The Head of Finance and Section 151 Officer provided a report to Council to inform them of the initial implications for the Authority of the recent referendum vote to leave the European Union.  He stated that the decision to leave the European Union would affect many areas of Council activity and therefore would inevitably impact upon delivery of the Corporate Plan.  He added that in the aftermath of the result, there was significant uncertainty over even the timeline for triggering the process and at the time of this report being submitted to Council, the president of the European parliament, Martin Shulz had suggested that negotiations should begin as early as 28 June 2016. 

The Head of Finance and Section 151 Officer advised that Wales receives significant levels of EU Funding, in particular for both Regional Development (European Regional Development Fund (ERDF) and Regional Development Fund Programme and Social Programmes (European Social Fund (ESF) as well as subsidies such as primary school milk.  The current programmes run to financial year 2020/21, with expectations prior to the referendum of an extension beyond this.  He advised that at least in the medium term, current approved grant schemes will be continued, though it was likely those which were closest to approval will be at least delayed, or put on hold, until the situation becomes clearer.  With specific reference to the Cardiff Capital Region City Deal, it was expected that specific funding measures would need to be urgently put in place to guarantee funding for the Metro Scheme.

The Head of Finance and Section 151 Officer advised Members that all of the Council’s investments were held in pounds, with no foreign currency exposure.  The Council operates a deposit account with a UK subsidiary of a Swedish Bank, Sveska Handelsbanken, whose branch is in Pencoed.  He informed Members that it was not considered that this posed any immediate risk, however the situation would be monitored.  The uncertainty of the future trade, political and legislative arrangements have caused significant volatility in both UK and World financial markets and it would likely take some time for the situation to stabilise.  He added that the Council’s Local Government Pension Scheme would have seen the value of its investments fall in recent days due to its volatility.  However, Members should note that pension fund holdings represent long term investments to meet the long term liabilities, and therefore the immediate fluctuations were less important than the longer term economic impact of the referendum. 

Members thanked the Officer for the report and stated that it was important that Members were kept informed of any potential loss of income as a result of the referendum vote to leave the EU.

The Leader stated that funding for the City Deal was a concern of Cabinet and as a result they had sent a letter to the UK and Welsh Government demanding that funding for it was not jeopardised and was hopeful that the media would also recognise this. 

The Deputy Leader stated that the Local Government Pension Scheme was a significant financial obligation for the Authority.  He added that there was a risk that the forthcoming valuation in the pension scheme might show that the value had plummeted and as a consequence the Authority may have to contribute more to the scheme to offset the loss.  He also added that this was just one consequence that was apparent so far. 

A Member stated that he had recently attended a Pensions Communication Forum but the position was not clear as the valuation was still underway.  He added that by September/ October time the value should be known and the situation will be clearer. 

The Cabinet Member Regeneration and Economic Development referred Members to the table in the report that showed the County of Bridgend currently has approved EU funding of £4.926million.  He added that the RDP funding would be honoured until 2020.  He stated that in the short term the Council should be concerned about the manufacturing and steel industry as the EU was the largest market for the industry.  

RESOLVED:           That Council noted the contents of the report.