Agenda item

The Leader presented the report and outlined the reasons for the Council adopting the approach in the current financial context. 

The Council was faced with finding £30 million from its budget over the next 3 years for which it was considering the options available to address the size of the challenge. At its last meeting the Cabinet had agreed an approach to establish a trading company to capture and generate profit making activities, further research was needed on this and the proposed report allocated up to a maximum of £100,000 to undertaken this for Cabinet to review.

Commercial properties, and set up an investment Board allocated borrowing capacity up to £50 million for potential investments. The primary objective of this approach was to support the vision rooted within the Corporate Plan and to promote social value. The second objective was to generate a profit that would be used to support core services of the Council.

The report was moved and seconded.

Cllr M Evans moved the following amendment:

‘Note that Cabinet recommended that these approaches be pursued, including the establishment of a £25m commercial property fund to create a net income for the Council, subject to the Councils consideration through their inclusion in the Council’s Capital Strategy’

The amendment was seconded by Cllr D Williams. When put to the meeting, the amendment was declared lost.

The substantive motion was debated.

 Points made against the substantive motion:

-       £25 million was considered a more prudent and proportionate amount to mitigate the risk;

-       It was argued that the Council has adequate resources and expertise to undertake the feasibility study in house.

-       the balance for commercial responsiveness and the need to ensure public accountability.

Points made in support of the report

-       Investment of capital was needed to support spending on core services and this approach was necessary to bridge the funding gap.

-       Expert advice for the feasibility study was required to ensure risk minimised and ensure investment compliant with the prudential code;

-       £25 million would not result in the critical mass to support the necessary spend on core services.

It was resolved

That the Council:

1.         Note the development of the commercialisation approach, in particular the two options outlined as the first step towards implementing this approach, as a strategy to contribute towards the Council’s on-going financial challenges.

2.         Note that Cabinet recommended that these approaches be pursued, including the establishment of a £50m commercial property fund to create a net income for the Council, subject to the Councils consideration through their inclusion in the Council’s Capital Strategy.

3.         Consider the benefits & risks of the proposed commercialisation strategy recommendation from Cabinet, in particular the establishment of a £50m property investment fund.

4.         Note the Council will be committing to a long-term indebtedness and the risks associated with this, highlighted in this report, alongside existing risks.

5.         Having regard to the above:

o    Approve the update to the capital strategy extract in Appendix 1 which sets out these options to the Council’s commercialisation approach.

o    Approve a borrowing limit of £50m and associated approved limits in the Appendix 2