Agenda item - Medium Term Financial Plan

Agenda item

Medium Term Financial Plan

Minutes:

Members received a presentation from the Climate Change Officer and Mr Rob Clarke, consultant from Greenfield Nordic, who had carried out the initial piece of work in respect of the Heat Network project.  It was noted that this had also been discussed at the Overview and Scrutiny Board’s Finance and Budget Working Group and there were a number of recommendations made from that meeting.  In this regard the Leader invited those Members observing the meeting to participate in the discussions which took place during the presentation from Mr. Clarke and the Climate Change Officer. 

 

The presentation (attached at appendix 1 to these minutes) covered a number of areas including the challenge of decarbonising heat and what the project would mean to Bromsgrove, the carbon saving climate change response, inward investment; reputational benefit and return on invest from the Council and/or other investors.  The proposed energy network was discussed in detail together with the details of the indicative arrangements in respect of the GSHP.  The conclusions of the piece of work Mr. Clarke had carried out were that there was a credible economic and environmental case for a heat network in Bromsgrove, which required more detailed project development, a timetable for this and funding breakdown were included within the presentation.

 

During the presentation the following areas were discussed in more detail between Members, officers and Mr. Clarke.

 

·         The proposed site of the energy network at Bromsgrove School and why this site had been chosen – it was confirmed that a number of other sites had been considered but this was the most appropriate.

·         The contribution from Bromsgrove School towards the project was also discussed.

·         Details around the boreholes and where these would be across the site.

·         The amount of pipework involved in the project – this was estimated at 7.5 kilometres.  The loss of heat from the pipes was also discussed.

·         Other authorities who were using Heat Network systems.

·         The systems overall efficiency and that that it was also around reducing the carbon footprint and using an alternative source of energy.

·         Any work on existing systems that were not suitable – it was confirmed that this would be assessed at stage 2 of the project.  The network has been designed at temperatures compatible with existing heating systems in general, but the details for each individual building would be confirmed at stage 2.

·         The largest consumers were Bromsgrove School, the NHS Trust, the Council owned buildings and BDHT, who had expressed an interest in the project.

·         The importance of support for the project from the public sector.

·         Any plans to recycle heat within buildings and the linking of new developments to the system, which would need the support of any relevant developers. 

·         Examples of similar projects were given, however the full extent of the costs of these were not currently available.  Members were keen to receive details around costings and the potential commercial and revenue aspect of the project moving forward.

·         Part of the next stage of the study would be to identify its viability and more detailed costings.

·         The impact on the Council’s carbon footprint from such a scheme which was estimated at between 30 and 60%.

·         Technical details in respect of the network heat density, the pipe size and water temperature (and how it was heated up) were discussed.

·         The project development stage including commercial structure of the project, key stakeholders and legal agreement.

·         It was confirmed that BDHT and the Hospital Trust were currently in a similar position to this Council in agreeing funds to contribute towards the project.

·         The availability of grant funding of the project from Central Government and the associated deadlines.  This was a open rolling programme with a budget agreed every 12 months by the Treasury, an application was submitted by this year’s deadline of 3rd January.  Unfortunately all the 2019/20 funding had been allocated so if the project was accepted it would be funded in the 20202/21 financial year subject to Treasury approval.

·         Members questioned what would be the impact if the funding from Central Government was not received.

 

Following the presentation and the detailed discussion it was agreed as there were a number of pertinent questions which remained unanswered, that any decision in respect of the Heat Network Business Case would be deferred, pending further information.  This included consideration of the recommendations from the Overview and Scrutiny Board.

 

The Financial Services Manager introduced the Medium Term Financial Plan 2020/21 – 2023/24 and highlighted the following:

 

·         The budget gap was smaller and more manageable, which was positive news and the Council was currently in a healthy position.

·         There were still challenges in the next four years, with the lack of clarity from Central Government being a contributing factor.  There was the option to use balances but this was not ideal and officers were being encouraged to be more commercial and make further efficiencies.

 

The Leader appreciated the work that had been carried out and reiterated that the Council needed to become more commercial in its work.

 

Members discussed a number of areas in more detail, including the pension deficit and the reserve for pension – the reserve had been put in place as it was clear that this was an area which could fluctuate significantly and therefore it was felt prudent to prepare for this.

 

The Deputy Leader and Portfolio Holder for Finance and Enabling advised Members that following discussions with the Valuation Office he was pleased to report that a £225k refund in respect of the Burcot Lane site had been agreed.

 

RESOLVED that the current Medium Term Financial Plan gap be noted and that officers continue to review the position to enable a balanced budget to be presented to Council on 26th February 2020.

 

Supporting documents: