Members of the Committee are requested to bring their copy of the agenda for the Executive meeting on 29 November 2023.
The Executive, Resources and Contracts PDS Committee will be scrutinising at the following items on the Executive Agenda:
· Budget Monitoring Q.2
· Capital Programme Monitoring Q2
· London Boroughs Legal Alliance Framework Agreement for Barristers
· Operational Property Repair Programme Update
· Local Authority & Voluntary Sector Leases
Minutes:
The Committee considered the following reports on the Part 1 agenda for the meeting of the Executive on 29 November 2023:
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BUDGET MONITORING Q2 Report FSD23080
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The report provided the second budget monitoring position for 2023/24 based on expenditure and activity levels up to the end of September 2023. The report also highlighted any significant variations which would impact on future years as well as any early warnings that could impact on the final year end position.
In opening the discussion, the chairman noted the overspend and the action being taken to achieve a balanced budget.
In response to a question, the Director of Finance confirmed that Officers only accounted for known income and as such conversations would take place with the property division concerning the impact of rent increases on income.
The Director of Finance highlighted that the Committee would be considering the draft budget at its next meeting in January 2024 and that report would detail a number of issues with any departmental overspends being factored in to the budget.
Stressing the need for rigor in the management of budgets, a Member highlighted that Directors should keep within their departmental budgets and, where there were overspends, savings and cut backs should be found in other areas of the department. If it was not possible to identify savings and mitigations, Members should be approached for supplementary estimates.
Another Member highlighted that it previous years it had been possible for Directors and their Officers to identify in-year savings resulting in balanced budgets, although it was acknowledged that this was becoming increasingly difficult. It was also recognised that the Council often faced pressures financial pressures that were difficult to predict and control such as homelessness.
The Director of Finance stressed that the role of the PDS Committees in budget monitoring was going to become increasingly important. Budget pressures were being addressed through mitigations and it was inevitable that the Council was moving towards a position where overspends in budgets would need to come from depleting reserves where they had previously been managed through the contingency. All costs would need to be scrutinised as this level of overspend was not sustainable.
Members of the Committee recognised that difficult decisions would be required in the next couple of years. A Member suggested that there was a need for the government to address the structural issues that existed in financing local government. Another Member stressed the need to consider all options, including insourcing, for some services such as SEN Transport and Foster Care, with there being a need for Member to carefully consider business cases.
RESOLVED: That Executive be recommended to
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CAPITAL PROGRAMME MONITORING Q2 Report FSD23078
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The report summarised the current position on capital expenditure and receipts following the first quarter of 2023/24 and sought the Executive’s approval to a revised capital programme.
RESOLVED: That the Executive be recommended to
(a) Note the report, including a total re-phasing of £25,375k from 2023/24 into future years, and agree a revised capital programme.
(b) Note the need going forward, given the full utilisation of capital receipts by 2026/27 forecast in the report and the limited options to replenish this resource in the future, to consider funding options for all new schemes, including external borrowing where appropriate.
(c) Recommend that Council approve the following amendments to the capital programme (set out in paragraph 3.3 of the report)
(i) increase of £3,000k in relation to reinforced autoclaved aerated concrete (RAAC)
(ii) increase of £1,893k in relation to depots
(iii) increase of £700k in relation to increased costs on the social care case management system
(d) Note that a report elsewhere on the agenda requests a supplementary capital estimate of £3,000k for additional costs associated with reinforced autoclaved aerated concrete (RAAC).
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LONDON BOROUGHS LEGAL ALLIANCE FRAMEWORK AGREEMENT FOR BARRISTERS Report CSD23139
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The report sought authority to join the London Boroughs Legal Alliance (LBLA) Framework Agreement for Barristers.
In response to a question, the Assistant Director for Legal Services confirmed that the proposed framework had been deemed the most suitable and under the framework the Council had discretion over the Chambers it used and the barristers instructed.
RESOLVED: That
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OPERATIONAL PROPERTY REPAIR PROGRAMME UPDATE Report HPR2023/065
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In March 2023 the Executive approved the award of construction consultancy services to commence the delivery of the OPR Programme. This report is seeking approval to commence procurement of further design led multidisciplinary consultancy services and to progress the surface car parks works tender.
In opening the discussion, the Chairman noted that some supplementary Part 2 (exempt from publication) information had been circulated to Members of the Committee in advance of the meeting.
In respect of the request to set aside £3m for investigations into possible Reinforced Autoclaved Aerated Concrete (RAAC) within the Council’s estate, the Committee were informed that of the £3m, £300k was for surveys and a provision of £2.7m had been made for any remedial work arising from the surveys being undertaken. Members noted that once the surveys had been completed a report on the full impact would be presented to Members.
A Member highlighted that as this was a national issue, pressure should be put on the Government to support Local Authorities with the response to the issue of RAAC.
In response to a question concerning the remedial works that could be undertaken, the Interim Head of Special Projects explained that any remedial works would be dependent on the location and severity of any steel corrosion in the concrete and that it was not so much the RAAC that was the issue but the bearing itself.
Members were informed that desktop surveys were underway and following those surveys, where necessary, site surveys would be undertaken. It was estimated that any non-intrusive surveys would be completed by Summer 2024 and Officers anticipated providing an update to Members prior to the summer. Surveys were being undertaken on the basis of risk and to date there had been no reports of issues requiring immediate action.
The Committee requested that that the Programme for Surveys setting out key milestone dates be made available to Members to enable robust monitoring.
RESOLVED: That Executive be recommended to
1) Note the contents of the report and agree the following recommendations:
a) To note that up to £1.046m of the OPR budget as planned will be used for the essential repair of surface car parks required to maintain statutory service.
b) To proceed to procurement for the works contract for the essential repair of surface car parks at an estimated value of up to £1m as set out in paragraphs 3.13, with delegated authority to the Director of Housing, Planning, Property and Regeneration to approve the detailed procurement strategy and contract award.
c) To approve the procurement of Construction Consultancy Services via a competitive tender process utilising the NHS SBS framework for consultants that can provide a Building Surveying led multidisciplinary team to design and deliver the Strategic Property OPR Workstreams, with delegated authority to the Director of Housing, Planning, Property and Regeneration. to approve the detailed procurement strategy.
d) To note that up to an additional £0.95M of the OPR budget as planned will be used for Building Surveying led multidisciplinary teams to design and deliver the Strategic Property Workstreams. The total budget value of the appointment(s) is estimated to be £2.4m.
e) To agree to delegate authority to the Director of Corporate Services and Governance to enter and manage legal matters relating to these services and works to allow matters to progress.
2. To recommend to Full Council a supplementary capital estimate of £3.0m for surveys and potential remedial works associated with Reinforced Autoclaved Aerated Concrete (RAAC).
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LOCAL AUTHORITY & VOLUNTARY SECTOR LEASES Report HPR2023/066
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A Member request had been received for a report on the Council’s policy on rental subsidies for Voluntary Sector Council tenants providing community benefits. This report provided an initial overview of the property portfolio held by the Council as it related to its leasing arrangements with Voluntary Sector Organisations. Further detailed investigations would be required to confirm the assumptions presented in this report.
On behalf of the Chairman, the Interim Assistant Director for Property proposed the following additional recommendation:
2.6 Authorise the Director of Housing, Planning and Regeneration in consultation with the Director of Finance and the Portfolio Holder for Resources, Commissioning and Contract Management to negotiate a revised lease term; where the tenant takes responsibility for repair and insurance of the property and it is at a revised rental that reflects these amendments within the lease.
The Chairman queried whether the possibility of longer-term leases should be being explored. In response the Director for housing, Planning, Property and Regeneration suggested that legal advice would be required as such a change would require a further Member decision.
A Member of the Committee, who had initially requested the report, highlighted that the Council did not have a consistent policy around supporting charities through peppercorn rents. Consequently there was a wide disparity. If charities were forced to cease operation as a result of rental increases, the Council would lose the income and would also lose valuable services across the Borough. On that basis it was felt that it was reasonable for consideration to be given to offering a non-market rent.
Councillor Jeal therefore proposed the following amendment to replaced the recommendations in the report, seconded by Councillor Adams:
2.1 In recognition of the significant contribution voluntary sector organisations make to the London Borough of Bromley, members recognise that Open Market Rent is not necessarily the most appropriate benchmarking for lease renewals or rental reviews on Council owned properties let to a voluntary sector organisation.
2.2. Officers are asked to review and suggest alternative benchmarks to be considered for such rent/lease reviews going forwards , including policy provision to allow for discounted rental rates for agreements with voluntary sector tenants, taking into account the social value they provide to residents, support of statutory services and contribution towards the Council's objectives.
In response to Councillor Jeal’s proposed amendments, the Director of Housing, Planning, Property and Regeneration explained that Officers would have to review the budget impact of an increase in subsidy, and this would be a large piece of work. The Director reported that the Churchill Court Letting Strategy would be presented to Committee in February 2024.
The Portfolio Holder for Resources, Commissioning and Contracts Management highlighted that the Council owned assets in order to provide services to residents. The current administration had consistently made clear that statutory services would be prioritised over non-statutory services. In respect of the issue of longer leases, it was not possible to have a one-size-fits-all approach and the Portfolio Holder urged Members to consider the possible implications to the Council of longer leases. The Portfolio Holder further noted that there had been a period of high inflation and as rents had not been increased during this period, the Council had effectively provided a subsidy. The Portfolio Holder concluded that the issues was one of how the Council chose to manage its assets however, it was important to note that the Council’s capacity to subsidise non-statutory services was severely limited.
Another Member stressed that it was important to conflate rents with giving backdoor grants and it was important that rents were not used as a subsidy.
The Portfolio Holder further reported that to avoid this issues arising in the future, CPI increases would be built into all future leases.
The Chairman put the following amendment, proposed by Councillor Jeal and seconded by Councillor Adams to the vote:
2.1 In recognition of the significant contribution voluntary sector organisations make to the London Borough of Bromley, members recognise that Open Market Rent is not necessarily the most appropriate benchmarking for lease renewals or rental reviews on Council owned properties let to a voluntary sector organisation.
2.2. Officers are asked to review and suggest alternative benchmarks to be considered for such rent/lease reviews going forwards , including policy provision to allow for discounted rental rates for agreements with voluntary sector tenants, taking into account the social value they provide to residents, support of statutory services and contribution towards the Council's objectives.
Upon the vote, 5 were in favour, 10 against, 0 abstentions. The amendment was therefore LOST.
The Chairman proposed that the following additional recommendation be agreed:
2.6Authorise the Director of Housing, Planning and Regeneration in consultation with the Director of Finance and the Portfolio Holder for Resources, Commissioning and Contract Management to negotiate a revised lease term; where the tenant takes responsibility for repair and insurance of the property and it is at a revised rental that reflects these amendments within the lease.
Upon the vote, 9 were in favour, 4 against, 1 abstention. The additional recommendation was therefore CARRIED.
RESOLVED: That the Executive be recommended to
1. Authorise the Director of Housing, Planning and Regeneration, in consultation with the Director of Finance and the Portfolio Holder for Resources, Commissioning and Contract Management, to negotiate Payment Management Plans with Voluntary Sector Organisations whose financial integrity may be significantly impacted by rental increases.
3. Authorise that Payment Management Plans provide a stepped rental increase over a period of up to 3 three years with the rent payable on the third anniversary of the lease renewal or rent review being the Open Market Rent as determined at the prior (increased rent) lease event and with all future rents to be increased annually in line with CPI (Consumer Price Index).
4. Authorise that a Payment Management Plan is a one-off transitional arrangement to allow a Voluntary Sector Organisation to adjust to the new increased rent.
5. Authorise the Director of Housing, Planning and Regeneration, in consultation with the Director of Finance and the Portfolio Holder for Resources, Commissioning and Contract Management, to negotiate repayment plans or other suitable financial arrangements with Voluntary Sector Organisations outside of the parameters of a Payment Management Plans as set out in paragraphs 2.2 and 2.3 of the report. These arrangements may be up to a maximum sum of £50,000 or if higher only with of the approval of the Executive.
6. Authorise the Director of Housing, Planning and Regeneration in consultation with the Director of Finance and the Portfolio Holder for Resources, Commissioning and Contract Management to negotiate a revised lease term; where the tenant takes responsibility for repair and insurance of the property and it is at a revised rental that reflects these amendments within the lease.