Thank you for your email response
I don't think I have a huge amount to add to the answer I have already given about the decision making process, the relationship between the deal, cabinet decision and payment profile and the Council's constitution.
The substantive point is that we have not relieved Capita of their obligation to fund the investment from within the contract price.
I can see from your response that there remains some confusion about terminology and I think we're in danger of having a debate about semantics. I wasn't at the Audit Committee to which you refer, so let me have another go at explaining the cash flow point. I've written separately to Ms Musgrove about this but not to you all. I don't think she has yet had time to publish that response. In summary, our cash balances are not the same as our balance sheet reserves. As I've previously set out, our balance sheet reserves are unchanged as a result of the payment profile to Capita. In terms of cash, at any given point in time the Council holds cash balances in the region of £200m as reported publicly at Cabinet (and also publicly to full Council - in the annual treasury management strategy. The Council finds it necessary to place cash in the order of £50m on overnight deposit often generating no or very little return. This is a function of the paucity of investment opportunities that meet the Council's stringent investment criteria. In this context, the front loading of the cash-flow of the £320m to release savings of £0.8m makes commercial sense and is in keeping with other routine treasury management decisions that are periodically made regarding the stewardship of the Council's investment portfolio. As set out in the Council's publicly published financial regulations these stewardship decisions are delegated to officers and quarterly treasury management reports are monitored by Committee, in public. See here for the link. We will often refer to the use of our cash balances as "internal borrowing". We have not taken out an actual loan from the public works loan board in this instance.
If I've still failed to articulate the differences between cashflow, cash balances and balance sheet reserves then I can only apologise. As a fellow accountant Mr. Dix may be able to make a better fist of it! Either which way, I trust you can now all accept that no payment has been made outside the contract sum or the Council's constitution.
Again, given that your respective blog comments and correspondence with Councillors are generating a lot of enquires for my team, I would ask that you publish this response. I will be sending a copy of this email to Members in due course.