Agenda item

Purpose: The report seeks to consolidate the investments and borrowing strategy for the year ahead by detailing how and where the Council will invest and borrow in the forthcoming year, within a particular framework. This strategy is monitored throughout the year, with a mid-year report going to the Governance Committee as well as an annual report being presented to Members.

The report also has a statutory footing under the Local Government Act 2003.  The Council must have an approved (by Full Council) Investment and Borrowing Strategy (or similar) for the forthcoming financial year. The Council is also required to comply with other regulatory requirements as highlighted in this report, for example to be a professional investor the Council must have £10 million of liquid investment funds on average during the financial year; the Council must also detail its compliance with the relevant Treasury Management indicators (as highlighted in this report).

The Council considered the report (Agenda Item 5). The report sought to consolidate the Investments and Borrowing Strategy for the year ahead by detailing how and where the Council would invest and borrow in the forthcoming year, within a particular framework.

The report also had a statutory footing under the Local Government Act 2003. The Council must have an approved (by Full Council) Investment and Borrowing Strategy (or similar) for the forthcoming financial year. The Council was also required to comply with other regulatory requirements as highlighted in this report.

MOTION: Proposed by Councillor Iain Cottingham and seconded by Councillor Jeff Brooks:

That the Council:

“agree and adopt the proposed Investment and Borrowing Strategy for 2024/25;

agrees the revised Commercial Property Terms of Reference in Appendix D; and

agrees that the capital receipts generated from disinvestment are applied to offset potential future financing costs or are utilised as part of the flexible use of capital receipts policy.”

Councillor Cottingham made the point that the current financial climate was one of unprecedented risk. It was therefore crucial to manage funds in a prudent and risk averse way. The Strategy set out the borrowing and investment plans for the Council. Officers in the Treasury Team managed these plans and followed a rigorous process of risk management in doing so.

Borrowing was one of the avenues used to fund the Capital Strategy and the current borrowing strategy was for shorter term borrowing as this achieved lower rates of interest at the present time. Capital receipts also funded the Investment and Borrowing Strategy, and the investment of those funds helped to reduce borrowing and associated costs.

As mentioned by Councillor Tony Vickers, Councillor Cottingham was pleased that the Municipal Bond would be relaunched in 2024/25 to help fund the solar farm.

The Council was evaluating the potential to borrow from the UK Infrastructure Bank as the cost of borrowing was less than that available from the Public Works Loan Board.

The Council’s borrowing costs for 2023/24 were in the region of £168m, this was expected to reduce to £164m by 2027/28.

Councillor Cottingham concluded by stating that the Section 151 Officer was confident that this Strategy would provide an effective, robust and prudent platform to support the Capital Strategy.

Councillor Ross Mackinnon noted the points made on risk aversion. However, he questioned if the Administration was clear on its plans for commercial property investment following a recent meeting of the Executive when amendments were sought to the Property Investment Strategy. The decision taken on the Strategy was called-in and it transpired that this was not a decision for the Executive to take. The Property Investment Strategy had since been amended with disinvestment planned over the longer term.

Councillor Mackinnon made reference to paragraph 5.17 of the report which outlined that the Executive could invest funds of up to £17.5m in real estate investment trusts with the aim of achieving rental income. He noted this would be a continuation of property investment and would be a high risk approach.

(Councillor Phil Barnett joined the meeting at 6.08pm).

Councillor Adrian Abbs commented that the ability to borrow and invest sums did not mean it was always the right thing to do. He felt that the prior property investment of the Council had not proved successful and the competition for properties amongst local authorities had led to overly inflated prices. Disinvestment had become the approach but property prices had lowered.

He felt it would have been more sensible to invest in solar and other energy schemes as these would have achieved ongoing benefits.

Mention had been made of the costs of implementing the Care Director system. He felt that the project had proved to be a waste of money that should have been halted by the Conservative Administration. The situation had been inherited by the Liberal Democrats who had sought to remedy it.

Councillor Brooks referred to plans to disinvest in commercial property. He stated that it was the intention to reinvest monies from capital receipts for the benefit of West Berkshire residents.

Councillor Cottingham stated that the Council was highly unlikely to invest in real estate investment trusts and agreed it would be high risk. However, the option was being retained in the Strategy should the market in this area show improvement in the future.

The Motion was put to the meeting and duly RESOLVED.