Members of the Committee are requested to bring their copy of the agenda for the Executive meeting on
Minutes:
The Committee considered the following reports on the Part 1 agenda for the meeting of Executive on 10th January 2018.
(6) DRAFT 2018/19 BUDGET AND UPDATE ON THE COUNCIL’S FINANCIAL STRATEGY 2019/20 TO 2021/22
Report FSD18001
The report sought the approval of the Executive of the initial draft 2018/19 Budget including the full year effect of changes agreed as part of the 2017/18 Council Tax report including savings approved during the year with the resultant impact on the Council’s medium term “budget gap”. The report also provided details of the third year of the four year local government financial settlement (2018/19 to 2019/20), the impact of the Chancellor’s Autumn Budget 2017 and the provisional Local Government Financial Settlement 2018/19.
In response to a question, the Director of Finance reported that there were opportunities to challenge the policies of Government in relation to Local Government finance. The Government was listening to some of the concerns that were being raised. The Leader, Resources Portfolio Holder and Senior Officers were lobbying hard to highlight the position in which Bromley found itself and to ensure that Bromley received a fairer funding settlement. On the day after the provisional Local Government Settlement had been announced the Leader, Portfolio Holder for Resources, Chief Executive and Director of Finance had met with the Secretary of State for Communities and Local Government to discuss the various financial challenges. Generally, Local Government Finance was becoming more complex however it appeared that the Government was now listening more than in previous years. The Local Authority was taking steps to ensure that Ministers were fully appraised of all the issues.
The Chairman noted that Council had powers to raise empty homes premium from the current 50% of council tax to 100% of council tax. It was agreed that the Executive should be asked to consider this option as it provided an opportunity to raise additional revenue. In response to questions from Members the Director of Finance explained that as a general rule any liveable property that remained vacant was deemed to be an empty property although there were exceptions to this such as where the property formed part of an estate for the purposes of probate. It was agreed that the Director of Finance would forward the definition of ‘empty property’ to the Committee
Action Point 17: That the Director of Finance forward the definition of “Empty Property” to the Committee.
The Chairman also highlighted that action would need to be taken by Chief Officers to fund increasing costs through alternative savings in the event that inflation exceeded budget assumptions. It was agreed that there should be a specific recommendation for the Executive to note this.
Members noted the perverse situation highlighted in Appendix 2 of the report whereby in 2019/20 Bromley was due to face negative Revenue Support Grant and could be required to pay the Government £2.3m. Members encourage senior politicians and officers to continue to lobby on this matter to achieve a fair outcome for Bromley.
Members noted that the Local Government Finance Settlement 2018/19 had confirmed that Council would be in a position to increase Council Tax by up to 2.99% without a referendum in addition to the Social Care precept.
The Committee also noted that, in the face of mounting financial challenges, there would be a need to manage the rising expectations of residents across the Borough. The Director of Finance further noted that it would not be possible to reduce local government funding by the amount that was being proposed whilst continuing to expect local government to meet the same number of statutory responsibilities. Whilst the financial outlook was very challenging it appeared that the view of the Government was simple, there was a clear expectation that council’s across the Country have a legal obligation to balance their budgets.
RESOLVED: That the Executive be recommended to:
1. Agree the initial draft 2018/19 Budget detailed in Appendix 7 to the report;
2. Refer the initial draft 2018/19 Budget for each portfolio to the relevant PDS Committees for consideration;
3. Note the financial projections for 2019/20 to 2021/22;
4. Note that there are still areas of financial uncertainty which will impact on the final 2018/19 Budget and future year forecasts;
5. Delegate the setting of the schools budget, mainly met through Dedicated Schools Grant, to the Education, Children and Families Portfolio Holder, allowing for consultation with head teachers, governors and the Schools Forum;
6. Note that the outcome of consultation with PDS Committees will be reported to the next meeting of the Executive;
7. Consider the outcome of the public consultation meetings detailed in Appendix 10 of the report;
8. Agree the proposed contribution of £248,033 in 2018/19 to the London Boroughs Grant Committee;
9. Note the outcome of the Provisional Local Government Financial Settlement 2018/19 as detailed in the report;
10. Note the significant budget gap remaining of an estimated £38.7m per annum by 2021/22 and that any decisions made for the 2018/19 Budget will have an impact on the future year projections;
11. Note that any final decision by Executive on recommended council tax and social care precept levels to Council will normally be undertaken at the next meeting of Executive;
12. Consider the option of raising the empty homes premium to 100% of council tax.
13. Agree to delegate authority to the Director of Finance in consultation with the Director of Corporate Services, Leader of the Council and the Resources Portfolio Holder, in relation to the operational details of the London Business Rate Pilot pooling arrangements with the participating authorities;
14.Agree to enter into a Memorandum of Understanding with the participating authorities as may be necessary to implement and/or regulate the pool and to delegate authority to the Director of Finance in consultation with the Director of Corporate Services, Leader of the Council and the Resources Portfolio Holder, to finalise the arrangements on behalf of the Council.
15.Note that action will need to be taken by Chief Officers to fund increasing costs through alternative savings in the event that inflation exceeds the budget assumptions.
(7) GATEWAY REPORT 1 – MEMBERS REPORT: REVIEW OF CORPORATE CUSTOMER SERVICES IT SYSTEMS
Report CSD17165
Councillor Simon Fawthrop left the room during consideration of this item and the Vice-Chairman (Councillor Keith Onslow) assumed the Chair.
The Committee considered an update on the progress of the review of alternative options for the Customer Relationship Management (CRM) system.
The review by BT had included a review of alternative systems available in the market place; including the Microsoft Dynamics products taking into account Customer Service requirements and the Business requirements.
It was noted that the CRM system was a critical system that was used by the waste management service and was required until 2019 when the new contract would be in place and the responsibility of a Waste IT system would pass to the contracted service providers.
Due to the unique and complex customisations that had been deployed to the system for the waste management service it was not possible to deploy a replacement system before 2019, when the new Environment contract would be placed. Obtaining costs for upgrading had also proved to be extremely difficult and had taken a considerable period of time from the Council’s system support provider (IBM).
The following three options had been reviewed:
Option 1 – Do Nothing - this would mean the system would be unsupported by Microsoft. If the system was hacked and personal data exposed the Council would be in breach of GDPR rules, an uninsurable risk with fines in the region of £18million.
Option 2 – Upgrade Dynamics CRM to 2011 – an upgrade to the existing platform with far less work and cost when compared with the latest version. Would provide a supported system until mid-2021. This would provide a secure and supported system to 2019 to coincide with the new Environment contract commencement date. The cost for moving to version 2011 was estimated to be £382,000, with a continuation of the annual revenue costs of £34,000 payable for as long as the system was used.
Option 3 – Upgrade Dynamic CRM to 2016 – this would require a complete system rebuild before implementation with costs estimated to be in excess of £1m to implement and £62,000 per annum revenue costs to support and host the system. In addition to this, continuing with a Dynamic system would incur costs for future upgrades every 2-3 years of approximately £50,000
It was therefore recommended that the Council commissioned BT, by variation to the existing contract, with a Change Control Notice, to upgrade Dynamics to Version 2011. This represented a lower cost and was essential to avoid critical service interruption.
In opening the debate the Vice-Chairman, in the Chair, sought clarification surrounding the risks of pursuing Option 1 – to do nothing. In response the Head of Customer Services confirmed that the Council would not be compliant with the public service network code of compliance, and therefore could risk breaching GDPR. If the system were to be hacked and personal data exposed the Council would be deemed to be in breach of GDPR and risk a fine in the region of £18m. A Member noted that if the system were to be hacked and personal data exposed every Member of the Council would be held individually responsible for the release of personal data. It was generally agreed that pursuing Option 1 was not an option. As a Local Authority Bromley had thousands of customers and the system under consideration was central to operations. The consequences of a failure in a customer facing system would be unimaginable and the reputational damage immeasurable. It was noted that significant staffing costs had been saved by going digital and there had not been a great deal of investment in the system in recent years.
Members expressed concerns surrounding the delay in the report coming before the Committee as there had been knowledge of the requirement to upgrade the system for at least 12 months. Members were keen to ensure that a council-wide approach to IT systems was pursued, and the report before the Committee appeared to be taking a relatively short-term approach. Any investment needed to be made with a view to looking forward and identifying future requirements in order to optimise the benefit of the investment.
The Director of Finance highlighted that work was underway on the Council’s IT Strategy which would also inform future decisions. It was suggested that it would be helpful to supply additional information about the IT Strategy in order to inform the discussion at the meeting of the Executive when the decision was due to be considered.
The Committee noted that the costs of £1.002m for the upgrade to Dynamic 2016 outlined in the report also included costs of £382k for the upgrade to Dynamic 2011. Members considered recommending Option 3 to the Executive, however during discussions it was noted that pursuing Option 2 would allow time to commission BT to undertake a review and would ensure that any future decisions could be taken in line with the IT Strategy which would be presented to Members later in the year and should make it clear that there should be no customisation of ‘off-the-shelf’ products. If customisation was required options for bespoke products should be considered.
RESOLVED: That Executive be recommended to:
1. Note the need to upgrade the current CRM system as outlined in this report.
2. Commission BT, by variation to their existing contract, to upgrade to Dynamics Version 2011 to avoid critical service interruption for the reasons set out in the report.
3. Commission BT, by variation to their existing contract, to provide a fully costed options appraisal for the longer term provision of IT services currently delivered by the current CRM system, as set out in the report, in conjunction with the developing IT Strategy.
4. Agree the addition of £480k to the capital programme, funded from a £37k reduction to the existing capital scheme for the website upgrade, and £443k from capital receipts.
(9) FEASIBILITY SYUDY FOR BANBURY HOUSE, CHISLEHURST
The Committee considered a report which provided an update on the feasibility assessment undertaken in respect of Banbury House for refurbishment and use as temporary accommodation to meet statutory housing need.
Members noted that the feasibility study had confirmed that that the building could be converted to achieve a maximum of 29 shared units. Unit sizes would be relatively small and thus only able to accommodate single households, couples or small families comprising one adult and one young child. Schemes of this nature required more intensive management and on-site presence than self-contained accommodation and also had higher costs in relation to turnover, security and communal areas. Whilst the scheme would provide additional local provision, it would be somewhat restrictive given the unit size. The net annual saving would be relatively small and payback for capital investment would take in excess of 7 years. It was therefore recommended that this option was not pursued.
The Committee noted that any future use of the site would require demolition of the existing building and basic clearance of the site for redevelopment. Members noted that demolition and basic preparation of the site would cost approximately £166k. This would increase the attractiveness of the site for future development to maximise future proceeds and that costs could be offset against the proceeds from future use. Members further noted that should a decision be made to dispose of the site, it was estimated that the capital receipt could be around £3.5m.
It was agreed that the Executive should be recommended to ask Officers to investigate whether modular homes could be a possibility once the site was prepared.
RESOLVED: That Executive be recommended to:
1. Note the outcome of the feasibility assessment for use of Banbury House as temporary accommodation and decision not to proceed with refurbishment as this does not offer an economically viable scheme and demonstrate best use of the site.
2. Approve demolition of the existing building to ensure the site is secured and prepared for future use to maximise future development opportunities.
3. Authorise officers to complete a final feasibility options appraisal to be reported back in May for decision on future use of the site to meet housing need or for methods for marketing and disposal of the site to secure best value.
4. Agree the estimated cost of £166k be added to the Council’s Capital Programme for demolition and site preparation. This sum will be funded from any future sale proceeds, or added to any future capital scheme for alternative use of the site.
5. Ask Officers to investigate whether modular homes might be a possibility once the site is prepared.