Issue - meetings

The Council considered the Capital and Investment Outturn report for 2022-23, which had set out: 

·   a summary of the economic factors affecting the approved strategy and counterparty updates

·    a summary of the approved strategy for 2022-23

·    a summary of the treasury management activity for 2022-23

·    non-treasury investments

·    capital programme

·    compliance with the treasury and prudential indicators

·      risks and performance

·    Minimum Revenue Provision (MRP)

·    details of external service providers

·    details of training

In total, expenditure on the General Fund capital programme had been £35.4 million against the original budget of £158 million, and a revised budget of £169 million.  Details of the revised estimate and actual expenditure in the year for each scheme were set out in Appendix 3 to the report. The budget for Minimum Revenue Provision (MRP) had been £1.5 million and the outturn was £1.38 million.  This was due to slippage in the capital programme in 2021-22.

The Council noted that Officers had reviewed the programme and had determined that there were schemes that were no longer required, that no longer met the original business case or had been removed pending a new business case in light of the Council’s ongoing budget deficit.  These schemes were detailed in the Financial Recovery Plan within the capital programme workstream.  Removing these schemes would reduce the Council’s underlying need to borrow for capital purposes and generate a saving to the revenue account in respect of MRP and interest.

The Council’s investment property portfolio stood at £178 million at the end of the year. Rental income had been £9.5 million, and income return had been 5.7% against the benchmark of 4.7%.

The Council’s cash balances had built up over a number of years, and reflected a strong balance sheet, with considerable revenue and capital reserves in the HRA.  Officers carried out the treasury function within the parameters set by the Council each year in the Capital and Investment Strategy.  As at 31 March 2023, the Council held £98 million in investments, £295 million in borrowing of which £147 million related to the HRA, £32 million related to the Weyside Urban Village project (WUV), and £115 million was short term borrowing resulting in net debt of £197 million.

The Council had borrowed short-term from other local authorities for cash flow purposes in the year, and had taken out a loan for WUV under the infrastructure rate.  This borrowing interest was capitalised to capital schemes using the pooled interest rate of the Council, so whether the Council was borrowing short or long term the borrowing associated with the capital programme expenditure was capitalised against the project and not charged to the General Fund as interest payable.

The report had confirmed that the Council had complied with its prudential indicators, treasury management policy statement and treasury management practices (TMPs) for 2021-22.  The policy statement was included and approved annually as part of the Capital and Investment Strategy, and the TMPs were approved under delegated authority.

Interest paid on debt had been lower than budget, due  ...  view the full minutes text for item 73

Recommendation (to Council: 5 December 2023)

(1)         That the capital and investment outturn report be noted.

(2)         That the actual prudential indicators reported for 2022/23, as detailed in Appendix 1 to the report, be approved.

Reasons:

1.        To comply with the Council’s treasury management policy statement, the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on treasury management and the CIPFA Prudential Code for Capital Finance in Local Authorities.

2.        As per the treasury management code although the scrutiny of treasury management (and indeed all finance) has been delegated to the Corporate Governance & Standards Committee, ultimate responsibility remains with full Council, this report therefore fulfils that need.

Other options considered and rejected by the Executive:

None.

Details of any conflict of interest declared by the Leader or lead councillors and any dispensation granted:

None.

The outturn report included capital expenditure, non-treasury investments and treasury management performance for the 2022/23 financial year.

The Lead Councillor for Finance and Property commended the report to the Executive.

It was noted that the council’s portfolio was performing well and with a balanced portfolio that included light industrial. Consequently, the council was not so exposed to the fluctuations in office space and retail as other councils.

The Executive,

RESOLVED:

To recommend to Council: 5 December 2023

1.       That the capital and investment outturn report be noted.

2.       That the actual prudential indicators reported for 2022/23, as detailed in Appendix 1 to the report, be approved.

Reasons:

1.       To comply with the Council’s treasury management policy statement, the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on treasury management and the CIPFA Prudential Code for Capital Finance in Local Authorities.

2.       As per the treasury management code although the scrutiny of treasury management (and indeed all finance) has been delegated to the Corporate Governance & Standards Committee, ultimate responsibility remains with full Council, this report therefore fulfils that need.

The Committee considered the annual outturn report on capital expenditure, non-treasury investments and treasury management performance for 2022-23.

In total, expenditure on the General Fund capital programme had been £35.4 million against the original budget of £158 million, and revised budget of £169 million.  Details of the revised estimate and actual expenditure in the year for each scheme were set out in Appendix 3 to the report.

The budget for Minimum Revenue Provision (MRP) had been £1.5 million and the outturn was £1.38 million.  This was due to slippage in the capital programme in 2021-22. 

Officers had reviewed the capital programme and had determined that there were schemes that were no longer required, that no longer met the original business case or had been removed pending a new business case in light of the Council’s ongoing budget deficit.  These schemes were detailed in the Financial Recovery Plan within the capital programme workstream.  Removing these schemes would reduce the Council’s underlying need to borrow for capital purposes and would generate a saving to the revenue account in respect of MRP and interest.

The Council’s investment property portfolio stood at £178 million at the end of the year.  Rental income was £9.5 million, and income return had been 5.7% against the benchmark of 4.7%.

The Council’s cash balances had built up over several years, and reflected the strong balance sheet, with considerable revenue and capital reserves in the HRA.  Officers carried out the treasury function within the parameters set by the Council each year in the Capital and Investment Strategy.  At 31 March 2023, the Council held £98 million in investments, £295 million in borrowing of which £147 million related to the HRA, £32 million related to the Weyside Urban Village Project, and £115 million was short term borrowing, resulting in net debt of £197 million.

The Council borrowed short-term from other local authorities for cash flow purposes in the year and had taken out a loan for Weyside Urban Village under the infrastructure rate.  This interest was capitalised against the project and not charged to the General Fund as interest payable.

Section 8 of the report confirmed that the Council had complied with its prudential indicators, treasury management policy statement and treasury management practices (TMPs) for 2022-23.  The policy statement was included and approved annually as part of the Capital and Investment Strategy, and the TMPs were approved under delegated authority.

The treasury management performance over the last year, compared to estimate, had been summarised in the report, and the factors affecting this performance had also been highlighted. There had been slippage in the capital programme which resulted in a lower Capital Financing Requirement than estimated. Interest paid on debt had been lower than budget, due to less long-term borrowing taken out on the General Fund because of slippage in the capital programme.

The yield returned on investments had been lower than estimated, but the interest received had been higher due to more cash being available to invest in the  ...  view the full minutes text for item 39