To report any issues with the information below please email executivecycle@westberks.gov.uk.

Agenda item

Investment and Borrowing Strategy 2021/22 (C3980)

Purpose: This report fulfils the Council’s legal obligation under the Local Government Act 2003 to have regard to the CIPFA Code and sets out the Council’s proposed Investment and Borrowing Strategy for 2021/22.

Minutes:

The Council considered a report (Agenda Item 15) concerning the Treasury Risk Management at the Council which was conducted within the framework of the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Treasury Management in the Public Services: Code of Practice 2017 Edition (the CIPFA Code) which required the Council to approve a treasury management strategy before the start of each financial year. This report fulfilled the Council’s legal obligation under the Local Government Act 2003 to have regard to the CIPFA Code and set out the Council’s proposed Investment and Borrowing Strategy for 2021/22.

MOTION: Proposed by Councillor Ross Mackinnon and seconded by Councillor Howard Woollaston:

That the Council:

“Agree and adopt the proposed Investment and Borrowing Strategy for 2021/22; and

Agree and adopt the revised 2021 Property Investment Strategy”.

Councillor Ross Mackinnon stated that this strategy came in two parts – it dealt with investments and it also dealt with borrowing. The report laid out the approved deposit institutions for the Council’s treasury investments and also set prudential limits for those investments. It recommended borrowing limits for the next three years and together with a longer term forecast for the Council’s borrowing requirements. The Council’s external borrowing was kept under regular and close review to ensure that it was manageable and sustainable.

Councillor Mackinnon stated that one of the other organisations which had enabled local authority bond issues was Abundance Investments who facilitated enabling investors, both inside and outside of the district, to invest directly in the Council’s Environment Strategy. He was proud to have played a small part in such an innovative scheme.

Councillor Jeff Brooks agreed that there were good reasons to borrow for infrastructure etc. but he felt that the Council was overdoing it.

Councillor Lee Dillon felt that members of the public would be disconcerted to see the annual rent for 4 The Sector. It had a purchase price of £8m and with no annual rent as yet. Councillor Steve Masters understood that 4 The Sector had been let to a capacity of about 30% and he understood from a question he had asked previously that the Council would be able to manage about a year to 18 months without the income before it became a major issue. Perhaps it would have been better to invest in social housing whereby the Council would have been getting rent from much needed social tenants.

Councillor Erik Pattenden referred to paragraph 5.2 which stated that the impact of Coronavirus and Brexit would have a major influence on the Council’s Treasury Management Strategy but he asked what the impact of Brexit had been on businesses and residents in West Berkshire since 1 January 2021 as the national press had had a huge amount of coverage of how it had impacted on some sectors.

Councillor Adrian Abbs stated that he would like to see an asset value against all of the commercial investment as commercial properties had not been increasing in value recently. He also noted that capital was being spent on software, hardware etc. which were generally a declining asset and he would therefore like to see the value of the assets against the initial investments.

Councillor Howard Woollaston pointed out that the debt costs in many cases would be covered by the income such as was the case with the Property Investment Portfolio which was creating an income of £700k a year. In relation to interest rates and whether they would be likely to increase he advised that a lot of the Council’s borrowing had come through PWLB which was a fixed rate for 40 years and therefore interest rates would not go up.  

Councillor Ross Mackinnon felt that it was necessary to look at the total borrowing figure in tandem with the percentage of the revenue budget that went towards repaying the borrowing for capital financing. The long term forecast for the Council’s borrowing was for it to decline. In relation to 4 The Sector he was bound by commercial confidentiality at this stage. However, the benefit of having a geographically diverse portfolio of assets was that in the case of having a vacancy or two it would wash its face and the Council was fortunate in that it was generating a positive return.

The Motion was put to the meeting and duly RESOLVED.

Supporting documents: