Limited Company, so it was not certain whether or not entering into an arrangement with them would be subject to the procurement rules. The Devon Partnership was still local authority led.

Councillor Macrae said that knowledge and experience of local staff was very important, as was continuity. He cautioned against regarding this as a cost-saving exercise. It should be about extending the range of expertise available to the Council. The same areas of work were deferred repeatedly, which suggested that there was a lack of expertise in these areas.

Councillor Coombes agreed that the emphasis should be on increasing expertise when the issue was taken to Cabinet. However, he wondered why restructuring was being considered at all. The report implicitly ruled out the in-house option, without making it clear why change was necessary or desirable and what the objectives were. He thought the similarity in some of the scorings for different options raised suspicions about how accurate they were. The Strategic Director of Resources suggested the objectives were implicit in the scoring criteria. There were comments about the in-house service in the report.

John Barker said that he had had an ongoing dialogue with the Divisional Director – Risk and Assurance during the development of these options. A lot of detailed work had been done, which he believed should be made available to the Committee. At present, it was not clear what level of resources the Council was prepared to allocate to audit functions; the only figure available was the £381K given in the report as the budget for Internal Audit in 2013/14. More clarity should  ...  view the full minutes text for item 23.

Mr Hackett presented the report.

RESOLVED to note the update from the external auditor and the findings from Appendix 1.

The Strategic Director of Resources presented the report. He invited the Committee to delegate to the Chair and the Divisional Director for Risk and Assurance the preparation of the Committee’s Annual Report to be submitted to Council in September.

Councillor Coombes objected that no draft Annual Report had been circulated with the agenda, contrary to previous practice. John Barker agreed that previous practice had been to circulate a draft Annual Report to Members, even if skeletal, on which the Committee commented before delegating to the Chair and senior officer the final editing of the draft. Since it was important that the Annual Report was submitted to Council at the same time as the Accounts he suggested that a draft be circulated to Members in time for them to comment on it before it went to Council in September The Chair and the Strategic Director of Resources undertook to do this.

RESOLVED that the draft annual report be circulated to Members and that the final editing of the draft to incorporate Members comments be delegated to Councillor Will Sandry as Chair of the Committee and the Divisional Director for Risk and Assurance.

The Divisional Director – Finance apologised for the lateness of this item. However, he thought it better to discuss it with the Committee before implementation rather than just to report it retrospectively at the September meeting. The consensus of city analysts was that low interest rates would continue in the medium term. So the Council’s treasury management advisors, Arlingclose, were requested to undertake a review of the Council’s debt portfolio.  The Council had a £120m of debt, on which the average interest rate was 4.5%, while the interest earned on cash was only 0.5%.  Arlingclose had advised that £50m of long-term loans should be repaid. There was a potential saving of £1.45m in the first year of repayment. The decision was one that had been delegated to officers, but he wanted to share it with the Committee and take its views into account.

Councillor Macrae said that he was willing to accept the professional judgement of officers on this matter.

Councillor Coombes asked why it was not intended to pay high-interest loans. The Divisional Director – Finance explained that premiums were payable when loans were repaid to the Public Works Loan Board, and the premium payable on high-interest loans was so high that early repayment was not worthwhile.

Councillor Curran asked whether the reduction in Council debt would be permanent. The Divisional Director – Finance said that this was not possible, because cash was needed for other things as well, but shortfalls arising from the use of cash to repay loans could be covered by short-term borrowing at very low interest rates. The process resembled the use of an offset mortgage.

John Barker said that he was sure that officers had received the best possible advice. The average rate at which the Council borrowed was an important issue. He thought the proposal was excellent and that officers should be congratulated.

RESOLVED to note the debt restructuring proposal.