Agenda item

(Section 151 Officer) To consider the attached report.

The Interim Chief Financial Officer, C Hargrove, outlined the Capital Strategy 2021/22 to 2025/26 and detailed this was  a requirement of CIPFA’s Prudential Code for Capital Finance in Local Authorities (“the Prudential Code”). The change in approach on commercial investment, regeneration and the introduction of Qualis, the Council’s arms-length investment and service delivery vehicle, was highlighted. The Strategy had broadened in scope and set out the wider financial commitments for added transparency.  The Council’s adopted five year Capital Programme, for both the General Fund and Housing Revenue Account, showed planned capital expenditure of £52m in 2021/22 and £267m over the next five years. This required increased external borrowing of £434m at March 2025. The Council’s Section 151 Officer was satisfied that Capital Programme was prudent, affordable and sustainable of the programme as required by the Prudential Code.

The Capital Strategy included the Council’s approach to Asset Management, Treasury Management, Service Investments, Commercial Investments, Financial Guarantees and the maintenance of professional capacity. The Capital Strategy would be updated annually and presented to the Committee.

The Minimum Revenue Provision Statement (MRP) 2021/22, had remained unchanged from the adoption of the previous policy in Nov 2021.

The Chairman sought clarity on the timing of funding long term capital expenditure before financing arrangements. He was advised that Council reserves funded some of the expenditure and borrowing was used at the point of necessity to finance the expenditure.

The Vice Chairman made several observations in relation to gaps in rules, guidance, systems and controls, with specific reference to investments and the large sums of money involved (£10m).  He suggested that additional detail should be made available and would clarify this position for the Committee in conjunction with the Section 151 Officer.  The Interim Chief Financial Officer,  advised that the Capital Strategy was an overarching document and the latest guidance on reporting had been used in the preparation of the report. Additional detail including lists of the outstanding loan portfolio and investments would be  included in future reports.

The Section 151 officer clarified that the decision in relation to capital spend was a Council decision, and this had followed due process, he agreed that the rules needed  to be clear in the strategy and highlighted that whilst the PWLB restricted access to funds for commercial return, this did not prohibit borrowing for commercial properties if this was in relation to regeneration or improving the local area.

The Vice Chairman asked if the Council made the decision on spend by third parties, this was confirmed by the Section 151 Officer.

Cllr Heap confirmed that additional details and information on the prudential code would be useful for the Committee. The Committee requested a paper on the changes to CIPFA prudential code at a future meeting.

Resolved

That the Committee:

i)              recommended for approval by Council, the Capital Strategy 2021/22 to 2025/26 and the Minimum Revenue Provision Statement (MRP) 2021/22..

ii)             required a paper on CIPFA’s Prudential Code and proposed amendments to the Code, at a future meeting.