Agenda item

This report provides an update to Members on the Investment Strategy and an opportunity to review the Annual Report of the Investment Board.

Declarations of interest:

None

Witnesses:

Tim Oliver, Cabinet Member for Property and Business Services

Susan Smyth, Head of Strategic Finance

Peter Hall, Investment & Disposal Manager

Key points raised during the discussion:

1.    The Cabinet Member for Property and Business Services introduced the report stating the deteriorating level of funding from Government had led Councils to seek alternative ways to generate funds and the Investment Strategy provided that opportunity. The Committee received a presentation outlining the purpose, review and decision process of the Investment Strategy (attached as Annex 2).

Tim Evans and Tim Hall returned at 12.05pm

2.    Officers advised that a number of scenarios are appraised during the decision process to determine financial costs when proposals are presented to the Investment Board. 

3.    Officers clarified that the sums received from investments would be released into the Council’s reserves, available for general use and were not allocated to specific issues.

4.    It was noted that due to the competitive nature of investment there was no requirement to consult with other Local Authorities on proposals to acquire investments out of county.

5.    Following questioning Members further noted that the Investment Strategy did not include a written ethical policy however guidance was provided from the Investment Advisory Board. To promote good practice the Committee suggested it would be useful to have a written form of guidance on an ethical stance for investments.

6.    Members raised concerns with investment properties in occupation and asked how much control the Council had over these properties if tenants were operating in unlawful activity. Officers assured members that lease agreements prohibited illegal operations and regular inspections were carried out to check compliance.

7.    The Investment and Disposal Manager informed the Committee that more local authorities were adopting investment strategies and there was an increasing level of local authority investment activity in the market.

8.    The Cabinet Member for Property and Business Services acknowledged concerns that the current Investment portfolio had limited residential acquisitions. The Committee received assurances that work was in progress to review current assets as well as looking into pursuing residential units and an update on this would be presented at the next Council meeting.

9.    It was highlighted that the Investment Strategy could be subject to change upon Government’s announcement of the budget and the necessary caution would be applied when considering further investments.

10.  Officers clarified that Energy Performance Certificates (EPC’s) were taken into account when considering the purchase of properties under the Investment Strategy. Members proposed officers consider the environmental, social and governance factors in the decision process also which are similarly assessed by the Surrey Pension Fund.

11.  To promote transparency the Cabinet Member for Property and Business Services agreed to consider the inclusion of the details of properties (names, addresses, cost) purchased in-year and to date when publishing the next annual report of the Investment Board.

12.  It was explained that the running costs of investment properties were the tenant’s obligation unless there was a void

13.  It was noted that the Investment Guide (attached as Annex 1 in the agenda papers) was developed in line with an industry standard approach. Officers clarified that the scoring matrix was applied to investments that were shortlisted, and not at the initial stage to ensure that opportunities are measured and assessed appropriately.

RESOLVED:

The Committee recommends that:

a)    It reviews the next annual report prior to submission to Cabinet in 2018 and that the report includes details of properties (names, addresses, cost) purchased in-year and to date when published to the public.

b)    The Investment Board develops a written non-financial investment policy covering ethical, environment, social and governance indicators to accompany its existing practice for discussion at its next meeting.