Sean Clark, Corporate Director of Finance, Governance and Property, presented the report that provided Members with a brief update on the Council’s investments and borrowings as of 10 September 2020. As requested by the committee this report provided the latest update to members and set out the actual levels of investments and borrowings as at 31 October 2020. Members were referred to the key financial information of the Council’s investment performance and the spread of the investments on pages 302 and 303 of the agenda

Councillor Collins congratulated Sean Clark and his team for the fantastic work that had been undertaken during this pandemic.

Councillor C Kent asked for reassurances that in light of the COVID pandemic that the Council’s investments were secure and that going forward the Council were not putting itself under any undue financial restraints in relation to those investments. Sean Clark raised a possible issue that one of the Council’s smaller investments had some small cash flow issues at this moment, but with the level of cash, with some cash already being pulled back and the levels of capital was largely secure. More details from this would be shared with the shadow investment committee when they meet in December. Sean Clark confirmed that the rest of the investments were doing very well, with returns and there had been no threats to the Council’s capital. That reassurance was given to Members that all was looking very positive and not such as a concern when compared to other places around the country.

Councillor C Kent referred to the Council’s income and questioned over the next few years would these investments still be holding up to help the Council when budgets were being looking into. Sean Clark stated that the majority of investments were in renewable energy and one of the reasons for this was there was no sign of this being impacted going forward and that these assets had not been so affected by COVID. That in terms of the medium term strategy the returns on the current investment would remain stable and nothing had been seen to change that opinion. In regards to the budget gaps and pressures, as no further investments would be made in the foreseeable future, this was no longer a tool to bridge those gaps going forward. Therefore the investments we had were stable but no further investments to be able to support the pressures.

Councillor Spillman thanked Sean Clark for the report and stated that further investments should still be looked into and questioned whether the decision to not make any future investments was political or based on risk. Sean Clark stated there were a number of reasons but the market had become a lot more difficult and the environment was becoming more difficult to go forward on investments of this nature. 

Councillor Spillman questioned whether it was dearer to borrow from PWLB rather than the borrowing from other councils. Sean Clark stated that it was more expensive but was dependant on the amounts and over what period.

Councillor Spillman questioned what the financial impact would be to the Council of this change in borrowing.  Sean Clark stated that it varied and so was a hard question to answer. The MTFS already assumed circa £1.5m growth per annum in borrowing costs to allow for these changes going forward and that this would reduce over time as investments dropped out.

Councillor Spillman stated he was passionate about renewables and for Council’s to start paying their own way and was happy with this approach and thanked Sean Clark.

Councillor Rice referred to the 80% of investments in renewables and questioned when these investments would come to an end. Sean Clark stated that the majority were around 7 to 8 years but there were various different periods within that. There was also the ability to pay back those at any time so some may be shorter than that.

RESOLVED

That the Standards and Audit Committee noted the report.