Agenda Document Pack - Midlothian Council - 25/02/2025
Midlothian Council · 25 February 2025
Back to Midlothian Council — 25 February 2025 and its agenda
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Notice of Meeting and Agenda Midlothian Council Venue: Council Chambers/Hybrid, Midlothian House, Dalkeith, EH22 1DN Date: Tuesday, 25 February 2025 Time: 11:00 Executive Director : Place Contact: Clerk Name: Democratic Services Clerk Telephone: Clerk Email: democratic.services@midlothian.gov.uk Further Information: This is a meeting which is open to members of the public. Privacy notice: Please note that this meeting may be recorded. The recording may be publicly available following the meeting. If you would like to know how Midlothian Council collects, uses and shares your personal information, please visit our website: www.Midlothian.gov.uk Page 1 of 270
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1 Welcome, Introductions and Apologies 2 Order of Business Including notice of new business submitted as urgent for consideration at the end of the meeting. 3 Declaration of Interest Members should declare any financial and non-financial interests they have in the items of business for consideration, identifying the relevant agenda item and the nature of their interest. 4 Deputations 5 Minutes 5.1 Minute of Council meeting of 17 December 2024 submitted for approval 5 - 27 5.2 Minute Volume Index 28 - 29 5.3 Action Log 30 - 35 6 Questions to the Council Leader No items for discussion 7 Motions 7.1 Labour Group representatives on Committees and Working Groups 36 - 36 7.2 Response to Storm Éowyn 37 - 37 8 Public Reports 8.1 Financial Monitoring 2024/25 – General Fund Revenue - Chief Financial Officer & Section 95 Officer 38 - 48 8.2 Housing Revenue Account Revenue Budget 2024/25 – 2025/26 and Capital Plan 2024/25 – 2027/28 - Chief Financial Officer & Section 95 Officer 49 - 57 8.3 General Services Capital Plan 2024/25 Quarter 3 Monitoring and 2025/26 to 2028/29 Budgets - Chief Financial Officer & Section 95 Officer 58 - 75 Page 2 of 270
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8.4 Treasury Management and Investment Strategy 2025/26 & Prudential Indicators - Chief Financial Officer & Section 95 Officer 76 - 153 8.5 Scottish Local Authorities Remuneration Committee - Recommendations - Chief Officer Corporate Solutions 154 - 157 8.6 Fees and Charges 2025/26 - Chief Officer Corporate Solutions 158 - 185 8.7 Medium Term Financial Strategy - Chief Financial Officer & Section 95 Officer - Paper to follow 8.8 Audit Committee Recruitment of an Independent Member - Chief Internal Auditor 186 - 197 8.9 Standing Orders Working Group update and schedule of meeting dates 2025/2027 - Chief Officer Corporate Solutions 198 - 234 8.10 UK Shared Prosperity Transition Funding 2025/26 - Executive Director - Children, Young People and Partnerships 235 - 259 8.11 Use of Glyphosate Update Report - Chief Officer, Place 260 - 265 8.12 Standards Commission Decision - Legal and Governance Manager/Monitoring Officer 266 - 270 Exclusion of Members of the Public (A) TO CONSIDER RESOLVING TO DEAL WITH THE UNDERNOTED BUSINESS IN PRIVATE IN TERMS OF PARAGRAPHS 8, 9 AND 10 OF PART 1 OF SCHEDULE 7A TO THE LOCAL GOVERNMENT (SCOTLAND) ACT 1973 - THE RELEVANT REPORTS ARE THEREFORE NOT FOR PUBLICATION; AND (B) TO NOTE THAT NOTWITHSTANDING ANY SUCH RESOLUTION, INFORMATION MAY STILL REQUIRE TO BE RELEASED UNDER THE FREEDOM OF INFORMATION (SCOTLAND) ACT 2002 OR THE ENVIRONMENTAL INFORMATION REGULATIONS 2004. 9 Private Reports 9.1 Proposed Disposal of Property Asset - Chief Officer – Place • 8. The amount of any expenditure proposed to be incurred by the authority under any particular contract for the acquisition of property or the supply of goods or services. • 9. Any terms proposed or to be proposed by or to the authority in the course of negotiations for a contract for the acquisition or disposal of property or the supply of goods or services. 9.2 Beeslack Replacement High School Contractor Appointment Update - Executive Director Place • 8. The amount of any expenditure proposed to be incurred by the authority under any particular contract for the acquisition of property or the supply of goods or services. • 10. The identity of the authority (as well as of any other person, by virtue of paragraph 6 above) as the person offering any particular tender for a contract for the supply of goods or services. • 9. Any terms proposed or to be proposed by or to the authority in the course of negotiations for a contract for the acquisition or disposal of property or the supply of goods or services. Page 3 of 270
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9.3 Shawfair Education Provision - Executive Director Place - Paper to follow 9.4 Capital Plan Prioritisation - Executive Director Place - Paper to follow 9.5 Developer Contributions Report – Use of Bonnyrigg Town Centre Developer Contributions - Chief Officer - Place • 8. The amount of any expenditure proposed to be incurred by the authority under any particular contract for the acquisition of property or the supply of goods or services. • 9. Any terms proposed or to be proposed by or to the authority in the course of negotiations for a contract for the acquisition or disposal of property or the supply of goods or services. • 10. The identity of the authority (as well as of any other person, by virtue of paragraph 6 above) as the person offering any particular tender for a contract for the supply of goods or services. 10 Date of Next Meeting The next meeting will be held on Tuesday 1 April 2025. Page 4 of 270
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Minute of Meeting Midlothian Council Tuesday 25 February 2025 Item No 5.1 Midlothian Council Date Time Venue Tuesday 17 December 2024 11:00 am Council Chambers, Midlothian House/Hybrid Present: Provost McCall (Chair) Deputy Provost Bowen (Deputy Chair) Councillor Parry (Council Leader) Councillor Cassidy (Deputy Council Leader) Councillor Alexander (virtual) Councillor Curran Councillor Imrie Councillor McEwan Councillor McKenzie Councillor McManus (virtual) Councillor Milligan Councillor Pottinger (virtual) Councillor Russell Councillor Scott Councillor Smaill Councillor Virgo Councillor Winchester Religious Representatives: Anne-Theresa Lawrie In attendance: Dr Grace Vickers, Chief Executive Kevin Anderson, Executive Director Place Fiona Robertson, Executive Director Children, Young People and Partnerships Morag Barrow, Director of Health and Social Care: Midlothian Health and Social Care Partnership, Chief Officer to Midlothian Integrated Joint Board David Gladwin, Chief Financial Officer/ Section 95 Officer Saty Kaur, Chief Officer Corporate Solutions Page 5 of 270
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Derek Oliver, Chief Officer Place Duncan Stainbank, Chief Internal Auditor Michelle Strong, Education Chief Operating Officer Peter Arnsdorf, Planning, Sustainable Development and Investment Manager Nick Clater, Head of Adult Services, Chief Social Worker Claire Gardiner, Audit Director, Audit Scotland (virtual) Annette Lang, Group Service Manager (Community Planning Partnership, Communities, Lifelong Learning and Employability) Alan Turpie, Legal and Governance Manager/Monitoring Officer Gordon Pollock, Project Director Zero Waste Edinburgh & Midlothian Hannah Forbes, Democratic Services Officer Iina Jaara, Democratic Services Team Leader Louise Middleton, Democratic Services Officer Maria Perez, Democratic Services Officer Nicola Thorburn, Democratic Service Officer 1. Welcome, Introductions and Apologies The Chair, Provost McCall, welcomed everyone to the meeting of Midlothian Council and thanked the children from King’s Park Primary School for getting everyone into the Christmas spirit with their singing. The Chair advised that the meeting was open to the public and would be webcast live. Apologies were received from Councillor Drummond. The Chair highlighted the hard work of the Roads Team in keeping residents safe during the recent bad weather and thanked them for working day and night to ensure Midlothian roads are cleared and gritted. The Chair congratulated Loanhead Miners Under 14 Girls’ Football Team who recently won the Claire Emslie League, and noted the Team Captain is Savannah Montgomery who is the daughter of a Midlothian Council staff member. The Chair also commiserated the players of the Dalkeith Thistle Girls’ Football Team, who had been unbeaten until they lost to the Dalkeith Miners on penalties. 2. Order of Business The Legal and Governance Manager/Monitoring Officer noted that the order of business is as per the agenda apart from a late report and adding its inclusion in the order of business would be at the Chair’s discretion. Due to its contents, if accepted, this late report will be added to the private section of the agenda. Page 6 of 270
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The Chair accepted the late report and agreed it would be discussed as item 9.2 on the agenda. 3. Declarations of interest None. 4. Deputations None. 5. Minutes of Previous Meetings Item No. Report Title Submitted by: 5.1 Minute of Special Council Meeting of 12 November 2024 Executive Director Place Outline and Summary of Discussion The Minute of the Special Meeting of Midlothian Council held on the 12 November 2024 was submitted for approval. Councillor Parry moved to approve the Minute of the Special Meeting of Midlothian Council of 12 November 2024, seconded by Councillor Virgo. Decision The Minute of the Special Meeting of Midlothian Council held on 12 November 2024 was approved as the correct record. Item No. Report Title Submitted by: 5.2 Minute of Council Meeting of 12 November 2024 Executive Director Place Outline and Summary of Discussion The Minute of the Meeting of Midlothian Council held on the 12 November 2024 was submitted for approval. Elected Members reported a discrepancy between the record of item 9.1 in the minute and their recollections of the discussion. The Executive Director Place requested that the minute is checked against the recording and amended accordingly. The Legal and Governance Manager/Monitoring Officer noted that as item 9.1 was a private item, there is not a recording, and this would need to be discussed out of the public meeting. It was agreed this would be discussed during the private session. Elected Members referred to item 8.4 in the minute noting that some parents of P7 pupils from Loretto Primary School had written to Elected Members with concerns about the S1 intake to St David’s High School. The parents had received a communication that they reported stated they may not be automatically entitled to a Page 7 of 270
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place at St. David’s High School. Elected Members asked for reassurance that there is no deviation from the current policy and that there will be places for all P7 pupils transitioning into S1 for next year and subsequent years, and that any changes from this policy are approved by Council. The Chief Executive confirmed there are no changes to the intake policy for the next academic year. It was noted that the issue the Loretto Primary parents reported is unrelated to the paper presented at the November 2024 Council on the proposed admissions review which, when completed, would be brought back to Elected Members for consideration. The Executive Director Children, Young People and Partnerships stated that placing requests are considered after the legislative deadline of 15 March 2025, and until then it is not possible to give any early indication if a child is likely to be given a place at their chosen school. In the event a school is oversubscribed the admissions policy is applied and parents will be contacted by the Pupil Placement Team at the end of April 2025. The situation of the Loretto Primary School P7 pupils is therefore not a deviation from the current admissions policy and the purpose of the communication sent to parents was to determine how many P7 pupils wish to submit a placing request to St David’s High School. Councillor Parry moved to approve the minutes with the exception of 9.1 which will be discussed in the private session later on the agenda, seconded by Councillor Cassidy. Decision The Minute of the Midlothian Council Meeting of 12 November 2024 was approved as the correct record with the exception of 9.1. Action Democratic Services Item No. Report Title Submitted by: 5.3 Minute Volume Index Executive Director Place Outline and Summary of Discussion The Minute Volume Index was submitted for approval. The Minute Volume Index was moved by Councillor Parry and seconded by Councillor Cassidy. Decision Council approved the Minute Volume Index. Item No. Report Title Submitted by: 5.4 Action Log Executive Director Place Outline and Summary of Discussion Page 8 of 270
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The Action Log was submitted for noting. Elected Members asked for clarification on the response received by Councillor Parry on the matter of the £20million pledge for Mayfield town development. Councillor Parry stated that the response received from the UK Government was shared with Group Leaders and can be included in the minutes for clarity. Councillor Parry’s understanding is that this money would not be forthcoming. Councillor Parry agreed to contact the MP for Midlothian again to reiterate the importance of this funding. Elected Members asked for an update on the learning estate condition surveys. The Executive Director Place stated that the surveys on High School assets is complete and the suitability assessment on Primary Schools will be completed shortly. Once complete the findings will be presented to the Business Transformation Steering Group (BTSG). Decision Elected Members noted the Action Log and agreed to close actions marked for closure. Action Letter from the UK Government to be added to the minute of February 2025 Council. 6. Questions to the Leader of the Council None. 7. Motions Item No. Report Title Submitted by: 7.1 Inclusion of Local Youth and School Parliaments in Council Meetings Councillor Virgo Outline and Summary of Discussion The notice of motion was proposed by Councillor Virgo and seconded by Councillor Scott. Councillor Virgo noted that in the 2022 local government elections turnout for the 18- to 24-year-old demographic was only 30%, and there is a need to improve engagement and participation of young people in local democracy. This motion to involve local Youth and School Parliaments in Council meetings is to build youth engagement with local government and foster links so the views of the whole community are represented. Councillor Scott seconded the motion, noting that by engaging with secondary and primary students, they have been impressed by their insight and thoughtfulness and believe young people have a lot to contribute. This motion also resonates with the Page 9 of 270
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principles of the United Nations Convention on the Rights of the Child and will give a voice to children and young people in local government decisions. Decision Elected Members approved the motion to include Youth and School Parliaments in Council meetings and noted the motion to the Standing Orders Working Group for consideration on next steps. Item No. Report Title Submitted by: 7.2 Requirement for approval and additionality of Planning Obligations associated with increasing major developments Councillor Smaill Outline and Summary of Discussion The notice of motion was proposed by Councillor Smaill and seconded by Councillor Virgo. Councillor Smaill explained that this motion is related to house building and the very rapid expansion of housing developments in Midlothian Council. Due to this growth, Midlothian Council will be faced with large expenses to build necessary infrastructure, such as schools. While the cost of building schools has almost doubled in the last 5 years, the developer contributions through Section 75 agreements have barely changed. An anomaly has also been reported by some Community Councils which is the developer’s practice of intensification, meaning additional properties are built after the planning permission is granted. Intensification has occurred in several developments in Midlothian such as North Middleton and North Mayfield which have substantially increased in size. This is an issue as the Section 75 agreement is set in stone and these additional houses do not bring any contribution despite adding to the need for council services and infrastructure. This motion aims to strengthen processes so Midlothian Council will be in position to monitor the practice of intensification, generate more funding through developer contributions and keep strict control of the house building industry. Councillor Virgo added that this is a comprehensive motion that aims to bring planning regulations into the 21st century and fit for the pace and scale of growth in Midlothian. Elected Members noted that Midlothian Council Planning Department keep strict controls of the house building industry and that any additional properties added to a development need to meet the same criteria as the main development, including the developer contributions per the Section 75 agreement. Councillor Smaill stated that as part of the motion Council is asked to conduct an audit on the extent of the practice of intensification and consider whether the amount paid in developer contributions needs to be increased as part of a wider planning review. Page 10 of 270
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Councillor Scott proposed an amendment to this motion to consider additional support needs educational provision costs when reviewing developer contributions. This is necessary as given the size of the houses the target demographic are families, and some of these families will have children who have special educational needs. The motion with the proposed amendment by Councillor Scott was moved by Councillor Smaill and seconded by Councillor Virgo. Decision Elected Members approved the motion of requirement for approval and additionality of planning obligations associated with increasing major developments with the proposed amendment by Councillor Scott. Action To be referred to the Chief Officer Place and Chief Planning Officer to action. 8. Reports Report No. Report Title Submitted by: 8.1 Midlothian Council 2023/24 Annual Audit Report Audit Director, Audit Scotland Outline and Summary of Discussion The Audit Director for Audit Scotland presented the report for noting. Audit Scotland completed an Annual Audit Report on the 2023-2024 accounts, and its conclusions were presented to the Audit Committee in November 2024. The Annual Audit Report provides an unmodified opinion on the Council’s annual accounts which means that the statements presented represent a true and fair view of the Council’s financial position on 31 March 2024. Exhibit 2 points out seven audit matters for Elected Members’ attention. The first three are in relation to condition ratings of Council buildings (received through the post year-end survey) which led to an adjustment of £19 million in the accounts. There were six other adjustments which were minimal and did not affect the General Fund position. Sections 2 to 5 in the report confirm that appropriate and effective arrangements are in place for financial management, governance and performance management. In terms of financial sustainability, the Council’s Medium Term Financial Strategy (MTFS) has identified a budget gap of £21 million by 2028/29. The Audit Director stated that Midlothian Council is not underestimating the risk and is taking appropriate action to address sustainability. The Audit Director referred to the Best Value Report. The Workforce Strategy recommendations made in the Best Value Report are in the process of being implemented and there are links to the Transformation Blueprint. The Audit Director Page 11 of 270
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thanked the Finance Team for their hard work and cooperation during the audit process. The Chair thanked the Audit Director for the report and opened it up for questions. Elected Members thanked Audit Scotland, the Chief Financial/Section 95 Officer and the Finance Team for their hard work, as well as the Audit Committee who already reviewed the Annual Audit Report. Decision Elected Members noted the recommendations in the report. Report No. Report Title Submitted by: 8.2 Medium Term Financial Strategy – 2025/26 to 2028/29 Chief Financial Officer/ Section 95 Officer Outline and Summary of Discussion The Chief Financial Officer/Section 95 Officer presented the report for noting. This report provides key messages and updates following fiscal announcements that will affect the 2025/2026 Council budget and the feedback from the recent public budget consultation. Sections 3.5 to 3.11 provide commentary on the UK Government budget and its implications for the MTFS. The main implications are £1.3 billion increased funding for Scotland through the Barnett formula in the current financial year and a further £1.9 billion in the financial year 2025/2026, increases to the employers’ National Insurance contribution and reduced minimum threshold which will cost almost £5 million to the Council pay bill as well as the continuation of the UK Shared Prosperity Fund for another year of which has been confirmed as £1.17 million. Sections 3.12 to 3.22 in the report discuss the 2025/2026 Scottish Government budget. This contains additional spends which are non-ring fenced or directed for councils of approximately £289 million revenue and £48 million capital. For 2025/2026 there is no Scottish Government prescribed Council Tax cap or freeze. The draft local government finance settlement was published last week, and while it is too early to provide detailed analysis on these events’ consequences for the Council budget, there is an increase in overall funding. There is also an improvement in Midlothian’s share of national funding pots, particularly those based on population and school age pupil numbers. There is also an improvement in the floor position for Midlothian. The increased funding will have a positive impact on the projected budget gap, based on the flat cash settlement, but it is too early to quantify this figure. There are other pressures to consider like Adult Health and Social Care spending and the increased National Insurance employer contributions. Additional consequentials are expected to flow to Scotland but the Chief Financial Officer/Section 95 officer warned Page 12 of 270
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of the risk of this funding falling considerably short of the additional costs that are mentioned in the report. Work continues on the 2025/2026 Council base budget which is due to be presented to the Business Steering Transformation Group on 14 January 2025 with final saving options. A balanced budget will be presented to Council in February 2025. Section 4 and appendixes B and C give information on the budget consultation responses. The Chair thanked the Chief Financial Officer/Section 95 Officer for the report and opened it for questions. Elected Members noted that the consultation responses are very helpful for understanding residents’ priorities and thanked all Council staff who were involved in the budget consultation. Elected Members noted that there will be clearer indication in January 2025 about the final amount of the cash flat settlement. Another matter in which further clarity is needed is the National Insurance employer contributions. Councillor Parry advised that a letter has been sent to the Treasury on the matter, but a response has not yet been received. Councillor Parry will also meet with the MP for Midlothian to make similar representations and follow up on the letter sent to the Treasury. Elected Members welcomed the recent announcements from the UK and Scottish budgets, as it will result in a less challenging position for Midlothian Council. Elected Members also pointed out that small business and retailers will also be affected by the decision to raise National Insurance contributions. Elected Members referred to the budget consultation responses and noted that many respondents are asking for clearer information on Council finances, expressing their hopes that the consultation may be the starting point to greater engagement with residents. Decision Council noted the recommendations set in the report. Report No. Report Title Submitted by: 8.3 Treasury Management Mid-Year Review Report 2024/2025 Chief Financial Officer/Section 95 Officer Outline and Summary of Discussion The Chief Financial Officer/Section 95 Officer presented the report for noting. The report informs Elected Members of treasury management activity undertaken during the first half of 2024/2025 and the forecast activity for the second half of 2024/2025 in accordance with the Treasury Management and Annual Investment Page 13 of 270
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Strategy. Elected Members are invited to comment on this report which was also presented to Audit Committee. Section 3 of the report provides background information. Section 4 provides a summary of the economic environment of the first half of this financial year. Section 5 describes the main areas of treasury activity focused on a continuation of the existing deposit strategy to balance cash and reserves with some internal borrowing. The underborrowed position increased slightly during the first half of the current financial year, and whilst continuing to plan for the longer term in line with market expectations, Council continued to take advantage of low interest rates and react quickly to favourable market conditions. The profile of funds and deposits on Table 2, page 90 of the agenda, shows little overall change during 2024/2025 other than replacing matured deposits with new ones at a similar interest rate. Section 6.1 provides an update on economic conditions post-UK budget showing an increase in inflationary pressures and section 6.2 shows expected treasury activity for the second half of the financial year 2024/2025. Through effective treasury decisions the Council avoided the need to borrow during the period of high interest rates. The Chief Financial Officer/Section 95 Officer stressed the need to not overly rely on internal borrowing and added that the Finance Team will continue to explore favourable borrowing opportunities. Section 7 updates prudential indicators based on activity during the current financial year. A revised list of indicators will be presented to Council in February 2025. Section 8 shows Midlothian’s average fund rate compared to other Local Authorities. Data on other Local Authorities illustrates the financial benefits of the current treasury management strategy for Midlothian Council. Moving closer to the Scottish average would have resulted in additional annual loan charges. The Chair thanked the Chief Financial Officer/Section 95 Officer for the report and opened it up for questioning. Elected Members noted that the current revised estimate of borrowings is above the authorised limit, and the report warns that Council may need to make a decision regarding increasing their borrowing limit. Elected Members asked about the magnitude of this increase and what consequences it may have. The Chief Financial Officer/Section 95 officer stated the current borrowing limits were approved by Council in February 2024 and restricted the Chief Financial Officer/Section 95 Officer’s ability to borrow, but that the amount of future borrowing will depend on the results of the Capital Plan Prioritisation, as there are significant pressures exerted by the growing population of Midlothian and these may need to be met by borrowing. Decision Page 14 of 270
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Council noted the recommendations set in the report. Provost McCall left the meeting at 12.02 Deputy Provost Bowen chaired the meeting from 12:03 pm. Report No. Report Title Submitted by: 8.4 Community Learning and Development Partnership Plan 2024 to 2027 Education Chief Operating Officer Outline and Summary of Discussion The Group Service Manager (Community Planning Partnership, Communities, Lifelong Learning and Employability) presented the report for decision. The report presents the new Community Learning and Development Partnership (CLDP) Plan for the period 2024 to 2027. Elected Members are asked to note the statutory duties of the Education Authority for planning and reporting, approve the progress report for 2021/2024 and the plan for Midlothian for 2024/2027. The CLDP Plan in Midlothian includes youth work, adult learning and community development and employability, delivered by Midlothian Council’s Community and Lifelong Learning Team as well as Third Sector partners. The CLDP Plan looks at successes and achievements of the past three years, including a very successful inspection and looks at ambitions for future years. This was due to be published in July 2024 but there was a delay due to the publication of the National Community Learning and Partnership review in July 2024.The findings of that this review have been included in the report. The CLDP Plan includes a one-page summary on what the service focuses on and the positive impact this work has on Midlothian residents. The report was approved by the Community Planning and Partnership Board last week and is now presented for Elected Members’ approval. The Chair thanked the Group Service Manager (Community Planning Partnership, Communities, Lifelong Learning and Employability) for the report and opened it up for questioning. Elected Members noted the underrated role of community learning services in improving residents’ wellbeing, especially those struggling with the cost –of living crisis. Elected Members thanked all those involved in the service for their hard work and praised them for meeting targets in increasingly difficult conditions and having ambitious yet realistic goals. Elected Members stated that youth work is crucial to ensure that local youths engaging in antisocial behaviour can see the error of their ways. It was suggested Page 15 of 270
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that considering the recent incidents in the Dalkeith Ward the CLDP should reach out to these youngsters. The CLDP Plan 2024 to 2027 was moved by Councillor Parry and seconded by Councillor Scott subject to Councillor Russell’s comments. Decision Council approved the report and its recommendations Report No. Report Title Submitted by: 8.5 Edinburgh, the Lothians and Scottish Borders MAPPA Annual Report for 2023/2024 Head of Adult Services and Chief Social Work Officer Outline and Summary of Discussion The Head of Adult Services and Chief Social Work Officer presented the report for noting. The report advises of the activities undertaken by agencies across Edinburgh, the Lothians and Scottish Borders who work in partnership as part of Multi Agency Public Protection Arrangements (MAPPA) and provides statistical information on activity. MAPPA is a statutory framework through which the Responsible Authorities discharge their responsibilities to protect the public and avoid the risk of serious harm. There are 3 categories of individuals subject to management under MAPPA. There are registered sex offenders, patients subject to special restrictions under the mental health legislation, and those who are at risk of serious harm. The majority of individuals subject to management under MAPPA belong to the registered sex offender category. There are three levels of management under MAPPA. The 2023-2024 report has a foreword by the previous Head of Children’s Services and Chief Social Work Officer which points out that only a small number of individuals are managed under MAPPA in Midlothian. The Head of Adult Services and Chief Social Work Officer noted that there has been a slight increase in numbers from the previous year and that the 5-year average of individuals managed under MAPPA is 864. There are three levels within the framework, and the majority of individuals are managed at level 1, which is the lowest and managed by police solely. Level 2 cases have Criminal Justice Social Work involvement. There are no level 3 cases this year in Midlothian, which is consistent with previous years. The Head of Adult Services and Chief Social Work Officer thanked the Criminal Justice Social Work Team at Number 11 and noted a typing error on page 159 of the report, where the report refers to Cabinet when it should read Council instead. Elected Members acknowledged the joint work of Social Work with other partners to manage the individuals subject to MAPPA and protect residents from potential Page 16 of 270
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predators. Elected Members added that the Police hold the work delivered by the partnership in high regard and noted that work is often under the radar and only becomes known to residents in the rare occasions when incidents happen. Decision Council noted the recommendations set in the report. Report No. Report Title Submitted by: 8.6 Review of Scheme of Polling Districts and Polling Places 2024 Chief Executive Outline and Summary of Discussion The Chief Executive presented the report for decision, requesting that the Council agree to a new Scheme of Polling Districts and Polling Places, which takes into consideration the representations received. The recommendation was that Council: (a) Adopt the Proposed Scheme of Polling Districts and Places as outlined in the Annex to Appendix B; (b) Agree to carry out the statutory procedures, in liaison with the Electoral Registration Officer, to publish the revised Scheme of Polling Arrangements to take effect from December 2024; and (c) Remit to the Chief Executive to continue to liaise with representatives of recognised Political Parties for any necessary further Scheme revisions. Elected Members raised concerns regarding the accessibility of the Ward 1 Penicuik Centre, as all the voting stations are on the first floor. While there is a lift in operation, it is unclear if this would be sufficient if there was a high volume of people present on polling days, as this location has five polling stations. Elected Members asked if it would be possible to look at alternative venues in Penicuik. The Chief Executive confirmed that it is a legal requirement that the venues chosen as polling stations meet the accessibility needs of everyone and that those that arrive to vote can do so. Elected Members highlighted the use of Newbattle Community Campus, noted the volume of postal voters in that area and asked if any other locations had been considered given that Newbattle Community Campus is at one end of the town. The Chief Executive confirmed that other venues were considered however those were schools that would need to close on polling days. The Legal and Governance Manager/Monitoring Officer advised Council that this report has to be approved by end of January 2025 and asked if they were comfortable approving the report as it stands, but on the basis that the Chief Executive would revisit the use of the Penicuik Centre. Elected Members agreed as the only concern was around the disability access. The Chief Executive assured Elected Members that the use of the Penicuik Centre, in terms of there being sufficient disability access, would be revisited. Page 17 of 270
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The report was moved by Councillor Parry and seconded by Councillor Cassidy. Decision Council approved the report and its recommendations. Action Revisit the use of the Penicuik Centre as a Polling Station and ensure there is sufficient disability access. Provost McCall rejoined the meeting at 12:21pm and resumed the role of Chair. Report No. Report Title Submitted by: 8.7 Annual Procurement Report 2023/24 Legal and Governance Manager/Monitoring Officer Outline and Summary of Discussion The Legal and Governance Manager/Monitoring Officer presented the Annual Procurement Report on regulated procurements during 2023/2024 for noting and highlighted an error on page 223 of the report. The estimated value of the Penicuik High School refurbishment and extension should show as £44 million and not £89 million. The Legal and Governance Manager/Monitoring Officer recommended Council note the report prior to it being published on Midlothian Council’s website. Elected Members requested that key performance indicators for Midlothian Council’s suppliers be added. The Legal and Governance Manager/Monitoring Officer advised that this can be included in next year's report. Decision Council noted the recommendation as stated in the report, with the error fixed as above Report No. Report Title Submitted by: 8.8 Appointments of Members in Accordance with the Scheme of Administration - Newbyres Community Trust Chief Officer Corporate Solutions Outline and Summary of Discussion Councillor Scott recused themselves from the discussion and left the Chamber at 12:22pm. The Chief Officer Corporate Solutions presented the report for decision. In accordance with Standing Order 14, which requires the Council to consider the appointments of representatives to Joint Committees, Outside Bodies and other partnership working where there is a vacancy, Council is invited to consider the Page 18 of 270
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appointment of an Elected Member to the Newbyres Community Trust, following the resignation of Councillor Ellen Scott. Councillor Parry nominated Councillor Bowen, and Councillor Cassidy seconded the nomination. Councillor Scott returned to the meeting at 12:24pm. Decision Council approved the report and its recommendations. Councillor Bowen will replace Councillor Scott as the Council’s representative on the Newbyres Community Trust. Report No. Report Title Submitted by: 8.9 Twinning Midlothian Chief Officer Corporate Solutions Outline and Summary of Discussion The Chief Officer Corporate Solutions presented the report for decision, providing Council with information on the value of Twinning, and requested Elected Member nominations to represent the Council on the Penicuik and Dalkeith Twinning Associations, as well as instructing the Executive Director Place to progress options for further Twinning of Midlothian’s towns. Councillor Parry nominated Councillor McCall to join the Penicuik Twinning Association, and Councillor Russell to join the Dalkeith Twinning Association. Both nominations were seconded by Councillor Curran. The Twinning Associations will now decide if they wish to accept these nominations. Elected Members requested that the Midlothian Council website includes a dedicated page which lets communities know what Twinning activities are taking place, so everyone has a chance to participate. The Chief Officer Corporate Solutions agreed that this could be arranged. Decision Council approved the report and its recommendations. Action Elected Members requested that the Midlothian Council website includes a dedicated page which lets communities know what Twinning activities are taking place, so everyone has a chance to participate. The Chief Officer Corporate Solutions agreed that this could be arranged. Report No. Report Title Submitted by: 8.10 Workforce Strategy 2024-2034 Chief Officer Corporate Solutions Outline and Summary of Discussion Page 19 of 270
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The Chief Officer Corporate Solutions presented the report detailing the Council’s revised Workforce Strategy 2024-2034 for decision. The report sets out the ten-year strategy and associated action plan, which Council is requested to approve and adopt as its strategic framework for workforce planning. Council is requested to note the work undertaken to develop the revised Workforce Strategy 2024-2034, which is still ongoing to design the final version. Council is requested to note that some of the activities contained within the action plan will require additional one-off financial support to deliver. Business cases or proposals will be presented to the BTSG when ready for consideration. The Chief Officer Corporate Solutions thanked those that had contributed to the development of the strategies, including the staff that participated in the survey, the Trade Unions and the interviewees. Elected Members thanked the Chief Officer Corporate Solutions and Councillor Virgo, as the Elected Member Sponsor for this initiative, for the report. Elected Members added that the organisation’s workforce is the lifeblood of the Council and that the Council’s service teams are first class. Councillor Virgo, Elected Member Sponsor, added that the success of any organisation hinges on its workforce and their ability to anticipate and adapt to future workforce needs. The report was moved by Councillor Parry and seconded by Councillor Virgo. Decision Council approved the report and its recommendations. Report No. Report Title Submitted by: 8.11 Midlothian Local Development Plan 2017 – Delivery Programme Chief Officer Place Outline and Summary of Discussion The Chief Officer Place presented the Midlothian Local Development Plan 2017 (MLDP) - Delivery Programme report for decision. The draft Delivery Programme was initially reported to the Planning Committee at its meeting of 29 October 2024 and has been amended in response to Elected Members comments. Council is recommended to approve the draft Delivery Programme for the MLDP 2017 for public consultation, instruct the Planning Service to instigate a public consultation for a minimum six-week period, and note the outcome of the public consultation. The final version of the Delivery Programme will be reported back to Council for approval in early 2025, ahead of 31 March 2025 Scottish Government deadline for submission. Page 20 of 270
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The report was moved by Councillor Cassidy and seconded by Councillor Imrie. Decision Council approved the report and its recommendations. Report No. Report Title Submitted by: 8.12 Midlothian On the Move: Our Active Travel Strategy for Everyone 2024- 2034 Chief Officer Place Outline and Summary of Discussion The Chief Officer Place presented the report, including details of additional funding that had been secured and highlighted the key points within the ‘On the Move Midlothian: Our Active Travel Strategy for Everyone 2024-2034’ for consideration and approval. It is recommended that Council: a. Approves ‘Midlothian on the Move: Our Active Travel Strategy for Everyone 2024-2034’. b. Notes and welcomes the responses to the 12-week public and stakeholder consultation on the final draft of ‘Midlothian on the Move: Our Active Travel Strategy for Everyone 2024-2034’. c. Agrees to seek funding to deliver safer walking, wheeling and cycling active travel infrastructure, route improvements and behaviour change programmes, as set out in the Active Travel Strategy Route Action Plan and 10-year Project Pipeline. d. Agrees to accept future reports on progress relating to the aims and objectives of the Active Travel Strategy and the delivery of active travel and sustainable transport projects and activities. e. Notes progress to date in 24/25 towards the securing of active travel funding, infrastructure delivery, delivery of behaviour change activities, development of proposals for 25/26, and other active travel promotional work. Elected Members thanked the Chief Officer Place for the report and for the work done to secure the additional funding, adding that this is a great result for Midlothian, and this will potentially also bring greater connectivity with areas outside Midlothian. Elected Members noted that focusing on active travel is a great way forward for the planet's health and all our health needs and that Midlothian Council is taking steps to make active travel as accessible as possible for everyone. Elected Members made observations on the low response rate to the public consultation, and whether there is clarity on what the people of Midlothian want. The Chief Officer Place acknowledged the point and reassured Elected Members that the consultations ran for 12 weeks and was heavily advertised, both on social media Page 21 of 270
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platforms and in hard copy format in libraries in a bid to reach all demographics. The Chief Officer Place added that those people that have come forward have been very supportive. Elected Members queried if there were different funding sources for different areas and whether the plan follows the funding, or vice versa. The Chief Officer Place confirmed that plans are set by specific criteria, and the plans will follow the funding. However, there are still ideas on where Midlothian Council wants to be in terms of planning and the service provision. Elected Members queried footways funding and how can they be ensured that footways are of a minimum standard. The Chief Officer Place confirmed that any footways need to be of an adoptable standard before Midlothian Council will take ownership for maintenance and quality for active travel. The report was moved by Councillor Cassidy and seconded by Councillor Alexander. Decision Council approved the report and its recommendations. Report No. Report Title Submitted by: 8.13 Animal Boarding Establishment Licence Conditions Chief Officer Place Outline and Summary of Discussion The Chief Officer Place presented the report for decision, informing Council of proposed conditions for animal boarding establishment licences (kennels and catteries) and sought Council’s approval for implementation. Elected Members welcomed this report which will help address concerns and provide reassurance within the community regarding how licence conditions are managed and demonstrates that Midlothian Council are actively working with these establishments. Elected Members queried whether this report included the licensing of commercial dog walkers. The Chief Officer Place confirmed that this was specifically for boarding establishments, such as kennels and catteries, where there is an increased risk to employees due the increase in different breeds becoming more prominent in the community. Commercial dog walkers are covered under a separate system for animal welfare. Elected Members requested that a review is conducted on commercial dog walkers, including a review of any existing policy, and a paper brought back to Council in 2025. The report was moved by Councillor McKenzie and seconded by Councillor Virgo. Councillor McManus left the meeting at 12:55pm. Decision Page 22 of 270
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Council approved the report and its recommendations. Action Elected Members requested that a review is conducted on commercial dog walkers, including a review of any existing policy, and a paper brought back to Council in 2025. Report No. Report Title Submitted by: 8.14 Motorhome Overnight Parking Executive Director Children, Young People and Partnerships Outline and Summary of Discussion The Executive Director Children, Young People and Partnerships presented the report for decision and sought approval to establish single overnight motorhome parking at identified sites across Midlothian. Council is recommended to approve a pilot project to establish overnight motorhome parking at identified sites across Midlothian, delegate authority to the Executive Director Children, Young People and Partnerships to set overnight parking charges for motorhomes based on availability of facilities and benchmarking and agree that a report is brought back to Council on the outcome of the pilot for its consideration. Elected Members welcomed the report and noted that this is a great attraction for visitors and will generate income while facilitating land that is currently unused. Elected Members queried how many parks Midlothian Council aimed to have and whether they would be staffed overnight. The Executive Director Children, Young People and Partnerships advised that the number of sites will depend on what other areas in Midlothian are appropriate, and this will be explored after the pilot at Vogrie Country Park has taken place. The team have been working alongside those responsible for the Midlothian Council Parking Strategy and questions for feedback and consultation have been shared for consideration. Staffing of the sites overnight is not the norm for other areas of the UK, and there are different ways to manage this such as barriers that lift and car licence plate booking systems. Therefore, it is not anticipated that these would be staffed overnight. The report was moved by Councillor Cassidy and seconded by Councillor Virgo. Decision Council approved the report and its recommendations. Report No. Report Title Submitted by: 8.15 Capital Plan Prioritisation - Progress Report Executive Director Place Outline and Summary of Discussion The Executive Director Place presented the report for information. The report details the progress to date in reducing the Capital Plan and the requirement for delivery of the remaining workstream areas to complete the exercise. The rationale for this is to ensure that an effective strategy is in place, is achievable and affordable. Page 23 of 270
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The Capital Plan Prioritisation is being carried out to agree an appropriate and required level of borrowing in the context of a financially sustainable Medium Term Financial Strategy (MTFS) and while this is an ongoing piece of work, a significant element of this has been progressed as referenced in the paper. Council is recommended to; a) note the actions to date to reprofile the available resources on our Capital Plan priorities b) note that further consideration needs to be given to further reducing the size of the existing General Services Capital Plan (GSCP) in the context of a balanced MTFS c) note a revised plan of recommended project changes towards an affordable GSCP is scheduled with a timescale for the Council Meeting on 25 February 2025. Elected Members thanked the Executive Director Place and expressed support for the report. They requested assurance from the Executive Director Place that the full Capital Plan would be shared by the February 2025 Council meeting. The Executive Director Place advised the Capital Plan is expected to be brought to February Council. Elected Members asked that they are given sight of the Capital Plan before the February Council papers are due, possibly in the form of a briefing. The Executive Director Place advised that they are happy to accommodate this. Elected Members asked if the Capital Plan for February Council will include final proposals and plans for Destination Hillend. The Executive Director Place advised that the plan is unlikely to include final figures as the work on the next phase of Destination Hillend will not begin until after the holiday period, and they are cautious about giving a firm timeline at this point. The Chair noted that this report is for noting only and advised that Council would be moving to discuss private items. Decision Council noted the recommendations outlined in the report. Action Executive Director Place to arrange a briefing on the Capital Plan for Elected Members, prior to the report being published to Council. The public part of the meeting ended at 13:42. 9. Private Exclusion of Members of the Public In view of the nature of the business to be transacted, the Committee agreed that the public be excluded from the meeting during discussion of the undernoted item, as contained in the Addendum hereto, as there might be Page 24 of 270
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disclosed exempt information as defined in paragraphs 6,8 and 9 of Part I of Schedule 7A to the Local Government (Scotland) Act 1973:- Page 25 of 270
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Kirsty McNeill MP Member of Parliament for Midlothian House of Commons, London SW1A 0AA Email address: kirsty.mcneill.mp@parliament.uk Website: www.kirstymcneill.com Councillor Kelly Parry Midlothian House Buccleuch Street Dalkeith Midlothian EH22 1DN 10th December 2024 Dear Kelly, Mayfield Funding Pledge Thank you for your correspondence about funding for Midlothian and the election pledge announced by the Conservatives of a Long-Term Plan for Towns award for Mayfield. My understanding is this letter was sent on behalf of a wider group of councillors, so I’d appreciate your help in distributing it on to them too. As you know, the award that was announced for Mayfield and other communities at the start of the election campaign was, like many Conservative announcements and pledges, entirely unfunded. When the Long-Term Plan for Towns was announced in October 2023 (at that time Mayfield was not mentioned), the Scottish Government said it welcomed all extra funding for Scotland, but "it would be much better if provided to the Scottish Government via the Barnett Formula in the normal manner". With that in mind, I know that our constituents will be very pleased by the increased funding for Scotland which was announced in the recent Budget. The £4.9 billion is sufficient to fill many of the gaps in public services, with £1.5 billion this year, and the rest next year. We saw commitments to invest £1.4 billion in local Scottish growth projects too. I hope you and all the Councillors will join me in encouraging the Scottish Government to spend this funding wisely and to ensure that Midlothian receives its fair share. I have also been trying to understand the circumstances behind the Long-Term Plan for Towns award. I have been in touch with the In It Together group and will meet with the Community Council soon. The Masterplan for Mayfield was completed in 2021 and had not been progressed, although it seems to be the basis for the Towns award in 2024. I would be glad to hear from the Council officers or Councillors any information about who actually submitted the project, as the In It Together group are unaware. Page 26 of 270
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Kirsty McNeill MP Member of Parliament for Midlothian House of Commons, London SW1A 0AA Email address: kirsty.mcneill.mp@parliament.uk Website: www.kirstymcneill.com At the request of constituents, I have written to the Department for Housing, Communities and Local Government to understand why and how Mayfield was selected for this announcement, in the hope that it can support them in further potential bids. I’ve supplied the In It Together group with guidance on bids and would be delighted to support any other groups across Midlothian with further information as it becomes publicly available. In the meantime, I am as committed to improvements in Mayfield and the whole of Midlothian as you all are, and I am glad to know that Midlothian Council should, if all is well distributed by the Scottish Government, have solid opportunities to support community projects. As always, I am happy to engage with you all on these matters. Yours aye, Kirsty McNeill MP Member of Parliament for Midlothian Page 27 of 270
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Midlothian Council Minute Volume Presented to the Meeting of Midlothian Council on Tuesday, 25 February 2025 Midlothian Council Tuesday 25 February 2025 Item No 5.2 Page 28 of 270
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1 Minutes of Meetings submitted for Approval No items for discussion 2 Minutes of Meetings submitted for Consideration Approved Minutes for Noting, Information and Consideration of any recommendations contained therein. Minute of Local Review Body Meeting 13 November 2024 3 - 6 Minute of Planning Committee Meeting of 29 October 2024 7 - 18 Minute of Planning Committee Meeting of 9 December 2024 19 - 28 Minute of the General Purposes Committee Meeting of 10 June 2024 29 - 30 Minute of the General Purposes Committee Meeting of 10 June 2024 Private Addendum 31 - 34 Minute of the General Purposes Committee Meeting of 19 November 2024 35 - 40 Minute of the General Purposes Committee Meeting 19 November 2024 Private Addendum 41 - 42 3 Minutes of Meetings submitted for Information Minute of the MIJB Audit and Risk Committee 12 September 2024 43 - 50 Minute of Midlothian Integration Joint Board 19 September 2024 51 - 56 Minute of Midlothian Integration Joint Board 24 October 2024 57 - 72 Page 29 of 270
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Midlothian Council Tuesday 25 February 2025 Item No 5.3 Midlothian Council Action Log No Date of meeting Item No and Title Action Action Owner Expected completion date Comments 1 21/02/2023 Capital Plan Prioritisation Refer approved Council report to BTSG on additional affordability scope and projects. Executive Director Place a) December 2024 b) October 2024 c) December 2024 Executive Director provided a verbal update to respective BTSG & Council meetings. Capital Plan report on February 2025 Council Agenda a) Learning Estate Strategy options being developed for consideration on conclusion of Edge Analytics pupil product review, expect reporting in December. b) Recommended for closure. Page 30 of 270
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No Date of meeting Item No and Title Action Action Owner Expected completion date Comments Climate Change – Net Zero 2030 / 2045 reporting to October Council – Update approved at Nov Council. c) Recommended for closure. Fleet & Asset Management Plans reported at December Council. 2 19/12/2023 8.4 Non-Domestic Rates Relief Policy Review of policy to be undertaken in 6 months – 1 year. Chief Officer Corporate Solutions No later than April 2025 Report to council to be submitted with income achieved as part of Q4 financial monitoring 3 19/12/2023 8.8 Fleet and Plant Asset Replacement Plan Considerations around increasing fleet capacity to be brought to BTSG. Chief Officer Place Report to BTSG in November and to Council in December 2024 Recommended for closure. Fleet Management Plan reported to December 2024 Council 4 26/03/2024 8.3 Midlothian Council Housing Allocation Policy Review 2023/24 1. Audit of tenancy allocations 2. Distribute ASB option paper to the different political groups and submit at council. a) Chief Internal Auditor b) Executive Director Place a) August Council updated. b) ASB options report to a) Recommended for closure. Audit completed with satisfactory assurance. b) Recommended for closure Update Member Briefing held 5 Sep. on Tenancy Page 31 of 270
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No Date of meeting Item No and Title Action Action Owner Expected completion date Comments political groups in November Agreements and Anti- Social Behaviour. ASB options report circulated to political groups in November 2024. 5 26/03/2024 8.4 Midlothian Council Mixed Tenure Strategy Arrange an Elected Member briefing on arm’s length organisations (ALEOs) Executive Director Place Briefing date to be scheduled post summer recess. Oak Leaf homes option (MMR & Market Rent) included in MTFS 2025/26 proposals consultation. Option for special purpose vehicle in development and management & maintenance of Mid- Market Rent 6 07/05/2024 8.10 Glyphosate Paper on neighbourhood service operatives would be undertaking a targeted winter programme of work in springtime 2025. Chief Officer Place Winter 2024 Recommended for closure Report to council submitted to February 2025 Council. 7 25/06/2024 8.14 Whitecraig Traveller Site A full cost report to come back to Council for final approval to include early termination cost Executive Director Place When termination costs are known Align to action jointly with ELC Page 32 of 270
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No Date of meeting Item No and Title Action Action Owner Expected completion date Comments and reinstatement cost unless the cost for this is nil. 8 27/08/2024 8.1 Financial Monitoring 2024/25 General Fund Revenue Report on the better utilisation of expensive machinery, such a used for potholes. Chief Officer Place ASAP 9 27/08/2024 8.2 Housing Revenue Account – Revenue Budget and Capital Plan 2024/25 Financial costs of Normandy Court to be provided to all Members. Report to be brought back to Council to look at the allocation of Normandy Court if no resolution reached. Executive Director Place Executive Director Place ASAP If required Email information circulated separately to all elected members. Further information once costs concluded. Recommended for closure. Allocations listed and applicants contacted. Viewings taking place. 10 27/08/2024 8.3 General Services Capital Plan 2024/25 Quarter 1 Monitoring Provide a final account for clarity to the Elected Members on Hillend Alpine Coaster project costings Chief Financial Officer GSCP Q3 Financial Monitoring report to Council in February. Coaster operational. Final account being concluded and will be reported to members. 11 27/08/2024 8.5 United Nations Convention on the Rights of the Child (‘UNCRC’) (Incorporation) (Scotland) Act Information on what the UNCRC is and what it means to be provided to the public. Executive Director Children, Young People and Partnerships December 2024 Recommended for closure. the GIRFEC (Getting it Right for Every Child) UNCRC group is working with children and parents/carers to Page 33 of 270
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No Date of meeting Item No and Title Action Action Owner Expected completion date Comments produce child and parent friendly information 12 27/08/2024 8.3 General Services Capital Plan 2024/25 Quarter 1 Monitoring Report to be presented to Council on a site for Gorebridge High School within six months. Executive Director Place End Feb 2025 Site search in progress 13 08/10/2024 8.1 Medium Term Financial Strategy Heads of Service to look for additional efficiency savings to bridge the budget gap of .3.4 million on top of the savings already suggested in the public budget consultation. This is to be reviewed at November council meeting. Chief Financial Officer Proposals presented to November BTSG Action in progress in MTFS 14 12/10/2024 8.2 Housing Revenue Account – Revenue Budget and Capital Plan 2024/25 To provide details of the multi-year HRA financial model to Elected Members. Chief Financial Officer Alongside the next iteration of the Rents Strategy. Current rent strategy final year is 2025/26. A consultation report will be submitted to Council thereafter. 15 17/12/2024 8.9 Twinning Midlothian Updated Midlothian Council website to include a dedicated page which lets communities know what Twinning activities are taking place. Chief Officer Corporate Solutions 2025 16 17/12/2024 8.13 Animal Boarding Conduct a review on commercial Chief Officer 2025 Page 34 of 270
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No Date of meeting Item No and Title Action Action Owner Expected completion date Comments Establishment Licence Conditions dog walkers, including a review of any existing policy. Place 17 17/12/2024 8.6 Review of Scheme of Polling Districts and Polling Places 2024 Revisit the use of the Penicuik Centre as a Polling Station and ensure there is sufficient disability access. Chief Executive 2025 There is a lift available at the Penicuik Centre and no disability access issues have been raised regarding previous polling scheme iterations. However, if members would prefer, a solution has been identified to move the polling stations at the Penicuik Centre from the first floor to the ground floor. This would require the library to close on polling day to accommodate this change. Page 35 of 270
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Midlothian Council Tuesday 25 February 2025 Notice of Motion "Midlothian Council notes that Cllr Bryan Pottinger is no longer a member of the Midlothian Labour Group. Therefore, Council agrees that to reflect accurately the political make up to the Council, Committees, Sub Committees and Working Groups that Council on block removes and replaces Cllr Bryan Pottinger as the Labour Group’s representative from the following: 1. Midlothian Council Cost of Living Task Force and be replaced by Councillor Margot Russell 2. Midlothian Council Petitions Committee and replaced by Councillor Stephen Curran 3. Midlothian Council Community Planning Partnership and replaced by Councillor Willie McEwan Moved Seconded Councillor Russell Imrie Councillor Derek Milligan 28th January 2025 Midlothian Council Tuesday 25 February 2025 Item No. 7.1 Page 36 of 270
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Response to Storm Éowyn This Council formally acknowledges the exceptional response of our first responders, Council staff and emergency services partners following the severe storm that struck Midlothian on 24th January 2025 with winds, recorded by us at Hillend, reaching 119 mph. Notes that the storm posed significant risks to both lives and property, but the swift, focused, and coordinated efforts of our dedicated staff ensured the safety of our residents. From emergency services to Council teams managing power cuts, fallen trees, those services looking after our most vulnerable children, adults and older people and communication to the public, every aspect of the response was handled with care, professionalism and efficiency. Further notes that despite the extreme conditions, many staff members went above and beyond to assist those in need, and their commitment to the community was truly outstanding. Their tireless work under challenging circumstances was critical in preventing any fatalities or major injuries. This Council is proud of the resilience, teamwork, and dedication displayed by all those involved in the response. We extend our heartfelt gratitude for their service, which is a testament to their professionalism and commitment to public safety. This Council formally recognises and celebrates these efforts to ensure that our staff are publicly commended for their hard work and dedication. Proposed Cllr Kelly Parry Seconded Cllr Derek Milligan Cllr David Virgo Friday 7 February 2025 Midlothian Council Tuesday 25 February 2025 Item No. 7.2 Page 37 of 270
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Midlothian Council Tuesday 25 February 2025 Item no 8.1 Financial Monitoring 2024/25 – General Fund Revenue Report by David Gladwin, Chief Financial Officer and Section 95 Officer Report for Information 1 Recommendations Council is recommended to note the contents of this report. 2 Purpose of Report / Executive Summary 2.1 The purpose of this report is to provide Council with information on projections of performance against service revenue budgets in 2024/25 and to provide commentary on areas of material variance against budget. The budget performance figures as shown in appendix 1 result in a projected net overspend of £2.168 million which is a slight improvement of £0.032 million from projections at quarter 2. The projected overspend represents 0.7% of the revised budget. 2.2 Some areas of projected overspend relate to recurring areas of financial pressure or slower than planned delivery of savings measures. The Corporate Management Team have discussed these in depth and, where possible, put in place recovery actions. 2.3 The projection of the General Fund balance at 31st March 2025 is £20.965 million, of which £13.126 million is earmarked for specific use leaving a non-earmarked General Fund balance of £7.839 million. Date: 31 January 2025 Report Contact: David Gladwin, Chief Financial Officer and Section 95 Officer David.Gladwin@midlothian.gov.uk 0131 271 3113 Page 38 of 270
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2 3 Background 3.1 This report encompasses all performance against revenue budget for General Fund services. 3.2 In response to the immediate and challenging financial outlook the Chief Executive, during the financial year 2022/23, introduced a moratorium on non-essential spend and a freeze on non-essential vacancies. This was recently heightened to a moratorium on any spend that is not business critical and it is expected that some areas of general spend, including staffing will reduce as a consequence. Performance against budget 3.3 The material areas of projected variance against budget at quarter 3 are outlined in table 1 below which also describes mitigating measures and next steps. Accurate projections during a financial year are difficult in some areas and come with a degree of uncertainty. Table 1: Material cost variances against budget Budget Overspend Reason Action Plan / Mitigating Measures Next Steps Staff Costs £1,543,000 Maternity cover in schools (£400,000), staffing in excess of budget in Neighbourhood Services (£442,000), absence cover costs for cleaning and janitorial services (£243,000) and higher costs from deploying temporary resources to cover service areas with permanent recruitment challenges (£388,000). Partially offset by some vacancies across the Council. Strategic Workforce Plan is being developed. Continuation of enhanced level of vacancy control. Continual review of service costs. Full Implementation of Neighbourhood Services Review will reduce costs to budgeted levels. Continued action to find a permanent staffing solution for Procurement. Pupil Transport £963,000 Volume and value of school pupil transport invoices higher than budgeted. Council approval to proceed with the transport review was granted on 25th June 2024. This will include a root and branch review of practices, processes and costs. Where possible, early implementation of identified efficiencies. Passenger Transport Transformation project well underway Insurance £408,000 The volume of insurance claims settled, particularly relating to potholes, increased considerably during quarter 1 and whilst reducing a little during Internal processes to consider each claim are being reviewed with potential to increase repudiation rates and consequently reduce Officer review meeting linking in with professional insurer advice. Page 39 of 270
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3 quarters 2 and 3 remains at a higher level than seen in previous years. projected costs in 2024/25. Council Tax Income £565,000 Whilst the Council Tax Base continues to grow total projected income is lower than budgeted. Household growth is slower than anticipated, the value of households eligible for a Single Person Discount has increased considerably from budgeted figures and a higher provision has been made for non- collection of Council Tax. A detailed review has been carried out and informs Council Tax Income projections for future financial years as part of the Medium Term Financial Strategy. Waste Disposal £283,000 The contract for disposal of Bulky Items expired in July. Tender responses necessitated an extension to the contract which came at an estimated additional cost for the current financial year of £89,000 including additional costs to separate upholstered materials. A legislative change on treatment and haulage of air pollution contaminants has driven a higher cost than budgeted of £194,000. The Waste Disposal budget in the MTFS has been updated. Fleet £434,000 Ageing vehicles and higher volumes of external contracting than planned (£305,000) External vehicle hire in Waste Services to support service continuity (£114,000). Areas of service have been re- provisioned. Cost containment measures in place. Fleet Maintenance Review underway. Multi-year Fleet Asset Management Plan approved by Council. In some areas purchase of new vehicles have eased repairs costs and pressure will be eased further as the Fleet Replacement Plan is implemented. Control measures are in place to ensure only essential spend is incurred. A review of the operational need for all externally hired vehicles is underway. Page 40 of 270
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4 Destination Hillend £295,000 A later than expected opening date and carefully managed opening hours have resulted in a projected shortfall against budget of £295,000. Opening hours are being extended. Building Repairs £140,000 Costs in 2024/25 relating to scaffolding for Midlothian House. Council approval granted to rationalise the main office estate. The project is in its early stages. Table 2: Shortfalls against income targets in the Budget Budget Overspend Reason Action Plan / Mitigating Measures Next Steps Cafes £61,000 Income is lower than budgeted targets. New menus have been introduced as a trial and will be fully implemented if successful. It is anticipated this development will move income received to targeted levels. Trial underway and outcomes to be evaluated later in 2024/25. There also remains £1.336 million of Medium Term Financial Strategy (MTFS) cost reductions either to be finalised or to be fully implemented. A number of these are taking longer than planned to implement with an impact on the 24/25 financial position. A detailed report on this was presented to the Business Transformation Steering Group (BTSG) on Monday 19th August and a further update will be provided on Monday 17th March. Underspends • Loan Charges are projected to underspend by £1.645 million in 2024/25. There are three main factors: o Deferral of borrowing to later years to match timing of capital expenditure; o A reduction of £36 million in the borrowing requirement for 2024/25; o Higher than forecast surplus cash related directly to timing of capital expenditure thus providing opportunity to generate deposit income. • Unit prices for the purchase of Electricity and Gas are considerably lower than those used to create the budget which was based on the latest available information from Scotland Excel. Consumption in some sites exceeds budget and these are being looked at in more detail. Overall, an underspend of £0.552 million is forecast. Page 41 of 270
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5 • With the exception of Additional School Needs (ASN), costs across the spectrum of learning settings for children and young people are lower than provided for in the budget mainly due to lower than expected pupil numbers thus giving rise to a positive variance of £0.478 million. • The cost of residential and day education placements for children and also for some non-residential services is projected to be £0.497 million less than budget. Pay and funding 3.4 All employees now have an agreed pay award for the current financial year. The award equates to a total uplift of 4.27% in-year with, at each Spinal Column Point (SCP), a £0.67 uplift to the hourly rate or 3.6% (whichever is better). 3.5 Funding for 2024/25 pay costs involves an assumption of 3% in council budgets, another 0.2% funded from Council Reserves with remaining costs provided by the Scottish Government with a variety of mechanisms to deliver this. Midlothian Council budgeted at 3% for pay in 2024/25 with the additional 0.2% budget approved by Council on 27th August. 4 Delegation of resources to Midlothian Integration Joint Board 4.1 The approved budget provided for the allocation of £63.535 million to the Midlothian Integration Joint Board (MIJB) for the provision of delegated services. 4.2 In accordance with the Integration Scheme the MIJB is required to deliver delegated services within the budget allocations from the Council and NHS Lothian and where any overspend is projected to put in place a recovery plan to address that. As a last resort the integration scheme allows for the MIJB to seek additional financial support from its partners, either by way of an additional budget allocation or by “brokerage” (provision of additional resources in a year which are repaid in the following year). 4.3 Financial Monitoring reports covering all of the MIJB activities are presented to the Integration Joint Board and are available on the committee management section of the Council website:- Midlothian Integration Joint Board (cmis.uk.com) 4.4 MIJB meet on Thursday 20th February and will discuss quarter 3 projections for 2024/25 which show a very significant overspend albeit with mitigating actions underway. There is a very significant likelihood of MIJB requiring significant additional resource from Midlothian Council to be able to fund costs in 2024/25. Detailed engagement with elected members has taken place and will continue. Page 42 of 270
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6 5 General Fund Reserve 5.1 The projected balance on the General Fund as at 31 March 2025 is as follows: £ million £ million General Fund Reserve at 1 April 2024 46.338 Planned movements in reserves Application of Budgets carried forward from 2023/24 for use in 2024/25 (15.366) Utilisation of reserve to balance 2024/25 budget (2.680) Utilisation of retrospective service concessions to fund costs in 2024/25 (4.093) Additional Scottish Government Funding 1.083 Transformation funding applied (1.787) Funding for pay (0.2%) – supplementary estimate (0.330) Other (0.032) (23.205) Overspend per appendix 1 (2.168) General Fund Balance at 31 March 2025 20.965 An element of the General Fund is earmarked for specific purposes and this is shown below: £ million General Fund Balance at 31 March 2025 20.965 Earmarked for specific purposes To support Council Transformation Blueprint (0.849) Planned use of Service Concession Retrospection (12.277) General Reserve at 31 March 2025 7.839 5.2 The Reserves Strategy approved by Council on 12th February 2019 requires Council to maintain an adequate level of General Reserve to provide a contingency for unforeseen or unplanned costs. In the financial context at that time Council approved the adoption of 2% of the approved budgeted net expenditure (excluding resources delegated to the IJB) to be considered a minimum. This now equates to £4.7 million. Council also agreed that where projections indicate that should the 2% minimum General Reserve balance be breached an immediate recovery plan be implemented to recover the position, failing which, the next available budget would need to provide for the reinstatement of reserve position. 5.3 The General Reserve of £7.8 million is £3.1 million above the minimum set in the Reserves Strategy. Considering current financial pressures, the General Reserve must be viewed both in the context of £3.2 million of underlying service pressures in 2024/25 (Appendix 1 - General Fund Services Net Expenditure), the Medium Term Financial Strategy (MTFS) projected gap through to 2028/29 and also the severe in-year pressure faced by MIJB. Until there is significant progress towards a balanced MTFS it remains sound financial practice to maintain a Page 43 of 270
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7 substantial buffer in the General Reserve to offset any further adverse performance against budget or delays in delivering savings measures. 6 Report Implications (Resource, Digital and Risk) 6.1 Resource The projected performance against budget set out in this report presents the updated projections for the year. Work continues across the council to reduce overspends and to progress at pace delivery of approved savings. 6.2 Digital Increased reliance and investment in digital solutions and digital first solutions will be a key element of future plans. 6.3 Risk The 2024/25 Budget was finalised with some assumptions on Scottish Government Grant Funding. The Scottish Government removed £145 million of funding for teachers from General Revenue Grant to Ring- Fenced Revenue Grant (£2.786 million for Midlothian) with a wish to attach conditions around teacher numbers to this funding. Whilst there now appears to be certainty over the funding it has not yet been distributed. Section 95 of the Local Government (Scotland) Act 1973 requires all Local Authorities in Scotland to have adequate systems and controls in place to ensure the proper administration of their financial affairs. The assessment of performance against budgets by services is underpinned by comprehensive financial management and budgetary control arrangements. These arrangements are central to the mitigation of financial risk. Ensuring that adequate systems and controls are in place reduces the risk of significant variances arising, and where they do arise they help to ensure that they are identified and reported on and that appropriate and robust remedial action is taken. The primary purpose of this report is to provide an assessment of performance against budget for the full year. The material variances detailed in the report highlight that the financial management and budgetary control arrangements require continual review and enhancement if financial risk is to be effectively mitigated during the year. There are some areas where effective forecasting of spend against budget is hindered due to incomplete service information which in some previous years has resulted in previously unreported or significantly adjusted variances at the financial year end. CMT continues to consider these areas and supports actions to address the underlying issues and mitigate the risk associated with them. At Page 44 of 270
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8 quarter 3 projections for building maintenance recharges remain under review. Activity is in place to ensure this will be rectified for quarter 4. The Council recognises the potential for compensation claims deriving from Scottish Government’s Limitation (Childhood Abuse) (Scotland) Act 2017 which removes the three year time limit on claims of child abuse. Some claims will be historic and relate to Lothian Regional Council, Midlothian District Council or their predecessors and some will date post reorganisation and relate to Midlothian Council, and so presents a risk that would further reduce reserves from those currently projected. Further financial obligations may also arise as the implications associate with the The United Nations Convention on the Rights of the Child (Incorporation) (Scotland) Bill, which has yet to secure Royal Assent, are more fully understood. 6.4 Ensuring Equalities As changes to existing plans are developed the assessment of the impact of these proposals in relation to their impact on equalities and human rights will be carried out. This will help to ensure wherever possible that there are no negative impacts on equality groups or potential for infringement of individuals’ human rights from the any of the proposals. 6.5 Additional Report Implications See Appendix A Appendices Page 45 of 270
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9 APPENDIX A – Report Implications A.1 Key Priorities within the Single Midlothian Plan The existing financial plans support the delivery of the key priorities in the Single Midlothian Plan. As the impact on the Council of the pandemic and recovery continues to unfold over the financial year any changes in the availability and allocation of resources will need to be considered in parallel to the actions proposed to continue to delivery key priorities. A.2 Key Drivers for Change Key drivers addressed in this report: Holistic Working Hub and Spoke Modern Sustainable Transformational Preventative Asset-based Continuous Improvement One size fits one None of the above A.3 Key Delivery Streams Key delivery streams addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value The report does not directly impact on Delivering Best Value. A.5 Involving Communities and Other Stakeholders The development of the Medium Term Financial Strategy reflects community consultation exercises carried out in 2019 and again in 2022 to help shape the drafting of the “Midlothian Promise” and the development of the Council’s Longer Term Financial Strategy. A further round of community consultation is underway. In addition, there is continued engagement with the recognised Trade Unions on the financial position. Page 46 of 270
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10 A.6 Impact on Performance and Outcomes The Financial Strategy facilitates decisions on how Council allocates and uses its available resources and as such has fundamental implications for service performance and outcomes. The lasting financial consequences of the pandemic will impact on the availability and allocation of resources in pursuit of key outcomes as set out in the Single Midlothian Plan for both the immediate and longer term and therefore the ability of the Council to continue to deliver services in a financial sustainable manner. A.7 Adopting a Preventative Approach Maintaining the effectiveness of the Financial Strategy will support the prioritisation of resources to support prevention. A.8 Supporting Sustainable Development There are no direct sustainability issues arising from this report and we will work to mitigate as far as feasible any sustainability issues which arise as a consequence of any of the changes to existing plans. Appendix 1 financial tables Page 47 of 270
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MIDLOTHIAN COUNCIL Appendix 1 GENERAL FUND 2024/25 Performance against budget Revised Budget Revised Budget Revised Budget (Underspend) Function Approved Budget Expenditure Income Net Outturn / Overspend £ £ £ Management and Members 3,892,101 3,983,485 0 3,983,485 4,047,485 64,000 Place Corporate Solutions 23,264,869 48,796,263 (24,665,446) 24,130,817 25,337,817 1,207,000 Place 43,290,284 66,793,812 (17,282,056) 49,511,756 50,915,756 1,404,000 Central Costs (504,556) 2,053,498 0 2,053,498 2,461,498 408,000 People and Partnerships Midlothian Integration Joint Board 63,534,354 72,464,512 (8,621,856) 63,842,656 63,842,656 0 Non-Delegated Services - Community Safety and Welfare Rights 710,635 830,414 (53,102) 777,312 775,312 (2,000) Childrens Services, Partnerships and Communities 20,171,442 22,701,108 (765,932) 21,935,176 21,438,176 (497,000) Education 144,975,521 160,346,635 (9,256,856) 151,089,779 151,778,779 689,000 Lothian Valuation Joint Board 581,659 581,659 0 581,659 581,659 0 Non Distributable Costs 898,936 898,936 0 898,936 873,936 (25,000) GENERAL FUND SERVICES NET EXPENDITURE 300,815,246 379,450,321 (60,645,248) 318,805,073 322,053,073 3,248,000 Loan Charges 5,460,091 5,460,091 0 5,460,091 3,815,091 (1,645,000) NDR Discretionary Relief 70,300 70,300 0 70,300 70,300 0 Investment Income (110,736) 0 (110,736) (110,736) (110,736) 0 Allocations to HRA, Capital Account etc. (5,536,901) (5,536,901) 0 (5,536,901) (5,536,901) 0 300,698,000 379,443,811 (60,755,984) 318,687,827 320,290,827 1,603,000 less Funding: Scottish Government Grant (226,443,000) 0 (229,633,937) 229,633,937 229,633,937 0 Council Tax (64,686,000) 0 (64,686,000) 64,686,000 64,121,000 565,000 Service Concessions - in-year (2,796,000) 2,796,000 0 2,796,000 2,796,000 0 Service Concessions - retrospection (4,093,000) 4,093,000 0 4,093,000 4,093,000 0 Utilisation of Reserves 2,680,000 386,332,811 (355,075,921) 17,478,890 19,646,890 2,168,000 Page 48 of 270
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Midlothian Council Tuesday 25 February 2025 Item No 8.2 Housing Revenue Account Revenue Budget 2024/25 – 2025/26 and Capital Plan 2024/25 – 2027/28 Report by David Gladwin, Chief Financial Officer & Section 95 Officer Report for Decision 1 Recommendations Council is recommended to: • Approve the Housing Revenue Account (HRA) Capital Plan for 2025/26 (appendix D); • Approve the HRA Revenue Budget for 2025/26 (appendix E); • Note the indicative HRA Revenue and Capital Budgets for 2026/27 and 2027/28 as detailed in appendices D and E; and otherwise • Note the remaining contents of this report. 2 Purpose of Report / Executive Summary The purpose of this report is to provide Council with: • A summary of expenditure and income to the end of quarter 3 in 2024/25 for the Capital Plan and a projected outturn for both the Revenue Account and Capital Plan for 2024/25; • Capital Plan and Revenue budgets for 2025/26 and indicative budgets for 2026/27 - 2027/28. The projected financial performance for 2024/25 is: • Capital Investment in the year totalling £47.459 million; • A net overspend of £0.049 million on the Revenue Account; • A projected HRA general reserve at 31st March 2025 of £35.094 million. The HRA Capital Plan 2025/26 – 2027/28 provides for: • £108.605 million for Phases 3-5 of New Build Social Housing; • £19.5 million for Housing-led Town Centre Regeneration; • £41.145 million for investment in Energy Efficiency Standards in Social Housing; and • £27.134 million for other investment in existing stock and off-market purchases. The Revenue Budget Reflects: • An update of the multi-year financial model prepared in line with the Social Housing Investment Plan (SHIP); • A 4.8% rent increase as approved at Council 21st February 2023; • A projected HRA Reserve of £35.094 million at 31st March 2025, which will be required to finance the majority of approved investment commitment and is projected to reduce to £1.880 million at 31st March 2040. Page 49 of 270
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Date: 20th January 2025 Report Contact: Lisa Young lisa.young@midlothian.gov.uk 3 Background 3.1 Capital Plan 2024/25 The Capital Plan Budget has been revised to reflect the current profile of spend as shown in appendix B and capital investment in the year is projected to be £47.459 million. There is a reduction in the borrowing requirement of £1.030 million due to:- • £0.825 million in relation to grant funding from Scottish Government for contribution towards net- zero emissions in the Council’s housing stock, reported to Council 27th August 2024; • An additional capital receipt of £0.175 million received for the sale of Station House in Loanhead. 3.2 Revenue Account 2024/25 The underspend reported to Council on 12th November 2024 was £0.526 million. The forecast position has deteriorated by £0.575 million at quarter 3 to a projected overspend of £0.049 million against budget, as shown in appendix C. The main reason for the movement is work associated with dampness and other high value repair works to bring properties up to lettable standard. The HRA general reserve balance is projected to be £35.094 million at 31st March 2025 and this is committed to finance existing investment plans to 2039/40. 3.3 Capital Plan 2025/26-2027/28 The current approved Housing Revenue Account Capital Plan provides for investment of £196.384 million over the period 2025/26 – 2027/28, of which £108.605 million is earmarked for completion of Phases 3–5 of the New Social Housing Programme. The estimated number of new builds in phases 3-5 is now estimated to be 959 units. The reduction from the original estimate is due to inflationary pressures associated with the costs of construction and a move to Passivhaus for some sites resulting in a higher construction cost per unit. The HRA Capital Plan is detailed in appendix D and has been amended to reflect the latest estimated costs of ongoing and planned projects. Page 50 of 270
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3.4 Revenue Account 2025/26 The HRA revenue model has been updated and projected forward to 2039/40 and reflects the revised Capital plan as well as the following key assumptions: • The borrowing cost of the capital investment detailed in appendix D together with estimated investment in existing properties over the remaining years of the projection; • The impact on rental income stream as a result of a 4.8% rent increase for 2023/24 - 2025/26, longer-term assumption of 4.49% to 2031/32 to continue to support investment in Energy Efficiency Standard in Social Housing (EESSH) and 1.69% thereafter; • Provision of £0.330 million has been budgeted for in 2025/26 to achieve Energy Performance Certificates, which is a legal requirement to be provided every 10 years and will also aid in the delivery programme for EESSH project. There is also budgeted provision of £0.445 million for Stock Condition Surveys to be conducted to inform delivery of the future Scottish Housing Quality Standard repairs project; • Projected provision for inflation over future years as per the GDP Deflator and BCI Tender Prices Index; • The longer-term requirement that the rents for new build properties will converge with that of the existing stock. These, together with a number of other minor adjustments to the previous financial projections, show that the HRA can continue to support the existing investment plans. The revised revenue budget for 2025/26 and indicative budget for 2026/27 - 2027/28 is detailed in appendix E. 4 Report Implications 4.1 Resource There are no direct resource implications arising from this report. 4.2 Digital There are no direct digital implications arising from this report. Page 51 of 270
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4.3 Risk The principal risks are around the issue of affordability, ensuring that the investment in new build and the existing stock can be made without having to impose unacceptable increases on weekly rents. This is mitigated by the adoption of a long term financial strategy and modelling which demonstrates that existing investment commitments are sustainable. There is also the risk of capital spend being lower than projected due to delays on projects, particularly in the current climate, this could result in lower debt charges causing the Housing Revenue Account Reserve balance to increase more than projected. 4.4 Ensuring Equalities There are no equality issues arising directly from this report. 4.5 Additional Resource Implications See Appendix A. Appendices Appendix A – Additional Resource Implications Appendix B - Capital Plan 2024/25 Appendix C – Revenue Account 2024/25 Appendix D – Capital Plan 2025/26 – 2027/28 Appendix E – Revenue Account 2025/26 – 2027/28 Page 52 of 270
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APPENDIX A – Report Implications A.1 Key Priorities within the Single Midlothian Plan Not applicable A.2 Key Drivers for Change Key drivers addressed in this report: Holistic Working Hub and Spoke Modern Sustainable Transformational Preventative Asset-based Continuous Improvement One size fits one None of the above A.3 Key Delivery Streams Key delivery streams addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value The report does not directly impact on Delivering Best Value. A.5 Involving Communities and Other Stakeholders The report does not directly relate to involving communities. A.6 Impact on Performance and Outcomes The report does not directly impact on Midlothian Council’s performance and outcomes. A.7 Adopting a Preventative Approach The report does not directly relate to adopting a preventative approach. A.8 Supporting Sustainable Development The report does not directly relate to supporting sustainable development. Page 53 of 270
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MIDLOTHIAN COUNCIL Appendix B HOUSING REVENUE ACCOUNT CAPITAL PLAN 2024/25 Revised Budget Actuals to Date Projected Outturn Variation (Under)/Over £'000 £'000 £'000 £'000 FUNDING Scottish Government Grants - Affordable Housing Supply Programme Funding 7,947 7,037 7,947 0 - Off Market Purchases Funding 471 0 471 0 - Social Housing Net-zero Funding 0 0 825 825 Other Receipts 0 175 175 175 Council Tax on Second Homes 90 0 90 0 Borrowing Requirement 38,951 23,560 37,921 (1,030) TOTAL AVAILABLE FUNDING 47,459 30,772 47,429 (30) APPROVED EXPENDITURE £'000 £'000 £'000 £'000 New Build Houses Phase 2 - Phase 5 33,184 24,409 33,184 0 Dalkeith Town Centre Regeneration - Social Housing 500 2 500 0 Backdated Developer Contribution 724 0 724 0 Off Market Purchases 1,260 165 1,260 0 Aids & Adaptations 519 252 519 0 Environmental Improvements 100 0 100 0 BDHS Meters 500 0 500 0 Homelessness - Temporary Accommodation Provision 30 0 0 (30) Scottish Housing Quality Standard 0 -Upgrade Central Heating Systems 1,677 654 1,677 0 -Energy Efficiency Standard for Social Housing (EESSH) 2,800 472 2,800 0 -Scottish Housing Quality Standards (SHQS) Repairs 6,165 4,818 6,165 0 TOTAL EXPENDITURE 47,459 30,772 47,429 (30) Page 54 of 270
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MIDLOTHIAN COUNCIL Appendix C HOUSING REVENUE ACCOUNT 2024/25 Revised Projected Variation Budget Outturn (Under)/Over Average No of Houses 7,664 7,595 (69) £000's £000's £000's Repairs and Maintenance General Repairs 8,483 9,421 938 Decant/Compensation 71 73 2 Grounds Maintenance 603 574 (29) 9,157 10,068 911 Administration and Management 5,537 5,687 150 Loan Charges 16,568 15,357 (1,211) Other Expenses 2,942 3,059 117 TOTAL EXPENDITURE 34,204 34,171 (33) Rents Houses 35,299 35,215 84 Garages 690 690 0 Others 176 178 (2) TOTAL RENTS 36,165 36,083 82 NET EXPENDITURE/(INCOME) (1,961) (1,912) 49 Movement in HRA Reserve Opening HRA Reserve (33,182) Enhancement during 2024/25 as above (1,912) Reserve Earmarked to fund capital investment plans (35,094) Page 55 of 270
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MIDLOTHIAN COUNCIL Appendix D HOUSING REVENUE ACCOUNT CAPITAL PLAN 2025/26-2027/28 Proposed Budget 2025/26 Indicative Budget 2026/27 Indicative Budget 2027/28 £'000 £'000 £'000 FUNDING Grants - Affordable Housing Supply Programme Funding 6,211 7,626 8,586 - Off Market Purchases Funding 990 110 0 Council Tax on Second Homes 92 94 96 Borrowing Requirement 72,949 64,173 35,457 TOTAL AVAILABLE FUNDING 80,242 72,003 44,139 APPROVED EXPENDITURE £'000 £'000 £'000 New Build Houses Phase 3 - Phase 5 44,026 42,334 22,245 Backdated Developer Contributions 1,000 1,000 1,000 Housing Led Town Centre Regeneration 10,000 9,500 0 Off Market Purchases 2,850 265 0 Aids & Adaptations 529 540 551 Bonnyrigg District Heating Scheme Meters 800 0 0 Environmental Improvements 2,000 2,000 2,000 Scottish Housing Quality Standard -Upgrade Central Heating Systems 3,012 0 0 -Energy Efficiency Standard for Social Housing 12,551 12,890 15,704 -SHQS Upgrades 3,474 3,474 2,639 TOTAL EXPENDITURE 80,242 72,003 44,139 Page 56 of 270
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MIDLOTHIAN COUNCIL HOUSING REVENUE ACCOUNT 2025/26-2027/28 Appendix E 2025/26 2026/27 2027/28 Proposed Indicative Indicative Budget Budget Budget Average No of Houses 7,747 8,068 8,228 £000's £000's £000's Repairs and Maintenance General Repairs 9,099 9,506 9,811 Decant/Compensation 85 87 88 Grounds Maintenance 586 597 609 9,770 10,190 10,508 Administration and Management 5,801 5,910 6,021 Loan Charges 18,240 21,466 24,081 Other Expenses 3,919 3,185 3,304 TOTAL EXPENDITURE 37,730 40,751 43,914 Income Houses Rents 36,840 40,131 43,296 Garages Rents 710 742 775 Other Income 180 187 195 TOTAL RENTS 37,730 41,060 44,266 NET EXPENDITURE/(INCOME) 0 (309) (352) BALANCE BROUGHT FORWARD (35,094) (35,094) (35,403) BALANCE CARRIED FORWARD (35,094) (35,403) (35,755) Page 57 of 270
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Council Tuesday 25 February 2025 Item No 8.3 General Services Capital Plan 2024/25 Quarter 3 Monitoring and 2025/26 to 2028/29 Budgets Report by David Gladwin, Chief Financial Officer & Section 95 Officer Report for Decision 1 Recommendations It is recommended that Council:- a) Note the inclusion of the projects listed in Section 3.1 in the General Services Capital Plan (GSCP); b) Approve the addition of the new projects to the GSCP, as outlined in Section 3.2; c) Note the forecast outturn for 2024/25 for expenditure, funding and borrowing as outlined in Section 4; d) Note the planned expenditure and funding levels in the GSCP for 2024/25 to 2028/29 (as outlined in Section 5 and shown in Appendices 1 and 2), prior to reaching a financially sustainable outcome from the Capital Plan Prioritisation exercise. 2 Purpose of Report The purpose of this report is to provide Council with:- • An update of the GSCP incorporating information on further additions to the Capital Plan for approval (Section 3); • Information on the projected performance against budget for 2024/25 (Section 4); • Forecast expenditure and income for the GSCP for 2025/26 through to 2028/29 (Section 5) • Update on the Capital Fund (Section 6). Date 6 February 2025 Report Contact: Name Gary Thomson Email gary.thomson@midlothian.gov.uk Page 58 of 270
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2 3 Update of General Services Capital Plan 3.1 Projects endorsed by Council and to be added into the Plan The plan now incorporates the projects approved by Council on 12 November 2024 and 17 December 2024 in respect of the following:- 12 November 2024 • Midlothian House Retrofit: Full Retrofit to Midlothian House. Capital expenditure budget of £12.590 million to be fully phased across 2024/25 to 2027/28 and fully funded by £12.590m of prudential borrowing. 17 December 2024 • Fleet Replacement Programme: Full Asset Management Plan covering 10 year time horizon for the replacement and management of the Council’s fleet and plant requirements to deliver the Council’s operational activities and ensure its fleet is modern, efficient and fit for purpose. Total capital expenditure budget of £23.552 million, of which £13.865 million is phased across the life of the General Services Capital Plan (2025/26 to 2028/29); and fully funded by prudential borrowing. Replaces the previous £1.677 million provision in the General Services Capital Plan. 3.2 Projects presented for endorsement in the Plan The following projects are presented for endorsement to be fully adopted within the GSCP:- Capital Plan & Asset Management Board 27 November 2024 • Active Travel Infrastructure Fund (ATIF) Tier 2: Crossings at Easthouses Primary School and Carlops Road, Penicuik along with Traffic Calming measures at Sherwood Crescent, Bonnyrigg. £0.753 million capital expenditure budget, fully phased in 2024/25 and fully externally funded by Capital Grant funding from Transport Scotland’s ATIF Tier 2 grant fund. • Sustrans People & Places Equipment Purchases: Purchase of bikes/scooters/bike parking equipment / e-bikes with larges storage boxes for Waste team / signage. £0.170m million capital expenditure budget, fully phased in 2024/25 and fully externally funded by Capital Grant funding from Sustran’s People & Places for Everyone grant fund. Capital Plan & Asset Management Board 4 February 2025 • Bilston Primary School: Extension of existing school to create additional 4 classroom/general purpose space capacity. £3.395 million capital expenditure budget phased across 2024/25 to 2027/28, to be fully funded by £3.395 million of developer contributions; • Roslin Primary School: 2 classroom Modular Unit extension to existing school to create additional capacity. £0.832 million capital expenditure budget fully phased in 2025/26, to be fully funded by £0.832 million of developer contributions; Page 59 of 270
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3 • UK Shared Prosperity Fund: Suite of projects funded by the UKSPF: Car Park Barrrier at Vogrie Country Park, Litter Bin & Bus Stop Improvements across the County, Upgrade of Millerhill Hub, Secret Garden provision at Hawthorn Family Learning Centre, Outdoor Shelter and Sensory Area at Bonnyrigg Community Garden, Provision of Laptops for Dalkeith Welfare Hall and Road Signage in Gorebridge. Total capital expenditure budget of £0.267 million fully phased in 2024/25 and fully funded in 2024/25 by £0.267 million on of UK Shared Prosperity Capital Grant Funding 4 2024/25 Projection against budget 4.1 2024/25 Budget & Rephasing The Capital Plan expenditure budget for 2024/25 as reported to Council at Quarter 2 on 12 November 2024 was £63.417 million, with a funding budget of £24.993 million and an in-year borrowing requirement of £38.423 million. After accounting for the new projects and adjustments to project budgets as outlined in Section 3, the capital plan expenditure budget for 2024/25 is £64.862 million, funding budget is £26.259 million and in-year borrowing of £38.603 million. Project expenditure budgets have been rephased based on the latest information available from Project Managers and Service Leads as noted in Table 1 below. Table 1: Rephasing of project expenditure budgets Project Description of amendment to budget Previous 2024/25 Budget £000’s Revised 2024/25 Budget £000’s 2024/25 Budget Movement £000’s CHILDREN, YOUNG PEOPLE & ESTATES PROGRAMME BOARD Lasswade High School – Enhancement of Facilities to Support School Capacity & ASN Provision – Social Complex Needs Review of options to increase capacity underway with works expected to be programmed across 2025/26 and 2026/27 702 0 -702 Beeslack Community High School Replacement The costs associated with the agreement of the Land Title have been rephased into 2025/26. 7,420 2,720 -4,700 Mauricewood Extension & Refurbishment RIBA Stage 2 design concluded. Project being reviewed further. 807 100 -707 Hopefield Farm Primary 2 (Hs12) Council reviewing requirements for this site at present as part of the Learning Estate Strategy update 500 0 -500 Page 60 of 270
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4 Dalkeith Catchment Additional Primary & Secondary Capacity Reprofiling of project expenditure in line with LES development work 1,652 650 -1,002 Page 61 of 270
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5 Project Description of amendment to budget Previous 2024/25 Budget £000’s Revised 2024/25 Budget £000’s 2024/25 Budget Movement £000’s ASSET MANAGEMENT PROGRAMME BOARD Digital Services Asset Management Plan Refreshed asset management programme provided along with extension of life of existing front office and schools devices with Solid State Drives (SDD) and Random Access Memory (RAM) upgrades rather than full device replacement and schools telephony system upgrade rephased to 2025/26 1,407 969 -438 Digital Equipped for Learning Hardware costs rephased to 2025/26 2,120 1,785 -335 Property Upgrades – Learning Estate All condition & suitability surveys now received and work to prioritise and review these reported separately in the Capital Plan Prioritisation Paper elsewhere on today’s agenda 843 0 -843 TRANSPORT, ENERGY & INFRASTRUCTURE PROGRAMME BOARD A701 & A702 Relief Road City Deal Decision regarding planning now expected mid February 2025 with subsequent rephasing of works for final quarter of 2024/25 now rephased into 2025/26 846 596 -250 OTHER Assistive Technology & Analogue to Digital The roll-out of new equipment continues, with purchases made as required to avoid holding too much stock. There has been some slippage in the programme due to previous supply issues and the programme is now anticipated to be complete by December 2025 953 600 -353 Others Minor rephasing 8,921 7,802 -1,119 Total 26,171 15,222 -10,949 This results in a rephased capital expenditure budget for 2024/25 of £53.913 million. In line with this, the expected level of funding available to finance the plan has also been rephased from £26.259 million to £22.188 million, a decrease of £4.071 million. This reduces the projected in-year borrowing requirement from £38.603 million to £31.725 million. The projected performance against budget for 2024/25 is shown in table 2 overleaf:- Page 62 of 270
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6 Table 2: General Services Capital Plan Projected Performance against Budget 2024/25 – as at Quarter 3 Item 2024/25 2024/25 Actual 2024/25 2024/25 2024/25 Budget Rephased To Projected Variance Carry Q2* £000’s Budget Q3 Outturn £000’s Forward £000’s £000’s £000’s £000’s £000’s Expenditure 64,862 53,913 32,211 53,913 0 -10,949 Funding 26,259 22,188 17,396 22,530 +342 -4,071 Borrowing Required 38,603 31,725 14,816 31,383 -342 * including new projects per Sections 3.1 and 3.2 4.2 Expenditure Expenditure to Quarter 3 is £14.816 million with a projected expenditure outturn of £53.913 million, in line with the rephased budget. The expenditure to Quarter 3 (£32.211 million) equates to 60% of the forecast outturn expenditure (£53.913 million). This means that the remaining £21.702 million, or 40% of expenditure, is projected to be incurred by the end of the financial year, with only 31% of the financial year remaining. The expenditure forecasts are based on the latest assessment of project expenditure by service leads and project managers. The risk in these forecasts is that expenditure is materially less than forecast, with overly optimistic forecasts from service leads and project managers resulting in underspends within the current financial year and/or rephasing from 2024/25 to 2025/26. The actual outturn position will be presented as part of the General Services Capital Plan – Outturn 2024/25 report to Council in June 2025, with prior reporting, challenge and assessment at Capital Plan & Asset Management Board. 4.3 Funding The funding available to finance the Capital Plan in 2024/25 is expected to total £22.530 million, £0.342 million higher than the revised budget and reflecting a redetermination of an additional £0.342 million of General Capital Grant funding from the Scottish Government in Finance Circular 10/2024 dated 12 December 2024. Funding of £17.396 million has been received at Quarter 3. Page 63 of 270
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7 4.4 Borrowing The original budgeted level of borrowing for 2024/25 was £49.945 million. This has been rephased at Quarter 1 and Quarter 2 (as previously reported to Council) and Quarter 3 (as outlined in Section 4.1 above) to a budgeted level of borrowing for 2024/25 of £31.725 million – a total reduction in the forecast level of borrowing of £18.220 million. Based on the forecast outturn expenditure and funding levels as noted above, the revised estimate of the level of borrowing required for 2024/25 is £31.383 million, which is £0.342 million less than the rephased Q3 budget, reflecting the movements as noted in Sections 4.2 and 4.3 above. The impact on the Council’s borrowing costs is reflected in the Financial Monitoring 2024/25 General Fund Revenue report elsewhere on today’s agenda. 5 Capital Plan 2025/26 to 2028/29 5.1 Rephasing of Project Expenditure & Funding In addition to the rephasing of project expenditure and funding from 2024/25 to/from 2025/26 as reported in Section 3, expenditure and income forecasts covering the remainder of the period of the plan have been rephased to reflect the most recent information available from Project Managers and Service Leads. Capital expenditure budgets have been established for 2028/29 to reflect the inclusion of block budgets for the Council’s asset management strands, equating to £8.037 million, as follows:- Table 3: Asset Management Strand Block Budgets Asset Management Strand 2028/29 Budget £000’s Business Applications 75 Digital Services 1,000 Street Lighting 1,000 Footway & Footpaths 500 Road Upgrades 1,500 Fleet* 2,812 Property 1,000 Assistive Technology 150 Total 8,037 * as per report to Council 17 December 2024 In addition, expenditure budgets from later years for already approved Learning Estate Strategy and other projects which are expected to fall into 2028/29 have also been included. £0.180 million for Member’s Environmental Funds have also been included. Page 64 of 270
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8 A target has been set in the Capital Plan for the release of project contingencies, with the annual target equating to 2.5% of prior year’s expenditure. Over the life of the plan (2024/25 to 2028/29), this equates to a total provision for the return of project contingencies of £11.801 million, based on a total of £384.884 million of capital expenditure. Project managers are therefore tasked with working within the approved budgets to deliver the release of contingencies in line with this. 5.3 Scottish Government Capital Grant Funding General Capital Grant The General Capital Grant in the Provisional Local Government Finance Order issues on 4 February 2025 provides General Capital Grant funding of £8.696 million for the 2025/26 financial year. This is an increase in General Capital Grant funding of c. 24% or £1.710 million from 2024/25 levels and reflects Midlothian’s share of the £551.500 million total General Capital Grant for Scottish Local Authorities (2024/25 value £445.837 million). An element of the 2025/26 General Capital Grant has been earmarked to fully fund capital expenditure budgets for Contaminated Land (£0.070m) and Public Sector Housing Grants (£0.291m). The planning assumption for the level of General Capital Grant funding from the Scottish Government over the period 2026/27 to 2028/29 is that the annual capital grant will be cash flat from 2025/26 levels, equating to £8.696 million per annum. Over the 4 year forward looking life of the plan (2025/26 to 2028/29), this equates to a total level of General Capital Grant funding of £34.784 million, an increase of £8.000 million in total over previous planning assumptions. Specific Grants Specific Capital Grant to fund Active Travel Infrastructure of £0.428 million is also included in the Provisional Local Government Finance Order issues on 4 February 2025, and has therefore been included in the General Services Capital Plan. A planning assumption that Specific Grant to fund Active Travel Infrastructure at this level (£0.428 million per annum) has been included in the General Services Capital Plan. 5.4 Borrowing As a result of these revised expenditure and funding forecasts, the possible forecast expenditure and funding levels are as outlined in Table 4 overleaf (with the level of borrowing shown for illustration purposes only), prior to reaching a financially sustainable outcome from the Capital Plan Prioritisation exercise. Page 65 of 270
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9 Table 4: General Services Capital Plan 2024/25 to 2028/29 Item 2024/25 Forecast Outturn £000’s 2025/26 Budget £000’s 2026/27 Budget £000’s 2027/28 Budget £000’s 2028/29 Budget £000’s Total Budget £000’s Total Expenditure 53,913 91,680 129,171 86,134 12,185 373,083 Total Funding 22,530 28,780 32,178 14,796 13,057 111,341 Total Borrowing Required 31,383 62,900 96,993 71,338 -872 261,742 6 Capital Fund The Capital Fund at the start of the 2024/25 financial year was £17.242 million. £7.694 million of this is committed to fund the City Deal, with a further £7.061 million committed to support capital investment. The forecast non-committed capital fund balance at 31 March 2025 is £2.778 million, as shown in table 5 below. Table 5: Capital Fund Item Amount £000’s Balance at 01 April 2024 17,242 Forecast Capital Receipts 2024/25 895 Forecast Balance at 31 March 2025 18,137 Committed to fund City Deal Project -7,694 Committed to support Capital Investment -7,061 Developer Contributions earmarked for specific purposes -604 Forecast non-committed balance at 31 March 2025 2,778 7 Report Implications 7.1 Resource The borrowing required to finance investment for fully approved projects and those under development in 2024/25 to 2028/29 is currently £261.742 million. The implications of this borrowing requirement will be addressed as part of the General Services Capital Plan Prioritisation project. 7.2 Digital There are no Digital Services implications arising from this report. 7.3 Risk The construction materials supply chain has already been subject to unprecedented disruption through a combination of the Coronavirus (COVID-19) Pandemic, the UK leaving the European Union, the conflict Page 66 of 270
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10 in Ukraine and the global inflationary picture. The Construction Leadership Council (CLC) continues to report shortages of construction materials and forecasts this disruption to continue for the foreseeable future. Ongoing engagement with suppliers confirms that materials shortages, longer lead times and steep price increases are highly likely to continue to impact the supply chain. This potentially exacerbates the inherent risk in the Capital Plan that projects will cost more than estimated thus resulting in additional borrowing, or will be subject to significant delay. Strengthened financial monitoring & governance procedures have been approved by CP&AMB, which will ensure that significant variations can be captured and reported to Programme Boards and CP&AMB so that remedial action can be taken to mitigate the risks. In developing the strategy and taking cognisance of the longer term affordability gap it is clear that a number of potential projects which are currently included will only be able to be progressed if they can be delivered on a spend to save basis (i.e. where income or cost savings more than offset the cost of funding the investment) or where they can be delivered on a cost neutral basis or through alternative funding mechanisms. The proposed recommendations of the General Services Capital Plan Prioritisation project, included elsewhere on today’s agenda, take cognisance of this. The Capital Plan includes a provision for the return of contingencies of £11.801 million over the period 2024/25 to 2028/29, equating to 2.5% of all project expenditure. The risk is that projects throughout the plan are unable to deliver this which could be in part due to factors outwith the Council’s control. Capital Plan & Asset Management Board will review the level of return of contingencies against the £11.801 million provision on an ongoing basis to ensure that projects can, where possible, deliver against this provision and that the provision continues to be appropriate. 7.4 Ensuring Equalities There are no equalities issues arising directly from this report. 7.5 Additional Report Implications See Appendix A. Page 67 of 270
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11 Appendix A: Report Implications A.1 Key Priorities within the Single Midlothian Plan Not applicable. A.2 Key Drivers for Change A.3 Key Delivery Streams Themes addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value Actively managing priorities within the GSCP will ensure that capital investment required to ensure Midlothian Council’s priorities as set out in the Single Midlothian Plan achieves Best Value. A.5 Involving Communities and Other Stakeholders No external consultation has taken place on this report. A.6 Impact on Performance and Outcome Actively managing priorities within the GSCP will ensure that capital investment required to ensure Midlothian Council’s priorities as set out in the Single Midlothian Plan achieves shared outcomes. A.7 Adopting a Preventative Approach Not applicable. A.8 Supporting Sustainable Development Actively managing priorities within the GSCP will ensure that capital investment required to ensure Midlothian Council’s priorities as set out in the Single Midlothian Plan are achieved in a financially sustainable way. Background Papers: Appendix 1 – Summary General Services Capital Plan 2024/25 to 2028/29 Appendix 2 – Detailed General Services Capital Plan Monitoring 2024/25 Quarter 3 Appendix 3 – Detailed General Services Capital Plan Expenditure 2024/25 to 2028/29 Page 68 of 270
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Appendix 1: Summary General Services Capital Plan 2024/25 to 2028/29 GENERAL SERVICES CAPITAL PLAN 2024/25 2025/26 2026/27 2027/28 2028/29 Total 2024/25 to 2028/29 Forecast Budget Budget Budget Budget Budget Outurn £'000 £000's £000's £000's £000's £'000 EXPENDITURE - PER PROGRAMME BOARD Children, Young People & Estates 21,547 52,177 101,332 63,822 4,572 243,449 Asset Management 15,736 18,639 12,063 12,160 8,800 67,397 Transport, Energy & Infrastructure 3,841 3,370 5,308 2,233 428 15,181 Regeneration & Development 13,706 17,648 12,097 10,509 0 53,960 Other 1,623 1,257 697 698 621 4,896 Provision for return of contingencies -2,539 -1,411 -2,327 -3,287 -2,236 -11,801 Total Expenditure 53,913 91,680 129,170 86,134 12,185 373,083 FUNDING Government Grants - General Capital Grant 7,016 9,188 8,696 8,696 8,696 42,292 Government Grants - Early Years 3,500 365 862 0 0 4,727 Government Grants - Others 5,105 2,771 428 428 428 9,160 City Deal Funding (Scottish Government) 596 2,942 4,880 1,002 0 9,420 City Deal Funding (Capital Fund) 0 0 0 0 0 0 Transfer from Capital Fund to Capital Plan 0 0 0 0 0 0 Receipts from Sales 895 0 0 0 0 895 Receipts from Sales transferred to General Fund Reserve -895 0 0 0 0 -895 Land Transfers from HRA Applied to Capital Plan 0 0 0 0 0 0 CFCR 0 0 0 0 0 0 Developer Contributions - Learning Estate Strategy 4,920 8,970 16,390 3,217 3,155 36,652 Developer Contributions - Learning Estate Retrospective 750 750 750 750 750 3,750 Developer Contributions - A701/702 0 0 0 676 0 676 Developer Contributions - Other Projects 638 343 171 28 28 1,208 Other Contributions 5 3,451 0 0 0 3,456 Total Available Funding 22,530 28,780 32,177 14,796 13,057 111,341 Total Borrowing Required 31,383 62,900 96,992 71,338 -872 261,742 Page 69 of 270
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Appendix 2 Detailed General Services Capital Plan Monitoring 2024/25 Quarter 3 Budget is approved in principle - requires approval of OBC before budget is fully approved Budget is a "Project Under Development" - requires approval of SOBC before budget is fully approved Rephased Rephased 2024/25 2024/25 2024/25 2024/25 2024/25 2024/25 GENERAL SERVICES CAPITAL PLAN Budget Budget Actual Forecast Variance Carry Q3 Monitoring Q2 Q3 to P9 Outturn Q3 Q3 Forward Q3 £000's £000's £000's £000's £000's £000's CHILDREN, YOUNG PEOPLE & ESTATES PROGRAMME BOARD FULLY APPROVED PROJECTS Education - Primary Woodburn Primary 9 class & activity hall extension 7,359 7,359 6,830 7,359 - - Easthouses Primary School 6,033 6,044 6,044 6,044 - (11) Mayfield & St. Luke's School Campus 1,080 1,080 400 1,080 - - Burnbrae Primary - Conversion of ASN to GP Space 55 55 14 55 - - Modular Units 2023/24 344 344 168 344 - - Education - Secondary Lasswade High - Enhancement of Faciltiies to Support School Capacity 452 - - - - 452 Beeslack CHS Replacement 7,420 2,720 974 2,720 - 4,700 Penicuik High School 2,058 2,058 659 2,058 - - Education - ASN Hawthornden Primary - ASN Unit 24 24 18 24 - - Education - Early Years King's Park Primary School 6 - - - - 6 Settings/Catering Kitchens 382 382 3 382 - - Mauricewood Primary School 125 125 - 125 - - Vogrie Outdoor Early Learning Centre 81 81 1 81 - - Education - Primary - Projects near completion Paradykes Primary Replacement 69 69 3 69 - - New Danderhall Primary hub 61 61 (57) 61 - - Acoustic Upgrades 95 95 4 95 - - Education _ General Learning Estate Strategy: Development Budget 200 200 92 200 - - Burnbrae Primary School External Works 1 1 1 1 - - TOTAL - CYPE PROGRAMME BOARD 25,844 20,697 15,157 20,697 - 5,147 Rephased Rephased 2024/25 2024/25 2024/25 2024/25 2024/25 2024/25 GENERAL SERVICES CAPITAL PLAN Budget Budget Actual Forecast Variance Carry Q3 Monitoring Q2 Q3 to P9 Outturn Q3 Q3 Forward Q3 £000's £000's £000's £000's £000's £000's PROJECTS APPROVED IN PRINCIPLE Education - Primary Bilston Primary School Extension - 100 74 100 - (100) Mauricewood Refurbishment 807 100 75 100 - 707 Hopefield Farm Primary 2 (HS12) 500 - - - 500 St Davids Primary - 4 class & EY extension 784 - - - 784 Education - ASN ASN Provision - Social Complex Needs 250 - - - 250 TOTAL - CYPE APPROVED IN PRINCIPLE 2,341 200 150 200 - 2,141 Rephased Rephased 2024/25 2024/25 2024/25 2024/25 2024/25 2024/25 GENERAL SERVICES CAPITAL PLAN Budget Budget Actual Forecast Variance Carry Q3 Monitoring Q2 Q3 to P9 Outturn Q3 Q3 Forward Q3 £000's £000's £000's £000's £000's £000's PROJECTS UNDER DEVELOPMENT Education - Secondary Dalkeith Schools Primary & Secondary Capacity Solution 1,652 650 429 650 - 1,002 TOTAL - CYPE PROJECT UNDER DEVELOPMENT 1,652 650 429 650 - 1,002 CYPE - OVERALL TOTAL 29,837 21,547 15,735 21,547 - 8,290 Page 70 of 270
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14 Rephased Rephased 2024/25 2024/25 2024/25 2024/25 2024/25 2024/25 GENERAL SERVICES CAPITAL PLAN Budget Budget Actual Forecast Variance Carry Q3 Monitoring Q2 Q3 to P9 Outturn Q3 Q3 Forward Q3 £000's £000's £000's £000's £000's £000's ASSET MANAGEMENT PROGRAMME BOARD Digital Business Applications 282 275 92 275 - 7 DS Corporate Solutions - - 9 - - - Front Office - Hardware, Software & Services 139 80 80 80 - 59 Back Office - Hardware, Software & Services 130 55 - 55 - 75 Network, Software & Services 520 440 - 440 - 80 Schools - Hardware, Software & Services 508 306 266 306 - 202 Recharge of Staffing 110 88 - 88 - 22 Digital: Equipped for Learning 2,120 1,785 1,214 1,785 - 335 Roads & Street Lighting Street Lighting and Traffic Signal Upgrades - New 1,015 1,015 302 1,015 - - Footway & Footpath Asset Management Plan - New 542 542 - 542 - - Road Upgrades - Asset Management Plan 1,598 1,598 705 1,598 - - Accelerated Roads Residential Streets 76 76 76 76 - - Roads: Potholes & Upgrades / Residential Streets 4,687 4,687 1,976 4,687 - - Fleet Vehicle & Plant Replacement Programme 3,369 3,369 849 3,369 - - Property Property Upgrades 1,034 1,005 521 1,005 - 29 Property Upgrades - LES 843 - - - - 843 Open Spaces / Play Areas Roslin Wheeled Sports Facility 59 - - - - 59 Mauricewood Road Bus Shelter 4 - - - - 4 Millerhill Park Asphalt Path 73 62 62 62 - 11 Birkenside Play Equipment 72 72 - 72 - - Play Park Upgrades: Clarinda Gardens & Ironmills Park 51 51 51 51 - - Play Park Renewal 2023/24+ 123 46 14 46 - 77 Nature Restoration Fund 2023/24 22 31 18 31 - (9) Contaminated Land 70 70 45 70 - - Sport & Lesiure Loanhead Memorial Park Pitch 66 66 66 66 - - Flotterstone Car Park Infrastructure & Charging 16 16 - 16 - - TOTAL - ASSET MANAGEMENT PROGRAMME BOARD 17,531 15,736 6,345 15,736 - 1,795 TRANSPORT, ENERGY & INFRASTRUCTURE PROGRAMME BOARD Transport A701 Relief Road: Bush Loan Junction 810 269 244 269 - 541 A701 Relief Road: A701 Active Travel Corridor 36 327 - 327 - (291) A7 Urbanisation 187 187 - 187 - - Active Travel Infrastructure 655 655 59 655 - - Active Travel Infrastructure: Tier 2 - 753 - 753 - - Sustrans - People & Places Equipment Purchases - 170 - 170 - - Community Bus Fund 4 4 - 4 - - Road Safety Improvement Fund 169 169 - 169 - - UKSPF: Infrastructure Improvements - 267 - 267 - - FCC Zero Waste - Heat Offtake Facility 1,040 1,040 - 1,040 - - TOTAL - TE&I PROGRAMME BOARD 2,901 3,841 303 3,841 - 250 REGENERATION & DEVELOPMENT PROGRAMME BOARD Regeneration Place Based Investment Fund 2021/22 298 298 15 298 - - Place Based Investment Fund 2022/23 182 182 96 182 - - Place Based Investment Fund 2023/24 149 149 31 149 - Rosewell Development Trust - The Steading Infrastructure Upgrades 10 10 - 10 - Development - Destination Hillend 4,975 4,975 4,080 4,975 - - Midlothian House RetroFit - 255 - 255 - - Shawfair Town Centre Land Purchase 2,122 2,122 2,122 2,122 - - Highbank Intermediate Care Reprovisioning 5,082 5,082 2,203 5,082 - - Day Care Centre 464 464 615 464 - - General Fund Share of Extra Care Housing 248 122 86 122 - 127 Recycling Improvement Fund (Stobhill Recycling Depot) 47 47 6 47 - - TOTAL - R&D BOARD 13,578 13,706 9,254 13,706 - 127 Page 71 of 270
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15 Rephased Rephased 2024/25 2024/25 2024/25 2024/25 2024/25 2024/25 GENERAL SERVICES CAPITAL PLAN Budget Budget Actual Forecast Variance Carry Q3 Monitoring Q2 Q3 to P9 Outturn Q3 Q3 Forward Q3 £000's £000's £000's £000's £000's £000's OTHER (PROGRAMME BOARD NOT YET DEFINED) PLACE Digital Council Hybrid Meetings 22 6 6 6 - 16 Property/Development - Midlothian & Fairfield House Shower Upgrades 5 5 - 5 - - 32-38 Buccleuch Street Ground Floor Redevelopment 1 1 47 1 - - Public Sector Housing Grants 291 291 99 291 - - Penicuik THI: Public Realm Scheme 171 86 - 86 - 86 CCTV Network 146 146 - 146 - - 2-4 West Street, Penicuik 20 20 1 20 - - EWiM - Buccleuch House Ground Floor 33 - 0 - - 33 Millerhill Pavilion 7 7 - 7 - - PEOPLE & PARTNERSHIPS - Education - Free School Meal Provision 210 210 - 210 - - Communities & Partnerships - Members Environmental Improvements 251 251 95 251 - - Adult Social Care - Assistive Technology 102 50 26 50 - 52 Analogue to Digital Transition 851 550 301 550 - 301 TOTAL NOT ALLOCATED TO PROGRAMME BOARDS 2,110 1,623 574 1,623 - 487 SUBTOTAL - PRE RETURN OF CONTINGENCIES 65,957 56,453 32,211 56,452 - 10,949 Provision for Return of Contingencies (2,539) (2,539) - (2,539) - - GENERAL SERVICES CAPITAL PLAN TOTAL 63,417 53,913 32,211 53,913 - 10,949 Page 72 of 270
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16 Appendix 3 Detailed General Services Capital Plan Expenditure 2024/25 to 2028/29 Budget is approved in principle - requires approval of SOBC before budget is fully approved Budget is a "Project Under Development" - requires approval of SOBC before budget is fully approved 24/25 to 28/29 GENERAL SERVICES CAPITAL PLAN 2024/25 2025/26 2026/27 2027/28 2028/29 Total 2024/25 to 2028/29 Forecast O/T Budget Budget Budget Budget Spend £000's £000's £000's £000's £000's £'000 CHILDREN, YOUNG PEOPLE & ESTATES PROGRAMME BOARD FULLY APPROVED PROJECTS Education - Primary Woodburn Primary 9 class & activity hall extension 7,359 178 - - - 7,537 Easthouses Primary School 6,044 288 - - - 6,332 Mayfield & St. Luke's School Campus 1,080 9,467 29,690 3,873 - 44,110 Burnbrae Primary - Conversion of ASN to GP Space 55 - - - - 55 Modular Units - 2023/24 344 - - - - 344 Bilston Primary School Extension 100 1,847 1,298 150 - 3,395 Roslin Primary School Modular Units - 832 - - - 832 Education - Secondary Lasswade High - Enhancement of Faciltiies to Support School Capacity - 452 - - - 452 Beeslack CHS Replacement 2,720 26,870 41,490 39,015 2,675 112,770 Penicuik High School 2,058 10,509 17,612 13,400 600 44,179 Education - ASN Hawthornden Primary - ASN Unit 24 - - - - 24 Education - Early Years Mount Esk Nursery School Replacement @ Hawthornden - - - - - - King's Park Primary School - 6 - - - 6 Setting/Catering kitchens 382 - - - - 382 Mauricewood Primary School 125 - - - - 125 Vogrie Outdoor Early Learning Centre 81 - - - - 81 Education - Primary - Projects near completion Paradykes Primary Replacement 69 - - - - 69 New Danderhall Primary hub 61 - - - - 61 Acoustic Upgrades 95 - - - - 95 Education _ General Learning Estate Strategy: Development Budget 200 200 200 200 200 1,000 Burnbrae Primary School External Works 1 - - - - 1 TOTAL - CYPE FULLY APPROVED 20,797 50,650 90,290 56,638 3,475 221,849 PROJECTS APPROVED IN PRINCIPLE Education - Primary Mauricewood Refurbishment & Extend 100 200 3,533 204 - 4,037 Hopefield Farm Primary 2 (HS12) - 250 5,387 6,735 1,097 13,469 St Davids Primary - 4 class & EY extension - - 2,122 245 - 2,367 Education - ASN Lasswade High - ASU - 827 - - - 827 ASN Provision - Social Complex Needs - 250 - - - 250 TOTAL - CYPE APPROVED IN PRINCIPLE 100 1,527 11,042 7,184 1,097 20,950 PROJECTS UNDER DEVELOPMENT Education - Secondary Dalkeith Schools Primary & Secondary Capacity Solution 650 - - - - 650 Gorebridge High School - - - - - - TOTAL - CYPE PROJECT UNDER DEVELOPMENT 650 - - - - 650 CYPE - OVERALL TOTAL 21,547 52,177 101,332 63,822 4,572 243,449 Page 73 of 270
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17 24/25 to 28/29 GENERAL SERVICES CAPITAL PLAN 2024/25 2025/26 2026/27 2027/28 2028/29 Total 2024/25 to 2028/29 Forecast O/T Budget Budget Budget Budget Spend £000's £000's £000's £000's £000's £'000 ASSET MANAGEMENT PROGRAMME BOARD Digital Business Applications 275 130 15 27 75 522 Front Office - Hardware, Software & Services 80 480 543 325 250 1,678 Back Office - Hardware, Software & Services 55 80 80 80 250 545 Network, Software & Services 440 238 150 150 250 1,228 Schools - Hardware, Software & Services 306 316 519 804 250 2,195 Recharge of Staffing 88 112 129 136 - 465 Digital: Equipped for Learning 1,785 2,460 - - - 4,245 Roads & Street Lighting Street Lighting Upgrades 1,015 1,000 1,000 1,000 1,000 5,015 Footway & Footpath Network Upgrades 542 500 500 500 500 2,542 Road Upgrades 1,598 1,500 1,500 1,500 1,500 7,598 Accelerated Roads Residential Streets 76 - - - - 76 Roads: Potholes & Upgrades 4,687 2,500 2,500 2,500 - 12,187 Roads Asset Management Plan - Temple Ground Stabilisation - 309 - - - 309 Roads Asset Management Plan - B6372 Arniston Embankment Stabilisation - 593 - - - 593 Fleet Vehicle & Plant Replacement Programme 3,369 5,676 2,683 2,694 2,812 17,234 Property Property Upgrades 1,005 1,559 1,530 1,530 1,000 6,625 Property Upgrades - LES - 843 843 843 843 3,373 Open Spaces / Play Areas Outdoor Play Equipment - Rosewell - 44 - - - 44 Roslin Wheeled Sports Facility - 59 - - - 59 Mauricewood Road Bus Shelter - 4 - - - 4 Millerhill Park Asphalt Path 62 38 - - - 100 Birkenside Play Equipment 72 - - - - 72 Welfare Park, Newtongrange - 39 - - - 39 Play Park Upgrades: Clarinda Gardens & Ironmills Park 51 - - - - 51 Play Park Renewal 2023/24+ 46 77 - - - 123 Nature Restoration Fund 2023/24 31 11 - - - 43 Contaminated Land 70 70 70 70 70 350 Sport & Lesiure Loanhead Memorial Park Pitch 66 - - - - 66 Flotterstone Car Park Infrastructure & Charging 16 - - - - 16 TOTAL - ASSET MANAGEMENT PROGRAMME BOARD 15,736 18,639 12,063 12,160 8,800 67,397 TRANSPORT, ENERGY & INFRASTRUCTURE PROGRAMME BOARD Transport A701 Relief Road: Bush Loan Junction 269 2,542 3,349 119 - 6,279 A701 Relief Road: A701 Active Travel Corridor 327 350 1,531 1,686 - 3,894 A701 Relief Road: Phases 3-8 - 50 - - - 50 A7 Urbanisation 187 - - - - 187 Active Travel Infrastructure: Tier 1 655 428 428 428 428 2,367 Active Travel Infrastructure: Tier 2 753 - - - - 753 Sustrans - People & Places Equipment Purchases 170 - - - - 170 Community Bus Fund 4 - - - - 4 Road Safety Improvement Fund 169 - - - - 169 UKSPF: Infrastructure Improvements 267 - - - - 267 FCC Zero Waste - Heat Offtake Facility 1,040 - - - - 1,040 TOTAL - TRANSPORT, ENERGY & INFRASTRUCTURE PROGRAMME BOARD 3,841 3,370 5,308 2,233 428 15,181 REGENERATION & DEVELOPMENT PROGRAMME BOARD Regeneration Place Based Investment Fund 2021/22 298 - - - - 298 Place Based Investment Fund 2022/23 182 - - - - 182 Place Based Investment Fund 2023/24 149 - - - - 149 Rosewell Development Trust - The Steading Infrastructure Upgrades 10 55 - - - 65 Development Destination Hillend 4,975 1,386 4,923 10,000 - 21,284 Midlothian House RetroFit 255 5,021 6,805 509 - 12,590 Shawfair Town Centre Land Purchase 2,122 3,451 - - - 5,573 Highbank Intermediate Care Reprovisioning 5,082 4,881 341 - - 10,304 Day Care Centre 464 464 16 - - 944 General Fund share of Extra Care Housing 122 115 12 - - 248 Recycling Improvement Fund (Stobhill Recycling Depot) 47 2,275 - - - 2,322 TOTAL - REGENERATION & DEVELOPMENT PROGRAMME BOARD 13,706 17,648 12,097 10,509 - 53,960 Page 74 of 270
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18 24/25 to 28/29 GENERAL SERVICES CAPITAL PLAN 2024/25 2025/26 2026/27 2027/28 2028/29 Total 2024/25 to 2028/29 Forecast O/T Budget Budget Budget Budget Spend £000's £000's £000's £000's £000's £'000 OTHER (PROGRAMME BOARD NOT YET DEFINED) PLACE Digital Council Hybrid Meetings 6 16 - - - 22 Property/Development Midlothian & Fairfield House Shower Upgrades 5 - - - - 5 32-38 Buccleuch Street Ground Floor Redevelopment 1 - - - - 1 Public Sector Housing Grants 291 291 291 291 291 1,455 Penicuik THI: Public Realm Scheme 86 86 - - - 171 CCTV Network 146 - - - - 146 2-4 West Street, Penicuik 20 6 - - - 26 Millerhill Pavilion 7 - - - - 7 PEOPLE & PARTNERSHIPS Education Free School Meal Provision 210 - - - - 210 Communities & Partnerships Members Environmental Improvements 251 180 180 180 180 971 Adult Social Care Assistive Technology 50 278 226 227 150 931 Analogue to Digital Transition 550 401 - - - 951 TOTAL NOT ALLOCATED TO PROGRAMME BOARDS 1,623 1,257 697 698 621 4,896 SUBTOTAL - PRE RETURN OF CONTINGENCIES 56,453 93,092 131,497 89,422 14,421 384,884 Provision for Return of Contingencies (2,539) (1,411) (2,327) (3,287) (2,236) (11,801) GENERAL SERVICES CAPITAL PLAN TOTAL 53,913 91,680 129,170 86,134 12,185 373,083 Page 75 of 270
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Midlothian Council Tuesday 25 February 2025 Item No 8.4 Treasury Management and Investment Strategy 2025/26 & Prudential Indicators Report by David Gladwin, Chief Financial Officer & Section 95 Officer Report for Decision 1 Recommendations Council is recommended to:- a) Approve the restriction of the Authorised Limit to the value of the Capital Financing Requirement at 31 March 2026 (£604.957 million), pending finalisation of the General Services Capital Plan Prioritisation; b) Note that there are no other material changes proposed to the Treasury Management and Investment Strategy (TMIS) for 2025/26 from the strategy currently in place, other than:- i. to no longer fully cash back the Council’s useable reserves – instead, to run down cash balances to support the deferral of borrowing as outlined in Section 4, to allow the Council to navigate past the current interest rate hump; and ii. to update the Prudential Indicators (Section 5 and Appendix 2), to reflect the revised capital plans; c) Note the use of the Asset Life method for the repayment of all loans fund advances as outlined in Section 6; and d) Accordingly approve the Treasury Management and Investment Strategy for 2025/26. 2 Purpose of Report/Executive Summary The purpose of this report to Council is to provide an update on the implementation of the Council’s TMIS 2024/25, and to make recommendations to facilitate consideration of the 2025/26 Strategy, the Prudential and Treasury indicators contained therein, and the approach to the statutory repayment of loans fund advances. In accordance with the Treasury Management Code of Practice, the annual Treasury Management & Investment Strategy (TMIS) & Prudential Indicators report is required to be adequately scrutinised before being recommended to the Council. For Midlothian, this role is undertaken by the Audit Committee, with this report being presented to Audit Committee on 24 February 2025. Page 76 of 270
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2 Any revisions arising from Audit Committee consideration of the report on 24 February 2025 will be verbally updated to Council before discussing the report on 25 February 2025. Date: 07 February 2025 Report Contact: Gary Thomson, Senior Finance Business Partner gary.thomson@midlothian.gov.uk Page 77 of 270
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3 3. Update on implementation of TMIS for 2024/25 3.1 Borrowing The Council’s borrowing position as set out in the 2024/25 Treasury Management Mid-Year Review Report was £340.871 million at 31 March 2024, and six months later was £359.812 million on 30 September 2024. The principal source of borrowing is the UK Debt Management Office’s Public Works Loans Board (PWLB) and fixed rate loans are taken at a time and tenure which takes cognisance of the PWLB rates (derived from the UK Gilts market) and the management of maturity risk in the long term across the Council’s loan portfolio. The Council’s loan portfolio, as at 24 January 2025, is shown in table 1 below:- Table 1: Current Loan Portfolio as at 24 January 2025 Loan Type Principal Outstanding £000’s Weighted Average Rate PWLB Annuity 395 8.91% PWLB Maturity 343,502 3.15% LOBO 20,000 4.51% Market Loans 15,548 2.68% Total Loans 379,445 3.21% The repayment profile of this debt is shown in graphical and tabular form below:- Figure 1: Loan Maturity Structure Page 78 of 270
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4 Table 2: Loan Maturity Profile Financial Year 2024/25 Remaining £000’s 2025/26- 2026/27 £000’s 2026/27- 2028/29 £000’s 2029/30- 2032/33 £000’s 2033/34- 2037/38 £000’s 2038/39+ £000’s Debt Maturing 0 2,263 46,323 60,106 32,365 238,389 % of total portfolio 0.00% 0.60% 12.21% 15.84% 8.53% 62.83% Proactive Treasury Management by the Council in the last decade has placed the Council in a strong refinancing position for its existing external debt portfolio, with just 12.80% (£48.585 million) of the Council’s total Loan Portfolio of £379.445 million requiring refinancing over the remainder of the current, and forthcoming four, financial years, as shown in the table above. The majority of this (£43m) matures in the final few years of this decade (March 2027+) where borrowing in the last 12 months to fund the Council’s in-year Capital Financing Requirements has been sourced in line with the approved TMIS – specifically, to borrow from PWLB for a relatively shorter term (3-5 years Maturity loan; 10 year Equal Instalment of Principle (EIP) loan), to navigate past the current interest rate hump, with gilt yields expected to ease throughout the course of the next 12-36 months. This relatively low short-term exposure to refinancing risk puts the Council in a strong position to plan its borrowings in advance, take advantage of any dips in longer-term borrowing rates from PWLB and other sources, and maintain a low weighted average coupon rate on external debt. 3.2 Deposits The Council’s position for funds on deposit fluctuates on a daily basis, with the 2024/25 Treasury Management Mid-Year Review Report setting out the position at 31 March 2024 of £56.619 million and six months later on 30 September 2024, at £49.550 million. The position at 31 January 2025, as set out in Table 3 below, totals £45.408 million. Table 3: Current Deposits as at 31 January 2025 Deposit Type Principal Outstanding £000’s Weighted Average Rate Bank Call Accounts 1,655 4.71% Money Market Funds 23,753 4.72% Bank Fixed Term Deposits 20,000 5.06% Total Deposits 45,408 4.87% The Council’s current deposit portfolio is broadly reflective of the wider UK Local Authority position, as noted in the Treasury Management & Annual Investment Strategy Statement – 2025/26 Detailed in Appendix 3, Section 4.4. Page 79 of 270
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5 4. Treasury Management & Investment Strategy 2025/26 4.1 Main Objectives of TMIS 2025/26 The objectives of the proposed TMIS are:- • To secure long-term borrowing to fund capital investment, through locking in to long-term interest rates and de-risking the Council’s Capital Financing Requirement (CFR); • To ensure short-term liquidity to manage the Council’s day-to- day cashflow. This is achieved through the utilisation of instant access Money Market Fund and Bank Accounts, with the amount held in these reflecting the Council’s level of working capital and fluctuating throughout the year due to a number of factors; The only material changes to the 2025/26 TMIS, from the 2024/25 TMIS approved by Council, are as follows:- 1. Approve the restriction of the Authorised Limit to the value of the Capital Financing Requirement at 31 March 2026 (£604.957 million) (see Section 5 – Prudential Indicators), pending finalisation of the General Services Capital Plan Prioritisation; 2. To approve a change in policy to no longer fully cash-back the Council’s usable reserves (see Section 4.4 – Investment Strategy). There are no changes recommended to the Permitted Investments. More detail on the borrowing and investment strategy for 2025/26 is provided in Sections 4.2, 4.3 and 4.4 below. 4.2 Borrowing Requirement 2024/25 to 2028/29 The Council’s capital plans contain projections of capital expenditure and income over the forthcoming financial years. Any expenditure not financed directly by income, requires funding through borrowing. The projected borrowing requirement arising from the Council’s Capital Plans, the Midlothian Energy Limited (MEL) Shareholder Injection, and the maturing long-term loans that require to be refinanced, over the period 2024/25 to 2028/29 is shown in table 4:- Table 4: Total Borrowing Requirement over the period 2024/25 to 2028/29 2024/25 £000’s 2025/26 £000’s 2026/27 £000’s 2027/28 £000’s 2028/29 £000’s Total £000’s Capital Expenditure General Services 53,913 91,680 129,171 86,134 12,185 373,083 HRA 47,429 80,242 72,003 44,139 28,826 272,639 Page 80 of 270
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6 Total Capital Expenditure 101,342 171,922 201,174 130,273 41,011 645,722 Total Available Financing -32,039 -36,073 -40,007 -23,478 -17,805 -149,403 Principal Debt Repayments -10,394 -10,679 -12,111 -13,711 -15,111 -62,006 Capital Expenditure less available Financing 58,909 125,170 149,054 93,084 8,095 434,313 MEL Shareholder Injection 4,590 0 0 0 0 4,590 Maturing Long-term Loans 0 2,263 12,391 12,409 22,427 49,490 Total Borrowing Requirement 63,499 127,433 161,445 105,493 30,522 488,393 Borrowing secured -40,000 0 0 0 0 -40,000 Anticipated borrowing over remainder of 2024/25 -15,000 0 0 0 0 -15,000 Total Remaining Borrowing Requirement 8,499 127,433 161,445 105,493 30,522 433,393 4.3 Borrowing Strategy for remainder of 2024/25 and 2025/26 Borrowing is undertaken to finance the Council’s approved Capital plans and to do so in the most cost-effective way. As can been noted from Table 4 above the Council has a significant borrowing requirement across the current and forthcoming four financial years (2024/25 to 2028/29). This TMIS provides for this capital investment to be underpinned by long-term borrowing, recognising the current interest rate environment, the significant borrowing requirement arising from the Council’s capital plans, and the long term benefits of de risking the delivery and affordability of these capital plans by locking into the certainty brought by PWLB fixed rate loans. The Council’s external loan debt at 31 March 2025 is projected to be £394.445 million. Based on the Council’s historic and current approved Capital Plans, the Underlying Borrowing Requirement (UBR) – which is the Council’s underlying need to borrow for capital purposes (excluding the long-term liability arising from PFI/DBFM projects) – at 31 March 2025 is expected to equate to £479.787 million (see Appendix 2, Table 2.3). This means that the Council is expected to be £85.342 million (18%) under-borrowed at the end of the 2024/25 financial year i.e. the Council has funded the majority (82%) of its underlying borrowing requirement as at 31 March 2025. In the current economic climate, this is a prudent approach which balances (a) de-risking the longer term borrowing requirement at current longer term borrowing rates; against (b) the current year and forthcoming financial year budget projections; and is in line with the majority of other Scottish Local Authorities. As noted in Section 3.1 above, the Council has a relatively low short-medium term exposure to refinancing risk and is therefore in a strong position to plan its new borrowing requirements in advance, taking advantage of any dips in longer-term borrowing rates from PWLB and other sources, and maintain a low weighted average coupon rate on external debt. Page 81 of 270
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7 The Underlying Borrowing Requirement is projected to rise to £855.191 million by 31 March 2029 (see Appendix 2, Section 2.3) – more than double the current external debt portfolio value. The profile of this, and the projected external loan portfolio to fund the Underlying Borrowing Requirement over the period 2024/25 to 2028/29, is shown in graphical format below. Figure 3: Projected Loan Portfolio & Underlying Borrowing Requirement Interest Rates The current PWLB yield curve is bell shaped with the low point in the curve at the 3 year mark (4.90%; certainty rate) with rates trending upwards towards the 20-30 year tenor (high point of 5.86%) before easing back slightly to sit at c. 5.55% in the 50 year duration. Current PWLB rates have generally increased by c. 50bps across the entire curve from levels reported at the time of the 2024/25 TMIS to Council in February 2024, and have shifted upwards by 25-35bps across the medium to long part of the curve since the TM Mid Year Review Report to Council in December 2024 whilst holding fairly steady at the very short (up to 7 year) range. The yield curve is expected to remain bell shaped over the short- medium term, with a gradual shift downwards of the entire curve by c. 40bps over the next 12 months, a further 40bps over the subsequent 12 months and a further 20bps over the following 12 months of the forecast period (so 100bps total). This is forecast to bring longer-term borrowing rates down from between 5.30%-5.50%, to between:- • 4.90%-5.10% by March 2026; • 4.50%-4.70% by March 2027; and • 4.30%-4.50% by March 2028. The Interest Rate Forecast from the Council’s Treasury Advisers, MUFG Corporate Markets (formerly Link Treasury Services Limited), is shown in Table 5 below, with Further commentary on this is provided in Appendix 3 Section 3.3. Page 82 of 270
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8 Table 5: MUFG Interest Rate Forecasts The funding of the Council’s in-year and forward CFR is typically for infrastructure with long asset lives (50-60 years), and the tenor of PWLB and market loans are typically drawn with this in mind. Borrowing Strategy Consideration for any new borrowing in the remainder of the 2024/25 financial year and during the 2025/26 financial year, to fund the Council’s in-year CFR, will seek to balance:- a) the security/certainty of current relatively high longer-term borrowing rates of upwards of 5.30% in the 30-50 year duration (which are forecast to drop by 40bps within one year and a total of 80bps within 24 months) and the potential additional budgetary pressure that this brings in both the short/medium and longer term; with b) the option to borrow initially for a shorter-term duration from PWLB or other markets, for 3 to 5 years (at say c. 4.50% at the HRA rate), to allow the Council to fund the immediate in-year borrowing requirement. Based on current interest rate forecasts (see Appendix 3 Section 3.3), this would then allow the Council the option to refinance this borrowing at initial 3-5 year maturity with less expensive, longer term borrowing, e.g. a 45 to 47 year tenor in, say, 36 months at a forecast rate of c. 4.30%. As noted in Section 3.1, the Council’s proactive Treasury Management over the last decade has put the Council in a strong refinancing position for its external debt portfolio which allows the Council to slot in shorter dated external borrowing into the current debt maturity profile to fund the current & forthcoming in-year borrowing requirements, to allow the Council to navigate past the current expected hump in longer-term borrowing rates. It is expected that any further long-term borrowing that is undertaken during 2024/25 and 2025/26 to finance the current & future year capital plans will be sourced by drawing new PWLB loans at the Certainty Rate (which has been available to the Council since 2012 and is priced at Gilts+80bps), and/or the HRA rate. The HRA rate is available to all Councils to fund HRA capital expenditure, at a rate that is priced at Gilts+40bps. In the UK Budget in October 2024, the availability over which Councils can draw HRA rate borrowing from PWLB was extended to 31 March 2026. MUFG Corporate Markets Interest Rate View Mar-25 Jun-25 Sep-25 Dec-25 Mar-26 Jun-26 Sep-26 Dec-26 Mar-27 Jun-27 Sep-27 Dec-27 BANK RATE 4.50 4.25 4.00 4.00 3.75 3.75 3.75 3.50 3.50 3.50 3.50 3.50 3 month average earnings 4.50 4.30 4.00 4.00 4.00 3.80 3.80 3.80 3.50 3.50 3.50 3.50 6 month average earnings 4.40 4.20 3.90 3.90 3.90 3.80 3.80 3.80 3.50 3.50 3.50 3.50 12 month average earnings 4.40 4.20 3.90 3.90 3.80 3.80 3.80 3.80 3.50 3.50 3.50 3.50 5 year PWLB 4.90 4.80 4.60 4.50 4.50 4.40 4.30 4.20 4.10 4.00 4.00 3.90 10 year PWLB 5.10 5.00 4.80 4.80 4.70 4.50 4.50 4.40 4.30 4.20 4.20 4.10 25 year PWLB 5.50 5.40 5.30 5.20 5.10 5.00 4.90 4.80 4.70 4.60 4.50 4.50 50 year PWLB 5.30 5.20 5.10 5.00 4.90 4.80 4.70 4.60 4.50 4.40 4.30 4.30 Page 83 of 270
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9 Both the General Services and HRA capital programmes are being kept under regular review due to the effects of inflationary pressures, shortages of materials and labour, and the ratios of financing costs to the net revenue streams. The Council’s borrowing strategy will, therefore, also be regularly reviewed and then revised, if necessary, to achieve optimum value and risk exposure in the medium-long-term. Appendix 3 Section 3.3 provides forecasts for interest rates from the Council’s Treasury Management advisor, MUFG Corporate Markets. Council officers, in conjunction with MUFG, will continue to monitor daily long-term borrowing rates in order to take advantage of any dips in the market or to de-risk any change in the medium-longer term forecast for gilt yields. Forward Borrowing The opportunity also continues to exist to consider further loans on a ‘forward dealing’ basis, and officers will continue to explore the viability of these loans as part of securing the long term borrowing required to meet the Council’s Underlying Borrowing Requirement. Debt Rescheduling As noted in the Mid-Year Review Report, now that the whole of the yield curve has shifted higher there may be opportunities for debt rescheduling in the remainder of the financial year. This would involve the Council repaying loans prematurely (both market and PWLB) whilst high discount rates on premature repayment prevail. Any debt rescheduling will be considered when the difference between the refinancing rate and the redemption rate is most advantageous and the situation will be continually monitored in order to take advantage of any perceived anomalies in the yield curve. The reasons for any rescheduling taking place would include: - the generation of cash savings at minimum risk; - to reduce the average interest rate; - to amend the maturity profile and/or the balance of volatility of the debt portfolio. Council officers will explore debt rescheduling opportunities with MUFG Treasury Solutions; with only prudent and affordable debt rescheduling that considers both the short and medium-longer term impact being considered. 4.4 Investment Strategy for remainder of 2024/25 and 2025/26 As noted in Section 4.1, the only change to the proposed Investment Strategy for the remainder of 2024/25 and 2025/26 is to no longer fully cash back the Council’s useable reserves, instead using these Page 84 of 270
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10 balances to allow the deferral of borrowing at the current high interest rates payable, to allow the Council to most effectively navigate past the current interest rate hump of the next 36 months, when rates on longer term borrowing are expected to drop by 100bps. No other changes are proposed to the Investment Strategy from that approved by Council in the 2024/25 TMIS. All deposits will be placed with high creditworthy counterparties in accordance with the approved creditworthiness policy as outlined in Appendix 1, with a tenor reflective of the expected drawdown of useable reserve forecasts, and at a yield commensurate with this. The list of Permitted Investments in Appendix 1 remains unchanged from that approved by Council in the 2024/25 TMIS. As required by the CIPFA Treasury Management Code, Local authorities “must not borrow to invest for the primary purpose of financial return.” Midlothian Council does not and has not borrowed to invest for the primary purpose of financial return. Environmental, Social and Governance (ESG) in credit and counterparty policies (Treasury Management Practice 1) As noted in the 2024/25 TMIS, the inclusion of ESG criteria continues to be an emerging area in the Local Authority environment which will require ongoing monitoring. For the 2025/26 financial year, the Council’s priorities of security, liquidity and then yield remain paramount and unchanged (and in that order), with ESG criteria an added 4th element to consider in the decision making process. For short term investments with counterparties, this Council utilises the MUFG creditworthiness service which uses the ratings provided by Fitch, Moody’s and Standard & Poor’s to assess creditworthiness, which in themselves include analysis of ESG factors, and specifically the “G” element, when assigning ratings. Of the 3 elements of ESG, the most important element when considering treasury deposits is the Governance aspect – given the majority of treasury deposits undertaken by Midlothian Council are naturally short dated in duration, poor governance can have a more immediate impact on the financial circumstances of an entity and potential for a default event that could impact the amount of principal returned on the deposit. Those financial institutions viewed as having poor/weak corporate governance are generally less well credit rated in the first instance or have a higher propensity for being subject to negative rating action, and the Council’s existing creditworthiness policy will therefore take this into account. Environment and Social factors are also important, but relate more to the long-term impact. Council should note that in relation to the security aspect of Treasury deposits, placing an undue weight on the Page 85 of 270
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11 Environmental and Social factors in the decision making process could have an adverse effect of limiting the list of potential counterparty options, thus decreasing diversification. This could then in turn lead to a widening of credit (security) criteria, or those with a stronger “ESG” performance, in order to restore a balance of diversification across the deposit portfolio, potentially increasing credit risk – and placing the cornerstone of prudent investing at risk. The inclusion of ESG criteria therefore remains an area which requires ongoing review. Council officers, in conjunction with the Council’s treasury advisers MUFG, will therefore continue to monitor and assess ongoing developments and emerging standards in this area, and methods in which the Council can incorporate ESG factors into our creditworthiness assessment process, and report back to Council accordingly. 5 Prudential Indicators – Midlothian Council The Prudential Code for Capital Finance in Local Authorities requires that Councils can demonstrate that their Capital Plans are affordable, prudent and sustainable, taking into account the financial provisions made in current and future revenue budgets; and that Treasury Management decisions are taken in accordance with good practice. The Prudential Indicators that Councils need to consider relate to both actual, historic outcomes, and future estimated outcomes (covering the same period as the Council’s Capital Plans), as follows:- • Actual outcomes for 2023/24; • Revised estimates of the 2024/25 indicators; and • Estimates of indicators for 2025/26 to 2028/29. The Prudential Indicators required by the Code are listed individually in Appendix 2. The key Prudential Indicators relating to the Underlying Borrowing Requirement, the expected Gross External Debt, and the proposed Authorised Limit, are shown in graphical format below. Figure 4: Prudential Indicators for Borrowing Page 86 of 270
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12 The Capital Financing Requirement (CFR) denotes the Council’s underlying need to borrow for capital purposes. The CFR includes borrowing arising as a result of the Council’s Capital Plans, plus the long-term liability arising from the Council’s PPP/DBFM contracts. The Underlying Borrowing Requirement as shown in Figure 4 above strips out the latter of these (long-term liability arising from the Council’s PPP/DBFM contracts) from the CFR. The Authorised Limit for Borrowing represents the limit beyond which borrowing is prohibited, and needs to be set and revised by Members. It is the expected maximum borrowing need with some headroom for unexpected movements. The Authorised Limit for Borrowing for the 2025/26 financial year has been calculated to equate to the maximum value of the Underlying Borrowing Requirement in 2025/26. This equates to £604.957 million as outlined in Table 6 below. Table 6: Authorised Limit for Borrowing: Calculation Authorised Limit for Borrowing Amount £000’s CFR – General Services (31 March 2026) 261,535 CFR – HRA (31 March 2026) 343,422 Proposed Authorised Limit for Borrowing 604,957 Council is therefore asked to approve an authorised limit for borrowing of £604.957 million (see Appendix 2, Section 4.2). IFRS16 The Council will adopt IFRS16 for its statutory accounts for financial year 2024/25. This will bring on balance sheet all operating leases where there is a right of use asset addition. Work is being finalised to quantify the effect of this on the Balance Sheet and the Prudential Indicators, and adjustments to the limits will be included in the Treasury Management Outturn Report to Council in June 2025, and the Treasury Management Mid Year Review Report to Council in late 2025. Council should note that the on balance sheet treatment of IFRS16 will have no 394,445 528,600 684,328 777,161 785,216 £- £100,000 £200,000 £300,000 £400,000 £500,000 £600,000 £700,000 £800,000 £900,000 2024/25 2025/26 2026/27 2027/28 2028/29 £000's Financial Year Prudential Indicators for Borrowing External Debt Authorised Limit Underlying Borrowing Requirement / Operational Boundary Page 87 of 270
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13 impact on the Council’s underlying need to borrow for Treasury Management purposes, and therefore no limit on the Authorised Limit for Borrowing of £604.957 million as proposed in this report. 6 Statutory repayment of loans fund advances Under the Local Government Finance Circular 7/2016, Council is required to set out its policy for the statutory repayment of loans fund advances prior to the start of each financial year. The repayment of loans fund advances ensures that the Council makes a prudent provision each year to pay off an element of the accumulated loans fund advances made in previous financial years. 6.1 New Assets In accordance with Finance Circular 7/2016, for all advances made in relation to the provision of a new asset, the policy will be to defer the commencement of the first principal repayment of the loans fund advance until the financial year following the one in which the asset is first available for use. 6.2 Prudent Repayment of Loans Fund Advances Finance Circular 7/2016 provides a variety of options to Councils for the profiling of the repayment of each loans fund advance, so long as the principle of prudence is maintained. For the 2025/26 financial year, there are 3 options available: (a) Asset Life method; (b) Depreciation method; and (c) Funding/income profile method. In line with the policy adopted in 2024/25, the Asset Life method shall be used for those assets in Table 7. Table 7: Asset Classes adopting the “Asset Life” method Infrastructure Current Loans Fund Advance Period New Primary Schools/Extensions 60 New Leisure Centres 60 New Offices 60 Road Upgrades 50 Street Lighting Columns 50 Structures/Bridges 50 Footway/Cyclepaths 50 Town Centre Environmental Improvements 50 New Care Homes 45 Children’s Play Equipment 20 The annual repayments under the “Asset Life” method for those asset classes as noted above will be calculated using the asset lives and will use the annuity method, in line with previous years. The annuity interest rate that will be used to calculate loans fund principal Page 88 of 270
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14 repayments under the “Asset Life” method will be the in-year loans fund rate, which for 2024/25 is currently estimated to be 2.54%. For all other asset classes, the policy will also be to profile the annual repayments under the “Asset Life” method, with the profile also calculated using the annuity method. The annuity interest rate that will be used to calculate loans fund principal repayments under the “Asset Life” method will be the in-year loans fund rate, which for 2024/25 is currently estimated to be 2.54%. Whilst neither the Depreciation nor the Funding/income profile methods are currently proposed, Council officers will continue to monitor whether it is appropriate to use this for future capital projects. 7. Report Implications 7.1 Resource There are no direct resource implications arising from this report. 7.2 Digital None 7.3 Risk The strategies outlined in this report are designed to maintain the effectiveness of the overall risk management arrangements for Treasury activity. Providing the limits outlined in the strategies are observed they will support the controls already in place in the Treasury Management Practices within which the treasury function operates. The Prudential Indicators contained in Appendix 2 maintain the effectiveness of the overall risk management of Capital Investment and Treasury Management. 7.4 Ensuring Equalities There are no equality issues arising from this report. 7.5 Additional Report Implications See Appendix A. Page 89 of 270
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15 Appendix A: Report Implications A.1 Key Priorities within the Single Midlothian Plan Not applicable. A.2 Key Drivers for Change A.3 Key Delivery Streams Themes addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value The report does not directly impact on Delivering Best Value. A.5 Involving Communities and Other Stakeholders Although no external consultation has taken place, cognisance has been taken of professional advice obtained from MUFG Asset Services, the Council’s appointed Treasury Consultants. A.6 Impact on Performance and Outcomes The strategies to be adopted are an integral part of the corporate aim to achieve Best Value as they seek to minimise the cost of borrowing by exercising prudent debt management and investment. This in turn helps to ensure that the Council’s capital expenditure is sustainable in revenue terms. A.7 Adopting a Preventative Approach Not applicable. A.8 Supporting Sustainable Development Not applicable. Background Papers:- Appendix 1:- Permitted Investments Appendix 2:- Prudential Indicators Appendix 3:- Treasury Management & Annual Investment Strategy Statement – 2025/26 Detailed Page 90 of 270
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Permitted Investments Appendix 1 The Council uses the Link creditworthiness service for specific categories of permitted investments. This utilises credit ratings from the three main credit rating agencies – Fitch, Moody’s and Standard & Poors, along with credit watches, outlooks, CDS spreads and country sovereign ratings in a weighted scoring system with an end product of a series of colour coded bands which indicate the relative creditworthiness of specific categories of counterparties for investment. These colour codes are used by the Council to determine the maximum suggested duration for investment with that counterparty. These are as follows:- Link Asset Services Colour Code Maximum Suggested Duration for Investment Yellow 6 years* Dark Pink 6 years** Light Pink 6 years** Purple 2.5 years Blue 1.25 years*** Orange 1.25 years Red 7 months Green 120 days No colour Not to be used * Note the yellow colour category is for:- UK Government Debt, or its equivalent, Money Market Funds (MMF's), and collateralised deposits where the collateral is UK Government Debt ** Dark Pink for Ultra Short Dated Bond Funds with a credit score of 1.25; Light Pink for Ultra Short Dated Bond Funds with a credit score of 1.5 *** Only applies to nationalised or semi-nationalised UK banks Note that the maximum suggested durations listed above have been extended by 1 year (when compared to the suggested maximum durations provided by Link) for the Yellow, Dark Pink, Light Pink categories (and so to 6 years); the Purple category by 6 months to 2.5 years; the Blue and Orange categories by 3 months to 1.25 years; the Red category by a month to 7 months, and the Green category by 20 days to 120 days. This is to allow flexibility around these durations on the margins e.g. the placement of a 13 month fixed term deposit for a counterparty rated Orange or Blue. A thorough appraisal of the additional risk involved in extending the duration of any deposit (marginally) beyond the maximum suggested by Link, against any enhanced value to the portfolio, will be undertaken prior to the placement of any deposit. Page 91 of 270
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1.1 Deposits Investment Category Minimum Credit Criteria Liquidity risk Market risk Max %/£m of total investments Max. maturity period Debt Management Agency Deposit Facility -- Term No 100% 6 months Term deposits – local authorities -- Term No 100% 5 years Call accounts – banks and building societies Green Instant No 100% 1 day Term deposits / Notice Accounts – banks and building societies Yellow Purple Blue Orange Red Green No Colour Term No 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use Fixed term deposits with variable rate and variable maturities: - Structured deposits Yellow Purple Blue Orange Red Green No Colour Term No 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use 1.2 Deposits with counterparties currently in receipt of government support / ownership Investment Category Minimum Credit Criteria Liquidity risk Market risk Max %/£m of total investments Max. maturity period UK nationalised banks – Call accounts Blue Instant No 100% 1 day UK nationalised banks – Term Deposits / Notice Accounts Blue Term No 100% 1.25 years UK nationalised banks – Fixed term deposits with variable rate and variable maturities: - Structured deposits Blue Term No 100% 1.25 years Non-UK(high sovereign rated country) nationalised banks – Call accounts Green Instant No 100% 1 day Non-UK (high sovereign rated country) nationalised banks:- Term Deposits / Notice Accounts Yellow Purple Blue Orange Red Green No Colour Term No 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use Non-UK (high sovereign rated country) nationalised banks:- Fixed term deposits with variable rate and variable maturities: - Structured deposits Yellow Purple Blue Orange Red Green No Colour Term No 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use If forward deposits are made, the forward period plus the deal period equate to the maximum maturity period. Page 92 of 270
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1.3 Collective investment schemes structured as Open Ended Investment Companies (OEICs) Investment Category Minimum Credit Criteria Liquidity risk Market risk Max %/£m of total investments Max. maturity period Government Liquidity Funds AAA Instant No 100% 1 day Money Market Funds CNAV AAA Instant No 100% 1 day Money Market Funds LVNAV AAA Instant No 100% 1 day Money Market Funds VNAV AAA Instant No 100% 1 day Ultra Short Dated Bond Funds with a credit score of 1.25 AAA T+1 to T+5 Yes 100% 1 week Ultra Short Dated Bond Funds with a credit score of 1.5 AAA T+1 to T+5 Yes 100% 1 week Bond Funds AAA T+2 or longer Yes 50% 2 days Gilt Funds AAA T+2 or longer Yes 50% 2 days 1.4 Securities issued or guaranteed by governments Investment Category * Minimum Credit Criteria Liquidity risk Market risk Max %?£m of total investments Max. maturity period Treasury Bills UK sovereign rating Sale T+1 Yes 100% 50 years UK Government Gilts UK sovereign rating Sale T+1 Yes 100% 50 years Bond issuance issued by a financial institution which is explicitly guaranteed by the UK Government e.g. National Rail UK sovereign rating Sale T+3 Yes 100% 50 years Sovereign bond issues (other than the UK govt) AAA (or state your criteria if different) Sale T+1 Yes 100% 50 years Bonds issued by multilateral development banks AAA (or state your criteria if different) Sale T+1 Yes 100% 50 years Page 93 of 270
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1.5 Securities issued by corporate organisations Investment Category * Minimum Credit Criteria Liquidity risk Market risk Max % of total investments Max. maturity period Certificates of deposit issued by banks and building societies Yellow Purple Blue Orange Red Green No Colour Sale T+0 Yes 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use Commercial paper other Yellow Purple Blue Orange Red Green No Colour Sale T+0 Yes 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use Floating rate notes Yellow Purple Blue Orange Red Green No Colour Sale T+2 Yes 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use Corporate Bonds other Yellow Purple Blue Orange Red Green No Colour Sale T+2 Yes 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use 1.6 Other Investment Category Minimum Credit Criteria Liquidity risk Market risk Max %/£m of total investments Max. maturity period Local authority mortgage guarantee scheme. Blue Term No 50% 5 years Loans to Third Parties n/a Term No £25m 25 years Subordinated Debt Subscription to Newbattle Centre SPV n/a Term No £0.326m 22 years Midlothian Energy Limited n/a Term No £10.2m n/a Treasury Risks and Mitigating Controls for each type of investment are as outlined in the Treasury Management & Annual Investment Strategy Statement – 2023/24 Detailed – Appendix 5.3. The Council’s Treasury Management Practices have also been updated in line with the new CIPFA Prudential and Treasury Management Codes which were approved by Audit Committee on 6 December 2022. Page 94 of 270
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Prudential Indicators Appendix 2 1. Prudential Indicators for Affordability These indicators provide an indication of the impact of the capital investment plans on the Council’s overall finances. 1.1 Estimates of Ratio of Financing Costs to Net Revenue Stream This indicator identifies the trend in the cost of capital (borrowing and other long term obligation costs net of investment income) against the net revenue stream. The figures above are based on the current General Services and HRA Capital Plans. 1.2 HRA Ratios The following indicator identifies the ratio of overall debt on the HRA account compared to annual house rent revenue. The following indicator identifies the ratio of overall debt on the HRA account per HRA dwelling. 1.3 Net Income from Service & Commercial Investments as a proportion of Net Revenue Stream A indicator, which is a requirement of the new Prudential Code, identifies the ratio of net income from service and commercial investments as a proportion of the net General Services revenue stream. 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 Actual Estimate Estimate Estimate Estimate Estimate General Services 0.62% 1.30% 2.85% 3.87% 4.90% 4.98% HRA 40.24% 42.80% 44.42% 48.49% 51.95% 53.19% Ratio of Financing Costs to Net Revenue Stream 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 Actual Estimate Estimate Estimate Estimate Estimate HRA debt £000's 246,524£ 277,473£ 343,422£ 399,595£ 426,052£ 440,130£ HRA Revenues £000's 33,162 37,730 41,060 44,266 46,352 48,642 Ratio of HRA Debt to Revenues % 743% 735% 836% 903% 919% 905% HRA Debt as a % of Gross Revenue 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 Actual Estimate Estimate Estimate Estimate Estimate HRA debt £000's 246,524£ 277,473£ 343,422£ 399,595£ 426,052£ 440,130£ Number of HRA dwellings 7,448 7,592 7,747 8,068 8,228 8,253 Debt per dwelling £ 33,099£ 36,548£ 44,330£ 49,528£ 51,781£ 53,330£ HRA Debt per Dwelling 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 Actual £000's Estimate £000's Estimate £000's Estimate £000's Estimate £000's Estimate £000's Income from Service Investments 34 34 34 34 34 34 Net Revenue Stream 257,849 293,755 313,460 318,960 320,210 321,460 % 0.01% 0.01% 0.01% 0.01% 0.01% 0.01% Net Income from Service Investments as a proportion of Net Revenue Stream % Page 96 of 270
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2. Prudential Indicators for Capital Expenditure The Council’s capital expenditure plans are the key driver of treasury management activity. The output of the capital expenditure plans is reflected in the prudential indicators, which are designed to assist members’ overview and confirm capital expenditure plans. 2.1 Estimated Capital Expenditure This indicator shows the gross capital spend included in the relevant capital plans. 2.2 Financing of Capital Expenditure This indicator shows how the Capital Expenditure forecasts are being financed by capital or revenue resources. Any shortfall of resources results in a funding borrowing need. 2.3 Estimated Capital Financing Requirement This indicator measures the Council’s maximum underlying need to borrow for capital purposes and other long term liabilities over the next three years. 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's General Services Children, Young People & Estates 26,241£ 21,547£ 52,177£ 101,332£ 63,822£ 4,572£ Asset Management 10,897£ 15,736£ 18,639£ 12,063£ 12,160£ 8,800£ Transport, Energy & Infrastructure 2,340£ 3,841£ 3,370£ 5,308£ 2,233£ 428£ Regeneration & Development 6,263£ 13,706£ 17,648£ 12,097£ 10,509£ -£ Other 1,915£ 1,623£ 1,257£ 697£ 698£ 621£ Provision for return of contingencies -£ (2,539)£ (1,411)£ (2,327)£ (3,287)£ (2,236)£ Total General Services 47,656£ 53,913£ 91,680£ 129,170£ 86,134£ 12,185£ Total HRA 50,412£ 47,429£ 80,242£ 72,003£ 44,139£ 28,826£ Combined Total 98,068£ 101,342£ 171,922£ 201,173£ 130,273£ 41,011£ Capital Expenditure 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's Capital Expenditure General Services 47,656£ 53,913£ 91,680£ 129,170£ 86,134£ 12,185£ HRA 50,412£ 47,429£ 80,242£ 72,003£ 44,139£ 28,826£ Total 98,068£ 101,342£ 171,922£ 201,173£ 130,273£ 41,011£ Financed by: Capital receipts -£ -£ -£ -£ -£ -£ Capital grants 33,539£ 25,462£ 22,467£ 22,602£ 18,712£ 13,774£ Capital reserves -£ -£ -£ -£ -£ -£ Developer/Other Contributions 88£ 6,578£ 13,606£ 17,405£ 4,767£ 4,031£ Net financing need for the year 64,441£ 69,303£ 135,849£ 161,165£ 106,795£ 23,206£ Capital Expenditure and Available Financing Page 97 of 270
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3. Prudential Indicators for Prudence 3.1 Net Borrowing Requirement This indicator shows the amount of external borrowing required to finance the current debt outstanding on capital projects. 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's Capital Financing Requirement CFR – General Services 169,764£ 202,314£ 261,535£ 354,416£ 421,043£ 415,061£ CFR – HRA 246,524£ 277,473£ 343,422£ 399,595£ 426,052£ 440,130£ CFR – PFI Schemes 88,739£ 84,815£ 80,661£ 76,277£ 71,663£ 66,819£ Total CFR 505,027£ 564,602£ 685,618£ 830,288£ 918,758£ 922,010£ Movement in CFR 102,163£ 59,575£ 121,016£ 144,670£ 88,470£ 3,251£ Movement in CFR represented by Net financing need for the year (previous table) 64,441£ 69,303£ 135,849£ 161,165£ 106,795£ 23,206£ MEL Shareholder Injection -£ 4,590£ -£ -£ -£ -£ Less Scheduled Debt Amortisation (9,494)£ (10,394)£ (10,679)£ (12,111)£ (13,711)£ (15,111)£ Less net PFI Finance Lease Principal Payments (3,694)£ (3,924)£ (4,154)£ (4,384)£ (4,614)£ (4,844)£ Movement in CFR 51,253£ 59,575£ 121,016£ 144,670£ 88,470£ 3,251£ Capital Financing Requirement (CFR) 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's External Debt Debt at 1 April 321,753£ 340,871£ 394,445£ 528,600£ 684,328£ 777,161£ Actual/Expected change in Debt 19,118£ 53,574£ 134,155£ 155,728£ 92,833£ 8,054£ Other long-term liabilities (OLTL) at 1 April 92,433£ 88,739£ 84,815£ 80,661£ 76,277£ 71,663£ Actual/Expected change in OLTL (3,694)£ (3,924)£ (4,154)£ (4,384)£ (4,614)£ (4,844)£ Actual/Expected Gross Debt at 31 March 429,610£ 479,260£ 609,261£ 760,605£ 848,824£ 852,035£ The Capital Financing Requirement 505,027£ 564,602£ 685,618£ 830,288£ 918,758£ 922,010£ Under / (over) borrowing 75,417£ 85,342£ 76,357£ 69,683£ 69,934£ 69,975£ Deposits Cash & Cash Equivalents 26,619£ 20,000£ 20,000£ 20,000£ 20,000£ 20,000£ Short-Term Investments 30,000£ -£ -£ -£ -£ -£ Total Deposits 56,619£ 20,000£ 20,000£ 20,000£ 20,000£ 20,000£ Net Borrowing Requirement Page 98 of 270
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4. Prudential Indicators for External Debt 4.1 Operational Boundary This is the limit beyond which external debt is not normally expected to exceed and will be the focus of day to day treasury management. Typically, this would be a similar figure to the CFR, but may be lower or higher depending on the levels of actual debt. For this Council:- • the Operational Boundary for Borrowing has been calculated to equate directly to the value of the CFR for General Services and HRA combined, over the current financial year and the following 4 financial years (2024/25 to 2028/29); and • the Operational Boundary for Other Long-Term Liabilities has been calculated to equate directly to the in-year CFR for Other Long-Term Liabilities, given the known contractual provisions for the repayment of debt within the Council’s two PPP agreements. Should the Operational Boundary be breached, for example as a result of a decision taken to borrow in advance (should market conditions indicate that it is prudent to do so), this will be reported to Council at the next available opportunity. 4.2 Authorised Limit of Total External Debt This indicator sets the limit for total external debt. The Authorised Limit for Borrowing for the 2025/26 financial year has been calculated to equate to the maximum value of the Underlying Borrowing Requirement in 2025/26. This equates to £604.957 million as outlined below. 2024/25 2025/26 2026/27 2027/28 2028/29 Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's Operational Boundary - Borrowing 479,787£ 604,957£ 754,011£ 847,095£ 855,191£ Operational Boundary - Other long term liabilities 84,815£ 80,661£ 76,277£ 71,663£ 66,819£ Total 564,602£ 685,618£ 830,288£ 918,758£ 922,010£ Operational Boundary £000's CFR - General Services at 31 March 2026 261,535£ CFR - HRA at 31 March 2026 343,422£ Authorised Limit for Borrowing 604,957£ Authorised Limit for Borrowing Page 99 of 270
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5. Prudential Indicators for Treasury Management 5.1 Upper limits on Fixed and Variable Interest Rates This indicator limits the amount of external debt that may be held at fixed or variable rates. These limits are proposed to be as follows:- 5.2 Maturity Structure of Borrowing This indicator sets the upper and lower limits of the time scales within which external debt may be held. The Treasury Management Code of Practice requires that LOBO’s with a call date in the next 12 months are classified as short-term borrowing rather than longer-term (10 year+) borrowing. In addition, the Code also recommends that where an authority’s debt is typically very long term (i.e. for a period of greater than 10 years), that authorities should break down the period in excess of 10 years into several ranges, for example 10 to 20 years, 20 to 30 years, etc. With the above in mind, the proposed upper and lower limits for each maturity band are shown below, with the overall aim to ensure a spreading approach to avoid a cluster of high value loans maturing/requiring refinancing within a short period of time. Limits on fixed interest rates based on gross debt 100.00% Limits on variable interest rates based on gross debt 30.00% Limits on fixed interest rates based on investments 100.00% Limits on variable interest rates based on investments 100.00% Upper Limits on Exposure to Fixed and Variable Interest Rates 2025/26 Interest rate exposures Upper Limit Page 100 of 270
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5.4 Total Principal Sums Invested for Periods Longer than 365 Days This indicator relates to the total level of investments held for periods longer than 365 days. The current strategy as outlined in the body of these reports is to continue to cash-back the Council’s balance sheet reserves. It is expected that the majority of this will be in the form of fixed term deposits and/or certificates of deposit. Given expected reserve forecasts and the current interest rate environment, in particular the short-medium term forecast for the Council’s Capital Fund and HRA Reserve, the limit for prinicipal sums invested for > 365 days has been retained at £70m. For its cash flow generated balances, the Council will seek to utilise its business reserve instant access accounts and money market funds. 5.5 Liability Benchmark The “Liability Benchmark” identifies future borrowing needs across the short, medium and longer terms, against the maturity profile of the Council’s existing loan portfolio. The Council’s Liability Benchmark in graphical format is as shown below. Maturity structure of fixed interest rate borrowing 2025/26 Lower Upper 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% Maturity structure of variable interest rate borrowing 2025/26 Lower Upper 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 30 years to 40 years Under 12 months 12 months to 2 years 50 years and above 40 years to 50 years Maturity Structure of Borrowing 2025/26 5 years to 10 years 10 years to 20 years 20 years to 30 years 30 years to 40 years 40 years to 50 years 50 years and above Under 12 months 12 months to 2 years 2 years to 5 years 2 years to 5 years 5 years to 10 years 10 years to 20 years 20 years to 30 years Limit £70m Principal Sums Invested for > 365 Days Page 101 of 270
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There are four components to the Liability Benchmark: - 1 Existing loan debt outstanding: the Council’s existing loans that are still outstanding in future years – shown as the stacked bar elements of the figure above. 2 Loans CFR: this is calculated in accordance with the loans CFR definition in the Prudential Code and projected into the future based on approved prudential borrowing and planned Loans Fund advances/Loans Fund principal repayments. 3 Net loans requirement: this shows the Council’s gross loan debt less treasury management investments at the last financial year-end, projected into the future and based on its approved prudential borrowing, planned Loans Fund principal repayments and any other major cash flows (drawdowns/enhancement of reserves) forecast. 4 Liability benchmark (or gross loans requirement): this equals net loans requirement plus short-term liquidity/working capital allowance. The Liability Benchmark Indicator identifies the Council’s expected future capital financing requirement, as driven by the Council’s approved Capital Plans – and therefore the Council’s future borrowing needs; along with how this matches to the existing debt maturity profile. It is therefore a key tool to support the financing risk management of the capital financing requirement. As can be noted from the figure above, the Council has a significant borrowing requirement (which equates to £448.393 million) in the short-medium term, arising as a direct result of the Council’s approved Capital Plans. The proposed approach to securing this borrowing need for the 2025/26 financial year is outlined in the main body of this report, Section 4.3. The Liability Benchmark also outlines the profile of the Council’s CFR over the medium-long term, against the Council’s existing debt portfolio maturity profile. As can be seen from the figure above, the profile of the CFR movements in the medium-long term broadly matches the movements in the Councils external debt portfolio over this period. Page 102 of 270
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The Debt Liability Benchmark will assist the Council with plotting the tenor of borrowing to finance the Council’s approved capital plans that is undertaken in the remainder of 2024/25 and the forthcoming 2025/26 period, to ensure that this aligns with the Council’s future expected CFR profile and Liability Benchmark projections, taking into account the profile of existing loan maturities as identified in the figure above. Page 103 of 270
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Appendix 3 Treasury Management Strategy Statement and Annual Investment Strategy Midlothian Council 2025/26 Page 104 of 270
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INDEX 1 INTRODUCTION ............................................................................................................................ 3 1.1 Background ............................................................................................................................................... 3 1.2 Reporting requirements ............................................................................................................................ 3 1.3 Treasury Management Strategy for 2025/26 ........................................................................................... 5 1.4 Training ...................................................................................................................................................... 5 1.5 Treasury management consultants .......................................................................................................... 6 2 THE CAPITAL PRUDENTIAL INDICATORS 2025/26 – 2028/29 ............................................. 7 2.1 Capital expenditure ................................................................................................................................... 7 2.2 The Council’s borrowing need (the Capital Financing Requirement) ...................................................... 8 3 Borrowing .................................................................................................................................... 11 3.1 Current portfolio position ......................................................................................................................... 11 3.2 Treasury Indicators: limits to borrowing activity ...................................................................................... 13 3.3 Prospects for interest rates ..................................................................................................................... 14 3.4 Borrowing strategy .................................................................................................................................. 16 3.5 Policy on borrowing in advance of need ................................................................................................. 20 3.6 Debt rescheduling ................................................................................................................................... 20 4 ANNUAL INVESTMENT STRATEGY ........................................................................................ 21 4.1 Investment policy ..................................................................................................................................... 21 4.2 Creditworthiness policy ........................................................................................................................... 23 4.3 Country and sector limits ......................................................................................................................... 24 4.4 Investment strategy ................................................................................................................................. 25 4.5 Investment risk benchmarking ................................................................................................................ 26 4.6 End of year investment report ................................................................................................................. 26 5 Appendices .................................................................................................................................. 27 5.1 APPENDIX: Economic Background ....................................................................................................... 28 5.2 APPENDIX: Treasury Management Practice (TMP1): Permitted Investments .................................... 28 5.3 APPENDIX: Treasury Management Practice (TMP1) – Credit and Counterparty Risk Management 41 5.4 APPENDIX: Approved countries for investments .................................................................................. 47 5.5 APPENDIX: Treasury management scheme of delegation .................................................................. 48 5.6 APPENDIX: The treasury management role of the section 95 officer .................................................. 49 Page 105 of 270
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3 1 INTRODUCTION 1.1 Background The main function of the treasury management service is the funding of the Council’s capital plans. These capital plans provide a guide to the borrowing need of the Council, essentially the longer term cash flow planning to ensure that the Council can meet its capital spending obligations. This management of longer term cash may involve arranging long or short term loans, or using longer term cash flow surpluses. On occasion any debt previously drawn may be restructured to meet Council risk or cost objectives. The Council is required to operate a balanced budget, which broadly means that cash raised during the year will meet cash expenditure. As such, the second part of the treasury management operation is to ensure that this cash flow is adequately planned, with cash being available when it is needed. Surplus monies are deposited with low risk counterparties or instruments commensurate with the Council’s low risk appetite, providing adequate liquidity initially before considering investment return. The contribution the treasury management function makes to the authority is critical, as the balance of debt and investment operations ensure liquidity or the ability to meet spending commitments as they fall due, either on day-to-day revenue or for larger capital projects. The treasury operations will see a balance of the interest costs of debt and the investment income arising from cash deposits affecting the available budget. Since cash balances generally result from reserves and balances, it is paramount to ensure adequate security of the sums invested, as a loss of principal will in effect result in a loss to the General Fund Balance. Whilst any loans to third parties, commercial investment initiatives or other non-financial investments will impact on the treasury function, these activities are generally classed as non-treasury activities, (arising usually from capital expenditure),and are separate from the day to day treasury management activities. CIPFA defines treasury management as: “The management of the local authority’s borrowing, investments and cash flows, its banking, money market and capital market transactions; the effective control of the risks associated with those activities; and the pursuit of optimum performance consistent with those risks.” Whilst any commercial initiatives or loans to third parties will impact on the treasury function, these activities are generally classed as non-treasury activities, (arising usually from capital expenditure), and are separate from the day-to-day treasury management activities 1.2 Reporting requirements 1.2.1 Capital Strategy The CIPFA Prudential and Treasury Management Codes require all local authorities to prepare an additional report, a capital strategy report, which provides the following: • a high-level long term overview of how capital expenditure, capital financing and treasury management activity contribute to the provision of services • an overview of how the associated risk is managed • the implications for future financial sustainability Page 106 of 270
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4 The aim of the capital strategy is to ensure that all elected members on the full council fully understand the overall long-term policy objectives and resulting capital strategy requirements, governance procedures and risk appetite. 1.2.2 Treasury Management Reporting The Council is required to receive and approve, as a minimum, three main reports each year, which incorporate a variety of polices, estimates and actuals. a) Prudential and treasury indicators and treasury strategy (this report) - The first, and most important report covers: • the capital plans (including prudential indicators) for 2024/25 to 2028/29; • a policy for the statutory repayment of debt, (how residual capital expenditure is charged to revenue over time); • the treasury management strategy (how the investments and borrowings are to be organised) for 2025/26, including treasury indicators; and • a permitted investment strategy for 2025/26 (the parameters on how investments are to be managed). b) A mid year treasury management report – This will update members with the progress of the capital position, amending prudential indicators as necessary, and whether the actual treasury strategy is meeting the strategy outlined in advance of the year, or whether any policies require revision. c) An annual treasury outturn report – This provides details of a selection of actual prudential and treasury indicators for the previous financial year and actual treasury operations compared to the estimates within the strategy. Scrutiny The above reports are required to be adequately scrutinised before being recommended to the Council. This role is undertaken by the Audit Committee with this report being presented to Audit Committee prior to consideration by Council. Any revisions arising from Audit Committee consideration of the report on 24 February 2025 will be verbally updated to Council before discussing the report on 25 February 2025. Page 107 of 270
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5 1.3 Treasury Management Strategy for 2025/26 The strategy for 2025/26 covers two main areas: Capital issues • the capital expenditure plans and the prudential indicators (Section 2 of this report); • The policy for the statutory repayment of loans fund advance (Section 2.4 of this report). Treasury management issues • policy on use of external service providers (Section 1.5); • the current treasury position (Section 3.1); • treasury indicators which limit the treasury risk and activities of the Council (Section 3.2); • prospects for interest rates (Section 3.3); • the borrowing strategy (Section 3.4); • policy on borrowing in advance of need (Section 3.5); • debt rescheduling (Section 3.6); • the investment strategy (Section 4.1); and • creditworthiness policy (Section 4.2). These elements cover the requirements of the Local Government in Scotland Act 2003, the CIPFA Prudential Code, the CIPFA Treasury Management Code and The Scottish Government Local Authority (Capital Finance & Accounting) (Scotland) Regulations 2016. 1.4 Training The CIPFA Code requires the responsible officer to ensure that members with responsibility for treasury management receive adequate training in treasury management. This especially applies to members responsibe for scrutiny. Furthermore, pages 47 and 48 of the Code state that they expect “all organisations to have a formal and comprehensive knowledge and skills or training policy for the effective acquisition and retention of treasury management knowledge and skills for those responsible for management, delivery, governance and decision making. Organisations need to consider how to assess whether treasury management staff and board/ council members have the required knowledge and skills to undertake their roles and whether they have been able to maintain those skills and keep them up to date. As a minimum, authorities should carry out the following to monitor and review knowledge and skills: • Record attendance at training. • Prepare tailored learning plans for treasury management officers and board/council members. • Require treasury management officers and board/council members to undertake self-assessment against the required competencies. • Have regular communication with officers and board/council members, encouraging them to highlight training needs on an ongoing basis.” In further support of the revised training requirements, CIPFA’s Better Governance Forum and Treasury Management Network have produced a ‘self-assessment by members responsible for the scrutiny of treasury management’, which is available from the CIPFA Page 108 of 270
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6 website to download. This was presented to members of the Audit Committee and Council as part of the Council’s Treasury Management 2021-22 Mid-Year Review Report. A formal record of Knowledge & Skills Schedule has been developed as part of the Council’s Treasury Management Practices. This will be periodically reviewed to assess suitability, and updated to reflect ongoing training, knowledge and skills gained. Similarly, a formal record of the treasury management/capital finance training received by members will also be periodically reviewed and updated. 1.5 Treasury management consultants The Council uses MUFG Corporate Markets (former Link, Treasury Solutions Limited) as its external treasury management advisors. The Council recognises that responsibility for treasury management decisions remains with the organisation at all times and will ensure that undue reliance is not placed upon our external service providers. All decisions will be undertaken with regards to all available information, including, but not solely, our treasury advisers. It also recognises that there is value in employing external providers of treasury management services in order to acquire access to specialist skills and resources. The Council will ensure that the terms of their appointment and the methods by which their value will be assessed are properly agreed and documented, and subjected to regular review. Page 109 of 270
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7 2 THE CAPITAL PRUDENTIAL INDICATORS 2024/25 – 2028/29 The Council’s capital expenditure plans are the key driver of treasury management activity. The output of the capital expenditure plans is reflected in the prudential indicators, which are designed to assist members’ overview and confirm capital expenditure plans. 2.1 Capital expenditure This prudential indicator is a summary of the Council’s capital expenditure plans, both those agreed previously, and those forming part of this budget cycle. The table below summarises the Capital Expenditure forecasts:- The table below shows how the Capital Expenditure forecasts are being financed by capital or revenue resources. Any shortfall of resources results in a funding borrowing need. Members are asked to approve the capital expenditure forecasts and the financing of these forecasts:- Note: The above financing need excludes other long term liabilities, such as PFI and leasing arrangements which already include borrowing instruments. 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's General Services Children, Young People & Estates 26,241£ 21,547£ 52,177£ 101,332£ 63,822£ 4,572£ Asset Management 10,897£ 15,736£ 18,639£ 12,063£ 12,160£ 8,800£ Transport, Energy & Infrastructure 2,340£ 3,841£ 3,370£ 5,308£ 2,233£ 428£ Regeneration & Development 6,263£ 13,706£ 17,648£ 12,097£ 10,509£ -£ Other 1,915£ 1,623£ 1,257£ 697£ 698£ 621£ Provision for return of contingencies -£ (2,539)£ (1,411)£ (2,327)£ (3,287)£ (2,236)£ Total General Services 47,656£ 53,913£ 91,680£ 129,170£ 86,134£ 12,185£ Total HRA 50,412£ 47,429£ 80,242£ 72,003£ 44,139£ 28,826£ Combined Total 98,068£ 101,342£ 171,922£ 201,173£ 130,273£ 41,011£ Table 1: Capital Expenditure 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's Capital Expenditure General Services 47,656£ 53,913£ 91,680£ 129,170£ 86,134£ 12,185£ HRA 50,412£ 47,429£ 80,242£ 72,003£ 44,139£ 28,826£ Total 98,068£ 101,342£ 171,922£ 201,173£ 130,273£ 41,011£ Financed by: Capital receipts -£ -£ -£ -£ -£ -£ Capital grants 33,539£ 25,462£ 22,467£ 22,602£ 18,712£ 13,774£ Capital reserves -£ -£ -£ -£ -£ -£ Developer/Other Contributions 88£ 6,578£ 13,606£ 17,405£ 4,767£ 4,031£ Net financing need for the year 64,441£ 69,303£ 135,849£ 161,165£ 106,795£ 23,206£ Table 2: Capital Expenditure and Available Financing Page 110 of 270
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8 2.2 The Council’s borrowing need (the Capital Financing Requirement) The second prudential indicator is the Council’s Capital Financing Requirement (CFR). The CFR is simply the total historic outstanding capital expenditure which has not yet been paid for from either revenue or capital resources. It is essentially a measure of the Council’s underlying borrowing need. Any capital expenditure above, which has not immediately been paid for (financed), will increase the CFR. The CFR does not increase indefinitely, as annual repayments from revenue need to be made which reflect the useful life of capital assets financed from borrowing. From 1st April 2016, Local Authorities may choose whether to use scheduled debt amortisation (loans pool charges) or another suitable method of calculation in order to repay borrowing. The CFR includes any other long term liabilities (e.g. PFI schemes, finance leases). Whilst these increase the CFR, and therefore the Council’s borrowing requirement, these types of scheme already include a borrowing facility and so the Council is not required to separately borrow for these schemes. The Council currently has £88.739m of such schemes within the CFR. The Council is asked to approve the CFR projections below: A key aspect of the regulatory and professional guidance is that elected members are aware of the size and scope of any commercial activity in relation to the authority’s overall financial position. The capital expenditure figures shown in 2.1 and the details above demonstrate the scope of this activity and, by approving these figures, consider the scale proportionate to the Authority’s remaining activity. 2.3 Liability Benchmark A third prudential indicator is the Debt Liability Benchmark (LB). The Authority is required to estimate and measure the LB for the forthcoming financial year and the following two financial years, as a minimum. There are four components to the Liability Benchmark: - 1 Existing loan debt outstanding: the Council’s existing loans that are still outstanding in future years. 2 Loans CFR: this is calculated in accordance with the loans CFR definition in the Prudential Code and projected into the future based on approved prudential borrowing and planned Loans Fund advances/Loans Fund principal repayments. 3 Net loans requirement: this shows the Council’s gross loan debt less treasury management investments at the last financial year-end, projected into the future and based on its approved prudential borrowing, planned Loans Fund principal repayments and any other major cash flows (drawdowns/enhancement of reserves) forecast. 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's Capital Financing Requirement CFR – General Services 169,764£ 202,314£ 261,535£ 354,416£ 421,043£ 415,061£ CFR – HRA 246,524£ 277,473£ 343,422£ 399,595£ 426,052£ 440,130£ CFR – PFI Schemes 88,739£ 84,815£ 80,661£ 76,277£ 71,663£ 66,819£ Total CFR 505,027£ 564,602£ 685,618£ 830,288£ 918,758£ 922,010£ Movement in CFR 102,163£ 59,575£ 121,016£ 144,670£ 88,470£ 3,251£ Movement in CFR represented by Net financing need for the year (previous table) 64,441£ 69,303£ 135,849£ 161,165£ 106,795£ 23,206£ MEL Shareholder Injection -£ 4,590£ -£ -£ -£ -£ Less Scheduled Debt Amortisation (9,494)£ (10,394)£ (10,679)£ (12,111)£ (13,711)£ (15,111)£ Less net PFI Finance Lease Principal Payments (3,694)£ (3,924)£ (4,154)£ (4,384)£ (4,614)£ (4,844)£ Movement in CFR 51,253£ 59,575£ 121,016£ 144,670£ 88,470£ 3,251£ Table 3: Capital Financing Requirement (CFR) Page 111 of 270
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9 4 Liability benchmark (or gross loans requirement): this equals net loans requirement plus short-term liquidity/working capital allowance. 2.4 Core funds and expected investment balances The application of resources (capital receipts, reserves etc.) to either finance capital expenditure or other budget decisions to support the revenue budget will have an ongoing impact on investments unless resources are supplemented each year from new sources (asset sales etc.). Detailed below are estimates of the year- end balances for each resource and anticipated day-to-day cash flow balances. *Working capital balances shown are estimated year-end; these may be higher mid-year 2.5 Statutory repayment of loans fund advances Under the Local Government Finance Circular 7/2016, Council is now required to set out its policy for the statutory repayment of loans fund advances prior to the start of each financial year. The repayment of loans fund advances ensures that the Council makes a prudent provision each year to pay off an element of the accumulated loans fund advances made in previous financial years. 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's HRA Balances 32,143£ 35,352£ 35,351£ 35,660£ 36,011£ 36,152£ General Fund Balances 9,877£ 7,000£ 5,000£ 5,000£ 5,000£ 5,000£ Earmarked reserves 24,317£ 13,767£ 6,883£ -£ -£ -£ Provisions 4,138£ 3,900£ 3,800£ 3,700£ 3,600£ 3,500£ Capital Fund 20,107£ 18,137£ 18,137£ 18,137£ 18,137£ 18,137£ Total Reserves / Core Funds 90,582£ 78,156£ 69,171£ 62,497£ 62,748£ 62,789£ Reserve Table 4: Balance Sheet Resources Page 112 of 270
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10 It is proposed to retain the methodology adopted in 2024/25 – that is as follows:- New Assets In accordance with Finance Circular 7/2016, for all advances made in relation to the provision of a new asset, the policy will be to defer the commencement of the first principal repayment of the loans fund advance until the financial year following the one in which the asset is first available for use. Prudent Repayment of Loans Fund Advances Finance Circular 7/2016 provides a variety of options to Councils for the profiling of the repayment of each loans fund advance, so long as the principle of prudence is maintained. There are 4 options available: (a) Asset Life method; (b) Statutory method; (c) Depreciation method; and (d) Funding/income profile method. In line with the policy adopted in 2024/25, the Asset Life method shall be used for those assets in Table 5. Table 5: Asset Classes adopting the “Asset Life” method Infrastructure Curren Loans Fund Advance Period New Primary Schools/Extensions 60 New Leisure Centres 60 New Offices 60 Road Upgrades 50 Street Lighting Columns 50 Structures/Bridges 50 Footway/Cyclepaths 50 Town Centre Environmental Improvements 50 New Care Homes 45 Children’s Play Equipment 20 The annual repayments under the “Asset Life” method for those asset classes as noted above will be calculated using the asset lives and will use the annuity method, to ensure consistency of approach with the Statutory method for all other asset classes (see below). The annuity interest rate that will be used to calculate loans fund principal repayments under the “Asset Life” method will be the in-year loans fund rate, which for 2024/25 is currently estimated to be 2.54%. For all other asset classes, the policy will also be to profile the annual repayments under the “Asset Life” method, with the profile also calculated using the annuity method. The annuity interest rate that will be used to calculate loans fund principal repayments under the “Asset Life” method will be the in-year loans fund rate, which for 2024/25 is currently estimated to be 2.54%. Whilst neither the Depreciation nor the Funding/income profile methods are currently proposed, Council officers will continue to monitor whether it is appropriate to use this for future capital projects. IFRS16 The Council will adopt IFRS16 for its statutory accounts for financial year 2024/25. This will bring on balance sheet all operating leases where there is a right of use asset addition. Work is being finalised to quantify the effect of this on the Balance Sheet and the Prudential Indicators, and adjustments to the limits will be included in the Treasury Management Outturn Report to Council in June 2025, and the Treasury Management Mid-Year Review Report to Council in late 2025. Council should note that the on- balance sheet treatment of IFRS16 will have no impact on the Council’s underlying need to borrow for Treasury Management purposes, and therefore no limit on the Authorised Limit for Borrowing of £605.707 million as proposed in this report. Page 113 of 270
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11 3 Borrowing The capital expenditure plans set out in Section 2 provide details of the service activity of the Council. The treasury management function ensures that the Council’s cash is organised in accordance with the the relevant professional codes, so that sufficient cash is available to meet this service activity. This will involve both the organisation of the cash flow and, where capital plans require, the organisation of approporiate borrowing facilities. The strategy covers the relevant treasury / prudential indicators, the current and projected debt positions and the annual investment strategy. 3.1 Treasury management portfolio position The overall treasury management portfolio as at 31 March 2024 and for the position as at 31 January 2025 are shown below for both borrowing and investments. Table 6: Portfolio Position 31 March 2024 and 31 January 2025 The Council’s forward projections for borrowing and investments are summarised below. The table shows the actual external debt (the treasury management operations), against the underlying capital borrowing need (the Capital Financing Requirement - CFR), highlighting any over or under borrowing. Within the range of prudential indicators there are a number of key indicators to ensure that the Council operates its activities within well-defined limits. One of these is that the Council needs to ensure that its gross debt does not, except in the short term, exceed Principal Weighted Principal Weighted Outstanding Average Outstanding Average £000’s Rate £000’s Rate PWLB Annuity 452 8.91% 395 8.91% PWLB Maturity 304,128 3.01% 343,502 3.15% LOBO 20,000 4.51% 20,000 4.51% Market Loans 16,221 2.68% 15,548 2.68% Salix Loans 70 0.00% - 0.00% Total Loans 340,871 3.09% 379,445 3.21% Principal Weighted Principal Weighted Outstanding Average Outstanding Average £000’s Rate £000’s Rate Bank Call Accounts 1,519 5.14% 1,655 4.71% Money Market Funds 25,100 5.29% 23,753 4.72% Bank Fixed Term Deposits 30,000 5.12% 20,000 5.06% Total Deposits 56,619 5.20% 45,408 4.87% 31 January 202531 March 2024 31 March 2024 31 January 2025 Loan Type Deposit Type 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's External Debt Debt at 1 April 321,753£ 340,871£ 394,445£ 528,600£ 684,328£ 777,161£ Actual/Expected change in Debt 19,118£ 53,574£ 134,155£ 155,728£ 92,833£ 8,054£ Other long-term liabilities (OLTL) at 1 April 92,433£ 88,739£ 84,815£ 80,661£ 76,277£ 71,663£ Actual/Expected change in OLTL (3,694)£ (3,924)£ (4,154)£ (4,384)£ (4,614)£ (4,844)£ Actual/Expected Gross Debt at 31 March 429,610£ 479,260£ 609,261£ 760,605£ 848,824£ 852,035£ The Capital Financing Requirement 505,027£ 564,602£ 685,618£ 830,288£ 918,758£ 922,010£ Under / (over) borrowing 75,417£ 85,342£ 76,357£ 69,683£ 69,934£ 69,975£ Deposits Cash & Cash Equivalents 26,619£ 20,000£ 20,000£ 20,000£ 20,000£ 20,000£ Short-Term Investments 30,000£ -£ -£ -£ -£ -£ Total Deposits 56,619£ 20,000£ 20,000£ 20,000£ 20,000£ 20,000£ Table 7: Net Borrowing Requirement Page 114 of 270
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12 the total of the CFR in the preceding year plus the estimates of any additional CFR for 2025/26. The Chief Financial Officer & Section 95 Officer reports that the Council complied with this prudential indicator in the current year and does not envisage difficulties for the future. This view takes into account current commitments, existing plans, and the proposals in this budget report. Page 115 of 270
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13 3.2 Treasury Indicators: limits to borrowing activity The operational boundary This is the limit beyond which external debt is not normally expected to exceed. In most cases, this would be a similar figure to the CFR, but may be lower or higher depending on the levels of actual debt. For this Council:- • the Operational Boundary for Borrowing has been calculated to equate directly to the in-year value of the CFR over the current and following 4 financial years (2024/25 to 2028/29); and • the Operational Boundary for Other Long-Term Liabilities has been calculated to equate directly to the in-year CFR for Other Long-Term Liabilities, given the known contractual provisions for the repayment of debt within the Council’s two PPP agreements. The authorised limit for external debt This indicator sets the limit for total external debt. The Authorised Limit for Borrowing for the 2025/26 financial year has been calculated to equate to the maximum value of the Underlying Borrowing Requirement in 2025/26. This equates to £604.957 million as outlined below. 2024/25 2025/26 2026/27 2027/28 2028/29 Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's Operational Boundary - Borrowing 479,787£ 604,957£ 754,011£ 847,095£ 855,191£ Operational Boundary - Other long term liabilities 84,815£ 80,661£ 76,277£ 71,663£ 66,819£ Total 564,602£ 685,618£ 830,288£ 918,758£ 922,010£ Table 8: Operational Boundary £000's CFR - General Services at 31 March 2026 261,535£ CFR - HRA at 31 March 2026 343,422£ Authorised Limit for Borrowing 604,957£ Table 9: Authorised Limit for Borrowing 394,445 528,600 684,328 777,161 785,216 £- £100,000 £200,000 £300,000 £400,000 £500,000 £600,000 £700,000 £800,000 £900,000 2024/25 2025/26 2026/27 2027/28 2028/29 £000's Financial Year Prudential Indicators for Borrowing External Debt Authorised Limit Underlying Borrowing Requirement / Operational Boundary Page 116 of 270
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14 3.3 Prospects for interest rates The Council has appointed MUFG Corporate Markets as its treasury advisor and part of their service is to assist the Council to formulate a view on interest rates. Link provided the following forecasts for certainty rates (gilt yields plus 80 bps) on 11 November with the next update scheduled for the week commencing 10th February following the Bank of England’s Monetary Policy Committee Meeting on 6th February 2025. MUFG’s revised PWLB rate forecasts below are based on the Certainty Rate (the standard rate minus 20 bps). Following the 30 October Budget, the outcome of the US Presidential election on 6 November, and the 25bps Bank Rate cut undertaken by the Monetary Policy Committee (MPC) on 7 November, MUFG have significantly revised their central forecasts for the first time since May 2024. In summary, the Bank Rate forecast is now 50bps – 75bps higher than was previously the case, whilst the PWLB forecasts have been materially lifted to not only reflect our increased concerns around the future path of inflation, but also the increased level of Government borrowing over the term of the current Parliament. Reflecting on the 30 October Budget, MUFG’s central case is that those policy announcements will be inflationary, at least in the near-term. The Office for Budgetary Responsibility and the Bank of England concur with that view. The latter have the CPI measure of inflation hitting 2.5% y/y by the end of 2024 and staying sticky until at least 2026. The Bank forecasts CPI to be 2.7% y/y (Q4 2025) and 2.2% (Q4 2026) before dropping back in 2027 to 1.8% y/y. The anticipated major investment in the public sector, according to the Bank, is expected to lift UK real GDP to 1.7% in 2025 before growth moderates in 2026 and 2027. The debate around whether the Government’s policies lead to a material uptick in growth primarily focus on the logistics of fast-tracking planning permissions, identifying sufficient skilled labour to undertake a resurgence in building, and an increase in the employee participation rate within the economy. There are inherent risks to all the above. The worst-case scenario would see systemic blockages of planning permissions and the inability to identify and resource the additional workforce required to deliver large-scale IT, housing and infrastructure projects. This would lead to upside risks to inflation, an increased prospect of further Government borrowing & tax rises, and a tepid GDP performance. MUFG’s central view is that monetary policy is sufficiently tight at present to cater for some further moderate loosening, the extent of which, however, will continue to be data dependent. MUFG forecast the next reduction in Bank Rate to be made in February (MPC meeting on 06/02/2025) and for a pattern to evolve whereby rate cuts are made quarterly and in keeping with the release of the Bank’s Quarterly Monetary Policy Reports (February, May, August and November). Any movement below a 4% Bank Rate will, nonetheless, be very much dependent on inflation data in the second half of 2025. The fact that the November MPC rate cut MUFG Corporate Markets Interest Rate View Mar-25 Jun-25 Sep-25 Dec-25 Mar-26 Jun-26 Sep-26 Dec-26 Mar-27 Jun-27 Sep-27 Dec-27 BANK RATE 4.50 4.25 4.00 4.00 3.75 3.75 3.75 3.50 3.50 3.50 3.50 3.50 3 month average earnings 4.50 4.30 4.00 4.00 4.00 3.80 3.80 3.80 3.50 3.50 3.50 3.50 6 month average earnings 4.40 4.20 3.90 3.90 3.90 3.80 3.80 3.80 3.50 3.50 3.50 3.50 12 month average earnings 4.40 4.20 3.90 3.90 3.80 3.80 3.80 3.80 3.50 3.50 3.50 3.50 5 year PWLB 4.90 4.80 4.60 4.50 4.50 4.40 4.30 4.20 4.10 4.00 4.00 3.90 10 year PWLB 5.10 5.00 4.80 4.80 4.70 4.50 4.50 4.40 4.30 4.20 4.20 4.10 25 year PWLB 5.50 5.40 5.30 5.20 5.10 5.00 4.90 4.80 4.70 4.60 4.50 4.50 50 year PWLB 5.30 5.20 5.10 5.00 4.90 4.80 4.70 4.60 4.50 4.40 4.30 4.30 Page 117 of 270
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15 decision saw a split vote of 8-1 confirms that there are already some concerns around inflation’s stickiness, and with recent public sector wage increases beginning to funnel their way into headline average earnings data, the market will be looking very closely at those releases. Regarding the PWLB forecast, the short to medium part of the curve is forecast to remain elevated over the course of the next year, and the degree to which rates moderate will be tied to the arguments for further Bank Rate loosening or otherwise. The longer part of the curve will also be impacted by inflation factors, but there is also the additional concern that with other major developed economies such as the US and France looking to run large budget deficits there could be a glut of government debt issuance that investors will only agree to digest if the interest rates paid provide sufficient reward for that scenario. Donald Trump’s victory in the US Election paves the way for the introduction/extension of tariffs that could prove inflationary whilst the same could be said of further tax cuts and an expansion of the current US budget deficit. Invariably the direction of US Treasury yields in reaction to his core policies will, in all probability, impact UK gilt yields. So, there are domestic and international factors that could impact PWLB rates whilst, as a general comment, geo-political risks abound in Europe, the Middle East and Asia. The MPC voted by 7-2 on 6 February 2025 to cut the Bank of England’s base rate by 0.25% to 4.50%. However, the other two votes were for base rate to be cut by 0.50% which is a very dovish outlook – with the prospect that yields will now fall. A more detailed interest rate view and economic commentary is provided at appendix 5.1. Page 118 of 270
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16 3.4 Borrowing strategy Borrowing is undertaken to finance the Council’s approved Capital plans and to do so in the most cost-effective way. As can been noted from Table 4 above the Council has a significant borrowing requirement across the current and forthcoming four financial years (2024/25 to 2028/29). This TMIS provides for this capital investment to be underpinned by long-term borrowing, recognising the current interest rate environment, the significant borrowing requirement arising from the Council’s capital plans, and the long term benefits of de risking the delivery and affordability of these capital plans by locking into the certainty brought by PWLB fixed rate loans. The Council’s external loan debt at 31 March 2025 is projected to be £394.445 million. Based on the Council’s historic and current approved Capital Plans, the Underlying Borrowing Requirement (UBR) – which is the Council’s underlying need to borrow for capital purposes (excluding the long-term liability arising from PFI/DBFM projects) – at 31 March 2025 is expected to equate to £479.787 million. This means that the Council is expected to be £85.342 million (18%) under- borrowed at the end of the 2024/25 financial year i.e. the Council has funded the majority (82%) of its underlying borrowing requirement as at 31 March 2025. In the current economic climate, this is a prudent approach which balances (a) de-risking the longer term borrowing requirement at current longer term borrowing rates; against (b) the current year and forthcoming financial year budget projections. The Council has a relatively low short-medium term exposure to refinancing risk and is therefore in a strong position to plan its new borrowing requirements in advance, taking advantage of any dips in longer-term borrowing rates from PWLB and other sources, and maintain a low weighted average coupon rate on external debt. The Underlying Borrowing Requirement is projected to rise to £855.191 million by 31 March 2029 – more than double the current external debt portfolio value. The profile of this, and the projected external loan portfolio to fund the Underlying Borrowing Requirement over the period 2024/25 to 2028/29, is shown in graphical format below. Figure 3: Loan Portfolio & Underlying Borrowing Requirement Interest Rates The current PWLB yield curve is bell shaped with the low point in the curve at the 3 year mark (4.90%; certainty rate) with rates trending upwards towards the 20-30 year tenor (high point of 5.86%) before easing back slightly to sit at c. 5.55% in the 50 year duration. Page 119 of 270
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17 Current PWLB rates have generally increased by c. 50bps across the entire curve from levels reported at the time of the 2024/25 TMIS to Council in February 2024, and have shifted upwards by 25-35bps across the medium to long part of the curve since the TM Mid Year Review Report to Council in December 2024 whilst holding fairly steady at the very short (up to 7 year) range. The yield curve is expected to remain bell shaped over the short-medium term, with a gradual shift downwards of the entire curve by c. 40bps over the next 12 months, a further 40bps over the subsequent 12 months and a further 20bps over the following 12 months of the forecast period (so 100bps total). This is forecast to bring longer-term borrowing rates down from between 5.30%- 5.50%, to between:- • 4.90%-5.10% by March 2026; • 4.50%-4.70% by March 2027; and • 4.30%-4.50% by March 2028. The Interest Rate Forecast from the Council’s Treasury Advisers, MUFG Corporate Markets, is shown in Table 5 below, with Further commentary on this is provided in Appendix 3 Section 3.3. Table 5: MUFG Interest Rate Forecasts The funding of the Council’s in-year and forward CFR is typically for infrastructure with long asset lives (50-60 years), and the tenor of PWLB and market loans are typically drawn with this in mind. Borrowing Strategy Consideration for any new borrowing in the remainder of the 2024/25 financial year and during the 2025/26 financial year, to fund the Council’s in-year CFR, will seek to balance:- a) the security/certainty of current relatively high longer-term borrowing rates of upwards of 5.30% in the 30-50 year duration (which are forecast to drop by 40bps within one year and a total of 80bps within 24 months) and the potential additional budgetary pressure that this brings in both the short/medium and longer term; with b) the option to borrow initially for a shorter-term duration from PWLB or other markets, for 3 to 5 years (at say c. 4.50% at the HRA rate), to allow the Council to fund the immediate in-year borrowing requirement. Based on current interest rate forecasts (see Appendix 3 Section 3.3), this would then allow the Council the option to refinance this borrowing at initial 3-5 year maturity with less expensive, longer term borrowing, e.g. a 45 to 47 year tenor in, say, 36 months at a forecast rate of c. 4.30%. As noted in Section 3.1 of the main body of this report, the Council’s proactive Treasury Management over the last decade has put the Council in a strong refinancing MUFG Corporate Markets Interest Rate View Mar-25 Jun-25 Sep-25 Dec-25 Mar-26 Jun-26 Sep-26 Dec-26 Mar-27 Jun-27 Sep-27 Dec-27 BANK RATE 4.50 4.25 4.00 4.00 3.75 3.75 3.75 3.50 3.50 3.50 3.50 3.50 3 month average earnings 4.50 4.30 4.00 4.00 4.00 3.80 3.80 3.80 3.50 3.50 3.50 3.50 6 month average earnings 4.40 4.20 3.90 3.90 3.90 3.80 3.80 3.80 3.50 3.50 3.50 3.50 12 month average earnings 4.40 4.20 3.90 3.90 3.80 3.80 3.80 3.80 3.50 3.50 3.50 3.50 5 year PWLB 4.90 4.80 4.60 4.50 4.50 4.40 4.30 4.20 4.10 4.00 4.00 3.90 10 year PWLB 5.10 5.00 4.80 4.80 4.70 4.50 4.50 4.40 4.30 4.20 4.20 4.10 25 year PWLB 5.50 5.40 5.30 5.20 5.10 5.00 4.90 4.80 4.70 4.60 4.50 4.50 50 year PWLB 5.30 5.20 5.10 5.00 4.90 4.80 4.70 4.60 4.50 4.40 4.30 4.30 Page 120 of 270
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18 position for its external debt portfolio which allows the Council to slot in shorter dated external borrowing into the current debt maturity profile to fund the current & forthcoming in-year borrowing requirements, to allow the Council to navigate past the current expected hump in longer-term borrowing rates. It is expected that any further long-term borrowing that is undertaken during 2024/25 and 2025/26 to finance the current & future year capital plans will be sourced by drawing new PWLB loans at the Certainty Rate (which has been available to the Council since 2012 and is priced at Gilts+80bps), and/or the HRA rate. The HRA rate is available to all Councils to fund HRA capital expenditure, at a rate that is priced at Gilts+40bps. In the UK Budget in October 2024, the availability over which Councils can draw HRA rate borrowing from PWLB was extended to 31 March 2026. Both the General Services and HRA capital programmes are being kept under regular review due to the effects of inflationary pressures, shortages of materials and labour, and the ratios of financing costs to the net revenue streams. The Council’s borrowing strategy will, therefore, also be regularly reviewed and then revised, if necessary, to achieve optimum value and risk exposure in the medium-long-term. The impact particularly of the General Services Capital Plan Prioritisation – which is also reported to Council on today’s agenda – will have a bearing on this. Appendix 3 Section 3.3 provides forecasts for interest rates from the Council’s Treasury Management advisor, MUFG Corporate Markets. Council officers, in conjunction with MUFG, will continue to monitor daily long-term borrowing rates in order to take advantage of any dips in the market or to de-risk any change in the medium-longer term forecast for gilt yields. Forward Borrowing The opportunity also continues to exist to consider further loans on a ‘forward dealing’ basis, and officers will continue to explore the viability of these loans as part of securing the long term borrowing required to meet the Council’s Underlying Borrowing Requirement. Treasury management limits on activity There are three debt related treasury activity limits. The purpose of these are to restrain the activity of the treasury function within certain limits, thereby managing risk and reducing the impact of any adverse movement in interest rates. However, if these are set to be too restrictive they will impair the opportunities to reduce costs / improve performance. The indicators are: • Upper limits on variable interest rate exposure. This identifies a maximum limit for variable interest rates for borrowing based upon the gross debt position, and variable interest rates for investments based upon the total investment position; • Upper limits on fixed interest rate exposure. This is similar to the previous indicator and covers a maximum limit on fixed interest rates for both borrowing and investments; • Maturity structure of borrowing. These gross limits are set to reduce the Council’s exposure to large fixed rate sums falling due for refinancing, and are required for upper and lower limits. Page 121 of 270
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19 The Council is asked to approve the following treasury indicators and limits: Limits on fixed interest rates based on gross debt 100.00% Limits on variable interest rates based on gross debt 30.00% Limits on fixed interest rates based on investments 100.00% Limits on variable interest rates based on investments 100.00% Upper Limits on Exposure to Fixed and Variable Interest Rates 2025/26 Interest rate exposures Upper Limit Maturity structure of fixed interest rate borrowing 2025/26 Lower Upper 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% 0.00% 50.00% Maturity structure of variable interest rate borrowing 2025/26 Lower Upper 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 0.00% 30.00% 30 years to 40 years Under 12 months 12 months to 2 years 50 years and above 40 years to 50 years Maturity Structure of Borrowing 2025/26 5 years to 10 years 10 years to 20 years 20 years to 30 years 30 years to 40 years 40 years to 50 years 50 years and above Under 12 months 12 months to 2 years 2 years to 5 years 2 years to 5 years 5 years to 10 years 10 years to 20 years 20 years to 30 years Page 122 of 270
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20 3.5 Policy on borrowing in advance of need The Council will not borrow more than or in advance of its needs purely in order to profit from the investment of the extra sum borrowed. Any decision to borrow in advance will be within forward approved Capital Financing Requirement estimates (as detailed in Section 3.2) and will be considered carefully to ensure that value for money can be demonstrated and that the Council can ensure the security of such funds. Risks associated with any borrowing in advance activity will be subject to prior appraisal and subsequent reporting through the mid-year or annual reporting mechanism. 3.6 Debt rescheduling As noted in the Mid-Year Review Report, now that the whole of the yield curve has shifted higher there may be opportunities for debt rescheduling in the remainder of the financial year. This would involve the Council repaying loans prematurely (both market and PWLB) whilst high discount rates on premature repayment prevail. Any debt rescheduling will be considered when the difference between the refinancing rate and the redemption rate is most advantageous and the situation will be continually monitored in order to take advantage of any perceived anomalies in the yield curve. The reasons for any rescheduling taking place would include: - the generation of cash savings at minimum risk; - to reduce the average interest rate; - to amend the maturity profile and/or the balance of volatility of the debt portfolio. Council officers will explore debt rescheduling opportunities with MUFG Corporate Markets; with only prudent and affordable debt rescheduling that considers both the short and medium-longer term impact being considered. Page 123 of 270
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21 4 ANNUAL INVESTMENT STRATEGY 4.1 Investment policy The Council’s investment policy implements the requirements of the following: - • Local Government Investments (Scotland) Regulations 2010, (and accompanying Finance Circular 5/2010); • CIPFA Treasury Management in the Public Services: Code of Practice and Cross Sectoral Guidance Notes 2021 (“the Code”); • CIPFA Treasury Management Guidance Notes 2021 The Council’s investment priorities will be security first, portfolio liquidity second and then yield, (return). The Council will aim to achieve the optimum return (yield) on its investments commensurate with proper levels of security and liquidity and with the Council’s risk appetite. In the current economic climate, it is considered appropriate to maintain a degree of liquidity to cover cash flow needs but to also consider “laddering” investments for periods up to 12 months with high credit rated financial institutions as we move down the interest rate yield curve. The above regulations and guidance place a high priority on the management of risk. This authority has adopted a prudent approach to managing risk and defines its risk appetite by the following means: - 1. The Council applies minimum acceptable credit criteria in order to generate a list of highly creditworthy counterparties which also enables diversification and thus avoidance of concentration risk. The key ratings used to monitor counterparties are the short-term and long-term ratings. 2. Ratings will not be the sole determinant of the quality of an institution; it is important to continually assess and monitor the financial sector on both a micro and macro basis and in relation to the economic and political environments in which institutions operate. The assessment will also take account of information that reflects the opinion of the markets. To this end the Council will engage with its advisors to maintain a monitor on market pricing such as “credit default swaps” and overlay that information on top of the credit ratings. 3. Other information sources used will include the financial press, share price and other such information pertaining to the banking sector in order to establish the most robust scrutiny process on the suitability of potential investment counterparties. 4. This authority has defined the list of types of investment instruments that are permitted investments authorised for use in appendix 5.2. Appendix 5.3 expands on the risks involved in each type of investment and the mitigating controls. 5. Lending limits, (maturity tenors), for each counterparty will be set through applying the matrix table in Section 4.2 (maturity durations). 6. Investments will only placed with counterparties from countries with a specified minimum sovereign rating, (see paragraph 4.3). 7. Lending per Country and Institution will be set through the application of the criteria in Section 4.3 (amounts). Page 124 of 270
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22 8. Transaction limits are set for each type of investment in appendix 5.2. 9. This authority will set a limit for the amount of its investments which are invested for longer than 365 days, (see paragraph 4.4). 10. This authority has engaged external consultants, (see paragraph 1.5), to provide expert advice on how to optimise an appropriate balance of security, liquidity and yield, given the risk appetite of this authority in the context of the expected level of cash balances and need for liquidity throughout the year. 11. All investments will be denominated in sterling. However, this authority will also pursue value for money in treasury management and will monitor the yield from investment income against appropriate benchmarks for investment performance, (see paragraph 4.5). Regular monitoring of investment performance will be carried out during the year. Page 125 of 270
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23 4.2 Creditworthiness policy This Council applies the creditworthiness service provided by MUFG Corporate Markets. This service employs a sophisticated modelling approach utilising credit ratings from the three main credit rating agencies - Fitch, Moody’s and Standard and Poor’s. The credit ratings of counterparties are supplemented with the following overlays:- • credit watches and credit outlooks from credit rating agencies; • CDS spreads to give early warning of likely changes in credit ratings; • sovereign ratings to select counterparties from only the most creditworthy countries. This modelling approach combines credit ratings, credit watches and credit outlooks in a weighted scoring system which is then combined with an overlay of CDS spreads for which the end product is a series of colour coded bands which indicate the relative creditworthiness of counterparties. These colour codes are used by the Council to determine the suggested duration for investments. The Council will therefore use counterparties within the following durational bands:- Note that the maximum suggested durations listed above have been extended by 1 year (when compared to the suggested maximum durations provided by Link) for the Yellow, Dark Pink, Light Pink, Purple, Blue and Orange categories, to allow flexibility around these durations on the margins e.g. the placement of a 13 month fixed term deposit for a counterparty rated Orange or Blue. Equally, the maximum suggested duration for the Red category has been extended by a month to 8 months, on the same basis. A thorough appraisal of the additional risk involved in extending the duration of any deposit (marginally) beyond the maximum suggested by Capita, against any enhanced value to the portfolio, will be undertaken prior to the placement of any deposit. The MUFG Corporate Markets creditworthiness service uses a wider array of information than just primary ratings. Furthermore, by using a risk weighted scoring system, it does not give undue preponderance to just one agency’s ratings. Link Asset Services Colour Code Maximum Suggested Duration for Investment Yellow 6 years* Dark Pink 6 years** Light Pink 6 years** Purple 2.5 years Blue 1.25 years*** Orange 1.25 years Red 7 months Green 120 days No colour Not to be used * Note the yellow colour category is for:- UK Government Debt, or its equivalent, Money Market Funds (MMF's), and collateralised deposits where the collateral is UK Government Debt ** Dark Pink for Ultra Short Dated Bond Funds with a credit score of 1.25 Light Pink for Ultra Short Dated Bond Funds with a credit score of 1.5 *** Applies only to nationalised or semi-nationalised UK Banks Table 14: Recommended Maximum Durations for Investments Page 126 of 270
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24 Typically the minimum credit ratings criteria the Council use will be (Fitch or equivalents):- • Short term rating F1; • Long term rating A-. There may be occasions when the counterparty ratings from one rating agency are marginally lower than these ratings but may still be used. In these instances consideration will be given to the whole range of ratings available, or other topical market information, to support their use. All credit ratings will be monitored weekly. The Council is alerted to changes to ratings of all three agencies through its use of the MUFG Corporate Markets creditworthiness service. • if a downgrade results in the counterparty / investment scheme no longer meeting the Council’s minimum criteria, its further use as a new investment will be withdrawn immediately; • in addition to the use of credit ratings the Council will be advised of information in movements in credit default swap spreads against the iTraxx benchmark and other market data on a daily basis via its Passport website, provided exclusively to the Council by MUFG Corporate Markets. Extreme market movements may result in downgrade of an institution or removal from the Council’s lending list. Sole reliance will not be placed on the use of this external service. In addition this Council will also use market data and market information, information on sovereign support for banks and the credit ratings of that supporting government. UK banks – ring fencing The largest UK banks, (those with more than £25bn of retail / Small and Medium-sized Enterprise (SME) deposits), are required, by UK law, to separate core retail banking services from their investment and international banking activities by 1st January 2019. This is known as “ring-fencing”. Whilst smaller banks with less than £25bn in deposits are exempt, they can choose to opt up. Several banks are very close to the threshold already and so may come into scope in the future regardless. Ring-fencing is a regulatory initiative created in response to the global financial crisis. It mandates the separation of retail and SME deposits from investment banking, in order to improve the resilience and resolvability of banks by changing their structure. In general, simpler, activities offered from within a ring-fenced bank, (RFB), will be focused on lower risk, day-to-day core transactions, whilst more complex and “riskier” activities are required to be housed in a separate entity, a non-ring-fenced bank, (NRFB). This is intended to ensure that an entity’s core activities are not adversely affected by the acts or omissions of other members of its group. While the structure of the banks included within this process may have changed, the fundamentals of credit assessment have not. The Council will continue to assess the new- formed entities in the same way that it does others and those with sufficiently high ratings, (and any other metrics considered), will be considered for investment purposes. 4.3 Country and sector limits The Council has determined that it will only use approved counterparties from the UK, or approved counterparties from other countries with a minimum sovereign credit rating of AA- from Fitch. The list of countries that qualify using the above criteria as at the date of this report are shown in Appendix 5.4. This list will be added to, or deducted from, by officers should ratings change in accordance with this policy. Page 127 of 270
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25 The Council will avoid a concentration of investments in too few counterparties or countries by adopting a spreading approach to investing whereby no more than £30 million will be invested in Lloyds Banking Group and the NatWest (Royal Bank of Scotland) Group, £15 million in any other UK counterparty, and £15 million in any one counterparty, group or country outwith the UK. 4.4 Investment strategy Current Deposits As at 31 January 2025, the Council’s deposits were as follows:- Counterparty Amount £000’s Security Long/Short Term Rating* (Colour)** Liquidity Yield UK Local Authority Investment*** £000’s MMF Aberdeen 11,913 AAAmmf (Yellow) Instant Access 4.69% 1,425,558 MMF Federated 485 AAAmmf (Yellow) Instant Access 4.72% 978,210 MMF LGIM 11,356 AAAmmf (Yellow) Instant Access 4.73% 502,695 Bank of Scotland Call Account 1,635 A+/F1+ (Orange) Instant Access 4.62% 162,411 Handelsbanken AB Call Account 19 AA-/F1+ (Orange) Instant Access 4.59% 145,084 National Westminster Bank plc 20,000 A+/F1 (Red) Start: 27 Mar 2024 End: 27 Mar 2025 5.06% 418,175 Total 45,408 3,632,133 * Credit Rating from Fitch ** Colour represents maximum recommended duration for investment per MUFG Corporate Markets Credit Scoring methodology – see Appendix 2. *** As at 31 December 2024 In-house funds. Investments will be made with reference to the core balance and cash flow requirements and the outlook for short-term interest rates (i.e., rates for investments up to 12 months, with the yield curve reducing the further out deposits are placed). While an element of cash balances are required in order to manage the ups and downs of cash flow, where cash sums can be identified that could be invested for longer periods, the value to be obtained from longer term investments will be carefully assessed. • If it is thought that Bank Rate is likely to fall within that time period, consideration will be given to locking in higher rates currently obtainable, for longer periods, where this is possible within the Council’s day-to-day and monthly cashflow projections; • Conversely, if it is thought that Bank Rate is likely to rise significantly within the time horizon being considered (unlikely in the current climate), then consideration will be given to keeping most investments as being short term or variable. Investment returns expectations The current forecast shown in paragraph 3.3, includes a forecast for Bank Rate to reduce from the current level of 4.50% at the time of writing (3 February 2025) to 3.50% by the end of the forecast time horizon (December 2027). The suggested budgeted investment earnings rates for returns on investments placed for periods up to about three months during each financial year are as follows: - Page 128 of 270
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26 Average earnings in each year 2024/25 (residual) 4.60% 2025/26 4.10% 2026/27 3.70% 2027/28 3.50% 2028/29 3.50% Long term later years 3.50% As there are so many variables at this time, caution must be exercised in respect of all interest rate forecasts. Investment treasury indicator and limit - total principal funds invested for greater than 365 days. These limits are set with regard to the Council’s liquidity requirements and expected usable reserve forecasts, and are based on the availability of funds after each year-end. The Council is asked to retain the following treasury indicator and limit: - For its cash flow generated balances, the Council will seek to utilise its business reserve instant access accounts and money market funds. 4.5 Investment risk benchmarking The Council will use an investment benchmark to assess the investment performance of its investment portfolio of 6 month SONIA compounded. The Council also participates in Investment Benchmarking groups with MUFG Corporate Markets whereby performance with other Benchmarking club members and the wider Scottish and UK Local Authority Investment benchmarking is compared. 4.6 End of year investment report At the end of the financial year, the Council will report on its investment activity as part of its Annual Treasury Report. Limit £70m Principal Sums Invested for > 365 Days Page 129 of 270
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27 5 Appendices 1. Economic background 2. Treasury Management Practice 1 – Permitted Investments 3. Treasury Management Practice 1 – Credit and Counterparty Risk Management 4. Approved countries for investments 5. Treasury management scheme of delegation 6. The treasury management role of the section 95 officer Page 130 of 270
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28 5.1 APPENDIX: Economic Background The third quarter of 2024 (July to September) saw: • GDP growth stagnating in July following downwardly revised Q2 figures (0.5% q/q) • A further easing in wage growth as the headline 3myy rate (including bonuses) fell from 4.6% in June to 4.0% in July; • CPI inflation hitting its target in June before edging above it to 2.2% in July and August; • Core CPI inflation increasing from 3.3% in July to 3.6% in August; • The Bank of England initiating its easing cycle by lowering interest rates from 5.25% to 5.0% in August and holding them steady in its September meeting; • 10-year gilt yields falling to 4.0% in September. Over the aforementioned period, the economy’s stagnation in June and July pointed more to a mild slowdown in UK GDP growth than a sudden drop back into a recession. However, in the interim period, to 12 December, arguably the biggest impact on the economy’s performance has been the negative market sentiment in respect of the fallout from the Chancellor’s Budget on 30 October. Reflecting on the 30 October Budget, MUFG’s central case is that those policy announcements will prove to be inflationary, at least in the near-term. The Office for Budgetary Responsibility and the Bank of England concur with that view. The latter have the CPI measure of inflation staying sticky until at least 2026. The Bank forecasts CPI to be elevated at 2.7% y/y (Q4 2025) before dropping back to sub-2% in 2027. Nonetheless, since the Budget, the October inflation print has shown the CPI measure of inflation bouncing up to 2.3% y/y with the prospect that it will be close to 3% by the end of the year before falling back slowly through 2025. The RPI measure has also increased significantly to 3.4% y/y. How high inflation goes will primarily be determined by several key factors. First amongst those is that the major investment in the public sector, according to the Bank of England, will lift UK real GDP to 1.7% in 2025 before growth moderates in 2026 and 2027. The debate around whether the Government’s policies lead to a material uptick in growth primarily focus on the logistics of fast-tracking planning permissions, identifying sufficient skilled labour to undertake a resurgence in building, and an increase in the employee participation rate within the economy. There are inherent risks to all the above. The worst-case scenario would see systemic blockages of planning permissions and the inability to identify and resource the additional workforce required to deliver large-scale IT, housing and infrastructure projects. This would lead to upside risks to inflation, an increased prospect of further Government borrowing & tax rises in the June 2025 Spending Review (pushed back from the end of March), and a tepid GDP performance. Regarding having a sufficiently large pool of flexible and healthy workers, the initial outlook does not look bright. Research from Capital Economics has alluded to an increase of some 500,000 construction workers being needed to provide any chance of the Government hitting its target of 300,000 new homes being built in each of the next five years (234,000 net additional dwellings in England in 2022/23). But the last time such an increase was needed, and construction employment is currently at a nine-year low, it took 12 years to get there (1996 to 2008). Also note, as of October 2024, job vacancies in the construction sector were still higher than at any time in the 20 years preceding the pandemic. Currently, it also seems likely that net inward migration is set to fall, so there is likely to be a smaller pool of migrant workers available who, in the past, have filled the requirement Page 131 of 270
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29 for construction worker demand. The Government plans to heavily promote training schemes, particularly to the one million 16- to 24-year-olds who are neither in education nor work. But it is arguable as to whether the employee shortfall can be made up from this source in the requisite time, even if more do enter the workforce. Against, this backdrop, there may be a near-term boost to inflation caused by a wave of public sector cash chasing the same construction providers over the course of the next year or so, whilst wages remain higher than the Bank currently forecasts because of general labour shortages, including in social care where Government accepts there is a 150,000 shortfall at present. Unemployment stands at a low 4.3% (September), whilst wages are rising at 4.3% y/y (including bonuses) and 4.8% (excluding bonuses). The Bank would ideally like to see further wage moderation to underpin any further gradual relaxing of monetary policy. Indeed, over the next six months, the market is currently only pricing in Bank Rate reductions in February and May – which would see Bank Rate fall to 4.25% - but further cuts, thereafter, are highly likely to be even more data-dependent. Focussing on borrowing, a term that is likely to be prevalent throughout 2025 is “bond vigilante”. Essentially, this represents a generic term for when the market is ill at ease with the level of government borrowing and demands a higher return for holding debt issuance. In the UK, we do not need to go back too far to recall the negative market reaction to the Truss/Kwarteng budget of 2022. But long-term borrowing rates have already gradually moved back to those levels since their recent low point in the middle of September 2024. Of course, the UK is not alone in this respect. Concerns prevail as to what the size of the budget deficit will be in the US, following the election of Donald Trump as President, and in France there are on-going struggles to form a government to address a large budget deficit problem too. Throw into the mix the uncertain outcome to German elections, and there is plenty of bond investor concern to be seen. Staying with the US, Donald Trump’s victory paves the way for the introduction/extension of tariffs that could prove inflationary whilst the same could be said of further tax cuts. Invariably the direction of US Treasury yields in reaction to his core policies will, in all probability, impact UK gilt yields. So, there are domestic and international factors that could impact PWLB rates whilst, as a general comment, geo-political risks continue to abound in Europe, the Middle East and Asia. The US Core CPI measure of inflation has indicated that inflation is still a concern (3.3% y/y, 0.3% m/m), as has the November Producer Prices Data (up 3.0 y/y v a market estimate of 2.6% y/y, 0.4% m/m v an estimate of 0.2% m/m) albeit probably insufficient to deter the FOMC from cutting US rates a further 0.25% at its December meeting. However, further rate reductions and their timing will very much be determined by Trump’s policy announcements and their implications for both inflation and Treasury issuance. The FTSE 100 reached a peak of 8,380 in the third quarter of 2024 (currently 8.304), but its performance is firmly in the shade of the US S&P500, which has breached the 6,000 threshold on several occasions recently, delivering returns upwards of 25% y/y. The catalyst for any further rally (or not) is likely to be the breadth of AI’s impact on business growth and performance. MPC meetings: 9 May 2024, 20 June 2024, 1 August 2024, 19 September 2024, 7 November 2024, 6 February 2025 • On 9 May 2024, the Bank of England’s Monetary Policy Committee (MPC) voted 7-2 to keep Bank Rate at 5.25%. This outcome was repeated on 20th June. • However, by the time of the August meeting, there was a 5-4 vote in place for rates to be cut by 25bps to 5%. However, subsequent speeches from Page 132 of 270
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30 MPC members have supported Governor Bailey’s tone with its emphasis on “gradual” reductions over time. • Markets thought there may be an outside chance of a further Bank Rate reduction in September, following the 50bps cut by the FOMC, but this came to nothing. • On 7 November 2024, Bank Rate was cut by 0.25% to 4.75%. The vote was 8-1 in favour of the cut but the language used by the MPC emphasised “gradual” reductions would be the way ahead with an emphasis on the inflation and employment data releases, as well as geo- political events. • On 6 February 2025, the MPC voted by 7-2 to cut base rate by 0.25% to 4.50%. However, the other two votes were for base rate to be cut by 0.50% which is a very dovish outlook – with the prospect that yields will now fall. Page 133 of 270
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31 5.2 APPENDIX: Treasury Management Practice (TMP1): Permitted Investments This Council is asked to approve the following forms of investment instrument for use as permitted investments as set out in tables 1.1-1.4. Treasury risks All the investment instruments in tables 1.1-1.4 are subject to the following risks:- 1. Credit and counter-party risk: this is the risk of failure by a counterparty (bank or building society) to meet its contractual obligations to the organisation particularly as a result of the counterparty’s diminished creditworthiness, and the resulting detrimental effect on the organisation’s capital or current (revenue) resources. There are no counterparties where this risk is zero although AAA rated organisations have the highest, relative, level of creditworthiness. 2. Liquidity risk: this is the risk that cash will not be available when it is needed. While it could be said that all counterparties are subject to at least a very small level of liquidity risk as credit risk can never be zero, in this document, liquidity risk has been treated as whether or not instant access to cash can be obtained from each form of investment instrument. However, it has to be pointed out that while some forms of investment e.g. gilts, CDs, corporate bonds can usually be sold immediately if the need arises, there are two caveats: - a. cash may not be available until a settlement date up to three days after the sale b. there is an implied assumption that markets will not freeze up and so the instrument in question will find a ready buyer. The column in tables 1.1-1.4 headed as ‘market risk’ will show each investment instrument as being instant access, sale T+3 = transaction date plus 3 business days before you get cash, or term i.e. money is locked in until an agreed maturity date. 3. Market risk: this is the risk that, through adverse market fluctuations in the value of the principal sums an organisation borrows and invests, its stated treasury management policies and objectives are compromised, against which effects it has failed to protect itself adequately. However, some cash rich local authorities may positively want exposure to market risk e.g. those investing in investment instruments with a view to obtaining a long term increase in value. 4. Interest rate risk: this is the risk that fluctuations in the levels of interest rates create an unexpected or unbudgeted burden on the organisation’s finances, against which the organisation has failed to protect itself adequately. This authority has set limits for its fixed and variable rate exposure in its Treasury Indicators in this report (see Section 3.4). 5. Legal and regulatory risk: this is the risk that the organisation itself, or an organisation with which it is dealing in its treasury management activities, fails to act in accordance with its legal powers or regulatory requirements, and that the organisation suffers losses accordingly. Page 134 of 270
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32 Controls on treasury risks 1. Credit and counter-party risk: this authority has set minimum credit criteria to determine which counterparties and countries are of sufficiently high creditworthiness to be considered for investment purposes. See Sections 4.2 and 4.3. 2. Liquidity risk: this authority has a cash flow forecasting model to enable it to determine how long investments can be made for and how much can be invested. 3. Market risk: this authority does not purchase investment instruments which are subject to market risk in terms of fluctuation in their value. 4. Interest rate risk: this authority manages this risk by having a view of the future course of interest rates and then formulating a treasury management strategy accordingly which aims to maximise investment earnings consistent with control of risk or alternatively, seeks to minimise expenditure on interest costs on borrowing. See Section 4.4. 5. Legal and regulatory risk: this authority will not undertake any form of investing until it has ensured that it has all necessary powers and also complied with all regulations. Unlimited investments Regulation 24 states that an investment can be shown in tables 1 / 2 as being ‘unlimited’ in terms of the maximum amount or percentage of the total portfolio that can be put into that type of investment. However, it also requires that an explanation must be given for using that category. The authority has given the following types of investment an unlimited category: - 1. Debt Management Agency Deposit Facility. This is considered to be the lowest risk form of investment available to local authorities as it is operated by the Debt Management Office which is part of H.M. Treasury i.e. the UK Government’s sovereign rating stands behind the DMADF. It is also a deposit account and avoids the complications of buying and holding Government issued treasury bills or gilts. 2. High credit worthiness banks and building societies. See paragraph 4.2 for an explanation of this authority’s definition of high credit worthiness. While an unlimited amount of the investment portfolio may be put into banks and building societies with high credit worthiness, the authority will ensure diversification of its portfolio ensuring that no more than £15 million can be placed with any one institution or group at any one time, other than the Bank of Scotland or Royal Bank of Scotland where the limit is £30 million. Page 135 of 270
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33 Objectives of each type of investment instrument Regulation 25 requires an explanation of the objectives of every type of investment instrument which an authority approves as being ‘permitted’. 1. DEPOSITS The following forms of ‘investments’ are actually more accurately called deposits as cash is deposited in an account until an agreed maturity date or is held at call. a) Debt Management Agency Deposit Facility. This offers the lowest risk form of investment available to local authorities as it is effectively an investment placed with the Government. It is also easy to use as it is a deposit account and avoids the complications of buying and holding Government issued treasury bills or gilts. As it is low risk it also earns low rates of interest. However, it is very useful for authorities whose overriding priority is the avoidance of risk. The longest period for a term deposit with the DMADF is 6 months. b) Term Deposits – Local Authorities. They are quasi-Government bodies with low counterparty and value risk. Typical deposit terms vary from 1 month to 2 years, with longer term deposits offering an opportunity to increase investment returns by locking in high rates ahead of an expected fall in the level of interest rates. At other times, longer term rates can offer good value when the markets incorrectly assess the speed and timing of interest rate increases. This form of investing therefore, offers a lot of flexibility and typically higher earnings than the DMADF. Where it is restricted is that once a longer term investment is made, that cash is locked in until the maturity date other than with agreement of the counterparty, at which point penalties would typically apply. c) Call accounts with high credit worthiness banks and building societies. See Section 4.2 for an explanation of this authority’s definition of high credit worthiness. These typically offer a much higher rate of return than the DMADF and now that measures have been put in place to avoid over reliance on credit ratings, the authority feels much more confident that the residual risks around using such banks and building societies are at a low, reasonable and acceptable level. There is instant access to recalling cash deposited (or short-dated notice e.g. 15-30 days). This generally means accepting a lower rate of interest than that which could be earned from the same institution by making a term deposit (see 1d below). However, there are a number of call accounts which at the time of writing, offer rates 2 – 3 times more than term deposits with the DMADF. Some use of call accounts is highly desirable to ensure that the authority has ready access to cash when needed to pay bills. d) Term deposits with high credit worthiness banks and building societies. The objectives are as for 1c. These offer a much higher rate of return than the DMADF and deposits made with other Local Authorities (dependent upon term) and, similar to 1c, now that measures have been put in place to avoid over reliance on credit ratings, the authority feels much more confident that the residual risks around using such banks and building societies are at a low, reasonable and acceptable level. This is the most widely used form of investing used by local authorities. The authority will ensure diversification of its portfolio of deposits ensuring that no more than £15 million is invested with any (non-nationalised) UK counterparty, and no more than £15 million is invested with any other non-UK counterparty, group or country. In addition, longer term deposits offer an opportunity to increase investment returns by locking in high rates ahead of an expected fall in the level of interest rates. At other times, longer term rates can offer good value when the markets incorrectly assess the speed and timing of interest rate increases. This form of investing therefore, offers a lot of flexibility and higher earnings than the DMADF. Where it is restricted is that once a longer term investment is made, that cash is locked in until the maturity date. e) Fixed term deposits with variable rate and variable maturities (structured deposits). This encompasses ALL types of structured deposits. There has been considerable change in the types of structured deposits brought to the market over the last few years, some of which are already no longer available. In view of the fluidity of Page 136 of 270
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34 this area, this is a generic title for all structured deposits so as to provide councils with greater flexibility to adopt new instruments as and when they are brought to the market. This line encompasses ALL types of structured deposits. There has been considerable change in the types of structured deposits brought to the market over the last few years, some of which are already no longer available. In view of the fluidity of this area, this is a generic title for all structured deposits so as to provide greater flexibility to adopt new instruments as and when they are brought to the market. 2. DEPOSITS WITH COUNTERPARTIES CURRENTLY IN RECEIPT OF UK GOVERNMENT SUPPORT / OWNERSHIP These banks offer another dimension of creditworthiness in terms of UK Government backing through either direct (partial or full) ownership. The view of this authority is that such backing makes these banks attractive institutions with whom to place deposits, and that will remain our view if the UK sovereign rating were to be downgraded in the coming year. a. Call accounts. As for 1c. but UK Government stated support implies that the UK Government stands behind these banks and building societies and will be deeply committed to providing whatever support that may be required to ensure the continuity of such institutions. This authority feels this indicates a low and acceptable level of residual risk. b. Term deposits with high credit worthiness banks which are fully or semi nationalised. As for 1d. but Government ownership partial or full implies that the UK Government stands behind this bank and will be deeply committed to providing whatever support that may be required to ensure the continuity of that bank. This authority considers this indicates a low and acceptable level of residual risk. c. Fixed term deposits with variable rate and variable maturities (structured deposits). As for 1e but UK Government stated support implies that the UK Government stands behind eligible banks and building societies and will be deeply committed to providing whatever support that may be required to ensure the continuity of such institutions. This authority feels this indicates a low and acceptable level of residual risk. This line encompasses ALL types of structured deposits. There has been considerable change in the types of structured deposits brought to the market over the last few years, some of which are already no longer available. In view of the fluidity of this area, this is a generic title for all structured deposits so as to provide greater flexibility to adopt new instruments as and when they are brought to the market. Page 137 of 270
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35 3. COLLECTIVE INVESTMENT SCHEMES STRUCTURED AS OPEN ENDED INVESTMENT COMPANIES (OEICS) a. Government liquidity funds. These are the same as money market funds (see below) but only invest in government debt issuance with highly rated governments. Due to the higher quality of underlying investments, they offer a lower rate of return than MMFs. However, their net return is typically on a par with the DMADF, but with instant access. b. Money Market Funds (MMFs). By definition, MMFs are AAA rated and are widely diversified, using many forms of money market securities including types which this authority does not currently have the expertise or capabilities to hold directly. However, due to the high level of expertise of the fund managers and the huge amounts of money invested in MMFs, and the fact that the weighted average maturity (WAM) cannot exceed 60 days, MMFs offer a combination of high security, instant access to funds, high diversification and good rates of return compared to equivalent instant access facilities. They are particularly advantageous in falling interest rate environments as their 60 day WAM means they have locked in investments earning higher rates of interest than are currently available in the market. MMFs also help an authority to diversify its own portfolio as e.g. a £2m investment placed directly with HSBC is a 100% risk exposure to HSBC whereas £2m invested in a MMF may end up with say £10,000 being invested with HSBC through the MMF. For authorities particularly concerned with risk exposure to banks, MMFs offer an effective way of minimising risk exposure while still getting much better rates of return than available through the DMADF. c. Ultra Short Dated Bond Funds . These funds are similar to MMFs, can still be AAA rated but have Variable Net Asset Values (VNAV) as opposed to a traditional MMF which has a Constant Net Asset Value (CNAV). They aim to achieve a higher yield and to do this either take more credit risk or invest out for longer periods of time, which means they are more volatile. These funds can have WAM’s and Weighted Average Life (WAL’s) of 90 – 365 days or even longer. Their primary objective is yield and capital preservation is second. They therefore are a higher risk than MMFs and correspondingly have the potential to earn higher returns than MMFs. d. Gilt funds. These are funds which invest only in U.K. Government gilts. They offer a lower rate of return than bond funds but are highly rated both as a fund and through investing only in highly rated government securities. They offer a higher rate of return than investing in the DMADF but they do have an exposure to movements in market prices of assets held. e. Bond funds. These can invest in both government and corporate bonds. This therefore entails a higher level of risk exposure than gilt funds and the aim is to achieve a higher rate of return than normally available from gilt funds by trading in non- government bonds. Page 138 of 270
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36 4. SECURITIES ISSUED OR GUARANTEED BY GOVERNMENTS The following types of investments are where an authority directly purchases a particular investment instrument, a security, i.e. it has a market price when purchased and that value can change during the period the instrument is held until it matures or is sold. The annual earnings on a security is called a yield i.e. it is normally the interest paid by the issuer divided by the price you paid to purchase the security unless a security is initially issued at a discount e.g. treasury bills.. a. Treasury bills. These are short term bills (up to 12 months, although none have ever been issued for this maturity) issued by the Government and so are backed by the sovereign rating of the UK. The yield is higher than the rate of interest paid by the DMADF and another advantage compared to a time deposit in the DMADF is that they can be sold if there is a need for access to cash at any point in time. However, there is a spread between purchase and sale prices so early sales could incur a net cost during the period of ownership. b. Gilts. These are longer term debt issuance by the UK Government and are backed by the sovereign rating of the UK. The yield is higher than the rate of interest paid by the DMADF and another advantage compared to a time deposit in the DMADF is that they can be sold if there is a need for access to cash at any point in time. However, there is a spread between purchase and sale prices so early sales may incur a net cost. Market movements that occur between purchase and sale may also have an adverse impact on proceeds. The advantage over Treasury bills is that they generally offer higher yields the longer it is to maturity (for most periods) if the yield curve is positive. c. Bond issuance issued by a financial institution which is explicitly guaranteed by the UK Government e.g. National Rail. This is similar to a gilt due to the explicit Government guarantee. d. Sovereign bond issues (other than the UK govt) denominated in Sterling. As for gilts but issued by other nations. Use limited to issues of nations with at least the same sovereign rating as for the UK. e. Bonds issued by Multi Lateral Development Banks (MLDBs). These are similar to c. and e. above but are issued by MLDBs which are typically guaranteed by a group of sovereign states e.g. European Bank for Reconstruction and Development. 5. SECURITIES ISSUED BY CORPORATE ORGANISATIONS The following types of investments are where an authority directly purchases a particular investment instrument, a security, i.e. it has a market price when purchased and that value can change during the period the instrument is held until it is sold. The annual earnings on a security is called a yield i.e. is the interest paid by the issuer divided by the price you paid to purchase the security. These are similar to the previous category but corporate organisations can have a wide variety of credit worthiness so it is essential for local authorities to only select the organisations with the highest levels of credit worthiness. Corporate securities are generally a higher risk than government debt issuance and so earn higher yields. a. Certificates of deposit (CDs). These are shorter term securities issued by deposit taking institutions (mainly financial institutions). They are negotiable instruments, so can be sold ahead of maturity and also purchased after they have been issued. However, that liquidity can come at a price, where the yield could be marginally less than placing a deposit with the same bank as the issuing bank. b. Commercial paper. This is similar to CDs but is issued by commercial organisations or other entities. Maturity periods are up to 365 days but commonly 90 days. Page 139 of 270
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37 c. Corporate bonds. These are (long term) bonds (usually bearing a fixed rate of interest) issued by a financial institution, company or other non-government issuer in order to raise capital for the institution as an alternative to issuing shares or borrowing from banks. They are generally seen to be of a lower creditworthiness than government issued debt and so usually offer higher rates of yield. d. Floating rate notes. These are bonds on which the rate of interest is established periodically with reference to short-term interest rates. 6. OTHER a. Local Authority Mortgage Scheme. Authorities who are participating in the Local Authority Mortgage Guarantee Scheme (LAMS) may be required to place a deposit with the mortgage provider(s) up to the full value of the guarantee. The deposit will be in place for the term of the guarantee i.e. 5 years (with the possibility of a further 2 year extension if the account is 90+ days in arrears at the end of the initial 5 years) - and may have conditions / structures attached. The mortgage provider will not hold a legal charge over the deposit. b. Loans to third parties – This would involve the Council borrowing from the PWLB/markets and onward lending to Registered Social Landlords to enable them to access lower cost loans and kickstart developments of affordable mid-market homes. The risk associated with such an investment would be mitigated by an assessment of the counterparty in advance of any loan being granted and through the application of a premium on the loan rate. Interest would be paid by the RSL over the term of the loan, with repayment of principal upon the earlier of 10/20 years or at the point of house sales. The Council will also request that a standard security is taken over the property which would allow the Council to require the sale of the homes to another landlord, providing greater risk mitigation. c. Subordinated Debt Subscription to the SPV set up to deliver the Newbattle Centre project – this involved the Council subscribing £332,806 of subordinated debt to the SPV that was set up to deliver the Newbattle Centre project (2 year construction and 25 year operational contract length). The length of the investment is 25 years with the subscription made at operation commencement of the contract. The repayment profile will comprise 81% of the principal remaining invested until the final two years of the contract. The risk associated with this type of investment will be mitigated through an annual assessment as a minimum to review the holding of such debt, and whether the exposure to risk arising from the investment has changed over the period. d. ESCO: Midlothian Energy Limited (MEL) Joint Venture between Midlothian Council and Vattenfall to deliver energy supply to Shawfair using heat supplied from the Millerhill Energy from Waste plant and related projects. Page 140 of 270
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38 Table 1: Permitted Investments 1.1 Deposits Investment Category Minimum Credit Criteria Liquidity risk Market risk Max %/£m of total investments Max. maturity period Max Transaction Value Debt Management Agency Deposit Facility UK Government Term No 100% 6 months n/a Term deposits – local authorities Quasi-UK Government Term No 100% 5 years £15m Call accounts – banks and building societies Green Instant No 100% 1 day £15m Term deposits / Notice Accounts – banks and building societies Yellow Purple Blue Orange Red Green No Colour Term No 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use £15m Fixed term deposits with variable rate and variable maturities: - Structured deposits Yellow Purple Blue Orange Red Green No Colour Term No 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use £15m 1.2 Deposits with counterparties currently in receipt of government support / ownership Investment Category Minimum Credit Criteria Liquidity risk Market risk Max %/£m of total investments Max. maturity period Max Transaction Value UK nationalised banks – Call accounts Blue Instant No 100% 1 day £30m UK nationalised banks – Term Deposits / Notice Accounts Blue Term No 100% 2 years £30m UK nationalised banks – Fixed term deposits with variable rate and variable maturities: - Structured deposits Blue Term No 100% 2 years £30m Non-UK (high sovereign rated country) nationalised banks – Call accounts Green Instant No 100% 1 day £15m Non-UK (high sovereign rated country) nationalised banks:- Term Deposits / Notice Accounts Yellow Purple Blue Orange Red Green No Colour Term No 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use £15m Non-UK (high sovereign rated country) nationalised banks:- Fixed term deposits with variable rate and variable maturities: - Structured deposits Yellow Purple Blue Orange Red Green No Colour Term No 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use £15m If forward deposits are made, the forward period plus the deal period equate to the maximum maturity period. Page 141 of 270
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39 1.3 Collective investment schemes structured as Open Ended Investment Companies (OEICs) Investment Category Minimum Credit Criteria Liquidity risk Market risk Max %/£m of total investments Max. maturity period Max Transaction Value Government Liquidity Funds AAA Instant No 100% 1 day £15m Money Market Funds CNAV AAA Instant No 100% 1 day £15m Money Market Funds LVNAV AAA Instant No 100% 1 day £15m Money Market Funds VNAV AAA Instant No 100% 1 day £15m Ultra Short Dated Bond Funds with a credit score of 1.25 AAA T+1 to T+5 Yes 100% 1 week £15m Ultra Short Dated Bond Funds with a credit score of 1.5 AAA T+1 to T+5 Yes 100% 1 week £15m Bond Funds AAA T+2 or longer Yes 50% 2 days £15m Gilt Funds AAA T+2 or longer Yes 50% 2 days £15m 1.4 Securities issued or guaranteed by governments Investment Category * Minimum Credit Criteria Liquidity risk Market risk Max %?£m of total investments Max. maturity period Treasury Bills UK sovereign rating Sale T+1 Yes 100% 6 months UK Government Gilts UK sovereign rating Sale T+1 Yes 100% 50 years Bond issuance issued by a financial institution which is explicitly guaranteed by the UK Government e.g. National Rail UK sovereign rating Sale T+3 Yes 100% 50 years Sovereign bond issues (other than the UK govt) AAA (or state your criteria if different) Sale T+1 Yes 100% 50 years Bonds issued by multilateral development banks AAA (or state your criteria if different) Sale T+1 Yes 100% 50 years Page 142 of 270
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40 1.5 Securities issued by corporate organisations Investment Category * Minimum Credit Criteria Liquidity risk Market risk Max % of total investments Max. maturity period Max Transaction Value Certificates of deposit issued by banks and building societies Yellow Purple Blue Orange Red Green No Colour Sale T+1 Yes 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use £15m Commercial paper other Yellow Purple Blue Orange Red Green No Colour Sale T+0 Yes 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use £15m Floating rate notes Yellow Purple Blue Orange Red Green No Colour Sale T+2 Yes 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use £15m Corporate Bonds other Yellow Purple Blue Orange Red Green No Colour Sale T+2 Yes 100% Up to 6 yrs Up to 2.5 yrs Up to 1.25 yrs Up to 1.25 yrs Up to 7 mths Up to 120 days Not for use £15m 1.6 Other Investment Category Minimum Credit Criteria Liquidity risk Market risk Max %/£m of total investments Max. maturity period Local authority mortgage guarantee scheme. Blue Term No 50% 5 years Loans to Third Parties n/a Term No £25m 20 years Subordinated Debt Subscription to Newbattle Centre SPV n/a Term No £0.326m 22 years ESCO n/a Term No £10.2m n/a Page 143 of 270
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41 5.3 APPENDIX: Treasury Management Practice (TMP1) – Credit and Counterparty Risk Management Midlothian Council Permitted Investments, Associated Controls and Limits Type of Investment Treasury Risks Mitigating Controls Council Limits Cash type instruments a. Deposits with the Debt Management Account Facility (UK Government) (Very low risk) This is a deposit with the UK Government and as such counterparty and liquidity risk is very low, and there is no risk to value. Deposits can be between overnight and 6 months. Little mitigating controls required. As this is a UK Government investment the monetary limit is unlimited to allow for a safe haven for investments. As shown in Appendix 5.2. b. Deposits with other local authorities or public bodies (Very low risk) These are considered quasi UK Government debt and as such counterparty risk is very low, and there is no risk to value. Deposits can only be broken with the agreement of the counterparty, and penalties can apply. Deposits with other non-local authority bodies will be restricted to the overall credit rating criteria. Little mitigating controls required for local authority deposits, as this is a quasi UK Government investment. Non- local authority deposits will follow the approved credit rating criteria. As shown in Appendix 5.2. c. CNAV, LVNAV and VNAV Money Market Funds (MMFs) (Low to very low risk) Pooled cash investment vehicle which provides very low counterparty, liquidity and market risk. These will primarily be used as liquidity instruments. Funds will only be used where the MMF has a “AAA” rated status from either Fitch, Moody’s or Standard & Poors. As shown in Appendix 5.2. d. Ultra Short Dated Bond Funds (low risk) Pooled cash investment vehicle which provides very low counterparty, liquidity and market risk. These will primarily be used as liquidity instruments. Funds will only be used where the Ultra Short Dated Bond Fund has a “AAA” rated status from either Fitch, Moody’s or Standard and Poor’s. As shown in Appendix 5.2. Page 144 of 270
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42 Type of Investment Treasury Risks Mitigating Controls Council Limits e. Call account deposit accounts with financial institutions (banks and building societies) (Low risk depending on credit rating) These tend to be low risk investments, but will exhibit higher risks than categories (a), (b) and (c) above. Whilst there is no risk to value with these types of investments, liquidity is high and investments can be returned at short notice. The counterparty selection criteria approved above restricts lending only to high quality counterparties, measured primarily by credit ratings from Fitch, Moody’s and Standard and Poor’s, with the credit scoring methodology by MUFG Corporate Markets overlaid. On day to day investment dealing with this criteria will be further strengthened by the use of additional market intelligence. As shown in Appendix 5.2. f. Term deposits with financial institutions (banks and building societies) (Low to medium risk depending on period & credit rating) These tend to be low risk investments, but will exhibit higher risks than categories (a), (b), (c) and (d) above. Whilst there is no risk to value with these types of investments, liquidity is low and term deposits can only be broken with the agreement of the counterparty, and penalties may apply. The counterparty selection criteria approved above restricts lending only to high quality counterparties, measured primarily by credit ratings from Fitch, Moody’s and Standard and Poor’s, with the credit scoring methodology by MUFG Corporate Markets overlaid. On day to day investment dealing, this criteria will be further strengthened by the use of additional market intelligence. As shown in Appendix 5.2. Page 145 of 270
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43 Type of Investment Treasury Risks Mitigating Controls Council Limits g. Government Gilts and Treasury Bills (Very low risk) These are marketable securities issued by the UK Government and as such counterparty and liquidity risk is very low, although there is potential risk to value arising from an adverse movement in interest rates (no loss if these are held to maturity. Little counterparty mitigating controls are required, as this is a UK Government investment. The potential for capital loss will be reduced by limiting the maximum monetary and time exposures As shown in Appendix 5.2. h. Certificates of deposits with financial institutions (Low risk) These are short dated marketable securities issued by financial institutions and as such counterparty risk is low, but will exhibit higher risks than categories (a), (b) and (c) above. There is risk to value of capital loss arising from selling ahead of maturity if combined with an adverse movement in interest rates (no loss if these are held to maturity). Liquidity risk will normally be low. The counterparty selection criteria approved above restricts lending only to high quality counterparties, measured primarily by credit ratings from Fitch, Moody’s and Standard and Poor’s. The selection defaults to the lowest available colour band / credit rating to provide additional risk control measures. Day to day investment dealing with this criteria will be further strengthened by the use of additional market intelligence. As shown in Appendix 5.2. i. Structured deposit facilities with banks and building societies (escalating rates, de-escalating rates etc.) (Low to medium risk depending on period & credit rating) These tend to be medium to low risk investments, but will exhibit higher risks than categories (a), (b), (c) and (d) above. Whilst there is no risk to value with these types of investments, liquidity is very low and investments can only be broken with the agreement of the counterparty (penalties may apply). The counterparty selection criteria approved above restricts lending only to high quality counterparties, measured primarily by credit ratings from Fitch, Moody’s and Standard and Poor’s, with the credit scoring methodology by MUFG Corporate Markets overlaid. On day to day investment dealing, this criteria will be further strengthened by the use of additional market intelligence. As shown in Appendix 5.2. Page 146 of 270
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44 Type of Investment Treasury Risks Mitigating Controls Council Limits j. Corporate bonds (Medium to high risk depending on period & credit rating) These are marketable securities issued by financial and corporate institutions. Counterparty risk will vary and there is risk to value of capital loss arising from selling ahead of maturity if combined with an adverse movement in interest rates. Liquidity risk will be low. The counterparty selection criteria approved above restricts lending only to high quality counterparties, measured primarily by credit ratings from Fitch, Moody’s and Standard and Poor’s. The selection defaults to the lowest available colour band / credit rating to provide additional risk control measures. Corporate bonds will be restricted to those meeting the base criteria. Day to day investment dealing with this criteria will be further strengthened by the use of additional market intelligence. As shown in Appendix 5.2. Page 147 of 270
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45 Type of Investment Treasury Risks Mitigating Controls Council Limits Other types of investments k. Loans to third parties Using the example of a loan to a RSL, these would be medium risk investments, exhibiting higher risks than categories (a)-(f) above. They are also highly illiquid and are only repaid at the end of a defined period of time (up to 20 years) or on the sale of a property, whichever is the earlier. The risk associated with such an investment would be mitigated through the application of a premium on the loan rate. The Council will also request that a standard security is taken over the property which would allow the Council to require the sale of the homes to another landlord, providing greater risk mitigation. £25m l. Non-local authority shareholdings These are non-service investments which may exhibit market risk, be only considered for longer term investments and will be likely to be liquid. Any non-service equity investment will require separate Member approval and each application will be supported by the service rational behind the investment and the likelihood of loss. Per Existing m. Local Authority Mortgage Scheme (LAMS) These are service investments at market rates of interest plus a premium. As shown in Appendix 5.2. n. Subordinated Debt Subscription to Newbattle Centre SPV These are investments that are exposed to the success or failure of individual projects and are highly illiquid. The Council and Scottish Government (via the SFT) are participants in and party to the governance and controls within the project structure. As such they are well placed to influence and ensure the successful completion of the project’s term. As shown in Appendix 5.2. o. ESCO These are investments that are exposed to the success or failure of individual projects and are highly illiquid. The Council is in a joint venture partnership and therefore party to the governance and controls within the project structure. As such the Council is As shown in Appendix 5.2. Page 148 of 270
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46 well placed to influence and ensure the successful completion of the project’s term The Monitoring of Deposit Counterparties - The status of counterparties will be monitored regularly. The Council receives credit rating and market information from MUFG Corporate Markets, including when ratings change, and counterparties are checked promptly. On occasion ratings may be downgraded when an investment has already been made. The criteria used are such that a minor downgrading should not affect the full receipt of the principal and interest. Any counterparty failing to meet the criteria will be removed from the list immediately by the Chief Financial Officer & Section 95 Officer, and if required new counterparties which meet the criteria will be added to the list. Page 149 of 270
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5.4 APPENDIX: Approved countries for investments Based on the lowest available rating as at 30.01.2025 AAA • Australia • Denmark • Germany • Netherlands • Norway • Singapore • Sweden • Switzerland AA+ • Canada • Finland • U.S.A. AA • Abu Dhabi (UAE) AA- • Belgium • France • U.K. Page 150 of 270
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48 5.5 APPENDIX: Treasury management scheme of delegation (i) Full Council • receiving and reviewing reports on treasury management policies, practices and activities; • approval of annual strategy. • approval of/amendments to the organisation’s adopted clauses, treasury management policy statement and treasury management practices; • budget consideration and approval; • approval of the division of responsibilities; • receiving and reviewing regular monitoring reports and acting on recommendations; • approving the selection of external service providers and agreeing terms of appointment. (iii) Audit Committee • reviewing treasury management reports, the treasury management policy and procedures, and making recommendations to the responsible body. Page 151 of 270
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49 5.6 APPENDIX: The treasury management role of the section 95 officer The S95 (responsible) officer • recommending clauses, treasury management policy/practices for approval, reviewing the same regularly, and monitoring compliance; • submitting regular treasury management policy reports; • submitting budgets and budget variations; • receiving and reviewing management information reports; • reviewing the performance of the treasury management function; • ensuring the adequacy of treasury management resources and skills, and the effective division of responsibilities within the treasury management function; • ensuring the adequacy of internal audit, and liaising with external audit; • recommending the appointment of external service providers; • preparation of a capital strategy to include capital expenditure, capital financing, non-financial investments and treasury management, with a long term timeframe; • ensuring that the capital strategy is prudent, sustainable, affordable and prudent in the long term and provides value for money; • ensuring that due diligence has been carried out on all treasury and non-financial investments and is in accordance with the risk appetite of the authority; • ensure that the authority has appropriate legal powers to undertake expenditure on non-financial assets and their financing; • ensuring the proportionality of all investments so that the authority does not undertake a level of investing which exposes the authority to an excessive level of risk compared to its financial resources; • ensuring that an adequate governance process is in place for the approval, monitoring and ongoing risk management of all non-financial investments and long term liabilities; • provision to members of a schedule of all non-treasury investments including material investments in subsidiaries, joint ventures, loans and financial guarantees ensuring that members are adequately informed and understand the risk exposures taken on by an authority; • ensuring that the authority has adequate expertise, either in house or externally provided, to carry out the above; • creation of Treasury Management Practices which specifically deal with how non- treasury investments will be carried out and managed, to include the following:- o Risk management (TMP1 and schedules), including investment and risk management criteria for any material non-treasury investment portfolios; o Performance measurement and management (TMP2 and schedules), including methodology and criteria for assessing the performance and success of non-treasury investments; o Decision making, governance and organisation (TMP5 and schedules), including a statement of the governance requirements for decision making in relation to non-treasury investments; and arrangements to ensure that appropriate professional due diligence is carried out to support decision making; o Reporting and management information (TMP6 and schedules), including where and how often monitoring reports are taken; Page 152 of 270
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50 o Training and qualifications (TMP10 and schedules), including how the relevant knowledge and skills in relation to non-treasury investments will be arranged. Page 153 of 270
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Midlothian Council Tuesday 25 February 2025 Item No. 8.5 Scottish Local Authorities Remuneration Committee - Recommendations Report by Saty Kaur, Chief Officer Corporate Solutions Report for Decision 1 Recommendations Council is recommended to: • Note that Scottish Government propose to set down regulations in relation to pay and banding changes to take effect from 1 April 2025 • To note that as of 1 April 2025, Midlothian will move from a Band A Council (for the purposes of Councillor Remuneration) to a Band B Council • To determine if Council should appoint an additional two Senior Councillors from 1 April 2025 (as per paragraph 3.7). • To determine if the payments to the Civic Head and Senior Councillors remain as per the existing % relative to the Council Leader salary (as per paragraphs 3.9 and 3.10). 2 Purpose of Report/Executive Summary To update on the outcome of the Scottish Local Authorities Remuneration Committee review and the regulations that will be laid down by Scottish Government from 1 April 2025. Date Tuesday 5 February 2025 Report Contact: Saty Kaur, Chief Officer Corporate Solutions Saty.Kaur@midlothian.gov.uk Page 154 of 270
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3 Background/Main Body of Report 3.1 The Scottish Local Authorities Remuneration Committee (SLARC) was re-convened by the Scottish Government in April 2023, at the request of COSLA, to undertake an independent review of Councillor remuneration. 3.2 SLARC was asked to review the remuneration of all Councillors and consider whether the present levels of remuneration, for ordinary and senior Councillors, were appropriate for the current context. 3.3 In addition, each council is currently placed into one of four bands based on various factors, including the size of the budget. The Committee was also remitted to review whether the current methodology for determining banding of Councils was appropriate and, if so, whether the current bands allocated to Councils remained accurate. 3.4 SLARC’s report was published in February 2024 and contained 22 recommendations for Scottish Government, COSLA and other bodies to consider and take forward. 3.5 The Scottish Government accepted the pay and banding related changes recommended by SLARC and will introduce regulations early in 2025 to put these into effect from 1 April 2025. 3.6 The Scottish Government will introduce regulations to take effect from 1 April 2025 for all Band A Councils to move into Band B. Midlothian is currently in Band A (SLARC recommendation 4). 3.7 The Scottish Government will introduce regulations to take effect from 1 April 2025 to enable the appointment of up to 10 senior Councillors in existing Band A authorities (SLARC recommendation 3). Currently Midlothian Council has 8 Senior Councillors. Council is asked to determine the appointment of an additional 2 Senior Councillors (up to 10 Senior Councillors in total). 3.8 The Scottish Government has accepted SLARC recommendation 6 to set a new base salary for Councillors at 80% of the median salary for all employees in the public sector in Scotland, using the finalised data from the 2022 Annual Survey of Hours and Earnings (ASHE). 3.9 The Scottish Government will introduce regulations to take effect from 1 April 2025 which will set new salaries for Council Leaders, Civic Heads and Senior Councillors. For Band B Councils the salary of the Council Leader will be set at 70% of the salary of the Council Leader of a Band D Council. The salaries of Civic Heads and Senior Councillors will continue to be set at up to a maximum of 75% of the salary of their Council Leader (SLARC recommendations 8-10). 3.10 Council is to determine the payments of the Civic Head and Senior Councillors (up to 75% of the salary of the Council Leader). Currently the Civic Head is paid 75% of the salary of the Council Leader. Page 155 of 270
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Currently Senior Councillors are paid 67% of the salary of the Council Leader. 3.11 The Scottish Government will introduce regulations to take effect from 1 April 2025 that the salaries of all Councillors continue to be uplifted on an annual basis as per the current arrangements introduced in 2017, which are in line with the median increase in earnings of public sector employees in Scotland, as published by the ASHE (SLARC recommendation 11). 4 Report Implications (Resource, Digital and Risk) 4.1 Resource The impact of removing Band A is £102,940.94 per annum. The regulations being laid by Scottish Government will bring this change into effect from 1 April 2025. If Council approve the changes in line with the existing % salary relative to the Council Leader for the Civic Head and Senior Councillors, the budget impact per annum is £122,550.73. Any Councillor may renounce the receipt of any remuneration payable in terms of the regulations, in whole or in part, in which case the remuneration is not payable by the Council. 4.2 Digital No implications 4.3 Risk There are no risks associated with the report as the remuneration arrangements as set by regulations. 4.4 Ensuring Equalities (if required a separate IIA must be completed) No implications 4.5 Additional Report Implications (See Appendix A) See Appendix A Appendices Appendix A – Additional Report Implications Page 156 of 270
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APPENDIX A – Report Implications A.1 Key Priorities within the Single Midlothian Plan Not applicable A.2 Key Drivers for Change Key drivers addressed in this report: Holistic Working Hub and Spoke Modern Sustainable Transformational Preventative Asset-based Continuous Improvement One size fits one None of the above A.3 Key Delivery Streams Key delivery streams addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value Not applicable A.5 Involving Communities and Other Stakeholders Not applicable A.6 Impact on Performance and Outcomes Not applicable A.7 Adopting a Preventative Approach Not applicable A.8 Supporting Sustainable Development Not applicable Page 157 of 270
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Midlothian Council Tuesday 25 February 2025 Item No 8.6 Fees and Charges 2025/26 Report by Saty Kaur, Chief Officer Corporate Solutions Report for Decision 1 Recommendations On the recommendation of Business Transformation Steering Group, Council is asked to: - Agree to the implementation of the new, revised and frozen charges as outlined within the report (and the associated policy changes for new and revised charges) from 1 April 2025; and - Note the final agreed fees and charges register will be published on the Council’s website. 2 Purpose of Report/Executive Summary This report provides Council with the proposed fees and charges table for 2025/26 for consideration and approval. Date Monday 3 February 2024 Report Contact: Saty Kaur, Chief Officer Corporate Solutions Saty.Kaur@midlothian.gov.uk Page 158 of 270
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3 Main Report 3.1 Fees and charges are reviewed annually and presented to Council as part of annual budget setting. The proposed fees and charges table for 2025/26 can be found online for review. Some charges are statutory, and these are noted on the register. As and when the statutory bodies issue the revised charges these will be actioned for these fees. Other charges are subject to inflationary uplifts and are noted on the register. 3.2 Below is a summary of where discretionary charges have been reviewed and has resulted in officer recommendations to introduce new charges, changes from the review and charges that remain frozen, and the rationale for these recommendations. New charges proposed to be introduced Roads Services – switch on/off of traffic signals 3.3 Road services currently approve road works to include temporary traffic signals for all roadworks which take place in Midlothian. When these works conflict with fixed asset permanent signals permission is granted to the contractor to isolate the signals and then re-energise following works. It is presumed likely that traffic management companies are charging contractors carrying out the roadworks a fee to isolate traffic signals. New charges are proposed where Midlothian Council would provide this service and isolate the traffic signals and re-energise when the works are complete, charging the contractor a flat fee for switching traffic signals on and off. Benchmarking has been carried out with other neighbouring Councils and our Local Government Benchmarking Framework family group who also charge for this service. Results show that: • Edinburgh Council charge a minimum of £165 per switch on and off during weekdays within office hours with increasing fees up to £495 per switch on and switch off for emergency or short notice requests under 5 days. • East Lothian currently charge for this service out with normal working hours only with a minimum charge of £126 to £191 for emergency requests. • Clackmannanshire charge a standard fee of £213.40 plus an additional 20% for requests out of hours. It is proposed to charge a flat fee of £150 per switch on/off during office hours and follow Edinburgh Council’s charging scale of 100% increase from office hours to out with office hours and 200% increase from during office hours to emergency. Page 159 of 270
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The proposed scale of charges per switch on or off are set out below: Mon to Friday (07:00-16:30 hrs) £150.00 Mon to Friday (16:30-07:00 hrs) £300.00 Saturday- Sunday (07:00-19:00 hrs) £300.00 Public holiday (07:00-17:00 hrs) £300.00 Emergency (24/7) or short notice (under 5 days) £450.00 Requests for this service should be submitted a minimum of 5 working days in advance of the required work. Requests should include confirmation that approval has been received from Midlothian Council’s Road Services for the works to take place, including times and dates of those works. The charges proposed are a flat rate and allow for Midlothian Council attendance up to 1 hour after the arranged attendance time. In instances where the switch on/off does not take place within 1 hour of the arranged time a further flat charge of £150 will be applied, with subsequent charges of £150 for every additional hour/part hour thereof. In the case where the Traffic Management system is not set up at the agreed attendance time, Midlothian Council may have to leave site and revisit later; further costs may apply as per the above. Expected volumes are of approximately 2-4 requests per week, equating to 4-8 site visits. The isolation/reinstating of traffic lights will be carried out by existing staff. The additional duties may cause an impact on lighting key performance indicators. Currently lighting repairs performance sits between 98-99% of lighting repairs responded to and repaired within timescales. If delivering the service over weekends, an on-call electrician would undertake the work which would involve higher overhead costs however the charges proposed above account for this. Pest Control – bedbugs and cockroaches – new charging scale 3.4 In general pest control charges are uplifted by a 5% inflationary rate with the exception of the charge for the additional visit and garden site survey for rats and mice where a 10% increase is proposed to recover the cost of providing the service. Pest control volumes year on year can be difficult to estimate and charges are already at a level to remain competitive against commercial providers costs. Page 160 of 270
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A new scale of charges is proposed for the eradication of bedbugs and cockroaches. The current per room charging model of £155 is considered to have influenced some customers to initially only treat 1 room within the house (the worst affected room) as a cost saving exercise which resulted in perpetuating the infestation and making it more difficult to eradicate the problem/prevent spread to neighbours. The proposed new charging scale, with the removal of the option to treat only one room, introduces new charges for up to 3 bedrooms plus a living room to be treated as well as charges for properties with more than 3 bedrooms. The new charge is determined per room I.e. (to treat a 3 bedroom property plus living room would equate to a charge of £650.00). For properties over 6 bedrooms, the £810 charge will apply plus a charge of £162.50 for each additional bedroom requiring treatment. The new charging scale is based on the 24/25 room rate of £155 plus 5% inflation and covers the initial survey and treatment plan of each room. These figures remain highly competitive against commercial providers costs and aims to encourage complete eradication of problem and prevention of spread. Animal Boarding Fee 3.5 A new charge of £147.00 is proposed for animal boarding licence fees (home boarding) where no inspection is required by Environmental Health. The current charge for an animal boarding licence where an inspection is required is £210.00. The new additional charge is a reduced charge covering the cost to provide the service and removes costs for inspection. Private water supplies 3.6 Private water supplies are classified as one of two types, each with their respective legislation: • Regulated (those with commercial/public activity or larger supplies) - The Water Intended for Human Consumption (Private Supplies) (Scotland) Regulations 2017 • Type B (domestic, owner occupied) – The Private Water Supply (Scotland) Regulations 2006 Midlothian Council is required to maintain a register incorporating all private water supply types. There are currently 41 Regulated and 27 Type B registered supplies. There is a duty to sample each Regulated supply annually and to undertake risk assessment at least every 5 years. Facility to apply reasonable charge applies in both cases. Page 161 of 270
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Sampling incorporates a prescribed suite of microbiological and chemical parameter testing. Samples are obtained by Environmental Health and taken to Edinburgh Scientific Services laboratory for analysis (which is charged to Midlothian Council). A risk assessment incorporates a site assessment of the full supply from source (borehole, spring, well or surface water) through to collection, treatment and property supply. Risks of potential contamination and suitable control measures are identified through the site visit and subsequent off site assessment/review and shared with persons responsible for the supply. Where sample results demonstrate parameter values above prescribed limits, supply users are informed and may be served with a boil water notice for the protection of public health. There is a further duty to sample and risk assess a Type B supply when requested by a relevant person. Currently, Midlothian does not fully recover costs in relation to the assessment of water supplies. The new charges proposed cover the costs to the council to undertake water sampling and associated risk assessments where required. Charges include preparatory work, officers’ time on site and associated administrative tasks. Short Term Lets – variation licence 3.7 A new charge is proposed for the variation of a short term let licence with an £85 variation fee plus an additional £42.50 for each increase in accommodation for every 4 (or part thereof) persons. The new fee proposed is to capture those who want to amend their licence to accommodate additional people and ensures fair pricing compared to applications. New charges are proposed for the transfer of a short term let licence to another owner. Since the short term let licence scheme was introduced in 2023 no requests for licence transfers have been received. It is anticipated that transfers of licences may be requested going forward. Resource requirements to process the transfer of a licence would be the same as a material change of a licence. It is therefore proposed to align both charges. Benchmarking was carried out and results show that other local authorities also charge for licence transfers. For initial and renewal applications for secondary lettings, the following charges are proposed and are charged at the same cost as a material change of licence: • Up to 4 bedrooms/8 guests – (Fee to consider licence transfer): £300 • 5 - 8 Bedrooms/16 guests - (Fee to consider licence transfer): £350 • 8-12 bedrooms/16-24 guests – (Fee to consider licence transfer): £430 • An additional charge (per additional room/guest): greater than 12 bedrooms or greater than 24 guests – (Fee to consider licence transfer): £35.00 Page 162 of 270
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For initial and renewal applications for home sharing or home lettings, the following charges are proposed and are charged at the same cost as a material change of licence: • 1 bedroom/3 guests - (Fee to consider licence transfer): £110 • 2-3 Bedrooms/9 guests - (Fee to consider licence transfer): £145 • 4 bedrooms/ 9 guests - (Fee to consider licence transfer): £210 • An additional charge (per additional room/guest): greater than 4 bedrooms or greater than 9 guests - (Fee to consider licence transfer): £35.00 Sport and Leisure – concessionary charging 3.8 Currently our Access to Midlothian scheme gives our service users free access to a range of sport and leisure facilities including swimming, gym access and exercise classes for users meeting eligibility criteria and receive one or more of the following: • Personal Independence Payment (PIP) at the enhanced rate for both the Daily Living and Mobility Component. • Employment & Support Allowance (ESA) at the severe rate and PIP at the enhanced rate for the Mobility Component. • Attendance Allowance at the higher rate • Adult Disability Payment (ADP) at the enhanced rate for both the Daily Living and Mobility Component. • Child Disability Payment (CDP) at the middle or highest rate for the Care component and at the lower or higher rate for the Mobility component. The scheme allows service users to access services with a carer who is permitted free of charge alongside the service user. Service users in receipt of any of the payments at a lower rate than detailed above may qualify for concessionary rate access. Concessionary rate access is applied for those who receive: • Income support/Universal credit • Standard Employment and Support Allowance • Job Seekers Allowance • Working Tax Credit • War Widows/Bereavement Allowance It is proposed to move to a minimum concessionary charge for service users who access our services free of charge to align with our minimum pricing structure for Midlothian Active Choices (MAC) of £2.30 per visit as a pay as you go option. The proposed charge would still permit carers to attend free alongside the service user. The proposed charges bring us in line with other Local Authorities who only offer concessionary prices and do not offer free use of facilities. From data covering the period 1st of Oct 2023 to 31st of October 2024, 620 service users (people who met eligibility criteria) accessed leisure facilities free of charge across leisure sites during this period. Page 163 of 270
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The total usage across various leisure facilities between this period by the 620 service users was 16,666 visits with 13,541 of those visits accessing Tonezone (6,108), Swimming (6,096) and our Health suites (1,337). 2,392 visits included an additional person (carer) alongside the service user. The table below shows the total number of visits per each site, along with the percentage of visits at each site and the number of service users accessing those sites. It should be noted that some service users use more than 1 site. Leisure site No of visits % of visits No of service users accessing sites Danderhall Leisure Centre 118 1% 13 Gorebridge Leisure Centre 692 4% 71 Loanhead Leisure Centre 2,768 17% 216 Newbattle Community Campus 5,328 32% 284 Newtongrange Leisure Centre 996 6% 57 The Lasswade Centre 3,863 23% 225 The Penicuik Centre 2,901 17% 121 Total visits 16,666 To note, Midlothian Snowsports Centre and Dalkeith Community Campus are not included in the Access to Midlothian Card Scheme. • 286 service users accessed facilities alone without an additional person (carer). • 22 service users accessed facilities only with an additional person (carer) • 312 service users accessed facilities either on their own or at times with an additional person (carer). Moving away from free access might put further pressures on our Health and Social Care services however by offering concessionary access to qualifying Midlothian residents will minimise direct impact on service users. Page 164 of 270
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Review of existing charges Building Standards 3.9 Benchmarking was undertaken with other Local Authorities and a 5% inflationary increase proposed across all Building Standards fees to continue to align with other Local Authorities. It is proposed that the Building Standards Service continue to use the nationally adopted construction industry rates (estimated cost of construction work per square metre) taken from the Building Cost Information Service (BCIS) to estimate the cost of building works required to calculate the fee for building warrant applications. Our Midlothian Cost Index sets out the minimum estimated costs per square metre for domestic works (houses and flats) and non-domestic works (commercial, industrial and agricultural) allowing the estimated cost of works to be determined by total floor area multiplied by estimated cost by square metre. The Midlothian Cost index ensures that building warrant applications fees are accurately determined by development type and based on the value of work and provides a consistent charging method. The Midlothian Cost Index is published on our website alongside our statutory detailed Building Standards fees and will be updated for 2025/26 to reflect changes to construction industry rates made available by BCIS. Benchmarking was undertaken with East Lothian and West Lothian Council who also adopt this method. School meals – review and uplift of existing charges 3.10 A 10% increase is proposed across all school meals (primary, secondary and adult). Benchmarking was carried out with neighbouring authorities, Edinburgh, East Lothian, Scottish Borders and West Lothian and our Local Government Benchmarking Framework family group. Results show that Midlothian is charging less than all other authorities benchmarked. The average charge for primary school meals and secondary school meals is £2.47 and £2.65 respectively. The proposed 10% increases align more with neighbouring authorities and contributes to the cost of providing meals where food costs have seen significant increases due to inflation over recent years. It should be noted charges for school meals have not been increased since 2019/20. The current 2025/26 budgeted cost per meal is £3.22. This includes nursery, school, adult, breakfast and lunch club meals. This is an average cost across all meal types because the same facilities and staffing are used for all meal preparations. The actual cost to the Council of producing school meals only will be higher than £3.22 because nursery and breakfast club costs will reduce the average figure. Page 165 of 270
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Café and vending machine products 3.11 A 10% increase is proposed across all products sold at our cafes, vending machines and basket service. Charges were frozen last year, and increases have been determined as a result of covering the increase of food costs. Burial and cemetery fees 3.12 A 5% increase is proposed across all charges for burials, purchase of lairs, foundations, monuments, plaques and exhumation to remain in line with other authorities. Benchmarking was undertaken with neighbouring authorities (Edinburgh, Borders, East Lothian) and Local Government Benchmarking family group (Inverclyde, Renfrewshire, South Lanarkshire, Angus, Clackmannanshire, West Lothian and East Renfrewshire). The average adult interment charges for neighbouring authorities is £1,046. The average adult interment charge from our LGBF group is £1,024. Results show Midlothian is averagely priced in comparison to both groups. The average full lair charges for neighbouring authorities is £1,159 and the average full lair charges from our LGBF group is £1,113. Results show Midlothian is averagely priced in comparison to both groups. Allotments – review and uplift of existing charges 3.13 A 5% increase is proposed for allotments fees to £120 per year and £60 for a concession charge. There is good demand for allotments which exceeds supply. Benchmarking has been carried out across neighbouring authorities where data was available, Edinburgh Council currently charge £161 per year, Scottish Borders, £52 per year and East Lothian Council £52 per year. The average charge across these areas is £89. Midlothian is already charging well above average in comparison. No other information could be gathered from our Local Government Benchmarking family group. These Local Authorities either do not publish their charges on site and/or sites are managed by an allotment association. Greenspaces – park and event field hire 3.14 A review of events charges and associated fees for events that occur in the Council’s Parks and Greenspaces was undertaken last year where charges were significantly increased to align with other authorities. Further benchmarking was undertaken this year, and an inflationary 5% increase is proposed to remain aligned to other authorities. Benchmarking information is limited for BBQ hiring facilities. The proposed increase of 5% would continue to align Midlothian with West Lothian Council after fees were uplifted last year. Page 166 of 270
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Similarly, benchmarking information is limited for outdoor space hire as a direct comparison (events, fairground, circus). Work was carried out last year to review all event field hire, circuses and fairgrounds. For event field hire, charges were benchmarked against Edinburgh Council charges for small events at city park sites as the closet direct comparison and East Lothian's large open space charges for commercial use. The average charge per day is £336. A 30% increase was applied to charges for 24/25 to bring charges in line with other authorities. A proposed inflationary 5% increase is proposed to continue to align charges. For fairground hire, benchmarking was carried out with East Lothian, Scottish Borders and Renfrewshire Council. The average charge for Fairgrounds (up to 10 shows/stands) is £187 per day. Fairgrounds (up to 20 shows) is £373 per day. Fairgrounds (over 20 stands/shows) is £586 per day. A proposed inflationary increase is proposed to continue to align charges. A 100% increase was applied to charges for fairground hire for 24/25 to bring charges in line with other authorities. For Circus space hire, benchmarking carried out with Scottish Borders and Renfrewshire Council show that Midlothian charge similar for circus space hire. It is likely other authorities charge per event hire which would show Midlothian are averagely priced in comparison. A 30% increase was applied last year to align with other local authorities. An inflationary rate is proposed to continue to align. Charges for our Ranger services were restructured as part of last year review of charges, no increases are proposed to encourage uptake of ranger sessions. Road Services road permits – review and uplift of existing charges 3.15 With the exception of footway crossing permits and access protection marking all permits are mainly aimed at developers and/or commercial businesses. Permits such as material road occupation, skip and scaffolding may be aimed at businesses but also members of the public. Table and chairs permits are mainly aimed at hospitality businesses and would include small local cafes. Benchmarking was undertaken with neighbouring authorities and our Local Government Benchmarking family group. After permits were brought more in line with other authorities last year, results show that Midlothian are either averagely priced or charging higher for table and chairs permits, cabin/storage, skip, hoarding, material/road occupation and scaffolding permits. Temporary Traffic Regulation Orders (TTROs) up to 5 days show Midlothian as slightly under charging compared to other authorities but TTROs over 5 days show Midlothian as charging higher than other authorities. In comparison benchmarking against other authorities for crane permits, footway crossings, access protection markings and hoist access tower permits show Midlothian as charging below average. Page 167 of 270
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Due to different scale of charges for excavations it is not possible to carry out a direct comparison for some excavation permits. However, for those charges where a close comparison can be made, Midlothian are charging under the average of other authorities. Recognising that Midlothian is the fastest growing Council, it is proposed to increase those permits aimed solely at developers/larger commercial businesses/utility companies by 100%. This would put Midlothian at the higher end of charges compared to other authorities. A 5% increase is proposed for those permits already in line with other authorities but where members of the public would be affected by a higher increase. A 20% increase is proposed for those permits where in comparison to other authorities Midlothian are undercharging. A 50% increase is proposed for Access Protection Marking to cover the cost of providing the service. Waste – New housing developments 3.16 The ordering of new waste and recycling bins and boxes for new housing developments are processed as part of our street name and numbering processes. These charges are aimed at property developers only. Developers are charged for the costs of providing waste and recycling containers for new build housing. This covers the initial capital purchasing cost of the containers, delivery and administration. A 90% increase was applied to these charges last year. A further 25% increase is proposed this year to £250 per full set of bins and boxes (excluding the garden waste bin which is part of additional charges to customers who sign up to the garden waste service). Council, when it acts as a property developer, will also be subjected to these costs. Garden Waste 3.17 In February 2024, Council agreed to uplift garden waste charges to £42/year, to take effect in year 2025/26. It is proposed to uplift this charge to £45 for 2026/27. Benchmarking was carried out across all 32 Councils and shows an average charge of £45 per permit with 12 Councils charging between £30 to £45 and 11 Councils charging between £45-£60. It should be noted that some of these Councils may offer a year round collection. Council should note that as the promotion for garden waste sign commences in January of each year, any change to charges needs to be agreed in this financial year to take effect for next. Customer uptake over the last two years has remained steady with 18,361 customers subscribing to the garden waste service in 2023 and 18,516 in 2024. Page 168 of 270
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Licensing – civic government 3.18 Taxi licences: A review across all licence charges and charging scales has been undertaken this year with detailed benchmarking carried out across our neighbouring authorities and our Local Government Benchmarking family group authorities. Proposed percentage increases vary across all taxi licence types and have been uplifted to align with other authorities, ensure the costs of providing the service are met and introduce a more consistent charging scale. Results of benchmarking in general highlighted that: • For taxi driver licence first application charges, Midlothian sit near the average charge of £160 across all authorities (Midlothian currently £143). • For taxi licence applications, Midlothian sit above average at £563 (combining our 1st and 2nd fee) with the average charge across all authorities of £463. • For private hire car driver first application licences, Midlothian charge £102 which is under the average charged across all authorities at £161. • For private hire car licence applications, Midlothian sit above average at £547 (combining our 1st and 2nd fee) with the average charge across all authorities £460. Benchmarking results showed that in general Midlothian's renewal fees are lower than other authorities with 4 out of 10 Councils benchmarked charging the same charge for taxi licence 1 year renewals as applications and 6 out of 10 authorities charging the same for private taxi licence 1 year renewals as applications. It should be noted that application and renewal fees for licences should reflect the cost to the Council of processing the application. Costs for a new application and renewal require the same level of resource and time to process. In addition, from the benchmarking carried out no other authorities offer a charge for a 2 year licence renewal or offer a spilt taxi licence 1st and 2nd fee. It is therefore proposed to remove the offer of a 2 year licence. 2 year renewals are licences rarely applied for. It is also proposed to combine both the 1st and 2nd taxi licence fees into one combined fee to streamline the administration and payments process. To introduce a more consistent charging structure, whilst covering the cost of providing the service including monitoring and “spot checks” throughout a 3 year licence period as required, all 3 year renewal licence charges have been calculated at a 75% increase rate from the cost of the application/1 year renewal fee. All licence renewal applications have been increased to the same charge as first/initial applications. Page 169 of 270
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3.19 All other civic licences: a review across all other licence charges and charging scales has been undertaken this year and benchmarking undertaken against Edinburgh, East Lothian, Scottish Borders and West Lothian Council. Proposed percentage increases vary across all licence types and have been uplifted to align with other authorities, ensure the cost of providing the service are met and introduce a more consistent charging scale. Results of benchmarking in general highlighted that: In general, Edinburgh Council charges are higher than any other authority benchmarked mainly due a variety of scales of charging for different locations. It is therefore difficult to directly compare these licence types. Comparing benchmarking information directly to East Lothian and Scottish Borders, Midlothian are charging less for window cleaning, street trader and houses of multiple occupation licences. For public indoor sports licences, metal dealers, second hand dealers, later hours catering, knife dealer, venison dealer and public entertainment licences, Midlothian are in line with these authorities or charging above. In terms of renewals, both Scottish Borders and East Lothian charge the same for applications and 1 year renewals and therefore in comparison Midlothian are undercharging for 1 year renewals across all licences. As a result, it is proposed to align with other authorities and ensure cost recovery of providing the service and increase renewals to the same fee as applications. It should be noted that application and renewal fees for licences should reflect the cost to the Council of processing the application. Costs for a new application and renewal require the same level of resource and time to process. To introduce a more consistent charging structure, whilst covering the cost of the providing the service including monitoring and “spot checks” throughout a 3 year licence period as required, all 3 year renewal licence charges have been calculated at a 75% increase rate from the cost of the application/1 year renewal fee. Various licence fees have been uplifted by a 5% inflationary rate where the fee is already at a level to recover costs. Environmental health 3.20 Charges across Environmental Health for caravan site applications, animal licences, immigration certificates and food certificates vary from 5% inflationary charge to 80% charge to cover the cost of providing the service. For permanent caravan site licence applications, a 5% increase is proposed to applications with one exception of a 40% increase in renewals with site inspections per pitch from £8.80 to 12.30, this aligns with the cost for first licence pitch inspections due to the same time and resource involved in the process. Page 170 of 270
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For animal licences, benchmarking was carried out with neighbouring authorities and results show that Midlothian are undercharging for animal licensing fees: • Licence fees for breeding of animals: Edinburgh charge: £372, West Lothian £322 and East Lothian £200. • Commercial animal boarding: East Lothian charge £69.00, Edinburgh £308 (with £140 for renewal). • Pet shop: West Lothian charge: £322, Edinburgh £436. • Dangerous wild animals: West Lothian charge £138.57, East Lothian £138 It is proposed to increase charges to an average charge across those authorities and where required increase to cover the cost of providing the service. For immigration/health/food certificates, immigration certificates have been increased by an inflationary rate of 5%. Food export certificates (with or without inspections requirements) have been increased by 5% and 30% to reflect the true cost of providing the service. Certificate of Compliance for street trading vehicles under Section 39 Civic Government Scotland Act have been increased by 34% to align with the food hygiene certificate charge under section 50 at £131.00. Resourcing requirements and costs are similar for both and therefore increased to ensure costs are met. Sport and Leisure 3.21 An inflationary rate of 5% is proposed across all fees within sport and leisure including hiring of pitches, halls, Tonezone memberships, Midlothian Access Card (6-12 month) and our general facilities including swimming, exercise classes and hiring of facilities and equipment. Charges across sport and leisure facilities have remained static since 20/21. A standard inflationary rate is proposed across all sport and leisure charges this year pending a further review of charges during 25/26 as part of the Councils Transformation Blueprint. All charges under the Snowsports centre have remained static since 20/21 and previous to 20/21 charges were uplifted between 1-3%. All fees for snowsports have been reviewed and a 10-20% increase is proposed to cover the costs of operating the service with the exception of a 30% increase for private lessons for racing taking into account the additional set up costs and requirements of a specialist instructor. In addition, it is also proposed to remove the combined charge for family lessons (1.5 hours) for two adults and 2 children and any additional children due to no demand over the years for this service. No increases are proposed for our Alpine Coaster rides which recently went live during 2024. Page 171 of 270
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Library 3.22 Benchmarking was carried out with Edinburgh, East Lothian, West Lothian, Inverclyde, Angus and Clackmannanshire Council. Increases between 4-25% are proposed for printing and photocopying to align with average charges across these authorities. Benchmarking results show that: The average charge for printing is: • 23p for A4 black and white • 68p for A4 colour The average charge for photocopying is: • 26p for A4 black and white • 60p for A4 colour • 50p for A3 black and white • £1.00 for A3 colour. Charges for fax sending and use of image for publication have generally remained static since 2019/20. Customer demand for faxing and use of publications images are very low and faxing is only available in one of our libraries. It is proposed to increase these charges by 10% to 25%. Registrars 3.23 A review of charges was undertaken across our citizenship’s ceremonies and civil marriage/partnerships ceremonies. The current charge for a private citizenship ceremony (£80) with or without guests has been replaced by a new tiered structure to now offer a ceremony charge with or without guests and an option of an express ceremony to ensure charges are more proportionate: • Citizenship Ceremony (private) with no guests at £100.00 • Citizenship Ceremony (private) with guests at £140.00 • Citizenship Ceremony (private), express options within 5 working days, 2 guests at £150.00 A benchmarking exercise was undertaken with other Local Authorities and ceremony charges increased to reach a competitive price. The current standard charge for civil marriage/ partnership ceremonies during office hours at £305 has been replaced by a new two tiered structure to offer the customer a reduced charge for a small ceremony with no guests. The two tiered structure is proposed to encourage uptake of office hour ceremonies whilst ensuring the charge is proportionate to that of a larger ceremony with guests. • Civil Marriage/Partnership in office during office hours (Ceremony room) with no guests at £205. • Civil Marriage/Partnership in office during office hours (Ceremony room) with guests at £355. Page 172 of 270
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Benchmarking was carried out with other Local Authorities and civil marriage/partnership ceremonies are increased to align with other authorities as well as ensuring the costs are met to provide the service. (including, upkeep of the ceremony room). A new charge is proposed for proof of life documentation at £15.00 to recover the cost of providing this service which is currently delivered free of charge. Benchmarking was carried out with other local authorities who are charging for this service. With the exception of the new proposed scale of charges set out above, changes to the remaining registrar fees are minimal. Charges proposed align with neighbouring Local Authorities after benchmarking was carried out or cover the cost of service being provided. No increases are proposed for baby naming ceremonies and renewal of vows to encourage uptake of these services. Further work is in progress to develop a wider ceremony offering maximising the opportunities across the Midlothian estate, to increase income levels. A proposal will be presented later in 2025/26 for consideration. Street naming and numbering 3.24 Benchmarking was carried out with Edinburgh, East Lothian, Scottish Borders, Inverclyde, Renfrewshire and Clackmannanshire. Against all Councils benchmarked, Midlothian are at the higher end of charges for street naming and numbering. A sample of benchmarking results show: • For naming of new street Midlothian charges are £500, Edinburgh, £333, East Lothian, £300, Scottish Borders £187, Inverclyde £150, Renfrewshire £190 and Clackmannanshire £187. • For naming/numbering new properties Midlothian charges are £150, Edinburgh, £75, East Lothian, £79.70, Scottish Borders £96, Inverclyde £50, Renfrewshire £80 and Clackmannanshire £96. A 5% increase is proposed to reflect increase in staffing costs/inflation. Adult Health and Social Care 3.25 The guidance for care charges for 25/26 has yet to be published however as in previous years there is an expectation the charging guidance will be amended to take into account the inflationary increase in welfare benefits. The effect of applying the inflationary increase to charging guidance is to increase the charging income by approximately the same amount. For example, in April ’24 and inflationary increase of 6.7% was applied to welfare benefits. Consequently, the COSLA guidance set out in increase in the threshold for charging of 6.7%. Since individuals’ benefit income also increased by 6.7% the net result will have been an increase of charging income of approximately 6.7%. Page 173 of 270
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The UK government is uplifting benefits by 1.7%. It is not known if the same increase will apply to devolved benefits. Assuming a 1.7% uplift is applied to all benefits this will result in an increase in charging income of approx. £16.3k. (1.7% of £960k). Care charges have not been increased for several years in Midlothian. The table below uses the uprating applied to benefits since 2011 and applies this to the current care charge and what the charge would currently be if it was uplifted in line with benefits. Charge Current Rate Last Increased Rate if uplifted as per benefits Care Charges (Hourly) £12.40 April ‘20 £15.65 Telecare £4.00 April ‘20 £5.05 Transport (per journey) £1.00 April ‘18 £1.34 Day Services £3.15 April ‘18 £4.24 Cherry Road Meals £2.50 April ‘12 £3.95 It should be noted that as charging is capped it does not necessarily follow that an increase in rates will result in proportionate increase in income and this is discussed further below. 3.26 Care Charges Currently 417 individuals receive non-residential chargeable services and are above the income threshold and therefore pay towards their services. The financial assessment caps the amount an individual has to pay in charges and 80% of the clients who pay charges are charged the maximum amount. This means if the hourly rate were to be increased only 20% of the users that pay charges would pay more. Any percentage increase may not also be fully realised as it would be expected that an increase in charges would draw more people into the cap of charges. The hourly charge for non-residential care provision is £12.40 per hour. The rate was last increased in April 2020 and if it had been increased in line with benefits would currently be £15.65. The table below sets out the additional income that could be realised by an increase in this hourly charge: • Estimated charging income FY 24/25 = £960k • Uncapped charging income FY 24/25 = £255k (26.6% of total income) Page 174 of 270
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Increase in Charges Revised Rate Additional Income Notes 1.7% £12.61 £4.3k Applied to full amount of uncapped income 3% £12.77 £7.7k Applied to full amount of uncapped income 5% £13.02 £12.8k Applied to full amount of uncapped income 10% £13.64 £25.5k Applied to full amount of uncapped income 20% £15 £38.3k Applied to 75% of uncapped income to account for more people falling within the cap on charges 26.1% £15.65 £46.6k Rate if uplifts had been applied as per benefits Applied to 70% of uncapped income to account for more people falling within the cap on charges The Midlothian Charging Policy currently sets the taper amount to 70% of excess income (the income after disregards have been applied). This means that 30% of excess income is not liable for charging. This taper could be increased and would result in the additional income as the maximum amount people could be charges would increase. The table below sets out the income that could be expected taking into consideration that the 20% of people paying less than the maximum amount would not see an increase in charges. The taper Midlothian applies is in line with other Local Authorities. Any changes in the taper would have a material impact on the available income of individuals who are charged for services. It should be noted that someone on full benefits is likely to be assessed as requiring to pay care charges so increasing the taper would reduce their income for daily living costs. Consequently, is should be expected there would be significant opposition to increasing the taper amount. Taper Amount Additional Income Notes 70% - Current taper amount 75% £51.4 k Assumes increase in overall charging income by 6.7% - reduced by 20% for clients under the cap 80% £109.8 k Assumes increase in overall charging income by 14.3% - reduced by 20% for clients under the cap Page 175 of 270
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Telecare Charges 3.27 Currently there is a flat rate charge for Telecare Alarms of £4 per week. This is not financially assessed. The rate was last increased in April 2020 and if it had been increased in line with benefits would currently be £5.05. Analogue to Digital work continues to progress. The digital network addresses the risks associated with the aging analogue system however there are known additional costs. The Integrated Joint Board (IJB) and specifically Midlothian Council have supported our Midcare team during the transition from analogue to digital which has included the additional costs associated with sim cards required for digital. Our current timeline to conclude this switchover is December 2025. The weekly charge will rise to £6.50 per week. As a 62% increase this may not be palatable however these costs are well documented and have been previously agreed by Midlothian Council. This will of course impact on the anticipated income generation beyond December. Mitigations for the risks around clients opting out as a result of rising costs are being addressed through communications with clients during switchover and for all new clients so that information is consistently known. Additional income that would be realised through an increase in charges is as follows: • Total charging income = £320k Increase in Charges Revised Rate Additional Income Notes 1.7% £4.07 £5.4k 3% £4.12 £9.6k 5% £4.20 £16k 10% £4.40 £32k 20% £4.80 £64k 26.3% £5.05 £84.2k Rate if uplifts had been applied as per benefits Day Service Charges 3.28 Currently there is a charge for attendance at Adult Day Services of £3.15 per day. This generates around £32k income per year. Increasing the charges will only result in an increase in income in 20% of the cases due to 80% of clients already being charged the maximum amount. Any percentage increase may not also be fully realised as it would be expected that an increase in charges would draw more people into the cap of charges. Additional income that would be realised through an increase in charges is as follows: • Total charging income = £32k (23/24 figures) • Uncapped charging income = £28.8k (90% of total income) Page 176 of 270
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Increase in Charges Revised Rate Additional Income Notes 1.7% £3.20 £0.5k 3% £3.24 £0.9k Applied to full amount of uncapped income 5% £3.31 £1.4k Applied to full amount of uncapped income 10% £3.47 £2.9k Applied to full amount of uncapped income 20% £3.78 £5.2k Applied to 90% of uncapped income to account for more people falling within the cap on charges 34.6% £4.24 £8.0k Rate if uplifts had been applied as per benefits Applied to 80% of uncapped income to account for more people falling within the cap on charges Transport Charges 3.29 Currently there is a charge for transport to Adult Day Services of £1 per journey. The maximum charge is £11 per week which is half of standard rate PIP / DLA mobility component when the charges were introduced. This generates around £31k income per year. The current charge was set in 2018 and has not been increased since then. Had charges been increased in line with benefits the current charge would be £1.34. As the standard rate PIP / DLA mobility component in 24/25 is £26.90 there could be a rationale to increase the maximum charge per week from £11 to £13.45, an increase of 22.2%. The estimated additional income that would be realised through an increasing the cap and the charges is as follows: • Total charging income = £31k (based on FY23/24) Increase in Charges Revised Rate Additional Income Notes 1.7% £1.02 £0.5 Full effect of increase applied 3% £1.03 £0.93k 5% £1.05 £1.55k 10% £1.10 £3.1k 20% £1.20 £6.2k 34% £1.34 £10.5k Rate if uplifts had been applied as per benefits Page 177 of 270
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Day Centre Meals (Cherry Road) 3.30 Currently there is a flat rate charge for meals at Cherry Road day service of £2.40 per day. This is not financially assessed. The current charge was set in 2012 and has not been increased since then. Had charges been increased in line with benefits the current charge would be £3.95. Additional income that would be realised through an increase in charges is as follows: • Total charging income = £7,000 Increase in Charges Additional Income Notes 1.7% £120 Daily Charge £2.44 3% £210 Daily Charge £2.47 5% £350 Daily Charge £2.52 10% £700 Daily Charge £2.64 20% £1,400 Daily Charge £2.88 64.6% £4,522 Daily Charge £3.95 Rate if uplifts had been applied as per benefits Respite Charges 3.31 During 23/24 Carer’s funding was used to ensure the majority of respite (up to equivalent of 6 weeks residential care) was non chargeable. Consequently only a negligible proportion of care charges be for respite care and in these cases is appropriate for the normal care charging policy to apply. Summary 3.32 It is anticipated that as a result of changes in benefits rates and a consequential update of the COSLA charging guidance the following additional income will be realised in FY24/25. • Care Charges £64,000 The following table summarised the potential additional income that could be realised by increasing care charges. Page 178 of 270
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Charges 1.7% 3% 5% 10% 20% In line with benefits Care Charges 4,300 7,700 12,800 25,500 33,300 46,600 Telecare Charges 5,400 9,600 16,000 32,000 64,000 82,200 Day Service Charges 500 900 1,400 2,900 5,200 8,000 Transport Charges 500 930 1,550 3,100 6,200 9,900 Day Centre Meals 120 210 350 700 1,400 4,340 Totals 10,820 19,340 32,100 64,200 110,100 151,040 The following table summarised the potential additional income that could be realised by increasing the taper amount for charging from 70%. Taper Amount Additional Income Notes 70% - Current taper amount 75% £51.4 k Assumes increase in overall charging income by 6.7% - reduced by 20% for clients under the cap 80% £109.8 k Assumes increase in overall charging income by 14.3% - reduced by 20% for clients under the cap No changes to charges Lifelong Learning and Employability 3.33 No increases are proposed for Code A and G courses (all levels) and a 3-4% increase proposed only for Codes C to F. Proposed fees aim to ensure courses remain affordable during the cost of living crisis and encourage uptake. Proposals aid in delivering the priorities and targets set out in the Single Midlothian Plan to increase the number of adults participating in adult learning and increase qualification levels. It should be noted that customers registering for qualifications who meet the criteria (in low paid work, no qualifications above a certain level etc) qualify for an Individual Learning Account from Skills Development Scotland of up to £200. Page 179 of 270
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Bonnyrigg District Heating Scheme 3.34 It is not proposed to change the charges at present due to an ongoing feasibility study. Travel and Fleet Services 3.35 It is proposed to freeze the charge for non-entitled travel school bus pass currently at £245.00. This will be reviewed as part of the Client Transport workstream contained within the Transformation Blueprint. Other charges within this service are statutory capped charges where charges are already at the maximum. Planning 3.36 Most fees across our planning service are statutory and no increases are proposed at present. The Scottish Government have indicated there may be some changes to statutory charges during the summer of 2025 however there is no further information at this stage. The fees register will be updated when changes to statutory charging are announced. In relation to pre-application planning advice, there are no plans at present to review the Planning Charter fees prior to April 2025 however the charter will be reviewed during 25/26 ahead of April 2026. Car Parking 3.37 No increases are proposed across our car parks. Car parking charges at Vogrie Country park are proposed to remain at £3.00 to stay aligned to local competitors in Midlothian and other local authorities. Charges for car parking within Dalkeith town centre (St Andrews Street and North Wynd) remained static since their introduction in 2011/12 until 24/25 when a 50% increase was applied to up to 3 hours and 25% increase over 4 hours stay. Benchmarking was carried out with neighbouring authorities and our Local Government Benchmarking Framework family group where data was available. With the exception of Edinburgh Council, increasing charges would put Midlothian above all other authorities benchmarked. Car parking fees will be further reviewed as part of our parking strategy. Car parking volumes gathered from NSL show that the total number of car parking sessions for 22/23 was 30,439, 23/24 was 33,442 and 24/25 to the beginning of December 2024, 23,445. Volumes for 24/25 are estimated to be 34,880 and similar to that of previous years. Wider work is ongoing to develop a Council Parking Strategy and is anticipated to be presented to members in 2025/26. Page 180 of 270
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Electric vehicle charging 3.38 Benchmarking was carried out with neighbouring authorities, Edinburgh, East Lothian, West Lothian and Scottish Borders and our Local Government Benchmarking family group. Data shows Midlothian is averagely priced in comparison. For slow/fast chargers, the average charges across LGBF group is £0.45. For neighbouring authorities, the average charge is £0.40. For rapid chargers, the average charge across LGBF groups is £0.78. For Neighbouring authorities, the average charge is: £0.60. No further increases are proposed this year to remain competitive with our local authorities near the area. Electric Vehicle charging will be reviewed as part of the EV strategy during 25/26. Trade waste 3.39 It is proposed to freeze Trade Waste bin collection and bin leasing charges pending a review of charges later this year. It is expected that a freeze of charges will encourage uptake of the service. Benchmarking was carried out with neighbouring authorities, East Lothian and Scottish Borders and our Local Government benchmarking family group. For weekly bin collections (240 litre) (residual), the average charge for neighbouring authorities is £337, average LGBF group charge is £365. Midlothian are currently averagely priced in comparison. For weekly bin collections (240 litre) (residual) charity, the average charge for neighbouring authorities is £337, average LGBF group £280. Of the authorities benchmarked only 2 out of 7 Councils have a reduced charge for businesses operating as charities. The average of those two authorities is £189, making Midlothian above average in direct comparison, however well below average in comparison to those authorities who do not have a reduced charity rate. For weekly bin collections (240 litre) (recycling), the average charge of neighbouring authorities is £300, average LGBF group £294. Midlothian are currently averagely priced in comparison. For weekly collections (660 litre), Midlothian are currently charging below the average of other local authorities. However, only approximately 7% of our customer base receive 660 litre bin collections and therefore no increases proposed to encourage uptake. Bulky Uplifts 3.40 The charging structure for bulky uplifts was reviewed last year and a new set of charges approved in line with other authorities after benchmarking was carried out. No increases are proposed for bulky uplifts to embed the new charging structure and encourage uptake of the service. Additional benchmarking was carried out this year to ensure we continue to align with other authorities. Page 181 of 270
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Statutory fees 3.41 Licence charges within trading standards are statutory. There may be changes to statutory charges around April 2025. The fees register will be updated when any information is available. 3.42 Landlord fees are statutory. There may be changes to statutory charges around April 2025. The fees register will be updated when any information is available. 4 Report Implications (Resource, Digital and Risk) 4.1 Resource Each service is individually responsible for implementing the recommended fees and charges. Charges are aligned to cost recovery so it is not anticipated that any additional resource will be required to implement. The approved fees and charges register will be published on the Council’s website. 4.2 Digital The Customer Service Platform project is ongoing and a key output from this is to rollout online payment processes that are available 24/7. The review of fees and charges has identified a number of areas that would benefit from an online payment option to improve the customer experience, reduce staff time processing manual payments and allow for greater visibility on income and volumes of transactions. These service areas will be added to the existing workplan and progressed through the 2025/26 financial year. 4.3 Risk The Council is facing significant financial pressure. The report outlines the rationale for the proposed changes to fees and charges. To do nothing would present significant risk in some areas where, for example, maintaining current charges with no increase means cost recovery is not being achieved; and in other areas where to do nothing would result in a missed opportunity to generate income for the Council. 4.4 Ensuring Equalities (if required a separate IIA must be completed) A separate IIA has been produced for the recommendations and will be revised following approval at Council to include any changes from the recommendations. Following on from this, where a change to fees and charges results in a policy change or redesign of existing process, the service area that is responsible for this will complete a more detailed IIA at the point of policy development/process redesign. The IIA is available for review online. 4.5 Additional Report Implications (See Appendix A) Page 182 of 270
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See Appendix A Appendices Appendix A – Additional Report Implications Page 183 of 270
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APPENDIX A – Report Implications A.1 Key Priorities within the Single Midlothian Plan Not applicable A.2 Key Drivers for Change Key drivers addressed in this report: Holistic Working Hub and Spoke Modern Sustainable Transformational Preventative Asset-based Continuous Improvement One size fits one None of the above A.3 Key Delivery Streams Key delivery streams addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value Not applicable A.5 Involving Communities and Other Stakeholders All service areas listed in the fees and charges register have been consulted to inform the recommended changes. A.6 Impact on Performance and Outcomes Not applicable A.7 Adopting a Preventative Approach Not applicable A.8 Supporting Sustainable Development Not applicable Page 184 of 270
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APPENDIX B Draft register of charges 2025/26 for publication – available to review on the Council’s website: Fees and Charges 2025-26 DRAFT | Fees and charges 2025-26 DRAFT Page 185 of 270
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Midlothian Council Tuesday 25 February 2025 Item No 8.8 Audit Committee Recruitment of an Independent Member Report by Duncan Stainbank, Chief Internal Auditor. Report for Decision 1 Recommendations Council is recommended to: • Approve the change to the Scheme of Administration (Appendix B) for the Audit Committee to recruit for 2 Independent Committee Members. • Approve the change to the Scheme of Administration (Appendix B) for the Audit Committee members to appoint a permanent Committee chair, from within all Audit Committee members. • Approve the permanent move to specifying the Audit Committee meeting schedule of 4 meetings a year, whilst still allowing additional meetings to be scheduled. • Approve the introduction of a payment of a fee of £200 per Committee attended for each Audit Committee up to a maximum of £1,000 per annum for Independent Audit Committee members. 2 Purpose of Report/Executive Summary 2.1 The Audit Committee Annual/End of Term Report 2023/24, by the Chair of the Audit Committee as approved by the Audit Committee on the 30 September 2024 had recommended improvements for the Audit Committee. Section 4.2 of that approved report contained the following 2 recommendations: • Schedule a recruitment, selection and appointment process for independent members of the Audit Committee within the next year. • Move to 4 scheduled meetings of the Audit Committee each year from the 7 meetings currently scheduled, whilst retaining the capability to call further meetings when required. Page 186 of 270
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2.2 The CIPFA Position Statement 2022: Audit committees in local authorities and police states, the following: “CIPFA recommends that each authority audit committee should include at least two co-opted independent members to provide appropriate technical expertise.” This is the standard that the Audit Committee annually assesses against and currently there are no independent members of the Midlothian Council Audit Committee. 2.3 A recruitment advert for an Independent Audit Committee Chair and Member was issued in May 2022, however no candidates applied for these positions, as a result agreement to rotate the Chair across the three political parties was agreed. Since May 2022 the Audit Committee has been Chaired by three separate Councillors. The CIPFA Position Statement 2022: Audit committees in local authorities and police, states under characteristics of audit committee membership: “A strong, independently minded chair, displaying a depth of knowledge, skills, and interest. There are many personal skills needed to be an effective chair, but key to these are: • promoting apolitical open discussion • managing meetings to cover all business and encouraging a candid approach from • all participants maintaining the focus of the committee on matters of greatest priority.” 2.4 The CIPFA Position Statement 2022: Audit committees in local authorities and police provides no statement that the Chair of the Audit Committee should be an independent member. The CIPFA Publication Practical Guidance for Local Authorities and Police Guiding the Audit Committee, states the following on appointing the Chair of the Audit Committee. “Unless there is specific legislation or guidance in place on the selection of the committee chair, authorities can determine their own approach. To try and emphasise the independence and apolitical nature of the committee, some authorities specify that the position should be occupied by an ‘opposition’ member. This approach may be appropriate for some but will not be possible for all authorities – for example, where there are few opposition members.” 2.5 It is therefore being recommended that a permanent chair is appointed following on from a recruitment exercise as early as possible in 2025. The Audit Committee should then be empowered to appoint a chair meeting the required skills from within the membership of the committee rather than appointing a chair directly from any recruitment exercise. Page 187 of 270
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2.6 Given the lack of candidates applying for Independent Member positions at the last attempt in 2022 a review of other authorities and public sector bodies has been undertaken. Scottish Local Authorities have not normally provided renumeration for Independent Audit Committee Members although limited Councils have independent members in place. However, other UK Local Authorities are beginning to offer renumerated roles, for example currently the London Borough of Hounslow are offering an annual allowance of £2,000 for Independent Members of the Audit & Governance Committee, Wealden District Council offering an annual allowance of £909, Mole Valley District Council offering £530 per annum, and Oldham Council offering £446 per annum. Consideration should be given to a small allowance being offered for an appropriate independent member candidate, with a mechanism to be agreed via the Chief Officer Council Resources. Date: 14 January 2025 Report Contact: Duncan Stainbank Tel No 01620 827353 duncan.stainbank@midlothian.gov.uk Page 188 of 270
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3 Background/Main Body of Report 3.1 It is important that the Council’s Audit Committee fully complies with best practice guidance on Audit Committees to ensure it can demonstrate its effectiveness as a scrutiny body as a foundation for sound corporate governance for the Council. 3.2 The Chartered Institute of Public Finance and Accountancy (CIPFA) issued an updated guidance note Audit Committees Practical Guidance for Local Authorities and Police 2022 Edition (hereinafter referred to as CIPFA Audit Committees Guidance). It incorporates CIPFA’s Position Statement: Audit Committees in Local Authorities and Police which sets out CIPFA’s view of the role and functions of an Audit Committee. 3.3 The CIPFA Audit Committees Guidance includes the production of an annual report on the performance of the Audit Committee against its remit for submission to the Council. 3.4 The Audit Committee Self-Assessment as approved by the Audit Committee on the 30 September 2024 identified 2 improvements that require changes to the sceheme of administration as laid out in the recommendations in 1. Above. These are: • Schedule a recruitment, selection and appointment process for independent members of the Audit Committee within the next year. • Move to 4 scheduled meetings of the Audit Committee each year from the 7 meetings currently scheduled, whilst retaining the capability to call further meetings when required. 4 Report Implications (Resource, Digital and Risk) 4.1 Resource The report recommends following benchmarking that the two Independent Members are provided an allowance of £200 per Audit Committee, prepared for and attended. Total cost is estimated as between £1,600 and £2,000 per annum. 4.2 Digital There are no digital implications arising from this report. 4.3 Risk There is a risk that the Audit Committee does not fully comply with best practice guidance thus limiting its effectiveness as a scrutiny body as a foundation for sound corporate governance. The implementation of the recommendations ensure that the best practice is being adhered to. Page 189 of 270
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4.4 Ensuring Equalities (if required a separate IIA must be completed) This report does not relate to a new or revised policy, service or budget change, which affects people (the public or staff), so an Integrated Impact Assessment (IIA) is not an applicable consideration. 4.5 Additional Report Implications (See Appendix A) Appendices Appendix A – Report Implications Appendix B - Revised Audit Committee Extract from the Scheme of Administration. Page 190 of 270
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APPENDIX A – Report Implications A.1 Key Priorities within the Single Midlothian Plan Although this report does not relate directly to the key priorities within the Single Midlothian Plan to which Midlothian Council and its Community Planning Partners have made a commitment (Reducing the gap in economic circumstances; Reducing the gap in learning outcomes; Reducing the gap in health outcomes; and Reducing the impact of climate change), good governance is important to enable Midlothian Council to deliver its key priorities in support of achieving the Council’s objectives. A.2 Key Drivers for Change Key drivers addressed in this report: Holistic Working Hub and Spoke Modern Sustainable Transformational Preventative Asset-based Continuous Improvement One size fits one None of the above A.3 Key Delivery Streams Key delivery streams addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value Self-assessment of the Audit Committee utilising best practice toolkits underpins its own continuous improvement to enhance its effectiveness as a scrutiny body as a foundation for sound corporate governance of the Council, thus supporting the delivery of the Council’s best value duties. A.5 Involving Communities and Other Stakeholders The Audit Committee in fulfilling its governance role acts as a bridge between the Council and other stakeholders. Including Independent members on the Committee should enhance this role further. Page 191 of 270
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A.6 Impact on Performance and Outcomes The members of the Audit Committee have reflected on the performance and outcomes against the remit of the Committee through the completion of annual self-assessments. The identification of improvement actions as evidenced through the Audit Committee Annual / End of Term Report are designed to enhance its effectiveness as a scrutiny body as a foundation for sound corporate governance of the Council. A.7 Adopting a Preventative Approach Assurances received by the Audit Committee from Management, Internal Audit and External Audit set out the assessment of prevention and detection internal controls and governance arrangements. A.8 Supporting Sustainable Development This report does not relate directly to supporting sustainable development. Good governance is important to enable Midlothian Council to achieve its objectives. Page 192 of 270
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Appendix B: Audit Committee Scheme of Administration Extract Proposed Changes Composition: The Audit Committee will comprise 5 Elected Members, currently on the following basis: • 2 Labour Members • 2 SNP Members • 1 Conservative Member The Audit Committee will be chaired by a Member of the Audit Committee, who can be an Elected Member or a non-voting independent member or a non- Cabinet Elected Member agreed by the voting members of the Committee The Committee will also include two independent non-voting members to be appointed by the Council on a report by the Chief Executive. The Independent members can comment on all aspects of the Committee’s business in order to assist it in its deliberations. Business: Statement of purpose 1. The audit committee is a key component of Midlothian Council’s corporate governance. It provides an independent and high-level focus on the audit, assurance and reporting arrangements that underpin good governance and financial standards. 2. The purpose of the audit committee is to provide independent assurance to elected members of the adequacy of the risk management framework and the internal control environment. It provides independent review of Midlothian Council’s governance, risk management and control frameworks and overseas the financial reporting and annual governance processes. It oversees internal and external audit, helping to ensure efficient and effective assurance arrangements are in place. Governance, risk and control 3. To review the council’s corporate governance arrangements against the good governance framework and consider annual governance reports and assurances, relating to the council’s service delivery models including partnership and collaboration, to ensure that the highest standards of probity, public accountability and ethical standards are demonstrated. 4. To review the Annual Governance Statement prior to approval and Deleted: will have an Independent Chair whose appointment will be made by the Council on the submission of a report from the Chief Executive.¶ ¶ Pending the appointment, or in the absence, of the Independent Chair, the Committee Deleted: n elected Deleted: meeting who is a non-Cabinet member. Deleted: one Deleted: At the invitation of the Chair, Deleted: t Deleted: is person Page 193 of 270
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consider whether it properly reflects the risk environment and supporting assurances, taking into account internal audit’s opinion on the overall adequacy and effectiveness of the council’s framework of governance, risk management and control. 5. To consider the council’s arrangements to secure value for money and review assurances and assessments on the effectiveness of these arrangements. 6. To consider the council’s framework of assurance, relating to the council’s service delivery models including partnership and collaboration, and ensure that it adequately addresses the risk and priorities of the council. 7. To monitor the effective development and operation of risk management in the council relating to the council’s service delivery models including partnership and collaboration. 8. To monitor progress in addressing risk-related issues reported to the committee. 9. To consider reports on the effectiveness of internal controls and monitor the implementation of agreed actions. 10. To review the assessment of fraud risks and potential harm to the council from fraud corruption. 11. To monitor the counter-fraud strategy, actions and resources. 12. To monitor controls operating over Treasury Management, through the scrutiny of the treasury management strategy, mid-term and annual performance reports prior to their presentation to Council for approval, and the Council’s approach to establishing ethical standards. Internal audit 13. To approve the internal audit charter. 14. To review proposals made in relation to the appointment of external providers of internal audit services and to make recommendations. 15. To approve the risk-based internal audit plan, including internal audit’s resources requirements, the approach to using other sources of assurance and any work required to place reliance upon those other sources. 16. To approve significant interim changes to the risk-based internal audit Page 194 of 270
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plan and resource requirements. 17. To make appropriate enquiries of both management and the Chief Internal Auditor to determine if there are any inappropriate scope or resource limitation. 18. To consider reports from the Chief Internal Auditor on internal audit’s performance during the year, including the performance of external providers of internal audit services. These will include: a) Updates on the work of internal audit including key findings, issues of concern and action in hand as a result of internal audit work. b) Regular reports on the results of the Quality Assurance and Improvement Programme. c) Reports on instances where the internal audit function does not conform to the Public Sector Internal Audit Standards and Local Government Application Note, considering whether the non- conformance is significant enough that it must be included in the Annual Governance Statement. 19. To consider the Chief Internal Auditor’s annual report: a) The statement of the level of conformance with the Public Sector Internal Audit Standards and Local Government Application Note (including code of ethics) and the results of Assurance and Improvement Programme that supports the statement – these will indicate the reliability of the conclusions of internal audit. b) The opinion on the overall adequacy and effectiveness of the council’s framework of governance, risk management and control together with the summary of the work supporting the opinion - these will assist the committee in reviewing the Annual Governance Statement. 20. To consider summaries of specific internal audit reports as requested. 21. To receive reports outlining the action taken where the Chief Internal Auditor has concluded that management has accepted a level of risk that may be unacceptable to the authority or there are concerns about progress with the implementation of agreed actions. 22. To contribute to the Quality Assurance and Improvement Programme and in particular, to the external quality assessment of internal audit that takes place at least once every five years. Page 195 of 270
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23. To consider a report on the effectiveness of internal audit to support the Annual Governance Statement. 24. To support the development of effective communication with the Chief Internal Auditor. External audit 25. To consider the external auditor’s annual letter, relevant reports, and the report to those charged with governance. 26. To consider specific reports as agreed with the external auditor. 27. To comment on the scope and depth of external audit work and to ensure it gives value for money. 28. To commission work from internal and external audit. 29. To advise and recommend on the effectiveness of relationships between external and internal audit and other inspection agencies or relevant bodies. Financial Reporting 30. To review the annual statement of accounts. Specifically, to consider whether appropriate accounting policies have been followed and whether there are concerns arising from the financial statements or from the audit that need to be brought to the attention of the Council. 31. To consider the external auditor’s report to those charged with governance on issues arising from the audit of the accounts. Accountability arrangements 32. To report to those charged with governance on the committee’s findings, conclusions and recommendations concerning the adequacy and effectiveness of their governance, risk management and internal control frameworks; financial reporting arrangements, and internal and external audit functions. 33. To report to full council on a regular basis on the committee’s performance in relation to the terms of reference and the effectiveness of the committee in meeting its purpose. Page 196 of 270
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Frequency of meetings: The Council will decide on the schedule of meetings for the Audit Committee, usually on a rolling annual basis which will be published.A minimum of 4 meetings will be held on an annual basis. Quorum: The quorum for meetings of the Audit Committee will be 3 Members, including at least 2 Voting Members. Minutes: The Minutes of the Audit Committee will be recorded by the Officer clerking the meeting and submitted to the next ordinary meeting of the Committee for approval. They will also be submitted to the Council both for information and to allow the Council to consider any recommendations contained in them. Meetings of the Audit Committee will also be audiocast subject to the exemptions contained within the Local Government (Scotland) Act 1973. Deleted: Deleted: which may include the Independent Chair (when appointed). Page 197 of 270
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Midlothian Council Tuesday 25 February 2025 Item No 8.9 Standing Orders Working Group update and schedule of meeting dates 2025/2027 Report by Saty Kaur, Chief Officer Corporate Solutions Report for Decision 1 Recommendations Council is recommended to: • Approve the updates to the Standing Orders (Appendix B) which includes changes to reflect the proposed process for recording private items (subject to approval of the next recommendation below) • Approve the process for recording of private items as set out in paragraph 3.4 and 3.5 and in doing so agree that the Standing Orders and Scheme of Administration are updated to implement the process as set out in paragraph 3.6 to 3.8 • Approve the schedule of meetings dates for 2025/26 and 2026/27 (Appendix C) 2 Purpose of Report/Executive Summary To update the Standing Orders, provide Council with the future meeting schedule for the next two academic years and agree a process for the recording of private items of meetings of Council and its Committees. Date Monday 20 January 2024 Report Contact: Saty Kaur, Chief Officer Corporate Solutions Saty.Kaur@midlothian.gov.uk Page 198 of 270
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3 Background/Main Body of Report Standing Orders updates 3.1 Appendix B presents an update to the Standing Orders. This was reviewed by Standing Orders Working Group (SOWG) at its meeting of Thursday 23 January 2025 and referred to Council for consideration and approval. Recording of private items of Council meetings 3.2 The Midlothian Council meeting of 17th of December 2024 requested a process be designed and presented to its meeting of February 2025 for the recording of private Council agenda items. 3.3 A paper was presented to SOWG who agreed in principle and has referred the process to Council for its consideration and approval. 3.4 It is proposed that all private agenda items (for Council and its Committees) are automatically recorded via Microsoft Teams, and a recording and transcript of the recording is retained by Democratic Services for 6 months after the meeting date. The recording and transcript will be stored safely with limited access only accessible by Democratic Services. 3.5 Members of the Committee and relevant Officers may request access to the recording within the retention time of which Democratic Services will keep a record of. After 6 months from the meeting date, the recording and transcript will be destroyed, of which Democratic Services will keep a record of. 3.6 If agreed, Standing Orders will be amended (as set out in Appendix B). 3.7 If agreed, the Scheme of Administration will be updated. Wording would be added in the Minutes section: Private items of any meeting agenda will be recorded and the recording retained by Democratic Services which will be accessible to all Elected Members and relevant Officers for 6 months from the date of the meeting.” 3.8 This will be amended under Midlothian Council, Cabinet, Performance Review and Scrutiny Committee, Audit Committee, Planning Committee, Local Review Body, General Purposes Committee, and the Police Fire and Rescue Board. Page 199 of 270
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Schedule of meeting dates 3.9 Appendix C presents the proposed meeting cycle for two years – August 2025 – June 2026 and August 2026 – June 2027. The schedule takes into account the academic holidays and has been drafted to not hold meetings during Christmas/New Year, February and October midterms, Easter and summer holidays. As far as possible it is drafted to not issues papers during these times, with some exceptions where papers are issued on the last day of the holidays in order to meet Standing Orders for notice of meetings. 3.10 The Council currently operates on a six-weekly cycle of most of its governance meetings, with the exception of Police and Fire and Rescue Board which meets 4 times per annum and Audit Committee which has agreed to move to 4 times per annum at its November meeting. Council should note the schedule has been drafted with the assumption that Council will agree to the proposed changes to the Scheme of Administration to facilitate the Audit Committee frequency of meetings change (as per the report prior to this one on the Council agenda). 3.4 The schedule has two new entries (highlighted in green) from previous schedules. These are not included in the Scheme of Administration. These are contained in the schedule for ease of planning: • Cost of Living Task Force was established by Council in 2022 • Licensing Board dates have been proposed quarterly. Council should note that the approval of these dates will be by Licensing Board and are included in the schedule for information. 3.5 Council should note that meetings of the Midlothian Integration Joint Board (MIJB) and its sub-Committees are not included. The schedule of dates for these meetings are approved by the MIJB. 3.6 SOWG have reviewed the schedule of meeting dates and agreed to refer to Council for consideration and approval. Council should note there are some small changes to the schedule presented to SOWG. Upon further review of the proposed schedule, Council in May 2027 has been moved back by one week to accommodate the anticipated Local Government elections and allow for paper issue to take place after the election date (scheduled for 6 May 2027); which means that the time between May and June Councils in 2027 has reduced to 4 weeks. Other minor changes have been made to accommodate Committees prior to the election date and after the first meeting of Council. Page 200 of 270
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4 Report Implications (Resource, Digital and Risk) 4.1 Resource None 4.2 Digital Covered by existing digital solutions. 4.3 Risk Good governance requires Standing Orders to be kept up to date and meeting schedules to be prepared in advance. 4.4 Ensuring Equalities (if required a separate IIA must be completed) This report does not recommend any change to policy or practice and therefore does not require an Equalities Impact Assessment. 4.4 Additional Report Implications (See Appendix A) See Appendix A Appendices Appendix A – Additional Report Implications Appendix B – Standing Orders (updated Feb 2025) Appendix C – Proposed Schedule of Meeting Dates August 2025/June 2026 and August 2026/June 2027 Page 201 of 270
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APPENDIX A – Report Implications A.1 Key Priorities within the Single Midlothian Plan Not applicable A.2 Key Drivers for Change Key drivers addressed in this report: Holistic Working Hub and Spoke Modern Sustainable Transformational Preventative Asset-based Continuous Improvement One size fits one None of the above A.3 Key Delivery Streams Key delivery streams addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value The report does not directly impact on Delivering Best Value but the absence of a schedule of meetings may result in delays in the ability to carry out proper scrutiny and ensure Best Value is secured in decisions made by the Council. A.5 Involving Communities and Other Stakeholders The report does not directly relate to involving communities A.6 Impact on Performance and Outcomes The absence of a schedule of meetings may impact on Midlothian Council’s performance and outcomes. A.7 Adopting a Preventative Approach Not applicable A.8 Supporting Sustainable Development Not applicable Page 202 of 270
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1 Standing Orders.doc STANDING ORDERS SCHEME OF DELEGATION TO OFFICIALS AND SCHEME OF ADMINISTRATION Approved by Midlothian Council on: 25 February 2025 Deleted: 07 May 2024 Page Break Page 203 of 270
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2 Corporate Governance “Midlothian Council endorses the principles of Corporate Governance, namely openness and inclusivity, integrity and accountability, and the documents contained herein form an integral part of the Council’s commitment to the achievement of this.” Kelly Parry Dr Grace Vickers Council Leader Chief Executive Page 204 of 270
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3 STANDING ORDERS I N D E X 1 Definitions Page 4 2 Commencement Page 4 3 Suspending, Rescinding or Altering Standing Orders Page 5 4 Arrangements for Meetings of Midlothian Council Page 5 4.1 First Meeting after Elections Page 5 4.2 First Meeting after a by-election Page 6 4.3 Ordinary Meetings of the Council Page 6 4.4 Special Meetings of the Council Page 7 5 Provost Page 8 6 Depute Provost Page 8 7 Scheme of Administration Page 8 8 Notices of Motion Page 11 9 Admission of Media and Public Page 12 10 Attendance of Councillors who are Non-Members Page 12 11 Procedural Matters Page 12 11.1 Conduct Page 12 11.2 Chair – Powers and Duties – Casting Vote Page 12 11.3 Order of Debate Page 13 11.4 Points of Order Page 14 11.5 Voting Page 14 11.6 Election, Selection or Appointment of Members to Office Page 15 12 Minutes – Referred and Delegated Matters Page 15 13 Termination of Office Page 16 14 Vacancies Page 16 15 Exceptions from Reference Page 16 16 Substitute Members Page 16 17 Appointment of Officers Page 16 18 Shared Service Officer Appointments Page 17 19 Chief Executive Page 17 20 Duties and Conduct of Officers Page 17 21 Works, Goods, Services Etc to be by Contract Page 18 22 Common Seal Page 19 23 Delegation to Parent Council Page 19 Page 205 of 270
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4 MIDLOTHIAN COUNCIL STANDING ORDERS 1 DEFINITIONS 1.1 In these Standing Orders: "Act of 1973" means the Local Government (Scotland) Act 1973 as amended. "Act of 1994" means the Local Government etc (Scotland) Act 1994. "Council" means The Midlothian Council. "Provost" means the Convener of the Council elected in terms of Section 4(1) of the Act of 1994. "Depute Provost" means the Depute Convener of the Council elected in terms of Section 4(2) of the Act of 1994. "Member" means (a) in relation to the Council, an Elected Member; and (b) in relation to a Committee, Sub-Committee or Other Committee, a Member of any of these, whether entitled to vote or not. “Convener of the Cabinet” means the Chair of the Cabinet, who shall be the Leader of the Council. “Counter motion” means a written alternative to a notice of motion which has been submitted in terms of Standing Order 8 for consideration at the same meeting as the substantive motion. The Counter motion must call for the same outcome as the substantive motion but will present an alternative method of achieving the outcome for consideration. “Depute Convener of the Cabinet” means the Depute Chair of the Cabinet, who shall be the Depute Leader of the Council. “Cabinet Member” means a member of the Cabinet. "Chair" means the person chairing any meeting, including those referred to above. 1.2 The Interpretation Act 1978 shall apply to the interpretation of these Standing Orders as it applies to the interpretation of an Act of Parliament. 1.3 Unless otherwise prevented by law, Members may use, or permit to be used, their electronic facsimile signature for the purpose of complying with any requirement under these Standing Orders. It shall be the responsibility of Members however to satisfy themselves as to the arrangements for the proper use and security of their electronic signature. Deleted: ed Page 206 of 270
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5 2 COMMENCEMENT AND SCOPE These Standing Orders shall apply from 25 February 2025and shall apply to Standing Committees, Sub-Committees and Other Committees of the Council (unless otherwise regulated), as they apply to the Council. 3 SUSPENDING, RESCINDING OR ALTERING STANDING ORDERS 3.1 One or more of the Standing Orders can be suspended for business at any meeting for the period of the item or for the duration of the meeting, provided two thirds of the Elected Members present (or the nearest whole number to this) vote for this. i.e. Number of Members present Two thirds required to suspend standing orders 6 4 7 5 8 5 9 6 10 7 11 7 12 8 13 9 14 9 15 10 16 11 17 11 18 12 3.2 Standing Orders can only be rescinded or altered on a decision of the Council, provided at least ten Members of the whole Council vote for this. 3.3 Standing Order 3 may not be suspended. 4 ARRANGEMENTS FOR MEETINGS OF MIDLOTHIAN COUNCIL 4.1 First Meeting After Elections The first meeting of Midlothian Council after an ordinary election of Councillors will be held within 21 days of the election. The date and time of the first meeting shall be determined by the Executive Director, Place. The meeting will deal with business in the following order:- (i) The Returning Officer will assume the Chair until the Provost is elected; (ii) To note the Election of Councillors; (iii) To confirm or otherwise that the newly elected Councillors have Executed the Declaration of Acceptance of Office ; Deleted: 26 March 2019 Deleted: ¶ Deleted: Page 207 of 270
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6 (iv) Elect Provost; (v) Elect Depute Provost; (vi) Elect Leader of the Council; (vii) Elect Depute Leader of the Council; (viii) Determine Scheme of Administration and consider associated schedule of meeting dates; (ix) Appoint Members in accordance with the Scheme of Administration; (x) Appoint representatives to Joint Committees, Joint Boards and Outside Bodies; (xi) Elect Midlothian Licensing Board; and (xii) Deal with any other urgent competent business. Nominations for the election of appointments under 4.1 (iv), (v), (vi), (vii), (ix), (x) and (xi) can be made as separate items or by block proposals from either a political group or an individual Member. Unless arising from:- (a) the need to fill a casual vacancy; or (b) an amendment to the Scheme of Administration under Standing Order 4.3(x); a proposal to replace any person duly elected or appointed under Standing Order 4.1, 4.2 or 4.3(x) shall have effect only where at least ten Members of the Council vote for this at an Ordinary or Special Meeting of the Council. 4.2 First Meeting After a By-Election The first meeting of Midlothian Council after a by-election of will be held in line with the agreed schedule of meetings or by a special meeting of the Council. This meeting will include the following business which will be included at the commencement of the meeting:- (i) The Returning Officer will confirm the outcome of the by-election; (ii) To confirm or otherwise that the newly elected Councillor(s) has/have Executed the Declaration of Acceptance of Office; (iii) If required, appoint newly elected Member(s) in accordance with the Scheme of Administration and confirm any further changes to the membership of these forums; Deleted: Page 208 of 270
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7 (iv) If required, appoint newly elected Member(s) as representatives to Joint Committees, Joint Boards and Outside Bodies and confirm any further changes to the membership of these forums; and (v) If required, appoint newly elected Member(s) to Midlothian Licensing Board. 4.3 Ordinary Meetings of the Council Ordinary meetings of the Council will be held at such places within Midlothian, at such times and on such dates as the Council or the Executive Director, Place may determine, provided the period between successive meetings of the Council shall not exceed ten weeks. The Council will ordinarily determine the annual schedule of meetings for Council, Cabinet and other Committees under the Scheme of Administration for the following calendar year at its meeting in September. At an ordinary meeting of the Council, business will normally be dealt with in the following order:- (i) Order of Business; (ii) Intimations received of election of Councillors; (iii) Deputations, if any, to be received; (iv) Minutes of the immediately preceding meeting of the Council and of any intervening Special Meeting; (v) Receive other Minutes; (vi) Consideration of items “called-in” from the Cabinet; (vii) Leader of the Council to respond to written questions from Elected Members (to be lodged with the Executive Director, Place not less than twelve working days prior to the day of the meeting); (viii) Motions in the order of which notice was received; (ix) Filling of appointments which may arise from time to time; (x) Amendments to the Scheme of Administration and appointments under it; (xi) Fixing dates and times of meetings as required; (xii) Business expressly required by statute to be dealt with at the meeting; (xiii) Business determined under the Scheme of Administration; (xiv) Any other competent business. Deleted: ¶ ¶ Page 209 of 270
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8 Members are required to attend in person at the meeting or attend via video link or other communication link. In such instances, the member will be expected to comply with the Council’s Hybrid Meeting Protocol. 4.4 Special Meetings A Special Meeting of the Council or any Committee under the Scheme of Administration may be called at any time:- (i) by the Provost or in his/her absence the Depute Provost; or (ii) by the Executive Director, Place, on receiving a notice of motion signed by at least six Members of the Council, which meeting shall be held within fourteen calendar days of receipt of the requisition by the Executive Director, Place; (iii) by the Executive Director, Place; or (iv) By the Chair of any Committee or Sub-Committee in relation to the Committee or Sub-Committee they Chair, in consultation with the Executive Director, Place and the Council Leader The location, date and time of special meetings of the Council shall be determined by the Executive Director, Place. In any case where a request for a special meeting is refused a clear rationale must be provided by the decision maker. 5 PROVOST The Provost acts as the Civic Leader within Midlothian. S/He, or, if absent, the Depute Provost, whom failing another Member of the Council chosen by the meeting, shall preside at meetings of the Council. 6 DEPUTE PROVOST Subject to these Standing Orders, the Depute Provost may undertake any of the functions of the Provost. 7 SCHEME OF ADMINISTRATION 7.1 The Scheme of Administration will be as shown as a separate document to these Standing Orders. The Scheme specifies:- • the composition of the Council and the various Committees, Sub-Committees and other bodies etc appointed; • what each can do; • the arrangements for their meetings; • what the quorum is; and Deleted: V Deleted: irtual Deleted: provided the Executive Director, Place is notified at least two working days prior to the day of the meeting.… Page 210 of 270
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9 • what is to happen to their minutes. Unless prevented by law, in exceptional cases where it has been impossible to achieve a quorum in Council, Committee or Sub-Committee because of the number of Members declaring an interest and withdrawing, the quorum can comprise any three Senior Officers of the Council, preferably Chief Officers or Heads of Service from more than one Division (always excluding the Chief Officer against whom the appeal has been taken, or representatives of that Chief Officer, in the case of the Appeals Committee). For the avoidance of doubt, this will not remove any requirement for the participation of any non-Elected Members (such as religious representatives, parent representatives, independent persons, Head Teachers etc.) where appropriate. As regards cases decided by Chief Officers or their representatives, the Minutes of those meetings will be submitted to the next ordinary meeting of the Council, Committee or Sub-Committee as appropriate for noting rather than for approval. 7.2 Unless otherwise covered by statute or regulation, all bodies referred to in the Scheme of Administration shall give effect to any instructions or decisions of the Council on matters of principle. 7.3 The Chair, whom failing the Depute Chair, where appointed, whom failing another Member chosen by the meeting, will preside at all meetings referred to in the Scheme of Administration, except as may otherwise be provided for by statute or regulation. This Standing Order will not however apply to meetings of the Council, the arrangements for which are stated in Standing Order 5 above. 7.4 In the event of a Committee appointing a Sub-Committee:- • the remit and membership of the Sub-Committee will be clearly established at the time of appointment by the parent Committee. The Committee can only delegate the remit it has under the Scheme of Administration to the Sub- Committee; • the Chair, unless otherwise agreed by the parent Committee, will be the Chair of the parent Committee. In the absence of the Chair of the Sub-Committee at any meeting of the Sub-Committee, a replacement Chair will be determined by those present at the meeting of the Sub-Committee; • only Members of the parent Committee can be Members of the Sub-Committee unless it is agreed by the parent Committee that membership should be determined by the Council; • A report will be presented to the Council confirming the formation of the sub- Committee, its membership, its functions and proposed meeting schedule following which the Scheme of Administration will be updated accordingly. For clarity this will not delay the commencement of meetings of the Sub-Committee; and • The minutes of meetings of any sub-Committee will be presented to the parent Committee and the Council for noting and consideration of any recommendations contained therein. 7.5 Subject to Standing Order 4 and any statutory requirements, all business for meetings referred to in the Scheme of Administration will be arranged in such order as the Executive Director, Place thinks will best ensure its effective dispatch. Page 211 of 270
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10 7.6 The various bodies referred to in the Scheme of Administration will meet at such places within the Midlothian Council area, at such times and on such dates as may be determined by the Council in line with Standing Order 4.3, the body itself or the Executive Director, Place, in consultation with the Chair. 7.7 The Executive Director, Place will have the power to cancel any meeting (subject to Standing Order 4 above) if it appears to him/herself that there is insufficient business to justify the holding of the meeting. In addition, the Executive Director, Place may postpone/re-schedule a meeting where this is agreed in consultation with the Chair. 7.8 All notices of meetings will be issued by the Executive Director, Place, where practicable at least ten working days for Council meetings and at least seven working days for Cabinet and Committee meetings and in any event not less than three working days before the meeting, unless otherwise required by statute or regulation. Notices of meetings will include the agenda for the meeting and any reports or background papers to be considered during the meeting. Notices and reports will be published via the Committee Management System and will also be available to the public unless any particular item is deemed as being exempt under the relevant section of the Local Government (Scotland) Act 1973 (as amended). In the event that any report for consideration at a particular meeting under the Scheme of Administration by the time the notice is published is not available, it will be for the Executive Director, Place in conjunction with the Chief Executive and the Council Leader to determine whether the matter will be considered or postponed. In any case where the publication of a report is less than three working days before the meeting, the Chair will have the final determination as to whether the matter will be accepted as urgent business.. For clarity the term ‘working days’ excludes weekends and Midlothian Council Public Holidays (which are 25 and 26 December and 1 and 2 January or following days in each year).. 7.9 The minutes of all meetings referred to in the Scheme of Administration will be drawn up by the Executive Director, Place, and will include the names of those Members who are in attendance. The minute will typically include: • Where appropriate, the name of the person presenting the item; • A short introduction of each item considered; • A brief commentary of the discussion (including any motions/ amendments/ votes); • A note of the decision of the meeting; and • Where appropriate, confirmation of who is to action the decision. Deleted: The weekly schedule of meetings will be displayed publically at the main reception at Midlothian House… Page 212 of 270
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11 The minute will not be a verbatim account or detail political debate or statements by individual Elected Members or other participants at the meeting although an Elected Member may specifically request at the time that a specific statement be recorded in the minute of the meeting. The Officer clerking the meeting will circulate the minute no later than two calendar weeks from the date of the meeting for information only pending formal approval at the next meeting. In the instance of an infrequent or ad hoc Committee meeting, the minute can be circulated to the Committee for approval no later than two weeks from the date of the meeting and then presented to the full Council for formal approval. Where practicable the minutes of all meetings referred to in the Scheme of Administration (other than meetings of Midlothian Council which will automatically be presented for approval by the Council) will be referred to the next meeting of the full Council for noting and consideration of any recommendations. Minutes of Midlothian Council meetings will be submitted to the next available full Council meeting for approval as an accurate reflection of the meeting. The approval of the minutes will be by formal motion from an Elected Member and seconded by another Elected Member which will be recorded in the minute of the meeting. For clarity the approval of the minutes is not an opportunity to re-open a debate from the previous meeting. Once the minute has been approved, the Chair will be asked to sign the minute whereupon it will be lodged with the Council’s Records, Archives and Document Management Team for permanent archiving. 7.10 If within ten minutes of the time appointed for a meeting a quorum is not present, the Chair will so confirm and adjourn the meeting to a date and time which he/she may then or afterwards fix. In the event of the Chair being absent, the Executive Director, Place will confirm to those present that the meeting is inquorate and that no business may therefore be done. The Executive Director, Place will also minute that, owing to the lack of the necessary quorum, no business was done. 7.11 If during any meeting the attention of the Chair is drawn to the number of Members present, the Chair shall, unless it is apparent that a quorum is present, direct the roll to be called. If it is found that there is not a quorum present, the meeting will be adjourned to a date and time to be fixed by the Chair in liaison with Executive Director, Place. 7.12 These Standing Orders will apply to Committees, Sub-Committees and Other Committees (unless otherwise regulated) as they apply to the Council itself. 7.13 The Council may at any time, if it so determines, exercise the functions, powers and duties of any body referred to in the Scheme of Administration, unless otherwise provided for by statute or regulation. 7.14 A decision of the Council shall continue to be operative and binding and no motion inconsistent with it will be considered or passed for at least six months after the decision unless information which was not previously available becomes available. Deleted: as these will be available via webcast or audio recording… Page 213 of 270
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12 8 NOTICES OF MOTION 8.1 A Member of the Council may not give notice of more than one motion for consideration at each Council meeting. 8.2 A Member of the Cabinet, a Committee or Sub-Committee may not give notice of more than one motion for consideration at each meeting of the Cabinet, Committee or Sub-Committee. 8.3 Every notice of motion must be in writing, signed by the Member giving the notice and countersigned by at least one other Member. A Member may only be counter signatory to one motion for consideration at each Council, Cabinet, Committee or Sub-Committee meeting. The terms of the motion must be stated clearly and the notice delivered to the Executive Director, Place. Except in the case of a notice of motion given under Standing Order 4.4 (ii) (ie calling a Special Meeting of the Council), a notice of motion which has not been received by noon twelve working days prior to the day of the meeting will not be included on the agenda for the meeting. 8.4 A written counter motion may be submitted to the Executive Director, Place no later than noon of the working day prior to the meeting that the parent motion is being considered. Any counter motion not received within this timescale will not be included within the debate for the meeting. The counter motion must meet the same criteria as a motion i.e. must be submitted in writing, signed by the Member giving the notice and countersigned by at least one other Member. A Member may only submit one counter motion for consideration at each Council, Cabinet, Committee or Sub-Committee meeting and equally a Member may only be counter signatory to one counter motion for consideration at each Council, Cabinet, Committee or Sub- Committee meeting. 8.5 If a motion, notice of which is specified on the agenda for a meeting, is not moved either by the Member who has given the notice or by any other Member, it will, unless postponed by the meeting, be considered as dropped and will not be moved without fresh notice. 8.6 Nothing within this Standing Order will prevent a Member moving an amendment during the course of a meeting for consideration providing it meets the criteria in Standing Order 11. 8.7 If, in the opinion of the Chair, more than one motion submitted deals with the same subject matter, only the motion first lodged will be considered. Also, if any motion, in the opinion of the Chair, deals with a matter already under consideration by the meeting that motion will not be considered. 8.8 During the course of the meeting that the motion is being presented to, the motion must be formally moved by the Member and formally seconded. Page 214 of 270
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13 8.9 The Executive Director, Place in liaison with the Council’s Monitoring Officer shall determine the competency and relevance of any motion submitted as per Standing Order 8.1, 8.2, 8.3 or 8.4. The test applied at this stage in relation to the competency of a motion shall be that the subject matter falls within the remit of the meetings as described within the Scheme of Administration and that the decision sought is within the Council’s legal powers. Once this test has been satisfied it will be for the Chair of the meeting to be the final arbiter as to whether the motion will be presented for consideration. If it is the opinion of the Chair of the meeting that a motion will not be presented for consideration, then they must provide a full explanation to the mover and seconder in respect of their decision. The Chair’s decision will be final and no further representations may be made. 9 ADMISSION OF MEDIA AND PUBLIC 9.1 Subject to the provisions of the Local Government (Access to Information) Act 1985 and other relevant Acts and Regulations, meetings will be open to the public and representatives of the media, subject to powers of exclusion in order to suppress or prevent disorderly conduct or other misbehaviour at a meeting. Without prejudice to the foregoing generality, the meeting may exclude or eject any member or members of the public whose presence or conduct or behaviour is impeding or is likely to impede the work or proceedings of the meeting. 9.2 All meetings of the Council, Cabinet and certain committees, as determined by time to time, (except items considered in private) will be webcast both in live and archive format and will be available via the Council website. In addition, all meetings will be audio recorded and such recording (except items considered in private) will be available to listen via the Council website. The recordings of private agenda items will not be available on the Council website but will be retained for a period of 6 months from the meeting date during which period the recordings can be made available to Elected Members on request. 10 ATTENDANCE OF COUNCILLORS WHO ARE NON-MEMBERS Unless otherwise prevented by statute or regulation, any elected Member may be present, but not take part, at any meeting of a Committee, Sub-Committee or Other Committee although not a Member, except meetings dealing with appointments or personnel matters (e.g. relating to discipline, grievance etc). This shall include attendance where exempt or confidential business is discussed in terms of the Local Government (Scotland) Act 1973 (as amended). However, in such cases the Member shall be bound by a requirement of confidentiality. 11 PROCEDURAL MATTERS 11.1 Conduct Deleted: will be audio recorded and such recording Deleted: will be available to listen to via the Council website. Council and Cabinet meetings… Deleted: also Page 215 of 270
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14 Members shall at all times observe the requirements of the Councillors’ Code of Conduct and other relative guidance issued by the Standards Commission for Scotland. 11.2 Chair - Powers and Duties - Casting Vote (i) Deference will at all times be paid to the authority of the Chair, and on all points of order the Chair's ruling will be final and not open to discussion. When the Chair speaks, any Member who is addressing the meeting will give way. It will be the duty of the Chair to preserve order and ensure that Members obtain a fair hearing. The Chair will also decide between two or more Members wishing to speak by calling on the Member first observed indicating a wish to speak. (ii) The Chair will be entitled, in the event of disorder arising at any meeting, to adjourn the meeting to a time he/she may then or afterwards fix, and quitting the Chair in such circumstances shall, without further procedure, have the effect of a formal adjournment of the meeting. (iii) In the event of any Member at any meeting disregarding the authority of the Chair or engaging in obstructive or offensive conduct, a motion may be moved and seconded to suspend the Member for the remainder of the meeting. This will be put to the meeting immediately without discussion, and, if supported by two-thirds of the Members present (or the nearest whole number to this) it shall be declared carried. The offending Member shall then be required by the Chair to leave the room in which the meeting is being held. (iv) In any division each Member shall have one vote only. The Chair, in the case of an equality of votes, will have a second or casting vote. This will not apply however when the matter which is the subject of the vote relates to the appointment of a Member of the Council to any particular office or Committee. In that case the decision will be by lot. 11.3 Order of Debate (i) A Member wishing to speak will address the Chair. If the meeting is within the Council Chamber, the Member will activate their microphone before speaking. The Member will speak strictly to the motion or amendment to be proposed or seconded or to other matters under discussion, or to a question of order. (ii) Every motion and every amendment relevant to the matter under discussion will be moved and seconded. The mover of a motion or of an amendment may be required by the meeting or by the Chair to state its terms or to set it down in writing. In the event of the latter it will be handed to the Chair and will Deleted: , including the “Guidance on Conduct in Chamber or Committee”… Deleted: at least Page 216 of 270
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15 be read out before being further discussed or put to the meeting. Where a motion is moved and seconded and there is no objection from any other Member then it will be deemed to be supported by the meeting and this will be confirmed by the Chair. (iii) A Member may not move or second a motion or amendment for the election or appointment of him/herself to any of the positions referred to under Standing Order 4, whether appointed at the first meeting of the Council after the election or at a later date. Neither shall a Member vote in any personal election or appointment. This Standing Order (11.3 (iii)) will not apply when block proposals are put forward to facilitate Council business. (iv) Every amendment will be relevant to the motion which has been moved. (v) Motions or amendments which are not seconded (other than by Standing Order 11.3 (ii) will not be discussed or inserted in the minutes. The dissent of any Member who is in a minority of one will, if that Member so requests, be recorded in the minutes of the meeting. (vi) The dissent of any Member who disagrees with the decision or recommendation in respect of any item discussed will, if that Member so requests, be recorded in the minutes of the meeting. (vii) A motion or amendment when made and seconded will not be withdrawn without the consent of the mover and the seconder thereof, and then only with the sanction of the meeting. (viii) When there is more than one amendment, the Chair, may call for a vote on the substantive motion itself which if carried by a majority of those present will mean that all the amendments will fall and the motion will become the decision of the meeting. (ix) When there is more than one amendment, and either the Chair has not opted to use the procedure outlined in Standing Order 11.3 (viii) above or the motion was not carried by a majority of those present, the Chair will call for a vote between the amendments and whichever amendment receives the highest number of votes will then be put to the vote against the motion. 11.4 Points of Order (i) A Member who wishes to raise a point of order or give a personal explanation, will be entitled to be heard immediately, but will not speak for more than three minutes. A point of order must relate only to an alleged breach of a Standing Order or of a statutory provision and the Member shall specify the Standing Order or statutory provision and the way in which it is considered that it has been breached. (ii) The ruling of the Chair on a point of order or on the admissibility of a personal explanation shall be final and not open to discussion unless challenged by one half of the membership of the meeting (i.e. one half of those in attendance at the meeting). Deleted: Page 217 of 270
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16 11.5 Voting (i) Subject to the provisions of these Standing Orders, all questions will be decided by a majority of the Members present and voting. (ii) Any vote will be taken normally by a show of hands. The Officer clerking the meeting will confirm the number of votes. If any Member objects to the vote being taken this way and if one-third of the Members present (or the nearest whole number to this), similarly agree then the vote will be taken by calling the roll. i.e. Number of Members present One third required to agree a vote to be taken by roll call. 6 2 7 2 8 3 9 3 10 3 11 4 12 4 13 4 14 5 15 5 16 6 17 6 18 6 (iii) Where a vote by a show of hands has been taken and the accuracy of the count is immediately challenged, it will be at the Chair’s discretion to call for a recount by a show of hands or to order the vote to be taken by calling the roll. In the case of a roll-call vote, the voting will be recorded so as to show how the vote was cast by each Member present, and the name of any Member present and not voting will also be recorded. (iv) As per the Hybrid Meeting Protocol, any member participating in a meeting remotely shall cast his/her vote as if participating in a roll call vote notwithstanding the terms of Standing Order 11.5(ii). 11.6 Election, Selection or Appointment of Members to Office (i) In the case of an election, selection or appointment of a Member or of any person to any office where the number of candidates nominated exceeds the number of vacancies, the Member or person to be elected, selected or Deleted: (iii) Deleted: A Page 218 of 270
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17 appointed will be decided by a show of hands or by a ballot as the meeting may decide. (ii) Where only one vacancy requires to be filled and any candidate has an absolute majority of the votes cast then that candidate will be declared elected, selected or appointed as the case may be. Where there are more than two candidates and no candidate has an absolute majority, then the candidate with the lowest number of votes will be eliminated and a further ballot will take place until one candidate is duly elected. Where there is no clear result due to an equality of votes, the candidate(s) to be eliminated shall be determined by lot. (iii) Where more than one vacancy requires to be filled, then voting will again be by ballot or show of hands, and the candidates so elected, selected or appointed will be those receiving the greatest number of votes. Where there is no clear result due to an equality of votes, the candidate(s) to be eliminated shall be determined by lot. 12 MINUTES – REFERRED AND DELEGATED MATTERS 12.1 When the minutes of a Committee come before the Council it shall be competent for the Council, in respect of any matter referred but not delegated, to change that decision or refer the matter in whole or in part back to the Committee for further consideration. 12.2 When the minutes of a Committee come before the Council in respect of any matter delegated but not yet fully carried into effect, the Council can refer the matter, whether in whole or in part, back to the Committee for further consideration. 13 TERMINATION OF OFFICE Unless otherwise provided for by statute or regulation, every Member of a body referred to in the Scheme of Administration or a Member of any Joint Committee, Joint Board or other Outside Body who, at the time of appointment, is a Member of the Council, shall upon ceasing to be a Member of the Council, also cease to be a Member of that body. 14 VACANCIES Every vacancy occurring in the membership of a meeting referred to in the Scheme of Administration or among the Council's representatives on any Joint Committee, Joint Board or Outside Body will be reported by the Executive Director, Place to the first meeting Page 219 of 270
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18 of the Council or relevant Committee, as appropriate, after the vacancy has occurred. The Council or Committee will then fill the vacancy or agree such other action as may seem proper. 15 EXCEPTIONS FROM REFERENCE 15.1 The following will be excluded from the reference to any meeting:- (i) any matter specifically referred to another meeting; and (ii) any matter which in terms of a decision of the Council is specifically excluded from such reference. 15.2 In the event of any doubt or difficulty arising over the proper co-ordination of the work of two or more bodies contained in the Scheme of Administration, then this will be referred to the Council for clarification and any necessary change. 16 SUBSTITUTE MEMBERS 16.1 Where substitute Members may be appointed to an outside body, Joint Committee or Joint Board, any other Member of the Council may be authorised to act as a substitute Member unless limited by statute or regulation. 16.2 Where a substitute Member has been identified, their appointment will be confirmed to the outside body, Joint Committee or Joint Board by the Executive Director, Place. 16.3 Members are required to attend in person at the meeting – this can be by virtual attendance. Where a Member of a Council Committee is unable to attend, he/she may authorise another Member to act as a substitute for that meeting only. The substitute Member shall have the same rights as the substantive Member. The substitute Member shall prior to the start of the meeting, state to the Clerk who they are substituting for. A Member who fails to do so shall not be permitted to take part in the meeting as a substitute Member on behalf of a substantive Member. A Member is precluded from acting as a substitute Member if they have not undertaken the relevant training required for some Committees eg Education Appeals, Licensing Board etc. 17 APPOINTMENT OF OFFICERS 17.1 A reference to the post of Chief Official means any of the following posts:- Chief Executive Page 220 of 270
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19 Executive Director, Children, Young People and Partnerships Executive Director, Place Joint Director, Health and Social Care The appointment of Chief Officials will be by the Council, on a recommendation by the Cabinet, which will also recommend conditions to apply to the posts. 17.2 The appointment of Chief Officers and Heads of Service shall be by the Appointments Committee, which shall agree conditions to be attached to the posts. 17.3 The authorised establishments of the Directorates of the Council will be determined by the Cabinet. 17.4 Any reference to a specified officer of the Council in these Standing Orders shall include any member of staff under the direction of that officer. 18 SHARED SERVICE OFFICER APPOINTMENTS Where the Council agrees to appoint an officer under a Shared Service agreement with another local authority (or authorities or other bodies) then the arrangements for the appointment of that officer shall be as determined between the bodies concerned. 19 CHIEF EXECUTIVE 19.1 The Head of the Council's paid service will be the Chief Executive who will have authority over all other officers except where a Chief Official or other officer is carrying out a responsibility imposed by statute. 19.2 The Chief Executive, after discussion with the Leader of the Council, whom failing the Depute Leader of the Council, will have authority to take decisions where urgent or immediate action is required. Where such decision(s) is required, the Chief Executive will provide a report to the next available full Council meeting to inform the Council of such decision(s). 19.3 Standing Order 19.2 shall not apply in the period between a local authority election and the first meeting of the Council. During this period, the Chief Executive will have authority to take decisions where urgent or immediate action is required. Where such decision(s) is required, the Chief Executive will provide a report to the next available full Council meeting to inform the Council of such decision(s). 19.4 In the absence of the Chief Executive, any Chief Official may assume the duties, powers and responsibilities of the Chief Executive. 20 DUTIES AND CONDUCT OF OFFICERS Deleted: Clause Page 221 of 270
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20 20.1 The Officers of the Council shall at all times observe such regulations for official conduct as may be prescribed by the Council, including without prejudice to the generality the Code of Conduct for Employees of Midlothian Council. 20.2 Officers of the Council shall, as soon as it comes to their notice that the Council or any Committee has entered or proposes to enter into a contract in which they have a pecuniary interest, whether direct or indirect, give notice in writing in the manner provided by Section 68 of the Local Government (Scotland) Act 1973 (as amended). 21 WORKS, GOODS, SERVICES ETC TO BE BY CONTRACT 21.1 Chief Officials may award contracts valued at less than £50,000 without using any of the methods in 21.3 below but in so doing must be able to demonstrate Best Value. Normally, this will involve adhering to the following guidelines in the Council’s Procurement Policies and Procedures Manual:- • For contracts under £500 by achieving value for money • For Contracts between £500 and £5,000, by demonstrating value for money (usually through obtaining a minimum of three quotations); and • For Contracts between £5,000 and £50,000, a minimum of three quotations should be obtained. In all the above scenarios, a contract may be awarded through a direct award or mini competition from a recognised framework or call off contract. Non-competitive action for contracts less than £50,000 may be approved by Chief Officials but only in the exceptional circumstances as detailed within the Council's Procurement Policies and Procedures Manual. 21.2 Tenders below an estimated contract value of £50,000 can be received and opened in the Directorate responsible for the contract but must be opened in the presence of the Chief Official or the Head of Service and not by an officer involved in the preparation of the specification. 21.3 For contracts valued at over £50,000, Chief Officials cannot award contracts unless tenders have been invited using at least one of the following methods:- (a) a notice in Find a Tender (for contracts over a certain value); (b) advertisement in Public Contracts Scotland (for contracts between £50,000 and the WTO Government Procurement Agreement threshold); (c) a direct award or mini competition from a recognised framework or call off contract; or (d) by another method approved by the Cabinet. Deleted: 1,0 Deleted: written or electronic Deleted: should be obtained Deleted: written or electronic Deleted: z Deleted: (a) Deleted: the European Journal Deleted: public Deleted: European Deleted: and where the expense is warranted Deleted: recognised Deleted: select list of contractors compiled from the Council’s Approved Lists of Contractors… Page 222 of 270
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21 21.4 For all contracts over £50,000, Chief Officials must accept the most economically advantageous tender in accordance with the tender evaluation criteria previously established for that contract. 21.5 For all contracts over £50,000, Chief Officials may in exceptional circumstances, as detailed in the Procurement Policies and Procedures Manual, issue a tender to one nominated contractor. All requests to proceed with such non-competitive action must be approved by the Executive Director, Place in advance, after discussion with the Leader of the Council. 21.6 All tenders must be invited, received, opened and evaluated in accordance with the Council’s Procurement Policies and Procedures Manual. 22 COMMON SEAL 22.1 The Common Seal of the Council will be kept by the Executive Director, Place, who will be responsible for its safe custody. 22.2 The Common Seal will be affixed to a deed or other document only if authority to affix the seal to the deed or other document has been given by the Executive Director, Place. 22.3 An entry of the sealing of every deed and other document to which the Common Seal has been affixed will be made by the Executive Director, Place in a Register to be provided for that purpose, and the Executive Director, Place subscribing the deed or other document on behalf of the Council will also sign against the appropriate entry in such Register. 22.4 For the avoidance of doubt, as an alternative to affixing the Common Seal and subscription by the Executive Director, Place self-proving execution shall also be competent by way of subscription by the Executive Director, Place, as attested by the subscription of a single witness. 23 DELEGATION TO PARENT COUNCIL Nothing in these Standing Orders or in the Appendix hereto shall apply to any matters delegated, in a Scheme of Delegation approved by the Council, to a Head Teacher or a Parent Council. ................................................................Provost Page 223 of 270
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22 …..............................................................Leader ...................................................Chief Executive ………………………………Executive Director, Place Page 224 of 270
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Proposed Schedule of Meetings Dates for August 2025 – June 2026 _________________________________________________________________________ Date Time Meeting Weeks since last meeting Comments School Holidays Friday 27 June – Tuesday 12 August 2025 (inclusive) August 2025 Wednesday 20 11.00 Business Transformation Steering Group First Meeting after Recess In advance of Sep Council Monday 25 10.00 Planning Site Visits “ Tuesday 26 11.00 Cabinet “ Tuesday 26 13.00 Planning “ 2 weeks before LRB School Holidays Friday 12 September – Monday 15 September 2025 (inclusive) September 2025 Monday 1 11.00 Cost of Living Task Force Tuesday 2 10.00 JCG “ 1 week prior to Council Monday 8 10.00 Local Review Body Site Visits “ Monday 8 13.00 Local Review Body “ 2 weeks after Planning Tuesday 9 11.00 Midlothian Council “ Wednesday 10 11.00 Licensing Board Tuesday 16 11.00 Performance Review and Scrutiny Committee First Meeting after Recess 3 weeks after August Cabinet Monday 22 11.00 Police Fire and Rescue Board “ Tuesday 23 11.00 General Purposes “ Monday 29 11.00 Business Transformation Steering Group 6 In advance of Oct Council Tuesday 30 11.00 Audit Committee First Meeting after Recess Q1 reporting October 2025 Monday 6 10.00 Planning Site Visits - Monday 6 13.00 Planning Committee 6 3 weeks before LRB Tuesday 7 11.00 Cabinet 6 Q1 reporting Thursday 9 11.00 JCG 5 October School Holidays Friday 10 October – Monday 20 October 2025 (inclusive) Page 225 of 270
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Date Time Meeting Weeks since last meeting Comments Tuesday 21 11.00 Midlothian Council 6 Monday 27 10.00 Local Review Body Site Visits - Monday 27 13.00 Local Review Body 7 3 weeks after Planning Tuesday 28 11.00 Performance Review and Scrutiny Committee Q1 reporting November 2025 Monday 3 11.00 Cost of Living Task Force Tuesday 4 11.00 General Purposes 6 Monday 17 10.00 Planning Site Visits - Tuesday 18 13.00 Planning 6 2 weeks before LRB Monday 24 11.00 Business Transformation Steering Group 8 In advance of Dec Council Tuesday 25 11.00 Cabinet 7 Q2 reporting Wednesday 26 11.00 Licensing Board December 2025 Monday 1 10.00 Local Review Body Site Visits - Monday 1 13.00 Local Review Body 5 2 weeks after Planning Tuesday 2 11.00 Audit Committee Q2 reporting Monday 8 11.00 Police Fire and Rescue Board Meets quarterly Tuesday 9 11.00 Performance Review and Scrutiny Committee 7 Q2 reporting Tuesday 9 14.30 JCG 8 Monday 15 11.00 Cost of Living Task Force Tuesday 16 11.00 Midlothian Council 8 School Holidays Friday 19 December 2025 – Monday 5 January 2026 (inclusive) Page 226 of 270
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Date Time Meeting Weeks since last meeting Comments January 2026 Tuesday 13 11.00 Business Transformation Steering Group First Meeting after Recess In advance of Feb Council Monday 19 10.00 Planning Site Visits “ Tuesday 20 11.00 Cabinet “ Tuesday 20 13.00 Planning “ 2 weeks before LRB Monday 26 11.00 Cost of Living Task Force Tuesday 27 11.00 General Purposes “ February 2026 Monday 2 10.00 Local Review Body Site Visits “ Monday 2 13.00 Local Review Body “ 2 weeks after Planning Tuesday 3 11.00 Performance Review and Scrutiny Committee “ Monday 9 11.00 Business Transformation Steering Group 4 In advance of February Council (additional) Tuesday 10 11.00 Police Fire and Rescue Board “ Meets quarterly Wednesday 11 11.00 Licensing Board Thursday 12 11.00 JCG “ In advance of Feb Council Midterm School Holidays Friday 13 February – Friday 20 February 2026 (inclusive) February 2026 continued Monday 23 11.00 Audit Committee Q3 reporting Tuesday 24 11.00 Midlothian Council “ Budget setting March 2026 Monday 2 11.00 Business Transformation Steering Group 4 In advance of March Council Tuesday 3 11.00 General Purposes 5 Tuesday 3 14:00 Cost of Living Task Force Monday 9 10.00 Planning Site Visits - Page 227 of 270
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Date Time Meeting Weeks since last meeting Comments Monday 9 13.00 Planning Committee 7 2 weeks before LRB Tuesday 10 11.00 Cabinet 7 Q3 reporting Monday 23 10.00 Local Review Body Site Visits - Monday 23 13.00 Local Review Body 7 2 weeks after Planning Tuesday 24 11.00 Performance Review and Scrutiny Committee 7 Q3 reporting Tuesday 24 14.30 JCG 5 1 week prior to Council Tuesday 31 11.00 Midlothian Council 5 Easter School Holidays Thursday 2 April – Monday 20 April 2026 (inclusive) April 2026 Tuesday 21 11.00 Cabinet 7 Thursday 23 11.00 Business Transformation Steering Group 7 In advance of May Council Monday 27 10.00 Planning Site Visits - Tuesday 28 10.00 General Purposes 8 Tuesday 28 13.00 Planning Committee 7 2 weeks before LRB May 2026 Tuesday 5 10.00 Performance Review and Scrutiny Committee 6 Tuesday 5 14.30 JCG 6 1 week prior to Council Monday 11 10.00 Local Review Body Site Visits - Monday 11 13.00 Local Review Body 7 2 weeks after Planning Tuesday 12 11.00 Council 6 Wednesday 13 11.00 Licensing Board Tuesday 19 11.00 Cost of Living Task force Tuesday 26 11.00 Business Transformation Steering Group 5 In advance of June Council June 2026 Monday 1 11.00 Police Fire and Rescue Board Meets quarterly Tuesday 2 11.00 Cabinet 5 Q4 reporting Monday 8 10.00 Planning Site Visits - Page 228 of 270
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Date Time Meeting Weeks since last meeting Comments Monday 8 13.00 Planning 6 2 weeks before LRB Tuesday 9 11.00 General Purposes 6 Monday 15 11.00 Audit Committee Q4 reporting Tuesday 16 11.00 Performance Review and Scrutiny Committee 6 Q4 reporting Tuesday 16 14.30 JCG 6 1 week prior to Council Monday 22 10.00 Local Review Body Site Visits - Monday 22 13.00 Local Review Body 6 2 weeks after Planning Tuesday 23 11.00 Midlothian Council 6 Page 229 of 270
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Proposed Schedule of Meetings Dates for August 2026 – June 2027 _________________________________________________________________________ Date Time Meeting Weeks since last meeting Comments School Holidays Monday 29 June – Wednesday 12 August 2026 (inclusive) August 2026 Monday 24 11.00 Business Transformation Steering Group First Meeting after Recess In advance of September Council Tuesday 25 11.00 Cabinet “ School Holidays Friday 11 September – Monday 14 September 2026 (inclusive) September 2026 Tuesday 1 11.00 Cost of Living Task Force Monday 7 10.00 Planning Site Visits “ Tuesday 8 11.00 Performance Review and Scrutiny Committee “ Tuesday 8 13.00 Planning “ 2 weeks before LRB Monday 21 10.00 Local Review Body Site Visits “ Monday 21 13.00 Local Review Body “ 2 weeks after Planning Tuesday 15 14.30 JCG “ 1 week prior to Council Wednesday 16 11.00 Licensing Board Monday 21 14.00 Audit Committee “ Q1 reporting Tuesday 22 11.00 Midlothian Council “ Monday 28 11.00 Police Fire and Rescue Board “ Tuesday 29 10.00 General Purposes “ October 2026 Monday 5 11.00 Business Transformation Steering Group 6 In advance of Nov Council Tuesday 6 11.00 Cabinet “ Q1 reporting October School Holidays Friday 9 October – Monday 19 October 2026 (inclusive) Page 230 of 270
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Date Time Meeting Weeks since last meeting Comments Monday 26 10.00 Planning Site Visits - Monday 26 13.00 Planning Committee 7 2 weeks before LRB Tuesday 27 11.00 Performance Review and Scrutiny Committee 7 Q1 reporting November 2026 Monday 2 11.00 Cost of Living Task Force Tuesday 3 14.30 JCG 7 One week prior to Council Wednesday 4 11.00 Licensing Board Monday 9 10.00 Local Review Body Site Visits - Monday 9 13.00 Local Review Body 7 2 weeks after Planning Tuesday 10 11.00 Midlothian Council 7 Tuesday 17 10.00 General Purposes 7 Monday 23 10.00 Business Transformation Steering Group 7 In advance of Dec Council Tuesday 24 11.00 Cabinet 7 Q2 reporting Monday 30 10.00 Planning Site Visits - December 2026 Tuesday 1 13.00 Planning 5 2 weeks before LRB Monday 7 11.00 Police Fire and Rescue Board Meets quarterly Tuesday 8 11.00 Audit Committee Q2 reporting Tuesday 8 14:00 Cost of Living Task Force Monday 14 10.00 Local Review Body Site Visits - Monday 14 13.00 Local Review Body 5 2 weeks after Planning Tuesday 15 11.00 Performance Review and Scrutiny Committee 7 Q2 reporting Tuesday 15 14.30 JCG 6 One week prior to Council Tuesday 22 11.00 Midlothian Council 6 School Holidays Wednesday 23 December 2026 – Wednesday 6 January 2027 (inclusive) Page 231 of 270
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Date Time Meeting Weeks since last meeting Comments School Holidays Wednesday 23 December 2026 – Wednesday 6 January 2027 (inclusive) January 2027 Tuesday 19 11.00 Cost of Living Task Force Monday 25 10.00 Planning Site Visits “ Tuesday 26 10.00 Business Transformation Steering Group First Meeting after Recess In advance of Feb Council Tuesday 26 13.00 Planning “ 2 weeks before LRB February 2027 Tuesday 2 10.00 General Purposes “ Wednesday 3 11.00 Licensing Board Monday 8 10.00 Local Review Body Site Visits “ Monday 8 13.00 Local Review Body “ 2 weeks after Planning Tuesday 9 11.00 Cabinet “ Tuesday 9 13.00 Audit Committee “ Q3 reporting Thursday 11 11.00 JCG “ Prior to Feb Council Midterm School Holidays Friday 12 February – Friday 19 February 2027 (inclusive) February 2027 continued Monday 22 11.00 Police Fire and Rescue Board “ Meets quarterly Tuesday 23 11.00 Midlothian Council “ Budget setting March 2027 Monday 1 11.00 Business Transformation Steering Group 5 In advance of March Council Tuesday 2 11.00 Performance Review and Scrutiny Committee “ Monday 8 10.00 Planning Site Visits - Tuesday 9 10.00 Cost of Living Task Force Tuesday 9 13.00 Planning Committee 6 2 weeks before LRB Tuesday 16 11.00 General Purposes 6 Monday 22 10.00 Local Review Body Site Visits - Monday 22 13.00 Local Review Body 6 2 weeks after Planning Tuesday 23 11.00 Cabinet 6 Q3 reporting Tuesday 23 14.30 JCG 5 1 week prior to Council Page 232 of 270
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Date Time Meeting Weeks since last meeting Comments Easter Weekend Friday 26 March – Monday 29 March 2027 (inclusive) Tuesday 30 11.00 Midlothian Council 6 Easter School Holidays Monday 5 April – Monday 19 April 2027 (inclusive) April 2027 Tuesday 20 11.00 Performance Review and Scrutiny Committee 7 Q3 reporting Monday 26 10.00 Planning Site Visits - Tuesday 27 10.00 Business Transformation Steering Group 8 In advance of May Council Tuesday 27 13.00 Planning Committee 7 1 week before LRB Wednesday 28 11.00 Licensing Board Thursday 29 10.00 Cost of Living Task Force May 2027 Monday 3 10.00 Local Review Body Site Visits - Monday 3 13.00 Local Review Body 6 1 week after Planning Tuesday 4 11.00 General Purposes 7 Tuesday 25 11.00 Council 8 June 2027 Tuesday 1 11.00 Cabinet 10 Q4 reporting – longer gap due to Easter hols and election Monday 7 10.00 Planning Site Visits - Monday 7 13.00 Business Transformation Steering Group 5 In advance of June Council Tuesday 8 10.00 Audit Committee Q4 reporting Tuesday 8 13.00 Planning 6 2 weeks before LRB Monday 14 11.00 Police Fire and Rescue Board Meets quarterly Tuesday 15 11.00 Performance Review and Scrutiny Committee 8 Q4 reporting Monday 21 10.00 Local Review Body Site Visits - Monday 21 13.00 Local Review Body 6 2 weeks after Planning Tuesday 22 11.00 General Purposes 7 Page 233 of 270
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Date Time Meeting Weeks since last meeting Comments Tuesday 22 14.30 JCG 13 Longer due to election period and first meeting of Council post election Tuesday 29 11.00 Midlothian Council 7 School Holidays Wednesday 30 June 2027 Note: the following dates are not included: Midlothian Integration Joint Board (MIJB) and the MIJB Audit and Risk Committee Page 234 of 270
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Midlothian Council Tuesday 25 February 2025 Item No. 8.10 UK Shared Prosperity Transition Funding 2025/26 Report by Fiona Robertson, Executive Director - Children, Young People and Partnerships Report for Decision 1 Recommendations Council is recommended to: • Delegate authority to the Executive Director Place and Executive Director Children, Young People and Partnerships in their role as Chair of the UK Shared Prosperity Fund Board to allocate UK Shared Prosperity transition funding 2025/26 in line with funding conditions • Agree that an update on the UK Shared Prosperity transition funding 2025/26 will be brought back to Council at a future date • Note outcomes of the UK Shared Prosperity Fund 2022-2025 programme 2 Purpose of Report/Executive Summary The purpose of this report is to seek Council’s agreement to approve the continuation of delegated authority to Executive Directors to allocate funding to projects for UK Shared Prosperity’s transition year of funding 2025/26. Date 27th January 2025 Report Contact: Name Gillian Cousin Tel No 07775 703011 gillian.cousin@midlothian.gov.uk Page 235 of 270
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3 Background/Main Body of Report 3.1 The UK Shared Prosperity Fund (UKSPF) is a strand of funding that replaced the old EU structural funds. The 2022-25 programme invested in the following priorities set by the UK Government: Communities and Place, Support for Local Businesses and People and Skills. In addition, there was a separate stream of funding called Multiply which focused on improving adult numeracy for those aged 16 plus. 3.2 Midlothian was awarded a total of £3,558,663 to address and deliver activity against the four Investment Priorities. 3.3 The majority of funding was awarded on a three-year basis following an initial application process, scoring panel recommendations and approval by the UKSPF Board. Support to Local Business grants were completed in a similar manner but at more regular intervals over the length of the programme. In addition, UKSPF supported four Regional Prosperity Framework initiatives. 3.4 As the UKSPF 2022-25 programme progressed, the use of identified project underspends and further applications were considered and approved by the UKSPF Board. 3.5 Appendix 1 provides an overview of projects funded over the 2022-25 period and the outputs and outcomes achieved to date. 3.6 In the Autumn Statement in October 2024, the new UK Government announced that the UK Shared Prosperity Fund would be extended for 2025-26 at a reduced level of £900 million. 3.7 The Midlothian allocation for 2025/26 is £1,166,951 with a split of capital £330,884 and revenue £836,067. 3.8 The UK Government has introduced new missions, themes and sub themes to streamline reporting. However, for the transition funding, the original interventions selected can be aligned to the new priorities via a mapping exercise. Appendix 2 provides an overview of the transition funding 2025/26. 3.9 The transition year is to provide a continuation of UKSPF activity until the end of March 2026. An announcement on a new funding programme to commence in April 2026 is expected in the Spring statement. 3.10 The UKSPF Board will analyse projects already funded by UKSPF and will approve, where appropriate, continuation funding for the transition year to ensure delivery of activity across Midlothian to support individuals, businesses and communities. Page 236 of 270
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4 Report Implications (Resource, Digital and Risk) 4.1 Resource There are no additional resource requirements involved as management and administration costs are covered within the UK Government allocation of funding. 4.2 Digital There are no implications directly for Council digital services. 4.3 Risk The UKSPF programme is subject to internal audit that helps reduce the risks associated with managing the programme. The processes associated with awarding funding include robust risk assessment procedures to ensure compliance with Following the Public Pound guidance. There is a possible risk that any delays in the allocation of funding for 2025/26 may result in a loss of skilled staff to deliver activity under the different Investment Priorities. 4.4 Ensuring Equalities (if required a separate IIA must be completed) This report falls within the scope of an existing IIA as the transition funding for 2025/26 is a continuation of the original UKSPF 2022-25 programme The integrated impact assessment concluded that the UKSPF programme will have a positive impact on equality groups across Midlothian. 4.5 Additional Report Implications (See Appendix A) See Appendix A Appendices Appendix A - Additional Report Implications Appendix B - Background information/Links Appendix 1 - Outcomes of 2022-25 UKSPF programme Appendix 2 - Overview of UKSP Transition Funding 2025/26 Page 237 of 270
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APPENDIX A – Report Implications A.1 Key Priorities within the Single Midlothian Plan The 2023-2027 Single Midlothian Plan focusses on three main aims: • Individuals and communities will have improved health and skills for learning, life and work • No child or household will be living in poverty • Significant progress is made towards net zero carbon emissions by 2030 The interventions under each of the three core Investment Priorities are aligned to the three main aims of the Community Planning Partnership and Single Midlothian Plan. A.2 Key Drivers for Change Key drivers addressed in this report: Holistic Working Hub and Spoke Modern Sustainable Transformational Preventative Asset-based Continuous Improvement One size fits one None of the above A.3 Key Delivery Streams Key delivery streams addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value This programme of funding has a key role to play in developing communities, reducing inequalities, improving skills, and supporting sustainable development. In addition it will help support the voluntary sector, improve public services and grow the private sector. A.5 Involving Communities and Other Stakeholders This funding is a continuation of the original UKSPF programme. The Local Employability Partnership was a key contributor in identifying the priorities for the investment plan and the interventions to be addressed. Third sector partners will be fundamental in delivering a continuation of UKSPF activity in 2025/26 across Midlothian. Page 238 of 270
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A.6 Impact on Performance and Outcomes By supporting the voluntary sector, growing the private sector and improving public services, the UKSP transition funding will have a positive impact on the performance and outcomes of the Council and the Community Planning Partnership and contribute towards meeting the three main priorities of the Single Midlothian Plan. A.7 Adopting a Preventative Approach Projects that are allocated funding for 2025/26 will undertake preventative work by reducing inequalities, carbon emissions, social isolation and the impact of poverty, improving mental and physical health and wellbeing, developing communities and supporting people into learning and employment. Without this valuable contribution, many of these services could not be delivered in Midlothian. A.8 Supporting Sustainable Development N/A APPENDIX B Background Papers/Resource Links (insert applicable papers/links) Appendix 1 Outcomes of 2022-25 UKSPF programme Appendix 2 Overview of UKSP Transition Funding 2025/26 Page 239 of 270
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Appendix 1 Outcomes of Midlothian UK Shared Prosperity Fund 2022-25 Interventions There were 51 set interventions as part of the UK Shared Prosperity Fund that Scottish Local Authorities were able to select from to prioritise the need for different types of activity to meet local requirements as identified in the Midlothian Investment Plan. https://www.gov.uk/government/publications/uk-sharedprosperity-fund- interventions-outputs-and-indicators Beneath these interventions sit a multitude of outputs and outcomes that are used to measure the success of delivering against these interventions and they are reported to the UK Government as per their reporting schedule. Below is the list of interventions selected by Midlothian. Intervention Definitions Communities and Place S2: Support and improvement of community assets and infrastructure projects. This could include support for decarbonisation of facilities, energy efficiency audits, and installation of energy efficiency and renewable measures in community buildings (including capital spend and running costs). S7: Funding for the development and promotion of wider campaigns which encourage people to visit and explore the local area. S8: Funding for impactful volunteering and/or social action projects to develop social and human capital in local places. S9: Investment in capacity building, resilience (including climate change resilience) and infrastructure support for local civil society and community groups. S10: Community measures to reduce the cost of living, including through measures to improve energy efficiency, and combat fuel poverty and climate change. S11: Funding to support relevant feasibility studies. S13: Support for linking communities together and with employment opportunities with a focus on decarbonisation. Support to Local Business S14: Funding for the development and promotion (both trade and consumer) of the visitor economy, such as local attractions, trails, tours and tourism products more generally. S17: Funding for the development and support of appropriate innovation infrastructure at the local level. S19: Strengthening local entrepreneurial ecosystems, and supporting businesses at all stages of their development to start, sustain, grow and innovate, including through local networks. S20: Support for expert business advice and support programmes at the local and regional level, including support for decarbonisation, climate adaptation and circular economy advice. This could include funding for new and improvements to existing training hubs, business support offers, ‘incubators’, ‘accelerators’ and Page 240 of 270
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Appendix 1 other forms of developmental environments for local enterprise (including social enterprise) which can support entrepreneurs and start-ups/high growth potential firms through the early stages of development and growth by offering a combination of services including: e.g. - account management, advice, resources, training, mentorship, coaching and access to workspace. S22: Support for growing the local social economy, including community businesses, cooperatives and social enterprises. S24: Export Grants to support businesses to grow their overseas trading, supporting local employment and investment, having regard to Scotland’s export plan (‘Scotland: a trading nation’). People and Skills S31: Employment support for economically inactive people: Intensive and wrap- around one-to-one support to move people closer towards mainstream provision and employment, supplemented by additional and/or specialist life and basic skills (digital, English, maths* and ESOL) support where there are local provision gaps. S32: Courses including basic skills (digital, English, maths (via Multiply) and ESOL), and life skills and career skills** provision for people who are not economically inactive and who are unable to access other training or wrap around support detailed above. This could be supplemented by financial support for learners to enrol onto courses and complete qualifications. S33: Activities such as enrichment and volunteering to improve opportunities and promote wellbeing. S34: Intervention to increase levels of digital inclusion, with a focus on essential digital skills, communicating the benefits of getting (safely) online, and in- community support to provide users with the confidence and trust to stay online. S37: Green skills courses to ensure we have the skilled workforce to support the Just Transition to a net zero economy and climate resilience, with a particular focus on vulnerable or low-income groups who will be disproportionately affected by climate change. Retraining support for those in high carbon sectors, providing career guidance and supporting people to seek employment in other sectors. S39: Support for education and skills targeting vulnerable young people leaving school, aligning with young person’s guarantee, modern apprenticeships and related policy. S40: Support for community learning and development. Multiply S42: Courses designed to increase confidence with numbers for those needing the first steps towards formal qualifications. S47: Innovative programmes delivered together with employers – including courses designed to cover specific numeracy skills required in the workplace. S51: Activities, courses or provision developed in partnership with community organisations and other partners aimed at engaging the hardest to reach learners – for example, those not in the labour market or other groups identified locally as in need. Page 241 of 270
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Appendix 1 Projects Funded The following table highlights all the projects that have been funded by UKSPF over the period 2022-25. Organisation Project Name Interventions Project Description £ Total Grant Awarded Access to Industry Access Learning Midlothian S31, S34, S40 Staff and running costs to provide learning across Midlothian to unemployed people of working age who experience barriers to both accessing and participating in learning 96,811 Rosewell Development Trust Community Company Ltd Rosewell - Creating a strong, safe and sustainable community for all S8, S9, S10, S33 Staff and running costs to provide community-led volunteering opportunities, capacity building, community led projects to address the cost of living and enrichment and volunteering opportunities 80,558 Midlothian Voluntary Action Build Back Bolder S9, S11 Feasibility study into third sector hub and staff costs for capacity building to upskill 3rd sector organisations in community benefits, charity related support and gift aid 33,380 Into Work Midlothian Works S10, S31, S33, S39, S40 Staff and running costs to provide person-centred, trauma informed approaches which are needs based, provide pathways into sustainable and fair work, promote and embed this locally with SME’s and work to close the disability employment gap 221,944 Page 242 of 270
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Appendix 1 Volunteer Midlothian Volunteer Midlothian S2, S8, S33 Staff, running costs and small amount of capital to increase volunteer numbers, establish a volunteering hub and provide tailored work experience placements 64,466.78 Mayfield and Easthouses Development Trust - MAEDT Making it Happen (Mayfield and Easthouses Development Trust - MAEDT) S2, S8, S10, S33, S39, S40 Staff and running costs for Development Trust activities and installation of solar panels. 197,735.00 Newbattle Abbey College Prescribe Nature S31, S32, Programme combining outdoor- based skills development, wellbeing in nature and personal development. It provides the opportunity for participants to improve their mental and physical health, reduce social isolation, develop new skills and enhance their life chances through further learning and/or employment options. 51,200.00 Cyrenians Fairer food for all (Cyrenians) S8, S10, Staff and running costs to provide local, accessible opportunities for individuals to increase their social capital and mitigate the effects of the cost-of-living crisis. Installation of an outdoor shelter and sensory area. To provide cookery courses. 149,308.00 Gorebridge Community Gorebridge Community S2, S8, S10, S33, S40 Increase user participation, expand 163,580.00 Page 243 of 270
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Appendix 1 Development Trust Development Trust the community hub, volunteering, peer- led activities, community events and activity. Improve and increase community wellbeing through delivery of initiatives to reduce the impact of the cost-of-living crisis. Continuation of community fridge, establish community pantry, community social and learning activities. Deliver accredited training, learning and development. Barnardo’s Barnardo’s Best S31, S33, S34, S39, S42 Deliver an integrated and holistic programme of support to Young People aged 16 –29 who live in Midlothian and are facing multiple disadvantage/barriers to entering/sustaining/ progressing into employment. 136,904.99 Edinburgh College Edinburgh College Skills for Life and Work S37, S42, S47, S51 To deliver Green Skills programmes and develop and deliver Multiply modules for those attending college without a Level 5 Maths qualification. 40,586.00 ENABLE Scotland (Leading the Way) First Steps S31, S32, S34 Deliver Stage 1 “First Steps” project for people who have disabilities, autism and long-term health conditions. This is a 1-2-1, face to face intervention service that helps those furthest from the 99,438.00 Page 244 of 270
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Appendix 1 labour market. We will provide an Employment Coordinator to engage these people. Midlothian Council CLLE - Shaping Places for Wellbeing Shaping Places for Wellbeing S9, S10, S11, CLLE will recruit a dedicated worker to deliver on inequalities work in the central Dalkeith and Woodburn area. The worker will deliver the Shaping Places for Wellbeing programme (SPW) which will increase the capacity of the local community and support local initiatives aimed at reducing inequalities, building on existing provision contributing to alleviating the impact of the current cost of living crisis. 182,998.00 Midlothian Council (Communities, Lifelong Learning and Employability) Participation All Levels – Midlothian (PALM Project) S31, S32, S34, S39, S40 Develop and deliver local networks to support the transition of young adults with ASD (Autistic Spectrum Disorder) into work or further learning. The project will deliver across 4 geographic networks to support young people develop life skills and employability skills to prepare for moving into work. We will offer a range of qualifications, tailored to group needs. We will work with vulnerable young people leaving school and offer the same opportunity to 44,141.00 Page 245 of 270
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Appendix 1 vulnerable people that are in an older age group. Midlothian Council (Communities, Lifelong Learning and Employability) Midlothian Numeracy Pathway S42, S47, S51 Recruitment of a Co- ordinator to develop a numeracy pathway to take people from Scottish Credit Qualification Framework (SCQF) Level 2 to SCQF Level 4. The Co-ordinator will be responsible for the development of training materials, course content and timetabling activities to deliver effective community numeracy programmes across Midlothian. 145,879.00 Temple Old Kirk Friends [SCIO] Temple Old Kirk Friends [SCIO] S2, S7 Temple Old Kirk is a Scheduled Ancient Monument (Historic Environment Scotland reference: SM119) and a former church no longer used for worship. The proposed repairs to the Old Kirk form part of a continuing conservation project to include its oversight and preservation along with similar efforts for the churchyard. 35,426.00 Penicuik Community Sports and Leisure Foundation Ladywood Leisure Centre (Penicuik Community Sports and Leisure Foundation) S2 Capital costs for refurbishment of the building and changing rooms. 87,550.00 Midlothian Council - Local Business - Castlelaw Ltd Castlelaw Ltd Secret Herb Garden Café Cake School S14 Local Business/ Secret Herb Garden Café Cake School - An existing visitor attraction and cafe, the applicant plans to 14,684.32 Page 246 of 270
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Appendix 1 create a cake school. The funding would be used to fully equip a kitchen for the cake making school and to market cake and cupcake classes to target families with young children in Edinburgh and Lothians. The cake school will also be marketed to the tourism sector to attract new visitors to The Secret Herb Garden. Midlothian Council - Local Business - SilviBio Ltd Ex002-Silvio Bio / Micro Cell Production for Peat-Free Growing S24 The project aims to fulfil a major gap in the domestic and international horticultural market by prototyping a peat-free growing media for micro cell production. The funding will be used to cover research staff time to develop the prototype. This is in response to the UK Government’s plan to ban peat use for the horticultural sector by 2030. There is significant scope for exporting a product of this nature to other countries where peat use for growing is banned or strictly regulated. Sweden and the Nordic countries have been identified as a significant and ideal first target market. 6,450.00 Midlothian Tourism Forum Midlothian Tourism Forum S19 Destination Midlothian Leaflet 6,323.00 Cairns Exclusive Drinks Cairns Exclusive Drinks S24 The funding will pay for an external 5,580.00 Page 247 of 270
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Appendix 1 consultant to develop a 20-page multi- language website, which will include an online platform for wholesalers and a compliant store for direct sales Gorebridge Development Trust Gorebridge Development Trust S14 Delivery of “Press Pause” workshop and action plan 4,565.00 Penicuik Community Alliance Ltd Penicuik Community Alliance Ltd S22 The project seeks to increase the efficiency in the running of the Penicuik Storehouse community cafe by using the grant to purchase refrigeration units to increase food storage, and to replace the commercial dishwasher. 14,581.42 One Dalkeith Community Development Trust One Dalkeith Community Development Trust S22 One Dalkeith is seeking funding to develop a retail shop from their premises in Dalkeith town centre providing a low-cost entry route for micro businesses including the creative sector. Part funding of a shop manager & CCTV system to ensure products are protected 24,539.85 Rosemains Steading CIC Rosemains Steading CIC S19 Fund a project facilitator to manage the redevelopment of the current website and integrate it with an e-commerce site and implement a strategic growth opportunity for this collective of businesses. 6,500.00 Page 248 of 270
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Appendix 1 Roslin Inn Ltd T/A The Original Rosslyn Inn Roslin Inn Ltd T/A The Original Rosslyn Inn S14 To promote outdoor access trails around Roslin and surrounding area to visitors and locals. The aim is to encourage wider distribution of the tourism benefits from the significant level of visitors to Rosslyn Chapel. 8,000.00 Rosslyn Chapel Trust Rosslyn Chapel Trust S14 To buy and install a bespoke display case in the visitor centre for this purpose of displaying objects and items such as historic guidebooks, postcards and souvenirs, as well as more recent items reflecting the Chapel’s role in the book and film The Da Vinci Code, 8,039.09 Stewart Contracts (Scotland) Ltd T/A Pentland Pods Stewart Contracts (Scotland) Ltd T/A Pentland Pods S14 To expand the business through purchase of an additional luxury accommodation pod and to employ staff to service the pods. 9,375.00 The Energy Training Academy The Energy Training Academy S22 To part fund the development of the Heat Networks Suite, a modern conference suite within The Energy Training Academy in Dalkeith 15,000.00 The Turing Trust The Turing Trust S19 S22 Turing Trust is a charity based in Loanhead that enables IT supported learning by reusing computers in classrooms globally. 24,672.75 Midlothian Tourism Forum Midlothian Tourism Forum S19 Midlothian Tourism Forum, a business led tourism association, will use the funding 9,592.00 Page 249 of 270
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Appendix 1 to commission Napier University’s 3-day Destination Development & Leadership Course for a Midlothian group of MTF member businesses The Turing Trust The Turing Trust S24 To create a new position of an International Sales Executive and fund the post for the initial 3 months. 6,000.00 Fifth House Design Ltd Fifth House Design Ltd S24 To export Fifth House’s specialised marketing services to the Dubai market. Funds to cover the costs associated with developing relationships and launching tailored marketing services. 5,796.13 Rosslyn Chapel Trust Rosslyn Chapel Trust S14 To help develop the understanding of people who have visited the Edinburgh area in this period, but not visited the Chapel and trial a digital marketing campaign with Reach media group to attract local residents to visit. 12,475.00 Midlothian Tourism Forum Midlothian Tourism Forum S19 This is a research project proposal led by MTF to scope out the needs and wants of the varied community enterprises and groups within the Midlothian area, to explore with them their tourism offering and establish a plan for helping them to gain benefit from the tourism visitor 3000.00 Page 250 of 270
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Appendix 1 market and integrating them into the overall tourism destination message for Midlothian. Buildu Buildu Scotland S22 The project creates a new social enterprise and a Renewable Energy and Construction training space. 33,323.24 LASC Childcare Services Ltd LASC Childcare Services Ltd S22 The funding will support the creation of a short promotion film to enhance their offer and development of marketing strategy 3,669.80 Prana Fitness CIC Prana Fitness CIC S22 The funding will support the purchase and installation of judo mats at a new community hub being established 15,121.13 Betabugs Ltd BetaBugs Ltd S24 The project will produce an export feasibility study to inform the growth strategy for 2025 – 2028 ensuring sustainable growth outside of the USA, enhancing global market position through entry to new markets from 2025 6,334.25 Secret Garden Distillery Ltd Secret Garden Distillery Ltd S24 The project will support the requirements to make Gin Still operational for new product range 6,334.25 Common Coffee Ltd Common Coffee Ltd S24 The funding offers an opportunity to showcase their groundbreaking, high end instant product as well as their other coffee products at the World of Coffee trade 6,043.47 Page 251 of 270
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Appendix 1 show. Currently, not trading with any Middle Eastern wholesaler or consumer, so this would be an entirely new market along with the hotel industry. Inclusive Play (UK) Ltd Inclusive Play (UK) ltd S24 Feasibility studies and trade show scoping visit 6,334.25 Rosslyn Chapel Trust Rosslyn Chapel Trust S14 The funding will enable Rosslyn Chapel to develop new functionality on the website to host online exhibitions. This would be a permanent feature for the website, they anticipate adding 3-4 different exhibitions each year. The Chapel’s website is an important means of communication and is used to attract visitors, process bookings, manage the online shop and promote visits to other local sites. 5,000.00 Midlothian Tourism Forum Midlothian Tourism Forum S14 The project is the development of a dynamic new treasure trail app with a route being an interactive Dalkeith town trail plus also the plan to support a variety of new thematic trail content within Midlothian for visitor engagement and promotional purposes 10,008.66 Energy Training Academy Energy Training Academy S19 Management costs - Green Skills Programme 25,011.00 Page 252 of 270
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Appendix 1 The Bubbling Toad The Bubbling Toad Ltd S14 New business development at Vogrie House 10,008.66 Fifth House Design Ltd Fifth House Design Ltd S14 Commissioned to produce a series of engaging Tourism Marketing Videos to highlight various attractions in Midlothian. The videos will promote the region's tourism, cultural heritage, and natural beauty, highlighting the region's unique offerings to engage and inspire potential visitors to explore the region. 24,800.00 Capital City Partnership – Net Zero Accelerator Hub and Midlothian Council Net Zero Accelerator Hub S11 NetZero Accelerator Hub (NZAH) - led by West Lothian College on behalf of all four Colleges. The study will complete skills mapping as well as supply and demand analysis based on expected NetZero activity. The project will complete by 31st July 2024. 18,775.00 Capital City Partnership – Climate Risk and Opportunity Assessment and Midlothian Council Climate Risk and Opportunity Assessment S11 Climate Risk & Opportunity Assessment (CROA) - led by Sniffer. The assessment will provide evidence of climate risk, provide an economic assessment of risk and undertake extensive public engagement. The findings will enable the 6 local authorities to identify local priority actions to address climate risk. 51,000.00 Page 253 of 270
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Appendix 1 Midlothian Council - Place Directorate - National Cycle Network route 196 NCN R196 Rosewell to Auchendinny S2 The project aims to replace and improve the cycle path between Rosewell and Auchendinny in Midlothian, National Cycle Network route 196 (NCN R196). 141,489.00 Midlothian Council and Capital City Partnership – Visitor Economy & Culture City Deal Visitor Economy S11 The Visitor Economy & Culture project includes a DDI-led Approach to Visitor Economy Destination Management, supporting and promoting the region’s cultural assets, the development of a Cycling Tourism Strategic Vision Framework and Regional Cycling Tourism Feasibility Study and the development of a Strategic Regional Cruise Management Plan. 30,500.00 Midlothian Council and Capital City Partnership – Regional Energy Masterplan City Deal REM - Regional Energy Masterplan S13 The Regional Energy Masterplan is a collaborative project that has a number of different components including a data sharing agreement between six local authorities, a regional GIS conceptual model, an Archetype classification, definition, and codification and Skills (supply and demand) requirements within this sector. 30,500.00 Midlothian Council - Education- Multiply for 16 plus Education – Multiply for 16 plus S42 Schools are to provide additional support for 16+ with maths confidence and qualifications. 140,012.00 Page 254 of 270
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Appendix 1 This will include tutoring, masterclasses and drop-in classes Midlothian Council - Millerhill Hub Millerhill Hub S2 Upgrade & install fire doors & upgrade kitchen 55,165.00 Midlothian Council - Hawthorn Family Learning Centre Midlothian Council - Children’s services Secret Garden S2 To develop a piece of land opposite the community room where groups and supervised family times take place. It will become a nurturing outdoor space to meet the needs of their community families. 8000.00 Midlothian Council - Hawthorn Family Learning Centre Midlothian Council - Children’s Services - Family Wellbeing S9 S40 To run a “Food and Family Learning Event” from Challenge Poverty Week on a monthly basis. 4,190.00 Midlothian Council -Place Directorate – Road Services- Gorebridge signs Gorebridge signs S2 Installation of Welcome to Gorebridge signs 7,591.00 Midlothian Council - Place Directorate and Vogrie Country Park Vogrie Country Park improvements S2 Install car park barrier and signage. 70,000.00 Midlothian Council - Place Directorate Midlothian Bin Improvement programme S2 Deliver Bin Improvement programme 40,000.00 Midlothian Council - Place Directorate Midlothian Bus Stop Improvement programme S2 Deliver Bus stop Improvement programme 50,000.00 Midlothian Council - CLLE Penicuik Town Hall feasibility study S11 Feasibility study, scoping and design for a lift to all floors 82,000.00 Page 255 of 270
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Appendix 1 Outputs and Outcomes The tables below show the indicative forecast figures against the actual figures reported to date with associated RAG ratings until December 2024 across the whole of the 2022-25 UKSPF programme. It should be noted that changes were made to the criteria of the Multiply Investment Priority at the end of Year 2 (2023/4). The age requirement to be eligible was reduced from 19+ years to 16+ years to reflect the school leaving age in Scotland. This has had a significant impact on the number of clients that were able to participate in Multiply activity and has to date resulted in Red RAG ratings for both outputs and outcomes. However significant changes have now been made to the delivery of Multiply activity and the expectation is that we are likely to have Amber ratings by the end of the programme. It is possible that we will have a Green rating for outputs by the end of March 2025. However, as a number of the Maths qualifications are not completed before the end of the UKSPF programme, there will be a time lag in obtaining results and the number of outputs will not convert into positive outcomes. The delivery of Multiply has been a problem Scotland wide and not just within Midlothian. The People and Skills Investment Priority addresses employability matters and although the outputs reflect a Green RAG rating, the outcomes are only rated Amber. Several projects have highlighted that their clients have been much further down the employability pipeline than expected with many facing multiple barriers to employment. The outputs highlight the amount of activity taking place to assist clients but, due to the increased intensive nature of support required, it has not yet converted into positive job outcomes. One of the most notable points from these tables is the much higher than predicted figures for both outputs and outcomes under the Communities and Place Investment Priority. One of the main reasons is as a result of the higher-than-expected numbers of people engaging with interventions associated with the cost-of-living crisis. There was a clear need for this type of activity in Midlothian but the scale of demand for it has surpassed all expectations. In addition, the number of volunteering opportunities created by some Development Trusts has been higher than expected especially those associated with developing and running local pantries. The overall UKSPF 2022-25 programme is on track to deliver within budget, having disbursed the full Midlothian allocation of funding to local projects, and positively against the indicative outputs and outcomes. The final programme figures will be available when the end of year report has been completed for UK Government in early summer. Page 256 of 270
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Appendix 1 Year 1-3 2022-2025 YTD Cumulative 3 Years April 2022 - December 2024 Outputs Totals RAG Rating Investment Priorities 3 Year Total Forecast YTD- Cumulative YTD- Cum'/3Yr Total % YTD-Cumulative Communities & Place 9,860 17,433 177 Local Business 338 359 106 People & Skills 4,540 4,651 102 Multiply 1,545 346 22 Full Fund Total 16,283 22,789 140 Year 1-3 2022-2025 YTD Cumulative 3 Years April 2022 - December 2024 Outcomes Totals RAG Rating Investment Priorities 3 Year Total Forecast YTD- Cumulative YTD- Cum'/3Yr Total % YTD-Cumulative Communities & Place 8,726 18,416 211 Local Business 161 194 120 People & Skills 1,443 694 48 Multiply 1,111 117 11 Full Fund Total 11,441 19,421 170 Page 257 of 270
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Appendix 2 Overview of UK Shared Prosperity Transition Fund 2025/26 In the Autumn Statement in October 2024, the UK Government announced that the UK Shared Prosperity Fund would be extended for 2025-26 at a reduced level of £900 million. This amounts to a 40% reduction in the 2024-25 allocation of funding. The Midlothian allocation for 2025-26 is £1,166,951 with a split of capital £330,884 and revenue £836,067. The transition year is to provide a continuation of UKSPF activity until the end of March 2026. An announcement on a new funding programme to commence in April 2026 is expected in the Spring statement. The transition year of funding enables local authorities to continue investing in local priorities and target funding where it is needed most. Although there is no longer any ring fenced funding for Multiply, this type of activity can continue to be delivered under the People and Skills Investment Priority. This programme of funding will significantly contribute to developing communities, reducing inequalities, improving skills, and supporting sustainable development. In addition it will help support the voluntary sector, improve public services and grow the private sector. The UK government has set out an ambitious plan for change, focused on 5 national Missions: ambitious, measurable, long- term objectives that provide a driving sense of purpose for the country. These Missions, Priorities, Themes and Sub-themes align with the three main aims of the Midlothian Community Planning Partnership and Single Midlothian Plan. • Individuals and communities will have improved health and skills for learning, life and work • No child or household will be living in poverty • Significant progress is made towards net zero carbon emissions by 2030 For 2025-26, existing UKSPF interventions can be mapped into Mission-led themes across the three priority areas: Communities and Place; Support for Local Business; and People and Skills (see diagram below). Page 258 of 270
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Appendix 2 Further information can be found in the links below: UK Shared Prosperity Fund 2025-26: Technical note - GOV.UK UKSPF 2025-26 allocations - GOV.UK Page 259 of 270
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Midlothian Council Tuesday 25 February 2025 Item No 8.11 Use of Glyphosate update Report by Derek Oliver, Chief Officer, Place 1 1 Recommendations Council is recommended to approve an expansion of the time period with which glyphosate can be applied, in order to improve the visual appearance of the local environment in the public realm across Midlothian. 2 Purpose of Report/Executive Summary The purpose of this report is to request permission from Council for the Recycling and Greenspace service to apply glyphosate to control weeds from the beginning of March 2025. The report will also update Council on the managed use of glyphosate which was approved in March 2021 when Council approved the use of glyphosate on a restricted spot application basis. The application of glyphosate to target weed growth in March, rather than from June, would significantly improve the visual quality of the local environment and would result in resource savings, which would be reinvested in the Recycling and Greenspace service. Date: 25th February 2025 Report Contact: Matt Kelly – Group Manager Recycling and Greenspace Email: matthew.kelly@midlothian.gov.uk Page 260 of 270
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2 3 Background 3.1 In March 2021, following a decision by Council, the managed use of glyphosate by the Greenspace service has resulted in a significant reduction in the volume of glyphosate used to control weeds. 3.2 The managed usage approved by Council applied to the following areas; • Restricted spot application of glyphosate on Midlothian’s streets and pavements • The continued reduction of glyphosate use in Midlothian’s parks and open spaces • Essential treatment, as required, of invasive species such as Japanese Knotweed and Giant Hogweed • Continued use, where essential in road safety, to ensure visibility for pedestrians and road users at key locations 3.3 The table below shows the ongoing downward trend in the use of glyphosate over the last ten years. The most significant principle which has reduced glyphosate usage is the concept of spot treatment, targeting weed growth, rather than blanket weed spraying of all streets and park paths, even if weed growth was not visible. Table 3.3.1 3.4 While the Recycling and Greenspace service has been committed to continue with the reduction of glyphosate use as directed by Council, there are circumstances where there will be a managed increase in use. Year Volume of Glyphosate (Litres) 2015 2398 2016 1238 2017 1823 2018 1843 2019 1374 2020 450 2021 650 2022 605 2023 680 2024 570 Page 261 of 270
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3 3.5 For example, the service has taken on the maintenance of three additional housing sites in 2024. These sites will require an element of weed control and therefore glyphosate use. 3.6 The service is also responsible for the delivery of private grounds maintenance contracts where chemical use is required as part of the agreed specification. As part of the Council’s commitment to reduce glyphosate use, we encourage our private clients to reduce the amount of chemicals used as part of the contract where possible. 4. The Neighbourhood Environment Team 4.1 As part of the Recycling and Greenspace service review, the grounds maintenance and street cleaning teams merged to create the Neighbourhood Environment Team, 4.2 The creation of the Neighbourhood Environment Team in August 2024 has already resulted in improvements to service delivery which have seen an increase in the quality of the local environment in a number of ways, including the way the service controls weeds. 4.3 In relation to weed control, the Neighbourhood Environment Team improves the local environment as follows; • Neighbourhood Operatives will carry out hand removal of weeds while carrying out street cleaning duties where practical, reducing the need for glyphosate • A targeted winter work programme involves a deep clean of key routes targeting the removal of detritus at wall bases and around obstacles such as traffic islands • Improvements to the way mechanical sweepers are deployed to reduce detritus which will result in a reduction in weed growth • A removal of poor quality shrub beds, to be replaced by grassed areas with trees planted, which increases bio-diversity and reduce the need for glyphosate use to control weeds within the beds. • The Neighbourhood Environment Team continues to build on the partnership with community based volunteer groups to jointly tackle weed growth across Midlothian which has mitigated the use of glyphosate. The service has also agreed to reduce glyphosate use where community groups have adopted specific locations. 4.4 A major challenge for the Neighbourhood Environment Team in 2024 was the amount of weeds already in the road gutters and footpaths. This was due to the restrictions on the timing of the first application of glyphosate in Midlothian. 4.5 In addition to this, the effects of climate change have seen an increase in the growing season to include March, October and even November, due to the longer periods of wet and warm weather which have now Page 262 of 270
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4 become the norm in the UK. This means that there is a now a longer period during which weeds require treatment. 4.6 Currently, the qualified staff responsible for applying glyphosate in the Greenspace teams are unable to treat weeds until the beginning of June. This is essentially three months into the growing season and results in significant weed growth that the service then has to manage through intensive hand weeding or following an initial spot treatment and then removal. 4.7 It is therefore proposed that the period during which spot treatment of glyphosate is applied commences at the beginning of March. This will give the service and additional three months to manage weed growth in Midlothian resulting in an increase to the visual quality of the local environment. 4.8 It is expected that while there will be an increase in glyphosate usage, this will be minimal due to the targeted work of the Neighbourhood Environment Team to remove detritus which effectively remove the seed base in which weeds germinate. It is estimated that the increase in glyphosate will be around 300 litres which means that the estimated usage will remain well below the 2019 figures. 4.9 The new working practices, in addition to the proposed extension of the period during which glyphosate can be applied, will result in a significant increase in the visual quality of the local environment in Midlothian. 5 Report Implications (Resource, Digital and Risk) 5.1 Resource The operational efficiencies from a reduction in the requirement to hand remove weeds through the summer months will result in a savings of £17,800, which is the equivalent of one Seasonal Gardener post that would no longer be required. Approximately £9,000 of this saving will be spent on training additional staff within the workforce, additional spraying equipment as well as an increase in glyphosate for the targeted spot treatment of weeds which will be in the region of around 300 litres. The remaining £8,800 will be reinvested into the Recycling and Greenspace service as part of an ongoing transformation programme of service improvement. The alternative to increasing the period during which the application of glyphosate can take place is the additional deployment of mechanical sweepers. Page 263 of 270
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5 The use of machinery to remove weeds would cost approximately £69,000 in staff time and would require the re-allocation of mechanical sweepers. This would divert the machines from essential work to support the prevention of flooding by keeping road channels clear of detritus, which would instead block road gullies. The additional use of glyphosate in March is the most cost effective way to ensure weed growth is controlled which will improve the visual amenity of Midlothian. 5.2 Digital There are no Digital Services issues associated with this proposal. 5.3 Risk The risk of not approving the decision is that the reputation of the council will suffer as a result of increased weed growth which will have a detrimental effect on the visual amenity of Midlothian for residents and visitors. 6 Ensuring Equalities (if required a separate IIA must be completed) No equalities issues identified. Page 264 of 270
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6 Appendices Appendix A – Report implication A.1 Key Priorities within the Single Midlothian Plan A.2 Key Drivers for Change Key drivers addressed in this report: Holistic Working Hub and Spoke Modern Sustainable Transformational Preventative Asset-based Continuous Improvement One size fits one None of the above A.3 Key Delivery Streams Key delivery streams addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value Not applicable A.5 Involving Communities and Other Stakeholders Not applicable A.6 Impact on Performance and Outcomes The proposed earlier seasonal use is to improve the impact on the public realm. A.7 Adopting a Preventative Approach Not applicable A.8 Supporting Sustainable Development Not applicable Page 265 of 270
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Midlothian Council Tuesday 25 February 2025 Item No 8.12 Standards Commission Decision Report by Alan Turpie, Legal and Governance Manager/Monitoring Officer Report for Decision 1 Recommendations It is recommended that the Council considers the decision of the Standards Commission in relation to complaint reference LA/Mi/4131. 2 Purpose of Report/Executive Summary In terms of Section 18 of the Ethical Standards in Public Life etc. (Scotland) Act 2000 and Rule 10.9 of the Standards Commission Hearing Rules, the Council requires to consider, within three months, the terms of a written decision issued by the Standards Commission for Scotland. Date Friday 31 January 2025 Report Contact: Alan Turpie, Legal and Governance Manager/Monitoring Officer Alan.Turpie@midlothian.gov.uk Page 266 of 270
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3 Background/Main Body of Report 3.1 The Standards Commission in Scotland encourages high ethical standards in public life through the promotion and enforcement of Codes of Conduct for Councillors and those appointed to the Boards of Devolved Public Bodies. 3.2 It is a statutory body established under The Ethical Standards in Public Life etc. (Scotland) Act 2000 (“the Ethical Standards Act”). The Ethical Standards Act created a framework whereby Councillors and Members of Devolved Public Bodies are required to comply with Codes of Conduct and also with Guidance which is issued by the Standards Commission. 3.3 Complaints about breaches of these Codes are investigated by the Commissioner for Ethical Standards in Public Life in Scotland (“ESC”) and thereafter adjudicated upon by the Standards Commission. 3.4 Following an investigation into a complaint received on 02 May 2024 about the conduct of Councillor Bryan Pottinger (the Respondent), the Ethical Standards Commissioner (ESC) referred a report to the Standards Commission on 22 October 2024, in accordance with the Ethical Standards in Public Life etc. (Scotland) Act 2000 (the 2000 Act). 3.5 The substance of the referral was that the Respondent had failed to comply with the provisions of the Code and, in particular, that he had contravened paragraphs 3.1, 3.3, 3.10 and 2 of Annex A, the terms of which are as follows: • I will treat everyone with courtesy and respect. This includes in person, in writing, at meetings, when I am online and when I am using social media • I will not engage in any conduct that could amount to bullying or harassment (which includes sexual harassment). I accept that such conduct is completely unacceptable and will be considered to be a breach of this Code. • I will follow the Protocol for Relations between Councillors and employees at Annex A and note that a breach of the Protocol will be consistent a breach of this Code. I will also comply with any internal protocol that the Council has on councillor/employee relations. • Councillors and employees should work in an atmosphere of mutual trust and respect, with neither party seeking to take unfair advantage of their position or influence. 3.6 A hearing of the Standards Commission took place on 15 January 2025 held at Midlothian House, Dalkeith in relation to this complaint reference LA/Mi/4131. 3.7 The Hearing Panel considered the submissions made both in writing and orally at the Hearing and concluded that the Respondent had not breached paragraphs 3.1, 3.3, 3.10 and Annex A of the Code. Page 267 of 270
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3.8 The Decision of the Hearing Panel is attached as Appendix B to this report. 4 Report Implications (Resource, Digital and Risk) 4.1 Resource N/A 4.2 Digital N/A 4.3 Risk The Council has a statutory duty in terms of section 18 of the Ethical Standards in Public Life etc. (Scotland) Act 2000 to consider the terms of the Commission’s findings within three months. Failure to do so would not only be a breach of the Act but could also be considered to be in breach of the Key Principles of the Code of Conduct. 4.4 Ensuring Equalities (if required a separate IIA must be completed) N/A 4.5 Additional Report Implications (See Appendix A) See Appendix A Appendices Appendix A – Additional Report Implications Appendix B – Background information/Links Page 268 of 270
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APPENDIX A – Report Implications A.1 Key Priorities within the Single Midlothian Plan N/A A.2 Key Drivers for Change Key drivers addressed in this report: Holistic Working Hub and Spoke Modern Sustainable Transformational Preventative Asset-based Continuous Improvement One size fits one None of the above A.3 Key Delivery Streams Key delivery streams addressed in this report: One Council Working with you, for you Preventative and Sustainable Efficient and Modern Innovative and Ambitious None of the above A.4 Delivering Best Value N/A A.5 Involving Communities and Other Stakeholders N/A A.6 Impact on Performance and Outcomes N/A A.7 Adopting a Preventative Approach N/A A.8 Supporting Sustainable Development N/A Page 269 of 270
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APPENDIX B Standards Commission Website: Cases - Forthcoming Hearings and Hearing Decisions | The Standards Commission for Scotland (standardscommissionscotland.org.uk) Page 270 of 270