Agenda item

The Director for Corporate Services to submit a report which outlines the Council’s prudential indicators for 2019/20–2021/22 and sets out the expected treasury operations for this period for scrutiny and approval prior to submission to the council meeting on 13^th February 2019.

The Director for Corporate Services

(a)  submitted a report (copies of which had previously been circulated to Members) outlining the Council’s prudential indicators for 2019/20 to 2021/22 and setting out the expected treasury operations for this period for scrutiny and approval prior to the Council meeting on 13 February 2019;

(b)  emphasised that the Treasury Management Strategy would be submitted to Council with the budget on 13 February 2019.  This Committee was responsible for undertaking the required scrutiny of the Strategy in advance;

(c)  advised that the document linked to the Capital Strategy and capital proposals set out elsewhere on the agenda.  The indicators contained within the report were split between the General Fund and HRA.

(d)  highlighted that Members had previously indicated the desire to increase the Council’s investment in property funds that had performed very well for the Council historically.  This type of investment was a longer term investment.  The Council had the flexibility to increase its holdings as cash-flow forecasts and forecast reserves and balances indicated that there was scope to do this.  However, it was proposed that officers consider this further when there is more certainty on Brexit and the impact it may have on investment returns.  In addition, there was a need to be mindful  of the implications of the new accounting standards rules (as reported to the previous meeting of this Committee on 28 November 2018), relating to these type of investments.  In future, any gains and losses on these funds would need to be recognised in the revenue account and as such, the risk associated with such fluctuations would need to be assessed to see what mitigation was appropriate to manage this potential financial impact.

A Member highlighted the table detailing Capital Expenditure at paragraph 3.2.4 of the report, commenting that there was a substantial additional amount of expenditure in the Housing Revenue Account (HRA) for 2019/20 and asking for clarification on what this was in respect of.

The Director for Corporate Services referred Members to the Capital Programme HRA, as detailed at Appendix D of the Revenue and Capital Budget Proposals report (agenda item 4).  This set out proposed investments in the HRA and should balance back to the amount of expenditure in the HRA for 2019/20.  It concerned the need and intention to invest in ensuring ‘decent homes’ and followed the housing and asset management plan.

The Member noted that ensuring decent homes represented an incredible expenditure for the Council.

The Chief Executive advised that there were two pieces of work, which needed to proceed as a matter of urgency.  A full stock condition survey of all housing assets to fully understand the need and following this, a full HRA business plan refresh to ensure confidence in terms of aspiration and maintaining and properly funding existing stock.  Historically, the Council had underspent on these areas but steps had now been taken to ensure there was sufficient funding to allow the Council to make these initial investments.  A full and fundamental review was required and this would begin over the course of this year.

The Member highlighted the table detailing Net Borrowing at paragraph 3.2.4 of the report, noting that gross borrowing was forecast to move up by 6% and investments move down by approximately 20% in 2019/20.  They asked what was causing this change.

The Director for Corporate Services advised that the £2m increase in gross borrowing from 2018/19 to 2019/20 involved a large portion of estimated expenditure and was also linked to the Gretton Court project, which would need to go through a full business case and be approved by Members etc.  The initial outline business case indicated the need to supplement with some borrowing from the HRA of £2m.  Concerning the reducing investments, this would follow an assessment indicating use of reserves.  This too may be linked to the Gretton Court project, as the regeneration reserve on the HRA was used to invest in projects such as Gretton Court and reduced the amount of reserves and therefore reduced investment.

The Member thanked the Director of Corporate Services and the Chief Executive for the information.

There being no further comments or questions from Members, Councillor Orson moved the recommendations and Councillor de Burle seconded.

RESOLVED that

(1)  the prudential indicators and limits be referred to Council for approval and adoption;

(2)  the Treasury Management Strategy and treasury management prudential indicators be referred to Council for approval and adoption;

(3)  the Minimum Revenue Provision (MRP) Statement, which sets out the Council’s policy on MRP be referred to Council for approval;

(4)  the linkages to the Capital Strategy, due to the integral nature of how the Council manages its treasury finances to support capital development be noted.