Cabinet Member for Finance
At its meeting on 11 February 2020, Cabinet considered Paper BCa/19/36, together with amendments to the Joint Capital, Investment & Treasury Management Strategies. Paper BC/19/37 now includes all the relevant updated information, together with the necessary recommendations.
Minutes:
213.1 The Chair of the Council invited Councillor Ward to introduce Paper BC/19/37.
213.2 Councillor Ward, the Leader, summarised the concerns of the MHCLG and CIPFA, which had resulted in a separate Capital, Investment and Treasury Management strategy statements and prudential indicators following the new guidance issued by CIPFA and MHCLG.
213.3 Councillor Ward then directed Members’ attention to the main points in the report, the Capital Strategy in Appendix A summarised the capital expenditure and financing requirements of the full capital programme, for both the GF and HRA, the details of which were detailed in the Budget Reports.
213.4 The report outlined the capital expenditure and capital investment decisions and the associated risks and rewards along with how risk was managed for future financial sustainability.
213.5 Capital expenditure for the next four years was shown in table 1 (paragraph 2.3) and the financing was detailed in table 2 (paragraph 2.11). The tables indicated that the total capital expenditure planned for 2020/21 was £32.89m, and most of the general fund expenditure would be funded by borrowing.
213.6 Appendix A included Prudential Indicators, which demonstrated that the Councils’ investment plans were affordable, prudent and sustainable, and decisions were made according to good practice. Tables 1, 4, 6, 8 and 9 illustrated the affordability and impact of capital expenditure decisions and included both Councils’ overall capital and treasury framework.
213.7 Tables 6 and 7 outlined borrowing measured against two benchmarks – the Capital Financing Requirement and Liability Benchmark. Babergh’s CFR was expected to increase by £21.34m to £177.77m in 2020/21 and the Outstanding Debt to increase by £15.25m to £138.21m.
213.8 Appendix B detailed those expenditure items in the capital programme that specifically relate to assets bought/owned by the Councils to generate a return, or for regeneration or development of the local area. In this context “Investments” means non-treasury management activities, which were described separately in Appendix C. There were 2 types of these investments:
· Service Provision – where the Councils lend to or buy shares in organisations that provide a service
· “For profit” Commercial Investments which generated a return – such as the Council owned companies CIFCO and Gateway 14, but also our directly-owned property assets.
213.9 Both Councils were continuing to develop their property and commercial portfolios, either by purchasing them directly or through the Councils’ investment companies.
213.10 Appendix C sets out the Council’s Treasury Management Strategy and borrowing requirement and borrowing and treasury management investment strategies. It also included the list of Approved Investment Counterparties and Limits. Table 1 (paragraph 3.3) illustrated the breakdown of the Capital Financing Requirement over the next four years. Both Councils had an increasing CFR due to the capital programme and investments.
213.11 Councillor Ward then summarised the content in Appendices D to I.
NOTE - Correction to Appendix A: page 130, paragraph 7.2, the Babergh number should read 4.44% and the Mid Suffolk 9.93%.
213.12 Councillor Ward MOVED recommendations 3.1 to 3.7 in the report, which was SECONDED by Councillor Holt.
213.13 Councillor Jamison asked when the work would start on the old council offices in the Hadleigh and when this project would be completed.
213.14 Councillor Ward responded that it was hoped to commence building work in Corks Lane in Hadleigh in March 2020.
213.15 The Assistant Director for Assets and Investments responded that work was being undertaken for the build out profile for the site, including how to release the units in a timely manner for the site.
213.16 Recommendations 3.1 to 3.7 were put to Members for voting and the vote was CARRIED.
It was RESOLVED: -
1.1 That the Joint Capital Strategy for 2020/21, including the Prudential Indicators, as set out in Appendix A and the updates tabled at the meeting be approved.
1.2 That the Joint Investment Strategy for 2020/21, as set out in Appendix B be approved.
1.3 That the Joint Treasury Management Strategy for 2020/21, including the Joint Annual Investment Strategy as set out in Appendix C be approved.
1.4 That the Joint Treasury Management Indicators as set out in Appendix D be approved.
1.5 That the Joint Treasury Management Policy Statement as set out in Appendix G be approved.
1.6 That the Joint Minimum Revenue Provision Statement as set out in Appendix H be approved.
1.7 That the key factors and information relating to and affecting treasury management activities set out in Appendices E, F, and I be noted.
Supporting documents: