Agenda item

The Committee considered the annual outturn report on capital expenditure, non-treasury investments and treasury management performance for 2021-22.

In total, expenditure on the General Fund capital programme had been £39.78 million against the original budget of £148.3 million, and revised budget of £141.9 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 2020-21. 

Officers had reviewed the capital programme and had determined that the following schemes were no longer required:

·       Albury closed burial grounds £57,000 in 2022/23

·       Mill Lane Flood Protection works - £16,000 2022/23 and £200,000 2023/24

·       Merrow & Burpham surface water study - £15,000 in 2022/23

This would reduce the Councils underlying need to borrow for capital purposes and generate a saving to the revenue account in respect of MRP and Interest of approximately £10,000 over the life of the schemes.

The Council’s investment property portfolio stood at £174 million at the end of the year.  Rental income was £8.75 million, and our income return had been 5.3% against the benchmark of 4.7%.

The Council’s cash balances had built up over several years, and reflected our strong balance sheet, with considerable revenue and capital reserves.  Officers carried out the treasury function within the parameters set by the Council each year in the Capital and Investment Strategy.  At 31 March 2022, the Council held £152 million in investments, £303 million in borrowing of which £147 million related to the HRA, and £134 million was short term borrowing, resulting in net debt of £157 million.

The Council borrowed short-term from other local authorities for cash flow purposes and aimed to minimise any cost of carry on this.  The Council had taken out three loans 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 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.

The treasury management performance over the last year, compared to estimate, had been summarised in the report, and the factors affecting this performance had been highlighted in the report. 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 year – a direct result of the capital programme slippage.  Officers had been reporting higher interest receivable and payable and a lower charge for MRP during the year as part of the budget monitoring when reported to councillors during the year.

Due to the Council projecting an over-spend earlier in the year, the decision was taken to sell a pooled fund that had accumulated a capital gain.  This had been redeemed in December at a gain of £1.398 million, which was income to the General Fund.

The report also contained detailed information on the return on investments, and interest paid on external debt.

During the debate, the Committee made the following comments:

·       A need to ensure that we have up-to-date information on the schedule of investments and the need to review the overall situation in respect of the prudence of investments in other local authorities.

·       Clarification was sought as to the position in respect of reviewing existing investments.

·       In relation to the proposed schemes that had been recommended for removal from the capital programme, concern was expressed in respect of two of the schemes, which sought to address flooding issues, that insufficient information had been provided to justify their removal. 

The Committee

RESOLVED: That the report be commended to the Executive subject to the various corrections set out on the Supplementary information sheet circulated at the meeting and to the comments referred to above made by the Committee during its debate.

Reasons:

·       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.

·       As per the treasury management code although the scrutiny of treasury management (and indeed all finance) had been delegated to the Committee, ultimate responsibility remained with full Council. This report therefore fulfilled that need.