Policy And Resources Committee - 03/06/2019

At a MEETING of the POLICY AND RESOURCES COMMITTEE held at Dundee on 3rd June, 2019.

Present:-

BAILIES

COUNCILLORS

Councillor John ALEXANDER, Convener, in the Chair.

The minute of meeting of this Committee of 13th May, 2019 was held as read.

Unless marked thus * all items stand delegated.

I DECLARATIONS OF INTEREST

Depute Lord Provost Campbell declared a non-financial interest in respect of Article V by virtue of being the Council's representative on the Dundee Fair Trade Forum.

Councillor McCready declared a non-financial interest in respect of Article V by virtue of being the Convener of the Dundee Fair Trade Forum.

Bailie Macpherson declared a non-financial interest in respect of Article V by virtue of being a member of the Dundee Fair Trade Forum.

Councillors Alexander, Smith, Flynn, Richardson and Duncan and Bailie Keenan declared non-financial interests in respect of Article IX by virtue of being Trustees of The Dundee Trust.

II MINUTE OF PENSION SUB-COMMITTEE AND PENSION BOARD

The minute of meeting of the Pension Sub-Committee and Pension Board of 3rd December, 2018, a copy of which is appended hereto, was submitted for information and record purposes (Appendix I).

III ESTABLISHMENT OF RECESS SUB-COMMITTEE

There was submitted Agenda Note AN36-2019 intimating that the Council's Summer Recess commenced on 29th June, 2019 and ended on 10th August, 2019. To facilitate the smooth, continuous conduct of the Council's business, it was proposed that a Recess Sub-Committee of the Council be set up to deal with matters of an urgent nature which the Chief Executive or Head of Democratic and Legal Services believed could not wait for the next ordinary meeting of the Committee concerned during that period.

The Committee approved the undernoted operating arrangements:-

(i) Membership - 5 members of the Administration, 2 members of the Labour Group, 1 member of the Conservative Group and 1 member of the Liberal Democrat Group;

(ii) Chair - Leader of the Administration or nominee;

(iii) Quorum - 3 members;

(iv) Dates - to be arranged when required;

(v) Remit - to deal with any urgent business arising during the recess period;

(vi) Power - full delegated powers to deal with business laid before it.

The Committee also noted that, notwithstanding the above, it might be necessary in view of the quasi‑judicial nature to arrange meetings of the Personnel Appeals Sub-Committee and Licensing Committee.

IV WEST END OFF-STREET PARKING

The Committee acceded to requests for deputations to address the Committee relative to this matter. After the deputations had stated their cases and answered questions from members of the Committee, they were thanked for their attendance and withdrew.

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

Bailie Macpherson, seconded by Councillor Hay, moved approval of the undernoted:-

Committee agrees that the parking charges and limited waiting introduced in the Review of Charges 2019/2020, approved by this Committee on 21st February, 2019, in respect of the following car parks:

Roseangle, Pennycook Lane, Miller's Wynd, Mid Wynd, Bellfield Street (North), Ryehill Lane and Union Place (North),

should be implemented only after the residents' parking scheme for the area in question, approved at City Development Committee on 12th March, 2018 (Report 99-2018) has been introduced.

As an amendment, the Convener, seconded by Councillor Flynn, moved the direct negative.

On a division, there voted for the motion - Councillors McCready, McIrvine, Hay, Scott and Duncan, Bailies Keenan, Wright, Scott and Macpherson (9); and for the amendment - the Convener, Councillors Cordell, Dawson, Flynn, Hunter, Lynn, Rendall, Rome, Ross, Short and Smith, Bailies Roberts and Sawers, Depute Lord Provost Campbell and Lord Provost Borthwick (15) - Councillors Marra and Richardson being absent when the vote was taken - whereupon the amendment was declared carried.

V INTERNATIONAL FAIR TRADE CHARTER

There was submitted Report No 183-2019 by the Chief Executive asking members to recognise the International Fair Trade Charter.

The Committee:-

(i) agreed that Dundee City Council should pledge its support to the International Fair Trade Charter; and

(ii) remitted to officers to register the City Council's support and announce the pledge on social media.

VI LOCAL CODE OF LOCAL GOVERNANCE

There was submitted Report No 202-2019 by the Executive Director of Corporate Services reviewing and updating the Council's Local Code of Corporate Governance.

The Committee:-

(i) approved the compliance review and updated Local Code of Corporate Governance appended to the report as Appendix 1;

(ii) noted the progress against the 2018/2019 Improvement Action Plan appended to the report as Appendix 2; and

(iii) approved the implementation of the improvements listed in Appendix 3 of the report for 2019/2020.

VII PROVISION OF BANKING SERVICES - TENDER REPORT

There was submitted Report No 210-2019 by the Executive Director of Corporate Services seeking approval for acceptance of the recommended tender for provision of banking services.

The Committee:-

(i) agreed to accept the tender from the Royal Bank of Scotland amounting to 129,135 over three years with an option to extend for a further two years and noted the figure included the cost of other bodies such as Tay Road Bridge Joint Board and Tayside Contracts which were administered as part of the contract; and

(ii) instructed the Chief Executive to write to the Royal Bank of Scotland expressing the Council's expectation that the remaining Royal Bank of Scotland branches in Dundee remained open and that the Royal Bank of Scotland continued to provide good coverage of free to use ATM services.

VIII COUNCIL TELEPHONY UPGRADE

There was submitted Report No 203-2019 by the Executive Director of Corporate Services relative to the above.

The Committee:-

(i) agreed to upgrade the Council's telephony system; and

(ii) remitted the Executive Director of Corporate Services to engage with Capita as the partner to upgrade the Council telephony system procured through the SWAN Value Add Services Framework.

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 2, 3, 6 and 9 of Part I of Schedule 7A of the Act.

IX PROPOSED REORGANISATION OF TRUST

There was submitted Report No 201-2019 by the Executive Director of Corporate Services relative to the above.

The Committee approved the recommendations contained within the report.

X ADDITIONAL SPECIFICATION REQUIREMENT TO ACCOMMODATION FOR ADULTS WITH DISABILITIES

There was submitted Agenda Note AN38-2019 relative to the above.

The Committee approved the terms of the note.

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 3rd December, 2018.

APPENDIX I

Present:-

PENSION SUB-COMMITTEE

Bailie Kevin KEENAN

COUNCILLORS

PENSION BOARD

Councillor Gregor MURRAY, in the Chair.

I DECLARATION OF INTEREST

No declarations of interest were made.

II MINUTE OF PREVIOUS MEETING

The minute of meeting of 3rd September, 2018 was submitted and approved.

III APPOINTMENT OF CHAIRPERSON OF PENSION BOARD

There was submitted Agenda Note AN81-2018 whereby it was reported that, in accordance with the Public Service Pensions Act 2013, the Sub-Committee were asked to note the appointment of Kenny Dick as Chair of the Pension Board for the period of 12 months.

The Sub-Committee noted this appointment and thanked the outgoing Chair, Arthur Nicoll for his service.

IV TAYSIDE PENSION FUNDS RISK REGISTER

There was submitted Report No 383-2018 by the Executive Director of Corporate Services updating the Risk Register for Tayside Pension Fund.

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

- Risk 11 Active Manager Risk

This was the risk that an active Investment Manager failed to meet their required investment objective, resulting in financial loss to the Fund in the short-term. Although the Fund was well diversified, the recent global market environment had resulted in sharp moves in individual portfolio valuations. As the outlook remained challenging, there was an increased active manager risk at this present time. Risk to the longer-term investment performance remain unchanged.

- Risk 12 - failure to comply with LGPS and other regulations which could result in wrong payments given or estimates provided.

- Risk 17 failure to communicate properly with stakeholders resulting in members not aware of their rights.

Both of the above risks were raised as a result of the Consolidated LGPS (Scotland) Regulations 2018 being issued in June without transitional regulations. Although transitional regulations were still awaited, the letter of comfort issued by the Scottish Public Pensions Agency (SPPA) in July has assisted, and additional clarity has been given from the SPPA as to the key areas of potential discrepancies. Both staff and employers had now been provided with training and guidance to enable correct treatment in the meantime.

V PENSION ADMINISTRATION PERFORMANCE QUARTERLY UPDATE

There was submitted Report No 384-2018 by the Executive Director of Corporate Services providing information on the recent quarters performance in relation to Pension Administration.

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

VI TREASURY MANAGEMENT ACTIVITY 2018/2019 (MID-YEAR REVIEW)

There was submitted Report No 385-2018 by the Executive Director of Corporate Services reviewing Tayside Pension Funds Treasury Management activities for the period 1st April, 2018 to 30th September, 2018.

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

VII PROPOSED TIMETABLE OF MEETINGS FOR 2019

There was submitted Report No 386-2018 by the Executive Director of Corporate Services proposing a suggested programme of meetings of the Pension Sub-Committee and Pension Board in 2019.

The Sub-Committee and Board examined the dates set out in the timetable in Appendix 1 and agreed the proposed programme of meetings.

VIII APPLICATION FOR ADMITTED BODY STATUS

There was submitted Report No 387-2018 by the Executive Director of Corporate Services seeking agreement of the Sub-Committee and Board to admission of a new body to be set up following a procurement exercise by the Scottish Fire and Rescue Service into the Local Government Pension Scheme as an Admission Body. Currently, the name of the successful bidder under the procurement exercise was not known.

The Sub-Committee and Board agreed that from the date of contract, and for the period of their current contract (three years plus option to extend for one further year), that the successful bidder be admitted to the Local Government Pension Scheme as an Admission Body and to make and enter into an appropriate admission agreement.

IX REVIEW OF THE STRUCTURE OF THE SCOTTISH LOCAL GOVERNMENT PENSION SCHEME RESPONSE BY DUNDEE CITY COUNCIL ASADMINISTERING AUTHORITY OF TAYSIDE PENSION FUND

There was submitted Report No 388-2018 by the Executive Director of Corporate Services providing a draft response to a review being carried out by the Pensions Institute on behalf of the Scottish Local Government Pension Scheme Advisory Board.

The Sub-Committee and Board agreed to:-

(i) note the contents of the report;

(ii) consider the response attached at Appendix A; and

(iii) approve the response for circulation to Tayside Pension Funds participating employees.

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 paragraphs 4, 6 and 11 of Part I of Schedule 7(A) of the Act.

X TAYSIDE PENSION FUNDS

(a) PERFORMANCE SUMMARIES

There was submitted Report No 389-2018 by the Executive Director of Corporate Services relating to Performance Summaries for the quarter, 1, 3, and 5 year time periods to 30th September, 2018 reviewing the investment performance of the Funds Investment Managers for the quarter to 30th September, 2018. The report compared investment performance of the Fund 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 their Fund Managers.

(b) SUMMARIES OF INVESTMENTS AND TRANSACTIONS

There was submitted Report No 366-2018 by the Executive Director of Corporate Services summarising investments and transactions during the period 1st July to 30th September, 2018 reviewing the investment activities of the Main Funds seven Fund Managers for the quarter to 30th September, 2018.

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

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

(c) QUARTERLY FUNDING REPORT

There was submitted Report No 390-2018 by the Executive Director of Corporate Services which considered the report by the Fund Actuary, reviewing the current funding level of the Fund.

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

XI PROPOSAL TO RESUME SECURITIES LENDING ACTIVITIES

There was submitted Report No 391-2018 by the Executive Director of Corporate Services presenting a proposal to the Sub-Committee and Board seeking to resume Securities Lending activities.

The Sub-Committee and Board agreed to:-

(i) note the content of the report; and

(ii) authorise the officers to resume Securities Lending within the pension portfolio for applicable asset classes.

XII TAYSIDE PENSION FUND BENCHMARK REVIEW

There was submitted Report No 392-2018 by the Executive Director of Corporate Services presenting a proposal to amend the Main Fund benchmark in view of changed underlying investment components and criteria.

The Sub-Committee and Board agreed to:-

(i) note the contents of the report; and

(ii) authorise the officers to implement the proposed benchmark.

XIII TAYSIDE PENSION FUND INVESTMENT STRATEGY REVIEW

There was submitted Report No 393-2018 by the Executive Director of Corporate Services considering a Fund Investment Strategy Review and its opinion and recommendations.

The Sub-Committee and Board agreed to:-

(i) note the report in Appendix 1;

(ii) agree to restructure a specific Fund Managers mandate to a market capitalisation weighted benchmark;

(iii) agree to the following further allocations within the opportunistic portfolio with the transition arrangements delegated to officers;

- 50% to diversified alternatives via a procurement exercise for an appropriate Diversified Alternatives Manager.

- 25% allocation to opportunistic direct investment.

- 25% allocation to opportunistic market investment.

(iv) agree to delegate officers to:

- consider reconstructing the current property allocation in line with recommendation of introducing a direct property mandate, offering diversification and cost reduction, consider increasing inflation and illiquid assets as appropriate.

(v) note that any of the above changes may occur over a longer timeframe (eg IV) due to the illiquidity of existing investments, and all investment changes would be fully considered prior to implementation regarding the timing and appropriateness to the changing market conditions. Furthermore, the Funds Actuary would also be consulted on any proposed changes ahead of implementation to understand if changes will impact the underlying funding basis. The Sub-Committee and Board would be informed of these changes as they progressed.

XIV SOCIALLY RESPONSIBLE INVESTMENT - SIX MONTHLY REPORT

There was submitted Report No 394-2018 by the Executive Director of Corporate Services, whereby reference was made to Article V of the minute of meeting of this Committee of 4th June, 2018 reviewing the progress by the Fund Managers regarding positive engagement in line with the Policy on Environmental, Social and Corporate Governance approved by the Sub-Committee.

The Sub-Committee and Board noted the information contained within the report with regards to the activities of the Fund Managers during the six month period ended 30th September, 2018.

XV PRESENTATION

Jason Freeman, Max Ramirez and Jeremy Cave from GSAM gave a short presentation.

A summary of the performance of the Portfolio was given, noting the key performance contributors and detractors and comparison of this to benchmark figures. It was noted that the Portfolio had slightly over performed its benchmark in the last quarter, however volatility in the market due to Brexit was continuing to cause instability.

Thereafter, the Sub-Committee and Board were given a brief outline of the strategy within the real estate element of the mandate, noting that investment aims were to generate risk adjusted returns by investing across the debt capital structure.

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

Thereafter, the Chair thanked Jason, Max and Jeremy for their presentation.

Gregor MURRAY, Chair.