Agenda and minutes

Councillor Chris Farr was elected Chair of the meeting in the absence of Councillor Langton.

To confirm as a correct record

These minutes were approved and signed as a correct record.

The investment analysis at Appendices A and B was presented. This confirmed that, as at 31^st December 2022:

·          total long term financial investments (over 12 months) amounted to £10.9 million (a reduction of £643k since 30^th September 2022 arising from a fall in the capital value of the CCLA Property Fund due to prevailing market conditions)

·          short term investments (less than 12 months) amounted to £22.8 million (an increase of £6.2 million since 30^th September 2022 due to increased balances invested in money market funds)

·          the Council held £21 million in non-financial investments, comprising capital loans to specific service providers and limited companies (a reduction of £79k since 30^th September 2022, representing the value of loan repayments from Freedom Leisure)

·         the total amount of Public Works Loan Board loans was £102.3 million, comprising £43.4 million General Fund loans and £58.9 million Housing Revenue Account loans (unchanged from 30^th September 2022).

Investment income for 2022/23 was forecast to be £433k over budget due to higher interest rates on the balances held in money market funds. Deployment of that surplus, which had not been factored into the General Fund revenue budget, would be considered by the Strategy & Resources Committee in due course.  

It was confirmed that, following the consultation exercise referred to at the previous meeting, the Government had extended the ‘IFRS 9 statutory override’ until March 2025. Consequently, the General Fund would continue to be insulated from gains and losses in the capital value of investments. The Chief Finance Officer confirmed the need for a strategy to be in place before March 2025 for dealing with ‘fair value’ investment fund losses in the event of the override ceasing to apply thereafter.  

The Chartered Institute of Public Finance and Accountancy’s Prudential and Treasury Management Codes required authorities to self-regulate the affordability, prudence and sustainability of their capital expenditure and borrowing plans. In that respect, updated estimates and limits for the Council’s Prudential Indicators were also presented. 

R E S O L V E D – that the following be noted:

A.    the Council’s investment and borrowing position at 31st December 2022, as

       set out in Appendices A and B;

B.    the outcome of the IFRS 9 statutory override; and

C.    the updated estimates and limits in the Council’s Prudential Indicators set out in     Appendix C to the report (and included within the Capital, Investment and Treasury Management Strategy referred to in item 4 below).

This updated strategy sought to provide a framework for delivering the Council’s capital programme. It summarised how the Council’s capital expenditure plans (as agreed by the respective policy committees) were to be financed, along with the governance arrangements for managing the programme. It included:

·      an ‘Annual Minimum Revenue Provision policy statement’ which defined how the revenue budget would be used to repay capital borrowing

·      a treasury management strategy statement regarding the management of the Council’s cash flows, borrowing, investments and the approach to risk

·      an investment property strategy statement.

New content within the treasury management strategy included the ability for the Housing Revenue Account to borrow surplus cash from the General Fund as opposed to the Public Works Loan Board (PWLB). Information had also been added about the ‘liability benchmark’ which compared the amount of current borrowing with that needed to fund the capital programme over the longer term. This measure indicated that borrowing from external sources may be required within the next two years.

In response to Members’ questions, the Chief Finance Officer:

·           explained the intention to avoid borrowing in advance of need and to seek advice from Arlingclose about how to manage ‘in-year’ cash surpluses more effectively (the advantages of:

Ø  participating in the inter-authority lending market; and

Ø  continuing to make short term investments in managed ‘money market funds’

were highlighted in this respect)

·           acknowledged that the future presentation of capital expenditure plans could be enhanced by including funding source breakdowns for each scheme, i.e. the respective external sources, together with the proportion of the total cost to be financed by the Council in accordance with the treasury management strategy

·           confirmed that borrowing from the PWLB was still relatively unconditional, provided levels were within previously declared overall borrowing forecasts and that borrowing would be used to fund capital projects, and not used to fund investment solely intended to generate a financial return

·           explained the difference between General Fund reserves and cash balances

·           confirmed that a further application would be made to the Department for Levelling Up, Housing and Communities seeking permission to use capital receipts to bolster General Fund reserves (i.e. for 2023/24).

            R E C O M M E N D E D – that the Capital Investment and Treasury Management Strategy 2023-24 , as at Appendix 1 to the report, be approved, subject to ratification by Full Council.

The Sub-Committee resolved to move into ‘Part 2’ for this item in accordance with Paragraph 3 (information relating to financial or business affairs) of Part 1 of Schedule 12A of the Local Government Act 1972.

Latest information was circulated about the commercial investment properties owned by the Council and its subsidiary company, Gryllus properties. The properties concerned were:

TDC properties:

     Quadrant House, Caterham Valley

     Details of recent lettings were provided, together with an update on the ongoing work to arrive at the final capital cost for the refurbishment works. Progress regarding the marketing of vacant units and prospective future use types were also discussed.

         Village Health Club, Caterham on the Hill

     Options for the future use of the building were discussed.

Gryllus properties:

        30-32 Week Street, Maidstone

     The temporary tenant would vacate in February 2023. Prospective arrangements for the subsequent use of the building were discussed. 

         Castlefield House, Reigate

     The next critical timeline was the rent review due on 25th March 2024. The current intentions of the existing tenant were noted.

     80-84 Station Road East, Oxted

            The current lease would expire on 17th September 2023.