Agenda and minutes

The Joint Executive Advisory Board (JEAB)

RESOLVED

that Councillor Ruth Brothwell be elected as Chairman for this meeting.

Apologies for absence were received from Councillors Jon Askew, Steven Lee and Jo Randall.  There were no notifications of substitutions.

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.

Councillor Paul Abbey declared an interest in item number 6 relating to the Housing Revenue Account Budget 2023-24 and did not take part in any discussion, comments or questions thereon.

To confirm the minutes of the meeting of the Joint Executive Advisory Board (EAB) held on 10 May 2022.

The minutes of the meeting of the Joint Executive Advisory Board held on 10 May 2022 were confirmed as a correct record, and would be signed by the Chairman at the earliest opportunity.

The Joint Executive Advisory Board (JEAB) considered a report concerning the Council’s Capital and Investment Strategy 2023-24 to 2027-28.

The Lead Specialist Finance presented the report and explained that the Strategy gave an overview of how capital expenditure, capital financing and treasury management activity contributed to the provision of local public services.  The Strategy also detailed how associated risks were managed and the implications for future sustainability.

Decisions made now, and during the period of the Strategy, in respect of 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, any new bids / mandates submitted for approval, plus the requirements of the Prudential Code and the investment strategy regarding treasury management investments, service investments and commercial investments.  The report also covered the requirements of the Treasury Management Code and the prevailing Department for Levelling Up, Housing and Communities Statutory Guidance.

It was highlighted that the Housing Revenue Account (HRA) capital programme anticipated a considerable spend of £20 million in 2023/24 in respect of major repairs and improvements to the existing housing stock, in addition to the budget allocation of £26 million for such works in the current financial year.  The General Fund (GF) had seven new bids totalling £10.4 million identified in the Strategy over 5 years increasing the Council’s underlying need to borrow to £296 million from 2022-23 to 2027-28.  Other bids in respect of the Spectrum and the Council’s Operational Depot would come forward as separate mandates in due course.  No further investment in North Downs Housing would be made until the Company’s operation had been reviewed and its business plan updated accordingly.

Subject to Council approving the budget on 8 February 2023, the Executive would be asked to agree that the amount of £500,000 earmarked for the North Street scheme be removed from the capital programme owing to significant changes in the scheme and that the new bids, as shown in Paragraph 4.12 of the report, be approved for inclusion in the capital programme as indicated.

The JEAB received supplementary information advising that, at its meeting held on 19 January 2023, the Corporate Governance and Standards Committee had also considered this report and endorsed the recommendations to the Executive and Council in respect of this matter.

The following points arose from the ensuing discussion, comments and questions for forwarding to the Executive:

1.           The Strategy was intended to represent an appropriate balance between risk and cost effectiveness in relation to new capital bids and mandates.  Although some alternative borrowing / investment strategies and risk management implications were highlighted in the report for comparative purposes, none were recommended for adoption as the present approach of a mixture of policies was felt to be the most appropriate.  It was acknowledged that, owing to constraints within its reserves, the Council was now entering a period where it would increasingly rely on external borrowing to fund schemes which would lead to  ...  view the full minutes text for item J60

A report outlining the Housing Revenue Account (HRA) budget for 2023-24 was before the Joint Executive Advisory Board (JEAB) for consideration.

The Lead Specialist Finance and the Head of Housing jointly introduced the report, which provided a position statement on the 2023-24 draft budget and made recommendations to the Council in respect of the HRA revenue budget.  Details of the HRA capital programme were set out within the Capital and Investment Strategy, which had been considered as a separate agenda item at this meeting.

The JEAB was reminded that the Council owned the freehold and managed over 5,200 council homes which it rented to tenants who qualified for social housing. The HRA was a ring-fenced account within which the Council recorded the income and expenditure for its operations as landlord to its residents and for the day-to-day management, repairs and maintenance of the Council housing stock.

The report outlined the proposed HRA budget for 2023-24, which had been built upon the estimates and assumptions in the updated 2023 HRA Business Plan.  The annual budget and Business Plan assumed that any surpluses in the HRA would be used to invest in redevelopment and upgrading of the existing stock, invest in new build affordable housing to be retained and rented by the Council within the HRA and then, if sufficient monies were available, the repayment of debt taken on under HRA self-financing.  The Business Plan had been reviewed to reflect changes in relevant legislation and guidance, along with consideration of the Council’s declaration of a Climate Emergency and the ongoing challenges of the wider operating environment.  It showed that there were sufficient resources within the HRA to carry out the Council’s investment plans in addition to repaying the debt over the 30 year plan period and leave a healthy reserve balance at the end of the 30 years for further investment not yet identified.  There were further expected investment needs that were yet to be fully developed in order to meet carbon targets and expected regulatory changes, and work on these continued.  These factors were not fully reflected within the current Plan and would be considered in future reviews.

Although a new Direction issued by the Regulator of Social Housing on 12 December 2022 indicated that rents should be capped at 7%, the Council was proposing to adopt a 5% rent cap in respect of its housing stock in recognition of the challenging wider climate faced by residents.  This reduced cap was achievable due to the ongoing prudential management of the overall HRA to provide households with some additional financial assistance at this time.  Although the Government had not set a rent cap for those living in shared ownership properties, the Council was proposing to cap those rents in line with rented homes at 5%.  A 3% increase in garage rents was proposed to correspond with the wider Council policy concerning fees and charges.

The following points arose from the related discussion, comments and questions for forwarding to the Executive:

1.           Although  ...  view the full minutes text for item J61

Report is to follow.

The Joint Executive Advisory Board (JEAB) was invited to consider a report in respect of the Council’s General Fund Budget 2023-24 and Medium-Term Financial Plan 2024-25 to 2026-27.  The report was introduced by the Lead Councillor for Finance and Planning Policy who sought councillors’ views thereon.

The JEAB was advised that the report set out the draft General Fund Budget for 2023/24 and Medium-Term Financial Plan (MTFP) ending 2026/27.  The MTFP set out a four year view and highlighted the key issues and work streams that the Council must focus on over this period to address the projected significant shortfall in the General Fund budget.  The report also requested that the Council approve the budget and Council Tax for 2023/24.

The Board’s attention was drawn to the first column in Appendix 1 to the report in particular, which indicated the changes in various elements from the 2022/23 base budget in terms of inflationary pressures and contractual changes.  However, there were some off-setting factors and it was noted that the budget deficit of approximately £3 million would be met from reserves.  The JEAB’s views regarding the position were sought.

The following points arose from related discussion, comments and questions for forwarding to the Executive:

1.           The JEAB was reassured that the Council’s financial position was sound and it had not over extended its borrowing capability in order to fund capital projects.  In terms of projects, the Weyside Urban Village scheme represented the greatest risk.  A governance audit of the scheme had been undertaken and resulted in some recommendations to strengthen the governance arrangements.  There was an intention to keep councillors informed of the financial projections relating to the scheme.

2.           During the last year, the Council’s asset base had been revalued and found to have increased in value by £60 million.  During the same timeframe, debt in the region of £40 million had been repaid, increasing the value of the authority’s asset position by £100 million to reach a total of £750 million.  This was a strong asset base compared to many other local authorities.

3.           The majority of assets held by the Council were revenue generating and if sold would reduce income to the revenue account, therefore there was no intention to sell such properties.  There was a need to identify the correct balance to be achieved between selling assets to release cash and incurring the cost of borrowing funds.

4.           There were opportunities to consolidate services and operational buildings to free properties for sale and the Assets Team was undertaking a review to identify under utilised or surplus property or land which could be sold to generate income.

5.           There was no guarantee that the New Homes Bonus would be paid to the Council by the Government in future years and the Medium-Term Financial Plan made an assumption that this funding would not be received.  In the absence of the Bonus, it was felt that the Government should identify an alternative incentive to encourage the delivery of housing.  The  ...  view the full minutes text for item J62