Governance & Transformation Cabinet Member – 15 December 2016

37      (37)    NATIONAL NON-DOMESTIC RATE RELIEF APPLICATIONS AND MONITORING – The Director of Policy and Resources submitted a report which sought consideration of the level of National Non-Domestic Rate (NNDR) relief to be awarded to ratepayers in North Lincolnshire.  The report also presented the current level of reliefs granted, mandatory and discretionary, compared to the budget.

NNDR legislation made provision for granting relief to a range of non domestic properties.  That included, for example, small business relief, charitable relief and empty property relief.  Some relief was mandated and must be granted; other relief was discretionary.

Under the current regime of part localisation of NNDR the council funded a proportion of both mandatory and discretionary reliefs.  For the level of collection assumed in the budget the council would fund 37% of all reliefs.

This meant that the level of NNDR reliefs had a larger impact on the council’s finances than before.  The levels of all mandatory and discretionary reliefs were now reported periodically to inform the cabinet member of the forecast impact on the budget.

Mandatory reliefs comprised around 97% of all reliefs by value.  The forecast was that more relief would be granted than was assumed in the budget.  The level of discretionary relief would be higher than originally estimated if the proposals in the report were approved.  The details were shown at Appendix A.

There had been an increase in mandatory empty property relief.  This was because of the closure of Killingholme A Power Station and several other sites with large rateable values qualifying for relief.

The criteria for assessing applications for discretionary relief were reviewed in May 2012.

The ratepayers in receipt of rate relief in 2015/16 have had their applications reviewed.  New and existing applicants continue to return forms fully completed.

The council also had a Hardship Relief scheme for cases of exceptional hardship.  Cases were rare, but two applications had been received which were detailed at Appendix B.

Resolved – (a) That the level of rate relief to each applicant as set out in the attached schedule to the report be awarded, and (b) that the latest position for 2016/17 on business rate reliefs be noted.

38      (38)    SALARY SACRIFICE SCHEME FOR UNPAID ANNUAL LEAVE  – The Director of Policy and Resources submitted a report that sought approval for the introduction of a salary sacrifice scheme for employees to ‘buy’ additional annual leave.

The Cabinet Member was informed that one of the agreed changes to employees’ terms and conditions from 1 April 2016 was the option for employees to ‘buy’ additional annual leave.  This was one part of the local agreement secured with trade unions.

The council’s Annual Leave policy (B.3) currently allowed employees to request additional unpaid leave, in excess of their annual leave entitlement, up to a maximum of 4 weeks’ per financial year (para 3.8).

If employees made an application under the current policy and their request was approved, this was usually deducted from their salary the month after the unpaid leave was taken.  This could be financially burdensome for employees.

A salary sacrifice scheme would involve employees giving up part of their cash salary each month in return for additional annual leave; spreading the cost throughout the financial year.

Salary sacrifice arrangements involved an employee sacrificing an element of their pay before tax and National Insurance (NI) contributions were taken, in return for a benefit, in this instance additional annual leave.

The report outlined the following aspects of the scheme –

The benefits to the council,

The benefits to employees,

Eligibility criteria,

Principles of the scheme,

Administration of the scheme, and

Impact of the scheme on members of the Local Government Pension Scheme.

Resolved – (a) That approval be given for the introduction of a salary sacrifice scheme for the purchase of additional annual leave; (b) that the scheme be introduced to coincide with the start of the next annual leave year: 1 April 2017, and (c) that P&MM be the scheme provider.

39      (39)    WATER MARKET COMPETITION AND PROCUREMENT – The Director of Policy and Resources submitted a report that informed the cabinet member of the opportunities arising from the opening of the non-residential water supply market in April 2017 and the associated procurement strategy implications for the council.

The water market presently operated as a series of regional privatised monopolies with certain limited exceptions.

This market had historically provided minimal choice for consumers.  Whilst satisfaction with water suppliers was generally higher than other utilities, noted issues existed such as lack of price competition, billing (over-reliance on estimated billing) and limited roll-out of smart metering and associated technology.

The Water Act 2016 introduced significant changes.  Notably from 1 April 2017 the water market would open to competition for all non-residential customers.

Significantly the market would separate into two sectors: “wholesalers” and “retailers”.  Wholesalers would remain regional entities.  Retailers could operate from anywhere in England and work with any wholesaler.

The market had already started to change shape:

United Utilities/Severn Trent:  Water Plus

Thames Water not entering as a retailer

Kelda/Yorkshire Water:  ThreeSixty

Anglian Water reported as “likely to rebrand” their retail arm

From 1 April 2017 it would become possible for non-residential water supply, waste water and ancillary services to be purchased from a single retailer or separate retailers.  Customers would have a relationship with retailers only.  Retailers would be licensed by a regulatory body – OFWAT and would be required to have access agreements in place with wholesalers in order to supply customers.  As of 12 September 2016, 14 retailer applications had been approved.

It was estimated that wholesale costs would account for around 93% of cost with retailers influencing 7% in respect of price competition.  As a consequence the initial scope for cost saving on water as a result of competition was expected to be limited.

The primary scope for cost reduction would continue to be reduced consumption.  However OFWAT would conduct a market review in 2019 which may increase competitiveness alongside opportunities presented by a maturing market.

The council had adopted a category strategy for the management of its utilities procurement through the Yorkshire Purchasing Organisation (YPO).  YPO was working with Crown Commercial Services and other central buying organisations to establish a pan-government framework offering a range of supply and service choices.

In readiness for accessing opportunities under the open market, it was intended at this stage that the council would access the framework in order to compliantly seek the most competitive supply option.

In preparation customers were encouraged to review and cleanse their site usage data and resolve current billing and consumption disputes.  This process was underway via the energy management team.

Resolved – (a) That the opportunities associated with the opening of the non-residential water supply market in 2017 be noted; (b) that the proposal to participate in the pan-government water supply procurement be approved, and (c) that a further report be submitted detailing the outcome of the pan-government procurement and associated options for the council’s water supply from 1 April 2017.