Agenda item

Report of the Cabinet Member for Finance and Assets

The Cabinet Member for Finance and Assets introduced her report, saying that the Capital, Investment and Treasury Management Strategies would provide the funding for the ambitious multi-million pound strategy set out in the budget approved in February, and ensuring that council tax payers’ money is spent and invested wisely for maximum return.  She said it is the real heart and soul of how the council manages money and services, from regenerating our favourite assets to EV charging points and safe cycle parking.

She went on to say that the housing capital programme proposed a £104.7m investment between 2024-25 and 2028-29, to increase the supply of social and affordable housing in Cheltenham, in addition to the £35m already spent on this.  Although a huge sum, she said there will always be a housing list, but the council will use every penny of the housing revenue account wisely and do all it can to deliver houses – as always in investing in Cheltenham for Cheltenham. 

She urged Member to approve the strategies, and thanked officers of the finance and assets team for making the detail of the work a reality and delivering one of the most innovative and inventive financial strategies of any council of the country.

Questions

A Member thanked the Cabinet Member and officers for the report, noting that the Capital Strategy states that capital expenditure will be funded from external resources, and capital receipts from the disposal of surplus assets where possible, with borrowing only used if no other funding source is available, and debt repayment and interest costs covered without additional pressure on the revenue budget.  He said Table 2 of the Capital Strategy shows £171m of capital expenditure being financed by debt over the next three years, and Table 7 shows financing costs for the same period falling from £4.6m to £4.2m, a reduction which, given current and future interest rates,  can only be achieved if a substantial portion of planned investment is financed from external resources and capital receipts. 

He asked for assurance that in reality, the majority of planned investment will be financed from external resources and capital receipts rather than the amount of new debt shown in Table 2, and asked if the Cabinet Member agreed that while a prudent level of borrowing to fund investments in acceptable, it would be inappropriate to borrow to meet interest payments.

The Cabinet Member for Finance and Assets said she would stand behind the finance team’s decades of experience in investment planning, and said that with some substantial assets in its portfolio, the council will do all it can to finance within its means through asset disposals and redeployments. .

In response to further questions, the Cabinet Member for Finance and Assets confirmed that:

-       the county council receives 74% of council tax income, understandable as it delivers very expensive services such as social services, education and highways, but unfortunate in that it means that CBC has no jurisdiction over some things, such as potholes and paving.  This is one of the problems highlighted by the devolution conversation - when delivering standardised services at scale and over an extremely large area, the community-driven ethos and connection is lost – but every financial decision the council makes is about delivering the best it can for the people of Cheltenham;

-       regarding the Environmental, Social and Governance Policy (ESG) in respect of treasury management - specifically what the council is doing to try and tackle the worst excesses and detrimental effects of extreme capitalism (including the tobacco and alcohol industries and irresponsible gambling companies) - the ethos at CBC is to invest in Cheltenham for Cheltenham.  Investment decisions align with that, particularly ESG decisions around climate, and she is confident that we have no investments in any of those areas. 

Debate

In debate, Members thanked officers and the Cabinet Member for an excellent piece of work and made the following points:

-       carrying out peer reviews on other authorities, it is interesting to note the different attitudes to borrowing:  some councils are completely risk averse and will not invest anything in their towns until they have enough money in the bank - laudable in some ways but not benefitting their residents – while others prefer to borrow at a reasonable rate to finance essential regeneration work.  CBC is very good at managing its debt ratio, and lucky to have some highly valuable assets; prudent borrowing is an important part of what we do;

-       Paragraph 2.3 of the Capital Strategy is particularly important, demonstrating that the aim is not just to get cash and spend it, but to look at what Cheltenham people and communities need and build everything we do on addressing those needs. Our finance team understands that and knows what to do to make Cheltenham’s economy grow and benefit all its residents;

-       the council is blessed with fantastic staff across the board, and investing in our town from property and industrial units to affordable and social housing is key to Cheltenham’s success.  We cannot sit back and be complacent – we need to take sensible risks, including borrowing, to invest in people and property which will in turn generate returns through council tax or rents. CBC is one of the best authorities in the country when it comes to investing in the town and its future.

The Cabinet Member for Finance and Assets thanked Members for their comments.  She said life is about risk, and CBC is not afraid to take the best risks available in a field it knows well, or to invest to make money to improve residents’ lives.  Unlike other more cautious authorities which are incapable of seizing opportunities and are subsequently living with the challenges that approach has brought them, CBC has followed this successful strategy for the past ten years, and always got it right on the things that really matter.  She thanked the Leader for embarking on this strategy of commerciality with a reasonable amount of risk when she was Cabinet Member for Finance.

RESOLVED THAT: 

-       the Capital Strategy 2025/26 at Appendix 2;

-       the Investment Strategy 2025/26 at Appendix 3; and

-       the Treasury Management Strategy Statement 2025/26 at Appendix 4

are noted and approved.