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Issue - meetings

Annual Capital Strategy 2025/2026

 

 

Meeting: 28/01/2025 - Audit and Governance Committee (Item 320)

320 Annual Capital Strategy 2025/2026 pdf icon PDF 529 KB

Purpose

The Council is required to approve a Capital Strategy for 2025/26 before 01 April 2025.

 

The Capital Strategy 2025/26 (Appendix 1) is prepared in accordance with CIPFA’s “Prudential Code” and the “Treasury Management Code of Practice” (2021 editions), and the Ministry of Housing, Community and Local Government (MHCLG) revised guidance on Local Government Investments.

 

Recommendation

That the Committee resolves to:

  1. Consider the draft Capital Strategy (Appendix 1) for 2025/26 and provide feedback to the Cabinet and Council for consideration as part of the Council’s budget-setting process.

 

Additional documents:

Minutes:

The report presented the Capital Strategy for 2025/26 for consideration prior to its approval by Council before 1 April 2025.

 

The Capital Strategy 2025/26 (Appendix 1) was prepared in accordance with CIPFA’s “Prudential Code” and the “Treasury Management Code of Practice” (2021 editions), and the Ministry of Housing, Community and Local Government (MHCLG) revised guidance on Local Government Investments.

 

The Capital Strategy was presented, outlining the Council’s long-term ambitions, available capital resources, and approach to capital expenditure. It was noted that the strategy aligned with corporate priorities, enabling the Council to achieve its plans while emphasising sustainability, risk management, and governance.

 

The Deputy Chief Executive and the Chief Accountant offered to respond to questions.

 

There was a discussion around pooled funds and the Council’s requirement to consider mitigation to ensure that there would be enough reserve balances to cover any eventual losses.

 

The Committee expressed disquiet around losing the statutory override IFR9. The Deputy Chief Executive stated that the government might argue that since discussions on the statutory override had been ongoing for five or six years, local authorities should have prepared for its eventual end, as proper accounting practice required recognising unrealised losses.

Councillors noted that if the statutory override was not renewed, many authorities would be forced to reallocate resources from their priorities and day-to-day services to cover unrealised losses.

 

It was noted that the Local Government Association (LGA) was actively lobbying to highlight the scale of the problem across the sector, emphasising that while individual councils like Cotswold District Council might manage, the overall impact across local authorities could be significantly larger.

 

There was a discussion around investment properties and their location. It was noted that the purchase of properties outside of the district had been funded by capital receipts. Councillors were reassured that the MTFS had taken into account the reduced rental values of high street properties with the effect of making decisions to retain or dispose of assets easier. It was noted that while existing properties could be retained, selling one and purchasing another outside the district would result in losing access to Public Works Loan Board (PWLB) borrowing option for approximately three years. Since PWLB remained the most cost-effective borrowing option, for capital projects this restriction could have significant financial implications.

 

The Committee suggested that some amendments be made to the draft tables.

 

The Deputy Chief Executive reassured members that the Audit and Governance Committee would have sight of the final reports before they were presented at Council on 24 February.

 

Resolved: The Audit and Governance Committee noted the report and undertook to consider the Draft Capital Strategy (appendix 1) for 2025/2026 and provide feedback to the Cabinet and Council for consideration as part of the Council's budget setting process.

 

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