Agenda and minutes

To confirm as a correct record

Given that the meeting was inquorate, approval of these minutes stood deferred until the next meeting.

The investment analysis at Appendices A and B was presented.

R E C O M M E N D E D – that the Council’s investment and borrowing position, at           31^st December 2021, as set out at Appendices A and B, be noted. 

Arising from the Sub-Committee’s meeting on the 24^th September 2021, a report was presented to update Members about the process to identify an appropriate investment portfolio to support the Council’s medium-term financial objectives and an approach to future decision making for such investments.

Building on the analysis previously undertaken by Link Group (the Council’s treasury advisors) and with their further support and guidance, the report proposed a conclusion to the process. It explained that future fund selections would have to be cognisant of:

·           the fact that the Council’s revenue budget relied on approximately £500,000 per annum of income from the four funds currently holding £12 million of investment and that, given the current budget pressures, there was little scope for pursuing a strategy that would generate less revenue income; and

·           the current reliance on the ‘statutory override’ (of usual accounting practice) which meant that the Council’s revenue budget was not impacted by annual gains or losses in the capital value of investments, unless they were withdrawn.

The current ‘statutory override’ was in place until 31st March 2023 and the Government had not yet decided whether to extend it. The outcome would influence future investment decisions as removal of the override would heighten the need to avoid capital losses (which would have an adverse impact on the revenue budget) whereas retention would make higher income funds more attractive and capital performance less of a concern.

In light of the above, the report contained:

·           an analysis of the performance of the four funds in which the Council was currently investing (namely the CCLA Property and Diversification Funds; Schroders Credit Fund; and UBS Multi Asset Fund*) which concluded that the Council should remain in the funds until capital values had recovered to at least the amount invested;

* the Council had previously decided to cease re-investing in its peer to peer loans with Funding Circle and to withdraw funds as those loans were repaid

·           commentary on the total sum which the Council should be investing with counterparties, based on current surplus cashflow projections – this advised that the current £12 million could be retained in the knowledge that the Chief Finance Officer (under powers provided within the Financial Regulations section of the Constitution) was authorised to change the balances invested in light of significantly reduced or increased cashflow scenarios.

The report suggested criteria for future adjustments to the Council’s investment portfolio but concluded that no changes be made for the time being. 

Nazmin Miah (Link Group) and Haley Woollard (Treasury Centre of Expertise via the Joint Working Arrangement for finance services with Surrey County Council) supported officers with the presentation of the report and in responding to Members’ questions. Discussion focused on the implications of the ‘statutory override’ not being extended, including the likely timeframe for having to adjust the current portfolio before the General Fund became adversely affected. Officers confirmed that, while the Government’s decision on the override was awaited, plans in response to various scenarios would be developed.    

Officers also  ...  view the full minutes text for item 3.

This updated strategy provided a high-level overview of how capital expenditure, capital financing and treasury management activity contributes to the delivery of the Council’s priorities, along with an explanation of how risk, security and liquidity are managed. It summarised the Council’s capital expenditure and financing plans, together with the principles, funding sources and governance arrangements for the management of the Capital Programme. It also covered: 

·           the treasury management function, which sought to ensure that income raised during the year is sufficient to meet expenditure plans and that cash is available when needed – a key objective is to invest surplus cash with counterparties and in instruments commensurate with the Council’s low risk appetite, whilst ensuring security and liquidity;

·           the Council’s investment property strategy, aimed at providing a robust framework for the acquisition of property investments and the pursuance of redevelopment and regeneration opportunities.

Upon presenting the strategy, attention was drawn to its impact upon the revenue budget, together with:

·           the recent CIPFA (Chartered Institute for Public Finance and Accountancy) consultation on the Prudential Code for capital finance in local authorities, which suggested that, while Councils should review the pros and cons of retaining current investments, they could be retained and expenditure on repairs, renewals and refurbishments could also be incurred; and

·           the intention to adopt, as part of the strategy, the Annual Minimum Revenue Provision (MRP) Policy Statement at Appendix C.

Regarding the investment property strategy, the means of evaluating economic regeneration benefits associated with ‘in District’ acquisitions were discussed.

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

The meeting moved 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.

As per the Sub-Committee’s recommendation at its previous meeting, Redstone House (South Nutfield) was being marketed for sale. Members were informed about the current position in respect of that process. A verbal update was also given regarding the other commercial investment properties owned by the Council and its subsidiary company, Gryllus properties, i.e.:

TDC properties:

-       Village Health Club, Caterham on the Hill

-       Linden House, Caterham on the Hill

-       Quadrant House, Caterham Valley

Gryllus properties:

-       Castlefield House, Reigate

-       80-84 Station Road East, Oxted

-       30-32 Week Street, Maidstone          

Regarding Linden House, Members were informed of the progress of negotiations with the existing tenant regarding the renewal of the lease which was due to expire in June 2022. Members were satisfied that the lease should be renewed based on the information provided and that the Executive Head of Communities should be authorised to conclude the negotiations in consultation with the Chair and Vice Chair of the Strategy & Resources Committee.

R E C O M M E N D E D – that authority be delegated to the Executive Head of Communities, in consultation with the Chair and Vice Chair of the Strategy & Resources Committee, to proceed with the lease renewal of Linden House, Caterham for the best consideration she can achieve.