Agenda item

Agenda item

CAPITAL STRATEGY (INCLUDING THE TREASURY MANAGEMENT STRATEGY) FOR 2021/22

A report of the Head of Finance and Property Services.

Minutes:

The Head of Financial Services submitted a report on the Capital Strategy (Item 6 on the agenda filed with these minutes), which was required under the terms of the ‘Prudential Code’, a statutory code of practice.

 

The report also set out the Treasury Management Strategy Statement together with the Annual Investment Strategy and Minimum Revenue Provision (MRP) Policy. These latter strategies and the MRP policy were integral to the overarching Capital Finance Strategy and were therefore presented within a single report for context.

 

Strategic Director; Commercial Development, Assets and Leisure, the Strategic Director; Environment and Corporate Services and The Head of Financial Services attended the meeting and assisted with consideration of the item.

 

It was noted that there was a minor error regarding the date that the Revised Capital Plan was subject to approval by Council.[1] This would be amended.

 

It was noted that the Strategy was the same as that of the previous year other than the withdrawal of the Commercial Investment Strategy.  Within this strategy there would be no purchase of commercial property in the 2021/22 financial year.  Any change in this strategy would be subject to a report to Cabinet.

 

Members of the Committee raised concerns regarding the removal of investment in commercial property.  Particular concern was expressed that the measurement criteria, which had previously been extensively discussed, should be seen by the Audit Committee should they be included in future.

 

The Committee were advised in response to questions that:

 

  • borrowing statistics included borrowing from other budgets within the Council.  Borrowing externally (i.e. from the Public Works Loan Board (PWLB)) would depend on whether opportunities arose to invest in areas such as the Enterprise Zone or regeneration and such borrowing would be subject to Cabinet approval.  If no such opportunities arose then an internally borrowed position would likely be maintained.
  • the Enterprise and Careers Hub had originally been purchased with advance funding from the Loughborough Town Deal.  To facilitate this and give Loughborough College a period of reduced risk a lease had been arranged and the College were obliged to pay rent following the three-year rent-free period.  This was not a financial liability for Council as the College would be liable for rates and operating costs.   After this period the lease could be continued at a market cost or broken and the building re-let, meaning it came back to CBC. 
  • the accommodation review to make better use of the estate that included the Enterprise and Careers Hub would likely take three to five years to fully deliver and this would be coming out of a Government town funding grant rather than from revenue or capital.
  • there was a distinction between regeneration and investment property.  Anything purchased outside of the borough would be difficult to justify as regeneration.
  • It was clarified that Solicitors and technical staff recruited to work on the commercial property were not permanent staff recruited by the Council, as such there were no concerns about the allocation of staff.
  • regarding capital expenditure:
    • £22,708,000 was the final figure for commercial investments.
    • There would be some Enterprise Zone expenditure against the budget of £15 million by the end of the financial year. 
    • Against the General fund of £12.5 million it was envisaged that spending would be increased. However it would be envisaged that some project would be some carry-over of schemes into the next financial year.
    • Some schemes, particularly relating to the Housing Revenue Account (HRA) had been affected by the Covid-19 pandemic and as such it was envisaged that there would be some carry-over of schemes into the next financial year.
    • Spending out of the £15 million budget on regeneration would be unlikely.
  • the figures on HRA contributions were made up of depreciation and revenue contribution to capital.
  • it was likely that underspends on the HRA would be carried forward.

·         The figures on HRA contributions would be clarified by the Head of Financial Services as they appeared to be higher than expected.  This would be circulated to the Committee when available.

 

RESOLVED

 

1.That the Capital Plan be noted and the recommendations to Cabinet be supported subject to Resolution 2 below

 

2.That Cabinet be asked to note the Audit Committee’s concern about the removal of the measurement criteria relating to future investment in Commercial Property.

 

Reasons

 

  1. To acknowledge the Committee’s consideration of the item.

 

  1. To ensure Cabinet are aware of the removal of these criteria, and that if they are reinstated at any point in the future a formal approval process will be required, which should involve the Audit Committee.

 



[1] Post meeting note: Following the meeting it was determined that the date was correct, but the following wording needed to be changed: “which is subject to approval by Council 9

November 2020” be corrected to read “which was approved by Council 9 November

2020”.

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