The report of the Executive Manager – Finance and Corporate Services.

The Service Manager – Finance provided the Capital and Investment Strategy 2019/20 report, which focused on traditional treasury activity and the Council’s commercial property investments.

The Service Manager – Finance advised the Group that the Local government Act 2003 requires the council to comply with the CIPFA Prudential Code for Capital Finance in Local authorities when Carrying out capital and treasury management activities. Adding that the objectives of the CIPFA Prudential code is to ensure that capital investment plans are affordable, prudent and sustainable and that treasury management decisions are taken in accordance with the treasury management strategy.

The Service Manager – Finance referred to Appendix A, attached to the report, which provided the Group with information on the:

·         Capital Prudential Indicators

·         Minimum Revenue Provision Policy (MRP)

·         Treasury Management Strategy

·         Commercial Investments

She added that the Capital |Prudential Indicators and Treasury Management Strategy give both a position statement and details of the future position of the Council’s Capital, Commercial Investment and Treasury plans, and confirmed the documents comply with best professional practice and as such are recommended for approval by Full Council.

The Service Manager – Finance confirmed that the report identifies the risks relating to interest rates, use of counterparties for investments and the returns from commercial investments, particularly in light of prevailing uncertainty with BREXIT and global financial markets.

Members considered the report and asked specific questions. In respect of underspends on Capital Budgets - why are these so excessive?

The Executive Manager – Finance and Corporate Services advised the Group that Capital Investment is fraught with risk and that there are good reasons why there are the underspends. He added that delays in completion on some of the Council’s larger projects, for example the Depot can lead to an under spend. A change in the environment for property investments and a requirement to invest more in the Borough has meant a planned slowdown in asset investments (the largest 2018/19 underspend).

Members questioned how often the Capital Programme is reviewed, and whether there is a mix of discussion with the management team and the auditors. Mr Hoose – External Auditor assured the Group that as the Council’s auditors, regular checks were carried out and they were comfortable with the Council’s investments.

Members raised their concerns and questioned the underlying need for the Council to borrow as projected in the Capital Expenditure and Financing section. The Executive Manager – Finance and Corporate Services advised that the £25m is the maximum the Council could borrow in the short term and effectively acts as a back-stop should the Council need to borrow.

It was RESOLVED that the Group approve the following for Full Council on 7 March 2019.

a)    The Capital Strategy and Prudential Indicators and Limits for 2019/20 to 2023/24 in Appendix A (paragraphs 5 to 13) of the report.

b)    The Minimum Revenue Provision (MRP) Statement in Appendix A (paragraph 19) which sets out the Council’s policy on MRP.

c)    The treasury Management Strategy 2019/20 to 2023/24 and the Treasury Indicators in Appendix A (paragraphs 20 to 63) of the report.

d)    The commercial Investments Indicators and Limits for 2019/20 to 2023/24 in appendix A (paragraphs 64 to 77).