Agenda item

Capital and Investment Strategy 2023-24 and 2027-28


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 increased exposure to risk, such as interest rate rises.

2.           With regard to the proposed North Street redevelopment scheme, the Council had received £500,000 on exchange of contracts for its land forming part of the site with a significant capital receipt expected at a later stage.  However, as planning permission in respect the current proposal had been refused, the future of the scheme and associated financial implications were now uncertain and under review.  It was hoped that a similar scheme for the site could be pursued.

3.           It was clarified that HRA capital programme expenditure in respect of existing and new housing stock included works to improve the energy efficiency of homes.  The Council was working towards meeting the Government’s zero carbon targets which would require further investment in the future.  There was some uncertainty as to the costs associated with the necessary green technology and, with the assistance of consultants, the Council was seeking to identify the correct balance between early adoption of technology at a higher cost or delaying installation until costs had reduced and systems became more efficient and effective.

4.           A range of options were available regarding the future of the Spectrum.  A significant investment in the existing facility would be required for it to meet the Council’s 2030 carbon neutral target.  The capital programme included a sum of approximately £7 million which was the estimated amount required to prolong the life of the existing building until a new facility could be provided.  The Council was committed to continuing to provide this sports and leisure service which supported the health and wellbeing and the fitness of its many users, from within and outside the Borough.

5.           It was recognised that the projected amount of £145 million included in the capital programme to spend between 2022-23 and 2027-28 in respect of development projects to build or acquire new housing, including Weyside Urban Village (WUV), may require revision when delivery options were known.  Further information concerning measures to mitigate the deficit in relation to the WUV project would be reported in due course.

6.           The cost associated with the provision of Walnut Bridge was anticipated to be £5-6 million and discussions with the contractor were taking place to establish the final cost.

7.           Capital programme project ED32 related to the construction of an internal estate road at Slyfield Industrial Estate to facilitate the WUV development whilst project OP6(P) Replacement Programme referred to refuse and recycling collection vehicles.


Supporting documents: