Issue - meetings

Recommendation on page 16

RESOLVED –  That Executive recommends to Council:

(i)   that £3.937m be invested to finance the Capital Programme as outlined in paragraph 1.11 of the report; and

(ii)  that the Capital Programme be re-financed in line with paragraph 1.11 of the report.

Executive considered the report of the Portfolio Holder – Finance and Resources whichset out a proposal to reduce the cost of debt charges that the Council pays, by using reserves to financial the Capital Programme.

The proposal was to swap the financing of the General Fund Capital Programme to the use of reserves rather than borrowing in order to make substantial savings through reduced debt charges.

As at 31^st March 2019, the Council’s Transformation Reserve had a balance of £8.354m, of which £5.998 was uncommitted. This reserve was available to support investment in cost reduction or income growth, reflecting the Council’s proactive approach to addressing the financial challenges it faced. It was proposed that part of the Transformation Reserve could be used to fund the Capital Programme which would lead to a reduction in the debt charges.

The General Fund Capital Programme expenditure to be funded from borrowing was currently £6.573m for the whole three years of the programme. The debt charges associated with this level of borrowing were already included in the General Fund budget at £1.441m.

As the Council did not have enough reserves to be able to avoid the need for all of this borrowing, an assessment had been carried out to calculate the largest savings on the highest value assets with the shortest lives.

The report at Table 2 showed the proposal to use £2.732m of reserves in 2019/20 which would save £0.191m in that year. With further use of reserves in 2020/21 and 2021/22 as outlined in Table 2 of the report, a total of £0.841m would be saved over the three year period.

Moved by Councillor Clive Moesby and seconded by Councillor Sandra Peake

RESOLVED – That Executive recommends to Council:

(i)   that £3.937m be invested to finance the Capital Programme as outlined in paragraph 1.11 of the report; and

(ii)   that the Capital Programme be re-financed in line with paragraph 1.11 of the report.

REASON FOR DECISION:

To achieve favourable rates of return compared with other forms of investment, through a proposal with little or no financial risk.

OTHER OPTIONS CONSIDERED:

Using a smaller amount of the Transformation Reserve was rejected as this would have reduced the overall revenue saving that could be achieved. The option of pursuing alternative investment projects instead of re-financing the Capital Programme was rejected as such projects were likely to involve greater financial risk and a return below 7-17%. 

(Chief Accountant and S.151 Officer)