Agenda Document Pack - Midlothian Council - 27/02/2024
Midlothian Council · 27 February 2024
Back to Midlothian Council — 27 February 2024 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, 27 February 2024 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 322
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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 None 5 Minutes 5.1 Minute of Meeting of Midlothian Council 19 December 2023 submitted for approval 5 - 24 5.2 Minute Volume Index 25 - 26 5.3 Action Log 27 - 28 6 Questions to the Council Leader None 7 Motions 7.1 Flood Risk Management 29 - 30 8 Public Reports 8.1 Financial Monitoring 2023/24 – General Fund Revenue, report by Chief Financial Officer & Section 95 Officer 31 - 44 8.2 Housing Revenue Account - Revenue Budget 2023/24 – 2024/25 and Capital Plan 2023/24 – 2026/27, report by Chief Financial Officer & Section 95 Officer 45 - 54 8.3 General Services Capital Plan 2023/24 Quarter 3 Monitoring, and 2024/25 to 2027/28 Budgets, report by Chief Financial Officer & Section 95 Officer 55 - 74 Page 2 of 322
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8.4 Treasury Management and Investment Strategy 2024/25 & Prudential Indicators, report by Chief Financial Officer & Section 95 Officer 75 - 154 8.5 Foster Carer Additional Funding, report by Chief Social Work Officer and Chief Officer Children’s Services 155 - 160 8.6 Council Tax charges on second homes and empty properties, report by Executive Director Place 161 - 166 8.7 Fees and Charges 2024/25, report by Executive Director Place 167 - 178 8.8 Medium Term Financial Strategy – 2024/25 to 2028/29, report by Chief Financial Officer & Section 95 Officer 179 - 204 8.9 Bus Partnership Fund Grants Awarded, Fund freeze and Community Bus Fund Award, report by Executive Director Place 205 - 228 8.10 ‘Midlothian on the Move’ Draft Strategy for Consultation and new bids to the Active Travel Infrastructure Fund, report by Executive Director Place 229 - 316 8.11 200th Anniversary of Braille, report by Executive Director Place 317 - 322 Exclusion of Members of the Public (A) TO CONSIDER RESOLVING TO DEAL WITH THE UNDERNOTED BUSINESS IN PRIVATE IN TERMS OF PARAGRAPHS 6, 9 AND 11 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 A701 Relief Road and A702 Spur Road – Phasing, report by Executive Director Place 9.2 Midlothian House Building Fabric Upgrades, report by Executive Director Place 9.3 Capital Plan Prioritisation and Strategic Investment Framework, report by Executive Director Place 10 Date of Next Meeting The next meeting will be held on Tuesday 26 March 2024 at 11am. Page 3 of 322
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Minute of Meeting Midlothian Council Date Time Venue Tuesday, 19 December 2023 11:00 am Council Chambers, Midlothian House/Hybrid Present: Provost McCall (Chair) Depute Provost Bowen Councillor Parry (Council Leader) Councillor Cassidy (Depute Council Leader) Councillor Alexander Councillor Curran Councillor Drummond Councillor Imrie Councillor McEwan Councillor McKenzie Councillor McManus Councillor Milligan Councillor Pottinger Councillor Russell Councillor Scott (virtual) Councillor Smaill Councillor Winchester Councillor Virgo Religious Representatives: Anne-Theresa Lawrie Elizabeth Morton In attendance: Dr Grace Vickers, Chief Executive Kevin Anderson, Executive Director Place Morag Barrow, Director of Health & Social Care: Midlothian HSCP / Chief Officer to Midlothian IJB Fiona Robertson, Executive Director Children, Young People & Partnerships Alan Turpie, Legal and Governance Manager / Monitoring Officer David Gladwin, Chief Financial Officer (Section 95 Officer) Derek Oliver, Chief Officer Place Saty Kaur, Chief Officer Corporate Solutions Midlothian Council Tuesday 27 February 2024 Item No 5.1 Page 5 of 322
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Joan Tranent, Chief Officer Children’s Services, Partnerships and Communities Fiona Clandillon, Head of Development Michelle Strong, Education Chief Operating Officer Myra Forsyth, Continuous Improvement Manager Claire Gardiner, Audit Scotland, External Auditors (Virtual) (Left at 11:23am) Lynn Cochrane, Communications Team Leader Gordon Pollock, Project Director Zero Waste Edinburgh and Midlothian Gary Leadbetter, Democratic Services Officer Lucy Roddie, Democratic Services Officer Janet Ritchie, Democratic Services Officer 1. Welcome and Apology for Absence The Provost welcomed everyone to this meeting of the Midlothian Council. A choir from King’s Park Primary School was noted as being in attendance to sing Christmas carols, which they went on to do and were subsequently applauded before leaving the meeting. The Provost advised that this meeting was open to the public and would be webcast live. The Provost informed the meeting that this was the last meeting that Elizabeth Morton, Religious Representative, would be attending and wished them all the best in their retirement from Midlothian Council duties. 2. Order of Business The Monitoring Officer, advised that per Standing Order 7.8, notices of meetings, which specifically includes the reports and reports to be considered, are to be published not less than 3 working days before the meeting. Reports were issued on Friday, 15 December 2023, for Items 8.1, 9.4 and 9.5 which therefore did not meet the test. In terms of Standing Orders, the Chair (the Provost) has the final decision as to whether the Items should be allowed as urgent business. The Provost confirmed that Item 8.1 would be accepted as urgent business, but after consultation with the Group Leaders, prior to the meeting, chose not to accept Item 9.4 or Item 9.5. Discussion from Members - It was raised that whilst Item 8.1 was circulated around Elected Members previously for the purposes of other Committees, there were then changes to this report before it was issued for the purposes of this meeting. It was raised that not enough time was provided to Elected Members to fully read and digest reports and papers prior to the meeting. It was requested that the number of reports and papers coming before the full Council meetings is controlled going forward, and that the Council Leader and the Chief Executive review this. Page 6 of 322
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The Council Leader agreed with the above and stated that they had spoken with the Chair of the Standing Orders Working Group on this matter to determine if there is a way to formalise this and ensure Elected Members have sufficient time to consider reports and papers. 3. Declarations of interest No declarations of interest were intimated at this stage of the proceedings. 4. Deputations None received. 5. Minutes of Previous Meetings Item No. Report Title Submitted by: 5.1 Minute of Meeting of Midlothian Council 21 November 2023 Executive Director Place Outline and Summary of Discussion The Minute of Meeting and Private Addendum of Midlothian Council held on 21 November 2023 was submitted and approved as a correct record. Councillor Parry moved. Councillor McManus seconded. Decision Minute of Meeting and Private Addendum of Midlothian Council held on 21 November 2023 was approved. Action Democratic Services Item No. Report Title Submitted by: 5.2 Minute Volume Index Executive Director Place Outline and Summary of Discussion The following minutes were previously circulated to Elected Members and subsequently noted and/or the recommendations contained therein approved: • Minute of Police, Fire and Rescue Board of 21 August 2023 • Minute of Local Review Boady of 25 September 2023 • Minute of General Purposes Committee of 3 October 2023 • Minute of Cabinet of 24 October 2023 • Minute of Planning Committee of 31 October 2023 Moved by Councillor Parry. Seconded by Councillor Cassidy. Page 7 of 322
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Decision Minute Volume Index noted. Action Democratic Services Item No. Report Title Submitted by: 5.3 Action Log Executive Director Place Outline and Summary of Discussion It was requested that Action 4 – Capital Plan Prioritisation, remain open. Decision The Action Log was noted, with all actions recommended for closure to be closed except Action 4 which remains open. Action Democratic Services 6. Questions to the Leader of the Council None received. 7. Motions None received. 8. Reports Report No. Report Title Submitted by: 8.1 Annual Audit Report to Members and the Controller of Audit – year ended 31 March 2023 Audit Scotland, External Auditors, and Chief Financial Officer & Section 95 Officer Outline and Summary of Discussion The Chief Financial Officer & Section 95 Officer introduced the report and explained that Claire Gardiner, Audit Scotland, would present the report. Midlothian Council has primary responsibility for ensuring the proper financial stewardship of public funds. This includes preparing annual accounts that are in accordance with proper accounting practices. This report summarises the findings from the 2022/23 annual audit of Midlothian Council. The scope of the audit was set out in an annual audit plan presented to the June 2023 meeting of the Audit Committee. The Annual Audit Report comprises: • Significant matters arising from an audit of Midlothian Council’s annual accounts. Page 8 of 322
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• Conclusions on the following wider scope areas that frame public audit as set out in the Code of Audit Practice: o Financial Management o Financial Sustainability o Vision, Leadership, and Governance o Use of Resources to Improve Outcomes • Conclusions on Midlothian Council’s performance in meeting is Best Value duties. Claire Gardiner highlighted that Audit Scotland issued a clean audit opinion in October 2023 and the accounts were signed at that point to meet publication deadlines. Claire Gardiner noted that there were some significant adjustments made to the accounts, with the most significant being in relation to treatment of unfunded pensions, following the application of the asset ceiling which related to the unusual event of having a pension fund surplus. Claire Gardiner further highlighted that there are ongoing challenges in relation to financial sustainability. In particular, it was noted that although reserves are increasing, a significant proportion of these is earmarked for specific purposes and therefore not necessarily usable. The Provost thanked the Chief Financial Officer and Claire Gardiner for the report and opened it up to questions. Councillor Parry thanked the External Auditors, the Chief Financial Officer, finance team and all Council Officers for the tremendous amount of work that was undertaken to complete the annual audit. Decision Elected Members noted the Annual Audit Report. Action Claire Gardiner, External Auditor, Audit Scotland, left the meeting at 11:23am. Report No. Report Title Submitted by: 8.2 Treasury Management Mid-Year Review Report 2023/24 Chief Financial Officer & Section 95 Officer Outline and Summary of Discussion The Chief Financial Officer & Section 95 Officer presented the report. The purpose of this report is to inform Council of the Treasury Management activity undertaken during the first half of 2023/24 and the forecast activity for the second half of 2023/24 in accordance with the Treasury Management and Annual Investment Strategy approved in February 2023. It also provides an update to the Treasury and Prudential Indicators for 2023/24. Council should note that in accordance with the Prudential Code, a draft of the report was considered by Audit Committee on 5 December 2023, with the report approved by Audit Committee as presented. Council is recommended to: Page 9 of 322
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a) Note the report and the treasury activity undertaken in the period to 30 September 2023, as outlined in Section 5; b) Note the actual and forecast activity during the second-half of the year as outlined in Section 6; c) Approve the technical revisions to the Prudential Indicators in Section 7 of this report; d) Note the loans fund rate performance relative to other Scottish Local authorities, as outlined in Section 8, and the cash saving (compared to the Scottish Average) that the Treasury Management function brings to support the Council’s in-year revenue budget. The Provost thanked the Chief Financial Officer for the report and opened it up to questions. Councillor Parry thanked the Chief Financial Officer and the finance team for the work undertaken on the activities outlined. Councillor Parry moved the report. Councillor Cassidy seconded. Decision Recommendations, as outlined above, were approved in full. Action Chief Financial Officer & Section 95 Officer Report No. Report Title Submitted by: 8.3 Medium Term Financial Strategy 2024/25 – 2028/29 Chief Financial Officer & Section 95 Officer Outline and Summary of Discussion The Chief Financial Officer & Section 95 Officer presented the report. This report provides Council with an update on development of the 2024/25 revenue budget, building on the report presented to Council on 10th October 2023 and looking ahead to Member engagement early in 2024 culminating in Council setting a balanced budget on Tuesday 27th February 2024. Key messages from recent UK and Scottish Government fiscal events are outlined along with the possible implications of these on the Scottish Government Budget for 2024/25 which is scheduled for Tuesday 19th December 2023. Recent developments relating to Employers Pension contributions for all groups of workers is discussed and the implications of these will be reflected in the projected 2024/25 base budget position and the remainder of the existing MTFS. Council is recommended to: a) Note that the Business Transformation Steering Group (BTSG) will continue to consider necessary measures to support delivery of a balanced Medium Term Financial Strategy (MTFS) before any policy recommendations are presented to Council. b) Note that the financial outlook remains challenging for this term of Council and recall the recommendation in the External Auditors report in 2022 that “as a matter of urgency, officers and elected members need to work together Page 10 of 322
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to develop and agree the medium-term financial strategy and progress the Council’s transformation plans”. c) Note that the projected budget gap for 2024/25, as presented to Council on 10th October 2023, incorporating planned use of service concession retrospection was projected to be £7.272 million, rising to a projected £34.677 million by 2028/29. d) Note the position relating to the UK Government’s Autumn Statement and the expected impact on the Scottish Budget. e) Note the update on Employer Pension contributions. f) Otherwise, note the remainder of the report. The Provost thanked the Chief Financial Officer for the report and opened it up to questions. Discussion from Members - it was requested that briefing sessions are set up in January, on a cross-party basis, to look at the financial settlement and the capital plan prioritisation. It was stated that consideration should be given to setting a target for when decisions on the capital plan prioritisation need to be taken and noted that a decision was needed on the capital plan prioritisation before a budget can be set. It was stated that a lot of the budget is non-recurring funding and that it is important to clearly understand what the budget challenges are for this year and for future years. It was stated that at the last Audit Committee there was a useful discussion on the lag between Midlothian’s population increasing and the Scottish Government recognising this in terms of the payments received. The Chief Financial Officer was asked to speak to this, particularly in relation to when the settlement from the Scottish Government will catch up in real terms with the population increase. The Chief Financial Officer noted that some of the census data will be reflected in the calculation of the settlement, and that the expectation is that this will increase Midlothian’s share. How this relates to the floor is unclear. The Chief Financial Officer noted that another increase is expected in 2024/25 when the rest of the census data is reflected. The Council Leader noted that they recently sent a letter to the Deputy First Minister making representations on this matter. Decision • Elected Members noted the report. • Briefing Sessions on financial settlement and capital plan prioritisation to be set up in January. Action Chief Financial Officer & Section 95 Officer Report No. Report Title Submitted by: Page 11 of 322
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8.4 Non-Domestic Rates Relief Policy Chief Officer Corporate Solutions Outline and Summary of Discussion The Chief Officer Corporate Solutions presented the report. Following the devolvement of powers to Local Authorities, from 1 April 2023 Midlothian Council can change its existing policy to potentially generate more revenue. This report sets out the proposal for a revised policy effective from 1 April 2024. Council is recommended to agree to implement the new policy with effect from 1 April 2024. The Chief Officer Corporate Solutions noted that Edinburgh Council administer the policy on Midlothian Council’s behalf and their own policy has been changed, which may pose issues if Midlothian Council does not change their own. The Provost thanked the Chief Officer Corporate Solutions for the report and opened it up to questions. Councillor Parry moved the report. It was also requested that a review of the policy is undertaken in 6 months to 1 year to mitigate any unforeseen circumstances. Councillor McManus seconded the report. Decision • Recommendation, as outlined above, was approved in full. • Review of policy to be undertaken in 6 months – 1 year. Action Chief Officer Corporate Solutions Report No. Report Title Submitted by: 8.5 Rent Pressure Zone Executive Director Place Outline and Summary of Discussion The Executive Director Place presented the report. At the Council meeting held on 10 October 2023 members requested a report to be brought forward on rent pressure zones. To date, no Rent Pressure Zones (RPZ) have been established in Scotland despite several local authorities expressing interest in making use of the powers. Due to the level of data required to be submitted in a RPZ application local authorities have indicated that it may take several years to collate this evidence base. There is also a concern that the legislation does not sufficiently control rents as a RPZ would still allow increases above inflation and between tenancies changing. Council is recommended to note the report and to consider: a) if there is a requirement to progress additional work to establish a case for a Rent Pressure Zone as any administering of RPZ within Midlothian Council Page 12 of 322
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would require resource and potentially a software solution to be procured and configured, with resource implications to be assessed for full costings, or b) decide that there is no present requirement to progress further. The Executive Director Place noted that, in addition to the details provided in the report, they can further advise Elected Members that the secondary legislation for the new rental control measures will be published after the New Housing (Scotland) Bill receives assent. This Bill is to deliver stronger rights for tenants, greater protection from eviction and a national system of rent controls for the private rented sector (PRS). All Local Authorities will be required to carry out mandatory PRS rent screening, regardless of whether rent control is required. The Executive Director Place noted that, in this respect, the Scottish Government have contacted Midlothian Council to ascertain whether it would be interested in participating in a pathfinder project to test the initial PRS rent screening process. The Scottish Government would then fund a 6-month post to test the broad rental market area. Those findings would help form legislation and guidance for the initial screening stage of rent controlled measures. Some exploratory discussions have taken place with the Scottish Government in this respect and agreed tentatively that Midlothian Council may be interested in taking part, although further information is required before a final decision can be taken. The Executive Director Place explained that officers will meet with the Scottish Government again in the new year and that the Scottish Government are hoping to start the project in the early months of 2024. The Provost thanked the Executive Director Place for the report and queried whether they should have submitted a declaration of interest, given that they are a registered private landlord in Midlothian. The Monitoring Officer explained that the Provost should have declared an interest and that they should excuse themselves for the remainder of this Item. The Provost left the meeting. The Deputy Provost took over as Chair for the remainder of this Item. Discussion from Members – it was queried whether there was an obligation to carry out profiling of PRS, which will potentially be funded by a government-funded post. It was queried if a decision on whether Midlothian Council should do an RPZ is dependent on understanding the profile of the PRS, then perhaps it is best to wait until this is undertaken before a decision is taken. The Executive Director Place noted that there is no current requirement in terms of existing legislation for RPZ or data collection in terms of rent control. The Executive Director Place clarified that the Scottish Government are offering a temporary funded post as part of the 6-month pilot pathway project, which in turn would allow Midlothian Council to establish the baseline information for Midlothian. Thereafter, funding this would likely default to the Local Authority. It was raised that in the report, 4.1 states that authorities must provide a profile of the PRS. The Executive Director Place noted that once the legislation is passed, this will become a requirement, but it is not currently. Page 13 of 322
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Councillor McKenzie moved recommendation B in the report. Councillor Curran seconded. Decision Recommendation B, as outlined above, was approved. Action Executive Director Place The Provost rejoined the meeting and took back over as the Chair. Report No. Report Title Submitted by: 8.6 Annual Road Works Performance Report 2022/23 Chief Officer Place Outline and Summary of Discussion The Chief Officer Place presented the report. The purpose of this report is to highlight the excellent performance of the Council’s Roads & Transportation team in relation to their statutory functions for the co-ordination of all road works on the Council’s public road network, and to acknowledge the consistently high level of performance achieved from the perspective of the Scottish Road Works Commissioner. The latest Annual Performance Report 2022/23 for all 32 Scottish Local Authorities from the Scottish Road Works Commissioner shows that Midlothian Council’s Roads & Transportation Service has again achieved the top rating of “Well Managed” for the third year in a row. Council is recommended to note and welcome the contents of the report. The Provost thanked the Chief Officer Place for the report and opened it up to questions. Discussion from Members – it was suggested that further investment in the road services plan and maintenance is required, going forward. A question was raised whether Midlothian Council has ever considered using an identifying mark on potholes, if it has not been fixed immediately, to allow people to see it and understand that the Council are aware of it. The Chief Officer Place stated that they will take this away and look at this as part of the continuous improvement of road services and come back on this. The Provost noted that gritters are on the national programme and can be tracked, and queried whether the pothole pro can be put on the national programme to monitor it. It was raised that the public should report potholes on the Council website to get them fixed. Decision • Elected Members noted the report. • Consider identifying marks for potholes as part of the continuous improvement of road services. Page 14 of 322
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Action Chief Officer Place Report No. Report Title Submitted by: 8.7 Waste and Recycling Service Standards Chief Officer Place Outline and Summary of Discussion The Chief Officer Place presented the report and outlined the salient points. The Chief Officer Place commended the Waste and Recycling Service team for their performance. Council is recommended to approve the: i. adoption of the proposed Waste Service Standards and Waste Service Policies; and ii. acceptance of £2.2m grant funding offered by the Scottish Government’s Recycling Improvement Fund, administered by Zero Waste Scotland. The Provost thanked the Chief Officer Place for the report and opened it up to questions. Discussion from Members – it was commented on the importance of contributing to achieving net zero targets and highlighted the possibility of creating income streams via waste recycling. Councillor Alexander moved the report. Councillor Cassidy seconded the report, noting that the policies would become statutory in 2025. In responding to a query from Members, the Chief Officer Place reported that changes to collection dates and opening times for recycling centres over the Christmas period were available on the Council website and communicated via social media. It was queried if there were any plans to adopt vehicle registration recognition technology. The Chief Officer Place reported that a proposal would be brought forward for Elected Member consideration via the ongoing waste services transformation work. Elected Members commended the team for their performance and gave thanks for their hard work. Decision Council approved: i. adoption of the proposed Waste Service Standards and Waste Service Policies; and ii. acceptance of £2.2m grant funding offered by the Scottish Government’s Recycling Improvement Fund, administered by Zero Waste Scotland. Action Page 15 of 322
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Chief Officer Place Report No. Report Title Submitted by: 8.8 Fleet and Plant Asset Replacement Plan Chief Officer Place Outline and Summary of Discussion The Chief Officer Place presented the report. This report details the on-going fleet and plant requirements and an accelerated replacement plan to deliver the Council’s operational activities whilst aiming to ensure its fleet is modern, efficient and fit for purpose mitigating significant current maintenance liabilities. Council is recommended to note: i. an accelerated capital investment of £4.67m from existing and future fleet capital budget allocations, to address a funding gap of £3.51m, for 2023- 25. The Provost thanked the Chief Officer Place for the report and opened it up to questions. Councillor Alexander moved the report. Discussion from Members – the acceleration of the capital investment was queried, in particular as to how this will allow operational planning if the funds are not there for future years at this moment in time, given that a lot of these vehicles are likely specialist with long lead-in times. The Chief Officer Place explained that this was to enable officers to mobilise the procurement of vehicles quickly to address the short- term impact currently being experienced on the revenue repairs budget. In terms of moving forward and returning to Council for additional capital allocation, this would be subject to the decisions made in relation to the Climate Action Plan. It was queried whether financing methods are open to the Council to reduce the depreciation risk of vehicles. The Chief Financial Officer noted that depreciation is not a primary concern, as the charges that hit the General Fund are through the Loans Fund. The Chief Financial Officer noted that it is the financing method that is more pertinent to the budget deliberations. The Chief Financial Officer noted that there are options to lease vehicles, also explaining that there is change in the accounting code for leasing that can effectively capitalise elements of the lease, and this is being looked at as part of the financing options for the piece of work being discussed. Concerns were raised in relation to whether the fleet will be sufficient to meet increased needs coming from the expansion of Midlothian through housebuilding, and whether the funds for expanding the fleet will be available, if needed. The Chief Officer Place noted that this would be looked at on a needs analysis and requests made through the appropriate internal governance arrangements, ultimately arriving at the capital plan and asset management board to then come back. As this would be additionality to the fleet as opposed to replacement, the Chief Officer Place explained that they would need to go through these channels to procure additional Page 16 of 322
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vehicles. The Chief Officer Place further explained that the current need was to look at replacing fleet vehicles. Councillor Cassidy seconded the report. It was queried whether the long-term running cost of running electric refuse collection vehicles and net zero ambitions had been considered. The Chief Officer Place noted that the consideration right now was that vehicles need replaced now, as maintenance costs were unsustainable. The Chief Officer Place explained that they would return with the report on the future fleet, which would be aligned to climate action goals. It was raised that the fleet budget had not been increased for many years, stating this is the reason this issue has arisen. It was queried whether it would be prudent to add additionality at this stage. The Chief Financial Officer responded that Elected Members are free to increase any budget through an amendment or the processes in place to consider the Council’s budgets. The Chief Financial Officer further explained that the work needs to be done quickly and whilst the budget could be increased, the solution is unknown and so more work would need to be done, which does not address the need to replace fleet vehicles now. Councillor Milligan moved an amendment to the report to add £3.5 million additionality to the fleet capital budget allocation from the reserves, rather than drawing it forward. Councillor Imrie seconded. A query was raised in relation to the purpose of the amendment, as opposed to agreeing to the recommendation outlined within the report. The Chief Financial Officer explained that their understanding of the amendment is that the fleet asset management replacement budget would be increased by a figure contained within the table at section 3.7, although clarity would need to be given on what figure. This would be to reflect the potential incoming cost. It was suggested to take this matter to BTSG to map out some of the financial needs of how the fleet might change and look at how to address the funding gap. The Chief Officer Place welcomed this, although noted that there is a significant need for the current matter to progress to offset the ongoing revenue impacts on maintenance and hire costs. The Chief Officer Place explained that after this matter is dealt with, they could come back to BTSG with climate options to be able to discuss and look at future funding mechanisms. Councillor Virgo moved an amendment that the matter about increasing fleet capacity should be brought back to BTSG. Councillor Smaill seconded. Councillor Alexander and Councillor Cassidy accepted Councillor Virgo’s amendment and as such it became part of the substantive motion. A vote was taken on the substantive motion (with Councillor’s Virgo amendment included) and the amendment proposed by Councillor Milligan, with 11 votes for the motion and 7 votes for the amendment. Page 17 of 322
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Decision Recommendation, as outlined above, was approved, with the addition that considerations around increasing fleet capacity are brought to BTSG. Action Chief Officer Place Report No. Report Title Submitted by: 8.9 Scottish Government Consultation Response - Education Reform: A Consultation on the provisions of the Education Bill Executive Director Children, Young People and Partnerships Outline and Summary of Discussion The Executive Director Children, Young People and Partnerships presented the report. The purpose of this report is to advise Council on the consultation on the provisions of the Education Bill and how key stakeholders have informed the response on behalf of Midlothian Council. Council is requested to delegate authority to the Executive Director Children, Young People and Partnerships to submit the Education Reform Consultation Response to the Scottish Government, on behalf of Midlothian Council. The Provost thanked the Executive Director Children, Young People and Partnerships for the report. The Monitoring Officer noted that although the report has been included in the pack from the date of issue, the consultation response itself which is annexed to the report, was only circulated on the morning of the meeting. The Monitoring Officer explained that it would therefore need to be accepted for consideration as urgent business under standing order 7.8. The Chair accepted the consultation response as urgent business. Councillor Scott moved the report. Discussion from Members - concerns were raised around the inadequate timeline allowed to complete the consultation and that there was a discussion at the cross- party group that responding to this consultation would be delegated to the cross- party group. It was raised that the draft consultation response was submitted without any Elected Members having had sight of it until the morning of the meeting. It was requested that, in relation to where the new education authority would be located, the wording should not be to seek clarity but to seek assurance that it will remain within Midlothian. The Executive Director Children, Young People and Partnerships explained that, in regard to the cross-party group delegation point, they had advised that they would be seeking legal advice in terms of whether it was appropriate for cross-party group to sign off the response. The Executive Director Children, Young People and Partnerships explained that they were advised that report should come to Council and seek delegated authority to sign off the report. Page 18 of 322
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Councillor Alexander seconded the report. It was requested that officers feed back to the Scottish Government about the brevity of the consultation time. It was stated that it would have been preferable if the cross- party group had been advised about the legal advice received. The Executive Director Children, Young People and Partnerships explained that the draft response had to be drafted quickly, as comments were able to be given up until the Wednesday/Thursday the week before this meeting. The Executive Director Children, Young People and Partnerships further explained that they had informed the Scottish Government about concerns with the brevity of the consultation period, although noted that they are mindful that parents, carers, staff and young people did participate in the national discussion. The Executive Director Children, Young People and Partnerships informed Elected Members that they had asked Head Teachers to work with their respective schools and submit individual school responses, and that they would follow up on this and confirm with Council that these have been submitted. The Executive Director Children, Young People and Partnerships confirmed they would be happy to strengthen the language ain the consultation response. The Executive Director Children, Young People and Partnerships also explained that there was no intent to exclude the cross-party group and explained that they seek every opportunity to engage with them and ensure their voice is heard. It was also stated that there has been a larger scale consultation with a significant response to it. It was queried what the legal impediment of circulating the draft response to the cross-party group was, stating that the draft response was submitted the previous day but circulated to Elected Members on the morning of this meeting. The Monitoring Officer explained that the legal impediment of the cross-party group signing this off was that the group is not a statutory body of the Council. Councillor Drummond moved that the language in the draft response is changed to seek assurances that the qualifications authority would remain in Midlothian. Councillor Pottinger seconded. Decision • Recommendation, as outlined above, was approved with the addition that the language in the consultation response should be strengthened to seek assurances that the qualifications authority would remain in Midlothian. Action Executive Director Children, Young People & Partnerships The Provost adjourned the meeting at 13:00pm for lunch and reconvened the meeting at 13:20pm. Report No. Report Title Submitted by: Page 19 of 322
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8.10 Attainment Update for Midlothian in Primary and Secondary schools Education Chief Operating Officer Outline and Summary of Discussion The Education Chief Operating Officer presented the report. The purpose of this report is to present the annual update on attainment for Midlothian on two key datasets: Achievement of Curriculum for Excellence Levels (ACEL) and Senior Phase Insight update. The Education Chief Operating Officer highlighted the salient points and noted there had been some improvement in attainment for most year groups for 2022/23 in comparison to last year and pre-pandemic levels. The Education Chief Operating Officer reiterated Midlothian Education Service’s commitment to raising attainment for all learners. The Education Chief Operating Officer reported that an Elected Member briefing was planned for January 2024. Council is recommended: i. to note the progress, strengths and improvements of our children and young people’s attainment in both primary and secondary schools as outlined in this Report. ii. to note and acknowledge the strategies adopted to address areas for continuous improvement outlined in this Report. iii. to congratulate all pupils, parents and staff on the significant improvements in attainment and achievement during session 2022/23. The Provost thanked the Education Chief Operating Officer for the report and opened it up to questions. Discussion from Members – Congratulations was extended to all parents, pupils and staff for the improvements in attainment and achievement during 2022/23, highlighting the context of the Covid-19 pandemic, cost of living crisis, the significant number of children living in poverty and the extensive waiting lists for access to child mental health support. It was noted that measures of attainment should not be based solely on academic performance. It was commented that leaving school at 16 may be appropriate for some young people and noted that it was possible to return to education in later life. It was suggested a longitudinal study from Primary 1 through to leaving school would be a useful indication of attainment. There was positive comments on improvements made but also concerns regarding Midlothian’s performance against comparators. It was reported that recent school visits that had been undertaken by Elected Members had been overwhelmingly positive. It was commented that further work was required to improve parent engagement. It was acknowledged that there was room for improvement but there was confidence that appropriate strategies were in place to achieve this. It was queried whether any tangible impact on reducing the attainment gap had been identified in relation to the Council’s investment in digital technologies. In response, the Education Chief Operating Officer commented that the Council was reaping the rewards of investment in digital technologies. A number of inspections across both primary and secondary schools had commended the use of digital technologies and digital skills within the classroom. The Education Chief Operating Page 20 of 322
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Officer spoke about the Council’s ongoing investment in accessibility tools, such as Read and Write, to assist young people in overcoming literacy barriers. The Education Chief Operating Officer reported that the Read and Write tool had been rolled out to all families free of charge in October 2023, with high uptake. In response to a comment from Elected Members regarding the reduction in attainment in S5 and S6, the Education Chief Operating Officer acknowledged further improvement was required and commented that scrutiny was being given to available datasets, including the correlation between attendance and performance. Comments were made on the relationship between attainment and home life and noted the impact of child poverty and the cost of living crisis, and on the importance of viewing attainment holistically and partnership working across services. Decision Council: i. noted the progress, strengths and improvements of our children and young people’s attainment in both primary and secondary schools as outlined in this Report. ii. noted and acknowledged the strategies adopted to address areas for continuous improvement outlined in this Report. iii. congratulated all pupils, parents and staff on the significant improvements in attainment and achievement during session 2022/23. Action Education Chief Operating Officer Report No. Report Title Submitted by: 8.11 Annual Procurement Report 2022/23 Legal and Governance Manager / Monitoring Officer Outline and Summary of Discussion The Legal and Governance Manager / Monitoring Officer introduced the report and outlined the salient points. Council is asked to: i. note the Annual Procurement Report on regulated procurements during 2022/23 to be published on the Council's website; and ii. note the current and planned strategy development and transformation activity for 2023/24. The Provost thanked the Legal and Governance Manager for the report and opened it up to questions. Discussion from Members – it was commented that the Council could do more to benefit the community in relation to the awarding of contracts. Decision Council: Page 21 of 322
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i. noted the Annual Procurement Report on regulated procurements during 2022/23 to be published on the Council's website; and ii. noted the current and planned strategy development and transformation activity for 2023/24. Action Legal and Governance Manager / Monitoring Officer Report No. Report Title Submitted by: 8.12 Rosewell to Auchendinny NCN 196 Pathway Upgrade Chief Officer Place Outline and Summary of Discussion The Chief Officer Place introduced the report and outlined the salient points. The purpose of the report is to update Council on the outcome of the public consultation and next steps to progress the upgrade of the Rosewell to Auchendinny NCN 196 Pathway. Council is recommended to note: i. the significant numbers of responses to the public consultation; and ii. the decision of Cabinet at its meeting of 28 November 2023 to approve the upgrade of the Rosewell to Auchendinny NCN 196 Pathway. The Provost thanked the Chief Officer Place for the report and opened it up to questions. Discussion from Members - the minute of Midlothian Council of 27 June 2023 was referred to and it was questioned whether when a public consultation had taken place that a further report was to be brought back to Midlothian Council for decision. It was suggested that as the report presented to the meeting of Midlothian Council today was for noting, that due democratic process had not been followed. Councillor Milligan moved to reject the recommendations as outlined in the report and called for a full report to be brought back to the next meeting of Midlothian Council in February 2024. Councillor Imrie echoed Councillor Milligan’s concerns and seconded the motion. It was highlighted that the report had been presented to Cabinet and could have been ‘called-in’ to the Performance Review and Scrutiny Committee in accordance with the Council’s Scheme of Administration. Councillor Parry, seconded by Councillor Alexander, moved the report. The importance of moving the project forward for the benefit of Midlothian’s residents was raised. In response to a request for clarity on the governance position, the Monitoring Officer reported that at the meeting of Midlothian Council of 27 June 2023, Elected Members had approved a public consultation with a further report to be presented to a future meeting of Midlothian Council. The minute of the meeting of Midlothian Page 22 of 322
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Council of 27 June 2023 was approved at the meeting of Midlothian Council on 29 August 2023. The minute as approved does not specifically retain the final decision to Council. The Monitoring Officer explained that the meeting webcast had been reviewed and confirmed that there was no specific reference to the report being brought back to Council for decision. As per the Council’s Scheme of Administration, it is the remit of Cabinet to make decisions such as this. The outcome of the consultation was duly presented to the meeting of Cabinet on 28 November 2023. It is therefore the governance position that the wording of the minute of the meeting of Midlothian Council of 27 June 2023 does not specifically retain the decision making to Council, but rather that the outcome would be reported to Council. The reference to Cabinet was therefore competent. It was suggested establishing a cross-party working group to review governance processes. Councillor Milligan, seconded by Councillor Imrie, moved to reject the recommendations as outlined in the report and called for a full report, including options, to be brought back to the next meeting of Midlothian Council. On an amendment to the motion, Councillor Parry, seconded by Councillor Alexander, moved to note the report. On an amendment to the motion, Councillor Virgo, seconded by Councillor Parry, moved to note the report and to add a further recommendation, namely, that a cross- party working group be established to review governance processes. Councillor Alexander accepted Councillor Virgo’s amendment and as such it became part of the substantive motion. The Monitoring Officer confirmed that the amendment was competent, citing Standing Order 12.1, which states: 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. On a vote being taken, 9 Elected Members voted for the motion and 9 Elected Members voted for the amendment. The Monitoring Officer advised that, in accordance with Standing Order 11.2 (iv), the Chair (the Provost) would have the casting vote. The Chair (the Provost) voted for the amendment. This then became the decision of the Council. Decision Council: i. noted the significant numbers of responses to the public consultation; and ii. noted the decision of Cabinet at its meeting of 28 November 2023 to approve the upgrade of the Rosewell to Auchendinny NCN 196 Pathway; and iii. agreed to establish a cross-party working group to review governance processes. Page 23 of 322
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Action Chief Officer Place The Public section of the meeting concluded at 14:16pm. 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 disclosed exempt information as defined in paragraphs 3, 6 and 14 of Part I of Schedule 7A to the Local Government (Scotland) Act 1973:- 9.1 Midlothian Energy Limited – Business Plan 2024-28, report by Executive Director Place 9.2 Acquisition of Land for an All through School Campus in Shawfair Town Centre from Network Rail, report by Executive Director Place 9.3 A701 Relief Road and A702 Spur Road – Phasing, report by Executive Director Place Date of Next Meeting The next meeting will be held on Tuesday, 27 February 2024 at 11:00am. The meeting concluded at 15:06pm. Page 24 of 322
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Midlothian Council Minute Volume Presented to the Meeting of Midlothian Council on Tuesday, 27 February 2024 Page 25 of 322
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1 Minutes of Meetings submitted for Approval Minute of Community Asset Transfer Committee of 30 January 2024 3 - 6 2 Minutes of Meetings submitted for Consideration Minute for Consideration Minute of Audit Committee of 30 October 2023 7 - 16 Minute of Special Audit Committee of 5 December 2023 17 - 24 Minute of Local Review Body of 13 November 2023 25 - 34 Minute of Local Review Body of 11 December 2023 35 - 42 Minute of Performance Review and Scrutiny Committee of 7 November 2023 43 - 50 Minute of Police Fire and Rescue Board of 15 November 2023 51 - 60 3 Minutes of Meetings submitted for Information Minute of MIJB of 24 August 2023 61 - 74 Minute of Special MIJB of 21 September 2023 75 - 82 Minute of MIJB of 21 December 2023 83 - 98 Minute of MIJB - Audit and Risk of 07 September 2023 99 - 106 Minute of MIJB - Audit and Risk of 23 November 2023 107 - 112 Page 26 of 322
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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 August 2023 Recommended for closure - Updates regularly provided to BTSG. A series of thematic BTSG sessions have been delivered over Oct/Nov 2023 and a report scheduled for December 2023 Council. Report re- presented to February 2024 Council. 2 19/12/2023 8.3 Medium Term Financial Strategy 2024/25 – 2028/29 Briefing Sessions on financial settlement and capital plan prioritisation to be set up in January 2024. Chief Financial Officer & Section 95 Officer January 2024 Recommended for closure – MTFS report presented to February 2024 Council. 3 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 Midlothian Council Tuesday 27 February 2024 Item No 5.3 Page 27 of 322
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No Date of meeting Item No and Title Action Action Owner Expected completion date Comments 4 19/12/2023 8.6 Annual Road Works Performance Report 2022/23 Consider identifying marks for potholes as part of the continuous improvement of road services. Chief Officer Place April 2024 5 19/12/2023 8.8 Fleet and Plant Asset Replacement Plan Considerations around increasing fleet capacity to be brought to BTSG. Chief Officer Place June 2024 6 19/12/2023 8.9 Scottish Government Consultation Response - Education Reform: A Consultation on the provisions of the Education Bill Language in the consultation response to be strengthened to seek assurances that the qualifications authority, SQA, would remain in Midlothian. Executive Director Children, Young People & Partnerships TBC Recommend for closure: consultation response submitted 7 19/12/2023 8.12 Rosewell to Auchendinny NCN 196 Pathway Upgrade Establish a cross-party working group to review governance processes. Executive Director Place TBC Recommend for closure: will be reviewed as part of the existing Cross Party Standing Orders Working Group Page 28 of 322
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Midlothian Council Tuesday 27 February Notice of Motion "Midlothian Council recognises that climate change is causing an increasing number of extreme weather events that in many cases results in severe flooding across the world, including here in Scotland. Therefore Council agrees that as a matter of priority • Council officers commission an updated review of flood risk management • Council officers present to Council no later than 27/08/24 a revised action plans to manage and mitigate flood risks • Council officers present to Council no later than 27/08/24 an updated emergency response plan for flooding incidents Moved Seconded Councillor Russell Imrie Councillor Derek Milligan Midlothian Council Tuesday 27 February 2024 Item No 7.1 Page 29 of 322
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Midlothian Council Tuesday 27 February 2024 Item No 8.1 Financial Monitoring 2023/24 – General Fund Revenue Report by David Gladwin, Chief Financial Officer and Section 95 Officer Report for Decision 1 Recommendations Council is recommended to: a) Approve increased funding of £0.794 million for the Midlothian Integration Joint Board in 23/24 to cover unbudgeted pay costs (section 4.2); b) Note projections of revenue costs and income in 2023/24 against budget; c) Note the projected General Fund Reserve Balance at 31st March 2024; d) Note recovery actions agreed by the Corporate Management Team in response to areas of projected overspend (section 3.3); and e) 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 2023/24 and to provide commentary on areas of material variance against budget. The budget performance figures as shown in Appendix B result in a projected net underspend of £0.128 million which is an improvement of £1.396 million from projections at quarter 2. The projected underspend represents 0.04% of the revised budget. 2.2 Projected overspends mainly 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 2024 is £12.109 million, of which £1.677 million is earmarked for specific use and a further £1.260 million relates to a VAT claim not yet settled leaving a non-earmarked General Fund balance of £9.172 million. Date: 2 February 2024 Report Contact: David Gladwin, Chief Financial Officer and Section 95 Officer David.Gladwin@midlothian.gov.uk 0131 271 3113 Page 31 of 322
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2 3 Background 3.1 This report encompasses all performance against revenue budget for General Fund services including additional costs incurred and lost income as a consequence of the Covid-19 pandemic. 3.2 In response to the immediate and challenging financial outlook the Chief Executive, during the previous financial year, introduced a moratorium on non-essential spend and a freeze on non-essential vacancies. This moratorium remains in place. Performance against budget 3.3 The main areas of projected overspend against budget at quarter 3 are outlined in tables 1 and 2 below also describing mitigating measures and next steps. 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 Pupil Transport £1,034,000 Volume and value of school pupil transport invoices higher than budgeted. In October, Council agreed a consultation on pupil transport and this is now underway. A root and branch review of Council Transport is underway as part of the Transformation Blueprint. Pupil Transport update report to Business Transformation Steering Group (BTSG). Fleet £815,000 Ageing vehicles and higher volumes of external contracting than planned. External vehicle hire to support service continuity. Areas of service have been re- provisioned. Cost containment measures in place. Fleet Maintenance Review underway. Multi-year Fleet Asset Management Plan being developed. Fleet replacement for ageing and costly vehicles to maintain has been accelerated as approved by Council on Tuesday 21st November. Orders have been placed with suppliers. Energy Consumption £453,000 Unit prices for electricity as provided by Scotland Excel are higher than budgeted Destination Hillend £483,000 Alpine Coaster not completed during 2023/24 due to delays with civil engineering works. Project Team aim to accelerate the Alpine Coaster construction. Regular update reports to governance forums. Homelessness £423,000 Service charge income Improvement in void Planned Page 32 of 322
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3 credited to the General for properties used to house homeless clients has reduced due to fewer temporary solutions in favour of permanent tenancies. property turnaround times thus increasing available supply. replacement of properties from future voids for temporary use purpose will improve service charge income position. Additional Support Needs (ASN) £341,000 Expensive out of authority placements and bespoke packages. Creation of additional and improved infrastructure in Midlothian. Continued development of ASN requirements in Learning Estate Strategy and the General Service Capital Plan. Digital Software Costs £265,000 Additional revenue costs as a consequence of a continued move to cloud based software. A move to cloud- based software is a continuing trend and brings an additional revenue cost. As assessment of future costs is complete and is reflected in future years budget projections. Insurance £211,000 Cost of Annual Premiums and higher than expected costs of existing claims. Continual review of claims at the Risk and Resilience Group. Foster Care Allowance £63,000 Cost of minimum Foster Care allowance exceeds Scottish Government funding Fair funding discussions with the Scottish Government. Table 2: Shortfalls against income targets in the Budget Budget Overspend Reason Action Plan / Mitigating Measures Next Steps Sport and Leisure £664,000 Membership numbers, albeit increasing slightly in recent months, remain significantly lower than pre-pandemic. Non membership based Individual and group use remains lower than pre- pandemic. Partly offset by reduced in-year running costs of £546,000. Externally commissioned options appraisal reported to BTSG with further work progressed. Sport and Leisure update report was presented to BTSG on 4th December and a more detailed options paper will follow. Trade Waste £111,000 Income is lower than budgeted targets. Review of Service. Waste Recycling Transformation Options presentation to BTSG on 9th November. Further update to BTSG as part of Waste Review. Cafes £139,000 Income is lower than budgeted targets. Review of offering embedded in Sport Sport and Leisure update report to Page 33 of 322
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4 and Leisure update report. be presented to BTSG on 4th December and a more detailed options paper will follow. There also remains £1.043 million of Medium Term Financial Strategy cost reductions either to be finalised or fully implemented. A number of these are taking longer than planned to implement with an impact on the 23/24 financial position. Underspends • Loan Charges are projected to underspend by £3.519 million in 2023/24. There are three main factors: o Higher than forecast and more sustained periods of surplus cash related directly to timing of capital expenditure thus providing opportunity to generate some deposit income; o Delays in in longer-term borrowing due to availability of existing funding to support capital programmes in 2023/24; and o Higher than budgeted deposit income from cash-backed reserves due to a significant increase in interest rates during 2023/24 from those expected when the budget was set. • With the exception of 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 pupil numbers thus giving rise to a positive variance of £0.732 million. Pupil projections in the budget for the following academic year are finalised during base budget development work in December. In the 2023/24 academic year there has been a significant number of primary 1 deferrals and a lower than estimated number of children in Council run Early Years settings; • The Council continues to hold some non-critical vacancies across the Council, partly to mitigate delivery of planned saving and partly as a financial discipline measure. Management measures are in place to review each vacancy before approving recruitment. The net projected impact in 2023/24 is £0.606 million; • Fuel prices are now much lower than forecast when the 2023/24 budget was set giving rise to a projected underspend of £0.176 million; • Income from roads construction charging exceeds budget by £0.195 million due to some large one-off receipts in 2023/24; • Income from Planning fees exceeds budget by £0.181 million due to a large one-off receipt in 2023/24 and a higher than anticipated volume of applications. Page 34 of 322
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5 3.4 The Corporate Management Team continue to meet to consider the financial position agreeing, alongside the continued financial discipline measures referenced in section 3.2, a range of recovery actions and clear timescales for these as outlined in tables 1 and 2 above. Pay Costs and Funding 3.5 The pay offer for employees whose pay negotiations are covered by the Scottish Joint Council (SJC) trade unions and also for Chief Officials was agreed late in 2023. Backdated payments have been made to all affected staff. 3.6 Funding for 2023/24 pay costs involves an assumption of 3% in council budgets enhanced by a range of Scottish Government funding as follows: • Revenue funding of £155 million equating to £2.662 million for Midlothian. • A further funding package of £80 million nationally involving: o £22 million of Scottish Government Capital Grant to be converted to revenue; o £7 million funding previously set aside for the Child Abuse Compensation Scheme in 2023/24 used to fund pay and replaced in 2024/25; o £21 million Employability Funding. There are underspends in programmes across Scotland in 2023/24. These can be redistributed in 2023/24 and replaced in 2024/25. o £30 million Pupil Equity Funding using cross year flexibility between 2023/24 and 2024/25 for unspent balances in 2023/24 to fund pay. The Scottish Government will replace funding in 2024/25. • Utilisation of Council Reserves in 2023/24 to the tune of £17.2 million nationally with funding being replaced by the Scottish Government in 2024/25. • £10 million additional Council contribution. 3.7 Additional Council contributions of £27.2 million outlined in section 3.6 equates to approximately £0.490 million of additional cost for Midlothian and Council have funded this by approving a supplementary estimate in 2023/24. 3.8 Scottish Negotiating Committee for Teachers pay awards for the current financial year have been agreed and are fully funded in the budget. Page 35 of 322
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6 4 Delegation of resources to Midlothian Integration Joint Board 4.1 The approved budget provided for the allocation of £56.593 million to the Midlothian Integration Joint Board (MIJB) for the provision of delegated services. Minor technical adjustments to this allocation during the year to date reduces the allocation to £56.544 million. 4.2 Additional pay funding received from the Scottish Government in 2023/24, as discussed in section 3.6 above, provides an opportunity to provide MIJB with additional in-year funding to contribute towards unbudgeted pay costs. A proportionate share of funding equates to £0.794 million and it is recommended that Council agree to increase funding to MIJB by this value. Approval will increase in-year MIJB funding to £57.338 million. 4.3 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 activity 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) 5 General Fund Reserve 5.1 The projected balance on the General Fund as at 31 March 2024 is as follows: £ million £ million General Fund Reserve at 1 April 2023 34.964 Planned movements in reserves Application of Budgets carried forward from 2022/23 for use in 2023/24 (16.013) Utilisation of reserve to balance 2023/24 budget (1.166) Supplementary Estimate for works at Mayfield Primary School and St Luke’s Primary School (0.060) Supplementary Estimate for Pay (0.490) (17.729) Underspend per appendix 1 0.128 Updated Assessment of VAT Claims (0.226) Cross year funding for pay (0.636) Projected application of Transformation Blueprint funding (1.392) Projected application of earmarked reserve to fund Public Realm works (3.000) General Fund Balance at 31 March 2024 12.109 Page 36 of 322
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7 Figures above do not include cross-year flexibility whereby service budgets not used in the current financial year and eligible to be carried forward for use in the next financial year are held in the General Fund balance at 31st March and released back to service budgets on 1st April. These will be assessed at quarter 4. An element of the General Fund is earmarked for specific purposes and this is shown below: £ million General Fund Balance at 31 March 2024 12.109 Earmarked for specific purposes To support Council Transformation Blueprint (1.677) General Reserve at 31 March 2023 10.432 VAT Windfall to be settled (1.260) Revised General Reserve at 31 March 2024 9.172 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 £4.627 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 At quarter 1 the anticipated settlement value of £6.839 million from the outstanding VAT claims was shown in the earmarked element of the General Fund Reserve. During quarter 2 one of the claims was settled to a value of £5.353 million which was £0.160 million more than anticipated and this is now included in the non-earmarked element of the General Fund Reserve. The second claim remains outstanding with recent projections showing a settlement of £1.260 million which is £0.387 million lower than previously anticipated. 5.4 The General Reserve is projected to be £9.172 million. This is £4.545 million is excess of minimum reserves strategy. Considering current financial pressures, the General Reserve must be viewed both in the context of £3.696 million of underlying service pressures in 2023/24 (Appendix B - General Fund Services Net Expenditure) and the latest Medium Term Financial Strategy (MTFS) projected gap of approximately £20.3 million through to 2028/29. Until there is significant progress towards a balanced MTFS it remains sound financial practice to maintain a buffer in the General Reserve to offset any further adverse performance against budget or delays in delivering savings measures. Page 37 of 322
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8 6 Report Implications (Resource, Digital and Risk) 6.1 Resource The projected performance against budget set out in this report presents the initial projections for the year. Work continues across the council to reduce overspends and to progress at pace delivery of approved savings. Whilst this report deals with financial issues there are no financial implications arising directly from it. 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 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 previous years has resulted in previously unreported or significantly adjusted variances at the financial year end. Financial Management CMT continues to consider these areas and supports actions to address the underlying issues and mitigate the risk associated with them. Information relating to the Building Maintenance Service has improved although there remains concern with its detail. Work is ongoing to resolve this issue. At this point it is expected that the Building Maintenance Service will show an on-budget position for 2023/24. The financial projections are predicated on new burdens, including those arising from the Government’s 100 day commitments to be fully funded. The position with outstanding pay awards and the potential for unfunded costs arising presents a significant risk to the Council’s financial position. Page 38 of 322
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9 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 Appendix A – Report Implications Appendix B – Financial Table Page 39 of 322
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10 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. In addition there is continued engagement with the recognised Trade Unions on the financial position. Page 40 of 322
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11 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 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 table Page 41 of 322
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MIDLOTHIAN COUNCIL Appendix B GENERAL FUND 2023/24 Performance against budget Revised Budget Revised Budget Revised Budget (Underspend) Function Approved Budget Expenditure Income Net Outturn / Overspend £ £ £ Management and Members 1,677,915 1,844,460 0 1,844,460 1,875,460 31,000 Place Corporate Solutions 23,626,261 50,928,267 (24,573,513) 26,354,755 26,909,755 555,000 Place 40,506,069 60,867,555 (17,592,549) 43,275,006 46,229,006 2,954,000 Central Costs 1,198,871 4,138,672 0 4,138,672 4,349,672 211,000 People and Partnerships Midlothian Integration Joint Board 56,593,028 65,754,896 (8,417,325) 57,337,571 57,337,571 0 Non-Delegated Services - Sport and Leisure, Community Safety and Welfare Rights 421,250 1,172,926 (94,001) 1,078,925 1,071,925 (7,000) Childrens Services, Partnerships and Communities 18,955,577 21,545,485 0 21,545,485 21,487,485 (58,000) Education 120,906,768 150,041,649 (17,420,133) 132,621,515 132,631,515 10,000 Lothian Valuation Joint Board 581,659 581,659 0 581,659 581,659 0 Non Distributable Costs 898,936 898,936 0 898,936 898,936 0 GENERAL FUND SERVICES NET EXPENDITURE 265,366,334 357,774,504 (68,097,521) 289,676,983 293,372,983 3,696,000 Loan Charges 4,435,000 4,435,000 0 4,435,000 916,000 (3,519,000) NDR Discretionary Relief 70,300 70,300 0 70,300 70,300 0 Investment Income (110,736) 0 (110,736) (110,736) (285,736) (175,000) Allocations to HRA, Capital Account etc. (5,414,898) (5,419,273) 0 (5,419,273) (5,419,273) 0 264,346,000 356,860,531 (68,208,257) 288,652,274 288,654,274 2,000 less Funding: Scottish Government Grant (191,629,000) 0 (199,439,951) 199,439,951 199,264,951 175,000 Council Tax (62,836,000) 0 (62,836,000) 62,836,000 63,086,000 (250,000) Transfer from Housing Revenue Account (2,014,000) 2,014,000 0 2,014,000 2,069,000 (55,000) Service Concessions - in-year (2,608,000) 2,608,000 0 2,608,000 2,608,000 0 Service Concessions - retrospection (4,093,000) 4,093,000 0 4,093,000 4,093,000 0 Utilisation of Reserves 1,166,000 358,874,531 (330,484,208) 24,362,323 24,234,323 (128,000) Page 43 of 322
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Midlothian Council Tuesday 27 February 2024 Item No 8.2 Housing Revenue Account - Revenue Budget 2023/24 – 2024/25 and Capital Plan 2023/24 – 2026/27 Report by David Gladwin, Chief Financial Officer Report for Decision 1 Recommendations Council is recommended to: • Approve the Housing Revenue Account (HRA) Capital Plan for 2024/25 - 2026/27 as detailed in Appendix D; • Approve the HRA Revenue Budget for 2024/25; • Note the indicative HRA Revenue Budget for 2025/26 and 2026/27 as detailed in Appendix 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 2023/24 for the Capital Plan and a projected outturn for both the Revenue Account and Capital Plan for 2023/24; • An update on the Capital Plan and Revenue budget 2024/25 - 2026/27. The projected financial performance for 2023/24 is: • Capital Investment in the year totalling £51.359 million; • A net overspend of £0.124 million on the Revenue Account; • A projected HRA general reserve at 31st March 2024 of £34.526 million. The HRA Capital Plan 2024/25 - 2026/27 provides for: • £151.385 million for Phases 2 - 5 of New Build Social Housing; • £20 million for Housing- led Dalkeith Town Centre Regeneration; • £27.908 million for investment in Energy Efficiency Standards in Social Housing; and • £33.305 million for other investment in existing stock and off-market purchases. The Revenue Budget Reflects: • An update of the multi-year financial model; • A 4.8% rent increase as approved at Council 21st Feb 2023; • A projected HRA Reserve of £36.135 million at 31st March 2025, which will be required to finance the majority of approved investment commitment and is projected to reduce to £2.509 million at 31st March 2039. Date: 17th January 2024 Report Contact: Lisa Young lisa.young@midlothian.gov.uk Page 45 of 322
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2 3 Background 3.1 Capital Plan 2023/24 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 £50.759 million. There is now a minor projected overspend of £0.007 million. Scottish Government have awarded an additional £0.534 million grant towards the Council’s investment in Net-zero in our Social Housing Stock, which was not previously budgeted for. A project team is now in place for the Housing-led Dalkeith Town Centre project, which has budget of up to £20 million as referenced in the executive summary of this report. Whilst no material spend is projected to be incurred this financial year the outline business case is now starting to progress. The construction industry across the UK has experienced unprecedented adverse market conditions, which led to significant rises in tender prices for a wide range of materials. There is evidence that inflation of between 10% and 15% beyond BCIS predictions was seen. Continued inflationary pressure provides a risk that the capital budgets provided for delivery of the New Social Housing project will need to be increased with a resultant impact on the funding strategy. 3.2 Revenue Account 2023/24 The underspend reported to Council on 21st November 2023 was £0.224 million. The forecast position has deteriorated by £0.348 million giving rise to a projected overspend at quarter 3 of £0.124 million against budget, as shown in Appendix C. • This is due to an increase in both the average cost and volume of reactive repairs resulting in an increased cost of £0.256 million. • Reflection of the most current new social housing delivery programme resulting in reduced rental income of £0.248 million. Offset by: • A reduction in the level of debt charges of £0.157 million. This is mainly due to the deferral of the total 2023/24 in-year borrowing requirement to later in the financial year than assumed at quarter two. The HRA general reserve balance is projected to be £34.526 million at 31st March 2024 and this is committed to finance existing investment plans to 2038/39. Page 46 of 322
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3 3.3 Capital Plan 2024/25-2026/27 The current approved Housing Revenue Account Capital Plan provides for investment of £234.598 million over the period 2024/25 – 2026/27, of which £151.385 million is earmarked for completion of Phase 3 – Phase 5 of the New Social Housing Programme. Initially when the new build phase 3 - 5 budget was approved it was estimated this budget would deliver 1,540 units. The amount now estimated to be delivered is 972 units. The reduction 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 Passivhaus programme is paused at present for a cost benefit review. Due to the Scottish Government’s recent announcement, the level of Affordable Housing Supply Programme grant monies being made available in 2024/25 has reduced. There is a risk the Council might not be awarded the full grant monies budgeted for Phase 5 of the New Social Housing Programme, potentially further reducing the level of units that can be delivered through this phase. Details of the direct impact are not yet clear. There is further potential to receive Scottish Government Social Housing Net-zero funding of £1.5 million in 2024/25, however this is yet to be approved so no budget provided for at this time. The HRA Capital Plan is detailed in Appendix D and has been amended to reflect the latest estimated costs of ongoing and planned projects. 3.4 Revenue Account 2024/25 The HRA revenue model has been updated and projected forward to 2038/39 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 4.1% to 2031/32 to continue to support investment in EESSH and 1.30% thereafter. • Projected provision for inflation over future years as per the available 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. Page 47 of 322
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4 These together with a number of other minor adjustments to the previous financial projections confirm that the HRA can continue to support the existing investment plans. The revised revenue budget for 2023/24 and indicative budget for 2025/26 - 2026/27 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. 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 of disruptive factors in material supply chains, workforce supply, economic impacts, global conflicts that 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 2023/24 Appendix C – Revenue Account 2023/24 Appendix D – Capital Plan 2024/25 – 2026/27 Appendix E – Revenue Account 2024/25 – 2026/27 Page 48 of 322
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5 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 49 of 322
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6 MIDLOTHIAN COUNCIL Appendix B HOUSING REVENUE ACCOUNT CAPITAL PLAN 2023/24 Revised Budget 2023/24 Actuals to Date Projected Outturn Variation (Under)/Over £'000 £'000 £'000 £'000 FUNDING Scottish Government Grants - Affordable Housing Supply Programme Funding 9,295 3,994 9,295 0 - Off Market Purchases Funding 1,543 1,213 1,543 0 - Social Housing Net-zero Funding 0 0 534 534 Council Tax on Second Homes 110 0 110 0 Borrowing Requirement 40,404 26,565 39,877 (527) TOTAL AVAILABLE FUNDING 51,352 31,772 51,359 7 APPROVED EXPENDITURE £'000 £'000 £'000 £'000 New Build Houses Phase 2 - Phase 5 35,375 22,503 35,375 0 Backdated Developer Contribution 875 0 875 0 Off Market Purchases 4,073 3,095 4,073 0 Aids & Adaptations 499 185 499 0 Environmental Improvements 100 13 100 0 BDHS Meters 20 0 20 0 Homelessness - Temporary Accommodation Provision 67 33 74 7 Scottish Housing Quality Standard 0 -Upgrade Central Heating Systems 1,677 865 1,677 0 -Energy Efficiency Standard for Social Housing (EESSH) 1,200 0 1,200 0 -Scottish Housing Quality Standards (SHQS) Repairs 7,466 5,078 7,466 0 TOTAL EXPENDITURE 51,352 31,772 51,359 7 Page 50 of 322
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7 MIDLOTHIAN COUNCIL Appendix C HOUSING REVENUE ACCOUNT 2023/24 Revised Projected Variation Budget Outturn (Under)/Over Average No of Houses 7,636 7,378 (258) £000's £000's £000's Repairs and Maintenance General Repairs 7,492 7,956 464 Decant/Compensation 65 70 5 Grounds Maintenance 829 591 (238) 8,386 8,617 231 Administration and Management 5,433 5,433 0 Loan Charges 14,484 13,627 (857) Other Expenses 2,821 3,011 190 TOTAL EXPENDITURE 31,124 30,688 (436) Rents Houses 32,819 32,258 561 Garages 647 647 0 Others 165 166 (1) TOTAL RENTS 33,631 33,071 560 NET EXPENDITURE/(INCOME) (2,507) (2,383) 124 Movement in HRA Reserve Opening HRA Reserve (32,143) Enhancement during 2023/24 as above (2,383) Reserve Earmarked to fund capital investment plans (34,526) Page 51 of 322
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8 MIDLOTHIAN COUNCIL Appendix D HOUSING REVENUE ACCOUNT CAPITAL PLAN 2024/25-2026/27 Proposed Budget 2024/25 Proposed Budget 2025/26 Proposed Budget 2026/27 £'000 £'000 £'000 FUNDING Grants - Affordable Housing Supply Programme Funding 18,783 10,801 0 - Off Market Purchases Funding 715 715 110 Council Tax on Second Homes 113 116 119 Borrowing Requirement 83,443 81,827 35,856 TOTAL AVAILABLE FUNDING 103,054 93,459 36,085 APPROVED EXPENDITURE £'000 £'000 £'000 New Build Houses Phase 2 - Phase 5 72,324 61,142 17,919 Backdated Developer Contributions 696 1,000 1,000 Housing Led Town Centre Regeneration 10,000 10,000 0 Off Market Purchases 1,950 1,950 265 Aids & Adaptations 519 529 537 Bonnyrigg District Heating Scheme Meters 1,280 0 0 Environmental Improvements 3,900 2,000 2,000 Scottish Housing Quality Standard -Upgrade Central Heating Systems 1,677 2,791 0 -Energy Efficiency Standard for Social Housing 6,445 10,573 10,890 -SHQS Upgrades 4,263 3,474 3,474 TOTAL EXPENDITURE 103,054 93,459 36,085 Page 52 of 322
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9 MIDLOTHIAN COUNCIL HOUSING REVENUE ACCOUNT 2024/25- 2026/27 Appendix E 2024/25 2025/26 2026/27 Proposed Indicative Indicative Budget Budget Budget Average No of Houses 7,664 8,029 8,284 £000's £000's £000's Repairs and Maintenance General Repairs 8,237 8,578 8,806 Decant/Compensation 71 73 74 Grounds Maintenance 603 614 624 8,911 9,265 9,504 Administration and Management 5,537 5,643 5,750 Loan Charges 16,568 20,131 23,081 Other Expenses 2,856 2,949 3,038 TOTAL EXPENDITURE 33,872 37,987 41,373 Income Houses Rents 34,631 38,546 41,828 Garages Rents 677 723 738 Other Income 173 184 188 TOTAL RENTS 35,481 39,453 42,754 NET EXPENDITURE/(INCOME) (1,609) (1,466) (1,381) BALANCE BROUGHT FORWARD (34,526) (36,135) (37,601) BALANCE CARRIED FORWARD (36,135) (37,601) (38,981) Page 53 of 322
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Council Tuesday 27 February 2024 Item No 8.3 General Services Capital Plan 2023/24 Quarter 3 Monitoring, and 2024/25 to 2027/28 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 adjustment to the project expenditure and funding budgets for the projects as outlined in Section 3.2. c) Approve the addition of the new projects to the GSCP, as outlined in Section 3.3. d) Note the changes to the GSCP in respect of the Learning Estate Strategy as outlined in Section 3.4 and as per the Capital Plan Prioritisation report. e) Note the forecast outturn for 2023/24 for expenditure, funding and borrowing as outlined in Section 4. f) Note the planned expenditure and funding levels in the GSCP for 2023/24 to 2027/28 (as outlined in Section 5 and shown in Appendices B and C), 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 2023/24 (Section 4). • Forecast expenditure and income for the GSCP for 2024/25 through to 2027/28 (Section 5) • Update on the Capital Fund (Section 6). Date 07 February 2024 Report Contact: Name Gary Thomson Email gary.thomson@midlothian.gov.uk Page 55 of 322
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2 3 Update of General Services Capital Plan 3.1 Projects presented for endorsement in the Plan. The plan now incorporates the projects approved by Council on 19 December 2023 in respect of the following: • Recycling Improvement Fund: Service & Transformational change in relation to kerbside recycling including new bins and an extended waste transfer shed at Stobhill Recycling Centre. Capital expenditure budget of £2.322 million to be fully phased in 2025/26 and fully funded by £2.322 million of external grant funding from Zero Waste Scotland’s Recycling Improvement Capital Grant. 3.2 Adjustments to Existing Project Budgets The plan now incorporates the adjustments to existing project budgets in respect of the following: • Vehicle & Plant Replacement Programme: Acceleration of Capital Investment with £3.515 million of existing capital expenditure budgets in 2025/26, 2026/27 and 2027/28 brought forward to 2023/24 and 2024/25 to allow the Council to continue to deliver its operational activities whilst ensuring that its fleet remains modern, efficient and fit for purpose. Approved by Council on 19 December 2023. • Shawfair Town Centre Land Purchase: Adjustment to funding budget to reflect Vacant & Derelict Grant Funding from Scottish Government (£3.667 million phased across 2023/24 and 2024/25) alongside Shawfair LLP Funding, with all project capital expenditure (£5.615 million) remaining fully externally funded. As approved by Council on 19 December 2023. • Millerhill Park Asphalt Park: Additional £0.010 million of external funding, Millerhill Park developer contributions, to be allocated to part fund the new Millerhill community hub, as approved by Council on 21 November 2023. • Rosewell & Roslin Pump Tracks: Update to the capital expenditure and funding budgets for both projects. o Rosewell: £0.090 million capital expenditure budget (replacing the existing £0.046 million capital expenditure budget), to be fully funded by £0.039 million of external developer contributions, £0.046 million of external Scottish Government Play Park Renewal 2023/24 Capital Grant, and £0.005 million of Member’s Environmental Funds. o Roslin: £0.090 million capital expenditure budget (replacing the existing £0.059 million capital expenditure budget) to be fully funded by £0.049m of external developer contributions, £0.031 million of external Scottish Government Play Park Renewal 2023/24 Capital Grant, and £0.010 million of Member’s Environmental Funds. Page 56 of 322
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3 • Dalkeith Thistle & One Dalkeith (Place Based Investment Fund 2): Men’s shed to be relocated to One Dalkeith premises. Release of remaining £0.002 million expenditure budget for Dalkeith Thistle pavilion, replaced with additional £0.002 million expenditure budget for One Dalkeith’s PBIF2 project. 3.3 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 30 January 2024 • Community Bus Fund 2023/24: Purchase and installation of 37 Real Time Passenger Information signs as part of SEStrans region-wide upgrade project. £0.279 million capital expenditure budget, fully phased in 2023/24 and fully externally funded by Capital Grant funding from Scottish Government’s General Capital Grant and Transport Scotland’s Bus Partnership Fund. 3.4 Capital Plan Prioritisation Presented elsewhere on today’s agenda is the Capital Plan Prioritisation Report. This exercise has been undertaken to reprofile the available resources in the GSCP with a list of recommended project changes to move towards an affordable GSCP. As part of this, an agreed set of changes have been made to the GSCP in respect of the Learning Estate Strategy: • Bilston Primary – Phase 3 Extension fully externally funded by developer contributions. • Extension only for Mauricewood Primary, fully externally funded by developer contributions. • Removal of the King’s Park Primary refurbishment / extension • Removal of the Newtongrange Primary refurbishment / extension • Removal of Gorebridge High School • Revised Scope for school provision to serve the Shawfair & Danderhall catchments, part externally funded by developer contributions. • Bonnyrigg Primaries solution replaced with expansion of Mount Esk & Hawthornden, to be fully externally funded by developer contributions. • Revision to level of developer contributions that can be applied to fund the Woodburn Primary extension and new Easthouses Primary projects. • Inclusion of Building Upgrades required to support the revised Learning Estate Strategy. Page 57 of 322
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4 The agreed changes to the LES as outlined above result in a reduction in the net borrowing requirement arising from the General Services Capital Plan of £80.521 million. 4 2023/24 Projection against budget 4.1 2023/24 Budget & Rephasing The Capital Plan expenditure budget for 2023/24 as reported to Council at Quarter 2 on 21 November 2023 was £72.040 million, with a funding budget of £36.127 million and an in-year borrowing requirement of £35.913 million. After accounting for the new projects and adjustments to project budgets as outlined in Section 3, the capital plan expenditure budget for 2023/24 is £73.700 million, funding budget is £37.987 million and in-year borrowing of £35.713 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 2023/24 Budget £000’s Revised 2023/24 Budget £000’s 2023/24 Budget Movement £000’s CHILDREN, YOUNG PEOPLE & ESTATES PROGRAMME BOARD Woodburn Primary School Extension Reprogramming of external works (MUGA) to summer/autumn 2024 5,525 4,773 -752 Modular Units 2023/24 Completion of external works will fall into early part of 2024/25 financial year 2,483 2,200 -283 Beeslack Community High School Replacement Programme extended due to further design work required following changes to scope of project prior to the RIBA Stage 2 approval. Construction cashflow revised to reflect construction process 4,481 1,303 -3,178 Penicuik High School Refurbishment Programme slippage due to design development work. Fee drawdown from the external PM provided, replacing previous assumptions on drawdown 736 178 -558 Shawfair/Dalkeith High Schools Programme slippage to reflect ongoing appraisal of scope 1,921 250 -1,671 Page 58 of 322
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5 Learning Estate Strategy – Development Budget Rephasing to 2024/25 given re-prioritisation of Learning Estate 846 200 -646 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 SDD and RAM upgrades rather than full device replacement 2,041 766 -1,275 TRANSPORT, ENERGY & INFRASTRUCTURE PROGRAMME BOARD A701 & A702 Relief Road City Deal Rephasing reflecting reprioritisation of project phasing and expenditure as reported elsewhere on today’s agenda 995 500 -495 REGENERATION & DEVELOPMENT PROGRAMME BOARD Destination Hillend Rephasing of project expenditure to reflect amended project programme 8,993 7,601 -1,392 Shawfair Town Centre Land Purchase Timing of expenditure (matched in full by funding) now reflecting updated structure of land acquisition and back-to-back funding 5,615 4,615 -1,000 OTHER Assistive Technology & Analogue to Digital There have been delays in being able to procure the necessary equipment through the Scotland Excel Digital Framework which is now expected to be in place by June 2024. The programme will therefore be accelerated in 2024-25 to make up for this delay with all equipment installed by December 2025 709 280 -429 Others Minor variances 3,133 2,863 -270 Total 37,478 25,529 -11,949 Page 59 of 322
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6 This results in a rephased capital expenditure budget for 2023/24 of £61.751 million as shown in detail in Appendix B. In line with this, the expected level of funding available to finance the plan has also been rephased from £37.987 million to £32.766 million, a decrease of £5.221 million. This reduces the projected in-year borrowing requirement from £35.713 million to £28.985 million. The projected performance against budget for 2023/24 is shown in table 2 below: Table 2: General Services Capital Plan Projected Performance against Budget 2023/24 – as at Quarter 3 Item 2023/24 2023/24 Actual 2023/24 2023/24 2023/24 Budget Rephased To Projected Variance Carry £000’s Budget Q3 Outturn £000’s Forward £000’s £000’s £000’s £000’s Expenditure 72,040 61,751 22,177 61,235 -516 -11,949 Funding 36,127 32,766 11,065 32,360 -406 -5,221 Borrowing Required 35,913 28,985 11,112 28,875 -110 4.2 Expenditure Expenditure to Quarter 3 is £22.177 million with a projected expenditure outturn of £61.235 million, £0.516 million less than the rephased budget – which would exceed the original target of the release of contingencies of £0.506 million for 2023/24. At this stage it is anticipated that budgets for the projects detailed in Appendix C will be fully spent in the current year, other than: • Modular Units 2023/24: Units installed and external works tenders assessed. Release of £0.450m of project expenditure budget, with equal reduction in application of developer contributions. • St. Mary’s PS / Burnbrae Early: Release of remaining £0.011m of project budget – now complete. • Homecare: Underspend of £0.055m as system now hosted so development budget can no longer be capitalised. The expenditure to Quarter 3 (£22.177 million) equates to 36% of the forecast outturn expenditure (£61.235 million). This means that the remaining £39.058 million, or 64% of expenditure, is projected to be incurred by the end of the financial year, with only 31% of the financial year remaining. Page 60 of 322
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7 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 2023/24 back to 2024/25. The actual outturn position will be presented as part of the General Services Capital Plan – Outturn 2023/24 report to Council in June 2024, with prior reporting, challenge and assessment at Capital Plan & Asset Management Board. 4.3 Funding The funding available to finance the Capital Plan in 2023/24 is expected to total £32.360 million, £0.406 million lower than the revised budget and reflecting the movement in funding to be applied as noted in Section 4.2, along with redetermination of an additional £0.044 million of General Capital Grant funding from the Scottish Government in Finance Circular 08/2023 dated 21 December 2023. Funding of £11.065 million has been received to 10 December 2023. 4.4 Borrowing The original budgeted level of borrowing for 2023/24 was £62.888 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 2023/24 of £28.985 million – a total reduction in the forecast level of borrowing of £33.903 million. Based on the forecast outturn expenditure and funding levels as noted above, the revised estimate of the level of borrowing required for 2023/24 is £28.875 million, which is £0.110 million less than the rephased Q3 budget. The impact on the Council’s borrowing costs is reflected in the Financial Monitoring 2023/24 General Fund Revenue report elsewhere on today’s agenda. 5 Capital Plan 2024/25 to 2027/28 5.1 Rephasing of Project Expenditure & Funding In addition to the rephasing of project expenditure and funding from 2023/24 to/from 2024/25 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. Page 61 of 322
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8 However, it has been observed for a number of years that “rephasing” occurs beyond even these forecasts due to a variety of issues including but not limited to supply chain pressures, issues arising during the consultation process, and internal capacity issues. This remains an issue as the UK continues to be impacted by the supply chain issues associated with the UK leaving the European Union remain, and wider global inflationary pressures resulting from the exiting of the Covid-19 pandemic and the conflict in Ukraine, which have already had a material impact on construction costs and project programmes. To address this, strengthened financial monitoring & governance procedures have been implemented by CP&AMB, which will ensure that significant variations can be captured and reported to Programme Boards and CP&AMB so that any variance to these forecasts can be reported at the earliest opportunity. Capital expenditure budgets have been established for 2027/28 to reflect the inclusion of block budgets for the Council’s asset management strands, equating to £6.650 million, as follows: Table 3: Asset Management Strand Block Budgets Asset Management Strand 2027/28 Budget £000’s Street Lighting 1,000 Footway & Footpaths 500 Road Upgrades 1,500 Fleet 1,500 Property 1,000 Assistive Technology 150 Total 5,650 In addition, expenditure budgets from later years for already approved Learning Estate Strategy and other projects which are expected to fall into 2027/28 have also been included. £0.180 million for Member’s Environmental Funds have also been included. 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, this equates to a total provision for the return of project contingencies of £11.040 million, based on a total of £470.899 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. 5.2 Scottish Government General Capital Grant Funding The General Capital Grant in Finance Circular 08/2023 issued on 21 December 2023 provides funding of £6.696 million for the 2024/25 financial year. Page 62 of 322
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9 This is a reduction in General Capital Grant funding of c. 28% from 2023/24 levels and reflects Midlothian’s share of the £430.287 million total General Capital Grant for Scottish Local Authorities (2023/24 value £590.000 million). An element of the 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 2025/26 to 2027/28 is that the annual capital grant will be cash flat from 2023/24 levels, equating to £6.696 million per annum. Over the 4 year forward looking life of the plan (2024/25 to 2027/28), this equates to a reduction in General Capital Grant funding of £10.372 million, increasing the affordability pressure on the plan. 5.3 Borrowing As a result of these revised expenditure and funding forecasts, the possible forecast expenditure and funding levels are as outlined in Table 4 below (with the level of borrowing shown for illustration purposes only), prior to reaching a financially sustainable outcome from the Capital Plan Prioritisation exercise. Table 4: General Services Capital Plan 2023/24 to 2027/28 Item 2023/24 Forecast Outturn £000’s 2024/25 Budget £000’s 2025/26 Budget £000’s 2026/27 Budget £000’s 2027/28 Budget £000’s Total Budget £000’s Expenditure 60,935 74,519 99,150 83,661 43,832 362,097 Expenditure Projects under development 300 3,791 21,042 31,187 42,622 98,942 Total Expenditure 61,235 78,310 120,192 113,668 86,454 459,859 Funding 32,360 28,365 30,889 29,001 19,005 139,621 Borrowing Required 28,875 49,945 89,303 84,667 67,449 320,238 6 Capital Fund The Capital Fund at the start of the 2023/24 financial year was £20.107 million. £7.694 million of this is currently committed to fund the A701 Relief Road / City Deal project, with a further £9.061 million committed to support capital investment across the wider General Services Capital Plan, including the utilisation of £2.533 million in 2023/24. Page 63 of 322
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10 The forecast non-committed capital fund balance at 31 March 2023 is £3.229 million, as shown in table 5 below. Table 5: Capital Fund Item Amount £000’s Balance at 01 April 2023 20,107 Forecast Capital Receipts 2023/24 350 Committed to fund City Deal Project -7,694 Committed to support Capital Investment -9,121 Developer Contributions earmarked for specific purposes -473 Non-committed balance at 31 March 2024 3,229 7 Report Implications 7.1 Resource The borrowing required to finance investment for fully approved projects and those under development in 2023/24 to 2027/28 is currently £320.238 million. The implications of this borrowing requirement will be addressed as part of the General Services Capital Plan Prioritisation project, which is also presented on today’s agenda. 7.2 Digital There are no digital 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 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. Page 64 of 322
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11 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 £11.040 million over the period 2023/24 to 2027/28, 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 £11.040 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 65 of 322
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12 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 B – Summary General Services Capital Plan 2023/24 to 2027/28 Appendix C – Detailed General Services Capital Plan Monitoring 2023/24 Quarter 3 Appendix D – Detailed General Services Capital Plan Expenditure 2023/24 to 2027/28 Page 66 of 322
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Appendix B: Summary General Services Capital Plan 2023/24 to 2027/28 GENERAL SERVICES CAPITAL PLAN 2023/24 2024/25 2025/26 2026/27 2027/28 Total 2023/24 to 2024/28 Forecast Budget Budget Budget Budget Budget Outturn £'000 £'000 £000's £000's £000's £'000 EXPENDITURE - PER PROGRAMME BOARD Children, Young People & Estates 28,516 42,362 93,017 99,690 75,636 339,221 Asset Management 14,190 17,205 12,312 9,470 10,423 63,598 Transport, Energy & Infrastructure 3,196 600 3,352 5,305 2,616 15,069 Regeneration & Development 12,990 13,707 7,191 1,386 0 35,274 Other 2,850 6,975 6,342 872 698 17,737 Provision for return of contingencies -506 -2,539 -2,021 -3,055 -2,918 -11,040 Total Approved Expenditure 61,235 78,310 120,192 113,668 86,454 459,859 Total Fully Approved 60,935 74,519 99,150 83,661 43,832 362,097 Total Approved in Principle / Planned Learning Estate 300 3,791 21,042 30,007 42,622 97,762 Total Projects Fully Approved 61,235 78,310 120,192 113,668 86,454 459,859 FUNDING Government Grants - General Capital Grant 7,771 6,991 7,188 6,696 6,696 35,342 Government Grants - Early Years 4,328 3,665 662 0 0 8,654 Government Grants - Others 4,790 2,004 2,747 425 425 10,391 City Deal Funding (Scottish Government) 500 175 2,927 4,880 0 8,482 City Deal Funding (Capital Fund) 0 0 0 0 0 0 Transfer from Capital Fund to Capital Plan 2,473 0 0 0 0 2,473 Receipts from Sales 350 325 0 0 0 675 Receipts from Sales transferred to General Fund Reserve -290 -325 0 0 0 -615 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 9,069 14,192 16,587 16,079 9,547 65,473 Developer Contributions - Learning Estate Retrospective 750 750 750 750 750 3,750 Developer Contributions - A701/702 0 0 0 0 1,587 1,587 Developer Contributions - Other Projects 626 589 28 171 0 1,414 Other Contributions 1,994 0 0 0 0 1,994 Total Available Funding 32,361 28,365 30,889 29,001 19,005 139,621 Approved Borrowing Required 28,875 49,945 89,303 84,667 67,449 320,238 Government Grants - Learning Estate Investment Programme 0 0 11,518 0 39,165 50,683 Net Capital Cost to Council 28,875 49,945 77,785 84,667 28,284 269,555 Page 67 of 322
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Appendix C Detailed General Services Capital Plan Monitoring 2023/24 Quarter 3 Budget is approved in principle - requires approval of OBC before budget is fully approved Rephased Rephased 2023/24 2023/24 2023/24 2023/24 2023/24 2023/24 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 5,525 4,773 1,514 4,773 - 752 Easthouses Primary School 15,723 15,723 5,377 15,723 - - Mayfield & St. Luke's School Campus 1,762 1,762 1,067 1,762 - - Burnbrae Primary - Conversion of ASN to GP Space 71 71 - 71 - - Modular Units 2023/24 2,483 2,200 1,616 1,750 (450) 283 Education - Secondary Beeslack CHS Replacement 4,481 1,303 646 1,303 - 3,178 Penicuik High School 736 178 13 178 - 558 Education - ASN Hawthornden Primary - ASN Unit 1,404 1,404 1,305 1,404 - - Education - Early Years King's Park Primary School 6 6 - 6 - - Settings/Catering Kitchens 150 150 104 150 - - Hawthorn Children & Families Centre Alteration 120 120 159 120 - - Mauricewood Primary School 46 46 6 46 - - Vogrie Outdoor Early Learning Centre 81 81 81 - - Other Outdoor Spaces 218 218 226 218 - - Education - Primary - Projects near completion Paradykes Primary Replacement 95 95 21 95 - - St. Mary’s RC & Early Burnbrae Primary Schools 22 22 9 11 (11) - New Danderhall Primary hub 88 88 (53) 88 - - Sacred Heart Primary School Extension 30 30 30 30 - - Acoustic Upgrades 150 150 59 150 - - Education _ General Learning Estate Strategy: Development Budget 846 200 - 200 - 646 Burnbrae Primary School External Works 56 56 55 56 - - TOTAL - CHILDREN, YOUNG PEOPLE & ESTATES PROGRAMME BOARD 34,094 28,677 12,155 28,216 (461) 5,417 Rephased Rephased 2023/24 2023/24 2023/24 2023/24 2023/24 GENERAL SERVICES CAPITAL PLAN Budget Budget Actual Forecast Variance Defer Q3 Monitoring Q2 Q3 to P9 Outturn Q3 Q3 Delete £000's £000's £000's £000's £000's £000's PLANNED LEARNING ESTATE PROJECTS Education - Primary Kings Park PS upgrade to existing building 50 - - - - - Mauricewood Refurbishment 50 - - - - - Rosewell Primary School - extend to 2 stream 50 - - - - - Education - Secondary Shawfair/Dalkeith High Schools 1,921 250 - 250 - 1,671 Education - ASN ASN Provision - Social Complex Needs 50 50 - 50 - - TOTAL - CYPP PLANNED LEARNING ESTATE PROJECTS 2,121 300 - 300 - 1,671 CYPP - OVERALL TOTAL 36,215 28,977 12,155 28,516 (461) 7,088 Page 68 of 322
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15 Rephased Rephased 2023/24 2023/24 2023/24 2023/24 2023/24 2023/24 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 258 213 62 213 - 45 Front Office - Hardware, Software & Services 399 197 159 197 - 202 Back Office - Hardware, Software & Services 534 191 135 191 - 343 Network, Software & Services 652 128 50 128 - 524 Schools - Hardware, Software & Services 457 180 38 180 - 277 Recharge of Staffing - 70 70 - (70) Digital: Equipped for Learning 2,373 2,388 737 2,388 - (15) Roads & Street Lighting Street Lighting and Traffic Signal Upgrades - New 1,276 1,276 756 1,276 - - Footway & Footpath Asset Management Plan - New 460 460 198 460 - - Road Upgrades - Asset Management Plan 1,483 1,483 578 1,483 - - Accelerated Roads Residential Streets 1,836 1,836 1,050 1,836 - - Roads: Potholes & Upgrades 1,100 1,100 1,100 - - Fleet Vehicle & Plant Replacement Programme 1,871 3,316 1,153 3,316 - - Property Property Upgrades 633 633 383 633 - - Open Spaces / Play Areas Ironmills Park Steps 7 7 - 7 - - Outdoor Play Equipment - Roswell - 46 - 46 - - Roslin Wheeled Sports Facility - 31 - 31 - - Mauricewood Road Bus Shelter 4 4 - 4 - - Millerhill Park Circular Path & Bicycle Pump Track 89 - - - - 89 Millerhill Park Asphalt Path 90 100 - 100 - - Birkenside Play Equipment 72 72 - 72 - - Welfare Park, Newtongrange 39 - - - - 39 Pump Track, North Middleton 2 2 (1) 2 - - Play Park Upgrades: Clarinda Gardens & Ironmills Park 51 51 - 51 - - Play Park Renewal 2021/22 9 9 5 9 - - Play Park Renewal 2023/24+ 162 85 9 85 - 77 Nature Restoration Fund 2022/23 3 3 3 3 - - Nature Restoration Fund 2023/24 211 177 177 177 - 34 Contaminated Land 70 70 54 70 - - Sport & Lesiure Property - Poltonhall Astro & Training Area Resurfacing 37 37 25 37 - - Dalkeith Thistle - Pavilion Upgrade 6 6 2 4 (2) - Loanhead Memorial Park Pitch 4 4 - 4 - - Flotterstone Car Park Infrastructure & Charging 16 16 - 16 - - TOTAL - ASSET MANAGEMENT PROGRAMME BOARD 14,204 14,192 5,572 14,190 (2) 1,545 TRANSPORT, ENERGY & INFRASTRUCTURE PROGRAMME BOARD Transport A701 & A702 Relief Road City Deal Project 995 500 340 500 - 495 A7 Urbanisation 187 187 - 187 - - Cycling, Walking & Safer Streets Projects 1,190 1,190 345 1,190 - - Community Bus Fund - 279 - 279 - - FCC Zero Waste - Heat Offtake Facility 1,040 1,040 - 1,040 - - TOTAL - TRANSPORT, ENERGY & INFRASTRUCTURE PROGRAMME BOARD 3,412 3,196 685 3,196 - 495 23% REGENERATION & DEVELOPMENT PROGRAMME BOARD Regeneration Place Based Investment Fund 2021/22 311 311 21 311 - - Place Based Investment Fund 2022/23+ 461 461 154 463 2 - Development Destination Hillend 8,993 7,601 2,574 7,601 - 1,392 Shawfair Town Centre Land Purchase 5,615 4,615 61 4,615 - 1,000 TOTAL - REGENERATION & DEVELOPMENT PROGRAMME BOARD 15,380 12,988 2,810 12,990 2 2,392 Page 69 of 322
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16 Rephased Rephased 2023/24 2023/24 2023/24 2023/24 2023/24 2023/24 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 52 52 48 52 - - Transport Food Waste Rural Routes 119 119 119 119 - - Property/Development Midlothian & Fairfield House Shower Upgrades 5 5 5 - - Public Sector Housing Grants 291 291 168 291 - - Penicuik THI: Public Realm Scheme 171 171 171 - - CCTV Network 444 444 10 444 - - 2-4 West Street, Penicuik 48 48 9 48 - - EWiM - Buccleuch House Ground Floor 33 33 33 - - Millerhill Pavilion 23 23 16 23 - - PEOPLE & PARTNERSHIPS Education Free School Meal Provision 397 397 256 397 - - Children's Services Residential House for 5-12 year olds 76 76 3 76 - - Communities & Partnerships Members Environmental Improvements 221 221 89 221 - - Adult Social Care Assistive Technology 209 30 21 30 - 179 Analogue to Digital Transition 500 250 250 - 250 Homecare 55 55 - (55) - Highbank Intermediate Care Reprovisioning 467 467 85 467 - - Day Care Centre 43 43 43 - - General Fund Share of Extra Care Housing 179 179 130 179 - - TOTAL NOT ALLOCATED TO PROGRAMME BOARDS 3,334 2,915 955 2,860 (55) 429 33% SUBTOTAL - PRE RETURN OF CONTINGENCIES 72,546 62,258 22,177 61,751 (516) 11,949 Provision for Return of Contingencies (506) (506) - (516) - - GENERAL SERVICES CAPITAL PLAN TOTAL 72,040 61,751 22,177 61,235 (516) 11,949 Page 70 of 322
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17 Appendix D Detailed General Services Capital Plan Expenditure 2023/24 to 2027/28 Budget is a "Project Under Development" - requires approval of SOBC before budget is fully approved 23/24 to27/28 GENERAL SERVICES CAPITAL PLAN 2023/24 2024/25 2025/26 2026/27 2027/28 Total 2023/24 to 2027/28 F/cast O/T Budget Budget Budget Budget Spend £'000 £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 4,773 6,622 171 - - 11,566 Easthouses Primary School 15,723 3,924 887 - - 20,533 Mayfield & St. Luke's School Campus 1,762 10,268 27,226 5,954 662 45,872 Burnbrae Primary - Conversion of ASN to GP Space 71 - - - - 71 Modular Units - 2023/24 1,750 283 - - - 2,033 Education - Secondary Lasswade High - Toilets & Changing to 1,800 Pupil Capacity - 452 - - - 452 Beeslack CHS Replacement 1,303 12,819 30,443 46,644 22,319 113,528 Penicuik High School 178 2,329 13,248 17,085 10,033 42,873 Education - ASN Hawthornden Primary - ASN Unit 1,404 21 - - - 1,425 Education - Early Years Setting/Catering kitchens 150 350 - - - 500 Hawthorn Children & Families Centre Alteration 120 - - - - 120 Mauricewood Primary School 46 100 - - - 146 Vogrie Outdoor Early Learning Centre 81 - - - - 81 Other Outdoor Spaces 218 - - - - 218 Education - Primary - Projects near completion Paradykes Primary Replacement 95 - - - - 95 St. Mary’s RC & Early Burnbrae Primary Schools 11 - - - - 11 New Danderhall Primary hub 88 - - - - 88 Sacred Heart Primary School Extension 30 - - - - 30 Acoustic Upgrades 150 - - - - 150 Education - General Learning Estate Strategy: Development Budget 200 1,402 - - - 1,602 Burnbrae Primary School External Works 56 1 - - - 57 TOTAL - CYPP FULLY APPROVED 28,216 38,571 71,975 69,683 33,014 241,458 GENERAL SERVICES CAPITAL PLAN 2023/24 2024/25 2025/26 2026/27 2027/28 Total 2023/24 to 2027/28 F/cast O/T Budget Budget Budget Budget Spend £'000 £000's £000's £000's £000's £'000 PLANNED LEARNING ESTATE PROJECTS Education - Primary Bilston Primary School Extension - - 794 2,383 795 3,972 Mauricewood Primary School Extension - 807 2,826 404 - 4,037 Hopefield Farm Primary 2 (HS12) - 500 4,887 6,735 1,347 13,469 Bonnyrigg Catchment Primary Schools Expansion - - - - - - St Davids Primary - Extension - 784 1,338 245 - 2,367 Education - Secondary Shawfair/Dalkeith High Schools 250 1,500 10,370 20,240 40,480 72,840 Education - ASN Lasswade High - ASU - - 827 - - 827 ASN Provision - Social Complex Needs 50 200 - - - 250 TOTAL - CYPP PLANNED LEARNING ESTATE PROJECTS 300 3,791 21,042 30,007 42,622 97,762 CYPP - OVERALL TOTAL 28,516 42,362 93,017 99,690 75,636 339,221 Page 71 of 322
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18 GENERAL SERVICES CAPITAL PLAN 2023/24 2024/25 2025/26 2026/27 2027/28 Total 2023/24 to 2027/28 F/cast O/T Budget Budget Budget Budget Spend £'000 £000's £000's £000's £000's £'000 ASSET MANAGEMENT PROGRAMME BOARD Digital Business Applications 213 235 60 105 - 613 Front Office - Hardware, Software & Services 197 160 400 543 325 1,625 Back Office - Hardware, Software & Services 191 55 80 80 80 486 Network, Software & Services 128 528 150 150 150 1,106 Schools - Hardware, Software & Services 180 356 266 519 804 2,125 Recharge of Staffing 70 110 90 129 136 535 Digital: Equipped for Learning 2,388 2,132 1,000 - - 5,520 Roads & Street Lighting Street Lighting Upgrades 1,276 1,000 1,000 1,000 1,000 5,276 Footway & Footpath Network Upgrades 460 500 500 500 500 2,460 Road Upgrades 1,483 1,500 1,500 1,500 1,500 7,483 Accelerated Roads Residential Streets 1,836 - - - - 1,836 Roads: Potholes & Upgrades 1,100 3,900 2,500 2,500 2,500 12,500 Roads Asset Management Plan - Temple Ground Stabilisatio - 309 - - - 309 Roads Asset Management Plan - B6372 Arniston Embankme - 593 - - - 593 Fleet Vehicle & Plant Replacement Programme 3,316 3,571 - - 984 7,871 Property Property Upgrades 633 1,000 1,530 1,530 1,530 6,224 Property Upgrades - LES - 843 843 843 843 3,374 Waste Services Recycling Improvement Fund - - 2,322 - - 2,322 Open Spaces / Play Areas Ironmills Park Steps 7 - - - - 7 Outdoor Play Equipment - Rosewell 46 44 - - - 90 Roslin Wheeled Sports Facility 31 59 - - - 90 Mauricewood Road Bus Shelter 4 - - - - 4 Millerhill Park Circular Path & Bicycle Pump Track - 89 - - - 89 Millerhill Park Asphalt Path 100 - - - - 100 Birkenside Play Equipment 72 - - - - 72 Welfare Park, Newtongrange - 39 - - - 39 Pump Track, North Middleton 2 - - - - 2 Play Park Upgrades: Clarinda Gardens & Ironmills Park 51 - - - - 51 Play Park Renewal 2021/22 9 - - - - 9 Play Park Renewal 2023/24+ 85 77 - - - 162 Nature Restoration Fund 2022/23 3 - - - - 3 Nature Restoration Fund 2023/24 177 34 - - - 211 Contaminated Land 70 70 70 70 70 350 Sport & Lesiure Property - Poltonhall Astro & Training Area Resurfacing 37 - - - - 37 Dalkeith Thistle - Pavilion Upgrade 4 - - - - 4 Loanhead Memorial Park Pitch 4 - - - - 4 Flotterstone Car Park Infrastructure & Charging 16 - - - - 16 TOTAL - ASSET MANAGEMENT PROGRAMME BOARD 14,190 17,205 12,312 9,470 10,423 63,599 TRANSPORT, ENERGY & INFRASTRUCTURE PROGRAMME BOARD Transport A701 Relief Road: Bush Loan Junction 52 100 2,750 3,349 80 6,331 A701 Relief Road: A701 Active Travel Corridor 32 75 177 1,531 2,111 3,926 A701 Relief Road: Phases 3-8 416 416 A7 Urbanisation 187 - - - - 187 Cycling, Walking & Safer Streets Projects 1,190 425 425 425 425 2,890 Community Bus Fund 279 - - - - 279 FCC Zero Waste - Heat Offtake Facility 1,040 - - - - 1,040 TOTAL - TRANSPORT, ENERGY & INFRASTRUCTURE PR 3,196 600 3,352 5,305 2,616 15,069 REGENERATION & DEVELOPMENT PROGRAMME BOARD Regeneration Place Based Investment Fund 2021/22 311 - - - - 311 Place Based Investment Fund 2022/23+ 463 - - - - 463 Development Destination Hillend 7,601 12,707 7,191 1,386 - 28,885 Shawfair Town Centre Land Purchase 4,615 1,000 - - - 5,615 TOTAL - REGENERATION & DEVELOPMENT PROGRAMM 12,990 13,707 7,191 1,386 - 35,274 Page 72 of 322
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19 GENERAL SERVICES CAPITAL PLAN 2023/24 2024/25 2025/26 2026/27 2027/28 Total 2023/24 to 2027/28 F/cast O/T Budget Budget Budget Budget Spend £'000 £000's £000's £000's £000's £'000 OTHER (PROGRAMME BOARD NOT YET DEFINED) PLACE Digital Council Hybrid Meetings 52 - - - - 52 Transport Food Waste Rural Routes 119 - - - - 119 Property/Development Midlothian & Fairfield House Shower Upgrades 5 - - - - 5 Public Sector Housing Grants 291 291 291 291 291 1,454 Penicuik THI: Public Realm Scheme 171 - - - - 171 CCTV Network 444 - - - - 444 2-4 West Street, Penicuik 48 - - - - 48 EWiM - Buccleuch House Ground Floor 33 - - - - 33 Millerhill Pavilion 23 - - - - 23 PEOPLE & PARTNERSHIPS Education Free School Meal Provision 397 - - - - 397 Children's Services Residential House for 5-12 year olds 76 - - - - 76 Communities & Partnerships Members Environmental Improvements 221 180 180 180 180 941 Adult Social Care Assistive Technology 30 100 226 226 227 809 Analogue to Digital Transition 250 714 100 - - 1,064 Highbank Intermediate Care Reprovisioning 467 5,082 5,081 159 - 10,789 Day Care Centre 43 464 464 16 - 987 General Fund share of Extra Care Housing 179 144 - - - 323 TOTAL NOT ALLOCATED TO PROGRAMME BOARDS 2,850 6,975 6,342 872 698 17,736 SUBTOTAL - PRE RETURN OF CONTINGENCIES 61,741 80,849 122,213 116,723 89,372 470,898 Provision for Return of Contingencies (506) (2,539) (2,021) (3,055) (2,918) (11,040) GENERAL SERVICES CAPITAL PLAN TOTAL 61,235 78,310 120,192 113,668 86,454 459,858 Page 73 of 322
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Midlothian Council Tuesday 27 February 2024 Item No 8.4 Treasury Management and Investment Strategy 2024/25 & 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 2025 (£534.105 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 2024/25 from the strategy currently in place, other than to update the Prudential Indicators (Section 5 and Appendix C), to reflect the revised capital plans. c) Note the retention of the current approach for the repayment of loans fund advances as outlined in Section 6 and that any changes arising from the Scottish Government’s consultation on the Amendment to the Local Authority (Capital Finance and Accounting) (Scotland) Regulations 2016 will be reflected in a revised TMIS if required; and d) Accordingly approve the Treasury Management and Investment Strategy for 2024/25. 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 2023/24, and to make recommendations to facilitate consideration of the 2024/25 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 approved as presented to Audit Committee on 29 January 2024. Date: 07 February 2024 Report Contact: Gary Thomson, Senior Finance Business Partner gary.thomson@midlothian.gov.uk Page 75 of 322
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2 3. Update on implementation of TMIS for 2023/24 3.1 Borrowing The Council’s borrowing position as set out in the 2023/24 Treasury Management Mid-Year Review Report was £321.754 million at 31 March 2023, and six months later was £321.314 million on 30 September 2023. 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 17 January 2024, is shown in table 1 below: Table 1: Current Loan Portfolio as at 17 January 2024 Loan Type Principal Outstanding £000’s Weighted Average Rate PWLB Annuity 452 8.91% PWLB Maturity 284,128 2.90% LOBO 20,000 4.51% Market Loans 16,221 2.68% Salix Loans 70 0.00% Total Loans 320,871 3.00% The repayment profile of this debt is shown in graphical and tabular form below: Figure 1: Loan Maturity Structure Page 76 of 322
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3 Table 2: Loan Maturity Profile Financial Year 2023/24 Remaining £000’s 2024/25- 2025/26 £000’s 2025/26- 2027/28 £000’s 2028/29- 2032/33 £000’s 2033/34- 2037/38 £000’s 2038/39+ £000’s Debt Maturing 0 1,426 2,795 45,136 32,239 239,275 % of total portfolio 0.00% 0.44% 0.87% 14.07% 10.05% 74.57% As can be noted in the graph and table above, proactive Treasury Management by the Council in the last decade has placed the Council in an extremely strong refinancing position for its existing external debt portfolio, with only £4.221 million, or just 1.31%, of the Council’s total Loan Portfolio of £320.871 million requiring refinancing over the current and forthcoming four financial years. This extremely low short-term exposure to refinancing risk has put the Council in a strong position to plan its new borrowings in advance, take advantage of any dips in longer-term borrowing rates from PWLB (as demonstrated above) 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 2023/24 Treasury Management Mid-Year Review Report setting out the position at 31 March 2023 of £113.982 million and six months later on 30 September 2023, at £111.344 million. The position at 17 January 2024, as set out in Table 3 below, totals £72.416 million. Table 3: Current Deposits as at 17 January 2024 Deposit Type Principal Outstanding £000’s Weighted Average Rate Bank Call Accounts 7,343 5.09% Money Market Funds 35,073 5.32% Bank Fixed Term Deposits 30,000 4.98% Total Deposits 72,416 5.15% The cash balances above represent the following: • Funds held in Bank Fixed Term Deposits and Money Market Funds which are cash backing £65.073m of the Council’s projected useable reserves (at 31 March 2024); • A balance held in instant access bank accounts and Money Market Funds which are used for day to day liquidity to meet cashflow requirements; Page 77 of 322
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4 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 – 2024/25 Detailed in Appendix D, Section 4.4. 4. Treasury Management & Investment Strategy 2024/25 4.1 Main Objectives of TMIS 2024/25 The objectives of the current and 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. • To cash back the Council’s usable reserves. No material changes are proposed to the current 2023/24 TMIS which was scrutinised by Audit Committee in January 2023 and approved by Council in February 2023, other than for the following: a) Approve the restriction of the Authorised Limit to the value of the Capital Financing Requirement at 31 March 2025 (£534.105 million), pending finalisation of the General Services Capital Plan Prioritisation; Similarly, no changes are recommended to the Permitted Investments. More detail on the borrowing and investment strategy for 2024/25 is provided in Sections 4.2, 4.3 and 4.4 below. 4.2 Borrowing Requirement 2023/24 to 2027/28 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. Page 78 of 322
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5 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 2023/24 to 2027/28 is shown in table 4: Table 4: Total Borrowing Requirement over the period 2023/24 to 2027/28 2023/24 £000’s 2024/25 £000’s 2025/26 £000’s 2026/27 £000’s 2027/28 £000’s Total £000’s Capital Expenditure General Services 61,235 78,524 111,852 90,027 46,165 387,803 HRA 51,359 103,054 93,460 36,679 23,286 307,838 Total Capital Expenditure 112,594 181,578 205,312 126,706 69,451 695,641 Total Available Financing -43,842 -48,190 -39,414 -20,582 -12,009 -164,127 Principal Debt Repayments -9,206 -10,760 -11,670 -12,557 -14,195 -58,388 Capital Expenditure less available Financing 59,546 122,628 154,228 93,567 43,157 473,126 MEL Shareholder Injection 710 3,560 0 0 0 4,270 Maturing Long-term Loans 830 1,426 1,355 851 700 5,162 Total Borrowing Requirement 61,086 127,614 155,583 94,418 43,857 482,558 4.3 Borrowing Strategy for remainder of 2023/24 and 2024/25 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 (2023/24 to 2027/28). 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 2024 is projected to be £382.917 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 2024 is expected to equate to £407.917 million. Page 79 of 322
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6 This means that the Council is expected to be £25.000 million (6%) under-borrowed at the end of the 2023/24 financial year i.e. the Council has funded the majority (94%) of its underlying borrowing requirement as at 31 March 2024. 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. As noted in Section 3.1 above, the Council has an extremely 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 £825.057 million by 31 March 2028 – more than double the current Underlying Borrowing Requirement. The profile of this, and the projected external loan portfolio to fund the Underlying Borrowing Requirement over the period 2023/24 to 2027/28, 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 is at the 5 year mark (4.40%) with rates trending upwards towards the 20-30 year tenor (5.25%) before easing back slightly to sit at c. 5.10% in the 50 year duration. Current rates have generally eased off 30-40bps from levels reported at the time of the 2023/24 Treasury Management Mid-Year Review Report to Council, with no material change to the medium term forecast for rates. 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. 40-60bps over the next 12 months and a further 40-50bps over the subsequent 12 months. This is forecast to bring longer-term borrowing rates down to between 4.10-4.60% by March 2025 and between 3.70%-4.20% by March 2026. Further commentary on this is provided in Appendix D Section 3.3. Page 80 of 322
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7 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 2023/24 financial year and during the 2024/25 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 5.25% in the 30-50 year duration (which are forecast to drop by 60bps within one year and 100bps 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. 4.40%), 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. 3.90%. 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 2023/24 and 2024/25 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+60bps. On 22 November 2023, the availability over which Councils can draw HRA rate borrowing from PWLB was extended to 30 June 2025. Page 81 of 322
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8 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 will be reported to Council in February 2024 – will have a significant bearing on this. Appendix D Section 3.3 provides forecasts for interest rates from the Council’s Treasury Management advisor, Link Treasury Solutions Limited. Council officers, in conjunction with Link, 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 Link Treasury Solutions; with only prudent and affordable debt rescheduling that considers both the short and medium-longer term impact being considered. Page 82 of 322
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9 4.4 Investment Strategy for remainder of 2023/24 and 2024/25 No changes are proposed to the Investment Strategy from that approved by Council in the 2023/24 TMIS. Council should note that in parallel to securing its external borrowing to finance the capital financing requirement, the strategy means that Council should continue to cash back the Council’s useable reserves. In doing so, the Council are able to continue to minimise the extent of under-borrowing and at the same time de-risk the Council’s forward borrowing requirement; whilst also ensuring that all deposits are securely placed with high creditworthy counterparties, complying with the CIPFA Treasury Management Code principles of security, liquidity and then yield – in that order. All deposits will be placed with high creditworthy counterparties in accordance with the approved creditworthiness policy as outlined in Appendix B, 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 B also remains unchanged from that approved by Council in the 2023/24 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 2023/24 TMIS, the inclusion of ESG criteria continues to be an emerging area in the Local Authority environment which will require ongoing monitoring. For the 2024/25 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 Link 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. Page 83 of 322
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10 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 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 Link, 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 2022/23. • Revised estimates of the 2023/24 indicators; and • Estimates of indicators for 2024/25 to 2027/28. The Prudential Indicators required by the Code are listed individually in Appendix C. 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. Page 84 of 322
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11 Figure 4: Prudential Indicators for Borrowing 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 2024/25 financial year has been calculated to equate to the maximum value of the Underlying Borrowing Requirement in 2024/25. This equates to £534.105 million as outlined in Table 5 below. Table 5: Authorised Limit for Borrowing: Calculation Authorised Limit for Borrowing Amount £000’s CFR – General Services (31 March 2025) 214,646 CFR – HRA (31 March 2025) 319,459 Proposed Authorised Limit for Borrowing 534,105 Council is therefore asked to approve an authorised limit for borrowing of £534.105 million. 382,917 509,105 663,333 756,900 800,057 £- £100,000 £200,000 £300,000 £400,000 £500,000 £600,000 £700,000 £800,000 £900,000 2023/24 2024/25 2025/26 2026/27 2027/28 £000's Financial Year Prudential Indicators for Borrowing External Debt Authorised Limit Underlying Borrowing Requirement / Operational Boundary Page 85 of 322
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12 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. The TMIS retains the methodology adopted in 2023/24 – that is as follows: 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. 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 2023/24, the Asset Life method shall be used for those assets in Table 6. Table 6: Asset Classes to adopt 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 * Average loans fund advance length Page 86 of 322
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13 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 2023/24 is currently estimated to be 2.29%. For all other asset classes, the policy will be to maintain the practice of previous years and apply what is termed “the Statutory Method” – following the principles of Schedule 3 of the Local Government (Scotland) Act 1975 – with all loans fund advances being repaid by the annuity method. The annuity rate that is proposed to be applied to the loans fund repayments varies and will be the in-year loans fund rate, reflecting the Council’s current loan and investment portfolio. The loans fund rate for 2023/24 is forecast to be 2.29% 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. 6.3 Scottish Government Consultation The Scottish Government issued a formal consultation on 28 November 2023 on the Amendment to the Local Authority (Capital Finance and Accounting) (Scotland) Regulations 2016. This consultation outlined proposed changes to the methodology for the repayment of loans fund advances. The consultation closed on 22 December 2023 with Midlothian Council, the Scottish Local Authority Directors of Finance Group, and Link Treasury Solutions Limited amongst those submitting formal responses to the consultation. Consultation on the Amendment to the 2016 Regulations remains ongoing and the outcome of any changes to these Regulations will be reflected in a revised 2024/25 TMIS if required. Page 87 of 322
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14 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 C 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. Appendices Appendix A – Report Implications Appendix B - Permitted Investments Appendix C - Prudential Indicators Appendix D - Treasury Management & Annual Investment Strategy Statement – 2024/25 Detailed Page 88 of 322
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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 Link 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. Page 89 of 322
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Permitted Investments Appendix B 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 322
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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 322
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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 322
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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 322
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Prudential Indicators Appendix C 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 new 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. 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 Actual Estimate Estimate Estimate Estimate Estimate General Services 0.38% 0.76% 2.40% 4.37% 5.62% 5.95% HRA 36.03% 42.78% 48.13% 52.14% 55.01% 56.97% Ratio of Financing Costs to Net Revenue Stream 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 Actual Estimate Estimate Estimate Estimate Estimate HRA debt £000's 209,129£ 242,715£ 319,459£ 393,890£ 422,290£ 437,008£ HRA Revenues £000's 32,165 32,492 34,719 38,546 41,828 43,276 Ratio of HRA Debt to Revenues % 650% 747% 920% 1022% 1010% 1010% HRA Debt as a % of Gross Revenue 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 Actual Estimate Estimate Estimate Estimate Estimate HRA debt £000's 209,129£ 242,715£ 319,459£ 393,890£ 422,290£ 437,008£ Number of HRA dwellings 7,372 7,470 7,675 8,029 8,284 8,289 Debt per dwelling £ 28,368£ 32,492£ 41,623£ 49,058£ 50,977£ 52,721£ HRA Debt per Dwelling 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 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 254,015 257,849 259,731 261,670 263,667 265,723 % 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 95 of 322
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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. 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's General Services Children, Young People & Estates 5,300£ 28,516£ 40,862£ 82,647£ 79,450£ 35,156£ Asset Management 11,439£ 14,190£ 17,205£ 12,312£ 9,470£ 10,423£ Transport, Energy & Infrastructure 551£ 3,196£ 2,314£ 5,425£ 1,956£ 2,723£ Regeneration & Development 1,059£ 12,990£ 13,707£ 7,191£ 1,386£ -£ Other 5,014£ 2,850£ 6,975£ 6,342£ 872£ 698£ Provision for return of contingencies (41)£ (506)£ (2,539)£ (2,064)£ (3,107)£ (2,834)£ Total General Services 23,322£ 61,235£ 78,524£ 111,852£ 90,027£ 46,165£ Total HRA 51,710£ 51,359£ 103,054£ 93,460£ 36,679£ 23,286£ Combined Total 75,032£ 112,594£ 181,578£ 205,312£ 126,706£ 69,451£ Capital Expenditure 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's Capital Expenditure General Services 23,322£ 61,235£ 78,524£ 111,852£ 90,027£ 46,165£ HRA 51,710£ 51,359£ 103,054£ 93,460£ 36,679£ 23,286£ Total 75,032£ 112,594£ 181,578£ 205,312£ 126,706£ 69,451£ Financed by: Capital receipts 3£ 60£ -£ -£ -£ -£ Capital grants 20,203£ 28,759£ 34,047£ 27,113£ 8,762£ 7,121£ Capital reserves 3,000£ 2,473£ -£ -£ -£ -£ Developer/Other Contributions 5,353£ 12,549£ 14,143£ 12,301£ 11,820£ 4,978£ Net financing need for the year 46,473£ 68,752£ 133,388£ 165,898£ 106,124£ 57,352£ Capital Expenditure and Available Financing Page 96 of 322
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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. 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's Capital Financing Requirement CFR – General Services 138,532£ 165,202£ 214,646£ 294,444£ 359,610£ 388,049£ CFR – HRA 209,129£ 242,715£ 319,459£ 393,890£ 422,290£ 437,008£ CFR – PFI Schemes 92,433£ 88,739£ 84,815£ 80,661£ 76,277£ 71,663£ Total CFR 440,094£ 496,656£ 618,920£ 768,995£ 858,177£ 896,720£ Movement in CFR 37,230£ 56,562£ 122,264£ 150,074£ 89,183£ 38,543£ Movement in CFR represented by Net financing need for the year (previous table) 46,473£ 68,752£ 133,388£ 165,898£ 106,124£ 57,352£ MEL Shareholder Injection -£ 710£ 3,560£ -£ -£ -£ Less Scheduled Debt Amortisation (5,762)£ (9,206)£ (10,760)£ (11,670)£ (12,557)£ (14,195)£ Less net PFI Finance Lease Principal Payments (3,481)£ (3,694)£ (3,924)£ (4,154)£ (4,384)£ (4,614)£ Movement in CFR 37,230£ 56,562£ 122,264£ 150,074£ 89,183£ 38,543£ Capital Financing Requirement (CFR) 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's External Debt Debt at 1 April 323,271£ 321,753£ 382,917£ 509,105£ 663,333£ 756,900£ Actual/Expected change in Debt (1,518)£ 61,164£ 126,188£ 154,228£ 93,567£ 43,157£ Other long-term liabilities (OLTL) at 1 April 95,914£ 92,433£ 88,739£ 84,815£ 80,661£ 76,277£ Actual/Expected change in OLTL (3,481)£ (3,694)£ (3,924)£ (4,154)£ (4,384)£ (4,614)£ Actual/Expected Gross Debt at 31 March 414,186£ 471,656£ 593,920£ 743,994£ 833,177£ 871,720£ The Capital Financing Requirement 440,094£ 496,656£ 618,920£ 768,995£ 858,177£ 896,720£ Under / (over) borrowing 25,908£ 25,000£ 25,000£ 25,000£ 25,000£ 25,000£ Deposits Cash & Cash Equivalents 15,982£ 25,000£ 25,000£ 25,000£ 25,000£ 25,000£ Short-Term Investments 98,000£ 70,000£ 57,000£ 57,000£ 57,000£ 57,000£ Total Deposits 113,982£ 95,000£ 82,000£ 82,000£ 82,000£ 82,000£ Net Borrowing Requirement Page 97 of 322
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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 (2023/24 to 2027/28); 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 2024/25 financial year has been calculated to equate to the maximum value of the Underlying Borrowing Requirement in 2024/25. This equates to £534.105 million as outlined below. 2023/24 2024/25 2025/26 2026/27 2027/28 Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's Operational Boundary - Borrowing 407,917£ 534,105£ 688,334£ 781,900£ 825,057£ Operational Boundary - Other long term liabilities 88,739£ 84,815£ 80,661£ 76,277£ 71,663£ Total 496,656£ 618,920£ 768,995£ 858,177£ 896,720£ Operational Boundary £000's CFR - General Services at 31 March 2025 214,646£ CFR - HRA at 31 March 2025 319,459£ Authorised Limit for Borrowing 534,105£ Authorised Limit for Borrowing Page 98 of 322
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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 2024/25 Interest rate exposures Upper Limit Maturity structure of fixed interest rate borrowing 2024/25 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 2024/25 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% Maturity Structure of Borrowing 2024/25 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 30 years to 40 years Under 12 months 12 months to 2 years 50 years and above 40 years to 50 years Page 99 of 322
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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. 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. Limit £70m Principal Sums Invested for > 365 Days Page 100 of 322
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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 £482.558 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 2024/25 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. 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 2023/24 and the forthcoming 2024/25 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 101 of 322
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Appendix D Treasury Management Strategy Statement and Annual Investment Strategy Midlothian Council 2024/25 Page 103 of 322
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INDEX 1 INTRODUCTION ............................................................................................................................ 3 1.1 Background ............................................................................................................................................... 3 1.2 Reporting requirements ............................................................................................................................ 3 1.3 Treasury Management Strategy for 2024/25 ........................................................................................... 5 1.4 Training ...................................................................................................................................................... 5 1.5 Treasury management consultants .......................................................................................................... 6 2 THE CAPITAL PRUDENTIAL INDICATORS 2024/25 – 2027/28 ............................................. 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 .................................................................................................................................. 17 3.5 Policy on borrowing in advance of need ................................................................................................. 21 3.6 Debt rescheduling ................................................................................................................................... 21 4 ANNUAL INVESTMENT STRATEGY ........................................................................................ 22 4.1 Investment policy ..................................................................................................................................... 22 4.2 Creditworthiness policy ........................................................................................................................... 24 4.3 Country and sector limits ......................................................................................................................... 25 4.4 Investment strategy ................................................................................................................................. 26 4.5 Investment risk benchmarking ................................................................................................................ 27 4.6 End of year investment report ................................................................................................................. 27 5 Appendices .................................................................................................................................. 28 5.1 APPENDIX: Economic Background ....................................................................................................... 29 5.2 APPENDIX: Treasury Management Practice (TMP1): Permitted Investments .................................... 29 5.3 APPENDIX: Treasury Management Practice (TMP1) – Credit and Counterparty Risk Management 42 5.4 APPENDIX: Approved countries for investments .................................................................................. 48 5.5 APPENDIX: Treasury management scheme of delegation .................................................................. 49 5.6 APPENDIX: The treasury management role of the section 95 officer .................................................. 50 Page 104 of 322
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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 105 of 322
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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 2023/24 to 2027/28; • 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 2024/25, including treasury indicators; and • a permitted investment strategy for 2024/25 (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 presented to Audit Committee on 29 January 2024 and approved as presented. Page 106 of 322
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5 1.3 Treasury Management Strategy for 2024/25 The strategy for 2024/25 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 107 of 322
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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 Link Group, Link Treasury Services 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 108 of 322
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7 2 THE CAPITAL PRUDENTIAL INDICATORS 2023/24 – 2027/28 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. Note: The above financing need excludes other long term liabilities, such as PFI and leasing arrangements which already include borrowing instruments. 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's General Services Children, Young People & Estates 5,300£ 28,516£ 40,862£ 82,647£ 79,450£ 35,156£ Asset Management 11,439£ 14,190£ 17,205£ 12,312£ 9,470£ 10,423£ Transport, Energy & Infrastructure 551£ 3,196£ 2,314£ 5,425£ 1,956£ 2,723£ Regeneration & Development 1,059£ 12,990£ 13,707£ 7,191£ 1,386£ -£ Other 5,014£ 2,850£ 6,975£ 6,342£ 872£ 698£ Provision for return of contingencies (41)£ (506)£ (2,539)£ (2,064)£ (3,107)£ (2,834)£ Total General Services 23,322£ 61,235£ 78,524£ 111,852£ 90,027£ 46,165£ Total HRA 51,710£ 51,359£ 103,054£ 93,460£ 36,679£ 23,286£ Combined Total 75,032£ 112,594£ 181,578£ 205,312£ 126,706£ 69,451£ Table 1: Capital Expenditure 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's Capital Expenditure General Services 23,322£ 61,235£ 78,524£ 111,852£ 90,027£ 46,165£ HRA 51,710£ 51,359£ 103,054£ 93,460£ 36,679£ 23,286£ Total 75,032£ 112,594£ 181,578£ 205,312£ 126,706£ 69,451£ Financed by: Capital receipts 3£ 60£ -£ -£ -£ -£ Capital grants 20,203£ 28,759£ 34,047£ 27,113£ 8,762£ 7,121£ Capital reserves 3,000£ 2,473£ -£ -£ -£ -£ Developer/Other Contributions 5,353£ 12,549£ 14,143£ 12,301£ 11,820£ 4,978£ Net financing need for the year 46,473£ 68,752£ 133,388£ 165,898£ 106,124£ 57,352£ Table 2: Capital Expenditure and Available Financing Page 109 of 322
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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 £95.914m 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. 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's Capital Financing Requirement CFR – General Services 138,532£ 165,202£ 214,646£ 294,444£ 359,610£ 388,049£ CFR – HRA 209,129£ 242,715£ 319,459£ 393,890£ 422,290£ 437,008£ CFR – PFI Schemes 92,433£ 88,739£ 84,815£ 80,661£ 76,277£ 71,663£ Total CFR 440,094£ 496,656£ 618,920£ 768,995£ 858,177£ 896,720£ Movement in CFR 37,230£ 56,562£ 122,264£ 150,074£ 89,183£ 38,543£ Movement in CFR represented by Net financing need for the year (previous table) 46,473£ 68,752£ 133,388£ 165,898£ 106,124£ 57,352£ MEL Shareholder Injection -£ 710£ 3,560£ -£ -£ -£ Less Scheduled Debt Amortisation (5,762)£ (9,206)£ (10,760)£ (11,670)£ (12,557)£ (14,195)£ Less net PFI Finance Lease Principal Payments (3,481)£ (3,694)£ (3,924)£ (4,154)£ (4,384)£ (4,614)£ Movement in CFR 37,230£ 56,562£ 122,264£ 150,074£ 89,183£ 38,543£ Table 3: Capital Financing Requirement (CFR) Page 110 of 322
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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 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's HRA Balances 32,143£ 34,384£ 35,762£ 37,087£ 38,367£ 39,100£ General Fund Balances 9,877£ 7,000£ 5,000£ 5,000£ 5,000£ 5,000£ Earmarked reserves 24,317£ 4,399£ 2,000£ -£ -£ -£ Provisions 4,138£ 4,000£ 3,900£ 3,800£ 3,700£ 3,600£ Capital Fund 20,107£ 17,984£ 10,290£ 10,290£ 10,290£ 10,290£ Total Reserves / Core Funds 90,582£ 67,767£ 56,952£ 56,177£ 57,357£ 57,990£ Working capital* 49,308£ 52,233£ 50,048£ 50,823£ 49,643£ 49,010£ Under/over borrowing 25,908£ 25,000£ 25,000£ 25,000£ 25,000£ 25,000£ Expected investments 113,982£ 95,000£ 82,000£ 82,000£ 82,000£ 82,000£ Reserve Table 4: Balance Sheet Resources Page 111 of 322
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10 makes a prudent provision each year to pay off an element of the accumulated loans fund advances made in previous financial years. It is proposed to retain the methodology adopted in 2023/24 – 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 2023/24, the Asset Life method shall be used for those assets in Table 6. Table 5: Asset Classes to adopt 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 * Average loans fund advance length 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 2023/24 is currently estimated to be 2.21%. For all other asset classes, the policy will be to maintain the practice of previous years and apply what is termed “the Statutory Method” – following the principles of Schedule 3 of the Local Government (Scotland) Act 1975 – with all loans fund advances being repaid by the annuity method. The annuity rate that is proposed to be applied to the loans fund repayments varies will be the in-year loans fund rate, reflecting the Council’s current loan and investment portfolio. The loans fund rate for 2023/24 is forecast to be 2.21% 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. Page 112 of 322
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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 2023 and for the position as at 17 January 2024 are shown below for both borrowing and investments. Table 6: Portfolio Position 31 March 2023 and 17 January 2024 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 505 8.91% 452 8.91% PWLB Maturity 284,128 2.90% 284,128 2.90% LOBO 20,000 4.51% 20,000 4.51% Market Loans 16,886 2.68% 16,221 2.68% Salix Loans 235 0.00% 70 0.00% Total Loans 321,754 3.00% 320,871 3.00% Principal Weighted Principal Weighted Outstanding Average Outstanding Average £000’s Rate £000’s Rate Bank Call Accounts 2 3.80% 7,343 5.09% Money Market Funds 15,980 3.96% 35,073 5.32% Bank Fixed Term Deposits 86,000 3.93% 30,000 4.98% Bank Certificates of Deposit 10,000 2.85% - 0.00% Other Local Authorities 2,000 1.60% - 0.00% Total Deposits 113,982 3.80% 72,416 5.15% 17 January 202431 March 2023 31 March 2023 17 January 2024 Loan Type Deposit Type 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 Actual Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's £000's External Debt Debt at 1 April 323,271£ 321,753£ 382,917£ 509,105£ 663,333£ 756,900£ Actual/Expected change in Debt (1,518)£ 61,164£ 126,188£ 154,228£ 93,567£ 43,157£ Other long-term liabilities (OLTL) at 1 April 95,914£ 92,433£ 88,739£ 84,815£ 80,661£ 76,277£ Actual/Expected change in OLTL (3,481)£ (3,694)£ (3,924)£ (4,154)£ (4,384)£ (4,614)£ Actual/Expected Gross Debt at 31 March 414,186£ 471,656£ 593,920£ 743,994£ 833,177£ 871,720£ The Capital Financing Requirement 440,094£ 496,656£ 618,920£ 768,995£ 858,177£ 896,720£ Under / (over) borrowing 25,908£ 25,000£ 25,000£ 25,000£ 25,000£ 25,000£ Deposits Cash & Cash Equivalents 15,982£ 25,000£ 25,000£ 25,000£ 25,000£ 25,000£ Short-Term Investments 98,000£ 70,000£ 57,000£ 57,000£ 57,000£ 57,000£ Total Deposits 113,982£ 95,000£ 82,000£ 82,000£ 82,000£ 82,000£ Table 7: Net Borrowing Requirement Page 113 of 322
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12 the total of the CFR in the preceding year plus the estimates of any additional CFR for 2024/25. 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 114 of 322
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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 (2023/24 to 2027/28); 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 2024/25 financial year has been calculated to equate to the maximum value of the Underlying Borrowing Requirement in 2024/25. This equates to £534.105 million as outlined below. 2023/24 2024/25 2025/26 2026/27 2027/28 Estimate Estimate Estimate Estimate Estimate £000's £000's £000's £000's £000's Operational Boundary - Borrowing 407,917£ 534,105£ 688,334£ 781,900£ 825,057£ Operational Boundary - Other long term liabilities 88,739£ 84,815£ 80,661£ 76,277£ 71,663£ Total 496,656£ 618,920£ 768,995£ 858,177£ 896,720£ Table 8: Operational Boundary £000's CFR - General Services at 31 March 2025 214,646£ CFR - HRA at 31 March 2025 319,459£ Authorised Limit for Borrowing 534,105£ Table 9: Authorised Limit for Borrowing 382,917 509,105 663,333 756,900 800,057 £- £100,000 £200,000 £300,000 £400,000 £500,000 £600,000 £700,000 £800,000 £900,000 2023/24 2024/25 2025/26 2026/27 2027/28 £000's Financial Year Prudential Indicators for Borrowing External Debt Authorised Limit Underlying Borrowing Requirement / Operational Boundary Page 115 of 322
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14 3.3 Prospects for interest rates The Council has appointed Link Group, Link Treasury Services Limited 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 8 January 2024. At its 14th December meeting, the Bank of England’s Monetary Policy Committee (MPC) kept rates on hold for the third time in a row, pushing back against the prospect of near-term interest rate cuts. The vote in favour of keeping rates on hold was 6-3. However, recent softer wage and inflation data (annual CPI is currently 3.9%) mean that markets have moved significantly in the direction of Link’s November interest rate forecast, pricing in a first rate cut in Q2 2024. Link now expects Bank Rate to be cut to 4.25% by the end of 2024 and 3% by the end of 2025. The low point of the interest rate cycle is also expected to be 3%. Regarding the Bank of England, it continued to sound hawkish last month. Indeed, the evidence of subsiding price pressures did not dissuade the more hawkish members of the Monetary Policy Committee (MPC) – Catherine Mann, Megan Greene and Jonathan Haskel – from again voting to raise interest rates by 25 basis points (bps). The MPC maintained its tightening bias saying that “further tightening in monetary policy would be required if there were evidence of more persistent inflationary pressures”. And it reiterated that policy will be “sufficiently restrictive for sufficiently long” and that “monetary policy is likely to need to be restrictive for an extended period of time”. At the time of the meeting, the Bank did not appear to have taken any comfort from subsiding price pressures in the US and the Eurozone either, saying that measures of inflation persistence are higher in the UK than in other major advanced economies. And its statement that relative to developments in the US and the Eurozone “measures of wage inflation were considerably higher in the UK and services price inflation had fallen back by less so far”. Nonetheless, even if the Bank would prefer to cut interest rates after the Fed and the ECB, Capital Economics’ forecast for the CPI measure of inflation to drop below 2% by April, and for core inflation to drop below 2% only three months later, adds further grist to the mill that rates will be cut sharply in the second half of 2024 if not before. Since the December rate decision, the Bank’s hawkish bias has also not prevented the markets from forming a view that rates will be falling soon. Accordingly, swap rates and gilt yields have reduced significantly over the past month despite a partial rebound upwards since the turn of the year. This will have the effect of ensuring upcoming mortgage rate resets (c400k per quarter) will be somewhat lower than they were through the second half of 2023. Indeed, it is noteworthy that the Halifax house price index has recently moved into positive territory after registering only a slight fall in house prices from their peak in the summer of 2022. Looking further afield, we suspect the wider economy may only endure the lightest of recessions or, possibly, not at all. The Bank’s November Quarterly Monetary Policy Report saw it revise down its Q3 and Q4 GDP forecasts for 2023 and its annual forecast for 2024 from 0.4% to 0.0% (2023 stayed at 0.5%). But it could be this outlook Page 116 of 322
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15 underestimates the robustness and resilience of the UK economy, particularly considering upward revisions to GDP stemming from the pandemic years. There are, of course, significant risks to Link’s central forecast. First, it is likely still the early days of the Gaza-Israel conflict, and a meaningful and prolonged shift up in oil prices from $75 per barrel to something closer to $120 would keep inflation higher for longer. Furthermore, the UK domestic labour market is still having to contend with very low unemployment (4.2%) and the total number of job vacancies is only a little below one million. It is unlikely that a fundamental overhaul of immigration policy, with a view to addressing staff shortages in various sectors of the economy, is going to be a priority regardless of the current/future government, so keeping a lid on wages is going to be a tough challenge even if some of the more recent signs are that wage growth is moderating (still c7% y/y). Regarding PWLB rates, movement in the short part of the curve has reflected the revised Bank Rate expectations to a large degree, whilst medium to longer-dated PWLB rates will remain influenced not only by the outlook for inflation, but by the market’s appetite for significant gilt issuance. Indeed, although Link have a slightly lower starting point for the envisaged reduction in short and medium dated gilts, they now forecast the 10, 25 and 50 years part of the curve to stay a bit higher than earlier forecasts from 2023/24. Furthermore, a General Election is expected in the next year, so Government fiscal policy may potentially loosen at the same time as the Bank’s monetary policy is still trying to take momentum out of the economy. That may mean that Bank Rate stays elevated for a little longer than Link’s central forecast. Of course, what happens outside of the UK remains critical to movement in gilt yields as well. The ECB has made it clear that policy tightening is at, or close to, the terminal rate (currently 4%), whilst the US FOMC has held its Bank Rate equivalent in the range of 5.25% - 5.5%. A SUMMARY OVERVIEW OF THE FUTURE PATH OF BANK RATE Link’s current central forecast for interest rates expects rate cuts to start when both the CPI inflation and wage/employment data are supportive of such a move, and when there is a likelihood of the overall economy enduring at least a slowdown or mild recession over the coming months (although most recent GDP releases have surprised with their on-going robustness). Naturally, timing on this matter will remain one of fine judgment: cut too soon, and inflationary pressures may well build up further; cut too late and any downturn or recession may be prolonged. In the upcoming months, Link’s forecasts will be guided not only by economic data releases and clarifications from the MPC over its monetary policies and the Government over its fiscal policies, but also international factors such as policy development in the US and Europe, the provision of fresh support packages to support the faltering recovery in China as well as the on-going conflict between Russia and Ukraine, and Gaza and Israel. PWLB RATES The short and medium part of the gilt curve has rallied since the start of November as markets price in a quicker reduction in Bank Rate through 2024 and 2025 than held sway back then. This reflects market confidence in inflation falling back in a similar manner to that already seen in the US and the Euro-zone. At the time of writing there is c70 basis points difference between the 5 and 50 year parts of the curve. Page 117 of 322
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16 The balance of risks to the UK economy: - The overall balance of risks to economic growth in the UK is even. Downside risks to current forecasts for UK gilt yields and PWLB rates include: - - Labour and supply shortages prove more enduring and disruptive and depress economic activity (accepting that in the near-term this is also an upside risk to inflation and, thus, could keep gilt yields high for longer). - The Bank of England has increased Bank Rate too fast and too far over recent months, and subsequently brings about a deeper and longer UK recession than we currently anticipate. - Geopolitical risks, for example in Ukraine/Russia, the Middle East, China/Taiwan/US, Iran and North Korea, which could lead to increasing safe-haven flows. Upside risks to current forecasts for UK gilt yields and PWLB rates: - - Despite the tightening in Bank Rate to 5.25%, the Bank of England allows inflationary pressures to remain elevated for a long period within the UK economy, which then necessitates Bank Rate staying higher for longer than we currently project. - The pound weakens because of a lack of confidence in the UK Government’s pre-election fiscal policies, which may prove inflationary, resulting in investors pricing in a risk premium for holding UK sovereign debt. - Projected gilt issuance, inclusive of natural maturities and QT, could be too much for the markets to comfortably digest without higher yields compensating. LINK GROUP FORECASTS Link expect the MPC will keep Bank Rate at 5.25% until the second half of 2024, to combat on-going inflationary and wage pressures, even if they have dampened somewhat of late. Link do not think that the MPC will increase Bank Rate above 5.25%. A more detailed interest rate view and economic commentary is provided at appendix 5.1. Page 118 of 322
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17 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 (2023/24 to 2027/28). 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 2024 is projected to be £382.917 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 2024 is expected to equate to £407.917 million. This means that the Council is expected to be £25.000 million (6%) under-borrowed at the end of the 2023/24 financial year i.e. the Council has funded the majority (94%) of its underlying borrowing requirement as at 31 March 2024. 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 an extremely 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 £825.057 million by 31 March 2028 – more than double the current Underlying Borrowing Requirement. The profile of this, and the projected external loan portfolio to fund the Underlying Borrowing Requirement over the period 2023/24 to 2027/28, 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 is at the 5 year mark (4.40%) with rates trending upwards towards the 20-30 year tenor (5.25%) before easing back slightly to sit at c. 5.10% in the 50 year duration. Current rates have generally eased off 30-40bps from levels reported at the time of the 2023/24 Page 119 of 322
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18 Treasury Management Mid-Year Review Report to Council, with no material change to the medium term forecast for rates. 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. 40-60bps over the next 12 months and a further 40-50bps over the subsequent 12 months. This is forecast to bring longer-term borrowing rates down to between 4.10-4.60% by March 2025 and between 3.70%-4.20% by March 2026. Further commentary on this is provided in Appendix 3 Section 3.3. 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. Consideration for any new borrowing in the remainder of the 2023/24 financial year and during the 2024/25 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 5.25% in the 30-50 year duration (which are forecast to drop by 60bps within one year and 100bps 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. 4.40%), 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. 3.90%. 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 2023/24 and 2024/25 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+60bps. On 22 November 2023, the availability over which Councils can draw HRA rate borrowing from PWLB was extended to 30 June 2025. 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 Page 120 of 322
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19 achieve optimum value and risk exposure in the medium-long-term. The impact particularly of the General Services Capital Plan Prioritisation – which will be reported to Council in February 2024 – will have a significant bearing on this. Council officers, in conjunction with Link, 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. 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 2024/25 Interest rate exposures Upper Limit Page 121 of 322
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20 Maturity structure of fixed interest rate borrowing 2024/25 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 2024/25 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% Maturity Structure of Borrowing 2024/25 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 30 years to 40 years Under 12 months 12 months to 2 years 50 years and above 40 years to 50 years Page 122 of 322
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21 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 Link Group, Link Treasury Services Limited; with only prudent and affordable debt rescheduling that considers both the short and medium-longer term impact being considered. Page 123 of 322
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22 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, whilst investment rates remain elevated, as well as wider range fund options. 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 322
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23 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 322
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24 4.2 Creditworthiness policy This Council applies the creditworthiness service provided by Link Group, Link Treasury Services Limited. 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 Link Group, Link Treasury Services Limited 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 322
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25 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 Link Group, Link Treasury Services Limited 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 Link Group, Link Treasury Services Limited. 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. Page 127 of 322
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26 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. 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 17 January 2024, 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 5,279 AAAmmf (Yellow) Instant Access 5.28% 516,393 MMF Federated 14,951 AAAmmf (Yellow) Instant Access 5.32% 1,059,536 MMF LGIM 14,843 AAAmmf (Yellow) Instant Access 5.33% 291,934 Handelsbanken AB Call Account 7,343 AA/F1+ (Orange) Instant Access 5.09% 142,698 National Westminster Bank plc 15,000 A+/F1 (Blue) Start: 08 Mar 2023 End: 08 Mar 2024 4.80% 578,003 National Westminster Bank plc 15,000 Start: 01 Jun 2023 End: 28 Feb 2024 5.15% Total 72,416 2,588,564 * Credit Rating from Fitch ** Colour represents maximum recommended duration for investment per Link Group, Link Treasury Services Limited Credit Scoring methodology – see Appendix 2. *** As at 31 December 2023 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). Greater returns are usually obtainable by investing for longer periods. The current shape of the yield curve suggests that is the case at present, but there is the prospect of Bank Rate having peaked in the second half of 2023 and possibly reducing as early as the second half of 2024 so an agile investment strategy would be appropriate to optimise returns. 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 rise significantly within the time horizon being considered, then consideration will be given to keeping most investments as being short term or variable; • Conversely, 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. Investment returns expectations The current forecast shown in paragraph 3.3, includes a forecast for Bank Rate to have peaked at 5.25% in Q4 2023. Page 128 of 322
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27 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: - Average earnings in each year 2023/24 (residual) 5.30% 2024/25 4.70% 2025/26 3.20% 2026/27 3.00% 2027/28 3.25% Long term later years 3.25% 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: - 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. 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 Link Group, Link Treasury Services Limited 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 322
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28 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 322
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29 5.1 APPENDIX: Economic Background The first half of 2023/24 saw: - Interest rates rise by a further 100bps, taking Bank Rate from 4.25% to 5.25% and, possibly, the peak in the tightening cycle. - Short, medium and long-dated gilts remain elevated as inflation continually surprised to the upside. - CPI inflation falling from 8.7% in April to 6.7% in September, its lowest rate since February 2022, but still the highest in the G7. - Core CPI inflation declining to 6.1% in September from 7.1% in April and May, a then 31 years high. - A cooling in labour market conditions, but no evidence yet that it has led to an easing in wage growth (as the 3myy growth of average earnings rose by 7.8% for the period June to August, excluding bonuses). The registering of 0% GDP for Q3 suggests that underlying growth has lost momentum since earlier in the year. Some of the weakness in July was due to there being almost twice as many working days lost to strikes in July (281,000) than in June (160,000). But with output falling in 10 out of the 17 sectors, there is an air of underlying weakness. The fall in the composite Purchasing Managers Index from 48.6 in August to 46.7 in September left it at its lowest level since COVID-19 lockdowns reduced activity in January 2021. At face value, it is consistent with the 0% q/q rise in real GDP in the period July to September, being followed by a contraction in the next couple of quarters. The 0.4% m/m rebound in retail sales volumes in August is not as good as it looks as it partly reflected a pickup in sales after the unusually wet weather in July. Sales volumes in August were 0.2% below their level in May, suggesting much of the resilience in retail activity in the first half of the year has faded. As the growing drag from higher interest rates intensifies over the next six monthsthe economy is expected to continue to lose momentum and soon fall into a mild recession. Strong labour demand, fast wage growth and government financial support packages have all supported household incomes over the past year. And with CPI inflation past its peak and expected to decline further, the economy has got through the cost-of- living crisis without recession. But even though the worst of the falls in real household disposable incomes are behind us, the phasing out of financial support packages provided by the government during the energy crisis means real incomes are unlikely to grow strongly. Higher interest rates will soon bite harder too. We expect the Bank of England to keep interest rates at the probable peak of 5.25% until the second half of 2024. Mortgage rates are likely to stay above 5.0% for around a year. The tightness of the labour market continued to ease, with employment in the three months to July falling by 207,000. The further decline in the number of job vacancies from 1.017m in July to 0.989m in August suggests that the labour market has loosened a bit further since July. That is the first time it has fallen below 1m since July 2021. At 3.0% in July, and likely to have fallen to 2.9% in August, the job vacancy rate is getting closer to 2.5%, which would be consistent with slower wage growth. Meanwhile, the 48,000 decline in the supply of workers in the three months to July offset some of the loosening in the tightness of the labour market. That was due to a 63,000 increase in inactivity in the three months to July as more people left the labour market due to long term sickness or to enter education. The supply of labour is still 0.3% below its pre-pandemic February 2020 level. But the cooling in labour market conditions still has not fed through to an easing in wage growth. The headline 3myy rate rose 7.8% for the period June to August, which meant UK wage growth remains much faster than in the US and in the Euro-zone. Moreover, while the Bank of England’s closely watched measure of regular annual average total pay Page 131 of 322
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30 growth for the private sector was 7.1% in June to August 2023, for the public sector this was 12.5% and is the highest total pay annual growth rate since comparable records began in 2001. However, this is affected by the NHS and civil service one-off non- consolidated payments made in June, July and August 2023. The Bank of England’s prediction was for private sector wage growth to fall to 6.9% in September. CPI inflation declined from 6.8% in July to 6.7% in August and September, the lowest rate since February 2022. The biggest positive surprise was the drop in core CPI inflation, which declined from 6.9% to 6.1%. That reverses all the rise since March. In its latest monetary policy meeting on 13 December 2023, the Bank of England left interest rates unchanged at 5.25%. The vote to keep rates on hold was a split vote, 6-3. It is clear that some members of the MPC are still concerned about the stickiness of inflation. Like the US Fed, the Bank of England wants the markets to believe in the higher for longer narrative. In terms of messaging, the Bank once again said that “further tightening in monetary policy would be required if there were evidence of more persistent inflationary pressures”, citing the rise in global bond yields and the upside risks to inflation from “energy prices given events in the Middle East”. So, like the Fed, the Bank is keeping the door open to the possibility of further rate hikes. However, it also repeated the phrase that policy will be “sufficiently restrictive for sufficiently long” and that the “MPC’s projections indicate that monetary policy is likely to need to be restrictive for an extended period of time”. Indeed, Governor Bailey was at pains in his press conference to drum home to markets that the Bank means business in squeezing inflation out of the economy. This narrative makes sense as the Bank of England does not want the markets to decide that a peak in rates will be soon followed by rate cuts, which would loosen financial conditions and undermine its attempts to quash inflation. The language also gives the Bank of England the flexibility to respond to new developments. A rebound in services inflation, another surge in wage growth and/or a further leap in oil prices could conceivably force it to raise rates in the future. In the table below, the rise in gilt yields across the curve as a whole in 2023/24, and therein PWLB rates, is clear to see. Page 132 of 322
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31 HIGH/LOW/AVERAGE PWLB RATES FOR 01.04.23 – 29.09.23 The peak in medium to longer dated rates has generally arisen in August and September and has been primarily driven by continuing high UK inflation, concerns that gilt issuance may be too much for the market to absorb comfortably, and unfavourable movements in US Treasuries. The S&P 500 and FTSE 100 have struggled to make much ground through 2023. CENTRAL BANK CONCERNS Currently, the Fed has pushed up US rates to a range of 5.25% to 5.5%, whilst the MPC followed by raising Bank Rate to 5.25%. EZ rates have also increased to 4% with further tightening a possibility. Ultimately, however, from a UK perspective it will not only be inflation data but also employment data that will mostly impact the decision-making process, although any softening in the interest rate outlook in the US may also have an effect (just as, conversely, greater tightening may also). 3.00 3.40 3.80 4.20 4.60 5.00 5.40 5.80 6.20 6.60 7.00 PWLB Certainty Rate Variations 3.4.23 to 29.9.23 3-Apr-23 29-Sep-23 Average 1 Year 5 Year 10 Year 25 Year 50 Year Low 4.65% 4.14% 4.20% 4.58% 4.27% Date 06/04/2023 06/04/2023 06/04/2023 06/04/2023 05/04/2023 High 6.36% 5.93% 5.51% 5.73% 5.45% Date 06/07/2023 07/07/2023 22/08/2023 17/08/2023 28/09/2023 Average 5.62% 5.16% 5.01% 5.29% 5.00% Spread 1.71% 1.79% 1.31% 1.15% 1.18% Page 133 of 322
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32 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 322
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33 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 322
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34 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 322
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35 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 322
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36 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 322
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37 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 322
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38 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 322
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39 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 322
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40 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 322
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41 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 322
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42 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 322
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43 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 Link Group, Link Treasury Services Limited 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 Link Group, Link Treasury Services Limited 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 322
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44 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 Link Group, Link Treasury Services Limited 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 322
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45 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 322
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46 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 322
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47 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 Link Group, Link Treasury Services Limited, 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 322
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5.4 APPENDIX: Approved countries for investments Based on the lowest available rating as at 07.02.2024 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 322
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49 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 322
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50 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 322
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51 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 322
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Page 1 of 5 Midlothian Council Tuesday 27 February 2024 Item No 8.5 Foster Carer Additional Funding Report by Joan Tranent, CSWO and Chief Officer, Children’s Services Report for Decision 1 Recommendations Council are asked to approve additional funding for foster carers as highlighted within the report. 2 Purpose of Report/Executive Summary This report advises of additional financial requests that have been requested by foster carers: • A 5.5% increase in fostering fees for 2024/25 • All foster carers move from Level 1 fees to Level 2 fees following a one-year probationary period. • The two items mentioned below are for noting only as they shall be incorporated within base budget and have been accepted and approved. - An increase in mileage payments from 45p per mile to 61p per mile. - Reinstate birthday and Christmas allowance for each child and an agreed amount to go towards holiday activities. Date: 31/01/2024 Report Contact: Joan.tranent@midlothian.gov.uk Page 155 of 322
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Page 2 of 5 3 Background 3.1 Midlothian foster carers are a much-valued resource within children’s services. They allow children and young people to remain living within Midlothian close to family, friends and within their local community, which is a key recommendation of the work of the Promise. Locally and nationally, there is a shortage of foster carers despite repeated recruitment campaigns, and within Midlothian we have struggled to increase our numbers of carers. 3.2 In September 2023 the Care Inspectorate arrived to inspect our fostering services, they identified areas for improvement around managers engagement with foster carers and the need to establish and promote positive relationships. Following on from this, regular meetings have been arranged so that we can hear the voice of carers. Over the course of several months the service manager and team leader have met with foster carers to re-establish these relationships and listen to what their concerns and issues are. 3.3 On the 18th of October 2023 the Scottish Government wrote to all local authorities to advise that they had agreed a Scottish Recommended Allowance (SRA) for foster carers and kinship carers across Scotland. The funding allocation given to Midlothian is less than the amount required to pay all carers the SRA. The shortfall of around £65k is expected to be made up by local authorities. The letter is clear that the allowance covers 16 core elements of care including birthday and Christmas allowances and holiday money. In Midlothian we made the decision to stop paying enhancements to carers for these elements as we understood they were now covered within the new Scottish Recommended Allowance. 3.4 The carers met with the Service Manager and Team Leader and shared their unhappiness at this decision advising that we were the only local authority within Scotland to take this approach. Having consulted with our carers we are asking that these elements are reinstated as additional payments. This action is for noting as we have discussed at CMT and approval granted. 3.5 Carers also asked that their mileage payments were increased so that they were being paid the same as social workers an increase from 45p per mile to 61p per mile. Again this is for noting only as this was accepted and aligns with Midlothian Policy for all employees. Page 156 of 322
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Page 3 of 5 3.6 As part of the inspection improvement plan, we agreed to re visit the different levels foster carers are paid at. We are requesting that all carers begin their fostering career at a probationary period (previously level 1 and move to a standard payment (previously level 2) following the one-year probationary period providing they undertake relevant training and their first year review highlights no concerns. This will incur a cost of £89k. 3.7 In 2023 we reviewed the foster carers fees and agreed a backdated 5% rise in their fees. Carers are now requesting that a further 5.5% rise is offered as part of the 2024/25 budget negotiations. We have liaised with our neighbouring local authorities to benchmark our fees. Edinburgh are offering a 1% rise for 24/25 and East Lothian are offering no rise in their fees and have not done so since 2016. If this rise were approved, we would be one of the highest paying local authorities for fees within Scotland. This could bring us many benefits with regard to more foster carers wishing to come to Midlothian to foster. A 5.5% rise in fees would result in an additional £57k. 4 Report Implications (Resource, Digital and Risk) 4.1 Resource Foster carers are a very valued resource and one that we are finding it increasingly difficult to recruit into. Whilst this is not unique to Midlothian, we do need to recruit more carers. Our demographics evidence that more 0–15 year olds will be residing within our communities which in turn will almost certainly result in increased demand on what is a limited resource. Failure to recruit will result in more expensive external placements for children and young people. The average cost of an external foster placement is around £52k compared to £24k for a local foster placement. We also need to offer competitive fees as we are competing against large private companies who offer larger fees and other incentives that we are unable to match. In essence we require an additional £146k within the children’s services budget to meet the need of the above requests. 4.2 Digital None 4.3 Risk Failure to agree to some or all the above requests could result in foster carers leaving and moving to private agencies. This in turn will result in significant cost increases as we shall have to accommodate children and young people out with Midlothian. These cost increases will also have to take cognisance of additional travel costs for families and workers and most likely additional education costs. On a human level the risk is great in that we shall be taking children and young people out Page 157 of 322
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Page 4 of 5 of their local communities to reside far away from family, friends and those people and places that are important to them. This does not align with our commitment to The Promise. 4.4 Ensuring Equalities (if required a separate IIA must be completed) The report will require a change to policy within the fostering team with regard to fostering levels and payment if approved. 4.4 Additional Report Implications See Appendix A Appendices Appendix A – Additional Report Implications Page 158 of 322
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Page 5 of 5 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 Not applicable A.8 Supporting Sustainable Development Not applicable Page 159 of 322
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Midlothian Council Tuesday 27 February 2024 Item No 8.6 Council Tax charges on second homes and empty properties Report by Saty Kaur, Chief Officer Corporate Solutions Report for Decision 1 Recommendations Council is asked to: • Agree to apply a 100% increase in respect of Council Tax charges for second homes as proposed in 3.8. • Agree that no discount be applied for empty properties as referred to in 3.12 and 3.13. • Agree to extend the initial six-month grace period on empty homes referred to in 3.12 for up to a maximum of an additional six months, therefore in total up to 12 months grace period can be applied as proposed in 3.13. • Delegate authority to the Executive Director Place to apply the discretionary six-month extension to the grace period on empty properties referred to in 3.12, on a case-by-case basis following recommendation from the Chief Officer Corporate Solutions as proposed in 3.13. 2 Purpose of Report/Executive Summary To provide Council with information on the recent legislative change on Council Tax charges for second and empty homes and present a recommended policy for approval. Date Friday 26 January 2024 Report Contact: Saty Kaur, Chief Officer Corporate Solutions Saty.Kaur@midlothian.gov.uk Page 161 of 322
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2 3 Background 3.1 On 14 December 2023, Scottish Parliament agreed amendments1 to the current legislation, resulting in new powers enabling Local Authorities to increase the amount of council tax payable on second homes by a levy up to 100%, which brings this in line with the current 100% levy already applied to empty homes. 3.2 In relation to empty homes there is also specific provision in the amended legislation for any property which has been unoccupied for at least 12 months, has been purchased by a new owner within the past six months, and which a local authority is satisfied is the subject of repairs or renovations with a view to improving the property. These properties will not be subject to 100% increase (levy) and the Council can also grant a discount of between 10% - 50% or no discount i.e. owners pay the standard Council Tax rate. The Council also have discretion to extend the period for which the exclusion from 100% levy applies, where they consider that it is appropriate to do so, for example, in order to enable works to be completed. 3.3 Local Authorities will be able to effect these changes from 1 April 2024. Therefore prior to the commencement date, Council are required to determine its policy on these new powers. Main Report Second Homes 3.4 A second home is a home which is furnished and lived in for at least 25 days in a 12-month period but is not someone’s sole or main residence. Currently Local Authorities have the discretion to apply a discount of between 10% to 50% to Council tax charges for second homes or apply no discount. 3.5 Midlothian Council currently applies a discount of 10% (except for purpose-built holiday homes and job-related properties where a 50% discount applies). 3.6 As of 1 April 2024, Local Authorities have powers to increase the Council Tax payable on second homes by a levy of up to 100%. 1 Council Tax (Variation for Unoccupied Dwellings) (Scotland) Regulations 2013/45 as amended by Council Tax (Variation for Unoccupied Dwellings) (Scotland) Amendment Regulations 2023/389 Page 162 of 322
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3 3.7 It is anticipated that the introduction of the 100% levy would incentivise sales of second homes to bring them back into use as main residences therefore reducing the potential additional income that would be generated. To provide an illustration of potential additional revenue, Table 1 details the number of second homes in Midlothian and what the impact of a 100% increase in Council Tax would be, using the figures for the last three financial years (noting that 2023/24 financial year figures are based on the property numbers as of end December 2023 and assumed to remain static to the 31 March 2024). No of properties Council Tax Band 2021/22 2022/23 2023/24 A -1 0 0 B 8 11 6 C 17 9 12 D 21 33 17 E 9 9 8 F 4 4 5 G 1 1 3 H 0 0 0 Total no of properties 59 67 51 Potential additional Council Tax billed (annual total) (£) 75728.84 93175.50 99197.98 Potential additional income (at average 97% collection rate) 96222.05 Table 1 – Second homes at 100% levy (2021/22-2023/24) *illustrative purposes only 3.8 Council are asked to agree to implement a 100% increase or levy of the Council Tax payable for all second homes, with the exception of purpose-built holiday homes and job-related properties which will still be subject to a 50% discount. 3.9 The intention of this proposal is to encourage second homes to be brought back into use as main residential properties, helping to alleviate the current housing crisis. Furthermore, fully occupied homes in Midlothian will generate income through local spend, participation in local life and can regenerate communities whereas vacant/long term empty properties can be less visually appealing. Empty properties 3.10 Where a property has been unoccupied for a continuous period of more than twelve months and is not actively being marketed for sale or let, the Council can apply a levy of up to 100% (deemed as long-term empty properties). If the property is being actively marketed for sale or let, then the 100% levy can only be applied where the property has been unoccupied for two years or more. Page 163 of 322
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4 3.11 Currently, Local Authorities are required to apply a 50% discount to Council Tax, for six months after sale, to an empty property that requires major repair work or structural alterations to make it habitable. The discount only applies where a property is undergoing (or has undergone) major repair work or structural alteration and is unhabitable as a consequence. Where a property prior to sale had been a long- term empty property and is then unoccupied due to renovations or repairs that are not of a structural nature, a new owner is required to pay a Council Tax premium with no discount applied. 3.12 As of 1 April 2024, in respect of the new regulation, the position for any property that has been unoccupied for at least 12 months, has been purchased by a new owner within the past six months, and which the Local Authority is satisfied is the subject of repairs or renovations with a view to improving the property is as follows for a period of six months: i. The Council cannot increase the amount of council tax payable by up to 100% for the unoccupied property. i.e. apply the levy ii. The Council can grant a discount of between 10 to 50% to the standard rate iii. The Council can grant no discount to the standard rate so the standard rate applies iv. The Council can agree to extend the levy exclusion period, if for example, the works are continuing. It should be noted that if the Council extend the levy exclusion period, then it can also choose to extend any discount that is in place (i.e. if (ii) has been applied then this can also be granted during the extension period) 3.13 Council are asked to agree that: a) During the first six months, as the 100% Council Tax levy does not apply, no further discount will be applied to the property i.e. adopt (iii) above. b) Any extensions (as per (iv) above) would only be for a maximum of 12 months and would be at the discretion of the delegated authority of the Executive Director Place, on a case-by-case basis following recommendation from the Chief Officer Corporate Solutions. 3.14 It should be noted that, at the time of writing this report, work is ongoing between Scottish Parliament and Local Government to produce joint guidance on the circumstances in which the grace period will apply and types of work that will be included under repairs or renovations. The regulations, however, state that ultimately it will be for Local Authorities to be satisfied the repairs or renovations are being undertaken with a view to improving the property. 3.15 Furthermore, it is important to note that in terms of the Council Tax (Exempt Dwellings) Order 1997 a dwelling house which is incapable of, and is not, being lived in because it is being structurally repaired, improved or reconstructed is exempt from Council Tax .and not affected by the amended regulations. Page 164 of 322
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5 4 Report Implications (Resource, Digital and Risk) 4.1 Resource No additional staffing resource is required to administer the recommended policy in this report. Communication and administration of the recommended policy can be delivered from existing resources in Corporate Solutions. Table 1 illustrates the potential additional annual income that may be generated based on a static position as of December 2023. The actual income generated can only be realised after the policy is implemented. 4.2 Digital No implications. 4.3 Risk Councils are facing significant housing and financial challenges. The recommended policy aims to alleviate these. To do nothing would continue to put pressure on already strained services and increase the associated risks aligned to these pressures. 4.4 Ensuring Equalities (if required a separate IIA must be completed) A separate IIA has been drafted assessing the impacts of the recommended policy presented for approval. This can be found in Members Library. If the policy is not agreed in full, the IIA will be revised to reflect the Council decision. 4.5 Additional Report Implications (See Appendix A) See Appendix A Page 165 of 322
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6 Appendix A – Additional 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 The changes to Council Tax second homes and empty properties were previously subjected to national consultation. The consultation analysis can be viewed here: Council tax for second and empty homes, and thresholds for non-domestic rates: consultation analysis - gov.scot (www.gov.scot) A.6 Impact on Performance and Outcomes The recommended policy aims to reduce the pressure on the current housing crisis. Having a safe and affordable home contributes to better outcomes for communities. A.7 Adopting a Preventative Approach The recommended policy aims to generate additional income for the Council, which contributes to reducing the current financial pressures. A.8 Supporting Sustainable Development Not applicable Page 166 of 322
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Midlothian Council Tuesday 27 February 2024 Item No 8.7 Fees and Charges 2024/25 Report by Saty Kaur, Chief Officer Corporate Solutions Report for Decision 1 Recommendations Council are asked to: - Agree to the officer recommendations for new, revised and frozen charges as outlined within the report; 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 2024/25 for consideration and approval. Date Tuesday 30 January 2024 Report Contact: Saty Kaur, Chief Officer Corporate Solutions Saty.Kaur@midlothian.gov.uk Page 167 of 322
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2 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 2024/25 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 (as requested by Council in 2023/24) 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 Building Standards – introduction of fees for non-statutory services 3.3 At its meeting of 21 February 2023, Council agreed to the introduction of fees for Building Standards for non-statutory duties. Within the fees and charges register for 2024/25, these now include: • Application for Midlothian Council’s acceptance of sports ground capacity less than 5,000 spectators – Non- Designated Sports Ground. For a sports ground that has not had confirmation previously from Midlothian Council (£189.00) • Application for Midlothian Council’s acceptance of sports ground capacity less than 5,000 spectators – Non- Designated Sports Ground. Applies to year 1 of 3-yearly confirmation cycle for a sports ground that has had confirmation previously from Midlothian Council (£126.00) • Application for Midlothian Council’s acceptance of sports ground capacity less than 5,000 spectators – Non- Designated Sports Ground. Applies to years 2 and 3 of 3- yearly confirmation cycle for a sports ground that has had confirmation previously from Midlothian Council (£63.00) Council is asked to note that the other charges in relation to Building Standards are statutory. Scottish Government wrote to Councils on 9 February 2024 to advise on the changes to fee levels and associated discounts for Certification of Design and Construction. A number of changes are being introduced to the building standards system through the work of the Building Standards Futures Board Programme. The increase in fees is part of a planned 3-year model to increase fees annually, dependent on the outcome from monitoring, reporting, and auditing of the application of increased building warrant fee income at local authority level in support of increased verification service capacity and will be subject to Ministerial approval. These changes will take effect from 1 April 2024. Page 168 of 322
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3 Waste – Bulky uplifts – new costs 3.4 The current charging structure for bulky uplifts has been reviewed and a new set of charges proposed in line with other local authorities after benchmarking carried out with neighbouring authorities and the Local Government Benchmarking Framework (LGBF) group. Due to the additional costs associated with the collection and disposal of waste upholstered domestic seating (WUDS) containing Persistent Organic Pollutants (POPs) i.e. sofas, armchairs, upholstered dining chairs as well as beanbags and footstools, Waste & Recycling Services propose amending the current charging structure for kerbside bulky waste collections to cover these costs. It is proposed that from 1 April 2024, the charge for bulky waste collections of upholstered seating would be dependent on the individual item/s that are required to be uplifted. This will be based on the cost for both collection (size/weight and staff time required) and the additional disposal charge. As the wood or metal in the frame or legs of POPs waste (sofas etc) can no longer be extracted for recycling, and crushing of POPs waste must be undertaken in a negative pressure environment to prevent release of particles to the environment, the disposal cost for upholstered seating is higher than for other bulky waste items. The existing bulky waste uplift charge (2023/24) is £27 for up to seven items. Fridges and freezers are individually charged at £27 per appliance. This charge was initially introduced to cover the cost of “de- gassing” these appliances. It is proposed that the existing charges change as follows: • £27.00 for up to seven items with rise to £30 for up to six items – the equivalent of £5 per item • Fixed fee of £40 for larger/heavier items such as range cookers, exercise machines or pianos will rise to £60 per item • £27.00 charge for fridge/freezer per item is raised to £30.00 item. New charges proposed are: • 2 seater sofa (per item) (size up to 180cm in length) - £30.00 • 3 seater sofa (per item) (size over 180cm in length) - £40.00 • corner sofa (per item) - £50.00 • other large domestic appliance (per item) - £30.00 • Mattress, divan bed, Armchair (up to 2 items) - £30.00 Page 169 of 322
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4 Short term lets licensing – new charges proposed 3.5 Two new charges are proposed for secondary letting: • Additional charge (per additional room/guest): greater than 12 bedrooms or greater than 24 guests - £55.00 • Additional charge (per additional room/guest): greater than 12 bedrooms or greater than 24 guests - Fee to consider material change - £33.00 Two new charges are proposed for home sharing/home letting: • Additional charge (per additional room/guest): greater than 4 bedrooms or greater than 9 guests - £55.00 • Additional charge (per additional room/guest): greater than 4 bedrooms or greater than 9 guests - Fee to consider material change - £33.00 Review of existing charges Parks and Greenspace – review and uplift of existing charges 3.6 A review of events charges for events that occur in the Council’s Parks and Greenspaces has taken place in 2023/24. Benchmarking has been undertaken and it is proposed to increase charges between 10 – 100% for activities in this service area. The proposed new prices will bring Midlothian in line with neighbouring authorities. It is also proposed to reduce the charges for ranger led activities to a schedule that is more streamlined and standardised. Permits – review and uplift of existing charges levied at developers 3.7 A review of permit charges has been carried out in 2023/24. With the exception of footway crossing permits and access protection marking, all other permits are mainly aimed at developers and/or commercial businesses. Benchmarking was undertaken with neighbouring authorities. From a sample of permits benchmarked, Midlothian sit above average in comparison to its neighbouring authorities for Temporary Traffic Regulation Orders (TTROs), skip permits, cabin, scaffolding. Edinburgh charges are higher than Midlothian whilst East Lothian and Scottish Borders are lower. In comparison against the LGBF group, charges for skip permits, cabin, scaffolding are either in line with these authorities or just below average with the exception of TTROs where Midlothian is above average. Due to the different scale of charges for excavations it is not possible to carry out a direct comparison. However, charges are similar to those charged by other authorities. It is proposed to increase charges to align with Edinburgh Council’s permit charges and range from a 10% increase to 250% for some permit requests. Page 170 of 322
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5 Dalkeith Car Parking Charges – proposed increase of charges 3.8 It is proposed to increase these for St Andrew St and North Wynd: • Up to two hours – was £1.00. Proposed new charge is £1.50 • 3 hours – was £2.00. Proposed new charge is £3.00 • 4 hours – was £4.00. Proposed new charge is £5.00 • 10 hours – was £10.00. Proposed new charge is £12.00 Charges for car parking have remained static since introduction (North Wynd July 2011 and St Andrew St February 2012). Benchmarking was carried out with neighbouring authorities and the LGBF group where data was available. Except for Edinburgh Council, increasing charges would put Midlothian above all other authorities. Pest Control – review and uplift of existing charges and new charges 3.9 Council, at its meeting of 21 March 2023 agreed to pest control treatments within domestic tenancies to be funded through the Housing Revenue Account. It should be noted there have been no increases to pest control charges since 2020/21. Pest control charging structure has been reviewed in 2023/24 and new charges proposed now cover the cost of providing the service. This results in an increase in charging from -1% to 195%. Two new charges are: • Rats/ mice - additional visits (should the initial treatment programme requires to be extended beyond 3 visits to site) (cost per visit) - £40.00 • Survey of residential garden area regards rodents (this does not include a treatment plan) - £40.00 Zoo licences 3.10 All zoos that are open to the public, with or without charge, on seven or more days in a twelve-month period need a licence from their local authority to operate. A zoo is defined as any establishment where animals of wild species are exhibited to the public. Circuses and pet shops are excluded from this definition. The Zoo Licensing Act 1981 sets out different timetables for new licence over a 4yr period and thereafter renewals over a 6yr period. Benchmarking carried out with other authorities show that Midlothian are significantly undercharging for Zoo or Small Zoo licences. Charges reviewed and increased to cover the cost of providing the service, which has resulted in increases ranging from 12% to 850%: • Application for grant or renewal of Zoo licence (4-year term) – currently £80.00, proposed new charge £760.00 • Application for grant or renewal of "small zoo" licence (4-year term) - currently £80.00, proposed new charge £445.00 Page 171 of 322
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6 • Significant alteration of a Zoo licence – currently £80, proposed new charge £90.00 • Transfer of a Zoo licence – currently £73.00, proposed new charge £90.00 Environmental Health – review and uplift of existing charges and new charges 3.11 Benchmarking carried out with neighbouring authorities show Midlothian are undercharging for animal licensing and stray dog fees. Charges increased to an average charge across those authorities: • Licence fees for animal boarding - commercial boarding – current fee £140.00, proposed new fee £250.00 • Breeding of animals (dogs, cats or rabbits) – current fee £140.00, proposed new fee £250.00 • Pet shops – current fee £140.00, proposed new fee £250.00 • Stray dogs - Regulatory fee to be paid by the person claiming to be the owner (additional to all expenses) – new charge of £25.00 is proposed under the Environmental Protection (stray dogs) Regulations 1992, reg 2. • Stray dogs collected on days 1-3 – current fee £17.00, proposed new fee £36.00 • Stray dogs collected after day 3 would rise to £17.00 plus £7.00 day thereafter Immigration certificates – revised and increased costs – Environmental Health Officers carry out an inspection of the identified residential property that will be accommodated to ensure that the house is of suitable repair and size for the current and anticipated people who will live there i.e. the house needs to meet the tolerable standard and with the additional proposed no of (usually) family members coming through immigration, will not be overcrowded. A report is prepared and issued following the inspection and this report is submitted as part of the visa application process. The uplift in costs is to cover the actual cost of the work in conducting the inspection and preparing and issuing the report: current fee £115.00, proposed new fee £150.00. There is a separate quick turnaround fee which is effectively a 50% surcharge – this is levied in cases where fast response is being asked for. This is in response to the team finding that applicants were contacting them at the last minute requiring immediate inspection because of deadlines in the visa application process. Therefore, a fast- track immigration certificate is also listed for those required within 4 working days of request (50% surcharge on usual fee) – current fee £173.00, proposed new fee £225.00. Although reports are necessary for the visa application process this is not considered to be statutory work. Page 172 of 322
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7 Other change is the Food Hygiene Certificate, for premises looking for a premises licence under Section 50 of the Licensing (Scotland) Act 2005 – current fee £108.00, proposed new fee £125.00. Trading Standards – Weights and Measures – review and uplift of existing charges and new charges 3.12 New charging structure for weights fees, introduces 3 categories dependent of weight. Designed to ensure the cost to re-calibrate a weight is less than purchasing a new weight. Charges proposed are benchmarked against other authorities that provide a similar service. This results in some changes of between 10% to 42% increase and a new charge introduced: • Weights and Measures Equipment Test Fees (weights fee) 1g - 500g – current fee £8.00, proposed new fee £10.00 • Weights and Measures Equipment Test Fees (weights fee) 1kg - 5kg – current fee £10.80, proposed new fee £12.00 • Weights and Measures Equipment Test Fees (length fee) – current fee £11.20, proposed new fee £16.00 • Weights and Measures Equipment Test Fees (weights fee) 10kg - 25kg or 1mg - 500mg – new fee proposed £15.00 Waste – New housing developments 3.13 This charge is associated with a new build house – set of bins and boxes (incl. food waste recycling). Charges include delivery, bin stickers and calendar). It is proposed to increase the charge from £104.00 to £200.00 (90% increase). 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. As the Council makes plans to move to 'twin stream' for the collection of recycling (paper/card collected in one bin), the future cost of an additional bin has been factored into the proposed increase in charge. To note: charges have been based on the average Scotland Excel price for wheeled bins and containers at cost recovery. Council, when it acts as a property developer, will also be subjected to these costs. 3.14 Garden Waste In February 2023, Council agreed to uplift garden waste charges to £40/year, to take effect in year 2024/25. It is proposed to uplift this to £42 for 2025/26 year. 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. Page 173 of 322
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8 Library Services 3.15 Minimal changes within the library service to include an increase to laminating charges, an increase to local studies research and the removal of charging for a lost membership card (adult). Registrars 3.16 Minimal uplifts to ceremony charges to bring these in line with neighbouring Local Authorities. Street naming and numbering 3.17 With the exception of the charge for single developments all other charges are services aimed at property developers. Council should note that Midlothian is already one of the highest charges in this service; however, recognising that Midlothian is the fastest growing local authority in mainland Scotland, it is proposed to further increase these charges: • Naming of a new street – current charge £360.00, proposed charge £500.00 • Naming/Numbering of New Properties or Alterations to existing buildings: 1 property – current charge £120.00, proposed new charge £150.00 • Naming/Numbering of New Properties or Alterations to existing buildings: 2 - 5 properties – current charge £300.00, proposed new charge £420.00 • Naming/Numbering of New Properties or Alterations to existing buildings: 6-10 properties – current charge £420.00, proposed new charge £600.00 • Naming/Numbering of New Properties or Alterations to existing buildings: 11-20 properties – current charge £600.00, proposed new charge £840.00 • Naming/Numbering of New Properties or Alterations to existing buildings: 21-50 properties – current charge £900.00, proposed new charge £1260.00 • Naming/Numbering of New Properties or Alterations to existing buildings: 51-100 properties – current charge £1200.00, proposed new charge £1680.00 • Naming/Numbering of New Properties or Alterations to existing buildings: 101 plus properties (Plus additional £45 per plot) – current charge £1700.00, proposed new charge £2380.00 • Allocation of a house name or renumbering/change of address – current charge £120.00, proposed new charge £150.00 Page 174 of 322
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9 No changes to charges No changes – Catering Services 3.18 It is proposed to freeze the following charges within Catering Services: • School meals (Primary, Secondary and Adult Meals) - No increases proposed due to cost of living crisis. Primary 1 to 5 receive free school meals and Primary 6 and 7 will follow in future. • Café, Vending and Basket Service – pending review of café options which is included in the Transformation Blueprint Theme 5 Commercialisation No changes – Bonnyrigg District Heating Scheme 3.19 It is not proposed to change the charges at present. No changes – Travel and Fleet Services 3.20 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 Home to School Transport sprint contained within the Transformation Blueprint. No changes - Health Living Services 3.21 Charges across all leisure services are frozen. There will be an external review of charges and memberships and, when that is completed, a full report will be brought to Council outlining any suggested changes to charges. This is part of the Transformation Blueprint. No changes - Health and Social Care – Adult Social Care 3.22 Midlothian Health and Social Care Partnership are currently undertaking work to review its charging policy and eligibility criteria. This will require benchmarking and need to take account of the still pending funding settlement for 2023-24 directed by the Scottish Government and agreed by Midlothian Council and NHS Lothian. Consequently, it is proposed that a further report on Social Care charges will be brought to Council at a future date. Lifelong Learning and Employability Classes – uplift and freezes 3.23 No increases are proposed for Code A courses (all levels except retired rate) due to the need to increase adults with qualifications, particularly for employability purposes as well as increase uptake. Similarly, no increases are proposed for codes C to F with the exception of rates for retired people (those who do not qualify for concessionary rate e.g. on some kind of top up benefit). Rates have been benchmarked against City of Edinburgh and still sit below their charge of £48.30 for retired code C. In addition, it is proposed to increase cost of weekend/short courses in line with benchmarking information with City of Edinburgh and cost of delivery. Page 175 of 322
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10 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 2024/25 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 in Members Library. 4.5 Additional Report Implications (See Appendix A) See Appendix A Appendices Appendix A – Additional Report Implications Appendix B – Background information/Links Page 176 of 322
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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 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 177 of 322
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12 APPENDIX B Register of charges 2024/25 for publication – available to review on the Council’s website: Fees and charges for 2023-24 | Fees and charges register | Midlothian Council Page 178 of 322
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Midlothian Council Tuesday 27 February 2024 Item No 8.8 Medium Term Financial Strategy – 2024/25 to 2028/29 Report by David Gladwin, Chief Financial Officer & Section 95 Officer Report for Decision 1 Recommendations a) Note that the financial outlook remains challenging for this term of Council and recall the recommendation in the External Auditors report in 2022 that “as a matter of urgency, officers and elected members need to work together to develop and agree the medium- term financial strategy and progress the Council’s transformation plans”. b) Note the position relating to Scottish Government funding for Councils in 2024/25 and the associated grant settlement for Midlothian Council. c) Note that the projected budget gap over the life of the Medium Term Financial Strategy (MTFS) through to 2028/29, assuming Council support all recommendations as shown in table 6, is £20.882 million. d) Approve a freeze in Council Tax rates for 2024/25 thus accepting the Scottish Government Grant offer of £2.870 million to support a freeze. Council Tax bandings are shown at Appendix B. e) Approve the 2024/25 budget as shown in table 6 and in Appendix D noting that it contains neither utilisation nor enhancement of reserves other than £4.093 million of one-off funding relating to retrospective service concessions. f) Approve an allocation to Midlothian Integration Joint Board (MIJB) for 2024/25 of £60.866 million in respect of delegated services (subject to final confirmation of the distribution of Scottish Government Funding). g) Note that a further MTFS report with updated financial projections and a specific focus on progress with Transformation Blueprint work will be presented to Council no later than 25th June 2024. h) Note that ongoing work on Capital Plan Prioritisation, including the updating of asset management plans, will be finalised and presented to Council no later than 25th June 2024. i) Otherwise, note the remainder of the report. Page 179 of 322
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2 2 Purpose of Report / Executive Summary 2.1 The main purpose of this report is to provide Council with the budget position for 2024/25 to allow discharge of their statutory duties to set a balanced budget for 2024/25. The report also provides budget projections for financial years 2025/26 through to 2028/29. 2.2 Commentary is provided to Members on the latest position on Scottish Government funding for Midlothian Council in 2024/25 and government timescales to finalise this. 2.3 Recent developments relating to Employers Pension contributions for all groups of workers is discussed and the implications of these are reflected in the 2024/25 base budget position and the remainder of the MTFS. 2.4 Council approved savings proposals and future planning assumptions around the use of service concession retrospection partially bridge the projected budget gap over the term of the MTFS. However, the use of one-off measures to balance budgets does not contribute to the underlying financial challenge of matching recurring expenditure and income to reach a financially sustainable position for Midlothian Council. 2.5 The budget position for 2024/25 is balanced after reflecting recommendations made in this report and in items 8.5, 8.6 and 8.7 on today’s agenda. A budget gap of £20.888 million is projected through to 2028/29. Wednesday 14th February 2024 Report Contact: David Gladwin, 0131 271 3113 david.gladwin@midlothian.gov.uk Page 180 of 322
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3 3 Background / Main Body of Report 3.1 The aim of the MTFS is to provide a multiyear financial strategy aligned to the Council’s Strategic Plans. It seeks to support the Council in fulfilling its statutory duty to set a balanced budget and determine Council Tax levels annually with a key aspect being ongoing financial sustainability for the Council where recurring costs are matched by recurring income. 3.2 Council and officers are reminded of a recommendation of the external Auditor that “as a matter of urgency, officers and elected members need to work together to develop and agree the medium-term financial strategy and progress the Council’s transformation plans”. The auditor also observed that “The Council continues to demonstrate good financial management arrangements and control of the in-year budget, including understanding of the ongoing impact of Covid and other financial pressures”. 3.3 The approval of the MTFS in June 2019 was an important step-change and one that provided greater certainty for local communities and for employees. It allowed the Council to shift from having to consider savings every year at February Council meetings to planning for the medium term and in turn securing continued financial sustainability. 3.4 As a result, the approval of the MTFS and, on the recommendation of the BTSG, the subsequent approval of the 2020/21 & 2021/22 budgets ensured that the Council secured strategic budgets which invested in Midlothian to help it fulfil its potential to be a great place to grow. 3.5 The MTFS also provided a strong foundation on which the Council has been able to build its response to the financial impact of the COVID pandemic. It was against this backdrop that a corporate solution for 2022/23 was developed to support the delivery of the last budget determined by the previous Council. 3.6 The pandemic has accelerated financial challenges, exacerbated by very challenging inflationary pressures. There are some difficult choices ahead as Midlothian Council try to deliver services within available budget alongside sustained demographic growth from being the fastest growing local authority in Scotland. As a result, there is a significant funding gap that will impact on what services the Council can continue to deliver and how they are delivered. Reprioritisation and redesign is crucial to balancing the financial position. The approved budget for 2023/24 included some areas of efficiency and service reduction whilst recognising the importance of driving transformation outlined in the Transformation Blueprint as quickly as possible. 3.7 Council last considered the MTFS on 19th December 2023 where budget projections were discussed with particular focus on recent fiscal events and the emerging position on employers’ pension contributions. Page 181 of 322
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4 Statutory Responsibilities of Councillors 3.8 Full Council has a statutory duty, as set out in Section 93 of the Local Government Finance Act 1992 (as amended), to set Council Tax and a balanced budget for the following financial year by 11th March. 3.9 Members should note that legislation contains no specific requirement for a Council to set its budget at the same time as setting its Council Tax. This is because it is implicit in setting the Council Tax that the income it raises needs to be sufficient to fund the balance of expenditure not otherwise funded from government grant, fees, reserves etc. 3.10 It is therefore implicit in legislation that Council Tax income funds the gap between income and expenditure. Accordingly, in determining a budget, Council needs to identify the gap between expenditure and income and if no other action is taken to redress any shortfall Council Tax has to be set at a rate that will do so. As a consequence, Council Tax decisions should not normally be taken in advance of other budget decisions. 3.11 Members should also continue to note that in terms of Section 112 of the Local Government Finance Act 1992 (as amended) it is an offence for members to participate in any vote in respect of setting Council Tax where the member has unpaid Council Tax. Accordingly, at the Council meeting on 27th February members would be required to disclose if this section of the act applies to them and subsequently not vote on any question with respect to the matter. Scottish Government Funding - Local Government Finance Circular 8/2023 3.12 The Scottish Budget was announced on Tuesday 19th December 2023 with the provisional Local Government Finance Circular issued on Thursday 21st December. Consultation on the circular took place during January 2024 and informed the next stages of the parliamentary process. Stage 1 of the Budget Bill passed on Thursday 8th February, stage 2 is planned for Tuesday 20th February and stage 3 (final) on Tuesday 27th February. The Local Government Financial Order Debate is scheduled for Wednesday 28th February. Page 182 of 322
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5 Scottish position 3.13 Total cash funding for 2024/25 shown in Finance Circular 8/2023 is £13,883.109 million which is a £522.934 million increase on the published 2023/24 position in Finance Circular 3/2023. Table 1 below provides details. Table1: All Scotland Aggregated Funding Totals 2023/24 2024/25 Cash Change £m £m £m Revenue 12,651.734 13,245.100 593.366 Capital 708.441 638.009 (70.432) Total 13,360.175 13,883.109 522.934 Revenue Funding 3.14 To reach a meaningful comparison between financial years it is necessary to compare numbers on the same basis. New and recurring funding provided to Councils during 2023/24 should be reflected in the starting figure and new funding provided in 2024/25 should be excluded. Analysing figures in this manner shows a core cash cut to revenue funding of £62.7 million. 3.15 Converting cash values to real terms figures is not an exact science illustrated by various commentators concluding slightly differently. Nonetheless, what is clear to all is a significant real terms reduction in funding for Local Government in 2024/25 with no additional funding for pay and other inflation or for service demand pressures. 3.16 The Scottish Government have provided Councils with funding for 2024/25 to support new expenditure commitments as shown in table 2 below. Table 2: 2024/25 new commitments Commitments (national funding) £m Free School Meals 4.5 Real Living Wage (£12ph) in Adult Social Care for PVI 230.0 Personal and Nursing Care for Older People 11.5 Discretionary Housing Payments 6.8 Council Tax Freeze 147.3 Total 400.1 3.17 The Scottish Budget also made a change to Non Domestic Rates (NDR) poundage for Intermediate rated (levied on properties with a rateable value from £50,001 to £100,000) and higher rated (levied on properties with a rateable value over £100,000) properties. The poundage rate for both categories increased by 6.7%. Page 183 of 322
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6 Impact of Finance Circular 8/2023 on Midlothian Council 3.18 Finance Circular 8/2023 distributes £12,878.251 million revenue funding to local authorities with the remaining £366.849 million undistributed at this stage. Table 3 below shows Midlothian’s share of distributed amounts and estimated shares of undistributed. Table 3: Midlothian Council shares of Scottish Government Grant Scotland £m Midlothian £m Distributed funding General Revenue Funding 9,547.264 180.389 Non Domestic Rates 3,068.000 34.834 Ring-Fenced Grants 262.987 3.682 Total 12,878.251 218.905 Undistributed funding General Revenue Funding 366.849 5.476 Non Domestic Rates (NDR) 0 0 Ring-fenced Grants 0 0 Total 366.849 5.476 Total Scottish Government Funding 13,245.100 224.381 3.19 Table 3 excludes funding of £147.3 million that the Scottish Government have offered Councils to support a Council Tax freeze in 2024/25 (sections 3.24 – 3.27 below). 3.20 It was expected that the published results from the 2022 census would result in a refresh of some of the indicators used in Scottish Government Grant calculations with an improved relative position for Midlothian Council. This was indeed the case and table 4 below shows the distributional gains. Table 4: Impact of 2022 Census and updating of other indicators GAE Service Grouping (note 1) £m Education 1.550 Social Work - Children 0.241 Social Work - Adults 0.610 Roads and Transport (0.171) Leisure and Recreation 0.130 Cleansing and Environment 0.213 Other (0.002) Growth in Midlothian Share of National Funding 2.571 Note 1 - Individual GAE lines (80+) are recalculated each year based on updated indicators. Further distributional gains are expected in 2025/26 once full census results are incorporate into calculations. Page 184 of 322
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7 3.21 In 2023/24 Midlothian contributed £3.069m to the Floor which was set at 0.25% below the average level of Local Authority revenue grant change. The Deputy First Minister (DFM) has discretion to choose where to set the floor but tends to work within agreed parameters of 0.25% to 0.75% as agreed by CoSLA Leaders. Growing Councils, like Midlothian, have continued to illustrate how the floor works against increasing service demand. 3.22 The annual average change in grant for Councils in 2024/25 was a reduction of 0.54%. The DFM has provisionally set the floor at 0.5% thus ensuring that the maximum percentage reduction any Council can receive is 1.04%. In 2024/25 Midlothian contributes £2.445 million to the floor. A floor of 0.25%, as seen in the 2023/24 settlement, would have resulted in a £2.988m contribution and a floor of 0.75% would have resulted in a contribution of £2.065. Whilst movement on the floor brings financial benefit to Midlothian Council it remains the case that the vast majority of additional funding for a growing population is re- distributed. 3.23 Despite a cash terms cut of £62.7 million in revenue funding to Councils in 24/25 (section 3.14), upsides in distribution result and movement in the floor, Midlothian Council see a marginal cash increase in funding. Council Tax Freeze 3.24 On the 17th October 2023 the First Minister announced that Council Tax is to be frozen for financial year 2024/25. Discussions have taken place between Councils and Government on the precise details of this particularly on the level of financial support the Scottish Government will provide to Councils. The average Council Tax rise across Scotland in 2023/24 was 5.3%. Midlothian’s increased by 5%. 3.25 National funding of £147.3 million is available to support a Council Tax freeze. Funding is calculated to equate to a 5% increase (increased Council Tax yield less additional costs of the Council Tax Reduction Scheme). Indicative shares were provided on 11th January with Midlothian receiving £2.870 million. This value has now been confirmed. 3.26 Every 1% increase in Council Tax generates additional income of approximately £0.630 million thus 5% equates to £3.150 million. A 5% increase in Council Tax Reduction Scheme costs equates to approximately £0.260 million. The net impact is £2.890 million which is £0.020 million different from Scottish Government funding leading to a conclusion that funding provided for Midlothian equates to fractionally less than 5%. Page 185 of 322
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8 3.27 The Scottish Government have confirmed that Council Tax funding provided in 2024/25 for the purposes of freezing Council Tax will be baselined into General Revenue Grant in future years for those Councils which freeze Council Tax. Local Government Finance Settlement Conditions 3.28 There are some conditions attached to the settlement set out in Finance Circular 8/2023 and in accompanying and subsequent letters from the DFM and Scottish Government Cabinet Secretaries. The letter received from the DFM on 19th December 2023 is attached for information at Appendix C. Key areas to note are: • Integration Joint Boards - “The funding allocated to Integration Authorities for Free Personal and Nursing Care and adult social care pay in commissioned services should be additional and not substitutional to each council’s 2023-24 recurring budgets for adult social care services that are delegated.” And “Where there is evidence funding is not passed across to be used for the policy intent, the Scottish Government reserves the right to look at reclaiming this.” • Ring-Fencing – “Our offer to baseline £564.1m of education funding is conditional upon the agreement that, by the end of March 2024, the assurance framework being sought by the Cabinet Secretary for Education and Skills is in place and that the new joint Education Assurance Board has been established.” • Council Tax Freeze – “We will seek agreement of councils freezing their Council Tax in 2024-25.” • Funding for Teachers – “We will provide further detail related to the maintenance of teacher numbers…and the conditions around the £145.5 million allocated for this purpose once we have finalised the process that is currently underway relating to this year (2023/24) teacher numbers”. 3.29 On the 8th February 2024 The DFM provided Councils with further advice relating to the Scottish Government position on the school workforce advising that the Cabinet Secretary for Education and Skills will shortly be writing to confirm the position on funding for school workforce in 2023/24 and 2024/25. Budget Projections 3.30 The projected net cost of services for 2024/25 has been continually refined to reflect new or changing information particularly relating to inflationary forecasts. The current year’s budget as approved on 21st February 2023 was reliant on £5.259 million of one-off funding measures as presented in table 5 below. Page 186 of 322
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9 Table 5: Underlying budget gap for 2023/24 One-off Measures in 2023/24 Budget £m £m Utilisation of uncommitted earmarked reserves 1.166 Service Concession retrospection 4.093 Underlying Budget Gap for 2023/24 5.259 3.31 Early indicative budget projections for 2025/26 and beyond as shown in table 6 below are predicated on assumptions related to Scottish Government Grant, pay and other inflation and Council Tax growth. They also assume continuation of the current structure of public services in Scotland. Projections for 2025/26 through to 2028/29 have been updated from those presented to Council in December 2023 to reflect updated assumptions on pay and pension costs, demographic pressures, inflation and debt charges to support capital investment and will be developed in more detail for inclusion in the next update to Council on the MTFS. Detailed service budgets are shown at Appendix D. Table 6: Financial Outlook 2024/25 to 2028/29 – Analysis of Change 2024/25 £m 2025/26 £m 2026/27 £m 2027/28 £m 2028/29 £m Opening gap for the year 5.259 3.502 9.295 13.959 16.913 Budget Changes Staffing – pay inflation and salary progression 5.338 5.394 5.556 5.723 5.895 Lothian Pension Fund Employers contribution (3.888) 0.000 0.000 0.000 0.000 Contractual inflation and indexation 0.595 0.591 0.558 0.561 0.563 Loan Charges 1.025 4.713 2.347 0.369 0.811 Energy Inflation 1.357 0.209 0.215 0.220 0.225 Demographic Pressures 2.703 1.227 1.234 1.240 1.248 Non Domestic Rates 0.427 0.174 0.178 0.183 0.187 Digital Cloud-based solutions 0.638 0.150 0.150 0.150 0.150 Other 0.571 (0.642) (0.182) 0.022 0.167 Expenditure Increases 8.766 11.816 10.056 8.468 9.246 Council Tax – Property Growth (1.350) (1.628) (1.479) (1.553) (1.630) Council Tax – 5% increase 0.000 (3.363) (3.601) (3.861) (4.138) Non Domestic Rates income from empty premises (0.250) 0.000 0.000 0.000 0.000 Destination Hillend Net Income (0.259) (0.100) (0.100) (0.100) (0.100) Scottish Government Grant Consolidation of capital funding for pay (2.069) 0.000 0.000 0.000 0.000 Council Tax freeze funding (2.870) 0.000 0.000 0.000 0.000 Floor (0.600) 0.000 0.000 0.000 0.000 Other (1.145) 0.000 0.000 0.000 0.000 Gross Income Increases (8.543) (5.091) (5.180) (5.514) (5.868) Budget Gap to Address 5.482 10.227 14.171 16.913 20.291 Approved savings measures (1.980) (0.932) (0.212) 0.000 0.000 Budget Gap 3.502 9.295 13.959 16.913 20.291 Service Concessions (4.093) (4.093) (4.093) (4.091) 0.000 (Surplus) / Gap (0.591) 5.202 9.866 12.822 20.291 Recommendations Funding for MIJB pay (3%) 0.664 0.664 0.664 0.664 0.664 Council Tax Income on 2nd Homes (0.100) (0.100) (0.100) (0.100) (0.100) Page 187 of 322
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10 Foster Care Fees and allowance progression 0.146 0.146 0.146 0.146 0.146 Fees and Charges (0.119) (0.119) (0.119) (0.119) (0.119) Revised (Surplus) / Gap 0.000 5.793 10.457 13.413 20.882 3.32 Council last considered MTFS projections in December 2023. The report outlined a budget gap of £7.272 million in 2024/25 rising to £34.677 million by 2028/29 but did reference some potential material changes to these projections relating to Employers Pension Contributions. Projections include the additional impact in 2024/25 of savings approved in setting the 2023/24 budget on 21st February 2023 and are shown in table 7 below. Table 7: Impact in 2024/25 of approved savings 2024/25 £m Shift customer engagement online (0.065) Hybrid working – rationalisation of the office estate (0.167) Increase garden waste fee (0.026) Location and vehicle advertising (0.015) 1% DSM budget (0.207) Transformation of the school week (1.500) Total (1.980) 3.33 On 14th November 2023 a letter was received from the Scottish Public Pensions Agency (SPPA) indicating an increase in the employer contribution rate to 26% from 23%. This applies to all teachers employed by Councils that are members of the occupational pension scheme. The principal reason for the increase was described as the impact of the UK Government’s decision to reduce the Superannuation Contributions Adjusted for Past Experience (SCAPE) discount rate. This increased rate will result in a significant cost increase for Councils estimated at £1.777 million for Midlothian in 2024/25 but, in the Chief Secretary to the Treasury’s statement announcing the change, the UK Government committed to providing funding for increases and, for Scotland, the Barnett formula will apply. It is expected that funding will flow through the Local Government Finance Settlement but there is a risk that funding will only partially meet the additional cost thus adding to existing budget gaps. Figures in table 6 above assume that all of the £1.777 million additional cost in 2024/25 will be matched by funding. 3.34 Draft results from the triennial revaluation of Lothian Pension Fund (LPF) were received on 24th November 2023. These were presented to the Pension Committee on Tuesday 5th December 2023 as part of the Funding Strategy Statement for the next three years, prior to a period of consultation and a final decision in March 2024. The funding position of LPF as at 31st March 2023 is 157% (assets as a percentage of liabilities). At 31st March 2020 the funding position was 104%. Page 188 of 322
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11 3.35 The Funding Strategy Statement recommends suspension of the Contribution Stability Mechanism which currently allows for an annual 0.5% increase or decrease in employer percentage contributions. It also recommended contribution rates for financial years 2024/25 – 2026/27 reduce from the current rate of 22.2% to 17.6% for Midlothian Council for all three years. The cost reduction in 2024/25 amounts to £3.888 million and this is recurring. 3.36 Loan charges are projected to increase in 2024/25 from those seen in the 2023/24 budget but by a much smaller value than previously estimated. In-year 2023/24 loans costs are considerably lower than budget due to slower than planned capital expenditure, a consequential reduced need to borrow and continued higher rates of deposit return for cash balances. This situation will continue into 2024/25 but to a lesser extent but will become much more challenging into later years of the MTFS. The ongoing Capital Plan Prioritisation exercise is addressing this challenge. 3.37 Budget projections previously modelled a 3% increase in Council Tax as a planning assumption whilst recognising that elected members were very likely to increase rates more than 3% to allow setting of a balanced budget. Funding for a Council Tax freeze of approximately 5% is now included in budget projections. 3.38 Some additional cost pressures exist in 2024/25. They mainly relate to the impact inflation continues to have on energy prices and contracts with embedded inflationary clauses. In addition a continued move from on premise digital provision to cloud-based provision brings with it a cost change from capital to revenue expenditure. 3.39 Demographic pressures remain a significant funding challenge for a fast-growing Midlothian. Statutory school places and an associated pressure from young people with additional support needs is a key challenge with costs ranging from specific infrastructure expansion to day-to-day service provision costs. 3.40 Key MTFS assumptions for 2025/26 to 2028/29 include: • 3% for pay inflation (maximum affordability level for the Council with the assumption that if settled at a higher rate the cost will be funded by additional Scottish Government grant). • Council Tax Band D increase of 5% per annum. • Cash flat Scottish Government Grant. • Loan charges are only provided for approved projects. included in the General Services Capital Plan. • Additional Scottish Government policy commitments will be fully funded. • Flexibility will be afforded by the Scottish Government for the Council to transform services without stipulation or direction. Page 189 of 322
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12 Council Tax and National Non-Domestic Rates legislation 3.41 Devolution to Councils of Non-Domestic Rates Empty Property Relief (EPR) provides Councils with power to end or reduce existing discounts for buildings that have been empty for six months. Council on 19th December approved an amended policy allowing a surcharge of 100% where applicable. Additional income in 2024/25 is estimated to be £0.250 million. 3.42 A Scotland-wide consultation on Council Tax for second homes and empty properties closed on 11th July 2023. Legislation has now been passed to allow a doubling of the full rate of Council Tax on second homes and bring this into line with long-term empty premises. This will give rise to additional recurring income of approximately £0.100 million if Council choose to amend policy in line with recommendations presented at agenda item 8.6 on today’s agenda. Fees and Charges 3.43 A review of existing fees and charges is complete and is presented to Council today at agenda item 8.7. Approval of recommendations will result in the generation of additional income. Some of this will simply contribute to the achievement of existing budgeted income targets. In addition to this it is estimated that an additional £0.117 million will be collected. Achievement of this will be monitored closely during 2024/25. Transformation Blueprint 3.44 Officers continue to progress work embedded in the Transformation Blueprint approved by Council on 27th June 2023. Updates on work are being provided to BTSG as quickly as possible. Delivery of transformation in this way is the key action in delivering a balanced MTFS and in turn a financially sustainable Council. A further MTFS report will be presented to Council no later than 25th June 2024 to allow elected members to consider savings options. Midlothian Integration Joint Board (MIJB) 3.45 The Chief Officer and the Chief Financial Officer of MIJB are being kept updated on the Council’s budget position and have also shared the Board’s own challenging financial forecasts both in 2023/24 and looking forward. Scottish Government guidance on Council funding parameters for IJB’s is outlined at section 3.28 above. 3.46 The proposed budget to be delegated to MIJB is £60.866 million and is made up as shown in table 8 below. Page 190 of 322
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13 Table 8 - MIJB budget offer for 2024/25 £m 2023/24 Approved Funding 56.593 Additional 2023/24 funding for pay costs 0.794 Other minor adjustments (0.024) Revised 2023/24 funding 57.363 Recurring cost reduction from Employers Superannuation reduction (0.669) New Scottish Government Funding £12 per hour living wage payment for private, voluntary and independent commissioned providers 3.344 Uplift to Free Personal Nursing Rates 0.164 Total 60.202 Funding for 3% pay increase 0.664 Proposed offer to MIJB for 2024/25 60.866 4 Report Implications (Resource, Digital and Risk) 4.1 Resource Whilst this report deals with financial issues there are no financial implications arising directly from it. 4.2 Digital The adoption of digital solutions is a central strand of the MTFS. 4.3 Risk Within any financial projections there are inherent risks in making assumptions to arrive at figures and also a risk of costs changing significantly or new pressures emerging. The following key risks and issues are highlighted in the context of this report: • Uncertainly over the Scottish Government’s and Council’s financial position. • The economic outlook and decision by Scottish Government on future years grant settlements and grant distribution. • Impact of further UK Government budget announcements and any associated policy revision. • The risk to service provision and service users associated with a continued decline in available resources to fund services. • Future years Public Sector pay policy and current and future year pay award settlements. • Actual school rolls varying from those provided for in the budget. • The impact of the wider economic climate on range of factors including: inflation, interest rates, employment, tax and income levels and service demands. Page 191 of 322
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14 • Cost pressures, particularly demographic demand, exceeding budget estimates. • The reform of public services and the implications for the National Care Service (Scotland) Bill. • The impact of any changes to benefits. • The cost of implementing national policies varying from resources provided by Government. • Potential liabilities arising from historic child abuse. • The financial sustainability of MIJB. • The affordability of borrowing to support capital investment; and • Ability to continue to meet the expectations of communities within a period of fiscal constraint. Developing and updating a MTFS is key to support the mitigation of a number of these risks by setting out the key assumptions on which forward plans are based. The risk of not having a balanced MTFS is the potential elimination of available reserves, which in turn would severely limit the Council’s ability to deal with unforeseen or unplanned events and also the imposition of significant cuts at short notice with limited opportunity for consultation. Early agreement of the measures required to balance the 2025/26 budget is crucial. 4.4 Ensuring Equalities (if required a separate IIA must be completed) The MTFS together with the resource allocation measures which will support financial sustainability will, as far as the constraint on resources allow, be developed within the context of the Council’s priorities, ensuring as far as possible that resources are directed towards the key priorities of reducing inequalities in learning, health and economic circumstance outcomes. The MTFS will continue, as far as is possible, to reflect Midlothian Council’s commitment to the ethos of the Equality Act 2010 with careful consideration of the interests of the most vulnerable in our communities through the preparation of equality impact assessments. Individual EQIA’s will be published in respect of future policy savings measures and an overarching EQIA will be published alongside them. 4.5 Additional Report Implications (See Appendix A) See Appendix A Appendices Appendix A – Additional Report Implications Appendix B – Council Tax Bandings Appendix C – Letter from Deputy First Minister to CoSLA President (19 December 2023) Appendix D – Service Budgets Page 192 of 322
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15 APPENDIX A – Report Implications A.1 Key Priorities within the Single Midlothian Plan The MTFS facilitates decisions on how Council allocates and uses its available resources and as such has fundamental implications for delivery of the key priorities in the Single Midlothian Plan. It helps ensure that resources are available 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 MTFS provides for public engagement. In addition, there has been and will continue to be, engagement with the recognised Trade Unions on the Council’s financial position and the development of the MTFS. Page 193 of 322
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16 A.6 Impact on Performance and Outcomes The MTFS facilitates decisions on how the Council allocates and uses its available resources and as such has fundamental implications for service performance and outcomes. The financial consequences of the pandemic have impacted 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 An effective Strategic plan supported by a MTFS will support the prioritisation of resources to support prevention activities. A.8 Supporting Sustainable Development There are no direct sustainability issues arising from this report and work will take place to mitigate any sustainability issues which arise as a consequence of the MTFS. Page 194 of 322
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APPENDIX B MIDLOTHIAN COUNCIL Council Tax for Financial Year 2024/25 This statement gives details of the 2024/25 Council Tax payable in respect of a chargeable dwelling in each of the valuation bands specified in Section 74(2) of the Local Government Finance Act 1992 determined in accordance with Section 74(1) of the Act (as amended) Based on Band D Council Tax of £1,514.73. Range of Values Band D Council Band From £ To £ Proportion Tax £ A - 27,000 240/360 1,009.82 B 27,001 35,000 280/360 1,178.12 C 35,001 45,000 320/360 1,346.43 D 45,001 58,000 360/360 1,514.73 E 58,001 80,000 473/360 1,990.19 F 80,001 106,000 585/360 2,461.44 G 106,001 212,000 705/360 2,966.35 H 212,001 upward 882/360 3,711.09 Z - - - 841.52 Page 195 of 322
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Scottish Ministers, special advisers and the Permanent Secretary are covered by the terms of the Lobbying (Scotland) Act 2016. See www.lobbying.scot St Andrew’s House, Regent Road, Edinburgh EH1 3DG www.gov.scot Deputy First Minister and Cabinet Secretary for Finance Shona Robison MSP F/T: 0300 244 4000 E: scottish.ministers@gov.scot Councillor Morrison COSLA President Verity House 19 Haymarket Yards Edinburgh EH12 5BH Copy to: Councillor Steven Heddle The Leaders and Chief Executives of all Scottish local authorities ___ 19 December 2023 LOCAL GOVERNMENT SETTLEMENT 2024-25 Today I formally set out the Scottish Government’s proposed Budget for 2024-25 to the Scottish Parliament. Further to the budget statement I write now to confirm the details of the local government finance settlement for 2024-25. This draft budget prioritises supporting people through the cost-of-living crisis, investing in our frontline public services, and tackling the climate emergency head-on. It focuses on our three missions: • Community - Delivering efficient and effective public services • Equality - Tackling poverty and protecting people from harm • Opportunity - Building a fair, green and growing economy This Budget comes at a difficult fiscal period for Scotland. The economic conditions for the 2024-25 Scottish Budget are set to remain challenging as inflationary and pay pressures continue to impact on households, businesses and public bodies. The funding provided by the UK Government in the Autumn Statement fell far short of what we needed. Scotland needed more money for infrastructure, public services and fair pay deals. Instead, the Autumn Statement delivered a real terms reduction in the total block grant. The UK Government have not inflation-proofed their Capital Budget which is forecast to result in a 9.8% real terms cut in our UK capital funding over the medium term between 2023-24 and 2027-28. It is also important to recognise the positive change in the relationship between the Scottish Government and local government. On 30 June of this year we signed the Verity House Agreement which set out our vision for a more collaborative approach to delivering our shared priorities for the people of Scotland. We agreed to change the way we work together, building a relationship on mutual trust and respect; focusing on achievement of better Appendix C Page 197 of 322
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Scottish Ministers, special advisers and the Permanent Secretary are covered by the terms of the Lobbying (Scotland) Act 2016. See www.lobbying.scot St Andrew’s House, Regent Road, Edinburgh EH1 3DG www.gov.scot outcomes; and consulting and collaborating as early as possible in policy areas where local government has a key interest. We committed to regularly reviewing councils’ powers and funding, with the expectation that services will be delivered at a local level unless agreed otherwise; and to develop a framework for collecting and sharing evidence to ensure progress is maintained. We also undertook to agree a new Fiscal Framework governing how local authorities’ funding is allocated, reducing ring-fencing and giving greater control over budgets to meet local needs. On Thursday 14 December we jointly published an update on the development of this fiscal framework and our officials will continue to work together to develop this further. We also wish to work with COSLA through the development of that Fiscal Framework to ensure the distribution arrangements for the settlement continue to meet the needs of our remotest communities and changing population. In this regard, I am open to considering adjusting the funding floor percentage ahead of the Local Government Order and would welcome any views on this or other elements of distribution as part of the consultation to the order due to publish on Thursday 21 December.” As part of our discussions with you on the new fiscal framework we will also seek to increase discretion for local authorities to determine and set fees and charges locally. This will include continuing our joint work to agree next steps following the recently closed consultation on building warrant and verification fees, and a consultation on planning fees to launch in early 2024. We also intend to explore with local government options in respect of other fees and charges which are currently levied locally but set nationally, with a view to further empowering councils in these areas. The intention is that the indicative allocations to individual local authorities for 2024-25 will be published in a Local Government Finance Circular on Thursday 21 December. That circular will begin the statutory consultation period on the settlement. The total funding which the Scottish Government will make available to local government in 2024-25 through the settlement will be over £14 billion for the first time should all 32 councils agree to freeze council tax. This includes: • An additional £6m to support the expansion of Free School Meals; • An additional £11.5m to support the uprating of Free Personal and Nursing Care rates; • Additional funding of £230m to deliver a £12 per hour minimum pay settlement for adult social care workers in commissioned services via agreed contract uplifts; • An additional £6.8m for Discretionary Housing Payments • £145.5m to continue to maintain teachers and support staff (on which further detail will follow) as well as £242m to support teacher pay uplifts; This excludes funding for teacher pension contributions. As you are aware there will be an increase in the employer contribution rate in the Scottish Teachers’ Pension Scheme. The rate is set to increase from 23% to 26% from 1 April 2024, following the conclusion of the 2020 scheme valuation. The UK Government have publicly stated that the funding will be allocated to individual UK Government departments in Spring 2024. Scottish Ministers will make decisions on funding allocations once the UK Government funding position is clearer and the implications for consequentials are understood. Page 198 of 322
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Scottish Ministers, special advisers and the Permanent Secretary are covered by the terms of the Lobbying (Scotland) Act 2016. See www.lobbying.scot St Andrew’s House, Regent Road, Edinburgh EH1 3DG www.gov.scot Discussions with COSLA are also underway to finalise the costs of delivering the £12 per hour minimum pay commitment for PVI providers delivering children’s social care, bringing this in line with ELC and adult social care. Following discussions with COSLA, and approval through the formal financial governance process, our aim is to provide additional funding in 2024-25 for children’s social care. The funding allocated to Integration Authorities for Free Personal and Nursing Care and adult social care pay in commissioned services should be additional and not substitutional to each Council's 2023-24 recurring budgets for adult social care services that are delegated. This means that, when taken together, Local Authority adult social care budgets for allocation to Integration Authorities must be £241.5 million greater than 2023-24 recurring budgets to ensure funding from Health and Social Care Portfolio contributes to meeting outcomes in this area. Where there is evidence funding is not passed across to be used for the policy intent, the Scottish Government reserves the right to look at reclaiming this. Within the Verity House approach, Scottish Government and Local Government are committed to developing a joint overarching framework of outcomes, accountability and monitoring. It is envisaged that this framework will be finalised by spring 2024. In the meantime, this settlement includes almost £1 billion of funding which has been baselined into the General Revenue Grant, as part of our commitment under the Verity House Agreement to remove ring-fencing and increase funding flexibilities to local authorities, subject to agreeing the detail set out below. As I have advised the COSLA President, Vice President and Resources Spokesperson in our pre-budget engagement, the baselining exercise has required us to restate the fiscal position for prior years to meet Parliamentary expectation on budget presentation. In light of this restatement, I have asked my officials to provide the necessary data to ensure that the reconciliations are clearly understood by COSLA. The baseline proposals will deliver flexibilities across Social Care, Education, Social Justice, Net Zero and Justice. The detail of the individual lines is set out in the Annex to this letter. In return, our expectation is that Councils will continue to deliver all statutory and contractual commitments associated with the relevant funding. In relation to the funding for Social Care being baselined we expect the continued payment of the living wage to adult social care staff in commissioned services, with Councils benefitting from flexibility on how that is delivered locally. Alongside this, we expect that local government will continue in good faith to engage in a range of discussions about future policy direction. Given the joint work required to progress the delivery of the National Care Service, and the positive progress made so far, we expect this to continue, with every effort being made to reach agreement on outstanding matters in relation to arrangements for the chairs of local boards, direct funding and consistency of delegation. Our offer to baseline £564.1m of education funding is conditional upon the agreement that, by the end March 2024, the assurance framework being sought by the Cabinet Secretary for Education and Skills is in place and that the new joint Education Assurance Board has been Page 199 of 322
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Scottish Ministers, special advisers and the Permanent Secretary are covered by the terms of the Lobbying (Scotland) Act 2016. See www.lobbying.scot St Andrew’s House, Regent Road, Edinburgh EH1 3DG www.gov.scot established. In light of the £521.9 million of early learning and childcare (ELC) funding which is being baselined, I am also seeking your agreement to commit publicly to exploring options for a national indicative rate or range of rates for the ELC PVI sector to secure their financial sustainability in future years. Further discussion on flexibility on other Education funding lines will take place within the Education Assurance Board once it is operational. Our expectation is also that Councils will continue to honour the existing joint agreement on provision of free school meals on a universal basis to primary 4, 5 and special school pupils, building upon our earlier agreement with respect to universal provision to primary 1 to 3 pupils. This baselining is an initial step in the process of embedding the Verity House Agreement and is not a one-off event. I have emphasised the need for further movement in Budget 2025-26 to my Cabinet colleagues and over the coming months we will be identifying further lines which could be considered and put forward for baselining supported by the outcomes, accountability and monitoring framework to be agreed in the coming months. The Scottish Government is committed to working in partnership with Local Government to deliver a national freeze on Council Tax in 2024-25. We have engaged closely with you to discuss the parameters and principles for identifying funding to support this commitment and will continue discussions during the coming months to reach agreement. Consequently, we have set aside £144 million to fund a freeze in Council Tax across each of Scotland’s 32 local authorities. The funding earmarked is equivalent to a 5% increase in Council Tax nationally, taking into account the average rise to Council Tax in 2023-24, whilst recognising that inflationary pressures have eased in the last 12 months. The funding represents the Council Tax revenue that might have been raised (net revenue), and excludes the forgone revenue associated with the increased cost of the Council Tax Reduction scheme, and other deductions (gross revenue), which Council Tax rises would have caused. On this basis we will seek the agreement of councils to freezing their Council Tax in 2024-25, and as I have indicated this week, I remain open to continued dialogue as to how we might best achieve that. In respect of the statutory accounting framework and discussions on its robustness over the past number of years, I can also confirm that I have no plans in the immediate future to commence the Capital Accounting Review which was proposed in the Resources Spending Review in May 2022. Should all councils agree to freeze Council Tax, the 2024-25 Local Government Settlement of over £14 billion offers an increase equivalent to 6.0% in cash terms since the 2023-24 budget. It continues to provide local government with a funding settlement that is both fair and affordable, under the most challenging of circumstances. Critically, in the face of a worst-case scenario Autumn Statement and amongst all the difficult decisions in the Budget, we have increased the Local Government Settlement’s share of the discretionary budget. I acknowledge that this Budget cannot deliver the resources all our partners will want. I am under no illusions about the challenging fiscal environment we face across all of our public services, not only this year but in years to come. This Budget addresses key priorities, targets resources on low-income households and paves the way for future investment in this Page 200 of 322
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Scottish Ministers, special advisers and the Permanent Secretary are covered by the terms of the Lobbying (Scotland) Act 2016. See www.lobbying.scot St Andrew’s House, Regent Road, Edinburgh EH1 3DG www.gov.scot Parliament. It treats local authorities fairly and consistently with other portfolios. Scottish Ministers have had to take difficult decisions which have allowed us to prioritise funding and invest in the areas which have the greatest impact on the quality of life for the people who call Scotland home. I look forward to working with COSLA in the year ahead to deliver our shared priorities and to continue to fully implement the Verity House Agreement. SHONA ROBISON Page 201 of 322
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Scottish Ministers, special advisers and the Permanent Secretary are covered by the terms of the Lobbying (Scotland) Act 2016. See www.lobbying.scot St Andrew’s House, Regent Road, Edinburgh EH1 3DG www.gov.scot ANNEX A FUNDING BASELINED IN 2024-25 Funding Line Proposal (£m) Local Heat and Energy Efficient Strategies 2.4 Community Justice Partnership Funding 2.0 Living Wage 333.5 Blue Badge 0.72 Free Personal and Nursing Care 42.3 Former Housing Support Grant 1.0 Free period products in schools and public places 4.9 Early Learning and Childcare Specific Revenue Grant 521.9 Free School Meals 42.2 Total (£m) £950.92 Page 202 of 322
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Appendix D MIDLOTHIAN COUNCIL REVENUE BUDGET 2024/25 SUMMARY 2024/25 SERVICE FUNCTION £ Management and Members 1,701,791 People and Partnerships Childrens Services 20,171,442 Education 144,725,521 Midlothian Integration Joint Board 60,866,354 Non-delegated services - Community Safety And Welfare Rights 710,635 Place Place 43,290,284 Corporate Solutions 25,455,179 Joint Boards 581,659 Non Distributable Costs 898,936 GENERAL FUND SERVICES NET EXPENDITURE 298,401,801 Loans Charges 5,460,091 Investment Income (110,736) Centrally Held Budget Provisions (299,919) Service Concessions in-year saving (2,796,000) Allocations to Housing Revenue Account, Capital Account (5,433,237) NET EXPENDITURE 295,222,000 Impact on General Reserves 0 Utilisation of Reserves – Retrospective Service Concessions 4,093,000 Council Tax Income 64,686,000 Scottish Government Grant 226,443,000 TOTAL FUNDING 295,222,000 Page 203 of 322
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Midlothian Council Tuesday 27 February 2024 Item No 8.9 Bus Partnership Fund Grants Awarded, Fund freeze and Community Bus Fund Award Report by Kevin Anderson, Executive Director - Place Report for Decision 1 Recommendations It is recommended that Council: a. Agree to accept the award of £178,336.80 from the Bus Partnership Fund (BPF) for the purchase of 24 upgraded Real Time Passenger Information screens, in 2023/24. as part of a SEStran region-wide upgrade project. b. Note the announcement of a freeze to the BPF in 2024/25, c. Note the completion of the BPF funded Orbital routes study, appended to this report. d. Note work by officers to explore other funding opportunities to support delivery the appraised measures from the Orbital study. e. Note the need to form a strategic view of the sustainability of bus services in Midlothian and officers will scope out the work required. f. Approve acceptance of £101,000 Transport Scotland’s Community Bus Fund grant award and allocates the £101,000 grant award to purchase 13 real-time passenger information screens as part of a SEStran region-wide upgrade project. 2 Purpose of Report/Executive Summary The report provides detail of a BPF award of £178,336.80 for adding 24 Real Time Passenger Information screens to the Council estate, this year. This brings the total BPF awarded to Midlothian to £480,336.80. The report advises of a freeze to the BPF in 2024/25. Following the Scottish Budget announcement on 19 December 2023, Transport Scotland has notified all BPF recipients by letter on 16 January 2024 of the freeze. The report summarises the outcomes of the BPF funded ‘Orbital’ study (now complete) and confirms that officers will explore all possible external funding sources to deliver the appraised measures. Page 205 of 322
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2 The report notifies Council of the intention to develop a strategic view of approaches to sustaining local bus services in Midlothian. Engagement with bus operators will be through the Midlothian Bus Alliance. Finally, this report describes the source and rationale for the granting of £101,000 Community Bus Fund money to the Council. The report proposes that the grant be used to purchase 13 real time passenger information signs to replace old signs which will be obsolete in March 2024 when the controlling system is switched off. Date: 27 February 2024 Report Contact: Anna Herriman, Strategic Transport Planning Manager anna.herriman@midlothian.gov.uk Tel: 07385 461 272 Page 206 of 322
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3 Background 3.1 In 2020, the Scottish Government announced £500m support for targeted bus priority measures on local and trunk roads, to reduce the negative impacts of congestion on bus services and address the decline in bus patronage. The Bus Partnership Fund (BPF) was established, and two competitive funding rounds were held in June 2021 and February 2022. A further ‘Quick Wins’ funding round was available throughout 2023/24. The total BPF disbursed across Scotland so far is £26.9m. 3.2 The BPF was also designed to complement new powers in the Transport (Scotland) Act 2019, enabling local authorities to work in partnership with bus operators to develop and deliver more ambitious schemes that incorporate bus priority measures and lead to the establishment of Bus Service Improvement Partnerships (BSIP). Applications to the BPF needed to show evidence of partnership work towards a future BSIP. 3.3 The Bute House Agreement and Programme for Government 2022/23 included a commitment to establish a “Community Bus Fund (CBF) to support local transport authorities to improve local public transport in their areas. The fund will support local authorities to explore the full range of options set out in the Transport (Scotland) Act 2019, including municipal bus services." Main Report Bus Partnership Fund Freeze 3.4 Midlothian Council has been successful in attracting nearly £5M from BPF, first from Round 2 (reported to Council on 21 March 2023) and also, through a ‘Quick Wins’ round, detailed further within this report. The two funded sets of activity are as follows: BPF Funding Awards to Midlothian Council BPF Funding Round Funded activity Funding Amount £ Round 2, September 2022 Develop options for four bus routes, identified by the Midlothian Bus Alliance (MBA) 302,000.00 ‘Quick Wins’ round, January 2024 Install 24 x Real Time Passenger Information Signs at £7,430.70 each 178,336.80 Total BPF Funding Awarded 480,336.80 Page 207 of 322
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4 3.5 On 16 January 2024, Transport Scotland wrote to the Council confirming that the £0.5Bn value BPF will be frozen in financial year 2024/25, due to budgetary constraints. The letter received, at Appendix B, thanks the Council and partners for work to date, noting there is now “an opportunity to recast bus priority projects within the wider work to be undertaken to deliver on (Transport Scotland’s) vision for the Future of Public Transport”. Funding for the project activity summarised in table 1 is committed for the remainder of this current financial year. Real Time Passenger Information Screens and BPF ‘Quick Win’ Grant 3.6 The availability of Real Time Passenger Information (RTPI) plays a significant role in increasing bus patronage in both urban and rural areas, improving social inclusion, and improving accessibility to employment opportunities and healthcare. In the south east of Scotland, RTPI is available for the main operators, however operators, Local Authorities and SEStran all recognise the need to make real time information available to passengers across the region. 3.7 The City of Edinburgh Council, SEStran and contractor, Journeo, are jointly developing a new, common regional RTPI system to improve the information provided on the screens incorporating multiple transport operator (bus, rail & tram) data and scheduled information. This will replace the current RTPI signage and software system, which becomes obsolete on 31st March 2024, with no further software upgrades. Midlothian currently has 44 RTPI sign sites; and several of the old units are no longer functioning. 3.8 To upgrade the RTPI signs as quickly as possible, four signs have been replaced as part of a SEStran pilot roll-out, and a further 13 are proposed for upgrade through a Community Bus Fund grant. The BPF ‘Quick Wins’ award of £178,336.80, for 24 RTPI signs (inclusive of installation and maintenance) makes a substantial and time critical improvement to the RTPI network for bus passengers in Midlothian. The purchases, utilising the SEStran Framework, will be completed within 2023/24. Community Bus Fund 3.9 £5 million capital was distributed through the General Capital Grant for distribution to all local authorities on a per capita basis, based on levels of transport poverty to support the fund objective of improving local public transport in areas of rural deprivation. On this basis Midlothian Council was allocated a £101,000 share of the £5m total grant fund. 3.10 It is proposed that the £101,000 Community Bus Grant be allocated to the purchase of 13 RTPI signs at a cost of £96,603. The proposed RTPI will be delivered utilising SEStran Framework (CT2119). The contract owner is City of Edinburgh Council and Midlothian Council have direct call off access. The framework delivers 5-year turn-key solution with unit price being inclusive of installation, maintenance, and communications. 3.11 The combined CBF, BPF and funded SEStran RTPI works will leave a balance of 3 units to be replaced in future. Page 208 of 322
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5 Orbital Bus Study, and implications of the freeze on delivery of orbital measures 3.12 The award of £302,000 (reported to Council on 21 March 2023) carried out an appraisal study into bus priority measures on four east-west routes in Midlothian. The work was conducted by consultants Aecom and is now complete. The four routes studied are: - Corridor 1: A6094 Whitecraig to A6094 Eskbank; - Corridor 2: B6392 Eskbank to A772 Gilmerton Junction; - Corridor 3: A7 Gorebridge to A7 Danderhall; and - Corridor 4: A6094 Eskbank to A701 Straiton 3.13 The Executive Summary of the Orbital Study provided at Appendix B, provides details of ‘Options packages’ of appraised measures for each corridor that would help improve bus priority, and in turn, bus journey times. An early costing indicates the delivery of all measures on all four routes of just over £5.6M. This early estimate includes a 44% optimism bias applied to measures involving some construction activity. 3.14 Proposed measures that include a construction element are realistically now deliverable in the medium-term (3-7 years), so there is a possibility that developer contributions may provide a source of funding. Nevertheless, officers will continue to liaise closely with Transport Scotland to identify any new prospective funding streams. Officers will also explore opportunities to re-package Midlothian measures as part of wider projects should this lead to their delivery, and benefit for Midlothian passengers. 3.15 Appraised measures such as road lining or new signage may instead be deliverable in-house, as part of any future planned road works. In fact, this has already happened at Lothian Street, Bonnyrigg, where new double yellow lines have helped reduce the impact of uncontrolled parking on bus movement. Future sustainability of bus services in Midlothian 3.16 The sustainability of bus services across Midlothian communities remains an ongoing concern for communities, the Council, and bus operators. There is a need to develop a strategic view of existing and new approaches to sustaining local bus services across all settlements, and engagement with bus operators is key to this. Therefore, it is recommended that a study be progressed, with ongoing engagement with bus operators achieved through the continued role of the Midlothian Bus Alliance. Page 209 of 322
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6 4 Report Implications (Resource, Digital and Risk) 4.1 Resource The BPF Orbital Study and the purchase of RTPI signs are both fully externally funded through capital grants and therefore the delivery of this infrastructure has no net borrowing requirement to the Council. RTPI infrastructure will be installed by a framework contractor, therefore no additional internal resource is required. Funds to support a study into sustainability of bus services will be met from existing Place resources. 4.2 Digital The RTPI system is a standalone system, replacing a previous standalone system managed by SEStran. As such there is no crossover with internal digital services. 4.3 Risk Failure to conduct the RTPI screen upgrades will risk public criticism when current units become obsolete on 31st March 2024. Lack of future funding sources will impact on the speed of delivery of identified bus priority measures. 4.4 Ensuring Equalities (if required a separate IIA must be completed) All new RTPI assets offer enhanced clarity and are angled in such a position they can be easily seen by all, including wheelchair users. The Orbital Bus Study reviewed the equalities impact of all proposed packages of measures. 4.5 Additional Report Implications Appendices Appendix A – Additional Report Implications Appendix B – Midlothian Orbital Bus Corridors Study - Executive Summary Appendix C – Letter from Transport Scotland, 16 January 2024 Page 210 of 322
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7 APPENDIX A – Report Implications 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 The report does not directly impact on Delivering Best Value A.5 Involving Communities and Other Stakeholders In summer 2022 and spring 2023, engagement activity was delivered by Aecom, to obtain public and stakeholder feedback on proposed bus priority improvements identified through the bus corridors study. This, and previous reports to Council (21 March 2023) mean there is an awareness of funded activity in the wider public domain. Key stakeholders within the Midlothian Bus Alliance will be advised of the freeze. 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 Not applicable A.8 Supporting Sustainable Development Not applicable Page 211 of 322
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Midlothian Orbital Bus STAG Executive Summary Case for Change, Preliminary Appraisal and Detailed Appraisal Midlothian Council June 2023 Page 213 of 322
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Midlothian Orbital Bus Study Executive Summary FINAL 1 Executive Summary Introduction In May 2022 AECOM was commissioned by Midlothian Council, in partnership with the regional transport partnership for South East Scotland, SEStran, to conduct a study based on Scottish Transport Appraisal Guidance (STAG) for four bus corridors within Midlothian: • Corridor 1: A6094 Whitecraig to A6094 Eskbank; • Corridor 2: B6392 Eskbank to A772 Gilmerton Junction; • Corridor 3: A7 Gorebridge to A7 Danderhall; and • Corridor 4: A6094 Eskbank to A701 Straiton. Figure E-1: Study Corridors The corridors traverse many of Midlothian’s largest settlements, including Loanhead, Lasswade, Bonnyrigg, Eskbank, Dalkeith, Newtongrange and Gorebridge. The routes operate through several key junctions, including Eskbank Road Roundabout, Sheriffhall Roundabout, Eskbank Toll and Gilmerton Road Roundabout. The principal objective of the study, which is being funded through Transport Scotland’s Bus Partnership Fund (BPF), is to develop and appraise options to enhance bus priority on each of the corridors to reduce bus journey times and improve bus journey time variability for trips within Midlothian and to neighbouring local authorities. The study has been undertaken by means of a focussed and proportionate STAG appraisal (comprising Initial Appraisal: Case for Change, Preliminary Options Appraisal and Detailed Options Appraisal), building on the existing body of work from the initial funding application submitted by the Midlothian Bus Alliance to the BPF in 2021. Policy Context The study has taken cognisance of the latest transport and planning policy landscape. At the national level, there is a strong focus on promoting sustainable travel, including bus, as captured in the Second Strategic Transport Page 214 of 322
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Midlothian Orbital Bus Study Executive Summary FINAL 2 Projects Review (STPR2), the Fourth National Planning Framework (NPF4), the Infrastructure Investment Plan, and the Second National Transport Strategy (NTS2) with its emphasis on prioritising transport improvements based on application of the Sustainable Travel and Sustainable Investment Hierarchies. The Climate Change (Scotland) Act 2019 emphasises the use of sustainable travel through set targets such as: reductions in all greenhouse gases of 75% by 2030 and 90% by 2040, as well as a reduction in car kilometres of 20% by 2030. The bus network has an important role in helping to meet net zero targets and to lower emissions across the transport sector, which also supports the vision of the Cleaner Air for Scotland Strategy. Similar policies are reflected at the regional and local level, which promote the important role bus must play in achieving net zero targets, particularly given forecasted population growth across the region, particularly in Midlothian. The SEStran Regional Transport Strategy supports the transition to a sustainable, post-carbon transport system; facilitate healthier travel options; widen public transport connectivity and access across the region; and support safe, sustainable efficient movement of people, all of which align with the STPR2 Case for Change for Edinburgh and South East Scotland. The promotion and delivery of options that increase the use of sustainable transport options, including bus, would support the aspirations of a range of local policies, including the Midlothian Local Development Plan, Midlothian Active Travel Strategy, Midlothian Council Travel Plan, and the Single Midlothian Plan. Socio-Economic Context Midlothian is forecast to be the fastest growing local authority in Scotland based on population growth, which will bring associated challenges for the transport network. The key socio-economic trends in the area can be summarised as follows: • Between 2011 and 2020, the population of Midlothian increased by 12.0%. Over the same period, Scotland’s population rose by 3.2%1. • Midlothian is projected to have the highest percentage change in terms of population out of all the 32 council areas in Scotland between 2018 to 2028 (13.8%)2. • Within Midlothian 57.6% of the population are aged between 16 and 59, which is lower than the Scotland- wide proportion (59.6%)3. • Midlothian has a slightly higher than Scotland average Economically Active Population (EAP) at 71% compared to 69%. Around 56% of the population in Midlothian work full- or part-time.4 • Car / Van availability in Midlothian is higher than the Scottish average (75.2% compared to 69.5% across Scotland)5. • Mode of travel to work in Midlothian is car-dominated, with 63.5% of trips made by car, which is slightly higher than the Scotland average of 62.4%. Travel by car is particularly dominant in Gorebridge, where it represents 67.6% of journeys to work6. • Distance travelled to work varies across the study area with most people residing in Danderhall and Loanhead (86% and 81% respectively) working within 10km of their home, compared to Gorebridge where only 50% work within 10km7. • The Scottish Index of Multiple Deprivation (SIMD) shows areas of high deprivation in parts of Dalkeith, Mayfield, Bonnyrigg and Gorebridge. • General Health across the study area is in line with the Scottish average. Bonnyrigg has the highest levels of good health (84%) compared with the lowest of Danderhall (80%)8. 1 Scotland Census 2011 and Mid-2020 Estimate Population, National Records of Scotland 2 National Records of Scotland, available in Profile of Midlothian 2021, Midlothian Council at 3 2011 Scottish Government Census, https://www.scotlandscensus.gov.uk 4 2011 Scottish Government Census, https://www.scotlandscensus.gov.uk 5 2011 Scottish Government Census, https://www.scotlandscensus.gov.uk 6 2011 Scottish Government Census, https://www.scotlandscensus.gov.uk 7 2011 Scottish Government Census, https://www.scotlandscensus.gov.uk 8 2011 Scottish Government Census, https://www.scotlandscensus.gov.uk Page 215 of 322
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Midlothian Orbital Bus Study Executive Summary FINAL 3 Key Problems and Opportunities Problems and opportunities have been identified through a review of the initial BPF application and consideration of the extent to which problems and opportunities remain valid through updated data analysis; a review of available up-to-date information to identify any other problems and opportunities for consideration; and engagement with the public and key stakeholders, including Midlothian Council, SEStran and local bus operators. The following problem themes were identified in the study area; the relevant corridor is noted in brackets. • Congestion and delays, leading to longer journey times for buses and journey time variability issues (all corridors): The identification of sections of corridors experiencing congestion has been supported by Automatic Vehicle Location (AVL) data provided by bus operators. This demonstrated that buses experience congestion in the following areas: Dalkeith Town Centre; Eskbank Road Roundabout; Eskbank Toll; Bonnyrigg Toll; Lasswade Road / Wadingburn Road junction; and A701 at Straiton. This is not an extensive list and further locations have been reported through stakeholder and public engagement. • Right turn movement causing bus congestion (Corridor 1), including at Buccleuch Street / High Street in Dalkeith town centre. • Uncontrolled on-street parking causing longer bus journey times (Corridors 1 and 4): This leads to buses frequently having to stop when there is oncoming traffic before overtaking stationary vehicles. This has been identified as a problem at the A6094 Bonnyrigg Road in Eskbank, A6094 Lothian Street and A768 The Loan. • Constrained movements at Eskbank Toll due to roundabout geometry, making it difficult for buses to manoeuvre (Corridors 1 and 2): The constrained geometry of the six-armed roundabout can be difficult for large vehicles such as buses to manoeuvre as they typically require a larger portion of roundabout to be clear before manoeuvring, thus reducing gaps in traffic for buses to enter the roundabout. • Rapid growth and development in Midlothian adding pressure to the transport network (all corridors): Midlothian is forecast to be the fastest growing local authority in all of Scotland in terms of population percentage growth because of new development, particularly large-scale residential development, including on or close to the four corridors. • High proportion of travel to work by car, contributing to congestion and medium and high risk of transport poverty (all corridors): A higher than average proportion of people in Midlothian travel to their place of work by car compared to the national average. This contributes to a high number of vehicles on the road, leading to greater levels of congestion experienced by all vehicles, including buses. Transport Poverty is also an issue identified in Midlothian. This is based on a tool developed by Sustrans which defines transport poverty by car availability, household income and access to services by public transport. Risk associated with transport poverty can impact people’s ability to travel around and to access key services. • Bus access to A7 from Stobhill Road causing longer bus journey times (Corridor 3): Bus services can experience delay when turning right from Stobhill Road onto the A7. This junction is not signalised and difficulties arise as a result of the dominant flow of traffic on the A7. The key opportunities in the study area can be summarised as follows: • Improve east-west connectivity in Midlothian by public transport and encourage development of new bus services and increase public transport accessibility through improved punctuality and reduced journey time variability of bus services. Linked to this is an opportunity to install more bus stops, for example on the A7 and A772 / B6392 as new development is built out. • Contribute to National Transport Strategy objectives: The NTS2 sets out the Scottish Government’s vision for transport over the next twenty years, which is supported by four priorities to Reduce Inequalities, Take Climate Action, Help deliver Inclusive Economic Growth and Improve our Health and Wellbeing. BPF and options promoted through this study provides an opportunity to positively contribute towards delivering on these priorities in Midlothian. • Greater partnership working: The BPF and establishment of the Midlothian Bus Alliance to guide and inform the development of this study has enabled greater partnership working between bus operators and local authorities, which in turn should deliver bus priority improvements for the benefit of bus passengers and residents in Midlothian. Page 216 of 322
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Midlothian Orbital Bus Study Executive Summary FINAL 4 • Opportunities associated with other schemes / projects: As well as opportunities around encouraging modal shift, there are opportunities to ensure that any bus priority measures either form part of or are complementary to ongoing transport schemes being progressed in Midlothian. This includes: A701 Relief Road, part of the rationale for the new road is to relieve pressure from the existing A701 corridor and thus support road space reallocation; A7 Urbanisation Scheme, which proposes to implement segregated walking and cycling facilities along the A7 between Gilmerton Road Roundabout in the north and Newtongrange in the south; Sheriffhall Grade Separation, where there are proposals to upgrade the roundabout to be grade separated; and Dalkeith town centre regeneration, where Midlothian Council is updating the regeneration masterplan for Dalkeith, including the potential for pedestrianisation. Midlothian Council is also currently undertaking a review of current speed limits in the local authority area which may have benefits in creating safer environments for pedestrians and cyclists, including potential bus users. • Encourage modal shift, including targeting increased uptake of bus use in areas of Midlothian where significant new development is planned. • Quick Wins: There are opportunities to build on the benefits of Quick Win sites identified as part of the Edinburgh Corridors Bus Partnership Fund workstream. • Bus Priority Technology: Innovations have been made in bus priority at traffic signals, allowing buses to operate more efficiently. Technology is available which permits buses which are behind schedule to be given priority, providing an opportunity for a reduction in journey time variability. • Match in Kind: Through the BPF there is an expectation to leverage other bus service improvements as part of the wider partnership offer. Match in kind proposals will be developed as options continue to progress, through dialogue with partners, including local authorities, SEStran and bus operators. Transport Planning Objectives Based on the problems and opportunities identified across the study area, the aspirations of stakeholders, and taking cognisance of the latest transport policy landscape, Transport Planning Objectives (TPOs) have been developed to guide the development and assessment of options emerging from this study. An initial set of TPOs were developed at the Case for Change stage, which have subsequently been refined and modified at preliminary and detailed appraisal stages following discussions with stakeholders including Transport Scotland. For this study, the following TPO has been developed which focuses on journey time reduction, with sub-TPOs developed for each of the four corridors with specific targets as below: • TPO 1: Reduce bus journey times in the AM and PM peak periods across each study corridor on sections where interventions are proposed between 2022 and 2030. o TPO 1.1: Reduce bus journey times in the AM and PM peak periods by 30% on sections of Corridor 1 where interventions are proposed between 2022 and 2030. o TPO 1.2: Reduce bus journey times in the AM and PM peak periods by 40% on sections of Corridor 2 where interventions are proposed between 2022 and 2030. o TPO 1.3: Reduce bus journey times in the AM and PM peak periods by 50% on sections of Corridor 3 where interventions are proposed between 2022 and 2030. o TPO 1.4: Reduce bus journey times in the AM and PM peak periods by 30% on sections of Corridor 4 where interventions are proposed between 2022 and 2030. Options In line with STAG, a long list of options was generated ahead of the Preliminary Options Appraisal stage, based on a range of sources including a review of existing strategy / policy documents, study team option identification following site visits, and a review of options generated from stakeholder and public engagement. The latter included stakeholder workshops, a Study Tour, 1-2-1 calls with key stakeholders and use of the Placecheck Tool, which allowed members of the public to provide comments and thoughts on potential options. This process generated 111 options. The long list of options was then cleaned to remove duplicate options and options which were located outside of a study corridor and therefore not in scope for this study. Following the cleaning process 97 options remained across the four corridors. Page 217 of 322
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Midlothian Orbital Bus Study Executive Summary FINAL 5 Options were then sifted based on their performance against: • Study TPOs; • Deliverability criteria – feasibility, affordability and public acceptability; • Scope / eligibility for BPF funding; and • Position in the Sustainable Investment Hierarchy and Sustainable Transport Hierarchy. Following the sifting process 31 options remained across the four corridors. In addition to those options that were ‘sifted in’ for further appraisal, 40 options were identified for consideration as complementary measures. Sifted in options were subsequently grouped into four Option Packages, one for each study corridor. The four Option Packages contain a range of individual options, hereafter referred to as option measures. These measures consist of different categories, which have been developed for the purpose of presenting concise Option Package titles. Examples of the type of measures which sit under each category are presented in Table E-1 below, followed by the Option Package titles. Table E-1: Summary of Categories and Examples of Measures Category Examples of Measures New Infrastructure Refers to bus lanes which require carriageway widening Traffic Light Priority9 Refers to traffic light priority for buses at existing or new signals Road Space Reallocation Refers to bus gates or the reallocation of road space to support bus lanes Signing and Lining Refers to review of existing parking provision to address on-street parking; or modifying bus lanes operating times (new and existing bus lanes) to operate from 7am – 7pm as a minimum Redesign of Bus Stops Refers to removing laybys at bus stops, where appropriate, thus reducing time for buses to re-join the carriageway The final Option Packages taken forward to appraisal were as follows: • Option Package 1: Measures to improve bus priority on Corridor 1 A6094 Whitecraig to A6094 Eskbank, including Road Space Reallocation, Redesign of Bus Stops, Traffic Light Priority and Signing and Lining; • Option Package 2: Measures to improve bus priority on Corridor 2 B6392 Eskbank to A772 Gilmerton, including New Infrastructure, Signing and Lining and Redesign of Bus Stops; • Option Package 3: Measures to improve bus priority on Corridor 3 A7 Gorebridge to A7 Danderhall, including New Infrastructure, Traffic Light Priority, Signing and Lining and Redesign of Bus Stops; • Option Package 4: Measures to improve bus priority on Corridor 4 A6094 Eskbank to A701 Straiton, including Road Space Reallocation, Traffic Light Priority, Signing and Lining and Redesign of Bus Stops. Preliminary Options Appraisal The four Option Packages made up of sifted in option measures were appraised in line with the guidance for Preliminary Options Appraisal. As noted above, in addition to sifted in options, a further 40 options were identified as potential complementary measures. These were not appraised but consideration was given to what benefit (if any) they would provide each of the Option Packages. Complementary measures include options such as enforcing parking measures and bus lanes, supporting electric vehicle (EV) charging facilities, improving access to bus stops, adding pedestrian crossings and reviewing bus timetables. There is potential for some of these complementary measures to be identified and funded as match in kind measures. 9 Referred to as ‘ITS’ in early reporting. Reference to ‘ITS’ has been replaced with ‘Traffic Light Priority’ in the package titles, to allow more specificity. Page 218 of 322
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Midlothian Orbital Bus Study Executive Summary FINAL 6 Option Packages were appraised against the five STAG Criteria (Environment; Climate Change; Health, Safety & Wellbeing; Economy; and Equality & Accessibility) using a seven-point scoring scale (major benefit / moderate benefit / minor benefit / neutral / minor negative impact / moderate negative impact / major negative impact). Option Packages were also assessed against TPOs and Deliverability Criteria10. In addition, consideration has been given to the extent to which the Option Packages align with established policy objectives, including those at the local, regional and national level, and performance against Transport Scotland’s Policy Assessment Framework (PAF) objectives, which includes objectives related to health and wellbeing, climate change, inclusive economic growth and reducing inequalities. Interdependencies and potential alternatives between option measures (for example more than one option measure at the same location) and links with other schemes such as the A7 Urbanisation Scheme, Proposed Sheriffhall Upgrade, A701 Relief Road and Dalkeith Town Centre Regeneration, were also considered. Overall, all four Option Packages performed positively against the assessment criteria, with Option Packages 1, 3 and 4 performing more strongly due to greater evidence of congestion on those corridors. Following the Preliminary Appraisal all four Option Packages were taken forward for further consideration at Detailed Appraisal stage. Option Packages Following further option development and assessment work undertaken prior to Detailed Appraisal stage, including the development of junction models to assess the impacts of interventions and consideration of where options sit in relation to the Sustainable Investment Hierarchy (particularly where more than one option remained at the same location), several measures were sifted out. The final list of “Retained” measures which form part of the four Option Packages at detailed appraisal stage are presented in Figure E-2. Figure E-2: Location of Option Measures by Corridor 10 Deliverability criteria have been given a risk score (Low, Medium, High). Page 219 of 322
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Midlothian Orbital Bus Study Executive Summary FINAL 7 Detailed Options Appraisal The Detailed Appraisal stage involved further development of Option Packages, including high-level design work to enable cost estimates to be prepared and further assessment of deliverability, risks and impacts to be undertaken. A qualitative appraisal was undertaken, supported by quantitative analysis where appropriate. Like the Preliminary Appraisal, each Option Package was appraised against TPOs (one TPO remained, with specific targets per corridor) and STAG criteria using the seven-point assessment scale, and deliverability criteria (feasibility, affordability and public acceptability) which were assessed based on risk. In addition, each Option Package was assessed from a public spending perspective to inform the anticipated Cost to Government. A summary of the performance of the Options Packages against the appraisal criteria is presented below. Transport Planning Objective The four Option Packages were appraised against their respective sub-TPO, which focuses on journey time reduction. Option Packages 1, 3 and 4 are considered to have a moderate benefit against the TPO through implementation of bus priority measures targeted at the most congested areas of the network. Option Package 2 has scored as having a minor benefit against the TPO. Median speed relative to speed limit outputs suggest that congestion is identified less on this corridor compared to other corridors; as such, although measures will provide bus journey time benefits these are considered to be more limited compared to other option packages. Environment The Option Packages were assessed according to the impacts they might have on Biodiversity and Habitats; Geology and Soils; Land Use; Water, Drainage and Flooding; Air Quality; Historic Environment; Landscape; and Noise and Vibration, using a largely map-based, qualitative approach. None of the measures included as part of Option Package 1 would be anticipated to require additional land take. Whilst the introduction of bus gates would require road space reallocation this would be expected to involve redesigning the existing road carriageway and so would not take from natural areas. The overall impact of Option Package 1 on biodiversity and habitats; geology and soils; land use; water, drainage and flooding; landscape; historic environment would be expected to be neutral / negligible. Option Package 1 would be expected to have a minor benefit to air quality owing to provision of traffic light priority, which would improve the reliability of bus services, and through implementation of bus gates and measures to address on street parking. Option Package 1 would not involve any new infrastructure and it is considered the impact against noise and vibration during operation would be neutral / negligible. Option Package 2 has the potential to have an overall minor negative impact against biodiversity and habitats given potential impacts of bus lane options. The overall impact of Option Package 2 on geology and soils; land use; water, drainage and flooding; and noise and vibration would be expected to be neutral. Whilst Option Package 2 would involve the introduction of new infrastructure to the landscape through new bus lanes, it is considered that the changes would be of such a scale and similar in characteristic to the existing road networks. Furthermore, at this stage, the overall impact on landscape would also be expected to be neutral / negligible. Similarly, given the requirement to widen the existing road network to accommodate the proposed bus lanes, there would be potential for both direct and indirect adverse effects on heritage assets in the study area, however at this stage the overall impact is assessed as neutral / negligible. Option Package 2 would be expected to encourage more people to travel by bus through provision of enhancements to reduce bus journey times and improved reliability, thus leading to fewer car trips, with an associated minor benefit on local air quality. Option Package 3 would be anticipated to perform similar to Option Package 2, achieving a neutral / negligible impact across many of the Environmental sub-criteria. It has the potential for a minor negative impact on biodiversity and habitats because of measures to provide a bus lane on the A7 northbound approach to Gilmerton Road Roundabout and northbound approach to Melville Dykes Roundabout. It is possible that new signals at A7 / Stobhill Road may lead to more frequent sounds associated with vehicles stopping and starting at the signals on the A7 and thus lead to some localised minor negative impact against Noise and Vibration. Like Option Package 2, it would be expected that more people would be encouraged to travel by bus through provision of enhancements to reduce bus journey times and improve reliability, thus leading to fewer car trips, with an associated minor benefit on local air quality. Given that works are restricted to changes to the current road network and located within the existing carriageway, Option Package 4 would be anticipated to perform in a similar manner to Option Package 1, achieving a neutral / negligible impact across many of the Environmental sub-criteria. It would be expected that Page 220 of 322
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Midlothian Orbital Bus Study Executive Summary FINAL 8 more people would be encouraged to travel by bus through provision of enhancements to reduce bus journey times and improve reliability, thus leading to fewer car trips, with an associated minor benefit on local air quality. Climate Change Greenhouse Gas Emissions In the short-term, greenhouse gas emissions would occur due to construction activities undertaken to deliver each of the Option Packages, including indirect emissions from the manufacture and transportation of materials and emissions from fuel combusted by construction plant and vehicles, where new infrastructure is required, for example carriageway widening. As the measures do not promote car movements and are anticipated to reduce congestion experienced by buses, each of the option packages would be considered to have a moderate benefit against net zero targets and greenhouse gas emissions; with potential for Option Packages which include bus lanes (Option Packages 2, 3 and 4) to have a larger benefit. Further work would be required to understand what impact the reallocation of road space to provide bus lanes associated with Option Package 4 would have on non-bus traffic. Vulnerability to the Effects of Climate Change Measures included within the Option Packages have the potential more generally to be vulnerable to the effects of climate change impacting the road network. However, new infrastructure would be designed to adapt to the potential effects of climate change and reduce vulnerability. The overall impact would be expected to be neutral for all Option Packages. Potential to Adapt to the Effects of Climate Change Given the nature of the measures, each Option Package would be considered to have a neutral impact against the potential to adapt to the effects of climate change. Economy Each of the Option Packages would be anticipated to provide benefits against the Transport Economic Efficiency (TEE) criteria by introducing bus priority that would reduce bus journey times for users and improve bus journey time reliability. Option Packages 1, 3 and 4 are considered to have a moderate benefit against this criterion and Option Package 2 is considered to have a minor benefit. A cost-benefit analysis based on the potential minimum journey time savings estimated for each Option Package is captured under Section 3.8 Cost to Government in the Detailed Appraisal report. Wider Economic Impacts refer to any economic impacts which are additional to transport user benefits; a qualitative appraisal against the criteria has been undertaken. Each of the Option Packages provide bus priority, helping to reduce bus journey times and reduce the journey time variability of services. By reducing congestion, the Option Packages provide economic benefits by reducing journey times and journey time variability, allowing bus users to better plan journeys. Journey times to a range of opportunities and services, including employment, education, healthcare and leisure would be reduced, thus supporting the local economy. Access to employment is particularly important and there are employment sites across the study area, such as Dalkeith town centre and Straiton Retail Park, as well as locations close to the study corridors such as at Easter Bush. There are also large employment sites in City of Edinburgh. There is potential for areas with higher levels of unemployment to benefit from the proposed measures, particularly if access to employment sites is improved. Overall, Option Packages 1, 3 and 4 are considered to have a moderate positive impact against this criterion, with Option Package 2 considered to provide a minor benefit owing to less congestion identified on the corridor, thus reducing the benefit. Health, Safety and Wellbeing Accidents Option Packages 2, 3 and 4 propose dedicated lanes for buses, which may encourage increased bus service levels along the corridors and therefore attract more users to travel by bus, owing to the potential for reduced journey times and reduced journey time variability. Bus lanes remove potential conflict between buses and other road users; which would be expected to have a positive impact on road safety and reduce the number of accidents occurring, including on approaches to junctions and through junctions. The overall benefit is considered to be moderate against these Option Packages. Page 221 of 322
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Midlothian Orbital Bus Study Executive Summary FINAL 9 Option Package 1 includes provision of traffic light priority at existing signals in Dalkeith town centre. This has the potential to deliver reduced journey times and reduced journey time variability, which in turn would be anticipated to encourage people to use bus services along this route and therefore have a minor beneficial impact on road safety and accidents. Bus gates would also be considered to have a benefit against this criterion by reducing the likelihood of collision between pedestrians / cyclists and motorised traffic. Security The bus priority measures for each of the four Option Packages include the redesign of bus stops, potentially including better lighting, which may improve the security of passengers waiting for buses, while measures which attract increased bus use could also increase passive surveillance. It should be noted however that such measures would likely be delivered through match in kind investment. Overall, the impacts of the Option Packages against the criterion have been assessed to be neutral. Health Outcomes Although none of the specific measures captured under the Option Packages promote improved health, they would be likely to provide indirect benefits, largely as a result of modal shift to sustainable modes of transport and the potential to make communities more attractive, providing benefits against Health Outcomes. For each Option Package it is considered that the overall benefit would be neutral. Access to Health and Wellbeing Infrastructure The provision of bus gates, traffic light priority and new bus lanes is anticipated to provide improved journey times and reduced bus journey time variability and thus each of the Option Packages would provide a minor benefit with regards to improving Access to Health and Wellbeing Infrastructure such as GP surgeries and health centres. Visual Amenity Overall, it is considered that each of the Option Packages would have a neutral impact against Visual Amenity. None of the Option Packages require significant new infrastructure, thus limiting their impact on visual amenity. New lanes / carriageway widening for bus lanes (Option Packages 2 and 3) have the potential to have the greatest impact, albeit adverse impacts would be minimal given they would be located next to existing carriageways. Equality and Accessibility Public Transport Network Coverage The Option Packages would not directly impact on Public Transport Network Coverage, and therefore overall impacts of each of the options against this criterion has been assessed to be neutral. Active Travel Network Coverage It is anticipated that the four Option Packages would have a neutral impact against the criteria to increase Active Travel Network Coverage, given the focus of measures in each of the Option Packages is on delivering enhanced bus priority. Comparative Access by People Group All four Option Packages would be likely to have minor positive impacts in terms of Comparative Access by People Group by improving transport inclusivity for commonly disadvantaged groups and those in more restricted user groups in particular, for example, those without access to a private vehicle for travel. Comparative Access by Geographical Location Areas of deprivation have been identified in parts of Dalkeith, Bonnyrigg, Loanhead, Mayfield and Gorebridge, which includes parts of Corridors 1, 3 and 4. Bus priority measures proposed on these corridors have the potential to benefit people residing in the most deprived areas the most, particularly measures such as bus lanes which could provide the greatest benefits in terms of bus journey times and reliability owing to provision of near free flow conditions. Measures that are not located in or close to the most deprived data zones still have a potential to benefit people residing in these areas by reducing journey times and reducing bus journey time variability. All Option Packages therefore have potential to have a minor benefit in terms of Comparative Access by Geographical Location. Affordability As none of the Option Packages directly propose changes to the affordability of buses, the overall impact on Affordability has been assessed to be neutral. Page 222 of 322
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Midlothian Orbital Bus Study Executive Summary FINAL 10 Deliverability Feasibility All Option Packages are considered to be technically feasible as measures proposed represent ‘tried and tested’ approaches to delivering bus priority. It is noted however that specific measures would require further detailed investigation and feasibility assessment prior to implementation; for example, to identify any utilities or landowner issues which may impact option feasibility, undertaking a road safety audit to confirm suitability of proposed sites to remove bus laybys and to understand the impact of road space reallocation measures (i.e. bus lanes and bus gates) on wider traffic; reallocation measures in particular have the potential to impact the operational feasibility of options. Accordingly, at this stage of the appraisal, Option Packages 1 and 4 are considered to present a medium risk in terms of their feasibility rating and Option Packages 2 and 3 are considered to present a low risk. It is also noted that ongoing projects in Midlothian have the potential to impact on the feasibility of the Option Packages considered in this study, including A7 Urbanisation, A701 Relief Road, Dalkeith Town Centre Regeneration and the proposed upgrade at Sheriffhall. These projects will continue to be taken into consideration going forward through continued engagement with relevant teams within Midlothian Council. Midlothian Council is also currently undertaking a review of speed limits throughout the local authority, which could lead to changes in speed limits on some roads. Affordability Option Packages 1 and 4 would be expected to present an overall low risk in terms of Affordability, although there are likely to also be costs associated with Traffic Regulation Orders (TROs) and consultation required for road space reallocation options. Option Packages 2 and 3 would be expected to have an overall medium risk in terms of Affordability, attributable to the bus lane measures requiring carriageway widening, and uncertainties related to utilities and land ownership, together with the requirement for new traffic signals at A7 / Stobhill Road and the higher number of bus stops for potential redesign / removal as part of Option Package 4. Public Acceptability Public Acceptability has primarily been informed by an online survey (which was live for a four week period in April / early May) and a drop in session held in Dalkeith in May 2023. In broad terms, each of the Option Packages are considered to present a low risk in terms of public acceptability noting that respondents supported the options presented owing to their positive impact on reducing bus journey times and journey time variability. There are however some specific measures within the packages which present a higher risk. This is primarily in relation to road space reallocation options (bus gates in Option Package 1 and bus lanes in Option Package 4), which could potentially have a negative impact on non-bus road users; impacts which would need further detailed assessment through modelling at a later stage. A summary of scores against STAG Sub-Criteria at Detailed Appraisal stage is presented below. Table E-2: Summary of STAG Scoring (Detailed Appraisal) STAG Criteria Option Package 1 Option Package 2 Option Package 3 Option Package 4 Environment Biodiversity and Habitats 0 - - 0 Geology and Soils 0 0 0 0 Land Use (including Agriculture and Forestry) 0 0 0 0 Water, Drainage and Flooding 0 0 0 0 Air Quality + + + + Historic Environment 0 0 0 0 Landscape 0 0 0 0 Noise and Vibration 0 0 0 0 Climate Change Greenhouse Gas Emissions + + + + + + + + Vulnerability to the Effects of Climate Change 0 0 0 0 Potential to Adapt to the Effects of Climate Change 0 0 0 0 Economy Transport Economic Efficiency ++ + ++ ++ Page 223 of 322
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Midlothian Orbital Bus Study Executive Summary FINAL 11 Wider Economic Impacts ++ + ++ ++ Health, Safety and Wellbeing Accidents + + + + + + + Security 0 0 0 0 Health Outcomes 0 0 0 0 Access to Health and Wellbeing Infrastructure + + + + Visual Amenity 0 0 0 0 Equality and Accessibility Public Transport Network Coverage 0 0 0 0 Active Travel Network Coverage 0 0 0 0 Comparative Access by People Group + + + + Comparative Access by Geographic Location + + + + Affordability 0 0 0 0 Table E-3: Summary of Deliverability Criteria Scores (Detailed Appraisal) STAG Criteria Option Package 1 Option Package 2 Option Package 3 Option Package 4 Deliverability Criteria Feasibility Medium Low Low Medium Affordability Low Medium Medium Low Public Acceptability Medium Low Low Medium Statutory Impact Assessments Consideration has been given to the performance of each Option Package in terms of the Statutory Impact Assessment criteria, including completion of an EqIA, and all four Option Packages would be expected to have an overall positive impact. Bus priority measures could provide benefits for groups with protected characteristics who depend on public transport for their journeys and are less likely to have access to a car. This includes children, young people, women, disabled people and older people, people from ethnic minority groups and people at risk of deprivation. More reliable and quicker public transport options could help to improve connectivity to key services such as employment, education, healthcare and shopping for these groups. Cost to Government The estimated capital costs associated with each Option Package is presented within Table E-4. Table E-4: Indicative Cost to Government11,12 Cost Element Option Package 1 Option Package 2 Option Package 3 Option Package 4 Construction Sub-Total £130,700.00 £938,700.00 £676,400.00 £579,700.00 Optimism Bias (44%) £57,500.00 £412,900.00 £297,700.00 £255,100.00 Construction Sub-Total (Inclusive of Optimism Bias) £188,200.00 £1,351,600.00 £974,100.00 £834,800.00 Design (10%) £18,900.00 £135,200.00 £127,700.00 £83,500.00 11 Costs exclude further investigation / survey, land purchase, relocation of utilities, structures, retaining walls, enhanced drainage, path lighting etc. 12 Note that cost estimates for signal options (bus priority at Dalkeith town centre; Lasswade Road / Wadingburn Road; A701 / Straiton Park & Ride; and A701 / Straiton Park Way signals) have been provided by Midlothian Council’s signal maintenance contractor do not include a breakdown of costs. Similarly, a breakdown of costs has not been provided for new signals at A7 / Stobhill Road junction. Therefore, two sub-totals have been provided; one for non-signal options, which include a breakdown of costs (see row “Sub-Total (excluding signal options)” and sub-total for signal options (see row “Sub-Total (Signal options only)”. Note that cost estimates have been rounded for the purpose of this exercise. Page 224 of 322
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Midlothian Orbital Bus Study Executive Summary FINAL 12 Cost Element Option Package 1 Option Package 2 Option Package 3 Option Package 4 Placemaking and Landscaping (5%) £9,400.00 £67,500.00 £48,700.00 £41,600.00 Site Supervision and Project Management (10%) £18,900.00 £135,200.00 £97,400.00 £83,500.00 Traffic Management (10%) £18,900.00 £135,200.00 £97,400.00 £83,500.00 Monitoring and Evaluation (5%) £9,400.00 £67,500.00 £48,700.00 £41,700.00 Protection of existing utilities (10%) £18,900.00 £135,200.00 £97,400.00 £83,500.00 Sub-Total (excluding signal options): £282,600.00 £2,027,400.00 £1,491,400.00 £1,252,100.00 Sub-Total (Signal options only) £160,000.00 N/A £330,000.00 £120,000.00 TOTAL (all options, including signals) £442,600.00 £2,027,400.00 £1,821,400.00 £1,372,100.00 The total cost estimate across the four Option Packages is £5,663,500.00. A Cost Benefit Analysis has been undertaken focused on the monetised bus journey time benefits estimated for each Option Package. As part of this journey time impact, demand calculations and benefit cost ratio calculations have been undertaken. The following BCRs have been generated for each Option Package: • Option Package 1: 15.60 • Option Package 2: 0.64 • Option Package 3: 2.33 • Option Package 4: 13.93 It is noted that Option Packages 1 and 4 generate very positive BCRs. This is in part due to disbenefits to other road users not being calculated. It is also in part owing to the lower cost estimate associated with the packages; this is due to measures included in these packages primarily relating to signing and lining, whereas Option Packages 2 and 3 include more costly options related to carriageway widening for bus priority lanes. Full details of the process undertaken to generate BCRs is summarised in the Detailed Options Appraisal report. Risk and Uncertainty Consideration of risk and uncertainty is essential throughout project development. The risk management process involves inputs from all appropriate stakeholders, and it is recommended that Transport Scotland, SEStran and Midlothian Council, together with bus operators and other key stakeholders as appropriate, are involved in discussions. At this stage it is uncertain what legal and planning issues may arise in relation to land ownership, specifically where planning approval or powers are required. This particularly applies to Option Packages 2 and 3 which include measures to widen the existing carriageway to provide bus lanes. It is noted that land ownership has not been investigated as part of this study. Detailed ground investigation would require to be undertaken to establish any specific risks prior to the preferred Option Package/s being progressed, particularly where land take / carriageway widening is required. Potential risks and uncertainties have also been identified in terms of levels of financial support and stakeholder support to progress interventions beyond this STAG stage. Monitoring and Evaluation For the purposes of this study, base case information would be developed and agreed with Midlothian Council, Transport Scotland, SEStran, bus operators and other partners, as appropriate, during the period immediately prior to completion / operation of the Option Package(s). It is not possible at this stage to be specific about the nature of the process evaluation. It is likely that there would be a need to provide data which would measure changes in the baseline parameters, such as bus passenger Page 225 of 322
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Midlothian Orbital Bus Study Executive Summary FINAL 13 counts, mode choice surveys and importantly bus journey time data (available through AVL data), together with junction performance where these are impacted by the measures, and safety and environmental parameters. Before the monitoring programme is agreed upon, consideration must be given to the actual availability of data, practicalities from collecting new data, its format, whether it will properly reflect the indicators proposed and cost of obtaining it. Indicators and targets should be subject to regular reviews to ensure that they continue to properly reflect the performance of the project against its objectives, throughout the monitoring period. Conclusions and Recommendations Following a process of option development, review and appraisal, four Option Packages were taken forward for detailed appraisal against the study TPO, STAG criteria and deliverability criteria. Overall, the assessment has identified that each of the four Option Packages would be anticipated to have positive impacts against the assessment criteria and address the study TPO by delivering bus priority measures that would reduce bus journey times, and in turn reduce bus journey time variability, particularly during the peak morning and evening travel periods. While several the bus priority measures within the Option Packages would be suitable for early delivery, such as traffic signal priority measures, it should be noted that further assessment is required to confirm the feasibility of specific measures. For example, for those measures which include road space reallocation, modelling would be required to understand their impact on wider traffic, road safety audits would be required to confirm suitability of bus laybys for removal, while for measures to address on street parking, these will require TROs and further consultation. Page 226 of 322
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www.transport.gov.scot Bus, Accessibility & Active Travel Bettina Sizeland E:Bettina.Sizeland@transport.gov.scot E: buspartnershipfund@transport.gov.scot Derek Oliver Chief Officer Place Midlothian Council By e-mail Derek.Oliver@midlothian.gov.uk Your ref: Our ref: BPF013 Date: 16 January 2024 Dear Derek, Bus Partnership Fund Update I am writing to you on behalf of your Bus Partnership Fund (BPF) to provide you with an update on the BPF following the recent budget announcement. We have provided £26.9 million of funding for bus priority through the BPF through two rounds of funding, the first in June 2021 and subsequent round in February 2022. Through the Partnership working undertaken by yourselves in Local Authorities, in collaboration with Bus Operators and others, this has delivered bus priority improvements on the ground and robust business cases across a number of Partnership areas. However, I am writing to inform you that given the budgetary constraints faced the BPF will be paused for 2024-25. Please be assured that fund spend will proceed as planned for 2023-24 to complete the delivery of the bus infrastructure underway for the benefit of passengers and operators and conclude business case work planned that could inform future investment. This pausing presents an opportunity to recast bus priority projects within the wider work to be undertaken to deliver on our vision for the Future of Public Transport. This builds on the Fair Fares Review work that is planned to be published in early 2024. In this context we will continue to make the case for bus priority projects which could be supported as part of an integrated approach to bus service improvement. This will be assisted by the robust business cases produced through the BPF. As you will be aware this already highlights the opportunities for an integrated place-based approach and in many Partnership areas considers the needs of active travel and bus together to meet shared outcomes. We have welcomed the Partnership working that is on-going to support the bus priority work undertaken through the BPF to date. In many areas these have provided a valuable forum for discussion and work beyond BPF. We trust that these will continue for the benefit of those involved, and ultimately passengers. Page 227 of 322
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www.transport.gov.scot As you are aware the Scottish Government encourages all local transport authorities to consider the full range of tools available to them under the 2019 Act, to ensure that everyone has accessible public transport regardless of where they are in Scotland and we look forward to the continued Partnership working demonstrated through the BPF to support you in this. Finally, I would like to extend my thanks to you, your fellow officers and the wider Partnership for the work and dedication that has gone into the BPF supported projects and business cases. The work undertaken will be valuable in informing future investment decisions. Yours sincerely, Bettina Sizeland Director, Bus, Accessibility and Active Travel c.c. Anna Herriman, Keith Fisken, Craig Cameron, Amy Phillips Page 228 of 322
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Midlothian Council Tuesday 27 February 2024 Item No 8.10 ‘Midlothian on the Move’ Draft Strategy for Consultation and new bids to the Active Travel Infrastructure Fund Report by Kevin Anderson, Executive Director- Place Report for Decision 1 Recommendations It is recommended that Council: a. Agrees to public consultation on the draft ‘Midlothian on the Move’ Strategy (Active Travel Strategy - ATS) 2024-34, commencing in March 2024. b. Agrees to receive a further report in summer 2024 presenting the Council with the final ATS for adoption. c. Agrees to extend the validity of the previous ATS to 2024 providing coverage for ongoing projects, until the new ATS is adopted, d. Notes that due to short timescales, four bids totalling £899,000 were submitted on 2 February 2024 to the Active Travel Infrastructure Fund (ATIF) for 100% of the costs of school route improvements on Morris Street, Nivens Knowe/A701, Carlops Road and Sherwood Crescent. e. Agree the proposals for the four projects as set out in paragraph 3.19. f. Agrees expenditure of up to £899,000 in the General Services Capital Plan, subject to successful ATIF grant award(s) by Transport Scotland, to be fully phased in 2024/25. 2 Purpose of Report/Executive Summary 2.1 This report seeks approval for the next steps in finalising a new Active Travel Strategy (ATS). It is needed to secure external funding for the projects within the new ATS. Approval is also sought to extend the end date of the previous ATS, giving interim coverage to its projects under development. 2.2 The report also details the submission of four bids to the new Active Travel Infrastructure Fund (ATIF) on 2 February, for which approvals to accept and spend from the Capital Plan are sought, if the bids are successful. Date: 27/02/2024 Report Contact: Anna Herriman, Strategic Transport Planning Manager anna.herriman@midlothian.gov.uk Page 229 of 322
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2 3. Background Importance of Active Travel funding as part of sustainable transport 3.1 The Scottish Government (SG) has set a legal target of a reduction in car kilometres of 20% by 2030, through the The Climate Change (Emissions Reduction Targets) (Scotland) Act 2019. The Act requires governments at all levels to contribute to the reduction through long-term, sustainable transport planning and better use of existing assets. The Act emphasises the use of sustainable travel (Active travel and public transport) in achieving the target. 3.2 Three key national policies set out the need for well-planned sustainable transport in the context of land use and wider societal outcomes. These are the National Transport Strategy (NTS2), Climate Change Plan (2020 Update) and National Planning Framework (NPF4). All three reinforce the application of new hierarchies to planned investment in transport, as follows: 3.3 £320M p.a. of Scotland’s Transport Budget is committed to developing and delivering Active Travel (AT) interventions, to make journeys safer and more appealing for those travelling without a car. From 2024/25, transitional funding arrangements apply – including the new, competitive ATIF funding stream. By attracting funds, Councils can deliver sustainable transport projects that provide better health outcomes for people as well as providing better access to local amenities. 3.4 Councils must now demonstrate they have an approved Active Travel Strategy (ATS) in place (or are finalising one) to apply for new funding streams. This must conform to new guidelines issued by Transport Scotland in 2023. Councils must also demonstrate there is sufficient management capacity and appropriate governance in place to deliver on new projects. Page 230 of 322
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3 Main Report ‘On the Move Midlothian 2024-34: Our Active Travel Strategy for Everyone’ 3.7 A new Midlothian ATS has been drafted in-house, in accordance with new guidelines. It reflects public input and feedback gathered from informal engagement events held since 2021. The working title of the draft ATS, “On the Move Midlothian 2024-34: Our Active Travel Strategy for Everyone” follows local feedback that the terminology ‘Active Travel’ needs to be shown as inclusive. A copy of the draft strategy is included at Appendix B. 3.8 “On the Move Midlothian” requires a full public consultation exercise, to check priorities and to ensure there is strong buy-in to proposals. This is particularly important as the strategy aims to make day-to-day journeys for everyone safer by walking, wheeling and cycling – whether these are journeys to school, shops, community centres or to bus stops and train stations. “On the Move Midlothian”. By enabling more active day-today journeys the Council can make a positive contribution to national Climate Change targets. 3.9 A public survey will be ‘open’ for a period of 12 weeks from March, with online survey accessible from the Council’s Consultation Hub. For those without digital access, hard copies of the survey and printed copies of the draft strategy will be available in all libraries. 3.10 Following public consultation, feedback will be analysed, and a final draft produced, with final graphics, for reporting to Council by Quarter 3 of 2024/25. Resourcing the delivery of the ATS and other Sustainable Transport projects 3.11 As part of the ‘Midlothian on the Move’ Strategy, a ten-year delivery programme has been developed, to ensure the phasing of projects is realistic and deliverable. The 10-year delivery programme will be reviewed annually. Construction ready projects will be added to the Capital Programme once funding can be confirmed and appropriate governance approvals are in place. 3.12 Dedicated and consistent staffing deliver focussed strategies that include multi- year projects. The ATS requires officers with experience of developing funding bids, managing, and monitoring funded projects, and industry standards. 3.13 The benefit to the Council to date since February 2022 includes funding receipt - including £226,000 from the competitive Places for Everyone (PfE) fund in 2022/23 (an outcome to 2023/24 bids is still unknown), as well as the development of the new ATS, and wider contributions to sustainable transport, including supporting Planning, Roads, and other services as required. Extending the ‘Midlothian Active Travel Strategy 2018-2021’ to 2024 3.14 Midlothian’s previous ATS 2018-2021 was agreed in 2017. It’s approved action plan included medium-term projects for that were set for delivery by 2028 and longer-term projects beyond that. Many projects remain relevant and are subsumed into the new ATS; others are in the early stages of development. Page 231 of 322
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4 Extending the validity of the previous ATS, just until the new, compliant strategy is finalised, would provide policy coverage for these, including: - the A7 corridor from Newtongrange to Sherriffhall, focussing on active and public transport connectivity, - connector routes for walking and wheeling in Easthouses, - studies for active travel along the A701 corridor north of Gowkley Moss junction. 3.15 Further, earlier ATS projects are under early development, with bids for feasibility studies including for Sherriffhall Park and Ride connections to the Wisp and Connecting Bush Loan Road to Seafield Moor Road. Active Travel Infrastructure Fund Applications 3.16 As part of the transitional arrangements for Active Travel Funding, the Council was advised in the second half of December of the new ATIF fund for construction ready projects of over £100,000 value each, in 2024/25. This means if awarded, delivery will be progressed with urgency. 3.17 Four eligible projects exist within Midlothian that will make a significant improvement to safety on routes to schools, as outlined in the table below: Table 1: Summary of the four ATIF proposals submitted 2 February 2024 Project Location Description £ 2024/25 Morris Road, Easthouses Improved pedestrian walking and crossing facilities and cycling crossing at the New Easthouses Primary School. 321,000 East-west crossing Routes to Beeslack High School at Nivens Knowe Road and A701, Loanhead Improved crossing facilities on key roads linking Loanhead to Beeslack High School 300,000 Carlops Road, Penicuik Improved crossing facilities 141,000 Sherwood Crescent, Bonnyrigg Improved crossing facilities 127,000 Total value of ATIF bids 899,000 3.18 The ATIF bids closed on 2 February 2024. With a very short lead-in time, officers completed four bids to deliver the projects in Table 1. An outcome is expected towards the turn of the financial year, and acceptance of any funding offers would be subject to Council approval recommended in this report. Page 232 of 322
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5 4 Report Implications (Resource, Digital and Risk) 4.1 Resource The proposed capital expenditure of £0.889m would be fully funded by £0.889m of external capital grant funding from Transport Scotland’s Active Travel Infrastructure Fund (ATIF) and as such would not give rise to any loan charges implications. 4.2 Digital None 4.3 Risk The recommendations and proposals outlined within this report seek to mitigate or manage the risks to the Council set out below. Not progressing with consultation on the new ATS will miss gathering necessary public input, including from equalities interests, into a key strategy. Not completing the new ATS will prevent the Council from making bid proposals to Active Travel funding streams, meaning less funding is identified for Midlothian communities, especially in relation to other Council areas. Not extending the validity of the previous active Travel strategy 2018-2021 would risk projects being taken forward without adequate policy coverage. Not developing sustainable travel may breech Council duties in relation to the Climate Change (Emissions Reductions Targets) Scotland Act 2019. Not adequately resourcing the delivery of the new ATS also risk the delivery of existing funded projects and targets, as well as contributing to a deterioration of existing assets that require investment and upgrading. A loss of suitably skilled and experienced staff would impact on the Council’s capability and capacity to develop and deliver long-term approaches and may risk increased costs through the need for consultancy support. Not agreeing to progress ATIF bids or accept any ATIF award with associated delivery of capital funded projects risks ensuring safety of school children and staff, or risks creating pressures on the Council’s capital budget. 4.4 Ensuring Equalities (if required a separate IIA must be completed) An IIA is underway in relation to the new Active Travel Strategy, and this will be updated through proposed consultation. 4.5 Additional Report Implications Appendices Appendix A – Additional Report Implications Appendix B – “On the Move Midlothian 2024-34: Our Active Travel Strategy for Everyone” - Draft for consultation Page 233 of 322
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6 APPENDIX A – Report Implications 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 Utilising a partnership approach to securing adequate staffing levels represents an example of Delivering Best Value. A.5 Involving Communities and Other Stakeholders Input into the new ATS from all geographic communities and communities of interest will be actively sought through the consultation period. A.6 Impact on Performance and Outcomes The report recommendations all contribute to the Single Midlothian Plan Vision “Midlothian will be a Great Green Place to Grow by achieving our net zero carbon ambitions”. A.7 Adopting a Preventative Approach Not applicable A.8 Supporting Sustainable Development Development of active and sustainable travel options for communities actively supports sustainable development. Page 234 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 1 ON THE MOVE MIDLOTHIAN Our Active Travel Strategy for Everyone: 2024 - 2034 Page 235 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 2 Foreword… ............................................................... p3 Part 1: Active Travel Strategy 1. Introduction… ................................................. p 4 2. Policy Context ................................................ p 12 3. The Current Status of active travel ................. p 19 4. Physical barriers to active travel ..................... p 28 5. Other barriers to active travel ........................ p 32 6. Auditing the active travel network ................. p 38 7. Introduction to priority routes/action plan .... p 39 8. Design guidance/standards for active travel ... p 44 9. Funding .......................................................... p 48 10. Aims, objectives and indicators ..................... p 49 Part 2: Active travel project timeline and route action plan… ........................................................................ p 58 Contents. Page 236 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 3 Foreword Page 237 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 4 1.1. What is active travel and why do we need an Active Travel Strategy? 1.1.1. What is active travel? “Getting around in a way that makes you physically active”; “walking or cycling to work, school, the shops or the train station”; “the transportation of people or goods by physically active means”. These are a few definitions of active travel found in the literature and the media. Active travel is much more than simply cycling and walking as a means of transport, and here in Midlothian, with our mix of urban, rural and semi-rural environments, it is important to emphasise the many forms and methods of travel and multi-modal journey types, encompassed by this term. require the entire journey to be made by physically active means. In this strategy we define active travel as: Active travel can take the form of walking, wheeling and cycling, which includes the use of wheelchairs, pushchairs, adapted bikes, cargo bikes scooters and skateboards. Active travel can form part or all of a journey, and includes physically active travel to bus stops, to reach public transport, and any short distance journey such as a walk to reach nearby facilities, or a longer journey regardless of the purpose or final destination. With a push to decrease the number of journeys by car and other forms of motorised transport, it is important to recognise how even making small parts of a longer journey ‘active’ can contribute to our aim of reducing total car mileage and the number of motorised vehicles on the road. Journey hubs and public transport services will play a vital role in meeting our active travel and sustainable transport targets. 1.1.2. Why do we need a new Active Travel Strategy? services, as well as for leisure, sport, health and recreational purposes. 1. Introduction Page 238 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 5 We want to lead the way in providing a We are aware funding for projects still relevant, but not yet delivered, as well as the delivery of new projects to reflect the changing demand and of the challenges ahead, given the current status and condition of our active travel infrastructure, and the barriers that currently exist in preventing people from choosing active forms of travel for their everyday journeys. Despite these barriers, we are committed to making Midlothian a place where: A lot has changed since the production of our last Active Travel Strategy in 2018. Production of the National Transport Strategy (NTS2), changes in the Highway Code, the National Transport Hierarchy, and publication of the (NPF4) all reflect a push to give more priority to active and sustainable transport. Changes in movement and lifestyle patterns post-Covid 19; more flexible working; large housing growth; growth in economic development areas; commitments to climate change and biodiversity targets, and more recent concerns around the cost of living, are all factors that emphasise the need for a new Active Travel Strategy here in Midlothian, to reflect and acknowledge changes in policy and demand. Having an up-to-date active travel strategy, reflective of Midlothian’s current needs, is vital to securing funding to deliver projects going forward. With the period covered by the previous ATS now passed, it is important that we build on the successes achieved, and pursue environment. To ensure that any funding made available to local authorities is spent in the most efficient way, and used to deliver best-practice active travel infrastructure, it is a requirement for all local authorities to have an active travel strategy and action plan in place. This reflects the importance that the Scottish Government are ascribing to active travel in helping Scotland to achieve ambitious transport, climate, biodiversity and air quality targets, as well as the prominence they are giving in ensuring that the aims of the Transport Hierarchy are reflected in all local authority areas. 1.1.3. How will the Active Travel Strategy sit alongside other local transport and land-use planning strategies, and incorporate National Policy and best practice design? Midlothian Council’s Sustainable Transport Team are currently working alongside consultants Stantec to produce a Local Transport Strategy (LTS), whilst officers in the Strategic Planning Team are in the early-stage process of developing Midlothian’s next Local Development Plan (MLDP2). Given the importance now being ascribed to active travel in government strategy and policy, production of this Active Travel Strategy will be influential in the writing and shaping of the LTS, and in guiding land use allocation and strategic networks in the LDP. Writing these three key documents at the same time provides us with an excellent and exciting opportunity to ensure that active travel is high on the agenda and prioritised in all aspects of land-use and transport planning going forward, and will choosing active travel will be an easy, convenient, cheap and realistic option for all. Page 239 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 6 enable close collaboration and communication between teams and council departments, which will help ensure that we can deliver and are striving for the same goals. Recent publication of NPF4 in February 2023 has allowed us to incorporate and build on National Planning Policy, spatial principles and regional policies in this document, meaning that we are referencing and referring to the most up-to-date best practice guidance/policy within any projects we deliver. 1.1.4. How is the picture changing in terms of priority and investment in active travel and local living? In their 2030 vision for active travel, Transport Scotland would like to see walking and cycling the most popular choices for everyday journeys, and for communities and places to be shaped around people. This commitment to more sustainable living is further reflected in NPF4, with a focus on the quality of areas, to make places where we live and work sustainable and resilient, with an infrastructure first approach, to make communities great places to live and work in. 1.2. Why are we promoting active travel? The overarching vision of the Scottish Government, set out in ‘A more active Scotland’ is for ‘people to enjoy more active and healthier lives’. Active travel is, however, about much more than health through physical activity, and can take many forms. developing a sustainable transport network, with active travel a major component in this modal shift. In 2017, £39 million was spent on active travel in Scotland, compared to targets of £320 million by 2024/25. With such a big increase in funding availability it is vital that Midlothian Council has a strategy and plan in place to seek and implement this funding. This will allow us to deliver the highest quality infrastructure and well-connected network possible, as well as to support and enable behaviour change. At Midlothian Council we recognise the many benefits that active forms of travel can have, not only to individuals personally, but to communities and the wider environment. Promotion of active travel is a key priority for Midlothian Council as it can: Ambitious targets to reduce total km travelled by car by 20% by 2030, and commitments to spend 10% of the total transport budget on active travel reflects the Scottish Government’s commitment to Our aim throughout this strategy is to promote the message that: active travel is not just about walking and cycling, but that all of us, no matter our age or ability, can take part in active travel, however Page 240 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 7 The many interlinkages between the positive changes brought about by people taking fewer vehicular journeys, and travelling more actively, emphasises the importance of encouraging and promoting this behaviour change, and incentivising people who already travel actively in their day to day lives to continue doing so. Figure 1. A health and well-being ride, along the NCN in Midlothian 1.3. How have we developed the Strategy? Development of Midlothian Council’s Active Travel Strategy has been the role of the Council’s Sustainable Transport Team, with public and stakeholder consultation events helping to shape both the strategy and action plan. The feedback from stakeholder and public consultation held in 2021, and the resultant report produced by consultants Arcadis helped to establish key priority areas/themes, acting as a case for change, as well as highlight specific problem routes and locations where demand for improved active travel infrastructure is high. Building on feedback from the consultation, we have held workshops within and across council departments to develop a strategy with measurable and achievable targets that we can commit to. Midlothian Council’s Sustainable Transport Team also attended Forward Midlothian events in October 2022 and 2023, to learn more about challenges faced by people with disabilities. Completion of the Integrated Impact Assessment Process has allowed us to consider and mitigate any potential impacts to all sectors of the community. More detailed 1-1 meetings with individual community councils has helped to inform the detailed site- specific action plan, with public consultation on the draft strategy and action plan helping to finalise the document. Figure 2. Midlothian Council Active Travel Officers at the Forward Midlothian Event in 2022 Page 241 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 8 With a focus on connectivity and strategic routes, collaboration and communication with neighbouring local authorities has also played a key role in the determination and feasibility of key route planning, to and that any connections into neighbouring authorities will produce a cohesive and joined up network. The prominence of ‘living locally’ and ’20 minute neighbourhoods’ within Scottish Government policy and strategy means that a key focus of formulating the active travel strategy, and delivering projects going forward has also involved building and strengthening relationships between the roads and development planning teams within the council. This will help to ensure that active travel is considered/designed into all new developments going forward. We are working in collaboration with Sustrans to allow us to make the best possible use of any funding streams, with a Sustrans embedded officer now a key part of the team. 1.4. Where we are since production of the last ATS? A lot has changed in Midlothian and surrounding local authority areas since the last ATS was produced in 2018. Our success in meeting specific objectives set out in the 2018 ATS will be reflected on in more detail in the sections that follow. On a personal level we are witnessing: • much greater home and hybrid working; • an increase in online working, shopping and deliveries; • greater recognition of the climate and biodiversity crisis amongst the population. On a policy and governmental level we are now seeing: • greater emphasis and funding being attributed to sustainable and active travel. On a local developmental level we are currently seeing: • many of the housing and commercial land allocations set out in the Local Development Plan now built/being delivered • A change in the character of some Midlothian communities/landscapes • great opportunities to connect to and expand the existing active travel network. Many of these changes, particularly with respect to personal movement trends and lifestyles were not predicted and will have impacted (both positively and negatively) on some of the targets set out in the 2018 ATS. Three key objectives of the 2018 ATS were to: • ‘Raise awareness of all aspects of active travel and promote walking and cycling as alternative transport modes for short trips and commuting’. • ‘Encourage more people to walk and cycle more often by providing them opportunities to do so’ • ‘Increase active travel in schools through a variety of walking and cycling programmes’. Since the writing of the 2018 ATS a number of events have been held to work towards meeting these objectives, including: Page 242 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 9 • recent ‘Winter-ready’ events • public cycle training sessions • Bikeability training in schools • School travel plan production and promotion • Road safety awareness training in schools • attendance at Midlothian’s Disabled Access Forum • Go-E bike promotional activities • staff cycle training sessions • staff driver awareness courses • attendance at the Midlothian Outdoor Festival We plan to build on this engagement and promotional activity going forward, with more detail on what has already been achieved and is planned in the relevant sections that follow. Figure. 3 Road Safety awareness and Bikeability training sessions in Midlothian’s schools Further objectives to ‘Increase the availability of active travel infrastructure and develop infrastructure improvements which encourage active travel’ along with ‘Improving the safety of walking and cycling and reduce the number of yearly walking and cycling casualties’ have been delivered through a range of ‘Cycling, Walking, Safer Routes’ funded projects, and expansion and development of the network through the creation of active travel routes through new housing and developments. Detail on those completed projects and progress towards others that have not yet been achieved but are actioned in the current plan is included in the local-neighbourhood action plan in Part 2 of this document. Staff from the Sustainable Transport/Active Travel Team are now attending Midlothian’s Road Safety forum and feeding in on best practice, and helping to promote infrastructure and behaviour change to reduce road casualties. The objective to ‘Ensure walking and cycling needs are included in new development design’ is currently being delivered through a detailed assessment of new housing sites in Midlothian, being undertaken by consultants ‘Living Streets’. More detail is included in the following sections on how we will use this assessment to deliver design guidance in new developments, and our aims to use this to ensure that all new developments are designed to best-practice standards in terms of active travel infrastructure, accessibility, and location to services. A move for the Sustainable Transport Team from the Roads Policy Team into the Planning Team also emphasises Page 243 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 10 progress towards this objective, and how it will be built on further in the new strategy. Figure 4. The inclusion and design of active travel infrastructure and links within and around new housing developments is a key aim of the Active Travel Strategy Progress towards the objective ‘Maintain, repair and upgrade walking and cycling infrastructure, including routes and facilities’ will be reported on throughout the main document, as well as indicated in the new action plan. Workshops and cross-team meetings have been held to discuss how we can best proportion resources and budgets going forward, to ensure that active travel infrastructure is inspected and maintained to reflect its place at the top of the transport hierarchy. Funding sources have been/are being actively pursued to demonstrate our commitment to routine maintenance of existing routes, as well as to upgrade routes for wider accessibility and year-round use. 1.5. Active Travel Action Plan Our active travel action plan consists of two key components, both presented in Part 2 of this strategy. The first component is our , which takes a more strategic view of active travel infrastructure and behaviour change work which we plan to implement over the next 10 years. The project pipeline lists: • key priority routes along strategic routes and corridors • key junction improvements • larger infrastructure projects with active travel elements • key behaviour change projects • local neighbourhood level infrastructure • commitments to pursue funding for rural roads and paths The second component takes a more detailed look at the local neighbourhood level element of the 10-year project pipeline, where we have included routes from the previous active travel strategy that have not yet been delivered, along with new routes that have been suggested during consultation events and from the output of site investigations. These routes have been ranked and prioritised using a scoring matrix to help us to categorise different routes for particular funding streams depending on for example, the scale, level of funding required, ability to provide connections to key trip Page 244 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 11 generators, if they are potential quick wins or more in-depth projects, or more aspirational in nature. The 10-year project pipeline and Action Plan list the potential sources of funding for each programme of delivery. The plan reflects the assumption that funding will increase over the next ten years in line with greater commitments to active travel. 1.6. Aims of the ATS The 3 key aims of the Active Travel Strategy 2024 – 2034 are to: 1.7. Acknowledging Risks/Uncertainties It is acknowledged that changes in circumstances and external drivers could occur during the lifetime of the ATS and Project Pipeline/Route Action Plan. We will continue with internal and external consultation throughout the lifetime of the ATS, and update the documents as required, directed by external drivers and changing priorities. These are described in detail in Chapter 10, along with their respective objectives and indicators. Page 245 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 12 2.1 Transport Targets/policies and the Transport Hierarchy Active travel features prominently in many of the Scottish Government’s long-term planning priorities, and has played an increasingly large role in strategy at all levels in response to both national and international targets. While environmental concerns frame much of the policy discussion on active travel (the transport sector accounts the largest share of Scotland’s carbon emissions), many policies favour active travel for its health and wellbeing, cost, and social benefits. Figures 5a. and 5b. broadly illustrate the desired outcomes of active travel policy in Scotland. Figure 5a. Desired outcomes of active travel policy in Scotland (Active Travel Framework, 2020) Figure 5b. Desired outcomes of active travel policy in Scotland (Active Travel Framework, 2020) 2.1.1 International targets Many of Scotland’s active travel policies have their root in internationally agreed goals and targets. The United Nation’s Sustainable Development Goals provide an international framework for a global low-carbon future with resilient communities at their heart. Organisations such as the World Health Organisation (WHO) have published reports such as Walking and Cycling: Latest evidence to support policy-making (2022) to encourage active travel through government policy. 2. Policy Context Page 246 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 13 2.2 Scottish targets, policies, and key guidance The Scottish Government has articulated plans to reach net neutrality by 2045 – an undertaking that will require significant investment in all sectors of the Scottish economy. As of 2017, transport is estimated to make up 37% of Scotland’s carbon emissions – the largest share of any sector in the Scottish economy. The Scottish government’s stated goal is to see a 20% reduction in car kilometres by 2030. The National Planning Framework 4 (NPF4), The National Transport Strategy (NTS2), and the Strategic Transport Projects Review 2 (STPR2) outline the Scottish Government’s main planning priorities, and have all placed a much greater focus on the importance of active travel for strong, healthy communities. 2.2.1 National Transport Strategy The National Transport Strategy is underpinned by four key priorities, all of which have place great importance on active travel: 1. Reduces inequalities through ensuring easy, affordable access for all 2. Takes climate action through meeting net-zero targets and promoting greener choices to adapt to the effects of climate change 3. Helps deliver inclusive economic growth through reliable high- quality infrastructure 4. Improves health and wellbeing through safe and secure infrastructure that encourages people to make healthy travel choices In terms of prioritising transportation, recent strategies have pointed to the transport hierarchy as a guide to prioritising user modes in transportation projects. This hierarchy is to provide a guideline for prioritisation between user groups in transportation projects, with those walking and wheeling to be considered the highest priority in the planning and development of transportation projects. This is reflected in the complementary investment hierarchy which places the reduction in unsustainable travel as the foremost priority for transportation-related investment. Figure 6. Transport Hierarchy and accompanying Investment Hierarchy (National Transport Strategy, 2020) Page 247 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 14 Recent strategies have increasingly emphasised a need to better integrate land use and transportation planning. NPF4’s spatial principles include reference to local living, compact, urban growth, and rebalanced development to help create sustainable, liveable, and productive places. The creation of a nationwide active travel network to connect these communities is seen as a key priority (National Development #8: National walking, cycling, and wheeling network). Place-based approaches that reduce car dominance should be pursued, with consideration being given to developments that promote local living and reduced car ownership levels. These priorities have been expanded on in the Strategic Transport Project Review 2 (STPR2), which breaks these strategies down into objectives at the national and regional levels. The first five objectives cover improvements to active travel infrastructure: 1. Connected neighbourhoods 2. Active freeways and cycle parking hubs 3. Village-town active travel connections 4. Connecting towns by active travel 5. Long-distance active travel network Similarly, active travel figures prominently under the objectives relating to ‘influencing travel choices and behaviour’. The Infrastructure Investment Plan for Scotland (2021) has allocated £550 million over five years (until 2026) for active travel, including £50 million to develop ‘active freeways’. In addition to these core policies, Transport Scotland have prepared a number of design guidance documents to help guide active travel projects across Scotland. Chiefly, Cycling by Design (updated in 2021) provides guidance to be used across all roads, streets, and paths to promote cycling as a practical and attractive choice for the everyday and occasional journeys for all people. Designing Streets (2010) has also been developed to inform the design of streets and other movement-focused public spaces at the neighbourhood level to encourage a more holistic approach to urban design. 2.3 Regional SEStran is the organisation responsible for providing regional oversight and coordination over transport developments in the Southeast Scotland region. SEStran has published a number of strategic documents outlining priorities for the creation of a coherent regional active travel network. These include the Strategic Cross-Boundary Cycle Development plan (2017) and the Strategic Network Plan (2020). Improvement of walking and cycling as realistic transportation options, and greater integration between active travel and public transport networks (to encourage multimodal journeys). The Regional Transport Strategy (RTS) advocates for an integrated Page 248 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 15 approach to land use and transportation planning, adhering to a 20- minute neighbourhood framework. Figure 7. The SESTran regional area (SESTran RTS, 2023) 20-minute neighbourhood or local living frameworks feature prominently in recent strategies Figure 8. 20 minute neighbourhood framework (SESTran RTS, 2023) 2.4 Local The Midlothian Local Development Plan (LDP, 2017) is the core document governing changes to the built environment in the Midlothian Council area. The current LDP ‘Secure active and Page 249 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 16 sustainable transport options for existing communities and future growth areas, and promote opportunities for walking, cycling and public transport, including links to shared open spaces. The current plan places an emphasis on development of active travel alongside the expansion and protection of the Midlothian Green Network. In early 2024, work began to update the Local Development Plan. In addition to MLDP2, other planning strategies make reference to active travel. The Single Midlothian Plan (2023), addresses the need for active travel infrastructure to connect communities, and provide a greater range of travel choices – particularly in areas that are not well served by public transport. From the Citizen’s Panel survey in the Single Midlothian Plan: • 94% of responses want communities better connected with good transport and active travel links, and improved network infrastructure and connectivity; • 81% of responses would like improved greener travel options; • 75% want to reduce carbon emissions from businesses and homes Local Place Plans are being encouraged under reforms to the Planning (Scotland) Act in 2019, allowing communities a greater voice in how local places can be shaped. 2.4.1 Shawfair The SEStran 2035 RTS highlights Shawfair as one of seven strategic sites across Southeast Scotland. Once developed, the Shawfair area is estimated to accommodate over 4,000, and will contain a town centre, enterprise area, and public transport connections. Located between the Edinburgh bypass, southeast Edinburgh (particularly the Bioquarter), and East Lothian (adjoining to the Queen Margaret University masterplan area in Musselburgh), Shawfair represents a key strategic connection between communities in Midlothian, and substantial growth areas in neighbouring local authorities. Due to its position within the wider city-region, Shawfair has the potential to be a key hub in the regional active travel network. 2.5 Recent Legislative and Policy Changes 2.5.1. Changes to the Highway Code (2023) In January 2023, the Highway Code was updated to reflect changes in national policy. These updates include the introduction of a hierarchy of users, where road users who are most vulnerable to harm should be given greater priority. This does not absolve users from behaving responsibly, but does enhance the priority of active travel users – particularly at parallel crossings. 2.5.2. Pavement Parking Legislation In December 2023, new legislation came into force allowing councils to pursue bans on pavement parking. Pavement parking bans are currently being implemented in Edinburgh and East Lothian, and Midlothian is currently examining the feasibility of implementing a ban locally. Page 250 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 17 2.6. 20 mph speed limits Many Council areas across Scotland have been examining the potential to implement 20 mph speed limits within settlements, or in the case of some Council’s, council-wide. Midlothian are currently consulting on measures to reduce speeds within towns and villages in Midlothian. 2.7 Themes 2.7.1. Demographic changes Midlothian is the fastest growing council area in Scotland by population, seeing a 17% (to 94,680) increase between 2001 and 2021, and anticipated to see a growth of approximately 13.8% by 2028. This is anticipated to be the highest rate of growth in any Scottish Council area. Midlothian’s population growth is boosted by the influx of young families from other parts of Scotland, accommodating a large number of young families. Simultaneously, Scotland as a whole is seeing an aging population with a unique set of needs from their transport infrastructure. Providing high-quality active travel infrastructure suited for the needs of all users, particularly younger and older residents will be a priority under this strategy Figure 9. Changes in population (source: NRS) Figure 10. Predicted changes in Scotland’s older population Page 251 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 18 2.7.2 Health Policy Public Health Scotland advocates for greater uptake in active travel for a number of reasons. Primarily, modal shift will result in a decrease in greenhouse gas emissions, and a reduction in noise and air pollution, but also touts active travel’s benefits for a healthier lifestyle, particularly in later years. Healthier lifestyles have also been noted to reduce the economic strains on the national health service. 2.7.3 Inequality Improving active travel access, particularly in conjunction with improved public transportation provision are viewed as an important way to address inequalities – particularly related to age and income. Page 252 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 19 3.1. The current Active Travel network A map showing the existing active travel network throughout Midlothian, including on-road cycle lanes, shared use cycleway/footpaths, tracks and paths, and the Sustrans National Cycle Network can be found on the Council website at the following link: Midlothian: Active Travel Map (mapsinteractive.co.uk). Figure.11 Midlothian Council’s ‘Interactive Active Travel Map’ displays cycling and walking routes and facilities, as well as detail on the type of infrastructure. 3.2. A case for change: What did you say? 3.2.1. Public Consultation In December 2021 we held a number of consultation events to establish views on the ease and accessibility of walking, wheeling and cycling in Midlothian. We wanted to know: • what is good about our active travel network • where improvements can be made • how we can support more people to walk, wheel and cycle more often • the key barriers to active travel in Midlothian In 2022 and 2023 we also attended the Forward Midlothian event in Dalkeith, hosted by The Midlothian Disabled Access Panel. The results from these consultation events have given us a clear picture of some of the main barriers to active travel, as well as examples of good practice that we aim to build on. Results from the public survey indicate that those who choose to travel by car as their main mode of transport to work or study do so because they feel it is the quickest option, and that they lack alternatives. Personal safety was also cited as a main concern. 3. The Current status of active travel Page 253 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 20 These results suggest a need to prioritise improving our active travel network so that travelling actively can be done safely along key strategic transport routes, and that desire lines and directness of some new routes and infrastructure are designed and located to provide options for those who wish to enjoy active travel away from busier roads. Figure 12. Results from the 2021 public consultation, displaying the main reasons for most frequent choice of travel mode (Arcadis, 2022) In comparison, people who choose to walk do so for the health and fitness benefits, and the enjoyment aspect. Similarly those who cycle as their main mode of transport cited health and fitness as the main reason, along with cost savings. Promoting active travel for its health and fitness benefits and enjoyment levels should also play a key part of any behaviour change initiatives. Given that enjoyment and health are two of the key reasons cited by current active travel users we must also ensure that Results around mode of travel by length of journey revealed that for journeys of less than 2 miles 25% of survey respondents still use the car A focus on active travel provision within and around town and village centres and close to key trip generators is required to make leaving the car at home an easier option, as well as a focus on providing rest stops, bus shelters, dropped kerbs and access for all to ensure that everyone is able to make these short journeys actively. The top 5 priority actions for roads and pavements from the public consultation were: The top 5 priority actions for paths were: Page 254 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 21 The most popular answers depending on bike usage reveal some interesting differences, but also similarities between those who never cycle, and those who cycle often for transport and leisure (Figure 13). Figure 13. Top priorities for active travel infrastructure depending on respondents frequency/use of active travel (Arcadis, 2022) it is better linking of paths, more scenic paths for leisure, and more that are seen as top priorities. more segregated cycling infrastructure, better linking of paths, and more direct active travel routes are considered top priorities. This suggests that to encourage more people to start travelling by bicycle a focus on linking off-road paths away from the road carriageway, via quieter rural areas and scenic routes is required. A simultaneous focus on providing well connected, safe and segregated next-to-carriageway routes as well as off-road connections is needed to improve conditions for those who already cycle. The full public consultation report can be found in the appendix. 3.2.2. School Surveys The results from the , with 73% of pupils who answered the survey walking, cycling or wheeling as their main mode of transport to school. This reflects the very successful behaviour change and school travel plan work ongoing in the council, which we commit to continue developing. Figure 14. Cycle and scooter parking provision and walk to school campaigns have been successful in increasing the numbers of children choosing active travel to get to school. Page 255 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 22 18% of pupils travelled by bus, which is also likely to have incorporated an element of active travel. The feedback from teachers skewed the overall results slightly, with only 16% of teachers walking or cycling as their main mode of transport. Quickness of travel and having no other alternative, and ‘other’ were the three most popular reasons for pupil transport choice, with health and fitness and enjoyment being the 4th and 5th most popular reasons. Quickness and lack of alternatives made up 71% of teachers responses. Although results are very encouraging there were some key barriers identified that prevent people from walking and cycling to school, with the lack of suitable cycle routes identified as the main reason from both pupils and teachers. The most frequent barrier identified by parents was the distance that they live from the school. Figure 15. 2021 school survey- Barriers to choosing active travel to school (Arcadis, 2022) Key improvements suggested to make cycling and walking more attractive included: • Improvement/creation of on-road and off-road segregated cycling paths • Safe crossing points • Better maintenance and surface conditions • Safer routes more generally The feedback from the school surveys suggests that providing the to make these options as quick (if not quicker) than using the private car, and a realistic option for those with time constraints and other commitments. We will continue our work on improving routes to school, and build on our already very successful school travel plan work. Our collaboration with the planning department will help to address distance from school, through advising on designs for local living and 20-minute neighbourhoods. 3.2.3. Stakeholder feedback Feedback from stakeholder consultation has highlighted aspects of the current active travel network considered to be good practice, which we will use to aid our decisions going forward, as well as areas where infrastructure and the wider network can be improved. Positive aspects of the current network included: • paths within new housing developments Page 256 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 23 • the use of old railway lines as active travel links Figure 16. Examples of active travel provision in Midlothian that were considered a positive aspect in the 2021 stakeholder survey key areas identified for improvements included: with the following themes identified as key aspects to take forward in the new strategy: were also highlighted as key barriers both in the stakeholder feedback and the disabled access forum event. There was also an of active travel, not solely commuting- something which we have taken on board and reflected in our new strategy, as well as consideration of the impact of any new routes on horse-riders. Some specific route improvements were also suggested, which have been incorporated into our project pipeline and aspirational route matrix. The Stakeholder consultation report can be found in the appendix. 3.3. Current Active Travel Network Usage 3.3.1. Strava Metro Heatmaps Strava Metro data is a very useful tool providing Midlothian Council with an insight into active travel trends and route preference- but comes with a number of limitations. The data reveals the most popular routes recorded on the app for walking, running and cycling, as well as the numbers of people recording their activity on the app. It can also be used to assess the most popular days of the week and time of day for activity. The data acts as a guide as to the most favoured and well-used roads and paths, but only provides a picture of those who choose to record their activity and upload it onto the Strava platform. As discussed in the introduction, active travel is much more than walking, running and cycling for fitness and leisure purposes, and some key everyday Page 257 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 24 journeys are likely to be missed when looking at data recorded on a platform marketed for fitness purposes. Everyday journeys to shops, bus stops, work and education, for example, are unlikely to all be presented in this dataset. Although the data can reveal the most popular routes, it is not possible for us to identify the reasons for route choices. A route showing up as heavily used on Strava Metro may be used because it is the only quiet and safe option, rather than it being the preferred option. With these limitations in mind, the data does still reveal some key findings on route choice (Figure 17). It also provides us with a clearer picture of the routes chosen for leisure and fitness purposes, and ones that should be included in any updated maintenance and inspection schedule going forward, as well as those routes that are more heavily utilised for everyday essential journeys (and not necessarily shown here). Figure 17a. illustrates the key walking and running routes recorded on the platform in 2022/23, with the lighter, brighter colours indicating greatest usage. The Dalkeith to Penicuik NCN196 route and are both popular and heavily utilised routes, but there is an equally popular use of the network around the main town centres and areas of population density. Figure 17b. illustrates key cycling routes recorded on the platform in 2022/23, with a much more extensive network, covering many minor and country roads, as well as key transport corridors. Key popular routes from Edinburgh into Midlothian can be seen, including: National Cycle Network route 1 around Temple and Carrington, and are also popular routes. a. b. Fig. 17. Midlothian Strava users May 2022 – April 2023. A. Walking/running; b. Cycling Going forward we will use this data to feed into the roads and paths inspection and maintenance schedule, and will use this in support of any funding applications to improve routine and winter maintenance along the most popular and heavily utilised routes. We will also look at developing a quiet route network to improve safety for all users of the roads in . The data will also be used in support of any funding applications for safe and segregated infrastructure provision along major roads where conditions are currently poor, but are clearly key direct routes for large numbers of active travel users. A703 Seafield Moor Road, Gilmerton Road, the Roslin to Shawfair Page 258 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 25 3.3.2. Strava Metro: Demographics and time of day/week Strava Metro also provides an indication of changing demographics and users, which we will use to help prioritise behaviour change and marketing campaigns, as well as the types of interventions and improvements to the network we might look to provide going forward. Figure 18a. suggests a decline in users of Strava aged 18-34 in Midlothian, compared to an increase in other age groups. As with the heatmap data, this must be taken with caution as it could indicate a move to recording on another platform, or an incresae in app and technology use in older age groups, rather than a true picture of active travel useage. Figure 18b. suggests an increase in e- bike use, which will influence the funding streams we target, and any route planning and infrastrutuce such as charging provision. Figure 18. a. Strava Metro users 2020-2023 b. Strava Metro bike users 2020- 2023 (Strava Metro, 2023) Data on the time of day and day of week of activity reveals a clear change in cyclist behaviour patterns post pandemic. Comparison of usage data in 2019 with 2022 displayed in Figures 19, shows a strong commuter trend in cycling activity in 2019, which although still present in 2022, is less pronounced, with the time periods over which people cycle during the day now wider. This is suggestive of more flexible working and working from home, but does still emphasise the network at the times of day when the roads are likely to be busiest. Use of the walking and running network is much more evenly spread throughout the day and has been less impacted by the pandemic and flexible working. Volumes by day of the week indicate that the network is being used consistently throughout the week and weekend. Figure 19. a. 2022 Walking/running vol. per hour/day b. 2022 Cycling vol. per hour/day (Strava Metro, 2023) c. 2019 walking/running vol. per hour/day d. 2019 cycling vol. per hour/day (Strava Metro, 2023) Page 259 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 26 3.3.3. Network Planning Tool for Strategic Cycle Network Planning Another useful tool is the newly developed ‘Network Planning Tool Scotland’ for strategic cycle network planning. This can be used to examine the cycle-friendliness, gradients, and fastest and quietest routes around Midlothian. The tool is publicly available at the following link: NPT Scotland, and will be used in supporting and developing funding bids to expand our active travel network going forward. 3.3.4. Sustrans Hands Up Survey The Sustrans ‘Hands up survey’ results from 2022 display a very positive picture of school travel in Midlothian, compared to the national average. 97.3% of state schools participated in the survey, and results presented in Figure 20 show that over 60% of Midlothian’s children either walk, cycle, scoot or skate to school. The numbers of children being driven to school are much lower than the national average. Figure 20. Results from the 2022 Sustrans ‘Hands up’ survey show higher rates of active travel to school than the national average As part of this strategy we are committed to building on these positive results through the continuation of Bikeability training and promotion of active and sustainable travel through school travel plan production and road safety initiatives. Figure 21. Walk to school campaigns and cycle and scooter storage facilities Page 260 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 27 3.3.5. Current Cycling Modal Share Cycling Scotland Monitoring Group Data provided by the Cycling Scotland Monitoring group shows cycling rates from counters located at Eskbank Road in Dalkeith, and John Street in Penicuik in September 2022. Cycling contributed 0.56% to total road users, a slight increase on the same month in the previous year (table 1). It should be noted that the results are taken from a 48-hour period and may be influenced by weather conditions and other external factors. It should also be noted that these counters are located on busy roads where cycling infrastructure may not be conducive/attractive for cycling to all users, and may under- represent the modal share for the local authority more widely. Table 1: Cycling Scotland Monitoring Group Cycle Count data: September 2022 Table 2: Cycling Scotland Monitoring Group Cycle Count data: May 2021- September 2022 May-21 Sep-21 May-22 Sep-22 Cyclists 451 265 395 315 All modes 52674 55921 58805 55784 Cycling modal share 0.86% 0.47% 0.67% 0.56% Installation of three new 24-hour automatic Cycling Scotland cycling counters at Lasswade Road, Gilmerton Road and on the Eskbank to Bonnyrigg section of NCN196 has taken place in May 2023, and will provide additional data on route use and demand, as well as external factors driving usage of the network. Subject to funding we also plan to install cameras to monitor desire lines and movement patterns at key junctions to help guide street layout and infrastructure design. Location Eskbank Road, Dalkeith John Street, Penicuik Midlothian total Cyclists 119 196 315 All modes 27829 27955 55784 Cycling modal share 0.43% 0.70% 0.56% Page 261 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 28 4.1. Active Travel Route Maintenance Our Active Travel Consultation event in 2021 highlighted route maintenance as a key concern and barrier to participation in active travel, raised by both public and stakeholder groups. A number of key issues were identified, including poor road and path surface conditions; debris and vegetation overgrowth in cycle lanes and along shared use paths; lack of/limited gritting of active travel routes in winter; and poor/lack of street lighting along some routes. Figure 22. Vegetation overgrowth has been highlighted as a key concern for active travel users. We are committed to addressing these issues and will seek out all available funding for road and path surface improvements for existing routes where possible. We have highlighted the lack of funding currently available for existing route maintenance as a key priority to encourage active travel going forward to our largest funding bodies, and will continue to explore all available funding opportunities. Within the council we have held a number of cross-departmental workshops to identify the potential for pooling of resources, and to discuss how the transport hierarchy can be better reflected in any roads and paths inspection regimes, as well as in the allocation of funding. Going forward we will make use of all available monitoring data on cyclist and pedestrian usage of the network to feed into the roads and paths inspection and maintenance schedule, so that the parts of the network most popular for active travel are prioritised for maintenance, reflecting the transport hierarchy. We will also look at key transport corridors and desire lines and ensure that those parts of the network not used as heavily for active travel are maintained to similar levels, to ensure that this is not a barrier to use along these routes. Funding and resource permitting, we aspire to inspect all active travel routes (both on and off-road) on foot or by bicycle. We will aim to address all reports of vegetation overgrowth within 2 weeks of any member of the public reporting these to the contact centre, and routine sweeping of routes will now be aligned to 4. Physical Barriers to Active Travel Page 262 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 29 coincide with routine cutting of vegetation. All repairs needed to the road and path network will be addressed once reported to the contact centre by members of the public, in addition to planned repairs and maintenance on the updated inspection schedule. Figure 22. Examples of work that has recently been undertaken as part of our new late summer ‘Reclaiming our paths and pavements programme’ with teams working together in a collaborative approach to cutting, clearing, sweeping and disposing, to ensure our routes for active travel are fully accessible all year round. In collaboration with neighbouring local authorities we will look at the potential to apply for funding and set up forums to support volunteers and community groups to help with maintenance and path improvement works. Where funding allows, we will commit to pursuing improvements to Street lighting and winter gritting on all main active travel routes. 4.2. Road Safety Cyclist safety was highlighted as a key priority for roads and paths improvements in the 2021 active travel consultation- with lack of segregation between different types of road users one of the key concerns. For all new active travel schemes we will look at introducing fully segregated routes where possible, but also acknowledge that the nature of some of our roads and spaces will require other forms of improvements to enhance safety, and make the roads and paths more attractive and appealing places for active travel. Traffic calming measures were identified as a key priority action for road safety, and we will work alongside colleagues in the roads department to see these implemented where possible, along with 20mph zones in some of our towns and villages, and other Page 263 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 30 considerations that emerge from the results of the Midlothian Speed Limit Policy Review in 2023. Alongside our Roads Safety and Roads Engineer colleagues we will work to improve routes to schools and key destinations throughout Midlothian as a priority. We will work with our School Travel Plan Coordinator and Road Safety Officer to prioritise key routes for improvements, where we will monitor desire lines and feedback from public consultation. We will look at increasing the number of along the most direct routes. Similarly we will look at prioritising key junctions where road safety has been flagged as an issue and work alongside road safety colleagues to look at increasing and improving crossing points and signalisation where relevant, with other measures considered on an individual basis. We will seek input from road safety officers and work alongside roads engineers and those in the roads policy team when advising on any new active travel infrastructure, as well as on policy and strategy around changes to any existing road design and layout, and other physical infrastructure. In particular we will work on writing new policy/guidance around guardrail, guardrail removal, cyclist and In addition to infrastructural and street/road layout and design changes, behaviour change initiatives will form a key part of our focus and drive to improve road safety, for active travel users of the network. Active Travel officers are now part of the Midlothian Road Safety Forum, allowing any key active travel concerns to be discussed with Police Community Officers, Roads Police and the Speed Camera Unit, the Fire Service, and Transport Scotland. We will use this forum as an opportunity to collaborate with these services/organisations on road safety campaigns, speed reduction and wider behaviour change initiatives, which are covered in greater detail in the behaviour change section of the strategy. We will lead by example by promoting and providing driver awareness training on sharing the roads with cyclists to all of our staff, which will now be incorporated as an essential learning module for all new and existing members of staff at Midlothian Council. Other behaviour change initiatives, discussed in more detail in the behaviour change section include public, school and staff bicycle training and awareness sessions, all of which have a focus on road safety. Given the rural nature of Midlothian, we have a number of national speed limit country lanes and roads where visibility, gradient, road width, and road condition mean that users need to treat the roads with extra caution, and drive to the conditions. Many of these roads are found in more quiet areas of Midlothian, and are appealing for pedestrians and cyclists, as well as horse riders, who use these for leisure and sporting activities, away from busier built-up areas and Page 264 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 31 volumes of traffic. We seek to promote these roads as safe spaces for active travel and will look for funding opportunities to develop a ‘green/quiet road network’ of roads, where signage and traffic calming measures, and potential speed limit reduction, will be used to increase driver awareness of the shared nature of these roads, and to make the routes safer spaces for all users. Figure 23. Rural roads throughout Midlothian are popular for walking and cycling. Many of the aspirational improvements to road and route maintenance highlighted in the route maintenance section, including improved street lighting and road surface conditions will also contribute to improved road safety for users of the active travel network. 4.3. Quality/inaccessibility of the active travel environment Design guidance produced by ‘Living Streets’ in their assessments of housing sites, discussed in Section 8 will be used to promote best- practice street design, and ensure that all new environments are designed in a way that fully delivers access for all. Feedback from consultation events and engagement with the public and stakeholders has helped us to identify where and how we can improve the existing environment, and engagement in the IIA process throughout development of this strategy and production of the action plan has helped to identify key issues. Physical barriers such as pedestrian guardrail, lack of dropped kerbs, lack of tactile paving and a lack of rest stops have been highlighted and incorporated into our 10-year and local neighbourhood action plan, where we intend to seek funding to address these issues. We will promote the availability of external funding to community groups and volunteer organisations, and help provide support where possible to ensure that Midlothian residents have the best access and clear guidance on how to get involved. The Sustrans ‘Artwork Fund’ and ‘Paths For All’ ‘Ian Findlay Fund’ are examples of funds that can be applied for by community groups to provide more appealing and quality environments for active travel. Page 265 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 32 Engagement & Behaviour Change Work The following barriers have been identified as key aspects limiting the number of journeys made by active travel in Midlothian, and in some cases preventing people from taking part in any form of active travel. We believe that promoting and encouraging behaviour change is as important, if not more so, than providing the infrastructure to allow change to take place. In many cases the two complement each other, but the promotion of behaviour change is a vital component in seeing any funded infrastructure schemes being used effectively to their full potential. The physical aspects of barriers to active travel are covered elsewhere in the strategy, as well as being presented in the action plan. 5.1. Barriers to walking 5.1.1 Route finding/knowledge of active travel routes Working with the public The Council produces a range of mapped resources that allow people to find out about local active travel infrastructure and journey times. We are currently working on updating these maps and publicising the active travel network via a refresh of our website. Interactive consoles around Midlothian have also helped to support more accurate travel planning and sustainable journeys, and we aim to replace and repair these where necessary. We will continue to provide hard copies of walking and cycling maps on a regular basis In addition to the supply of physical maps, the Active Travel team are currently working on the production of a free that will be made available to the wider Midlothian public. The aim is to offer more accessibility to a breadth of Active Travel information, allowing users to have flexibility in undertaking journeys through checking the app while out and about in the area. We consider promotion and familiarisation of the active travel network to Midlothian residents a key aspect of behaviour change. We will also look to work with developers on active travel packs provided to new residents in new-build housing estates. 5.Other barriers to active travel Page 266 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 33 Midlothian Council staff engagement To encourage and promote healthy working lives, will be offered to all council staff at various office locations, encouraging staff to become more active, as well as exposing them to new routes and opportunities for active travel. Step count challenges have proven very successful and will continue to run to promote competition and motivation throughout the workforce- the first step to longer term behavioural change. Figure 24. Organised lunchtime walks will be promoted to Midlothian Council staff at a range of locations to suit those working in the office and at home 5.1.2. Traffic related concerns over safety Working with the public Midlothian Council staff, funded through Transport Scotland funding, will continue to work on schools projects including ‘Walk to school week’, ‘Walking Battle’, various road safety activities, ‘School Streets’, as well as working with Junior Road Safety Officers in schools on ‘Park Smart’ initiatives. We will also continue to work with Sustrans to promote ‘Sustrans Big Walk and Wheel’- the UK’s largest inter-school walking, wheeling, scooting and cycling challenge, which aims to inspire pupils to get active during the school run. Figure 25. Midlothian Council School Travel Plan and Bikeability officers will continue to lead and promote walk to school, road safety and other active travel campaigns. 5.1.3. Distance and gradient Working with the public Given the varied terrain and rural nature of some of Midlothian’s towns and villages, distance between origin and destination of journeys can prevent people from using active travel. We consider Page 267 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 34 in many cases, where shared transport, journey hubs, improved bus stop/rest stop provision, community owned transport and lift sharing schemes can be implemented and utilised to allow active travel to make up a . We will seek funding opportunities to implement and expand these schemes, and will work with SESTran, public transport providers and neighbouring local authorities to promote multi-modal journey provision where possible. Examples include exploring the possibility to expand bikes on bus and supporting free travel for under 22s on public transport. 5.2. Barriers to cycling. 5.2.1. Costs of owning and maintaining a bike Working with the public We will continue to deliver ‘Dr. Bike’ sessions to the public, where free maintenance checks will be offered, along with advice on using the active travel network. We also providers to look at installing mobility hubs at key transport interchanges and trip generators, where bike share schemes could reduce the need to own and maintain your own bicycle and make using a bike a realistic option for those who cannot afford their own. We will also continue our work in schools where bicycle maintenance sessions are delivered as part of the Duke of Edinburgh Award. We will continue our bike loan service, which is provided to all schools across the authority, with 288 beneficiaries since 2023. The bike library consists of 49 bikes, ranging from balance bikes to 29” bikes for larger children/adults. Figure 26. Continuing to deliver free bike maintenance sessions and training will be a key component of the Active Travel Strategy Midlothian Council staff engagement We will continue to promote the cycle to work scheme to all council staff, and seek to increase the maximum price of any bike that can be purchased. The Council is currently renewing our Cycle to Work contract, which may open up the opportunity for staff to buy an electric bike through the scheme. The Council currently has two pool bikes that are available for staff to use for business purposes, as well as an electric cargo bike to allow staff to carry and transport heavy items via active travel. Under the staff bike-loan scheme 13 bikes are available for commuting (funded by Cycling Scotland). Staff can borrow a bike for up to two months, free of charge, after which it will go to another member of staff. It is hoped that the initiative will encourage staff to buy their own bike and change their travel Page 268 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 35 behaviour after the hire period. We plan to continue to offer this service going forward. Midlothian Council employee Greg explains how he has benefited from the bike loan scheme: “I thought the bike hire scheme was great and really beneficial to me exercise out of work. Was great for both my fitness and mental health. I would definitely participate again in the future and plan on a half decent bike and what a difference it makes! A lot easier on the 5.2.2. Cycle storage space and security Working with the public A lack of secure bike parking is a key barrier to both owning a bicycle, and to using a bicycle as part of a journey, where it needs to be stored or left temporarily at a destination. We will promote Cycling Scotland’s ‘Residential Cycle Storage and Parking Fund’, to local communities, and support them in their applications. We will also work with the planning team to update the ‘Parking Standards’ and ensure that we feed into, and are consulted on, any new developments to ensure that cycle storage is provided to reflect requirements set out in Cycling by Design. Where possible, we will seek all funding opportunities to introduce safe, secure and convenient cycle parking facilities at key trip generators, workplaces, and places of education. Cycling Scotland’s school storage fund will be utilised going forward to improve shelters within school grounds across the authority. Four schools benefitted in 2023 of having updated or increased storage as a strategy to increase school pupils cycling, and reinforce behaviour change regarding cycling from an early age. Figure 27. An example of secure bicycle parking at a Midlothian school. Midlothian Council staff engagement Midlothian Council currently holds Cycling Sctoland’s “Cycle Friendly Employer” status, valid until February 2024. Lockers are available in Page 269 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 36 Fairfield and Midlothian Houses on a first-come, first-served basis for storage of clothing and equipment for staff that use active travel to work. Cycle parking facilities currently include an externally-funded covered cycle shelter in the car park behind Midlothian House and rails behind Fairfield House. There are two working showers for staff use. We will continue to seek funding to improve and enhance these facilities and renew our application to improve staff bicycle storage and changing and drying facilities at all sites. 5.2.3. Distance and gradient Working with the public We currently provide a number of maps on our website, and as hard copies in leisure centres and libraries to promote the active travel network in and around Midlothian. We are working on updating these maps to give Midlothian residents access to the most up-to- date knowledge of direct routes to and from key destinations. We will work with to promote their Network Planning Tool, which will allow users to plan journeys based on criteria such as gradient, fastest route, how quiet the route is, cycle friendliness etc. Following the recent end to our collaboration with Bewegen and Go- ebikes we are committed to pursue future possibilities schemes- helping to reduce the physical demands created by journey distance and hilly terrain, opening up the option to cycle to a greater number of people. Discussions with public transport providers and options around developing mobility hubs will also be actively pursued. Midlothian Council staff engagement All employees at Midlothian Council are currently able to purchase a bike, tax-free, using the Cycle to Work Scheme. Going forward we aim to open discussions with the Employment and Rewards team to increase the value of bikes that can be purchased on the scheme to enable purchase of electric bikes, which will help to tackle barriers around distance and gradient that prevent staff from travelling by bicycle. We will continue to cycling challenges such as Cycleschemes ‘Cycle to Work’ day and Love to Ride’s ‘Ride it Out’ campaigns. 5.2.4. Cycling skills, concerns over traffic and perception of safety Working with the public and Midlothian Council staff We will continue our commitment to encouraging and enabling behaviour change in schools through delivering Bikeability sessions, projects including ‘Bike to school week’, ‘Smoothie Bike’, Road Safety activities, School Streets, and work with Junior Road Safety Officers. Figure 28. Bikeability training will continue to be delivered throughout Midlothian’s primary schools. Page 270 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 37 We plan to continue to deliver public and staff cycle training sessions in collaboration with Cycling Scotland, as well as led rides for adults and families. We will look to collaborate with Police Scotland on their Close Pass campaign as well as seek funding for implementation of quiet routes and infrastructure/signage to increase driver awareness of cyclists using the rural road network. Figure 29. Training sessions will be promoted to council staff and the general public to increase the safety of cycling on the road network. Page 271 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 38 A high-level baseline audit of the active travel network has been undertaken in developing the active travel action plan, and will be progressed further as the action plan develops and is up-dated. Further, more in –depth auditing of specific aspects and sections of the network has also been delivered as part of the development of guidance around new housing layout, as well as in school travel planning and the development of routes to school. A detailed audit of the Sustrans National Cycle Network Route 196 will be undertaken using funding from Sustran’s Barrier Removal Fund. Going forward, as part of this strategy, we are committed to seek funding to allow us the resources to carry out a full audit of the active travel network to bring this in line with inspections of the main road carriageways to fully reflect the change in the transport hierarchy and feed-in to the inspection and maintenance schedule. 6. Auditing the Active Travel Network Page 272 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 39 7.1. What is the Action Plan? Our Active Travel Action Plan is comprised of two parts. The first, a 10-year strategic project pipeline, and the second, a detailed local neighbourhood scale list of priority, planned, and aspirational local and longer distance routes and connections. Together these provide an ambitious list of priority infrastructure projects that are most enhance, our active travel network. The 10-year project pipeline is our action plan with respect to major strategic routes and network expansion, along with behaviour change and maintenance work. The local neighbourhood action plan looks at each of the main towns/villages in Midlothian, and their surrounding areas, and provides a list of key priority routes and aspirational routes for improvements/network expansion. The purpose of both parts of the plan is to provide a transparent picture of our aims and aspirations, against which we can monitor progress. The project plan will also help in the preparation of funding applications and has been formulated to allow us to map out interconnecting projects, and ensure joined-up approaches between projects and departments. The project plan and its transparent nature allows it to be viewed by other council departments, local authorities and key stakeholders, increasing the likelihood and opportunities for collaboration and joined-up route planning across local authority borders and departments. The project plan will also be used to steer future investment, so that resources are available at the right time for the design and build of future schemes, as well as allow funds for maintenance and upkeep of any new and existing routes to be sought. With the local Transport Strategy and the next Local Development Plan both being prepared in 2024, the Active Travel Action Plan will also directly inform these key pieces of council policy/strategy, helping to ensure that future development complements the existing and planned active travel network, and that sustainable transport and active travel are key drivers in the location and design of new developments. Smaller links in the local neighbourhood action plan will feed directly into the next Local Development Plan, to allow for integration and delivery as part of new development. The projects and work-streams set out in the 10-year project plan will inform the Local Transport Strategy regarding potential changes in future travel/transport habits, and where demand for multi-modal journeys and journey hubs may present. It can also encourage collaboration between transport providers, and local roads and planning teams. 7. Introduction to Priority Routes/action plan Page 273 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 40 7.2. Why were these routes/work-streams chosen? The strategic routes/work-streams and the more detailed and location specific routes have all been selected to: improve/provide safe and accessible links from key locations to improving local street design and permeability in new link up with public transport networks and other key transport Routes within the local neighbourhood action plan have been prioritised to improve accessibility and ease of short journeys, with a neighbourhood concept. Elements of this are reflected in the 10-year strategic project pipeline, where commitments to addressing barriers to active travel (such as provision of cycle parking, dropped kerbs, etc.) will also aid in encouraging the switch away from private car trips to active travel for local journeys. As discussed in the introduction, we consider active travel to cover travelling by physical means for a large range of purposes. This is reflected in both parts of the action plan. We are committed to: expanding and filling gaps in the longer distance strategic roads and pathways to improve access to nature and more 7.3. How were the routes/work-streams selected? The strategic routes and work-streams set out in the 10-year project plan, and the more specific routes in the local neighbourhood action plan have been selected based on a range of criteria. This includes: The feedback from our Active Travel Consultation event in 2021 has mostly been used to help develop our 10-year strategic project pipeline and prioritise key work-streams. The survey was used to gather high-level feedback around barriers to active travel, and Page 274 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 41 priorities for network improvement. Some of the key barriers identified in this consultation included: • a lack of segregated infrastructure • a lack of safe crossing points at major junctions • poor maintenance and route conditions • the lack of a continuous and cohesive network • busy and dangerous roads • physical barriers and poor accessibility along routes • a lack of cycle parking and bike hire All of these are reflected in the main work-streams and strategic routes/network that we propose to take forward. We will build on what we are already doing well, through a commitment to , identified as key positive aspects of the current route network. Collaborative working with Development Planning, schools and neighbouring local authorities will also allow us to: • ensure a cohesive network across boundaries • enhance safety and ease of active travel around schools The Local Neighbourhood Action Plan looks to prioritise those routes that were set out in the previous Active Travel Strategy, and includes new routes, based on more detailed feedback from the community, internal audits and site visits, mapping exercises, school engagement and public consultation. Prioritisation of the routes has been achieved using a scoring matrix described in more detail in the following section, and included in the appendix. The scoring matrix includes key criteria such as: location relative to trip generators; predicted volume of users; potential to improve safety; providing links in an existing network. 7.4. The 10-year project pipeline The 10-year project pipeline takes a strategic view to active travel infrastructure and behaviour change work, which we plan to implement over the next 10 years, subject to funding. The pipeline identifies: • key strategic routes and corridors • key junction improvements • larger infrastructure projects with active travel elements • key behaviour change projects • commitments to pursue funding for rural roads and paths • local neighbourhood level infrastructure Local neighbourhood level infrastructure improvements are not identified in detail by location and project type/specifics, but instead it is highlighted that 4-6 of these will be taken forward each year Page 275 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 42 using Transport Scotland’s Cycling Walking Safer Routes funding. The specific detail on these projects and how they have been prioritised is contained within the route prioritisation matrix. The 10-year project pipeline identifies the following key aspects/work streams… • An active travel strategic route network (on or next to the main road carriageway) • Expansion of the long-distance off-road (away from the road carriageway) network • Major junction improvements • Rural roads and rural paths programme • Routes to school • Shared use paths • Removal of physical barriers • Production of design guidance • Behaviour change work • Multi-modal journey provision/integration Specific detail on the above, and the routes that we have selected to take forward for funding as part of the strategic route network, long- distance off-road network and major junction improvements is contained within the Action Plan, along with more in-depth detail on the behaviour change programmes of work, barriers to active travel that we will aim to address, and the types of provision that we will look to implement for multi-modal journeys. The Project Pipeline will be kept under review, and we will monitor, evaluate, and report on progress. 7.5. Local Neighbourhood Action Plan This second component of the Action Plan looks at the local neighbourhood level element of the 10-year project pipeline in detail. Here we have used a scoring matrix to assess and prioritise routes for funding, and have included new routes that have been suggested during consultation events and the output of site investigations, along with those from the previous active travel strategy that have not yet been delivered. These neighbourhood- level projects are likely to be funded through the Transport Scotland Cycling, Walking, Safer Routes grant and Active Travel Infrastructure Fund, and the plan reflects the assumption that funding will increase over the next ten years in line with greater commitments to active travel. The scoring matrix gives points to each route depending on the following factors: • Proximity to key services and amenities (community centres; places of education; workplace; health services; Page 276 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 43 retail; e-bike docks; public transport stops/hubs; tourism and leisure attractions) • Who it will support- pedestrians, wheelers, cyclists • Intersections/interactions with existing active travel routes • The potential to provide benefit (personal safety; physical safety; improved accessibility (to existing routes); improved accessibility (new route); commuting route; inclusion of place-making elements; route to school; leisure route; connects residential areas; connects remote areas; potential modal shift) • Timeline (short term; medium term; long term) • Area of low SIMD (20% or less) • Mentioned in the 2021 Active Travel Strategy Consultation (as a minor issue; significant problem; top priority intervention) • Links to current or planned developments (large scale; medium scale; small scale) • Accident data recorded on the route (minor; significant) • Perception of safety Although not directly used in the scoring of routes, the timing of delivery with other planned or aspirational routes; deliverability (suitable topography; minimal environmental impact; affordability) and the length of the route, have all been noted to help us prioritise schemes in terms of timing, funding windows and resource availability. Detail on the exact scoring system can be seen in the appendix. Page 277 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 44 When providing feedback on any new schemes during internal consultation, the Active Travel Team will refer to national guidance provided in (or any newer updated versions as they are released) to ensure best-practice design is followed and implemented. It will be an expectation that the highest level of service is provided in the design of any new or updated active travel infrastructure schemes, unless solid reasoning against this can be provided as part of the design review process. We will use Sustrans’ ‘Walking for everyone’ report and Wheels for Wellbeing ‘Guide to Inclusive Cycling 2020’ (and any newer updated versions) to provide further advice on design standards, and will ensure that the Council’s IIA process is followed for any new active travel infrastructure projects. 8.1 Development of our own Design Guidance As the fastest growing Local Authority area in Scotland, it is acknowledged that local population growth and the corresponding demand for new housing will continue to increase in the coming years, putting pressure on the environment, as well as urban and rural mobility in Midlothian and surrounding areas. In Midlothian, we consider the correct design and layout of new housing and new areas of development to be the key to ensuring that this population growth can continue with minimal impacts on to consolidate and strengthen communities. Through actively encouraging a spatial planning approach, in which active and sustainable travel is aligned with housing, planning, and economic development we can help alleviate these problems, through making In addition to the design and layout of new developments, we also want to ensure that new and existing developments are linked and permeable, allowing ease of access by walking, wheeling and cycling, and that the highest level of design, best-practice, and access for all is applied to not only new house building, but to any new infrastructure projects, and a change to any existing Our commitment to ensure that active travel is designed into all new development at the earliest stages, and to the highest standard, is reflected in the creation of a new Strategic Transport Team within 8.Design Standards and guidance for active travel Page 278 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 45 the council, and the movement of Sustainable and Active Travel Officers into this team. Going forward, all new planning applications will now be distributed to this team for feedback on best-practice design, in addition to the transport assessment response currently provided to the case officer. Active Travel officers will act as internal consultees on any car in new development, reflective of the new transport hierarchy. The new Strategic Transport Team are also involved in helping to shape the next local development plan, working closely with the strategic planning team to ensure active travel is incorporated at the earliest plan stage, and that any new developments are close to services and key trip generators to minimise overall journeys made. In addition to referring to UK and Scottish best-practice guidance on active travel infrastructure and accessibility when consulted, we also aim to produce our own Midlothian Council New Housing Street and Location Design Guidance, which will be submitted/proposed to Council for approval, and used to guide the location of new development as well as distributed to developers at the planning application stage. Alongside consultants ‘Living Streets’, funded through Sustrans, we have been working on ‘Designing and Aligning Midlothian’- a project to produce design guidance that will maximise the provision and quality of infrastructure and accessibility for travel modes that are the most sustainable. An assessment of five new housing sites and their wider areas has been undertaken, with the production of new design guidance on street design, layout and accessibility the intended outcome. The intention is for the new guidance to be used to inform and guide locations within the next local development plan, as well as be used as a guidance document for developers during the development The outcomes of the project will help ensure that the choice of new housing sites encourages people to walk, cycle, wheel or use public transport, to the greatest extent possible. Our intention is for the design guidance to cover active travel infrastructure and street design directly, as well as give guidance on: • development location • accessibility for all disabilities • best practice design for buses and public transport to allow integration with active travel • best practice design for traffic control measures such as speed bumps, traffic calming measures, and on-street parking Page 279 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 46 In addition to the new design guidance, we are currently in discussions and working on new policy with respect to pedestrian guardrail and chicane barriers; cyclist dismount signs; introduction of priority crossings and signage; and layout of other crossing points. We are committed to continuing these conversations and will set up working-groups within the council to formulate a series of policy documents to take to council for approval, which will then be used in the development management process. Figure 30. Physical barriers can prevent access for all, and make using active travel a difficult option. We will look at all opportunities to improve access and remove phyiscal barriers where this can be done safely. 8.2. Placemaking in Midlothian The nature and design of Midlothian’s towns, settlements and rural areas means that travel involves longer journeys to work and to access services for some sections of the community. By designing places that support local living, so that they are attractive and liveable spaces, in which people can live, work and socialise, we can decrease those journey times and lengths, and open up the opportunities to travel actively. The ‘Designing and Aligning Midlothian’ project looks at the 20- minute neighbourhood concept and assesses how new housing can be designed to ensure services and everyday needs are provided within a 20-minute return walk, or short cycle, without the need to use a car. The outcome of the study will be used to provide guidance on creating better places, where people want to live, access amenities, and do business, reducing the need and distances required to travel, thus making active modes more appealing. A mix of urban and rural locations have been presented in the study, to provide an assessment of this concept in different locational scenarios, acknowledging the rural nature of areas of Midlothian and the challenge that this presents for placemaking and active travel. As part of the study a ‘place standard tool’ has been created and this will be made available going forward and used in guiding new development in the next local development plan. It will help us to Page 280 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 47 understand what is needed within an area to allow people to move around actively, and how places can be designed to be attractive and pleasant centres, where people feel safe and part of the community, and where cars do not dominate. In formulating the active travel action plan and more detailed local neighbourhood route network the results of community feedback have been, and will continue to be used to help rank and prioritise schemes to take forward. Community engagement forms a key part of the process and will ensure we take a collaborative approach, listening to the voices of local people. On-going collaboration with the planning and development teams and other key stakeholders, both internally and externally, will be a key part of any active travel work going forward. We are committed to further on-going engagement and will ensure that we maintain open and transparent conversations through the establishment of active travel forums and direct communications with community councils to ensure that communities are at the centre of any decisions we progress. Page 281 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 48 The Active Travel Route Action Plan and 10-year Project Pipeline provide information on secured and potential sources of funding for the range of projects we hope to deliver. Throughout the lifetime of the strategy/action plan, different external funding sources will be identified, and applications submitted, for both capital and revenue funding. Some of the key external funding opportunities currently being pursued/utilised include: • Sustrans- Places for Everyone Fund (from feasibility, through to design and construction) • Sustrans- Network Fund • Sustrans- Barrier Removal Fund • Sustrans- School Cycle and Scooter Parking Grant • Cycling Scotland- Cycling Friendly Employer Programme • Cycling Scotland- Residential Cycle Storage and Parking Fund • Cycling Scotland- Bikeability Scotland • Paths for All- Smarter Choices, Smarter Places Direct sources of funding from Transport Scotland include: • Cycling, Walking, Safer Routes Fund • Active Travel Infrastructure Fund For projects of a more recreational nature, or those that link to tourism, we will also look to apply to the following: • Rural Tourism Infrastructure Fund • Other sources of cycling tourism funding 9. Funding Page 282 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 49 Aim 1: Expand the active travel network and improve accessibility, safety, connectivity and maintenance. Objective: 1.1. Work with planning team and feed into Local Development Plan to ensure safe and accessible active travel connectivity with new developments and support living well locally. Indicator: 1.1.1. Number of project applications that Sustainable Transport Officers have been consulted on. 1.1.2. Number of new developments with connections to existing active travel network. 1.1.3. Locality of new developments to public and shared transport facilities 1.1.4. Presence of sufficient bike parking facilities 1.1.5. Connectivity of active travel infrastructure to local shops and services 1.2. Work with relevant teams to identify and prioritise safety and maintenance issues affecting active travel in Midlothian. Indicator: 1.2.1. Integrated core active travel routes within the council’s maintenance plans and schedules 1.2.2. To use road condition surveying to influence road maintenance schedules for active travel. 1.2.3. To have an easily accessible means of reporting issues on the active travel network. 1.3. Working with relevant internal and external bodies to enable multi-modal journeys Indicator: 1.3.1. Improved provision of bus shelters 1.3.2. Increased cycle parking at transport hubs including bus stops, train stations and park and ride locations. 1.3.3. Increased provision of benches 1.3.4. Increased options and accessibility for taking bikes on buses 1.3.5. Established connections with public and shared transport providers to support delivery of services. 1.4. Follow best practice design guidance to ensure that new active travel infrastructure is accessible for all and supports the transport hierarchy. Indicator: 1.4.1. To have referenced best practise design guidance in all project design work and applications. 1.4.2. To have referenced the transport hierarchy in all project work and applications. 10. Aims, objectives and indicators Page 283 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 50 1.4.3. Reported engagement with community and stakeholders in regards to design for all project work and applications. 1.4.4. Ensure signage and infrastructure is clear and inclusive (wording for dementia friendly signage, etc.). Could also include tactile paving, dropped kerbs, etc. 1.5. To seek appropriate funding to deliver projects as established in the action plan. Indicator: 1.5.1. To have created an internal database of funding sources. 1.5.2. To have sought funding to cover all aspects of active travel where possible. 1.6. To utilise existing routes where possible to build new active travel infrastructure and to procure materials that adhere to the Midlothian Climate Change Strategy. Indicator: 1.6.1. To have met target proportion of active travel infrastructure projects utilising existing routes. 1.6.2. To have met targets and followed guidance as set out in the Climate Change Strategy with regards to use of materials and contractors. 1.6.3. Sourcing locally 1.7. Ensure that all major roads infrastructure projects are developed to include elements that support more and safer AT journeys and deliver network connections Indicator: ? Aim 2: To promote and enable behaviour change towards uptake in all forms of active travel. Objective: 2.1. Work with business and community organisations to promote active travel e.g. cycle to work scheme, e-bike hire scheme, cycle storage, changing facilities, adult skills training. Indicator: 2.1.1. Increase in Cycling Friendly employers in Midlothian. 2.1.2. Increased number of employers that have rolled out Cycle to Work Scheme. 2.1.3. Increased number of employees utilising a Cycle to Work Scheme in Midlothian. 2.1.4. Number of businesses and community organisations we have engaged with to promote active travel initiatives. 2.1.5. Numbers of attendees at adult skills training events. 2.2. Promote and deliver active travel initiatives within Midlothian Council workplaces including driver awareness training, cycle to work scheme, staff bike hire scheme. Indicator: 2.2.1. Number of drivers who have completed driver awareness training. 2.2.2. Number of new employees signed up to the Council Cycle to Work Scheme. 2.2.3. Number of new employees who have signed up to staff bike hire scheme. Page 284 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 51 2.2.4. Pool bikes 2.2.5. Provisions at the council to encourage site visits, etc. to be carried out actively 2.3. Running community events and activities to promote and make active travel more accessible to all. Indicator: 2.3.1. Amount of engagement with community events and activities. 2.3.2. Percentage of people engaged who are more likely to engage in active travel as a result of the event/activity. 2.4. Continuing to run initiatives within Primary and Secondary schools to promote active travel including Bikeability and led rides. Indicator: 2.4.1. Percentage of school children who have completed training 2.4.2. Percentage of children cycling to school 2.5. Increase availability and accessibility of active travel information online and offline. Indicator: 2.5.1. Council website maps and information kept updated and promoted on a regular basis. 2.5.2. Increased number of site visits to Council website pages. 2.5.3. Number of signage projects delivered. 2.5.4. Number of active travel activities and events involving information sharing and attendance. 2.6 Ensure that transportation and access strategies submitted as part of new planning applications adequately provide for journeys by active travel or public transportation. Indicator: ?? Aim 3: Provide transparent monitoring in the delivery of all projects. Objective: 3.1. Develop an online platform to report progress. Indicator: 3.1.1. To produce interim progress reports at scheduled intervals and make any necessary changes. 3.1.2. Developed mapping to be shared publicly 3.1.3. To have a means of reporting online via Council website. 3.2. To produce interim progress reports at scheduled intervals and make any necessary changes. Indicator: 3.2.1. Production of interim progress reports at scheduled intervals. 3.2.2. Production of robust baseline monitoring statistics for project areas. 3.3. Monitor qualitative as well as quantitative outputs Indicator: Page 285 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 52 3.3.1 Carry out surveys with residents and users to help augment feedback for planned infrastructure improvements. 3.3.2 Measure qualitative outputs against equalities impact assessments, and use feedback from survey forms to inform accessibility measures for future projects. Page 286 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 53 Part 2: Midlothian Council Active Travel Project Timeline and Route Action Plan 2.1. Active Travel Route Action Plan Green = funded; Yellow = funding bids in preparation/planned; Blue = part delivered or due to be delivered through new housing schemes Type of funding/funding source: subject to change to TS direct funding or Active Travel Infrastructure Fund once the PFE programme is phased out Route reference numbers relate to those ascribed in the 2018-2021 ATS, if not completed riority Name/area Description Desired type of infrastructure Funding status Notes Type of project/potential funding source: Sustrans Network, Sustrans PFE, CWSR, Tourism, recreational 1. Very high RR3a. Roslin to Auchendinny Creation of a new route to link the Roslin to Shawfair Path (at the end of Manse Road) to NCN196 at Auchendinny. The route is likely to go via Penicuik Road, Oatslie Road, and through the new Bellway housing site at Auchendinny. Mix of new shared use off- road and fully- segregated infrastructure Funding required Topographical and gradient challenges. If the route is not feasible then route 17 should be promoted in terms of priority Network or PFE Page 287 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 54 2. Very high BL8. A7 Hardengreen Roundabout to Gilmerton Road Roundabout Connection between Hardengreen Roundabout and Gilmerton Road Roundabout along the A7. Creation of new fully segregated active travel infrastructure along one or both sides of the A7 Feasibility and design stages funded through Sustrans 0-2 Places for Everyone grant (2023). Construction funded through developer contributions PFE 3. Very high BL4. Lasswade Road and Mellvile Dykes Road Creation of segregated infrastructure along Lasswade Road between Gilmerton Station Road and Melville Dykes Road Roundabout (A7). This is currently a pedestrian only path. The route would allow strategic active travel journeys from Bonnyrigg/Dalkeith and the A7 corridor into Edinburgh Creation of fully segregated active travel infrastructure Funding required Potential to combine this with route 15 for a large PFE project (24/25?) Potential topographical challenges and width restrictions. Section from Gilmerton Station Road to Wadingburn Road could be Delivered alongside route 15 PFE 4. Very high LB4. A701. Gowkley Moss Roundabout to the Straiton Junction. Connection between the Seafield Moor Road (A703) junction and the Straiton Junction along the A701 Fully segregated active travel infrastructure Funded from Straiton to the A701/A703 jucntion through the Relief Road Project. City Deal + potentially PFE Page 288 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 55 5. Very high LB1. Connection between A702 and Easter Bush Campus via Bush Loan Road Waiting for outcome of relief road project 6. Very high LB3. A703 Easter Bush Campus to the A720 via Hillend and Lothianburn Connection between the A703/A701 junction, along the A703 to Hillend, and onwards along the A702 to the Lothianburn Junction of the A720. Providing for commuter journeys from Edinburgh to the Easter Bush Campus and Science Park Fully segregated active travel infrastructure Funding required Proposal to submit bid for Sustrans Places for Everyone 0-2 funding 23/24 The A702 and A720 Lothianburn Junction are managed by Transport Scotland PFE 7. Very high DS1. A7. Gilmerton Road roundabout to Sherifhall Park and Ride Connection along the A7 corridor from Gilmerton Road Roundabout to Sherifhall Park and Ride, allowing onward journeys connecting Midlothian to Edinburgh, across the A720. Fully segregated active travel infrastructure Feasibility and early stage design funded through Sustrans 0-2 Places for Everyone Grant (2023). The A720 Sherifhall Roundabout is managed by Transport Scotland PFE Page 289 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 56 8. Very high Millerhill to East Lothian via Old Craighall Road. Millerhill to Shawfair Town Centre. Connection to link the existing shared use path network at the end of the Shawfair to Roslin path and Millerhill to East Lothian, via Old Criaghall Road. Connections to link Millerhill into the new Shawfair town centre. A mix of shared use and fully segregated active travel infrastructure Feasibility and early stage design funded through Sustrans 0-2 Places for Everyone Grant (2023). PFE 9. Very RR4 Roslin or Extension of NCN196 from A mix of shared- Discussions Network/tourism high Penicuik to either Rosewell or Penicuik use off road underway to apply Leadburn to the Midlothian/Scottish paths and quiet for Sustrans Borders boundary at rural roads Network expansion Leadburn. This will link into funding 2024/25 the Scottish Borders extension of their network from Peebles-Eddleston- Leadburn, creating a fully off-road/quiet route from Peebles to Musselburgh. 10. Rosewell to Resurfacing of NCN196 from Surface Funded using Subject to the CWSR, Network Very Auchendinny Rosewell to Auchendinny to improvements Transport outome of high improvements make the entire length of Scotland’s Cycling. public the off-road shared use Walking, Safer Routes Grant (2023/24) consultation route from Dalkeith to Penicuik fully accessible year-round Page 290 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 57 11. NM6. Connection between Fully segregated Feasibility and PFE Very Newtongrange to Main Street, Newtongrange active travel early-stage design high Hardengreen and infrastructure funded through Roundabout Hardengreen roundabout, Sustrans 0-2 Places via the A7 for Everyone Grant (2023). 12. B7006 Roslin High Connection between the Widening of Funding required Network, PFE, Very Street from the centre of Roslin to Bilston pedestrian only CWSR high Roslyn Inn to and the A701 corridor- footpath to A701/Bilston providing a connecting route create a shared for residents of new housing use path as a in Roslin and Bilston to Quiet minimum – Route 61 and the proposed ideally fully A701 active travel corridor segregated infrastructure 13. Very high BL1. NCN1 connection to NCN196, B6392 and Rosewell Road Connection between the quiet on-road section of NCN1 near Dalhousie Burn with the B6392 and onwards to connect to NCN196 and Rosewell Road Mix of off-road shared-use paths and segregated infrastructure Some of this is likely to be funded through new housing development in the Hopefield area. Network Other funding required? Page 291 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 58 14. Very high BL5 + BL10. Connection between Melville Dykes Road, Eskbank Road and NCN196 Provision of an off- road/quiet route link through Broomieknowe Golf Course, plus an onward connection to NCN196 Surfacing of existing track (currently track and surfaced road) Funding required Network 15. Very high BL12. Quiet route connecting Wadingburn Road (and onwards to Loanhead/Lasswa de Road) to Bonnyrigg Opening up of Lasswade Viaduct to provide a quiet route connecting Wadingburn Road to Westmill Road, via Kevock Rd. Opening up of Bromieknowe Tunnel to provide a quiet route connecting Westmill Road to Bonnyrigg, and NCN196. Onward connections from Wadingburn Road to the Loanhead to Shawfair path and/or Lasswade Road are also being considered Mix of off-road shared use paths, quiet roads, and segregated active travel provision Potential for funding from Highways England for early stage design and feasibility. Proposal to submit a joint bid with Sustrans Places for Everyone funding (2024/25) PFE, Highways England 16. Very high Shawfair to NCN1 Link from Newton Village via Shawfair Railway station to NCN1 at the A1 underpass via Whitehill/Cauldcoats Road Mix of quiet roads and shared use paths Feasibility and early design stage funded through Sustrans Places for Everyone grant (2023/24) PFE Page 292 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 59 17. Ver y high A701 from Gowkley Moss Roundabout to Peebles Road, Penicuik Provision of fully segregated active travel infrastructure along the A701 from Gowkley Moss to Penicuik, to link up with the A701 active travel corridor, and replace existing on-road advisory lanes Fully-segregated active travel infrastructure Funding required PFE 18. Ver y high RR1. Connection between Dryden Farm and A701 Connecting route from the Roslin to Shawfair path across to meet the A701 at Bilston. Surfacing and upgrading of existing path via Langhill Farm. Shared-use off- road path Funding required Network, CWSR 19. Ver y high RR2. Connection between Manse Road and Penicuik Road, Roslin. Extension of Quiet Route 61 to Easter Bush Estate. via the former Roslin Institute site and B7006. Surfacing of existing path and creation of new paths. Potential route via the underpass and steps at Main Street and onwards links to the A701 Shared-use, off road path network Plan to explore opportunities using Sustrans Network Funding or CWSR (24/25) Some aspects already delivered through new housing. Network, CWSR 20. Ver y high RR3c. Roslin to Gowkley Moss Roundabout via the B7003 Creation of new segregated infrastructure to provide a strategic route alternative to Fully-segregated active travel infrastructure Funding required PFE Page 293 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 60 off-road shared use path network 21. High Lauder Road and Newmills Road to Dalkeith Town Centre Fully-segregated infrastructure along the length of the A6106 from Dalkeith Town Centre to connect communities of Woodburn, Kippielaw and Easthouses Road Fully-segregated active travel infrastructure Funding required Potential to include this in a ‘Dalkeith Connections’ funding bid to Sustrans PFE 24/25 PFE 22. High NM1. Stobhill Road to Bogwood Road/B6482 Suttislea Road Alternative active travel connection to avoid use of Crawlees Road, which lacks a pavement and is a busy road with national speed limit Due to be delivered as part of new housing in the area 23. High NM4. Connections to Butterfield Road Connection along the B704 between Butterfield and Cockpen, and Butterfield and the A7, improving links to the industrial estate and NCN1 from Gorebridge Shared use path or fully segregated Funding required Network, CWSR 24. High Newbattle Abbey Road/Newbattle Road Connection between Eskbank Toll through Newbattle to Newtongrange. Providing an alternative route to the A7 and access to connecting footpaths and trails. Widening of pavement to create a shared- use path? Funding required Potential width restrictions CWSR Page 294 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 61 25. High LB2 Connections within Bilston and Loanhead Widening and surfacing of some existing off-road paths; creation of new shared-use pathways through new housing developments- providing key connections to the A701, A703 in Bilston, and avoiding main roads through Loanhead Mix of widening, surfacing/re- surfacing and new shared use paths Some funded through developer contributions; some funding required CWSR 26. High Links from Shawfair/Millerhill to Dalkeith Country Park Connections from Shawfair and Millerhill via a crossing/under the A720 Edinburgh Bypass to allow access into Dalkeith Country Park and onward links to East Lothian Funding required Some potentially funded through developer contributions? Potential to achieve some of this through the Newton Welington Farm slip road to the A68? Network or PFE, recreational, tourism 27. High Link from the Shawfair Spine Road to the Edinburgh boundary Connecting the Shawfair to Roslin path onwards into Shawfair Town Centre, railway station and the Edinburgh City boundary via Millerhill Road Fully segregated active travel infrastructure Feasibility and early- stage design funded by Sustrans PFE 0-2 grant (2023/24) PFE 28. High D4. Connection between Easthouses Road and Waterfall Park Widening of existing path from Easthouses Road to Lothian Drive; creation of new link between lothian Drive and existing cycleway along Wester Part of the route has been completed- The section from the bottom of Kippielaw to Funding required for the work not yet completed CWSR Page 295 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 62 Kippielaw Drive; creation of new cycleway between Wester Kipplielaw Drive and Waterfall Park. Easthouses road is not complete. 29. High Abbey Road and Lothian Road, Dalkeith Providing quieter and more direct connection from/to Eskbank train station into the centre of Dalkeith, avoiding busier roads Shared use paths Funding required Network? 30. High Improvements to NCN1 along the B704- Dundass Street and Cockpen Road, Bonnyrigg, to meet Carrington Road This is part of NCN1 but there is no provision other than on road cycling. NCN1 continues over the roundabout at the junction with the B6392 to the junction with Carrington Road Widening of pavements to provide shared use facilities, or fully segregated infrastructure Funding required. Potential for Sustrans Network Funding or PFE 24/25 Network/PFE 31. High Nivens Knowe Road and The Loan, Loanhead Provision of safe routes from the Loanhead railway path (in the centre of Loanhead) to Bilston and Loanhead Industrial Estates, and onwards to the A701 is required. This is also required for safe routes to school for pupils attending the new Beeslack High School Widening of pavements to provide shared use facilities, and improved crossing points Funding for enhanced crossing facilities of side roads being sought from Education. Funding and feasibility required for widening of paths and segregated infrastructutre etc. Width limitations will prevent fully segregated infrastructur e? PFE Page 296 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 63 32. High DS1 (part 2). Sheriffhall Park and Ride to the Wisp. Connection along the A7 between Sheriffhall P&R and The Wisp Fully segregated active travel provision Potential for early- stage design and feasibility to be funded through the Bioquarter to Danderhall CEC PFE 0-2 work Collaboration with CEC required PFE 33. High D3. Improved direct connection into Dalkeith Town Centre along Musselburgh Road Connection between the existing cycleway along Musselburgh Road and Shadepark Drive and onwards into the town centre. Removal of guard rail and widening of path to create a shared use or fully segregated facility Funding required CWSR, Network, PFE 34. High Dalhousie Road North of Eskbank Train Station (to meet Eskbank Toll) Direct cycling links are currently lacking from Eskbank Station onwards to Eskbank Toll, Dalkeith and Edinburgh. Widening of pavements to create shared- use facilities or segregation Funding required Width restrictions? Network/PFE 35. High Penicuik town centre to NCN196 Improved links to Valleyfield Road and NCN196 from Penicuik town centre required. Links towards Cornbank via Cairnbank Road could also be investigated Crossing points, signage and shared use paths/full segregation Funding required Potential for Sustrans Network funding 24/25? Network Page 297 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 64 36. High NM8. Connections within Easthouses Improved walking and cycling links within Easthouses, as well as to and from the new Easthouses primary school, and Newbattle High School New crossing points and shared use pathways Funded through a mixture of developer contributions for the new Easthouses Primary School, new housing, and CWSR 2023/24 CWSR 37. LB6. Straiton. Creation of a new off-road Shared use or Funding required Land Recreation, High Connection East-West link between fully segregated ownership? Tourism, CWSR between existing Straiton and Hillend/the remote rural cycleway along Pentland Hills, as an pathway Straiton Road and alternative to using busy Hillend (LB6) sections of the A701, Pentland Road and the A702 38. Loanhead Railway Resurfacing of the path Shared use, Funding required Tourism, High Path to Straiton connecting QR61 (Loanhead remote rural recreation, Retail Park Railway Path) at Straiton pathway- Network Nature Reserve to the retail surfaced to park provide year- round accessibility for All segregated 39. High G1. North Middleton to Gorebridge (Gore Glen Primary) Direct connection between North Middleton and Gorebridge along the A7. Widening of pedestrian-only pavement to create a shared- use pathway or preferably fully- Funding required PFE, CWSR Page 298 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 65 walking/cycling infrastructure 40. High G2. Connection between Hunterfield Road and Goreglen Country Park- Upgrading of remote trails to provide improved, safe and accessible access from Gorebridge to the Country Park widenning and surfacing of paths to allow access for all, provision of crossing facilities over main roads Funding required Recreation, tourism, CWSR 41. High Vogrie Country Park West to Gorebridge and East to Edgehead/Ford Connection between Barleyknowe Road, Gorebridge and Vogrie Country park via B6372, and onwards to the junction with Edgehead and Ford to create improved provision towards Pathhead Widening and surface improvements of the current pedestrian only path to create a shared-use facility alongside the main carriageway Installation of a new shared-use path where sections of pavement are currently Missing Funding required Gradients to reach the top of Gorebridge are steep, before you reach this section of the route CWSR, PFE, Tourism, recreation Page 299 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 66 42. CP1. A6106 Connection between A6124 Widening of Funding required Potential to link CWSR, PFE High Lauder and Lauder Road/Cowden current into active Road/Cowden Road roundabout along the pedestrian only travel Road Roundabout A6106 pavement to infrastructure to Cousland allow either being planned shared use or by TS along the fully segregated A68 to active travel Pathhead (TS infrastructure feasibility study alongside the 24/25) main carriageway 43. High BL11. Dobbies Road to Hillhead through King George V Park. Connecting Hillhead to Dobbies Road via a quiet off- road route and an alternative to the busier main street and town centre. Widening of existing paths to allow shared- use, off-road remote access Funding required Network, CWSR, recreation Provision of a quiet route from/to Polton from NCN1/196 44. High LB8. Connection between Bush Loan Road. And Seafield Moor Road. Surfacing of trails and new provision to allow connections between Bush Loan Road and Seafield Moor Road, avoiding the A701/A703 Fully segregated off-road remote active travel path Part route potential to be provided through new Beeslack High School. Network, PFE, CWSR Page 300 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 67 Potential for section from Bush Loan Road to be funded as part of QR61 extension (Sustrans Network or PFE 24/25?) 45. High LB9. Loanhead to Lasswade via Wading Burn Off-road connection between the Loanhead Railway Path and Wadingburn Road (via Spittal Gardens/ Hunter Ave. Wading Burn and Wadingburn Lane)- avoiding the busy Wadingburn Road which currently has a very narrow pedestrian only pavement Fully segregated off-road remote active travel path, incorporating some quiet lanes Potential to include this as part of route 15 in a funding bid to Sustrans PFE/Highways England 2024/25? Land ownership CWSR, PFE, Network 46. Mediu m G3. Gorebridge Medical Centre to the A7 Improved, quiet, off-road connections between Gorebridge town centre and health centre to existing multi-user paths and onwards to the A7, Gore Glen Country Park, and Engine Road Surfacing, widening and upgrading of existing off-road path/trail to create an accessible shared-use path Funding required CWSR, recreation, tourism Page 301 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 68 47. Medium D2. Easthouses Road to Cowden Connection between the existing shared-use path along Easthouses Rd and Quiet route/quiet road link Funding required Land ownership? CWSR Road and the A6106 existing shared use path along Cowden Rd. The missing link currently requires cyclists to use the road carriageway through existing housing estate/ farm. Crossing facilities to cross the A6106 49. Mediu m Bilston Glen Viaduct to Bilston Glen Industrial Estate Link from Bilston Glen Viaduct to Bilston Glen Industrial Estate to allow off- road access from the Loanhead Railway Path. Surfacing of existing off-road trails required. Off-road, remote shared surface path Funding required Recreational, tourism, Network 48. Medium Loanhead to Lasswade- Wadingburn Road Better provision for direct active travel journeys between Loanhead and Lasswade – currently a narrow, pedestrian only un- lit pavement alongside Waddingburn Road Widening of the current pedestrian only, narrow pavement next to the carriageway to a shared-use surface with Funding required Width restrictions? Land ownership? CWSR, PFE Page 302 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 69 street-lighting, or fully segregated pedestrian/cycli ng infrastructure 50. G4. Gorebridge Improved connections for Widening of Funding required Gradient CWSR Mediu Railway Station to cycling between Gorebridge pedestrian-only challenges? m Stobhill Primary Town Centre and Stobhill pavements to School Primary School, where create shared- currently pedestrian-only use pathways pavements and on-road next to the cycling are available carriage. Widening of existing pedestrian only paths through parkland, and provision of crossing facilities to connect them up 51. G6. Gorebridge Off-road connection Upgrading and Funding required? Potential for Network and Mediu Primary School to between the A7 at creation of new some of this to developer m Cockpen Gorebridge Primary School off-road, be delivered contributions and the B704 remote shared through the surface path new Redheugh housing development 52. G7 and G9. New Improved off-road Surfacing and Funding required CWSR Page 303 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 70 Mediu Hunterfield Road connection between Stobhill upgrading of for part of the m to Stobhill Road, Road, New Hunterfield existing off-road route. Gorebridge, and Road, and the A7, and new path/trail to an the A7 active travel links through accessible new housing development from Stobhill Road to New Hunterfield. Improved facilities along Greenhall Road shared-use path. Potential installation of crossing facilities and widening of current pedestrian only path Part of the route to be completed/progres sing as part of new housing development. 53. Mediu m RR3b. Connecting RR3a to A701 and Science park Crossing facilities and onward connections from Oatslie Road across The Brae, Auchendinny, to meet the existing shared-use path on the A701 Shared-use path or fully- segregated infrastructure next to the carriage and crossing facilities Funding required Could be combined with route 1 PFE, Network, CWSR Page 304 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 71 54. Mediu m Edinburgh Road from Dalkeith Main Street to Lugton Brae Connection required to join Dalkeith’s planned new pedestrianised high street to the existing shared use path on Old Dalkeith Road for onward journeys towards Edinburgh Fully-segregated or shared use path alongside the main carriageway, or alternative use of Old Edinburgh Road as an active travel route and traffic restrictions Funding required. Potential to look at this connection as part of a wider ‘Dalkeith Connections’ project submission to Sustrans PFE fund 23/24 or 24/25 Bridge over the River North Esk and other width restrictions. PFE 55. Mediu m Easthouses Road to Cauden Road, Dalkeith Easthouses Road leading up to Lauder Road, and then East on Lauder Road to meet Cauden Road (If D2 is not feasible) Shared-use pathway alongside both carriageways to link into the existing shared use path along Easthouses Road. Crossing points Funding required CWSR Page 305 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 72 56. Mediu m BL6. Cockpen Road to NCN196 Improved off-road path/quiet road connection between Cockpen Road and NCN route 1/196 Widening of existing path to allow shared- use for the full length. Barrier removal Funding required Alternative off- road link from the B704 to NCN1/196 avoiding cycling/walking along the busy B704- May not be as great a priority if improvements made to the B704 CWSR 57. Mediu m P5, P6, P7 Penicuik- John Street to Beeslack High School Provision of a mixed off- road/quiet road route to improve travel throughout Penicuik and as an alternative to using the A701. Connection between St. Kentigern Way & Eskhill. Connection between Loanburn and Eastfield Drive along Cuiken Burn. Connection between Eastfield Industrial Estate and Beeslack High-School via Beeslack Woods. Widening of existing surfaced pedestrian only off-road paths to allow shared use. Widening and resurfacing of existing off- road unsurfaced path. Installation of crossing facilities Funding required CWSR Page 306 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 73 58. Mediu m A702 Bush Loan Road to Flotterstone Improving connections from Roslin, Easter Bush, Loanhead etc. to Flotterstone and the Pentland Hills Regional Park Pavement widening to create shared- use infrastructure alongside the A702 carriageway Alternative surfacing of pathways through the Bush Estate to allow access for all Funding required Owned/manage d by Transport Scotland Width restrictions Recreational/Touri sm 59. Mediu m D5. Dalkeith High School campus to Salters Road Connection between Salters Road and NCN route 1/196 creation of new shared-use active travel infrastructure as part of new development To be funded/delivered as part of new housing development? Advantages over the current NCN route? Who will the connection serve? 60. Mediu m Eskbank Toll to the A7 via Lasswade Road Flatter and shorter route from Eskbank Toll to the A7 than using the un-protected cycle lanes on the B6392. Will provide a direct link into the A7 urbanisation active travel infrastructure Shared-use or fully segregated pedestrian/cycli ng infrastructure alongside the carriageway Funding required Within the scope of a ‘Dalkeith Connections’ 24/25 Sustrans PFE bid? PFE, CWSR Page 307 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 74 61. Mediu m P2. Connection between Rulion Rd and Queensway Provision of an off-road cycling connection and improved access to Cuiken Primary School, avoiding busier roads Widening and resurfacing to allow shared- use Funding required CWSR, recreation 62. Mediu m P3. Cuiken Burn path link to Edinburgh Rd. Improved active travel connectivity within Penicuik, avoiding main roads Widening and re-surfacing of existing paths. Funding required CWSR 63. Mediu m Eskbank Toll to Beccleuch Street Direct connection between Eskbank Toll (and the A7 if route 60 is funded) to the centre of Dalkeith Upgrading of pavements to fully-segregated pedestrian/cycli ng infrastructure along busy road into the town centre Funding required Combined with route 60 as part of a ‘Dalkeith Connections’ 24/25 Sustrans PFE bid? Width restrictions? Private properties PFE, CWSR 64. Mediu m Edgehead to Whitehill Footpath or shared use provision to fill in the missing section without a footpath between Whitehill and Edgehead. Shared use provision along the entire length of road would require widening of existing sections of pavement. Potential for Quiet Road status? New path to replace existing on-road only walking/cycling in places, and widening to shared-use in others. Alternatively look to make this part of a ‘Quiet Road’ network Funding required Would provide better access to Vogrie Country Park Steep gradients may restrict usage Quiet rural road already CWSR, Recreational, tourism Page 308 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 75 65. Mediu m Hillhead- linking Melville Dykes Road to Bonnyrigg Most direct route from Bonnyrigg for commuting towards Edinburgh, also avoiding the A7. This would link into route number 3 if it proceeds Next to carriageway fully segregated pedestrian/cycli ng provision Funding required Town centre location at beginning of route- width restrictions along length CWSR, PFE, Network 66. Mediu m Straiton Nature Reserve and QR61 improved accessibility Converting the stepped access to Straiton Nature Reserve path and connection to QR61 to a ramp Ramp access Funding required Land ownership Potential development in the vicinity Recreation, tourism, CWSR, Network 67. Mediu m P12 – Penicuik. Connection between Rullion Road and Bellman's Road. Improved road safety for travel to primary and secondary schools. Widening of existing path to make a shared- use facility. Funding required CWSR 68. Mediu m Carlops Road from Bog Road to Penicuik House Improved access to Penicuik House/Penicuik Estate Widening of existing pedestrian only pavement alongside the carriageway. Combine with route 80 CWSR, recreational, tourism Page 309 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 76 69. Mediu m D6. Path along Melville Gate Rd - widening of existing path (currently pedestrian only). Providing a connection between the shared use path on Old Dalkeith Road and the B6392, and onwards to Edinburgh via the shared use path on Gilmerton Road. Shared-use path next to the carriageway to link in with the surrounding shared-use path network Funding required Provides an alternative to using the Sheriffhall Roundabout to Edinburgh, or the unprotected lanes on the B6392 from Eskbank The route would require some infrastructure on the missing section of the B6392 at the Melville Castle Entrance CWSR 70. Mediu m NM2. Connection between B6482 Suttislea Road and A7 Murderdean Road Improved connections between Newtongrange and Mayfield, Newbattle High School, and the existing shared-use path network. Improved active travel links to the railway station Widening of existing pedestrian-only paths, upgrading of some existing paths, provision of crossing facilities Funding required CWSR Page 310 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 77 71. Low NM3. Connection between B704 and the A7 via Butterfield Industrial Estate Improved active travel provision through Butterfield Industrial Estate, linking the B704 and the A7 and links into Newtongrange Railway Station. Will also provide a connection into new housing at Redheugh Widening of existing pedestrian only pavement to allow shared- use. Crossing facilities on the B704 Funding required This could be combined with route 23 to enable onward connections CWSR, PFE, Network 72. Low NM5. Connection between Suttislea Road and B703 Main Street, Newtongrange Improving links between Mayfield and existing paths around the Newbattle Campus to the centre of Newtongrange, avoiding negotiation of the double roundabouts in Newtongrange Widening of existing pedestrian only pavements to allow shared- use facilities alongside the main carriageway and through the park Funding required CWSR 73. Low NM7. Mayfield- Improving links between Widening of Funding required CWSR Connection north east Mayfield and existing between Easthouses and Newbattle pedestrian only Oak Place and Community Campus, linking pavements to B6482 into the existing shared-use allow shared path network in the area use facilities alongside the main carriageway, Page 311 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 78 and provision of crossing points 74. Low LB7. Loanhead- Surfacing of an existing off- Surface Funding required CWSR Connection road path to provide an off- improvements between Park road link as an alternative to provide an View and Park route to Bilston Glen off-road remote Avenue Industrial Estate shared-use path 75. Low G5. Barleyknowe Connection between Stobhill Widening of Funding required CWSR Road Primary and Stobhill Road pedestrian only along Barleyknowe Road pavement to provide a shared-use path alongside the carriageway, plus addition of continuous crossings 76. Low BL3. Path along Improving connectivity in Widening of Funding required If extentded to CWSR Polton the vicinity of schools and pedestrian only Lasswade and Road W and around Polton pavement to combined with Polton provide a route 3 it would Drive between shared-use path provide a Cameron alongside the connection from Crescent and carriageway, Polton to the Dobbie’s Road plus addition of Edinburgh continuous boundary crossings 77. Low P11. Connection Resurfacing of existing Surfacing of Funding required CWSR, recreation between Belwood unsurfaced path for more existing path to and Glencorse local connections avoiding provide a fully- Page 312 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 79 the A701 accessible remote off-road rural route 78. Low CP3. Path along Similar to route 64, but only Widening of Funding required CWSR, recreation, Edgehead the Edgehead end of the existing tourism Road between route pedestrian only B6372 path and Cotty Burn 79. Low Road from Pavement provision out of Pavement or Funding required CWSR. Cousland Village the village of Cousland to shared-use path Hall to the A6124 meet up with existing to allow for safe (down to and pavement on the A6124 for active travel on through the traffic safe active travel out of the a country road signals) village and into East Lothian with no current pavement 80. Low P4. Penicuik- Improved access to Widening of Funding required CWSR, recreation, Broomhill Road to Montgomery Park and pavements next tourism Carlops Road via existing shared-use paths to the Bog Road and around the school campus; carriageway to Loan Burn. improved onward allow shared- connections from NCN196 use, and re- avoiding the busy A701, surfacing of improved access along Loan existing paths Burn; improved access along the burn towards Penicuik Estate 81. Low BL2. Connection between Polton Road W and Rosewell Road. Improved connectivity within Polton Widening and re-surfacing of existing path. Funding required CWSR Page 313 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 80 82. Low BL7. Cockpen Road, B704 to Hardengreen Roundabout Improved connections from NCN1 at Cockpen Roundabout to the A7 and onwards to Dalkeith. Widening of existing paths next to the main road carriageway. Part delivered as part of new housing development? CWSR Improved connections around new housing Provision of crossing facilities. Additional crossing points/continuosus crossings/widening required? 83. Low P1. Rullion Road Surface improvements to Surface Funding required Crossing point Recreation, to the A702 increase accessibility linking improvements required on the tourism, CWSR Rullion Road and the A702. to allow access A702? Onward Improved links to the for all along a access to the Pentland Hills- but no direct shared-use off Pentland Hills access point off the A702 road remote path. Addition of lighting. required? 84. Low P8.Penicuik. Improved, shorter, direct New shared-use Under Look at CWSR Connection access for all from path creation as construction/to be provision of between Mauricewood Road to part of new completed as part signage Rullion Road and Rullion Road avoiding longer housing of new housing Mauricewood route incorporating the development. development Road. A701 85. Low P9. Penicuik. Improved, shorter, direct New shared-use Under Look at CWSR Philip Place to access for all from path creation as construction/to be provision of Mauricewood Mauricewood Road to part of new completed as part signage Road Rullion Road avoiding longer housing of new housing route incorporating the development. development A701 86. Low P10. Penicuik. Improved connectivity New shared-use Under Look at CWSR Page 314 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 81 Connection path creation as construction/to be provision of between part of new completed as part signage Belwood Road and housing of new housing Mauricewood development. development Road. 87. Low P13. Connections around the Mauricewood area of Penicuik Improved connectivity within new housing, and between Mauricewood Road and Belwood Road to avoid sections of the A701 Shared use paths through new housing developments. Under construction/to be completed as part of new housing development CWSR New crossing facilities and access to bus stops 88. Low CP2. Pathhead to Fully segregated N/A The A68 is N/A the A6106 along active travel managed by the A68 - infrastructure, Transport or widening of Scotland- TS existing path to have plans to do provide a a feasibility shared-use path study looking at next to the main active travel carriageway infrastructure along this route in 24/25 Page 315 of 322
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On The Move Midlothian. Our Active Travel Strategy for Everyone: 2024- 34 82 89. Low BL9 S and BL9 N. Cockpen (NCN1) to NCN196, Bonnyrigg and the A7 Improved connectivity between NCN196 and Cockpen, and onwards on NCN1. Quiet road options as an alternative to using the busier surrounding roads. Creation of new shared-use paths to be delivered as part of new housing developments New links into the A7 active travel corridor 90. Low LB5. Straiton Road, Loanhead to Pentland Road Provision of new active travel links from the Straiton Junction to Pentland Road, avoiding the main A701 and busy roads around the retail park. Segregated or shared use active travel paths and crossing facilities Heavily dependent on development in the area, and progress with the relief road. Subject to development proposals and relief road progress Developer contributions, CWSR Some funding required Providing improved access from Straiton to Hillend and Easter Bush Page 316 of 322
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Midlothian Council Tuesday 27 February 2024 Item No 8.11 200th Anniversary of Braille Report by Saty Kaur, Chief Officer Corporate Solutions Report for Decision 1 Recommendations Council are asked to: - Note the 200th anniversary of Louis Braille; and - Endorse the officer recommended actions to recognise the 200th anniversary. 2 Purpose of Report/Executive Summary To update Council on the request to support the 200th anniversary of Braille. Date Friday 26 January 2024 Report Contact Saty Kaur, Chief Officer Corporate Solutions Saty.Kaur@midlothian.gov.uk Page 317 of 322
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2 3 Background 3.1 The braille system is based on six raised dots, arranged in two columns of three. Variations of the six dots represent the letters of the alphabet, punctuation and groups of letters. 3.2 Louis Braille (1809-52), from France, was the inventor of Braille, having become blind at the age of 4. The system was invented and developed through the early 1820s when Louis Braille was a teenager. Main Report 3.3 August 2024 is the 200th anniversary of the invention of the Braille system. Braille provides an active reading and writing methods for people who cannot access print. It provides people with independence, learning, literacy, and the enjoyment of reading. By opening doors in this way it makes a different for blind and partially sighted people. 3.4 RNIB is the largest publisher of Braille in Europe and published its first braille book in 1871. Today, it’s library holds over 25,000 books and music scores. Recognition of Louis Braille 3.5 RNIB Scotland has written to Midlothian Council (Appendix B) asking it to consider naming of streets in new build developments, or new buildings, after Louis Braille. 3.6 Council should note that there is already a Louis Braille Way in Gorebridge. As per the current street naming policy, it is not possible to duplicate a street name except in the circumstances of a street encompassing a flatted development which is attached to the existing street, whereby the flatted development may be given the same name with its uniqueness being identified by using a different suffix such as Place, Court or Way. Therefore, it would not be possible to name any other street or otherwise after Louis Braille. However, it is proposed to work with the local community to consider a small celebration event in the green open space within Louis Braille Way. 3.7 In recognition of the 200th anniversary, officers have identified existing work and activities that could be promoted during the 200th anniversary month: • Libraries: there has previously not been demand for Braille stock however the library will promote the current audiobook and eAudio resources that area available to all library users • Communications: awareness raising of screen readers, translation services through Reachdeck and if requested, through the Communications Team physical documents can be translated into Braille Page 318 of 322
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3 • Communities, Lifelong Learning and Employability: work is ongoing through the Local Employability Partnership and Sight Scotland to build relationships and seek to support those with visual impairments into employment • Equalities: the Equalities Mainstreaming Plan is reviewed annually and during the 2024/25 review the actions associated with visual impairment will be looked at to see what else can be achieved in this area. 4 Report Implications (Resource, Digital and Risk) 4.1 Resource No resource implications 4.2 Digital No digital implications 4.3 Risk No risk implications 4.4 Ensuring Equalities (if required a separate IIA must be completed) Visual impairment is identified in the Council’s Equalities Mainstreaming Plan. The report does not propose any changes that would require an IIA to be completed. 4.4 Additional Report Implications (See Appendix A) See Appendix A Appendices Appendix A – Additional Report Implications Appendix B – Background information/Links Page 319 of 322
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4 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 320 of 322
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Royal National Institute of Blind People A registered charity in England and Wales (226227), Scotland (SC039316) and the Isle of Man (1226). Also operating in Northern Ireland. A company incorporated by Royal Charter. Registered in England and Wales (RC000500). Registered office The Grimaldi Building 154a Pentonville Road London N1 9JE RNIB Scotland Logo RNIB Scotland 12-14 Hillside Crescent, Edinburgh EH7 5EA rnib.org.uk RNIB Helpline: 0303 123 9999 helpline@rnib.org.uk Sent via email. 10 January 2024 Dear Dr Vickers August 2024 sees the start of 12 months of celebrations to mark a significant milestone in the history of accessibility and literacy with the 200th anniversary of the invention by Louis Braille of the Braille system. In the early 1820s, at the age of 15, Louis Braille, who himself was visually impaired, introduced a revolutionary tactile writing system that would empower millions of blind and visually impaired individuals worldwide. The Braille system, comprised of raised dots representing letters and numbers, opened a new world of possibilities for blind and partially sighted people, providing them with a means to read, write, and communicate independently. Two centuries later, Braille continues to be a crucial tool, fostering inclusivity and equal opportunities for blind and partially sighted people worldwide. Louis Braille's legacy transcends physical barriers, with his system enriching the lives of countless individuals who can navigate the world through the touch of their fingertips. RNIB Scotland thought that a fitting tribute to mark this 200th anniversary might be the naming of any streets in new build developments, or any new buildings after Louis Braille, and wondered if this might be a possibility? Page 321 of 322
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rnib.org.uk Please do not hesitate to get in touch if you would like any further information. Yours sincerely James Adams Director RNIB Scotland Page 322 of 322