Agenda and draft minutes

The Joint Executive Advisory Board

RESOLVED:

That Councillor Jenny Wicks be elected as Chairman for the meeting.

Apologies for absence were received from Councillors Liz Hogger, Gordon Jackson, Julia McShane, Bob McShee, Mike Piper and Matthew Sarti. In accordance with Council Procedure Rule 23(i), Councillors Caroline Reeves and Tony Rooth acted as substitutes for Councillors Julia McShane and Mike Piper respectively.

There were no declarations of disclosable pecuniary interest.

The Board received an overview from the Principal Corporate Services Solicitor on the community right to bid for and buy local land considered to have community value. This included information on what constituted an asset of community value (ACV), how land could be listed as such, and by whom. All local authorities had a duty to maintain lists of ACVs, and the Board’s attention was drawn to the current lists of successful and unsuccessful nominations received by this Council, as published on its website. The Board suggested that details of ACVs should also be published on the Surrey interactive map.

The Board noted that numbers of nominations were low, and that successful nominations would not necessarily progress through to successful bids. None of the nominations received by this Council appeared to have resulted in a successful bid. The Board suggested that parish councils should be contacted with information about the process, to raise awareness and encourage nominations.

The Lead Councillor for Finance and Asset Management provided the Board with an overview of the capital and investment strategy, incorporating the general fund capital programme and prudential indicators (2018-19 to 2021-22) and the treasury management annual strategy report (2018-19). The joint treasury management and capital report followed a new recommendation from the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Department for Communities and Local Government (DCLG) for a capital strategy, and detailed financial and non-financial investments, as well as investments in subsidiaries such as North Downs Housing (NDH). The report covered management of value for money (VFM), level of risk, investments, liquidity and yield of financial and non-financial investments, as well as this Council’s borrowing strategy. 

The Board heard that capital bids totalled £125 million, of which one bid was for £81 million for student accommodation. The remaining £44 million comprised twenty bids. All the bids had been considered by the corporate management team (CMT), and the Joint EAB budget task group. The new bids, which would be considered by the Executive on 23 January 2018, would increase the underlying need to borrow through the general fund to £419 million. The Board’s attention was drawn to comments received on the bids from the Joint EAB budget task group, and to officers’ responses.

The Lead Councillor for Finance and Asset Management explained that it was anticipated that this Council would run down its investments and externally borrow £30 million in 2018-19. There were options around delivery mechanisms and the role of the housing revenue account (HRA) in funding schemes. New local indicators had been introduced to demonstrate the sustainability of this Council’s financial position, and a new approval process had been developed for capital bids, in line with best practice, which included parameters for investment schemes. The programme was split between essential and investment schemes, and it was proposed that limits should be set on essential schemes. The key impact of the capital programme on the revenue account was the borrowing and interest costs. The MRP for 2018-19 was estimated at £1.2 million. In respect of treasury management, interest paid was estimated to be £6.3 million, of which £5.1 million was HRA. Investment income was estimated to be £1.6 million, and the weighted average investment rate was 1.63%.

The Head of Financial Services explained that local authorities were able to borrow for anything related to their function and purpose in order to finance capital expenditure. The power to borrow existed where the authorised debt limit was below the capital financing requirement, and the capital financing requirement showed that there was a need to borrow to fund particular capital expenditure projects. DCLG was clarifying its guidance around borrowing to invest but it had always been illegal to borrow to invest in financial markets. Borrowing in advance of need was permitted under the guidance, and could be for any capital purpose.

The Principal Group Accountant  informed the Board that the authorised borrowing limit was the maximum external borrowing permitted,  ...  view the full minutes text for item 10.

The Joint EAB is asked the consider passing the following resolution:

“That under Section 100A(4) of the Local Government Act 1972 (as amended), the public be excluded from the meeting for 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”. 

The Board

RESOLVED: 

That under Section 100A(4) of the Local Government Act 1972 (as amended), the public and press be excluded from the meeting for the following item of business on the grounds that it involved the likely disclosure of exempt information as defined in paragraph 3 of Part 1 of Schedule 12A to the 1972 Act.

The above-mentioned bids are to be considered in conjunction with agenda item 6 on this agenda.

The Board commented on particular aspects of Bid Nos. 97, 169 and 268.

In relation to bid no: 268 (Student Accommodation Investment), the Board expressed

concern around the level of funding required, and was keen to see the benefits of the

investment quantified. The Board was also supportive of the strategic objectives set out in the bid but wanted to keep as much control and flexibility as possible, with regards to the affordability of the rents charged and the income levels obtained.

The Board also noted that whilst the student accommodation investment contributed towards the achievement of one of its local plan targets, it still fell short of fully achieving the target.

In respect of bid No: 268 (Student Accommodation Investment), the Joint EAB recommended:

(a)   that the Business Case be submitted to the Borough EAB for further discussion prior to its consideration by the Executive; and

(b)   that, following consideration by the Executive, the Business Case be referred to Full Council for final approval before the project is transferred from the provisional to the approved capital programme.