Agenda item

The Council considered the Capital and Investment Outturn report for 2021-22, which had set out:

·       a summary of the economic factors affecting the approved strategy and counterparty updates

·       a summary of the approved strategy for 2021-22

·       a summary of the treasury management activity for 2021-22

·       compliance with the treasury and prudential indicators

·       non-treasury investments

·       capital programme

·       risks and performance

·       Minimum Revenue Provision (MRP)

·       details of external service providers

·       details of training

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.

The Council noted that 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

At its meeting on 27 October 2022, the Executive had agreed to remove those schemes from the General Fund Capital Programme. This would reduce the Council’s underlying need to borrow for capital purposes and would 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 had been £8.75 million, and income return had been 5.3% against the benchmark of 4.7%.

The Council’s cash balances had built up over a number of years, and reflected a 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.  As at 31 March 2022, the Council held £157 million in investments, £304 million in borrowing of which £170 million related to the HRA, and £134 million was short term borrowing resulting in net debt of £147 million.

The Council had 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.

The report had 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.

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 slippage had resulted in a lower CFR than estimated.

The yield returned on investments had been lower than estimated, but the interest received was 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, a pooled fund that had accumulated a capital gain had been sold.  This was redeemed in December at a gain of £1.398 million – this is income to the General Fund.

The report had also been considered by the Corporate Governance and Standards Committee at its meeting on 29 September 2022. The Committee had commended the report to the Executive, subject to a number of comments which were set out in the report to Council. 

The Council noted concerns expressed by councillors over the investment of £10 million pounds in Thurrock Council but were reassured that notwithstanding the financial difficulties of that council, this Council’s investment was safe.  There was also concern over the continual underspending on the Council’s capital programme, but it was noted that rigorous review processes had been put in place in respect of capital schemes.

Upon the motion of Councillor Tim Anderson, seconded by the Leader of the Council, Councillor Julia McShane, the Council

RESOLVED:

(1)  That the capital and investment outturn report for 2021-22 be noted.

(2)   That the actual prudential indicators reported for 2021-22, as detailed in Appendix 1 to the report submitted to the Council, be approved.

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) has been delegated to CGSC ultimate responsibility remains with full Council this report therefore fulfils that need.