Apologies were received from two Co-Optees;  Liz Murrall and Andrew Ling.  

Any member of the Council who has a disclosable pecuniary interest in a matter to be considered at the meeting is reminded to disclose the interest to the meeting and to leave the Chamber while any discussion or vote on the matter takes place.

Members are also reminded that if they have any other significant interest in a matter to be considered at the meeting, which they feel should be declared in the public interest, such interests should be declared to the meeting. In such circumstances Members should consider whether their continued participation, in the matter relating to the interest, would be reasonable in the circumstances, particularly if the interest may give rise to a perception of a conflict of interests, or whether they should leave the Chamber while any discussion or vote on the matter takes place.

No declarations of interest were made.

The minutes of the Meeting held on 18 June 2024 are submitted for confirmation.

The minutes of the meeting held on 18 June 2024 were confirmed as a correct record.

Patrick Rowe, Strategic Finance Manager, addressed the Committee and highlighted that the Council delayed taking new borrowing throughout 2023/24 to the second half of the year due to higher borrowing costs. As borrowing was delayed through the first two quarters of the fiscal year cash balances were lower than had been assumed when setting the budget. This resulted in a favourable variance for borrowing costs and an adverse variance in interest receivable.

Mr Rowe also updated the Committee on the performance of the Council’s reserves against the Bank of England’s base rate and the Sterling Overnight Rate (SONIA).

The Committee noted that the interest receivable figure of £6.3 million was larger than the interest payable figure of £4.5 million and questioned this calculation noting that the loan amount was larger than the investment amount.

Mr Rowe explained this was due to the average borrowing rate being lower than the average yield on cash balances, as well as the Housing Revenue Account internal borrowing recharge on approximately £130 million.

In response to questioning from the Committee, Mr Rowe clarified that the capital financing requirement included in the Prudential Indicators was not a set limit, but rather an estimate based on the forecast at the prior year end which is used as a comparator to actual capital programme activity during the year. He committed to making this clearer in the table.

The Committee noted that the Investment Grade Short Dated Credit Fund (IGSDCF) resulted in a capital return of -2.93% whilst the money market funds yielded +5.29% questioning why the Council was still investing in it.

Mr Rowe clarified that the investment in the IGSDCF was part of a diversification strategy, and that the investment was made on the basis that it created an opportunity to generate a higher yield over the medium term. He added that the IGSDCF had experienced improvement in the underlying capital value in year, as well as a steady increase to its distribution yield. He noted that because of the duration of the Fund’s underlying instruments it is expected that yields from the Fund will be greater than those of Money Market Funds at the tail end of the rate cycle.

Ewan McAlpine, Investment Director, and Andrew Cunnigham, Senior Account Manager, from Royal London made a presentation to the Committee in relation to the IGSDCF). The figures they provided showed the state of the fund as of 30^th June 2024.

The following was highlighted;

• The value of the Council’s holding in the fund was circa £23.2 million; and

• The income distribution yield was +4.5% over the past year; and 

• The total return on the Council’s investment since 2021, when it invested funds was 2.74%; and

• Royal London’s fee was fixed at 0.24% and was accounted for in the daily unit price of the fund.

The Committee noted that social housing was being used as security and questioned whether the overall portfolio index rating correctly captured the liquidity of social housing as an asset. Mr McAlpine explained  ...  view the full minutes text for item 4.

Lisa Taylor, Director of Financial Management and Shaheena Kabir, Interim Head of Financial Reporting and Controls, updated the Committee.

The draft accounts were published on the Council website on 31^st May and  are not subject to external audit. Ms Taylor explained that the audited accounts would be presented to the Committee at the meeting scheduled for 23^rd September 2024 and the auditors would attend that meeting.

The Council’s application for the Council’s capitalisation direction was accepted and the Council has been given approval to borrow up to £75 million. Provision was created within the Accounts 2021/22 accounts for £41 million. This was allocated against reserves as the Government had not approved the Council’s request. Following approval, the Council repaid to the reserves the value of the provision. The Council has not yet fully drawn down the £75 million and may not need to do so. 

The Committee discussed the assumptions used in calculating the accounts and discussed the pension fund noting that a one-off reduction in contributions for the period of the current tri annual valuation has been made and will used to pay back some of the capital direction costs. Ms Taylor indicated that further reductions would arise if considered appropriate by the actuaries as part of the tri annual valuation. The Committee sought and received clarification on the budget stabilisation reserve and that it was included in the ‘Movements in Reserves’ section.

The Committee examined data relating to the pension fund. Julia Stevens, Pensions Fund Manager, clarified that the data is based on demographic assumptions drawn up by the actuary and applies to the Local Government Pension Scheme (LGPS) and is not connected to the Council. Ms Stevens added that the actuary uses variables relating to life expectancy, the effect of Covid-19 and any other relevant data. Further discussion took place on the effect of life expectancy and Mr Rowe and Ms Stevens highlighted that life expectancy varied from region to region. The pension fund was open ended, including employees just starting their career as well as those nearing retirement. This required a long-term approach to investing funds and investment policy was to be cautious when it came to contribution rates.

Ms Stevens and Mr Rowe also addressed questions relating to investment managers noting that the Investment Committee oversaw the funds that the Council invested in. There were 86 pension funds across the UK and, addressing Committee questions relating to economies of scale, Mr Rowe said that funds were pooled, and the Council would invest in funds that match the Council’s investment strategy.

The Annual Governance Statement was discussed including the implementation of Oracle, which is due to go live in April 2025, which the Committee noted was complicated. Ms Taylor said that the project was being closely monitored and that projects of this nature do carry risk adding that she was the responsible officer and that Mike Curtis, Executive Director of Resources, was the sponsor. The Chair asked that a briefing on Oracle be prepared.  ...  view the full minutes text for item 5.

Dr Fatima Zohra, Data Protection Officer, updated the Committee. The Data Protection Act 2018 requires that the Council evidence its compliance with the law as opposed to making a declaration of compliance. The Council is also required to comply with the UK General Data Protection Regulations (GDPR).

The report set out how the Council was complying with its obligations and Dr Zohra highlighted that the Council had a dedicated data protection team which managed information relating to individuals and dealt with subject access requests. The Council has seen an increasing number of information relation requests from the public. In relation to the Right to erasing information about individual, there was a clear process which required the applicant to demonstrate that the information related to them. All erasure requests are subject to any exemptions that may apply. 

The Committee sought more information on the structure of the data protection team and heard that there were five employees and that they also dealt with Freedom of Information requests. Approximately 2,000 requests were made per annum. Dr Zohra added that she was not part of that team as her role related to data protection only and entails in reviewing and monitoring the Council’s policies and procedures.

Dr Zohra highlighted areas of challenge relating to training on risk awareness drawing attention to the introduction of refresher course and a dedicated SharePoint site as well as longstanding data protection and cyber security training.

Staff were encouraged to report any actual or possible data breaches and Dr Zohra acknowledged the challenges that remained; however, the number of breaches were low.

The Committee, noting that 26.5% of staff had not undertaken cyber security training, asked if there were sanctions applied. David Hughes, Director of Audit, Fraud, Risk and Insurance, said that there were issues with the existing IT system, in recording completion by staff so it was likely that 26.5% was an overstatement. However, the introduction of Oracle would improve recording of the system and aid managers in ensuring all members of their team have undertaken the training.

In response to Committee questioning on potential improvements the Council could make, Dr Zohra indicated she would like to improve the monitoring systems underpinned by an allocated budget. It was also important that senior managers lead from the front and to provide direction to those for whom they are responsible.

Dr Zohra also clarified that the rules relating to UK GDPR and Data Protection also applied to Councillors in their capacity as individuals, party political representatives, ward representatives and as decision makers and administrators.

Mr Hughes added that training was provided to Councillors and senior staff who were at high risk of cyber-attack. The training was the offered to all Councillors and there was a cybersecurity portal for Councillors to access information.

The Chair thanked Dr Zohra for her presentation and the Committee noted the report.

The Committee noted the action tracker and work programme and, in response to questioning, Mr Hughes clarified that fire doors would be included in the next Internal Audit Update or Risk Management Update.