To receive any announcements from the Chief Executive.
Minutes:
The Chief Executive made the following announcements:
“It has been - by any measure - a remarkable municipal term - half of which has been dominated by a global pandemic.
We can rightly be proud of how this authority mobilised to preserve the lives of more than 17,000 extremely vulnerable residents for two long, bruising years.
Recently, our Corporate Peer Challenge Review acknowledged the ‘brilliant’ exemplary work that we undertake to keep our communities at the heart of everything we strive to do.
The Spelthorne Civic Trust embroidered award - on display at the back of this chamber - is testament to how closely we have worked with our communities and volunteers across our borough.
Our work has repeatedly been recognised externally with a wide array of awards, including a Gold award for our armed forces commitment in the Defence Employer Recognition Scheme, a Quest Award for outstanding leisure service, Lexel quality marks for governance services, Gold Exemplar award for IT, numerous Green Flag and South East in Bloom awards for our gardens, parks and cemeteries, a Cabinet Office shortlisting (one of only two local authorities) for the ‘Government Property Project of the Year’ award and an MJ Award shortlisting for the Best Council Housing Team for the steps we have taken towards eradicating homelessness in the Borough. Most recently, this authority was also awarded the all-England Local Council ‘future-ready’ award by the Federation of Small Businesses.
Whichever way you view it, our work has made a qualitative difference on the ground, now and for future generations. From securing homes for vulnerable and homeless residents with the completion of our single homeless hostel and emergency bed and breakfast family provision to delivering affordable homes across the Borough, such as those in the West Wing of this very building – that is the physical manifestation of our commitment to local people. For some, seeing is believing and our magnificent new Leisure Centre is rising-up to symbolise this authority’s commitment to net-zero in building the world’s first full scale wet and dry leisure centre built to Passivhaus standard.
Madam Mayor, I am incredibly proud of Team Spelthorne, its commitment, its professionalism, and its dedication to serving our communities and our businesses and we can all take immense pride in the knowledge that this authority’s work is recognised alongside the best in the country.
I would therefore like to place on record my heartfelt appreciation as the Head of Paid Services for what we have collectively achieved and to formally thank each Member in this Chamber for the role you have played in this endeavour.
Our innovative and enterprising commercial work has invested over £40million in this 4 year municipal term into non-discretionary services supporting our most vulnerable members of our community – though to put our financial success as well as future challenges into perspective, I should now like to hand over to the Council’s Section 151 Officer, Terry Collier”.
The Section 151 Officer made the following announcements:
“The four years of this Council cycle has seen unprecedented external economic challenges particularly as a result of COVID-19 Pandemic, the tragic events in Ukraine and the Cost of Living Crisis. Whilst the associated increased inflationary pressures have added to the pressures on our budget moving forwards, this has been the case for all public sector bodies. Whilst some of our income streams, particularly car parking have not fully recovered since the economic impacts of the Pandemic and may never recover; overall relative to most councils we are in a better financial position than others, and have been able to protect the services we provide to our residents.
Council, over the last four years has also made some important decisions with regard to the height and massing of its own development schemes particularly in Staines-upon-Thames, which has reduced the annual income from Knowle Green Estates by over one million pounds. This will make balancing future annual budgets more challenging as Council will have to make some difficult choices in the future.
The Council at its Extraordinary Council Meeting on 2nd February 2023, took the responsible step in addressing the financial viability of the residential pipeline (and avoiding undermining the ability of the Council to provide discretionary services) by:
· committing to seek to maximise Homes England funding for affordable and key worker units,
· making Thameside and Benwell Phase 2 private rental,
· accelerating Tothill affordable residential; and
· agreeing to a capital injection for Knowle Green Estates.
Whilst the Council are facing a more challenging budget process over the next 4 years, it is still financially better placed than most Councils. Our investment assets continue to deliver a net income contribution of £10.8m per annum to support the provision of services to our residents. Without this income, the resilience of the ability of our services would be significantly weakened and we would have to significantly scale back discretionary services such as community centres. As the Chief Executive has commented, cumulatively since 2016 this equates to well over £40m extra funding being available to support our services.
Whilst we are well placed compared to many local authorities, over the next four year Council cycle we are going to need to focus on closing budget gaps over the medium term period. Some of this will come from income including future investment rental uplifts and investments in areas such as EV charging which have the potential to bear fruit. We will need to focus on continuing to explore opportunities for collaboration with other councils and partners, look at how we can lever better terms when we purchase goods and services, look at how we can align seeking to cut our carbon impact with generating ongoing revenue benefits. Importantly, the next Council is going to need to focus much on prioritising and recognising that if we wish to enhance services in one area we will need to look at how we make efficiencies in other areas.
Unsurprisingly, given the external economic challenges, we have witnessed a certain amount of churn of tenants. This has temporarily reduced the occupancy rate across our investment assets portfolio below 90%, and is the reason why we are budgeting to make some use of the sinking funds we have built up over the last seven years to address a dip in net rental income over this year and next financial year, before we recommence building those reserves up again. This is applying the sinking fund reserves for the earmarked purpose they were set aside from the rental income streams to act as a safety net to protect the Revenue Budget from short term dips in rental income. We anticipate the sinking funds balance at the end of 2022-23 will be approximately £37m. Despite the economic pressures of first the pandemic and now the cost of living crisis, we have continued to do well in collecting the asset investment rental invoiced in 2021-22 when we collected 99.8%. So far for 22-23 we have collected 98.9% and expect to collect the majority of the rental still outstanding.
The Assets team have responded pro-actively to the turn over of some tenants and last month CPRC agreed Heads of Terms with a tenant who will take occupation from July of three floors at the Hammersmith Grove Development. The Development Sub-Committee have approved a deal with a tenant to take occupation of one floor in one of our other properties, and we have a potential tenant to occupy half of a floor in one of our properties. These incoming tenants will potentially reduce the void percentage in terms of rental income from 15% to 8%. We are looking at options for short term lets to voluntary and other sectors to offset holding costs of vacant space until longer term income producing lettings are in place.
We will be reviewing and refreshing the modelling of our sinking funds reserves to ensure that we continue to have sufficient levels set aside to meet future pressures over the next 50 years.
Equally, by taking a pro-active approach to managing our retail centre at Elmsleigh, we are performing well with only one void at the centre and currently having collected 97.5% of the rent due for 2022-23 (a figure which will rise). We are excited to be moving forward proposals in partnership with Surrey County Council to relocate the library in the Elmsleigh centre and to secure a £4m investment from the County to ensure that our residents have a modern fit for purpose library close to the main footfall in the town.
Over the last four years, as has been mentioned by the Leader, the Council has delivered the Whitehouse single person facility (including move on units) and the 20 bed family emergency accommodation at Harper House, plus we have delivered 25 affordable rental units in the West Wing- to our knowledge we are the only Council in the country to have literally delivered affordable housing on its literal council offices door step. Additionally we deliver a 55 bed mixed tenure scheme at Benwell. Looking ahead to the next 4 years it is important that we deliver on our pipeline affordable, keyworker and PRS schemes both to support the Council Housing Strategy objectives but also to protect the Council’s financial position. Officers have been having very positive discussions with Homes England who have reiterated their keenness to become involved and provide grant support for our affordable housing delivery programme across the Borough. This grant will play a key part in underpinning the financial viability of our affordable and key worker schemes.
We are also seeking to address the challenges of ensuring that as a geographic area we make an appropriate contribution to ensuring that there is appropriate accommodation for recent Afghan and Ukrainian arrivals. As part of this, Development Sub-Committee on Monday approved using Local Authorities Housing Fund grant to part finance the acquisition of 4 homes within the borough to initially house such families. Once the Afghan/Ukrainian families move on we would then be free to use the accommodation to address general housing need. This scheme over the long term will deliver a surplus for the Council and its housing management company Knowle Green Estates.
During the last year we had the positive experience of the LGA Peer Review which has reinforced our intention of building on the Finance Team’s upgrade to the Centros platform to focus on improving the usefulness of financial reports for their recipients, both councillors and managers. We are looking to make them more visual and moving more to a dashboard approach. Paul Taylor and his team have a two year implementation programme to address this.
The last four years has been very frustrating with respect to the speed it has taken to resolve matters with KPMG with respect to their 2017-18 Value for Money opinion. It was very positive that at the March Audit Committee KPMG reported that they had concluded their work and were issuing an unqualified opinion on the 2017-18 Statement of Accounts. Now the incoming auditors have a significant backlog catch up exercise which will also, over the next two years, be a significant drain on the time and resources of the finance team. As reported to the March Audit Committee, officers, particularly with a useful fresh perspective from Coralie Holman our new Group Head for Assets, are preparing an Action Plan to address areas for improvement identified by the Public Interest Report. As has previously been debated the Council legal advisers had a different view to the Auditors Legal Advisers, and we do not believe there are issues of substance to address but we are always looking at how we can improve the way we manage our assets
Over the last year, we have engaged positively with the Department of Levelling Up, Housing and Communities (DLUHC) and the Chartered Institute of Public Finance and Accounting (CIPFA) (as we have positively encouraged conversations previously with NAO, LGA and previous incarnations of DLUHC) to share with them our approach to mitigate risks with respect to our significant levels of debt associated with our Capital Programme. When we receive the feedback from DLUHC we will share it with councillors and report to Corporate Policy and Resources and Audit Committee. We will of course engage positively with any recommendations suggesting areas of focus for improvement which may be made by DLUHC post the elections. In seeking to maintain the momentum of our residential and regeneration pipeline, in order to address the housing needs of our residents and support Government priorities, we will continue to seek to manage risk and moderate the proportion of the funding which will be required to come from borrowing”.