Cabinet Member for Finance and Performance

The Chairman drew attention to the confidential appendices set out later in the agenda, and reminded Members that they would need to exclude the press and public should they wish to discuss the content of those papers.

Cabinet considered the report of the Head of Finance and the above Cabinet Member which set out a business case for borrowing up to £28m (of the £30m approved) and sought agreement to the funding of some specific works associated with Sittingbourne Town Centre redevelopment.  In introducing the report, the Cabinet Member emphasised the importance of the scheme for the financial future of the Council, referring to the need for the Council to generate income to become self-sufficient, and the decision taken by the Council in March to give authorisation to borrow up to £30m.  The Cabinet Member referred to the reduction in government grant since 2010 from £12m to £2m, and that this would be zero in 2020; acknowledging that there would be business rates generated of £6.5m but these were subject to appeal; and said that whilst the Council had built up reserves, the interest rate return was now 0.63%.  He referred to schemes by other local authorities to invest in property in the local area, such as Canterbury and Spelthorne Councils, for financial return.

In proposing the recommendations, the Cabinet Member emphasised that the proposal was for financial return, so that income was generated from the tenants and not by the Council Tax payer; and that there was clear viability for the scheme referring to economic conditions nationally and market conditions in Sittingbourne.  In the Autumn, the Spirit of Sittingbourne had made progress on lettings and the Interim Director of Regeneration had held discussions as to whether the Council could become a funder.  The proposal was a good financial investment and external financial advice had been sought.  Even with prudent assumptions, the investment would generate an average of £2.8m per annum over the lifetime of the project, a return of 7.8% which was much better than the current level of interest on the Council’s investment.  The Cabinet Member considered this was an excellent opportunity to use the returns to help safeguard public services.  The Leader seconded the recommendations.

A Member spoke against the proposal, saying that the Council had no mandate to invest, and suggested that there should be full public consultation with the people of Swale to ask if they supported the level of borrowing, and whether what to spend it on reflected their priorities, suggesting that this could be better spent on the Lower Road, Isle of Sheppey.  He suggested that if the Council was looking at investing, it should invest in housing which had the potential to make a profit, and could be used for some council housing.  He did not consider that the investments being made by Canterbury and others were comparable, and expressed caution that the expected return would only be if all units were rented out.

Another Member  ...  view the full minutes text for item 996