Agendas, reports and minutes

15. Your Voice: Budget Engagement and Financial Update 
Cunntas às Ùr mu Bhuidseat          
                                                                                                                  
There had been circulated Report No. HC/50/18 by the Chief Executive and Depute Chief Executive.

In addition to the report, the Depute Chief Executive provided a verbal update on the previous day’s Scottish budget announcement during which he explained that the specific grant allocation for the Council would not be known until Monday 17 December.  The headline figure presented by the Scottish Government was a cash increase of £163m for local government in the next financial year.  However, COSLA was presenting that as a reduction in core grant funding of £237m, the difference between the two figures relating to ring-fenced funding for a number of new commitments that were included in the settlement, details of which were provided.  The reduction in core grant equated to 2% but the Council’s budget assumptions were based on a 1% reduction.  The difference between 1% and 2% was approximately £4.3m.  However, time was needed to analyse the figures in detail.

The Budget Leader commended the report to Members, commenting that, in common with other local authorities, the Council faced considerable challenges in managing its budget, but there were also opportunities.  The Budget Team remained committed to a three-year planning cycle and the projected overspend had reduced from £5.112m to £2.238m.  However, there were risks, such as the Looked After Children budget, winter maintenance and the staff pay award.  A target had been set of returning Council reserves to at least 2% of the revenue budget and, although the situation was challenging, it was important to bear in mind that there was in excess of £500m currently available to spend on the delivery of core services.

The Budget Team was committed to closing the budget gap, primarily by raising money through Council Tax and other fees, charges and taxes, and to spending less on services by delivering them more efficiently.  It was important that communities influenced the Council’s priorities, and the recent round of engagement events with staff and the public was evidence of the consultative approach to the budget.  The principal message in the face of the challenging national situation was delivering services to meet community needs as efficiently as possible, keeping within budget, and this would be best achieved through a collaborative approach within the Council and working with staff and the public, the input from whom had been humbling and encouraging.

During discussion, Members raised the following issues:-

• concern was expressed that the Budget Team had not been working collaboratively with the Opposition, who were also working on proposals with officers, and information was sought on when more detail on the budget proposals would be available.  In response, the Budget Leader explained that the budget papers were a work in progress and it was hoped that they would be available in early January in good time for the proposed seminar;
• the report referred to the very positive contributions to the budget engagement process.  However, many of the comments on social media were negative and there was a lot more to be done in terms of communicating why the Council did certain things and how initiatives such as the River Ness public art project and the Inverness Town House refurbishment were funded.  It was added that the press had a role to play in that regard.  In response, the Budget Leader acknowledged that there was a long way to go.  However, the engagement events that had taken place had been positively received and the Budget Team was listening to feedback and was committed to continuing the process;
• information was sought, and provided, on the current position in relation to undelivered savings;
• it was necessary to do things differently and the redesign work was starting to pay dividends.  However, some savings and culture changes took time to materialise;
• it was necessary to ask whether specific services needed to be provided and, if so, whether there was a more effective way of doing things;
• increasing income was key, and it was necessary to set targets and aim to reach them but recognise that, in some cases, they would not be achieved;
• it was important to think big and to take steps to get there, and the Council’s vision was ambitious, transformational and aspirational;
• Members and the public needed to know, in much more granularity, what Council funding was being spent on;
• the importance of consultation and communication was emphasised;
• it was necessary to explore new systems and processes, and there was a need for more remote, flexible and agile working;
• Members described the positive engagement that had taken place at Dingwall Academy, particularly at the School Fair, emphasising that the public recognised the issues being faced in relation to the budget, and had, in some cases, experienced the same issues in their own workplace and wanted to work with the Council to achieve improvements.  Other Members added that re-arranging one of the sessions at short notice had not been helpful, and inviting all Local Members to attend the Fair would have been more collaborative;
• thanks were expressed to the Budget Leader and the Executive Leadership Team, who had attended a significant number of engagement events throughout Highland;
• there was a need for a critical analysis of service provision from the bottom up rather than the top down to ensure that frontline staff had the opportunity to say what was working and what was not, and that their ideas for improving services and realising savings or revenue increases were reflected in the budget proposals that came forward;
• sometimes culture change was required.  However, it was not always comfortable to think about the impact some changes might have internally;
• in relation to income generation, it was believed that the parking meter at Eden Court Theatre was generating over £1000 per week, the majority of which was going back to the theatre to support drama and the arts;
• it was important to get maximum value out of the public pound;
• whilst the civic bonfire and fireworks display in Inverness cost in the region of £15,000 annually, the event brought a significant amount of revenue to the city and the money spent on stewarding, safety barriers etc benefitted the community and other public agencies;
• concern was expressed regarding janitors’ houses which had lain empty for a number of years and the associated missed potential in terms of rental income and Council Tax;
• whilst the Redesign Board was on the right track, it was necessary to move much faster and to monitor initiatives at an early stage so they could be modified or terminated if the anticipated efficiencies were not being achieved;
• it was necessary to apply more business acumen to public services to generate income;
• the level of response to the Facebook live session on education had been disappointing;
• if the predictions by COSLA and other local authorities were correct, the reduction in core grant funding was likely to be between 2-3% and the Council would require to identify additional savings of £4-5m.  It was no longer possible to “salami slice” and it was necessary to consider what areas to target and what services not to deliver.  It was important to recognise the enormity of the challenge, particularly against a backdrop of trying to increase capacity and better engage with the Third Sector, Community Councils, and communities in general.  It was necessary to work in collaboration to find the best possible solutions and to move forward with a sense of positivity, share the challenges with communities, be open and transparent in all communications and hopefully identity areas where any cuts would have the least possible impact on the most vulnerable people in Highland;
• staff and the public had a lot of good ideas and confidence was expressed that, with their help, the Council was up to the challenges and the legal requirement of a balanced budget would be achieved;
• there were positives and negatives to the Scottish Government budget depending on your point of view.  For example, HIE funding had been cut by 16% or £10m whereas Government Business and Constitutional Relations funding had increased by 500%, which equated to an additional £9.7m; and
• the island authorities had received extra money and it was maintained that, in many ways, Highland was like a large island and also required additional funding.

Decision

The Council:-

i.    NOTED the very positive contributions and the significant effort made by communities, staff and Members to the budget engagement process in the month of November; and 
ii.   AGREED to a Members’ seminar in January 2019 to take forward the matters raised into clear actions which will then be incorporated into the February budget paper.

16. Options for Funding Future Highland Tourism Development: A Transient Visitor Levy
Cìs Neach-tadhail Sealach

Declaration of Interest – Mrs I Mackenzie, Mrs I Campbell, Mr A Henderson, Mr G Adam, Mrs C Caddick, Mr H Morrison, Mr R MacDonald, Mr R Bremner, Mr C MacLeod, declared financial interests in this item as a tourist operator and Mr J Gordon declared a financial interest as a tourist operator and a non-financial interest as a director of SkyeConnect but, having applied the test outlined in Paragraphs 5.2 and 5.3 of the Councillors’ Code of Conduct, concluded that their interests did not preclude them from taking part in the discussion.

There had been circulated Report No. HC/51/18 dated 5 December 2018 by the Director of Development & Infrastructure.

It was highlighted to Members that, if approved, the proposed public consultation on the implementation of a Transient Visitor Levy would commence in early 2019.

During discussion, Members raised the following issues:-

• the Cabinet Secretary had informed the Convener that he was looking forward to receiving responses from the Council’s consultation;
• the consultation presented a once in a lifetime opportunity to consult on a Transient Visitor Levy and it was estimated that a levy could bring in between £5-10m per annum;
• whilst there were currently some areas which might not attract much tourism, it was important to ensure that the consultation reached every person and village in the Highlands as there was potential that visitor numbers could increase due to exposure through the internet and social media;
• there was a growing consensus across the whole of Scotland that a Transient Visitor Levy was required immediately and this had been recognised by the Scottish Government;
• Members should act as ambassadors for the levy and actively encourage people to respond to the consultation;
• in highlighting that other countries operated a tourism levy, it was emphasised that the levy was seeking to generate income from tourists and not the tourism sector or hoteliers.  The levy could be used to help address issues regarding infrastructure and had the potential to create opportunities for the tourism industry to apply for funding from;
• it was important to recognise the wider impact the introduction of a levy could have on the tourism industry in the Highlands and that the focus should not just be on the revenue that could potentially be generated from it;
• the consultation should contain evidence of how tourism levies worked in other countries as the way they operated could be different to what was being proposed in Scotland;
• the UK had both the highest level of VAT rates and air traffic passenger levies in Europe;
• other countries had the ability to change or reimburse tourism levies to compensate the local economy;
• in emphasising that the way in which a tourism levy was implemented in a city could be very different to how it was implemented within a rural area, it was highlighted that planning had started within Skye towards the introduction of separate car parking charges in iconic sites frequented by tourists, which could be considered as an equitable tax;
• in highlighting the importance of investing in infrastructure to sustain a viable tourism model, it was pointed out that, whilst revenue generated by tourism in Skye had made an important contribution towards central government, this had not always been reinvested in the area;
• discussion should take place with business representatives at the earliest opportunity to identify any issues they might have in relation to extra work arising from the introduction of a tourism levy;
• four years previously Inverness had had the highest proportion of empty commercial units of any high street within the UK and caution was urged against anything that could potentially impact on businesses;
• a recent study by UK Hospitality had identified Scotland as being ranked 135th out of 136 countries for tourism price competitiveness and concern was expressed that a small increase in cost to tourists could exacerbate this;
• any impact on income could be addressed by devolving a small percentage of local VAT revenues to the Council and that the consultation should seek views on this as an addition to the second recommendation contained within the report;
• it was not always the case that tourists were responsible for the increase in tax and these types of comment should be avoided during the consultation as some of instances of this tax would fall on those businesses and individuals that provide the services and could alienate those businesses the Council was seeking to consult with;
• the economy of rural and remote communities along the West Coast was reliant on tourism;
• it had been suggested locally by some organisations that there was potential for levies from tourism to be devolved to local areas for spending;
• the potential income generated from car parking charges at iconic visitor sites could raise similar sums of money to that suggested in the tourism levy and could also have a smaller impact on local businesses;
• the Highlands and Islands Federation of Small Businesses had recently conducted a survey of around 200 firms, of whom almost three quarters felt that the tourism levy would have a negative impact on the areas’ economy.  Conversely, it was highlighted that only 8% of firms within the Highlands and Islands Federation of Small Businesses had actually responded;
• the proposed tourism levy had the potential to increase revenue to the Council and that whilst various cases for spending money had been made by Members, other ideas for generating income were not always forthcoming;
• a tax on tourism was a standard form of income generation and could be used for investment in infrastructure;
• the potential to generate income from users of motorhomes was highlighted and whilst there was a willingness from users to spend money to clear their waste water and fill up water tanks, the opportunity was not currently available to them due to a lack of infrastructure;
• people visiting other countries were used to the concept of a tourism tax and it was unlikely an extra charge would put off potential visitors;
• in response to a comment expressing the need to ensure that the consultation included businesses and tourist operators and the potential for a cross-party group to identify what content should be included, it was highlighted that there was already a Tourism Working Group comprising of cross-party Members;
• the importance of having a means of financing improvements to infrastructure that would help to contribute to sustainable tourism was emphasised; and
• the popularity of videos recorded in Highland and posted on YouTube, such as those by Danny MacAskill, helped attract tourists to the area and it was important to generate revenue for investment in infrastructure.

Thereafter, Mr A Henderson, seconded by Ms M Smith, MOVED the terms of the recommendation as detailed.

As an AMENDMENT, Mr A Jarvie, seconded by Mr C Smith, moved that the following additional phrase be included within the second recommendation: ‘also, for this consultation to seek the same views on devolving a percentage of local VAT revenue to the Council’.

On a vote being taken, the MOTION received 46 votes and the AMENDMENT received 8 votes, with 2 abstentions, and the MOTION was therefore CARRIED, the votes having been cast as follows:- 

For the Motion:
Mr G Adam, Mrs J Barclay, Mr B Boyd, Mr R Bremner, Mrs C Caddick, Miss J Campbell, Mrs I Campbell, Mrs G Campbell-Sinclair, Mr A Christie, Dr I Cockburn, Mrs M Cockburn, Ms K Currie, Mrs M Davidson, Mr J Finlayson, Mr M Finlayson, Mr K Gowans, Mr A Graham, Mr J Gray, Ms P Hadley, Mr T Heggie, Mr A Henderson, Ms E Knox, Mr R Laird, Mr B Lobban, Mrs L MacDonald, Mr R MacDonald, Mr G MacKenzie, Mr A MacInnes, Mr A Mackinnon, Mrs A MacLean, Mr C MacLeod, Mr D Macpherson, Mr R MacWilliam, Mr H Morrison, Ms L Munro, Mrs P Munro, Mrs M Paterson, Mr M Reiss, Mr D Rixson, Mrs F Robertson, Mrs T Robertson, Mr K Rosie, Mr G Ross, Ms N Sinclair, Ms M Smith and Mr B Thompson.

For the Amendment:
Mr J Bruce, Mr L Fraser, Mr A Jarvie, Mr D Mackay, Mr D MacLeod, Mr P Saggers
Mr A Sinclair and Mr C Smith.

Abstentions:
Mr R Balfour and Mr A Baxter.

Decision

The Council:-

i.    NOTED the range of factors that would need consideration in deciding whether and how to implement a Transient Visitor Levy; and
ii.   APPROVED the proposal that the Council should carry out a public consultation on the implementation of a Transient Visitor Levy as described in section 7 of the report.

17. Redesign of Highland Council – Progress Report
Ath-dhealbhadh Chomhairle na Gaidhealtachd – Aithisg Adhartais

Declaration of Interest – Mr L Fraser as housing maintenance sub-contractor and Mr D Rixson as a Board member of Lochaber Housing Association declared non-financial interests in this item but, having applied the test outlined in Paragraphs 5.2 and 5.3 of the Councillors’ Code of Conduct, concluded that his interest did not preclude him from taking part in the discussion.

There had been circulated Report No. HC/52/18 dated 4 December 2018 by the Chief Executive.

There had also been circulated Minutes of Meeting of the Redesign Board held on 13 November 2018. 

During discussion, the following main issues were raised by Members:-

• reference was made to press reports about an Auditor’s Report in relation to the Council’s financial arrangements, written on behalf of the Council.  It was explained that these press reports were inaccurate.  The Council had received a report for the Redesign Board, free of charge, by a person independent of the Council.  The Board had commended the report as a great piece of work for consideration;
• there had been good engagement in the Redesign process by staff at all levels.  It was important to focus now on the implementation of reviews;
• it was acknowledged that the Trade Services Review had been very complicated but if good systems and processes were put in place that were easy to adopt then staff were more likely to adapt easier to the changes which had the potential to generate significant savings.  The implementation of this review required to be regularly monitored to ensure it was achieving the desired outcomes;
• in terms of the Trades Review, if there was evidence of poor workmanship then this needed to be challenged, as should excessively high charges for work completed. It was suggested that a lack of supervision might be a reason for poor workmanship.  Furthermore, it was understood that the merging of two systems within Trades Services had been tried in the past and halted some years later and there was concern that this could happen again;
• it was important that all the appropriate Officials that had an interest in the Trades Review had the chance to comment on the report, particularly from a health and safety perspective; and
• in relation to the Agency and Temporary workers review, some benefits could be achieved by simply adhering to current Council policies.  This review would also involve organisational change and flexible working.

The Council:-

i.    APPROVED the Minutes of the Redesign Board;
ii.   NOTED progress on Council Redesign work;
iii.  APPROVED the recommendations of the Trade Services Peer Review; and  
iv.  AGREED that the Redesign Board should continue to oversee the delivery and implementation of three specific recommendations in the short term which would assist with the delivery of savings, with increased efficiency of operation and with the development of the in-house capability for trade services for both Council housing and other property. These were:

• A Lean review into housing and property repairs processes;
• The development of a trial to pilot more effective joint working between Community Services and Development & Infrastructure; and 
• The procurement of a new framework for trade services.

18. Inverness and Highland City Region Deal Annual Report     
Cùmhnant Roinne/Baile

Declaration of Interest – Mr A Christie declared a financial interest in this item as a Board Member of NHS Highland but, having applied the test outlined in Paragraphs 5.2 and 5.3 of the Councillors’ Code of Conduct, concluded that his interest did not preclude him from taking part in the discussion.

There had been circulated Report No. HC/53/18 dated 3 December 2018 by the Director of Development and Infrastructure.

During discussion, Members raised the following issues:-

• it was queried what would follow after the current Inverness and Highland City Region Deal was concluded.  It was requested that, in the Council Programme, there be a commitment for the Council to promote to the UK and Scottish Governments for a successor to the City/Region Deal, particularly focusing on the North and West Coast Highlands and perhaps also in partnership with Partners in Northern Argyll to address some of the fundamental issues in these areas that the current City/Region Deal was just beginning to address.  In this respect, the Leader undertook to arrange a meeting with Members interested in this issue; 
• the time was now right for a new Region deal as the current City/Region deal had provided minimal benefits out with Inverness.  Any successor to the City/Region Deal should give consideration to smaller rural areas;
• the extensive geographical area and coastline of the Highlands needed to be taken into account in any successor to the City/Region deal;
• the work by Officers involved in the City/Region Deal was commended and there was good progress on projects such as the installation of WiFi and ultra-fast Broadband in various villages and towns across Highland.  This was a fantastic benefit for UHI, colleges and businesses across the Highlands;
• given the importance of retaining young people in the Highlands, the housing element within the City/Region Deal was mid-market rent housing, aimed at younger people.  Developments were planned in various locations throughout the Highlands;
• there was a need to look at how Local Committees could deliver on their local strategic priorities and how any successor to the City/Region Deal funding could be used to help meet these priorities; and
• it was explained that when the Council had drawn up its wish list of projects for City/Region Deal, the Treasury had only been interested in projects that could generate significant tax income or economic benefits e.g. more housing with increased income from Council tax.  However, the value of projects was not just be about their cost benefit return and the Council needed to be able to demonstrate the economic benefits of projects beyond any tax income that could be achieved.

Thereafter, the Council:-

i.    NOTED progress with the City Region Deal during 2018; and
ii.   APPROVED the publication of the report on the Council’s website.

19. Member Attendance at Meetings    
Làthaireachd Bhall aig Coinneamhan

It was confirmed that the Local Government (Scotland) Act 1973 required that if a Member of a Local Authority failed, throughout a period of six consecutive months, to attend any meeting of the Authority, they should, unless the failure was due to some reason approved by the Authority, cease to be a Member of that Authority.

In this regard, it was advised that Mr Blair Allan had, because of illness, been unable to attend meetings of the Council since 28 June 2018. As this might continue beyond the 6 months stipulated in the Act, the Council was required to approve his absence because of illness to enable him to continue as a Member of the Authority. 

Decision

The Council APPROVED Mr Allan’s absence as a result of illness on the basis that the position would be reviewed following a further three month period and an update provided for the meeting on 7 March 2019 if necessary.   

20. Timetable of Meetings
Clàr-ama Choinneamhan

The Council AGREED the following change to the timetable of meetings for 2019 - 

Special Meeting of Highland Council – 16 January 2019 at 2.00 pm

Lochaber Area Committee – to now be held on 23 January 2019 (instead of 16 January 2019) 

North Planning Applications Committee – to now be held on 9 April 2019 (instead of 16 April 2019)

The Council also AGREED to revisit Committee meeting dates scheduled for October 2019 with a view to avoiding school holidays.

21. Deeds Executed
Sgrìobhainnean Lagha a Bhuilicheadh

The Council NOTED that a list of deeds and other documents executed on behalf of the Council since the meeting held on 25 October 2018 was available in the Members’ Library and on the Council’s Website.

The meeting ended at 5.35 pm.