The exempt appendices and information were discussed in the closed part of the meeting.

Councillor Snell explained that the report provides an update for Cabinet on work being undertaken to address the Council’s financial challenges.  It focuses on three areas:

Ø  financial strategy

Ø  divestment of the previous investments

Ø  other financial management initiatives

Councillor Snell confirmed that the financial strategy aims to:

-       sell £1.035bn of investments to the fullest extent possible and pay down debt.

-       generate at least £150m of capital receipts and pay down debt

-       save £18.2m from the revenue budget for next 2 years and a further £13.65m 7.5%, for each of the following 3 years

The plan is to divest 93% of the investment portfolio by March 2023. It is recommended that an indicative hurdle rate of 12% (i.e., 7% PWLB rate and 5% MRP) is set for investment yield / return, with anything yielding less being put forward for sale. The Council does not have the expertise to manage the investment portfolio without substantial external advice.

Litigation options are being explored.

ReSOLVED:

2.1      It is recommended that Cabinet:

i)               notes the progress on the investment recovery and divestment strategy

ii)             notes the progress being made on the other financial actions

iii)           notes the urgent ED2 decisions made, copies of which are included in the Appendices to this report covering divestments and asset sales

iv)           agrees the continued use of necessary advisors as required until completion of work associated with divestment of and recovery of value of investments including the conduct of litigation, subject to the review of the programme currently being undertaken by the Council’s officers to be reported to Cabinet in November 2023 and the Leader, Finance PFH, Chief Executive and Commissioners being consulted before advisors are instructed on new work streams

v)             agrees that the each council Director involved in delivering the strategy is in consultation with the Leader, Finance Portfolio Holder the Section 151 officer, the Monitoring Officer (where the Director does not fulfil one of those roles) and Commissioners is authorised within their professional area to:

(a)   subject to recommendation 2.1 iv), to procure and appoint the advisors using the most expeditious and efficient procurement process which is lawfully available under the Public Contract Regulations 2015 and that the financial thresholds in the Council`s Contract Procedure Rules are waived for this purpose; and

(b)   to take all action necessary (within appropriate budgets) to ensure the implementation of the Council`s recovery strategy if timescales do not allow for a report to Cabinet as long as a full update is provided at the next available Cabinet meeting.

vi)           the Director of Law and Governance is authorised to the commence legal proceedings for the potential claims set out in Appendix B of this report where there is a supportive advice from a King`s Counsel together with any associated action after consultation with the Leader Chief Executive, Section 151 Officer and Commissioner subject to reports on progress being brought to Cabinet.

vii)          the Section 151 Officer in consultation with the Leader and Portfolio Holder, the Monitoring Officer and Commissioners is given delegated authority to take all action necessary to implement the divestment strategy where a divestment meets the criteria set out in the Direction subject to reports on progress being made to members.

viii)        confirms that the main objective is to reduce the Council’s exposure to financial risk by delivering a divestment strategy that optimises (sums and timing) receipts to repay the borrowings as long as doing so .secures best value using its criteria set out in this report

ix)           agrees an indicative hurdle rate of 12% (i.e., 7% PWLB rate and 5% MRP) is set for investment yield / return, with anything yielding less being put forward for sale, subject to the detail of the individual investment, the Council’s contractual obligations and the ability to deliver value for money

x)             notes and agrees the review of the programme as set out in paragraph 4.70 and requests regular reports back to Cabinet on progress on the financial strategy

Reason for the decision: as outlined in the report

This decision is subject to Call-in