The Head of Financial Services introduced the report.   He said that national shifts in inflation, which was rising, and general economic growth, which had slowed in the first half of 2017, were yet to feed through to the Oxford economy in a tangible way.  Business Rates income was holding up, units in the new Westgate Shopping Centre were being let and there had been no significant increase in bankruptcies.  BMW had recently announced that the next generation Mini would be produced in Cowley, which was good news for the local economy.

The London School of Economics (LSE) has assessed the expected impacts of a ‘hard’ and ‘soft’ Brexit on the Gross Value Added (GVA) of UK cities over the next ten years.  The LSE predicted that there will be a negative impact across the board but Oxford was expected to be among the least adversely affected UK cities in the South of England, with GVA impacted by -1% (soft Brexit) to -2% (hard Brexit) over the period.  This analysis was based on assumptions about increases in trade costs and did not factor in the effects of Brexit on innovation, foreign investment and migration flows, or how cities would respond to changes linked to Brexit.   The LSE therefore expected that their analysis would underestimate the economic impacts of Brexit.

In terms of interest rates, the Bank of England’s base rate remained at a historic low of 0.25% and was not expected to be increased until 2019.  This had the effect of supressing investment returns.   It also meant that borrowing rates available through the Public Works Loan Board were very low.  The Council was likely to benefit from the low borrowing rates at some stage when borrowing to finance the Housing Company’s development programme.

The Panel heard that Brexit was having an effect on the employment market, with a number of EU nationals reported to be leaving or planning to leave the

UK.  Direct Services were having difficulties recruiting to some posts and these issues may start to bite over time.

The Panel noted that seven council employees who were EU nationals had applied  to  be  reimbursed  the  £65  cost  of  applying  for  a  UK  Registration Certificate or Permanent Residence Card.  The Panel suggested that the Council should continue to offer this to staff, either through further communications to all staff or more targeted communications.

The Panel questioned the extent to which the Westgate Shopping Centre was attracting new retail business to the city or causing existing businesses to relocate.  The Major Projects and Development Manager said that the Westgate would provide a different offer to other parts of the city centre, including a number of new London-based operators who were opening flagship stores outside the capital.  Some existing city centre businesses had been turned down for plots in the new Westgate.  It was expected that there would be a period of flux for 1-3 years during which time there may be a number of empty units in the city centre  ...  view the full minutes text for item 59

Cllr Gant, Chair of the Scrutiny Committee presented the report.  He said that there was no evidence that any bankruptcies or business closure were linked to Brexit.

Cllr Price, Board Member for Corporate Strategy and Economic Development said the Economic steering group was keeping a watching brief on the impact of Brexit on businesses. He recommended that someone from the Scrutiny Committee be appointed to the steering group.

Invited:

Nigel Kennedy, Head of Financial Services

The Panel considered the implications of Brexit for the Council’s finances in September 2016 and asked to monitor the impacts over time.

This updated report enables the Panel to monitor the impacts of Brexit on the Council as of March 2017 (Article 50 is expected to be triggered on 29 March).

The Head of Financial Services introduced the report.  He highlighted the low interest rates and said that property fund values were recovering after a dip that followed the referendum vote but that values remained significantly above purchase values.  However, these were long term investments and capital appreciation values would only be realised when the Council sold up.  The Head of Financial Services said that Brexit had significant risks to the local economy.  For example, if BMW decided to move production from Cowley to continental Europe there would be serious impacts on jobs (including in the supply chain) and on the Council’s Business Rates income.

The Panel noted that there were 3,999 business premises in Oxford with a total rateable value of £255m.  24% of this value was attributable to only 22 properties, the second highest rateable value being for the BMW plant.

The Panel questioned whether there was a mechanism for business to raise specific warnings at an early stage during the Brexit process, given that the Council could potentially offer certain Business Rate Reliefs or make representations to Government on behalf of smaller businesses in particular that don’t necessarily have a voice at a national level.  The Head of Financial Services said that to date Business Rates collection had remained buoyant but that could change in future.  It may also be useful to monitor bankruptcies.  The Panel also suggested that it may be useful to monitor the impacts of Brexit on the higher education and language school sectors.

The Panel agreed to continue to monitor the impacts of Brexit at regular intervals and to make the following recommendation to the City Executive Board:

Recommendation - That the Council, perhaps through the LEP, considers whether there is a need for a mechanism for local businesses to express concerns at an early stage about the expected impacts of Brexit on their businesses and jobs in the local economy.