Agenda and draft minutes

Investment Sub Committee - Friday, 17th January, 2025 10.00 am

Venue: Council Chamber, Council Offices, Station Road East, Oxted. View directions

Items
No. Item

10.

Minutes of the meeting held on 8 November 2024 pdf icon PDF 839 KB

To confirm as a correct record.

Minutes:

These minutes were confirmed and signed as a correct record.

11.

Summary Investment and Borrowing Position at 31 December 2024 pdf icon PDF 70 KB

Additional documents:

Minutes:

A report with the investment analysis at Annexes A to C was presented, along with commentary from Arlingclose (the Council’s treasury advisors) on the external context for treasury management activity and the performance against the Council’s approved Prudential Indicators for 2024/25. The indicators showed full compliance as at 31 December 2024.

 

The investment analysis confirmed that, at 31 December 2024:

 

i)              Total long-term treasury investments (over 12 months) amounted to £8.8 million. This reflected the closure of the UBS Multi-Asset Fund on 16 September 2024, with the funds reinvested in two one-year fixed-rate bonds.

 

ii)             Short-term investments (less than 12 months) amounted to £19.5 million, including £2.3 million invested in one-year fixed-rate bonds.

 

iii)           The Council held £20.6 million in non-treasury investments, consisting of capital loans to service providers and limited companies.

 

iv)           The Public Works Loan Board (PWLB) loans totalled £96.3 million, comprising £43.4 million General Fund loans and £52.8 million Housing Revenue Account loans.

 

Investment income for 2024/25 was forecast at £1.95m which was £0.45m better than budget.

 

The report noted the statutory override on pooled investment funds had been extended until 31 March 2025. This allowed the Council to manage fair value movements outside its budgets. A further 1-year extension was the subject of a government consultation. An Investment Performance Equalisation Reserve had previously been established using surpluses from 2022/23 and 2023/24 investment income. This reserve was designed to mitigate capital losses, such as the £738k loss realised upon the closure of the UBS Multi-Asset Fund. The reserve now stood at £412k.

 

Members asked several questions of Officers, and it was confirmed:

 

·         the value held in money market funds would fluctuate significantly. This was dependent on whether portions of captured receipts, for example Council Tax, had been paid over to other authorities.

 

·         the rate at which the Housing Revenue Account (HRA) borrowed from the General Fund fluctuated throughout the year. This was dependent on the average rate of income from investments. Officers would include estimated rates in future reports.

 

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

 

A.    The Council’s investment and borrowing position at 31st December 2024 as detailed in Annexes A and B.

 

B.    The Council’s performance against the indicators set within the Treasury Management Strategy 2024/25 in Annex C.

 

C.   The commentary from Arlingclose on the external context for treasury management in Annex D.

12.

Capital, Investment and Treasury Management Strategy for 2025/26 pdf icon PDF 65 KB

Additional documents:

Minutes:

The purpose of the Capital, Investment and Treasury Management Strategy was to provide a high-level overview of how capital expenditure, capital financing and treasury management activity contributed towards the delivery of the Council’s priorities, along with an explanation of how risk, security and liquidity were managed. It comprised:

 

·      capital and investment overviews

 

·      a treasury management strategy statement for 2025/26

 

·      an investment property strategy for 2025/26

 

·      a Minimum Revenue Provision (MRP) policy statement for 2025/26, at appendix A to the report

 

·      a statement of principles of corporate governance for the capital programme.

 

The Director Resources confirmed figures in tables 11 and 12 had been updated since the agenda had been published. The strategy was fundamentally the same as for 2024/25. Changes included a peak in the MRP to £1.6m in 2027/28 (compared to a peak to £1.5m in 2026/27), to ensure the Council had adequately planned for repayment of debt, and other minor amendments as outlined in paragraph 8 of the covering report.

 

In response to Member questions, it was confirmed:

 

·         the strategy is amended annually and approved by Full Council. Once the Sub-Committee had approved it, a recommendation to the Strategy & Resources Committee and Full Council for approval would follow. The Strategy & Resources Committee was responsible for approving the level of borrowing for capital programmes.

 

·         Officers would provide details of which schemes were funded from borrowing in the report to the Strategy & Resources Committee on 30 January 2025. This information is attached as annex E to these minutes.

 

·         it was important the Council ensured it could service its debt, and the level of borrowing was appropriate. Borrowing only took place when funding was needed, and slippage on capital spending was reported through the policy committees. The Council was marginally over-borrowed due to past borrowing levels but would need to borrow again in future years as the gap between external debt and the liability benchmark grew.

 

·         Officers would amend the strategy by removing “The portfolio is at an early stage of development.” from paragraph 33 of the Investment Property Strategy. In the future, proposed changes to the Strategy (and similar documents being considered by the Sub-Committee) would be clearly marked in the draft revised version presented to the Sub-Committee.

 

·         Officers would seek Member input on contents of non-technical training to establish key areas of focus. This would be done in time to ensure the training would be delivered before the next scheduled meeting in June.

 

·         Members would be asked to consider the implications of local government reorganisation on the Council’s investments at a future meeting of the Sub-Committee.

 

  

COUNCIL DECISION

(subject to ratification by Council)

 

            R E C O M M E N D E D – that that the Capital Investment and Treasury Management Strategy 2025-26, as at Appendix 1 to the report, with amendments to tables 11 and 12 and paragraph 33 of the Investment Property Strategy, be approved, subject to ratification by Full Council.

 

13.

Investment Property Update - January 2025 - Verbal Update

Minutes:

The Sub-Committee resolved to move into private session 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 presented about the investment properties owned by the Council and its subsidiary company, Gryllus Property Limited. The properties concerned were:

 

Gryllus properties:

    

     80-84 Station Road East, Oxted

     The lease with Cook had completed.

                  

     30-32 Week Street, Maidstone

     Refurbishment had been completed, and handover was expected within the next two weeks.

 

     Castlefield House, Reigate

The lease would expire in 2029 and the Council had instructed a consultant to advise on the development options.

 

TDC properties:

 

     Quadrant House, Caterham Valley

A new logo for The Q had been designed and Officers were working on a brochure, website and other digital marketing. Two new single desk lettings had been agreed. A new letting of 1,044 sq ft had been completed. Officers were considering options for the larger suites which were proving harder to let

 

The McDonalds letting had received planning approval, and the lease was close to finalisation. Officers would present the final lease to Members prior to completion.

 

     Village Health Club, Caterham on the Hill and Tandridge Leisure Pool, Oxted

     Officers had served schedules of dilapidations on the tenant in respect of both centres. The latent defect at Tandridge Leisure Pool was the Council’s responsibility and would be tendered shortly.

    

     Council Offices, Oxted

No updates.

 

Linden House, Caterham

Regear negotiations had commenced with the tenant. Officers were considering other options for the building.