Issue - meetings

To receive a report by the Corporate Director (Services) seeking approval of a Commercial Investment Strategy. 

The Cabinet approves the Commercial Investment Strategy as attached to Appendix A of the Officer’s report and the ‘as is’ model of governance arrangements.

The Cabinet gave consideration to a report (a copy of which is appended in the Minute Book) by the Corporate Director (Services) to approve the Commercial Investment Strategy (CIS) and the ‘as is’ model of governance arrangements.

In order to achieve the Council’s ambition to reduce reliance on Central Government funding, a funding gap of £8.2m had to be addressed by 2019/20.  Income generation was one business activity that would assist to address the funding gap.

The Council’s current commercial estate generated a net return of £1.5m (7.2% of the £20.8m value of the estate) and the Council had established a ‘Capital Investment Earmarked Reserve’ to provide a source of funding for further investment in assets generating a revenue cash flow. The CIS established the parameters and governance arrangements for managing this investment.

A Business Plan was being drafted which would be presented to the Cabinet for approval.  The Business Plan would establish the parameters for the Loan to Value of each type of investment to ensure that additional borrowing was affordable and that there was adequate security over direct capital investment in assets.

The governance structure for the CIS needed to allow the Council to trade on a commercial basis and also to recognise the statutory and political boundaries.  The report to the Cabinet advised of the two options available to the Council.  The preferred option recommended to the Cabinet was for the ‘as is’ position which made use of existing resources and ensured Members were involved in relevant decisions through the Treasury and Capital Management Group.  The governance structure would ensure regular reporting to Members

At the Council meeting in July 2015 amendments to the Constitution were approved to reflect the Disposal and Acquisitions Policy to provide new financial thresholds for the disposal and acquisition of land and property and subsequently greater delegated decision making powers to allow Senior Officers and Members to act and take decisions on disposals and acquisitions of land and property.

In considering the comments of the Overview and Scrutiny Panel (Economic Well-Being) it was noted that the Panel had endorsed the CIS and questioned the resources available to deliver the Strategy.

The issue of risk was discussed amongst the Cabinet and it was explained that this was considered within the CIS.  It was not proposed that the Council concentrated on one type investment, for instance commercial property.  The CIS identified a range of investment strategies with different financial, risk and timing profiles.  Initial investment would focus on lower risk investments, with potential risk and reward to be increased over time.  The Business Plan would set out risks and mitigation for the types of investments planned each year.

The amount of savings that the Council was required to generate would be impossible to deliver without an impact on services; therefore the Cabinet considered that there was a bigger risk in doing nothing.  The Cabinet were in agreement that they wanted to make Huntingdonshire a better place and were mindful that in implementing the CIS  ...  view the full minutes text for item 35

The Corporate Director (Services) will present the Commercial Investment Strategy to the Panel.

Councillor Jonathan Gray, the Executive Councillor for Resources, introduced the Commercial Investment Strategy report to the Panel.  The report sets out the high level strategic approach taken in terms of investments, the approach to risk and a balance in the Council’s portfolio.  The Panel were informed that the information will be broken down further and that a Business Plan will follow on from this report.

It was explained that the investments the Council have at the moment are both high tough and high risk; diversification will reduce the risk and in the process will allow the Council to find other ways of delivering services rather than cutting them.

In terms of locality in future investments, the Panel heard that the location of potential property investments is not restricted to Huntingdonshire.  Diversification of investments is important and allows the Council to expand the commercial portfolio.  The Council consider this to be investing in the UK economy and there will be no overseas element.

Subject to Cabinet agreeing that a quarterly report on CIS performance be submitted to Overview and Scrutiny, the Panel has endorsed the recommendations for Cabinet to approve the Commercial Investment Strategy and the “enhanced as is” model of governance arrangements set out in the report.