Capital, Non-Treasury Investment, Treasury Management and MRP Strategies and Statements
Report of the Cabinet Member Finance and Assets.
The Cabinet Member Finance and Assets presented the report, recalling the council’s journey in recent years. With a decade of austerity and a commitment to fund discretionary services, this council looked commercialise its operations wherever possible. With the cost of services at £22m and income from local taxation and grants equalling £14m, they had to fill the void of £8m with trading and investment income. How the council used capital and managed investments was more important than ever, in order to ensure it was maximising the returns generated to support the general fund budget.
The documents presented to Council set out how they planned to do this over the next 12 months. These strategies were all mandatory for local authorities and should be reviewed and approved by Council each year. Together with the asset management strategy, they provided the framework for all our capital, asset and investment decisions for the coming year. He also presented for approval the annual Minimum Revenue Provision statement, which explained how the payment of their borrowings had been calculated. There had been no significant changes to their approach for the coming year as they were still waiting for a formal response to the government consultation from 2021, which had still not been published.
The Mayor moved into Member questions:
- One Member noted that some property purchases used short-term loans, and queried the possible impact of this when it came to renewal, with interest rates creeping up. The Executive Director Finance, Assets and Regeneration clarified that they took a hybrid approach, and all the investments they classified as operational were subject to long-term borrowing. Four or five years ago, when they made a number of strategic investments in the town including a supermarket and a number of office buildings, these were financed using what was called a basket of maturities. Instead of taking one loan over 40 years, they took 40 loans over 40 years, with the first loan maturing each year and so on. All of those were fixed. The rationale for that was that it saved some £990k in interest over the 40 years. The only strategic investment they now had in short-term borrowing was the land acquisition at West Cheltenham. The rationale for this was that if they got it right, over time they would release plots to developers to develop out, and obtaining capital receipts to offset this debt repayment. He reassured Members that they were not in a situation where the majority of their debts were short-term loans.
- One Member asked about the opportunity costs and time and effort needed to seek the available sources of funding from the government. The Cabinet Member Finance and Assets agreed that officers had to spend a lot of time working on bids when they could be doing other things, but unfortunately this was how the government chose to operate now. Funding was only made available through limited windows and they had to compete with other authorities for it.
There being no further questions, the Mayor moved into debate, where the following points were made:
- The appendices were more accessible and easier to read than the usual black and white, with descriptions also provided for key terms with which the public might not be familiar. This was a positive step which ought to continue. The Cabinet Member Finance and Assets was pleased with the documents’ accessibility and intended for it to continue. Readability was key so that the public could fully understand the decisions being made.
- The capital and investment strategies were closely linked to the new Corporate Plan, and it was particularly good to see a focus on building affordable net zero homes.
- One of the key priorities on page 32 (to enhance Cheltenham’s reputation as the cyber capital of the UK) had already started, and they were hosting a delegation from Canada in the next few days on cyber. Cheltenham’s reputation was already growing around the world, and this would provide further income to offset some of their costs.
- The investment in housing was welcome, but the council needed to avoid relying on Golden Valley, and instead ensure a balance across different priorities. The Cabinet Member Finance and Assets disagreed that they were reliant on Golden Valley, but acknowledged the project’s importance considering the economic challenges they faced.
The Cabinet Member Finance and Assets thanked Members for their contributions, and summarised that Cheltenham always did things differently and sought innovative solutions.
The Mayor moved to the vote, which was carried unanimously.
- Capital Treasury strategies 2023-24, item 9. PDF 387 KB
- Appendix 2 - Capital Strategy, item 9. PDF 1 MB
- Appendix 3 - Investment Strategy, item 9. PDF 2 MB
- Appendix 4 -Treasury Management Strategy, item 9. PDF 2 MB
- Appendix 5 - MRP-Statement, item 9. PDF 339 KB