To make comments on the above titled item.

Andrew Vallance explained that RBWM had avoided borrowing where possible, with other alternative sources of finance being considered, for example grants and Section 106/Community Infrastructure Levy (CIL). The report was currently a draft strategy, with the final strategy being presented as part of the Budget in early 2021. Numbers that were part of the strategy would be revised as they were currently draft figures, with officers always being aware of future changes in the market. Andrew Vallance invited members of the Committee to make any comments on the draft strategy.

The Chairman asked if borrowing was more short term or long term. Andrew Vallance said that there had been no long term borrowing recently undertaken, with the long term debt from Berkshire County Council. Short term loans would regularly be used once other loans had expired.

Councillor Sharpe said that he was concerned about the increase in borrowing and asked if the level of current borrowing was sustainable.

Andrew Vallance said that money from borrowing was being used to fund regeneration strategies and short term rates were relatively cheap at the moment which meant they had less risk.

Councillor Story asked for an explanation on the minimum revenue provision policy mentioned in the report. Andrew Vallance explained that the purpose of the policy was to pay back the premium, which included the actual amount borrowed along with any interest rates. The policy also covered any internal borrowing.

Councillor L Jones mentioned part of the report where it said ‘debt had built up over time to fund its fixed assets’ and asked what this meant. An affordable borrowing limit was also mentioned and Councillor L Jones asked what the criteria was for something to be affordable. Payments were being deferred and it was important to understand the reasons and risks associated with this. Regarding potential indicators, Councillor L Jones asked if the operational boundaries would go up compared to last year’s report.

Andrew Vallance said that the operational boundary was increasing to help fund the council’s capital programme and assets. Fixed assets were needed to fund the capital expenditure programme. Affordability relied upon how much of the revenue budget was being used to finance capital and the impact this had.

Councillor L Jones said that as part of the ratio of financing costs to net revenue stream in Appendix B, there were a number of percentages. She asked if these percentages were the ones looked at by officers with regard to affordability.

Andrew Vallance said that these percentages could be benchmarked against other authorities to compare patterns and performance. Councillor L Jones asked if it would be possible to have this as a benchmark,  Andrew Vallance said it was something that could be done.

Adele Taylor, Director of Resources, confirmed that the cash flow was regularly reviewed along with the receipts, officers might look to sell as asset should an opportunity arise.

Councillor Bond commented that when RBWM was looking to borrow short or long term, it could be difficult to predict what would happen and lock in good rates. He asked if there was an implication if inflation turned negative.

Andrew Vallance said that the rates did not move particularly quickly compared to other market rates.

Councillor Sharpe mentioned that repayment schedule and asked how much of the schedule was based on agreements that were already in place. He queried if RBWM was reliant on selling assets to cover its borrowing.

Andrew Vallance informed him that most of the debt was short term so would be fairly flexible to extend or renew it if RBWM did not want to sell the assets. There was no reliance on selling assets at the moment to cover borrowing while rates were low.

The Chairman asked how much of the debt came from Berkshire County Council. Andrew Vallance said that he believed it was the full amount but would check this.

RESOLVED UNANIMOUSLY: That Audit and Governance Committee noted and commented on:

i)             The Council’s Treasury Management Strategy for 2021/22 as set out in section 4 of the report.

ii)            The Council’s Prudential Indicators set out in Appendix B.

iii)           The Council’s associated counterparty list as set out in Appendix C.