Agenda item

Recommendation

It is recommended that the Policy O&S Committee consider the draft Capital Strategy 2022/27 incorporating Treasury Management Strategy and Asset Investment Strategy and pass comments and observations to the Executive.

The Head of Finance and Property will lead this agenda item.

The Head of Finance and Property presented the item which set out a proposed Treasury Management Strategy for dealing with banking the Council’s money, market investments and its borrowing policy; and the policy which governed its treasury management activity.  The Capital Strategy was an overarching governance document which set out how the Council governed its capital spend.  The Asset Investment Strategy was a much more detailed governance document in respect of how Waverley dealt with asset investment. 

The Government had carried out a full-scale review based on its concerns around local authorities’ foreign asset investment.  The National Audit Office had looked into a number of authorities surrounding Waverley.  The National Audit Office went into a period of consultation on the Strategy Management Code and the Capital Code or effectively prudential code for capital.  They concluded the revision of both of those codes in late December 2021.  In February 2021 the Council carried forward its existing Capital and Property Investment Strategies and the Treasury Management Strategy with updated indicators pending the outcome of the long-term review.  Therefore, the three documents contained in the report were brand new.  The Council was not able to do anything primarily for yield and the Government would not lend the Council money for that purpose.  The Government stated that local authorities must focus their investment on service delivery i.e. strategic functions such as housing regeneration schemes, market failure areas where there was employment at stake and refinancing of existing positions.  It was noted that the treasury management investment was now a corporate matter which had to be complied with.

Cranleigh Leisure Centre was in the core programme and had been considered by the Council recently.  This was a £20 -22 million scheme which split over two years in terms of cash flow.  There were some mixed-use developments in each of those years totalling just short of £20 million.  The Burys Project was the other key project costing around £30 million, which was £15 million a year for two years.   There was a question around whether the Council was allowed to invest in Cranleigh Leisure Centre if that would generate income.  It was explained that the Council was restricted in terms of speculative income.  It was able to invest in schemes which generated income as long as it was service related and a leisure centre met this criteria.

Councillors sought clarification that the second recommendation to Council was not open ended and would come back to Council for consideration each year.  Officers advised that if the Council was minded to keep the risk element of the proposal under review, then an annual review would be appropriate.

It was stated that the HRA accounts would still see the interest cost attributed to their debt.

With regards to the recommendation in para 3.1.1, the Committee RECOMMENDED the approval of the 5-year Capital Strategy for 2022/2027, incorporating the Treasury Management Strategy, Prudential Indicators and Asset Investment Strategy by Full Council.

The Committee RECOMMENDED that the proposed delegation in para 3.1.2 be subject to annual reapproval by Full Council.

The Committee THANKED the officers in the Treasury Management team for their underappreciated work on frequently technically challenging tasks.