02 November 2021 – Minutes
THAME TOWN COUNCIL
Minutes of a Meeting of the Policy & Resources Committee held on 02 November 2021 at 6.30pm in the Upper Chamber, Thame Town Hall.
B Austin, D Bretherton (Deputy Chairman), P Cowell (Town Mayor), A Dite, D Dodds, M Dyer (Chairman), H Fickling, C Jones, A Midwinter, J Tipping
C Pinnells, Acting Town Clerk
K Slater, Responsible Financial Officer & Office Administration Manager
L Fuller, Committee Services Officer
1 Apologies for Absence
Apologies for absence received from Cllr Champken-Woods (county council business). Cllr Gregory was absent without apology.
2 Declarations of Interest and Dispensations
There were no declarations of interest or dispensations.
3 Public Participation and Public Questions
There were no applications to address the Committee.
There were no questions put to the Committee.
4 Investment Portfolio
Mr. Rupert Baron and Mr. Bert Weston-Davies of Rathbones presented the annual review of the Town Council’s Investment Portfolio. Rathbones had been given a discretionary mandate and took direction from the Town Council, with the objective being capital growth whilst conforming to the agreed level of risk. As of 31 October 2021, the investment fund stood at £2m and generated just under £26,000 of income with a yield of 1.3%.
The total returns from the portfolio over 1 year, 3 years and 5 years, are calculated using five benchmarks of varying risk levels. The portfolio had returned 10% over the last year, which was in part due to the FTSE All-Share increase of 35% following the Covid-19 vaccination approval which had a great effect on the UK and US markets. In March 2020, the markets were badly affected by Covid-19 however whilst the portfolio fell it was not as heavily affected as other benchmarks due to the risk design of the portfolio. The portfolio has been designed with the longer-term returns in mind, so Rathbones were not concerned that the portfolio had returned 10% rather than 35% in the last year. When compared with the performance over the last 3 and 5 years, the portfolio had outperformed all benchmarks. It was pleasing that the portfolio had performed well despite volatility in the market and had returned 10% in the last year.
Rathbones consider the overall performance before taking a more detailed look at each investment, taking into account what has performed well and why, as well as its weighting within the portfolio and whether its growth is appropriate. By doing this, it is possible to identify themes over the last year. The main theme is movement of Environmental, Social, and Governance (ESG) into the mainstream, which was reflected in the performance of the Baillie Gifford & Co Ltd Positive Change fund. The US market had been a strong performer in the last year too. On the other hand, Gold had not performed as well, as investors moved away from the risk-free asset class as markets bounced back. Rathbones continue to monitor the markets and manage the portfolio to recycle capital into areas that were expected to perform well.
Rathbones reminded Members of their three asset classes for managing risk – liquidity, equity-type risk, and diversifiers. The asset classes are used to see how they respond in times of stress. The asset classes are then used to form Rathbones’ six risk strategies, increasing in risk level from 1 to 6. Rathbones continually balance risks and return for the Town Council, with the longer-term strategic asset allocation influencing decisions rather than the day-to-day fluctuations. In response to the equity market growing, Rathbones have moved funds into liquidity and diversifier assets.
Looking to the future, Rathbones felt that there were some key issues to consider.
Firstly, for many years China has been a major contributor to global economic growth, low inflation, and globalisation. However, China is undergoing a change and a slowing of their economy, with a clampdown on tech billionaires as a result of excessive economic and corporate power. China is an immature economy in regulating capitalism, and it is likely that there will be policy errors. However, China will continue to be the beating heart of the global economy.
Secondly, there are reasons to be cheerful. For example, the global economy is still growing with next year’s growth predicted to be 4%. However, there is unprecedented disruption within the supply chain, partly due to the impact of Covid-19, which is disrupting growth, however, in time this will work its way through the system. The surge in inflation is a concern and it is expected that global inflation will settle at around 2.5% – 3%. The expected rise in interest rates in coming months may be partly offset by spending within the Eurozone.
Thirdly, the rise in the ESG movement and transition to a low-carbon economy will provide excellent opportunities over the coming decades with large sums of money committed to low carbon and zero carbon technologies. However, caution needs to be exercised to ensure that too much capital is not invested into too little idea, which would harm investments.
Overall, Rathbones expected that growth in the next 12 months will continue but will be less vigorous, and whilst inflation is transitory it will settle just above 2% and it is hoped that this will not affect wages. The pandemic has accelerated social and economic change, with significant winners and losers. Interest rates are expected to rise, however Governments could not afford for them to rise too high as this would have a profound impact on the economy, as well as a material impact on mortgages. It is unlikely that the portfolio will return a double-digit figure next year and therefore the Town Council was advised to moderate its expectations.
A question was raised as to whether the Town Council’s investments related to theoretical investments rather than in companies that manufacture? Mr. Baron advised that the investments were investors in companies that manufacture, which were largely overseas as Western economies transition to a more service-based economy.
There was some confusion relating to the 1.3% yield and 10.8% return of the portfolio. Rathbones clarified that the yield related to the income generated by the portfolio, whereas the return related to the value of the portfolio over time.
Members recognised that addressing climate change was high on the agenda, particularly given COP26 which was taking place currently. Rathbones advised that this was a complex issue, however climate change and sustainability is at the centre of the Financial Conduct Authority’s thinking. The financial industry is taking this into account by point scoring companies on their ESG when considering where to invest, however this can be problematic as companies are often stronger in one aspect of ESG than another which can make comparisons difficult. Mr Baron advised that Rathbones has four principles – integrate ESG into the process, vote with purpose and aggressively where Rathbones does not support a company’s activities, engage with companies from the beginning, and be totally transparent with Rathbones’ actions and voting behaviour.
A question was raised as to whether Rathbones worked with other local authorities that used the same risk level as the Town Council? Mr. Baron advised that Rathbones did not manage portfolios for many other local authorities but could not disclose further information. Furthermore, the risk strategy used by Rathbones is unique to them, however Rathbones is open to discussions with the Town Council as to whether the current risk level is right. Rathbones recognised that a more cautious approach is required when managing public money.
A question was raised as to what confidence Rathbones could give to the Town Council, given that inflation was almost inevitable, and the Prime Minister was looking to raise wages despite productivity being low in the UK. Mr. Baron advised that the portfolio’s exposure to the UK economy is minimal and therefore so is the risk.
The Minutes of the meeting held on 3 August 2021 were confirmed as a correct record and signed by the Chairman.
6 Financial Update
Members received the budget summary and balance sheet up to 30 September 2021.
The Responsible Financial Officer (RFO) & Office Administration Manager advised that the 19% over budget expenditure on budget line 115 (Car Parks) related to the salary of the former Car Park Attendant who is currently undertaking additional responsibilities as temporary Community Project Support Officer. This is an administrative process, and the salary will be recharged at the end of the financial year into the correct budget line, 101 (Central Services).
7 Financial Overspends
Members noted the following financial overspends against budget line items (greater than the agreed de minimis of £100 / 5%):
- Recruitment – Town Clerk £1.6k
- Staff structure – James Corrigan £2.3k
- Staff job evaluations – James Corrigan £750
- Subscriptions – £500 increase on annual OALC membership
- Insurance – New Mower, Cricket Club damage excess £1.5k
- Neighbourhood Planning Professional Fees – £5.7k
- Town Awards £1k
- Radar Gun purchase & holiday pay for car park attendants (leavers) £2.2k
8 Investment Update
The Investment Summary was noted. Following the earlier presentation by Rathbones, Members noted that the portfolio was performing well.
The portfolio valuation currently stood at £2million. Members questioned whether this was the right amount in comparison to the Town Council’s precept, and what the Town Council intends to use the monies for. The portfolio had been used to fund various projects totalling around £1million but the portfolio had performed well and remained at the original £2million investment. The £25,000 income from the investment portfolio forms part of the budget alongside the precept. A smaller portfolio would generate less income. It was noted that it may be difficult to rebuild the portfolio if funds were withdrawn. How the Town Council invests is currently being considered as part of the Investment Strategy review.
The RFO & Office Administration Manager advised that the Town Council had made several community loans which now had repayments due. Once these had been repaid, the Town Council would be in a more favourable position to consider options for reinvesting the portfolio income and loan repayments.
The Town Council would also be looking at other avenues for income generation and it was noted that the Town Council has around £92,000 in CIL monies.
It was suggested that the portfolio funds could be used on projects that would improve the quality of life for Thame residents. The Acting Town Clerk advised that the Town Council needed a business plan first.
9 Internal Audit
Members received the First Interim Internal Audit Report for 2021-22. Members thanked the RFO & Office Administration Manager for another clear audit and recognised that a large amount of work goes into achieving this each year.
10 Health & Safety Visit Outcomes
The RFO & Office Administration Manager was pleased to report that all 73 actions reported a year ago have been completed. The Health & Safety Visit had flagged no actions and just one recommendation relating to the Maintenance Team’s job sheets, which will be taken on board. The Town Council was commended for its event management and depot operations.
Within the Officer’s report it was suggested that relocating the smoking bins by the Town Hall away from the windows may help to improve air quality in the office and reduce unpleasant smells. It was questioned whether this would have an effect given the buses idling here too. It was advised that the carbon dioxide monitor in the office was regularly exceeding the limit which showed that air quality in the office was inadequate. A professional survey would be undertaken in December, funded using Community Infrastructure Levy (CIL) monies as it measures internal and external air quality, and poor internal air quality is a health and safety concern for both Officers and hirers / users of the Town Hall.
11 Council Policies
The RFO & Office Administration Manager advised that the Emergency Response Plan, Insurance Strategy and Terrorism Policy had been reviewed and no changes were required.
- The unchanged Emergency Response Plan, Insurance Strategy, and Terrorism Policy be approved.
12 Speed Indicator Device
The report was noted. The RFO & Office Administration Manager advised that three residents associations had been notified that the radar guns were available to hire and that they now needed to undertake the online speedwatch training from the Police. The Town Council will check that the groups have passed the training prior to the radar guns being issued. The Police had confirmed that the radar guns were covered by their insurance therefore it was not necessary for the Town Council to take deposits. The Police had recommended that the groups keep the radar guns for six months and must log each session so that the Police always know where the radar guns are.
A question was raised as to what happens if the residents’ association caught people speeding? It was advised that the radar guns automatically take the licence plate of the vehicle, which is sent to the police and the DVLA and a letter is sent to the driver. The driver would not receive a fine, however if it happened again then the police will visit.
Another question was raised as to whether signage was needed to advise drivers of the speedwatch checks. The police would place temporary signage to advise drivers that it was a speedwatch area once the necessary training had been completed. This would enable the residents’ associations to undertake speedwatch checks as and when they were available.
It was clarified that any volunteer group could undertake the training and it was not limited to residents’ associations.
13 Thame Museum
It was noted that work to the glass lantern and roof commenced on 19 October 2021 and is progressing well. Cllr Dite advised that the glass lantern had been removed, pane by pane, and the next step was to paint it. Works to the roof would then begin. The works were around a third of the way through.
14 Reports from Representatives on External Organisations
The reports were noted.
15 Staffing Update
It was noted that Personnel Committee meetings were held on 12 October 2021 and 26 October 2021 at which Grading Levels, Appraisal Outcomes, Staffing Matters and Staffing Costs / Gradings were discussed.
It was noted that the recruitment of the Town Clerk as agreed at the 13 August 2021 meeting of the Personnel Committee has proceeded to plan with Amanda Sturdy starting full time on 15 November 2021.
It was noted that Car Park Attendants David Gander and David Reed last day of employment with Thame Town Council was on 25 August 2021 and 29 October 2021 respectively.
16 Free Use / De Minimis Delegated Authority
Members noted that the Acting Town Clerk through De Minimis delegated authority, has granted the following:
- Free Use of Upper Chamber for Wild Pear CIC – 4 November 2021 – Event for organisations to pledge action on climate and biodiversity to each other at the Upper Chamber.
- Free Use of Upper Chamber for Thame Youth Projects Fundraising – 29 January 2022.
17 Compliments & Complaints
The report for April 2021 to September 2021 was noted.
18 For Information
The items for information were noted.
The meeting concluded at 7:40pm.
Chairman, 15 February 2022