The meeting of Newark and Sherwood District Council on the 17th of December 2024 will include a motion from Councillors Lee and Farmer in support of local farmers following recent inheritance tax changes in the budget, as well as discussions on how the council's seats on committees will be allocated now that Councillors Dales and Holloway have left the Conservative Group. There will also be a report on the council's treasury management activities.

Cross-Party Support for Local Farmers and Protection Against the Impact of Recent Budget Changes

Councillors Lee and Farmer will be asking the council to support a motion expressing concern over changes to inheritance tax in the budget announced by the Chancellor, Rachel Reeves MP.

The motion is in response to a change in the budget that now caps agricultural property relief at £1 million. The motion notes that, according to the DEFRA statistics for agricultural land use in June 2023, the average UK farm size is 213 acres and, according to Savills, the average value of agricultural land in Newark and Sherwood is £11,000 per acre. Based on these figures, the motion argues that the land value alone is £2.3 million and with other assets included most average farms in our area carry a IHT rating of over £3,000,000. The motion states that The Country Land and Business Association (CLA) puts the total farms affected in the UK at 70,000.

The motion states that the change could force local farmers to sell land in order to pay inheritance tax, which will impact farmers and the farming community’s ability to produce food and threatens national food security at a time when geopolitical tensions threaten to destabilise global food production capacity. It further states that this would increase the distance food has to travel to reach the district, increasing carbon emissions.

The motion also recognises the environmental benefits of farming, stating that Farming also supports environmental objectives such as increasing biodiversity through habitat creation and support for pollinators whilst simultaneously enhancing natural flood management like tree planting and creating and maintaining buffer zones to mitigate localised flooding.

The motion asks the council to recognise The invaluable contribution of farmers to our district, our food security, enhancing the natural environment and the local economy and The immediate and long-term risks posed to local farmers and multi-generational farming families by the current Budget measures.

The motion calls on the council to write to Rachel Reeves MP and "urge a reconsideration of the most recent budget decision to levy inheritance tax on agricultural land and protect family-owned farms from excessive tax burdens that threaten their operations and legacy.”

Political Composition of the Council and Allocation of Seats on Committees

This report informs the council of changes that need to be made to the political makeup of the council's committees following the recent departures of Councillor Dales and Councillor Holloway from the Conservative Group.

The report notes that Section 15 of the Local Government & Housing Act 1989 requires the Council to consider the political composition of the Council. Under The Act, local authorities to allocate seats on Committees of a local authority on a proportional basis, in accordance with the number of seats on the Council held by each political group.

Now that Councillors Dales and Holloway have left the Conservative Group, there are 12 Conservative Councillors, 10 Labour Councillors, 6 Independants for Newark & District Councillors, 3 Liberal Democrat Councillors, 2 Newark & Sherwood District Independents Councillors, 2 Green Councillors, and 4 Independent Councillors not aligned to any group.

The council is legally required to allocate seats on the following committees in proportion to the number of councillors in each political group:

• The Policy & Performance Improvement Committee
• The Planning Committee
• The Licensing Committee
• The General Purposes Committee
• The Audit & Governance Committee
• The Board of Gilstrap Trustees

The report proposes that the seats on these committees be allocated in the following way, following discussions with all of the political groups and independent councillors:

• 26 Conservative Councillors
• 20 Labour Councillors
• 12 Independents for Newark & District Councillors
• 6 Liberal Democrat Councillors
• 4 Newark & Sherwood District Independents Councillors
• 4 Green Councillors
• 2 Independent Councillors not aligned to any group
• 1 Independent Councillor not aligned to any group
• 1 Independent Councillor not aligned to any group
• 1 Independent Councillor not aligned to any group

The report recommends that Councillor Dales be given a seat on the Planning Committee and Councillor Holloway be given a seat on the Policy and Performance Improvement Committee.

Councillor Kellas will be replacing Councillor Holloway as Leader of the Conservative Group. Councillor Jackson will continue to be the Deputy Leader of the Conservative Group.

The report notes that, as Leader of the Largest Opposition Group, Councillor Kellas will now sit on the cabinet, and is therefore no longer able to sit on the Policy & Performance Improvement Committee.

Treasury Management Mid-Year Report 2024/25

This report provides an update on the council's treasury management activities, which include "The management of the local authority’s borrowing, investments and cashflows, 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”.

The report is prepared in accordance with the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on Treasury Management (revised 2017).

The report provides information about the council's borrowing strategy, and notes that As the Council is in a significant under borrowed position... there may be a requirement during the remainder of the financial year where new borrowing is required. The report assures the council that Any new borrowing will be within the approved Treasury Management Borrowing Strategy framework and will have been reviewed by the S151 Officer for cost effectiveness as whether to borrow shorter term or long term in relation to interest rate forecasts. ¹

The council holds £3.5 million of Lender's Option Borrower's Option loans (LOBOs), where the lender has the option to propose an increase in the interest rate at set dates, following which the Council has the option to either accept the new rate or to repay the loan at no additional cost. None of the lenders chose to raise the interest rate on these loans in the last 6 months.

The report also discusses the council's investment activity, which is guided by The Guidance on Local Government Investments in England. The council's investment objective is to strike an appropriate balance between risk and return, minimising the risk of incurring losses from defaults and the risk of receiving unsuitably low investment income.

The report notes that the council has adopted a number of voluntary measures of its exposure to risk, and that there have been no breaches of those measures during the current financial year. The council monitors:

• Portfolio average credit rating: This measures the council's exposure to credit risk, or the risk that an organisation the council lends money to will be unable to repay it. The council aims for the average credit rating of its investments to be at least A. At the moment, the average credit rating is AA.
• Liquidity risk: This measures the council's exposure to the risk that it will be unable to meet its short term financial obligations. The council monitors the percentage of the money it has available that could be accessed within three months, between 3-12 months, and over 12 months. The council's targets are to have 100% available within three months, 80% available within 3-12 months, and 60% available within over 12 months. At the moment, 59% is available within three months, 12% is available within 3-12 months, and 29% is available within over 12 months.
• Price risk: This measures the council's exposure to the risk that the price of an investment could go down. The council limits the amount of money it invests for longer than one year to £15 million. At the moment, the amount of money invested for longer than one year is £12.5 million.

The report summarises the state of the UK economy during the third quarter of 2024 (July to September) and notes that The economy’s stagnation in June and July points more to a mild slowdown in GDP growth than a sudden drop back into a recession. The report goes on to say that CPI inflation stayed at 2.2% in August, but services inflation rose from a two-year low of 5.2% in July to 5.6%, significantly above its long-run average of 3.5%. The report concludes that Our central forecast is still for rates to fall to 4.5% by the end of 2024 with further cuts likely throughout 2025.