Agenda item

This report details progress made by the Investment Strategy and the income being delivered in support of the council’s services.  The Board will consider proposals to amend governance arrangements in order to continue to grow the investment portfolio. 

Declarations of interest:

None

Witnesses:

Denise Le Gal, Cabinet Member for Business Services & Resident Experience

Susan Smyth, Strategic Finance Manager and Secretary to the Investment Advisory Board

Peter Hall, Asset Investment and Disposal Manager

Key points raised during the discussions:

Keith Witham and Michael Gosling briefly left the meeting during this item

1. The Chairman began discussions by informing Members that he was pleased the report included the annual report proposal previously put forward by the Council Overview Board as a recommendation to Cabinet.

2. It was noted that the new Investment Board (IB) would provide an update of decisions made to Cabinet each month, as a confidential agenda item and a summary investment position would continue to be reported as part of the monthly budget monitoring report considered by Cabinet.

3. Members questioned whether these monthly reports and summaries would be available to the Scrutiny Board, as the Council Overview Board had the responsibility to hold the Cabinet to account for progress in relation to achieving the stated aims of the Investment Strategy. The Cabinet Member for Business Services and Resident Experience explained that arrangements on this matter were unclear and assured the Members a review on the scrutiny process was in place to resolve this. It was further advised due to the competitive nature, proposed investments were time sensitive and until they were secure and complete, disclosure will need to be restricted to prevent leaks that could jeopardize the investment opportunity.

4. The Board noted that one of the justifications in delegating to the IB the authority to take decisions was to allow investments to progress quickly and to secure the opportunity against competition in the market. The Chairman requested that Officers relate to the Board one example where under the existing arrangements, an investment opportunity was lost.  Officers provided the example of a warehouse in Banbury which had interest from six other institutions and the Council was unsuccessful as heads of terms could not be agreed with the vendor due to the Cabinet’s timetable in approving the acquisition.

5. Officers noted that the Evaluation Criteria at paragraph 14 in the Investment Board terms of reference would be better served under Scrutiny, paragraph 11, to clearly identify the criteria the Council Overview Board would need to take into consideration when scrutinising the IB on the aims of the Investment Strategy.

Bob Gardner left the meeting at 11:44am

6. The Chairman expressed the view that the rates of return should be included in paragraph 1, page 2 of the Investment Board terms of reference as part of the advice on how each investment proposal could be taken forward. It was explained that the rates of return were not specified as there was a broad list of criteria of which rate of return was one but the Strategic Finance Manager would include this.

7. The Cabinet Member stated that the growth of the portfolio was dependent on the opportunities available and had the potential to reach £2bn going forward. Officers further advised the Board that that the portfolio was a mix of low and high risk investments, ensuring the portfolio was balanced by taking a diversified approach.

8. Members acknowledged the current achievable returns in the market with the table provided in the report and asked whether return of investments were tracked. Officers advised that returns were recorded and were shared in part 2 in the reports provided to Cabinet.

9. There was a discussion around approving finance for property investments via the council’s property company and the Board noted that this authority was also proposed to be delegated to the IB. Members expressed the view that COB’s capacity to scrutinise the IB as per the Investment Strategy was dependent on the information available and raised concern for review in this area to ensure public money was being managed efficiently.

10. Officers clarified that the procurement of a property investment advisor would be funded by the income generated by the Investment Strategy and assured Members that the burden would not fall on council tax payers.

11. The Cabinet Member for Business Services and Resident Experience was asked about the results of investing to support economic growth. The Cabinet Member informed the Board of the recent agreement to invest in the Brightwells regeneration scheme in Farnham. It was highlighted that this investment would produce 400 jobs and would also bring major community benefits to residents, visitors and local businesses.

12. Officers explained that once the IB took a decision regarding an acquisition, its would be  reported as part of a monthly, confidential paper to Cabinet. COB could then scrutinise the details of the report to Cabinet. The Cabinet Members added that the Scrutiny Board would have to demonstrate a need to know as these matter could become political.

13. Members suggested that the proposed membership of the Investment Board should reflect a broader make up of members with the right skills and expertise which is not always reflected by the Member in the specific position referenced in the Terms of Reference. The Cabinet Member for Business Services and Resident Experience noted the suggestion to have the IB membership include non-cabinet members and assured the Board that this would be expressed to Cabinet for consideration.

14. The Chairman felt that a key issue was with the governance in the proposal to delegate authority solely to the IB to take decisions in relation to property acquisitions. The Board voted in favour of a recommendation to allow COB to retain the ability to scrutinise these decisions before they are made.

Recommendations:

1. The Council Overview Board welcomes the proposal to produce an annual report on the investment portfolio as previously suggested to the Cabinet by the Board.

2. Recommends that COB retains the right to scrutinise individual investment proposals on property acquisitions before decisions are taken.

3. Cabinet review the proposed membership of the Investment Board to:

a)    replace the two specified Cabinet posts with two members of the Cabinet with appropriate knowledge

b)    include a Members of the Council who is not a member of the Cabinet