Agenda item

To receive the National Audit Office report on Local Authority investment in Commercial property.

The Chair welcomed Councillor Caton, who had sat on the Scrutiny Committee in the previous municipal year and had worked on the matter of Local Authority investments, to present the report.

CouncillorCaton referred to the role of the Public Works Loans Board (PWLB) and the principles of borrowing for yield. He recognised that the Council had been borrowing on the open market. He highlighted the fact that Spelthorne Council had at one point borrowed fifty times their annual budget for commercial investments in comparison with the Council’s current level of £300m, representing 8/9 times the annual budget. He said that the Council needed to look at levels of borrowing and needed to update the Commercial Strategy and be more open and transparent. He suggested that Key Performance Indicators and other performance measures should be considered by Scrutiny Committee. He said that the Council should take a more holistic view of the Investment Strategy, not just from an income point of view and referred to the idea of having an Independent Chair of the Investment Board.

Councillor Reeve, as Chair of the Investment Board, responded. He said that the points being made were not new and the current priority was to complete the portfolio. This would be followed by reviewing the maintenance of the portfolio and updating policy documents.

Councillor Sell said that he sat on the Investment Board and there was a need to determine the relationship between the Board and Scrutiny. He said there was a need to revisit the Commercial Strategy and that matters should not just be financial but should also be reputational.

Councillor Lavelle outlined the current processes in place in respect of investment decisions that he considered to be robust. He agreed that there was a need to ensure that the Investment Board correctly managed reputational risk.

Several Members commented on the governance processes in place prior to approval of investments. The good work of officers in the process was recognised.

The Director – Finance and Corporate Services said that there had been nothing issued yet in respect of PWLB consultation and there was QC opinion that the Council was investing to underpin the budget, not for yield. He said the November meeting of the Investment Board would receive its first Quarterly report and these would include some KPI’s that the Government had recommended. He said that it was the role of GAP Committee to review the KPI’s. He said that the Commercial Strategy was a five year strategy and that actions taken had complied with the strategy as approved in February 2020.

CouncillorCaton welcomed Councillor Reeve’s recognition of the need to look forward at improvements.

The Chair thanked Councillor Caton for his contribution to ensuring that the Council was doing things correctly and he thanked the Investment Board.

Councillor Sell asked about the role of GAP Committee in relation to monitoring KPI’s and also at what point investments were in the public domain.

The Director – Finance and Corporate Services confirmed that KPI monitoring sat within the remit of GAP Committee and that once investments had been completed they would be publicised.

The meeting was adjourned for a comfort break at 8.00pm and reconvened at 8.10pm.