Agenda and minutes

The Joint Executive Advisory Board (EAB)

RESOLVED

that Councillor Angela Gunning be elected as Chairman for this meeting.

Apologies for absence were received from Councillors Graham Eyre and Fiona White.  There were no substitute councillors.

In accordance with the local Code of Conduct, a councillor is required to disclose at the meeting any Disclosable Pecuniary Interest (DPI) that they may have in respect of any matter for consideration on this agenda.  Any councillor with a DPI must not participate in any discussion or vote regarding that matter and they must withdraw from the meeting immediately before consideration of the matter.

If that DPI has not been registered, the councillor must notify the Monitoring Officer of the details of the DPI within 28 days of the date of the meeting.

Councillors are further invited to disclose any non-pecuniary interest which may be relevant to any matter on this agenda, in the interests of transparency, and to confirm that it will not affect their objectivity in relation to that matter.

Councillors Angela Goodwin and Gordon Jackson both declared non-pecuniary interests in agenda item number 5 as Directors of North Downs Housing Limited.

To confirm the minutes of the meeting of the Joint Executive Advisory Board held on 11 November 2020.

The minutes of the meeting of the Joint EAB held on 11 November 2020 were confirmed as a correct record, and would be signed by the Chairman at the earliest opportunity.

The Joint EAB considered a report which provided a position statement on the proposed Housing Revenue Account (HRA) draft budget for 2021-22 and made recommendations to the Executive in respect of both the HRA revenue and capital programme budget.  The estimates upon which the draft budget was based were predicated on the assumptions, ambitions and priorities contained in the current HRA Business Plan which was to be reviewed in the light of the implications stemming from Brexit and the Coronavirus pandemic.

The Director of Finance advised that the 2021-22 HRA budget was a roll forward of the 2020-21 budget and there had not been any new growth bids or capital bids to date due to changing circumstances including the Council’s transformation programme and therefore previously agreed projects would be pursued.

It was reported that on 31 March 2021, social rent policy requiring social housing providers in England to reduce social rents by 1% per annum for the four years from 1 April 2016, as prescribed in the Welfare Reform and Work Act 2016, would cease.  From April 2021, the rents for 2021-22 would increase in line with the Consumer Price Index (0.8%) plus 1% and would continue to do so in future years.

Attention was drawn to the fact that the HRA did not budget to repay any of its debt, the responsibility for which had been assumed by the Council in 2011 as part of the self-financing HRA settlement therefore the servicing of debt against the HRA was in the form of an interest only mortgage allowing the generation of a significant surplus to invest in the housing stock and new build housing schemes.

Although bad debt provision had been increased in the current year as a result of potential risk associated with the Coronavirus pandemic, no rise in bad debt had occurred to date.

In terms of fees and charges, a 3.4% increase in garage rents was proposed from April 2021 continuing the trend the Council had been following in recent years to bring garage rents more closely in line with rents for storage units instead of parking spaces. 

Appendix 5 to the report set out the capital programme which indicated proposals to invest in the housing stock and new build programme during 2021-22.  It was anticipated that a surplus of £11 million (m) would be generated in the HRA which would, in line with normal policy, be transferred into a combination of reserve for future capital and the new build reserve.  Annually surpluses in the HRA had built up over the past ten years to a current accrual of reserves of over £100m to finance the construction of new social and affordable housing.

The schedule of loans outlined loans against the HRA and the remaining repayment terms.  The majority of the loans were on a fixed interest basis enabling interest charges to be determined with some certainty.

The HRA budget took account of Right to Buy property disposals, over which the Council had no control.  Although typically  ...  view the full minutes text for item 16.

The Board considered a draft report to the Corporate Governance and Standards Committee in respect of the Council’s Capital and Investment Strategy 2021-22 to 2025-26 which included recommendations to both the Executive and full Council, subject to the latter approving the budget at its meeting on 10 February 2021.  The report explained that the Strategy gave a high-level overview of how capital expenditure, capital financing and treasury management activity contributed to the provision of local public services together with an overview of how associated risk was managed and the implications for future sustainability.  Details of any new capital programme bids together with 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 Statutory Guidance were included in the report.

The related presentation by the Lead Specialist – Finance introduced and provided the context to the Capital and Investment Strategy and advised that although this report would normally be before the Board to invite it to review each new capital bid, no new capital bids had been received to date owing to the present financial constraints.  However, a new bid in respect of the Guildford Economic Regeneration Programme was expected.  A summary regarding the current capital programme focused on four schemes, namely, the Museum, public realm, Bike Share scheme and town centre gateway regeneration, which were recommended for deletion from the programme, where they had been included for some time, as the related business cases originally approved were no longer relevant and the schemes were now subject to the new governance process featuring new business cases outlining new remits.  This was not an indication that the schemes would not proceed at some point in the future if considered appropriate.  The Board’s attention was drawn to a detailed summary of the capital programme in the report and supporting appendices, the internal / external borrowing line and the liability benchmark which showed the overall net borrowing amount required for capital purposes and was split between the General Fund (GF) and Housing Revenue Account (HRA).

The Lead Councillor for Resources provided supplementary information and explanations advising that the report constituted a high level overview of Council expenditure covering both financing and treasury management together with the checks and balances utilised to ensure scrutiny and apposite financial control.

The underlying borrowing to fund the capital programme was approximately £400 million (m) and all projects would be funded by GF capital receipts, grants, contributions, reserves and borrowing with scope to utilise HRA funds.  The main areas of expenditure consisted of strategic property acquisitions (£24m), town centre transport schemes (£32m), Ash road bridge (£25m), North Downs Housing Limited and Guildford Borough Council Holdings Limited (£42m), Midleton Industrial Estate development (£14m) and Wisley Urban Village scheme (£265m).

In terms of treasury management, the budget for investment income in 2021-22 was £1.684m based on an average investment portfolio of £79.8m giving a typical return rate  ...  view the full minutes text for item 17.

The meeting received and discussed a presentation from the Director of Finance which gave an update in respect of the Savings Strategy.  The presentation provided a reminder of the budget gap as at November 2020 based on core assumptions, explained changes since November to give the latest financial position regarding the budgetary gap, and included an update concerning the Savings Strategy for discussion in Part 2 of the meeting.

The Board was reminded that in November 2020 the Council was predicting a budget gap of £2.69 million(m) in 2021-22 climbing to approximately £ 4.4m by 2024-25.  The Local Government Finance Settlement (LGFS) had been received subsequently and offered a more positive outlook with additional one-off grants relating to the New Homes Bonus (£192,000), Section 31 of the Local Government Act 2003grant for Business Rates multiplier not increasing with inflation (£153,000), Section 31 grant for Local Council Tax Support (£100,000), grant for lower tier services (£237,000), additional COVID-19 funding (£623,000), and savings from reviewing the Capital and Investment Strategy (£700,000).  As a result of the LGFS, the budget gap was currently in the region of £1m for 2021-22 rising to around £4.7m over the medium term period to 2024-25.  However, Business Rates income and Collection Fund deficit figures remained to be determined and a related gap in collection rates could possibly result from the impact of COVID-19.

The Joint EAB

RESOLVED

That, under Section 100A(4) of the Local Government Act 1972, the public and press be excluded from the meeting for the consideration of the following item of business on the grounds that it involves the likely disclosure of exempt information as defined in paragraph 3 of Part 1 of Schedule 12A to the Act; namely, information relating to the financial or business affairs of any particular person (including the authority holding that information).

Accordingly, the Board moved to a second (Part 2) meeting to consider the Savings Strategy element of the presentation which contained exempt information.