Issue - meetings

The Council considered a report on the Capital and Investment strategy, which gave a high-level overview of how capital expenditure, capital financing and treasury management activity contributed to the provision of local public services along with an overview of how associated risk was managed and the implications for future sustainability.

Decisions made now, and during the period of the strategy on capital and treasury management would have financial consequences for the Council for many years into the future. This report therefore included details of the capital programme, including one new bid (Guildford Economic Regeneration Programme), plus the requirements of the Prudential Code and the investment strategy covering treasury management investments, commercial investments including the requirements of the Treasury Management Code and the Ministry of Housing, Communities and Local Government (MHCLG) Statutory Guidance.

The Council had an ambitious Corporate Plan and in order to achieve the targets within that, investment in assets was required, via capital expenditure. The Council had a current underlying need to borrow for the general fund capital programme of £400 million.   Some capital receipts or revenue streams may arise as a result of investment schemes but in most cases, these were currently uncertain, and it was too early to make assumptions.  Some information had been included in the capital vision highlighting the potential income.  It was likely that there would be cash-flow implications of the development schemes, where income would come in after the five-year time horizon and the expenditure incurred earlier in the programme.

All projects would be funded by general fund capital receipts, grants and contributions, reserves and finally borrowing.  It was not currently known how each scheme would be funded and, in the case of development projects, what the delivery model would be.  To ensure the Council demonstrated that its capital expenditure plans were affordable, sustainable, and prudent, Prudential Indicators had been set and monitored each year, details of which were shown in Appendix 1 to the report.

The capital programme included several significant regeneration schemes, it was assumed would be financed from General Fund resources.  However, subject to detailed design of the schemes, there might be scope to fund them from HRA resources rather than General Fund resources in due course.  Detailed funding proposals for each scheme would be considered when the Outline Business Case for each scheme was presented to the Executive for approval.

Details of the main areas of expenditure in the capital programme were set out in the report. The report included a summary of the new bid submitted, the position and profiling of the current capital programme (2020-21 to 2024-25) and the capital vision schemes.

The report had also included the Council’s Minimum Revenue Provision policy and the Prudential Indicators. 

In relation to treasury management, the Council noted that officers carried out the treasury management function within the parameters set by the Council each year and in accordance with the approved treasury management practices. The Council noted that the budget for investment income in 2021-22 was £1.278 million,  ...  view the full minutes text for item 74

Decision:

Subject to Council approving the budget on 10 February:

(1)    That the following schemes be removed from the capital programme because the remit of the schemes, if they were to proceed, would be different to the business case that was originally approved in the programme: 

·       Museum £18.26 million

·       Public realm £1.6 million

·       Bike Share £530,000

·       Town centre gateway regeneration £3.473 million

(2)   That should any of the schemes be moved forward in future, a new business case be presented to councillors.

(3)   That the affordability limit for schemes to be funded by borrowing be set as per paragraph 4.32 in Appendix 1 to the report submitted to the Executive.

(4)  That the following new capital bid referred to in Appendix 2 to the report:

·       Guildford Economic Regeneration Programme

be added to the General Fund Capital programme provisional list and that this scheme, subject to the limits in the Financial Procedure Rules, be subject to a further report to the Executive, before being progressed.

Executive recommended to Council:

(1)   That the General Fund capital estimates, as shown in Appendices 3 and 4 (current approved and provisional schemes), as amended to include the new capital bid in respect of the Guildford Economic Regeneration Programme, Appendix 5 (schemes funded from reserves) and Appendix 6 (s106 schemes), be approved.

(2)   That the Minimum Revenue Provision policy, referred to in section 5 of the report be approved.

(3)   That the Capital and Investment Strategy be approved, specifically the Investment Strategy and Prudential Indicators contained within the report and in Appendix 1.

Reason(s):

1)    To enable the Council to approve the Capital and Investment strategy for 2021-22 to 2024-25

2)    To enable the Council, at its budget meeting on 10 February 2021 to approve the funding required for the new capital investment proposals

Other options considered and rejected by the Executive:

As set out in paragraph 17.2 of the report

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

None.

The Executive considered a report setting out a high-level overview of capital expenditure, capital financing and treasury management activity contributing to the provision of local public services along with an overview of how associated risk was managed and the implications for future sustainability.

The report set out details of the capital programme including one new bid to be agreed; the requirements of the Prudential Code, the Council’s Minimum Revenue Provision policy and the Prudential Indicators;  the investment strategy covering treasury management investments, the control and management of the Council’s cash, daily cash position, investments and borrowing; commercial investments plus the requirements of the Treasury Management Code and the Ministry of Housing, Communities and Local Government (MHCLG) Statutory Guidance.

The Council had a current underlying need to borrow £400 million for the general fund capital programme. It was possible that capital receipts or revenue streams could arise as a result of investment schemes, but in most cases, this was uncertain and assumptions could not be made at this stage. Where there was more certainty of potential income, this had been included in the capital vision.

It is likely that there would be cash-flow implications for development projects where expenditure would be required early on in the project and income would be delivered after the five-year time horizon. All projects would be funded by general fund capital receipts, grants and contributions, reserves and finally borrowing. There was no detail provided for individual funding for each scheme as this was a high-level report. Subject to detail coming forward there might be scope to fund from Housing Revenue Account (HRA) resources rather than General Fund resources. Detailed funding proposals for each scheme would be considered when the Outline Business Case for each scheme was presented to the Executive for approval at a future date.

A number of schemes were recommended for removal from the capital programme as they were no longer deliverable as previously programmed. There was one new bid of £1.58 million received for 2021-22 which was the Guildford Economic Regeneration Programme, details of which were set out in Appendix 2 to the report.

The report had also been considered by the Joint Executive Advisory Board at its meeting held on 7January 2021 and the Corporate Governance & Standards Committee on 14 January 2021. Both endorsed the recommendations set out for the Executive.

The Capital and Investment Strategy was an important guide to enable the Council to deliver prioritised schemes that addressed key issues for the Borough such as housing need, congestion, and the future of the town centre.

Having considered the detailed report, the Executive

RESOLVED:   Subject to Council approving the budget on 10 February:

(1)    That the following schemes be removed from the capital programme because the remit of the schemes, if they were to proceed, would be different to the business case that was originally approved in the programme: 

·       Museum £18.26 million

·       Public realm £1.6 million

·       Bike Share £530,000

·       Town centre gateway regeneration £3.473 million

(2)   That should  ...  view the full minutes text for item 73

The Committee considered a report on the Council’s capital and investment strategy, which gave a high-level overview of how capital expenditure, capital financing and treasury management activity contributed to the provision of local public services along with an overview of how associated risk was managed and the implications for future financial sustainability.

Decisions made now, and during the period of the strategy on capital and treasury management would have financial consequences for the Council for many years into the future. The report therefore included details of the capital programme new bids plus the requirements of the Prudential Code and the investment strategy covering treasury management investments, commercial investments plus the requirements of the Treasury Management Code and the Ministry of Housing, Communities and Local Government (MHCLG) Statutory Guidance.

The Committee noted that in order to achieve the ambitious targets within the Corporate Plan, the Council needed to invest in its assets, via capital expenditure.

The Council had a current underlying need to borrow for the general fund capital programme of £400 million.  No new bids had been received for 2021-22, although it was anticipated that a bid, currently estimated to be around £1 million, would be submitted in respect of the Guildford Economic Regeneration Programme.

Some capital receipts or revenue streams could arise as a result of investment in particular schemes, but in most cases were currently uncertain and it was too early to make assumptions.  Some information had been included in the capital vision highlighting the potential income.  It was likely that there were cash-flow implications of the development schemes, where income would come in after the five-year time horizon and the expenditure would be incurred earlier in the programme.

All projects would be funded by general fund capital receipts, grants and contributions, reserves and, finally, borrowing.  It was not currently known how each scheme would be funded and, in the case of development projects, what the delivery model would be.  To ensure the Council demonstrated that its capital expenditure plans were affordable, sustainable and prudent, Prudential Indicators were set that must be monitored each year.

 .

The capital programme included a number of significant regeneration schemes, which it was assumed would be financed from General Fund resources.  However, subject to detailed design of the schemes, there might be scope to fund them from HRA resources rather than General Fund resources in due course.  Detailed funding proposals for each scheme would be considered when the Outline Business Case for each scheme was presented to the Executive for approval.

The report to be presented to the Executive would include a summary of the new bid submitted, the position and profiling of the current capital programme (2020-21 to 2024-25) and the capital vision schemes.

The report had also included the Council’s Minimum Revenue Provision (MRP) policy and the Prudential Indicators. 

The Committee was informed that officers carried out the treasury management function within the parameters set by the Council each year and in accordance with the approved treasury management practices.  ...  view the full minutes text for item 45