Policy And Resources Committee - 30/10/2017

At a MEETING of the POLICY AND RESOURCES COMMITTEE held at Dundee on 30th October, 2017.

Present:-

BAILIES

COUNCILLORS

Councillor John ALEXANDER, Convener, in the Chair.

The minute of meeting of this Committee of 25th September, 2017 was held as read.

Unless marked thus * all items stand delegated.

I DECLARATION OF INTEREST

No declarations of interest were made.

II MINUTES

(a) PENSION SUB-COMMITTEE AND THE PENSION BOARD - 5TH JUNE, 2017

(b) PENSION SUB-COMMITTEE AND THE PENSION BOARD - 4TH SEPTEMBER, 2017

(c) PERSONNEL APPEALS SUB-COMMITTEE - 3RD OCTOBER, 2017

The minutes of meetings of the above Sub-Committees, copies of which are appended hereto, were submitted for information and record purposes (Appendices I, II and III).

III RELIEF OF RATES - CHARITY RELIEF

There was submitted Report No 332-2017 by the Executive Director of Corporate Services relative to the above.

The Committee approved the recommendations detailed in the report.

IV EQUALITY OUTCOMES 2017-2021

There was submitted Report No 340-2017 by the Chief Executive and Executive Director of Children and Families seeking approval for the Equality Outcomes to be adopted by Dundee City Council for the period 2017-2021, including specific requirements for Children and Families Service (Education Authority) in accordance with the Equality Act 2010 (Specific Duties) (Scotland) Regulations 2012.

The Committee:-

(i) approved the Equality Outcomes for Dundee City Council for 2017-2021 as outlined in Appendix 1 to the report; and

(ii) approved the Equality Outcomes for Children and Families Service (Education Authority) 2017-2021 as outlined in Appendix 2 to the report.

V REVENUE MONITORING 2017/2018

There was submitted Report No 342-2017 by the Executive Director of Corporate Services providing an analysis of the 2017/2018 projected revenue outturn as at 31st August, 2017 monitored against the adjusted 2017/2018 Revenue Budget.

The Committee:-

(i) noted that the overall General Fund 2017/2018 projected revenue outturn as at 31st August, 2017 was an overspend of 1,982,000 against the adjusted 2017/2018 Revenue Budget compared with an overspend of 4.1m at July 2017;

(ii) noted that the Housing Revenue Account as at 31st August, 2017 was projecting a breakeven position against the adjusted HRA 2017/2018 Revenue Budget;

(iii) agreed that the Council Management Team would take every reasonable action to ensure that the 2017/2018 revenue expenditure was below or in line with the adjusted Revenue Budget; and

(iv) instructed the Executive Director of Corporate Services, in conjunction with the Council Management Team, to continue to monitor the Council's 2017/2018 projected revenue outturn.

At this point, the Committee agreed to suspend Standing Order No 26 in order to allow the meeting to proceed past 9.30 pm.

VI CAPITAL EXPENDITURE MONITORING 2017/2018

There was submitted Report No 319-2017 by the Executive Director of Corporate Services appraising elected members of the latest position regarding the Council's Capital Plan 2017-2022.

The Convener, seconded by Bailie Sawers, moved to note the contents of the report.

As an amendment, Bailie Keenan, seconded by Councillor McIrvine, moved:-

The Council instructs the Chief Executive to engage a consultant to review how the McLelland Report and its findings have been implemented across the Council.

Also call upon the Chief Executive to bring forward a report within the next two months that identifies the resource required to more accurately cost capital projects.

On a division, there voted for the motion - the Convener, Depute Lord Provost Campbell, Bailies Roberts, Sawers and Macpherson and Councillors Cordell, Dawson, Flynn, Hunter, Lynn, Murray, Rendall, Ross, Short, Smith and Duncan (16); and for the amendment - Bailies Keenan and Scott and Councillors Cruickshank, Gordon, McCready, McIrvine, Malone, Marra, Richardson, Hay and Scott (11) - whereupon the motion was declared carried.

VII CAPITAL PLAN 2018-2023 - GENERAL SERVICES AND HOUSING HRA

There was submitted Report No 350-2017 by the Executive Director of Corporate Services providing elected members with background information and details of the Council's General Services and Housing HRA Capital Plan for the five year period 2018-2023.

The Committee:-

(i) approved the Council's General Services and Housing HRA Capital Plan for 2018‑2023 attached to the report;

(ii) noted the gross capital expenditure investment of 346m over the next five years;

(iii) noted the updated position for the 2017-2018 projected capital expenditure programmes, as at 31st August, 2017; and

(iv) approved the Prudential Indicators for the Capital Plan 2018-2023, as shown in Appendix 2 of the report and noted that these Indicators demonstrated that the Capital Plan 2018-2023 was affordable, prudent and sustainable.

VIII AWARD OF CONTRACT FOR THE SUPPLY OF INTERNAL AUDIT AND ADVICE

There was submitted Report No 356-2017 by the Executive Director of Corporate Services seeking approval for the award of contract for the supply of the above.

The Committee approved acceptance of the most economically, advantageous tender by KPMG under the Crown Commercial Service ConsultancyOne Framework Agreement, for the supply of internal audit and advice for an initial period to 30th June, 2019, with an option to extend for up to three further twelve month periods.

IX DUNDEE CITY COUNCIL 2016/2017 - ACCOUNTS AND AUDIT

(a) AUDITED STATEMENT OF ACCOUNTS 2016/2017

(i) Dundee City Council

The above report was submitted and noted (Report No 360-2017).

(ii) Dundee City Council Charitable Trusts

The above report was submitted and noted (Report No 361-2017).

(iii) Lord Provost of Dundee Charity Fund

The above report was submitted and noted (Report No 362-2017).

(b) EXTERNAL AUDITOR'S REPORT

The above report was submitted and noted (Report No 363-2017).

(c) DUNDEE CITY COUNCIL 2016/2017 - ACCOUNTS AND AUDIT (RESPONSE TO THE EXTERNAL AUDITOR'S ANNUAL AUDIT REPORT)

There was submitted Report No 364-2017 by the Executive Director of Corporate Services in response to the report by the Council's External Auditor on the audit of Dundee City Council for the year to 31st March, 2017.

The Committee:-

(i) noted the contents of the External Auditor's report including the completed action plan at Appendix 1, and in particular that Audit Scotland had issued an unqualified audit opinion on each of the 2016/2017 Annual Accounts noted above; and

(ii) noted the report as the Council's formal response to the External Auditor's report.

X TAYSIDE PENSION FUNDS 2016/2017

(a) TAYSIDE PENSION FUNDS 2016/2017 - ACCOUNTS AND AUDIT

There was submitted Report No 357-2017 by the Executive Director of Corporate Services in response to the report by the Council's External Auditor on the audit of the Tayside Pension Funds for the year to 31st March, 2017.

The Committee noted the contents of the External Auditor's Annual Audit Report, in particular that Audit Scotland anticipated an unqualified audit opinion.

(b) EXTERNAL AUDITOR'S ANNUAL REPORT

The above report was submitted and noted (Report No 358-2017).

(c) AUDITED ANNUAL REPORTS AND ACCOUNTS 2016/2017

The above report was submitted and noted (Report No 359-2017).

XI STREET CLEANING AND OPEN SPACE MANAGEMENT

It was reported that this item had been placed on the agenda at the request of Bailie Macpherson.

The Committee approved the undernoted resolution:-

Given that it is approaching two years since adoption of Report No 439-2015 on the Street Cleaning and Open Space Review, adopted at Committee on 7th December, 2015, the Committee instructs Neighbourhood Services to review the effectiveness of the street cleaning revised operation to ensure that the changes undertaken since 2015 have not significantly impacted on the quality of street cleaning in any part of the city.

A report on the outcomes of such a review should be brought back to Committee, together with any necessary recommendations, to ensure Dundee City Council maintains good quality street cleaning standards across the city over the coming years.

The Convener agreed that the undernoted item of business be considered as a matter of urgency in terms of Standing Order No 17(b) in view of the timescales involved.

XII CATALONIA

The Committee approved the undernoted resolution:-

Dundee City Council recognises that the decision over Catalonia's future direction is a matter for the people who live there; acknowledges that the Catalan and Spanish Governments are perfectly entitled to take positions for and against independence; condemns any use of disproportionate force against citizens seeking to express their views of the future of Catalonia and calls upon the UN, the EU and the Council of Europe to mediate negotiations with the purpose of facilitating a peaceful way forward.

The Committee resolved under Section 50(A)(4) of the Local Government (Scotland) Act 1973 that the press and public be excluded from the meeting for the undernoted items of business on the grounds that they involved the likely disclosure of exempt information as defined in paragraphs 3, 6, 7 and 9 of Part I of Schedule 7A of the Act.

XIII RELIEF OF NON-DOMESTIC RATES ON THE GROUNDS OF HARDSHIP - (HARDSHIP RELIEF)

There was submitted Report No 333-2017 by the Executive Director of Corporate Services relative to the above.

The Committee approved the recommendations detailed therein.

XIV COMPLAINTS REVIEW COMMITTEE - OUTCOME OF MEETING

After considering Report No 339-2017 by the Head of Democratic and Legal Services relative to the above, the Committee approved the recommendations detailed therein.

John ALEXANDER, Convener.

At a JOINT MEETING of the PENSION SUB-COMMITTEE OF THE POLICY AND RESOURCES COMMITTEE AND THE PENSION BOARD held at Dundee on 5th June, 2017.

APPENDIX I

Present:-

PENSION SUB-COMMITTEE

Bailie Willie SAWERS

COUNCILLORS

PENSION BOARD

Bailie Willie SAWERS, Convener, in the Chair.

I DECLARATION OF INTEREST

There were no declarations of interest.

II TAYSIDE PENSION FUND'S RISK REGISTER

There was submitted Report No 192-2017 by the Executive Director of Corporate Services updating the Risk Register for the Tayside Pension Fund.

The Sub-Committee and Board approved the updated quarterly Risk Register for the Tayside Pension Fund and Tayside Transport Pension Fund and noted the change to the undernoted risk profile from the previous report.

Risk 15 - Lack of expertise on Pension Committee, Pension Board or amongst officers.

This risk had increased following the recent local elections and appointment of new Sub-Committee and Board members who would require training. Sufficient knowledge and expertise remained on both Sub-Committee and Board as well as that of officers to mitigate significant increase in risk.

III ADMINISTERING AUTHORITY DISCRETION - REQUEST TO CEASE ABATEMENT OF PENSION BENEFITS

There was submitted Report No 193-2017 by the Executive Director of Corporate Services reviewing the current policy of Tayside Pension Fund in respect of pension abatement on re-employment in the context of changes to pension regulations, the financial implications in terms of administration, and also the costs to individuals. The report also commented on the policies of the other Scottish LGPS.

The Sub-Committee approved to cease abatement of pension payments in respect of pre-2015 entitlements to be more compatible with modern working practices and in line with nine other Scottish LGPS with effect from 1st April, 2017.

IV APPOINTMENT OF PENSION FUND GLOBAL CUSTODIAN

There was submitted Report No 194-2017 by the Executive Director of Corporate Services seeking approval to appoint a Global Custodian for the Pension Fund for a period of five years commencing 1st July, 2017, with an option to extend for a further two years.

The Sub-Committee and Board agreed that the incumbent custody service provider, Northern Trust be re-appointed as Global Custodian for Tayside Pension Fund. They would be required to supply the following services:

- Safekeeping of assets in a range of global markets

- Trade settlement

- Global Tax reclaims

- Corporate actions, instruction and collection

- Proxy voting facilitation

- Cash management

- Investment accounting

- Online reporting

- Performance measurement

- Compliance monitoring

V ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE POLICY

There was submitted Report No 195-2017 by the Executive Director of Corporate Services reviewing the Funds current policy on Socially Responsible Investing (Article III of the Minute of Meeting of the Pension Sub-Committee of the Policy and Resources Committee of 6th June, 2016, Report No 213‑2016 refers).

The Sub-Committee and Board approved the Environmental, Social and Corporate Governance Policy for the Tayside Pension Funds, and noted the incorporation of guidance on Fiduciary Duty from the Scheme Advisory Board.

VI PENSION ADMINISTRATION PERFORMANCE

There was submitted Report No 196-2017 by the Executive Director of Corporate Services. This report provided information on the recent quarters operational performance in relation to Pension Administration.

The Sub-Committee and Board noted the content of the report providing information on the recent quarters operational performance in relation to Pension Administration.

VII APPOINTMENT OF 3RD PARTY ADMINISTRATION SERVICE FOR GUARANTEED MINIMUM PENSION (GMP) RECONCILIATION WITHHMRC RECORDS

There was submitted Report No 197-2017 by the Executive Director of Corporate Services seeking approval to appoint a 3rd party administration service to carry out scheme/GMP reconciliation for the Tayside Pension Fund for members with GMP and contracted out service, including active members, with all specified work completed by 31st December, 2018.

The Sub-Committee and Board agreed that Equiniti be appointed as the service provider for Tayside Pension Fund. They would be required to carry out the following to ensure a successful and timely conclusion:

- Stage 1 Initiate exercise, carry out data collection and analysis.

- Stage 2 Initial reconciliation, resolving bulk issues (eg members who are incorrectly included in HMRC records and vice versa).

- Stage 3 Individual reconciliations including identifying any cases that may have been underpaid and overpaid, and ensuring that all records are certified with the correct GMP and contracted out information.

- Stage 4 - Rectification - benefit correction (including drafting individual letters to scheme members with under and overpayments), and carry out final Altair (pensions system) update and production of files for updating ResourceLink (payroll system).

VIII APPOINTMENT OF 3RD PARTY ADMINISTRATION SERVICE FOR A SPECIFIED CASE EXERCISE

There was submitted Report No 198-2017 by the Executive Director of Corporate Services seeking approval to appoint a 3rd party administration service to process a legacy backlog of specified cases, with all work completed by 31st March, 2018.

The Sub-Committee and Board agreed that JLT be appointed as the service provided for Tayside Pension Fund.

IX TAYSIDE PENSION FUND GOVERNANCE COMPLIANCE STATEMENT

There was submitted Report No 199-2017 by the Executive Director of Corporate Services setting out the governance arrangements for Tayside Pension Fund and the extent to which it complied with regulations.

The Sub-Committee and Board noted the content of the report.

X REPATRIATION OF TRANSPORT FUND

There was submitted Report No 200-2017 by the Executive Director of Corporate Services setting out the course of action currently underway in the repatriation of the assets and liabilities of the single employer, Tayside Transport Fund back to the main Fund for exercise completion on 30th June, 2017.

The Sub-Committee and Board noted the content of the report.

XI ANNUAL TREASURY MANAGEMENT ACTIVITY 2016/2017

There was submitted Report No 201-2017 by the Executive Director of Corporate Services reviewing the Treasury Management activities for the period of 1st April, 2016 to 31st March, 2017.

The Sub-Committee and Board noted the information contained within the report.

The Sub-Committee and Board resolved under Section 50(A)(4) of the Local Government (Scotland) Act 1973 that the press and public be excluded from the meeting for the undernoted items of business on the grounds that they involved the likely disclosure of exempt information as defined in paragraphs 4, 6 and 11 of Part I of Schedule 7A of the Act.

XII TAYSIDE PENSION FUNDS

(a) PERFORMANCE SUMMARIES

There was submitted Report No 202-2017 by the Executive Director of Corporate Services relating to Performance Summaries for the quarter 1, 3 and 5 year periods to 31st March, 2017 reviewing the investment performance of the Main Funds seven Fund Managers for the quarter 31st March, 2017. It also considered the performance of the Transport Fund which invested with four of these managers.

The report compared investment performance of the Funds with the Funds specific benchmarks which consisted of various stock and security market indices.

The Sub-Committee and Board noted the information contained therein with regard to the performance of the Tayside Main Fund and Tayside Transport Fund and their Fund Managers.

(b) SUMMARIES OF INVESTMENTS AND TRANSACTIONS

There was submitted Report No 174-2017 by the Executive Director of Corporate Services summarising investments and transactions during the period 1st January to 31st March, 2017.

This report reviewed the investment activities of the Main Funds seven Fund Managers for the quarter to 31st March, 2017. The Transport Fund shared three of these managers and their transactions were included.

The Sub-Committee and Board noted the information contained therein with regard to the activities of the Tayside Pension Fund and Tayside Pension Fund and their Fund Managers.

(c) QUARTERLY FUNDING REPORT

There was submitted Report No 203-2017 by the Executive Director of Corporate Services which considered reviews of the current funding level of the Funds as assessed by the Fund Actuary.

The Sub-Committee and Board noted the report by the Fund Actuary.

XIII SOCIALLY RESPONSIBLE INVESTMENT SIX MONTHLY REPORT

There was submitted Report No 204-2017 by the Executive Director of Corporate Services reviewing the progress by the Fund Managers regarding the positive engagement Policy on Environmental, Social and Corporate Governance approved by the Sub-Committee on 6th June, 2016.

The Sub-Committee and Board noted the information contained within the report with regard to the activities of the Fund Managers during the six month period ended 31st March, 2017.

XIV ALTERNATIVE INVESTMENT OPPORTUNITY - DEVELOPMENT LAND FUND

There was submitted Report No 205-2017 by the Executive Director of Corporate Services providing detail of an investment case which had been successful in meeting the relevant investment criteria required within the Local and Alternative Opportunities Portfolio.

The Sub-Committee and Board noted the content of the report.

XV AMENDMENT TO EXISTING BOND MANDATE - GOLDMAN SACHS ASSET MANAGEMENT

There was submitted Report No 206-2017 by the Executive Director of Corporate Services detailing a proposed amendment to an existing fixed income investment mandate.

The Sub-Committee and Board approved the proposed buy and maintain strategy in respect of the mandate detailed following consultation with investment managers and consultants.

XVI PRESENTATION

James Griffin and David Barber from Fidelity Investment Management gave a short presentation.

A summary of the performance of the Portfolio for quarter 1 was given, noting the key performance drivers and comparison of this to benchmark figures. It was noted that the Portfolio had underperformed its benchmark in 2016, however long-term performance was still adding value. It was also anticipated that the Portfolio would echo its consistent out performance seen in previous years.

A brief question and answer session followed after which the Chair thanked the speakers for their presentation.

Willie SAWERS, Convener.

At a JOINT MEETING of the PENSION SUB-COMMITTEE OF THE POLICY AND RESOURCES COMMITTEE AND THE PENSION BOARD held at Dundee on 4th September, 2017.

APPENDIX II

Present:-

PENSION SUB-COMMITTEE

Bailie Willie SAWERS

COUNCILLORS

PENSION BOARD

Bailie Willie SAWERS, Convener, in the Chair.

I DECLARATION OF INTEREST

There were no declarations of interest.

II TAYSIDE PENSION FUNDS RISK REGISTER

There was submitted Report No 287-2017 by the Executive Director of Corporate Services updating the Risk Register for the Tayside Pension Funds.

The Sub-Committee and Board approved the updated Quarterly Risk Register for the Tayside Pension Fund and Tayside Transport Pension Fund and noted the following in relation to the risk profile from previous report:-

(i) RISK 13 - FAILURE TO HOLD PERSONAL DATA SECURELY (INCORPORATING THE RISK OF CYBERCRIME)

This risk had been reconfigured and re-evaluated. It would now be amended to incorporate the threat of Cybercrime. Although the risk had been heightened as a result of this re-evaluation, it may be subject to imminent adjustment as the Council IT Services were awaiting the outcome of an independent Cybersecurity Readiness Audit.

(ii) RISK 15 - LACK OF EXPERTISE ON PENSION COMMITTEE, PENSION BOARD OR AMONGST OFFICERS

The risk would remain until new Sub-Committee and Board members had undertaken appropriate training to provide them with sufficient knowledge and expertise to fully undertake their roles. It was however important to note the sufficient knowledge and expertise remained on both Sub-Committee and Board as well as that of officers to mitigate significant increase in risk.

III PENSION ADMINISTRATION PERFORMANCE

There was submitted Report No 288-2017 by the Executive Director of Corporate Services providing information on the recent quarter's operational performance in relation to Pension Administration.

The Sub-Committee and Board noted the content of the report.

IV REPATRIATION OF TRANSPORT FUND

A verbal update was given to members by the Head of Corporate Finance regarding the full reparation of Transport Fund on 30th June, 2017.

V MARKETS IN FINANCIAL INSTRUMENTS DIRECTIVE (MIFID II)

There was submitted Report No 289-2017 by the Executive Director of Corporate Services providing information on the rules for implementation of the Markets in Finance Instruments ("MiFID II"), effective from 3rd January, 2018.

The Sub-Committee and Board noted the content of the report and the intention for Tayside Pension Fund officers to apply to "opt-up", thus electing to be treated as "professional" (rather than "retail") clients.

The Sub-Committee and Board resolved under Section 50(A)(4) of the Local Government (Scotland) Act 1973 that the press and public be excluded from the meeting for the undernoted items of business on the grounds that they involved the likely disclosure of exempt information as defined in paragraphs 4, 6 and 11 of Part I of Schedule 7A of the Act.

VI TAYSIDE PENSION FUNDS

(a) PERFORMANCE SUMMARIES

There was submitted Report No 290-2017 by the Executive Director of Corporate Services relating to Performance Summaries for the quarter, 1, 3 and 5 year time periods to 30th June, 2017.

This report reviewed the investment performance of the Main Fund's five Fund Managers (including Property) for the quarter 30th June, 2017. It also considered the performance of the Transport Fund which invested with four of the managers.

The report compared investment performance of the Funds with the Funds' specific benchmarks which consisted of various stock and security market indices.

The Sub-Committee and Board noted the information contained therein with regard to the performance of the Tayside Fund and Tayside Transport Fund and their Fund Managers.

(b) SUMMARIES OF INVESTMENTS AND TRANSACTIONS

There was submitted Report No 280-2017 by the Executive Director of Corporate Services summarising investments and transactions during the period 1st April to 30th June, 2017 reviewing the investment activities of the Main Funds seven Fund Managers for the quarter to 30th June, 2017. The Transport Fund shared three of these managers and their transactions were included.

The report summarised the transactions of each Fund Manager and showed the market values of the Main and Transport Fund.

The Sub-Committee and Board noted the information contained therein with regard to the activities of the Tayside Pension Fund and Tayside Transport Pension Fund and their Fund Managers.

(c) QUARTERLY FUNDING REPORT

There was submitted Report No 291-2017 by the Executive Director of Corporate Services which concerned a report by the Fund Actuary.

The Sub-Committee and Board noted the report accordingly.

VII ALTERNATIVE INVESTMENT OPPORTUNITY - BROAD STREET REAL ESTATE CREDIT PARTNERS

There was submitted Report No 292-2017 by the Executive Director of Corporate Services providing details of an investment case which had been successful in meeting the relevant investment criteria required within the Local and Alternative Opportunities Portfolio.

The Sub-Committee and Board noted the content of the report.

VIII PRESENTATION

Jason Smith and Jason Freeman from Goldman Sachs Asset Management gave a presentation to members.

A summary of the performance of the Portfolio was given, noting the key performance drivers, and comparison of this to benchmark figures. It was noted that the Portfolio had slightly under performed its benchmark due to volatility in the market, however, it was expected that future quarters would achieve consistent stable returns due to the stock selection strategies.

Future fund operational strategies were discussed, with members having an opportunity to ask questions of the Fund Managers.

The Convener thanked Jason and Jason for their interesting and informative presentation.

Willie SAWERS, Convener.

At a MEETING of the PERSONNEL APPEALS SUB-COMMITTEE held at Dundee on 3rd October, 2017.

APPENDIX III

Present:-

COUNCILLORS

Councillor Stewart HUNTER, Convener, in the Chair.

The minute of meeting of this Committee of 24th April, 2017 was held as read.

Unless marked thus * all items stand delegated.

The Sub-Committee resolved under Section 50(A)(4) of the Local Government (Scotland) Act 1973 that the press and public be excluded from the meeting for the undernoted items of business on the grounds that they involved the likely disclosure of exempt information as defined in paragraph 1 of Part I of Schedule 7A of the Act.

I DECLARATION OF INTEREST

There were no declarations of interest.

II APPEAL AGAINST DISMISSAL

It was reported that an appeal against dismissal from an employee of the Children and Families Services Department had been submitted.

The Sub-Committee heard the Councils representatives and witnesses and, thereafter, the Appellant and her representative.

After questions had been put and answers given by both parties to each other and the witnesses and by members of the Sub-Committee, the parties withdrew.

Thereafter, following careful consideration of all the information, the Sub-Committee agreed that the grounds of the appeal had not been substantiated and that the appeal be not upheld.

Stewart HUNTER, Convener.