In accordance with the CIPFA 2017 codes for Prudential and Treasury Management, the Council was now required to have a Capital Strategy.  The draft Capital Strategy was attached at Appendix A to the report and gave a high-level overview of how capital expenditure, capital financing and treasury management activities contributed to the provision of local public services, along with an overview of how associated risk was managed and the implications for future financial sustainability.  The Strategy was intended to be a longer term view of investment and go beyond the detailed five year Capital Programme. However, it was recognised that the strategy was likely to change in the near future to reflect the Corporate Plan which was currently out to consultation.

From the 26 November 2020, the Government confirmed the introduction of new lending criteria from the Public Works Loan Board (PWLB) designed to prevent councils accessing low cost finance for investments made purely for financial return. This was a prospective change and did not affect any previous investment made by the Council prior to this date. A preliminary review of the draft Capital Programme indicated that all loan funded projects remained eligible for PWLB support, but further work was being undertaken to ensure this was the case.

The Council’s Capital Programme at Appendix B to the report totalled some £186.7m, although £80.0m was currently unfunded and showed the investment in approved schemes over the next five years.  A significant part of the programme related to the Council’s approved Property Investment Strategy (PIS) and capital support to the Council’s company Alliance Homes (Rother) Ltd. Income of approximately £1m was included within 2021/22 the Revenue Budget for PIS assets that have been acquired.

The draft Capital Programme continued to minimise the use of Revenue (including Revenue Reserves) to fund capital expenditure. For 2021/22, some £0.619m was planned to be used, but this reduced thereafter. Largely this would be replaced by low cost borrowing where appropriate which, whilst having a revenue impact, was spread over a longer time period.

The Programme was broadly the same as that reported in November 2020, save for the re-phasing of expenditure in line with the latest information. The Programme now included the cost of improvements being made to Sidley Recreation Ground, which were being funded externally in addition to the Council’s own contribution to the scheme. 

The draft Capital Programme showed that, despite the continued impact of the pandemic and Government austerity measures, the Council aimed to make a significant commitment to invest in the district to improve it economically and socially, to ensure it remained an outstanding place to work and live in.

RECOMMENDED: That:

1)         the Draft Capital Strategy 2021/22 to 2025/26 be approved and adopted, as submitted; and

2)         the updated Capital Programme 2020/21 to 2025/26 at Appendix B to the report be approved.

(Councillor Bayliss declared a Personal Interest in this matter in so far as she was a convener for the Skate Park Action Group and in accordance with the Members’ Code of Conduct remained in the meeting during the consideration thereof).