Agenda item

RECOMMENDED THAT COUNCIL            increase the maximum investment limit from the Council’s cash reserves with Ermine Street Housing from £35 million to £45 million while retaining the maximum investment with Ermine Street at 60% of the Council’s total investment portfolio.

Council

AGREED        To increase the maximum investment limit from the Council’s cash reserves with Ermine Street Housing from £35 million to £45 million while retaining the maximum investment with Ermine Street at 60% of the Council’s total investment portfolio.

Councillor Simon Edwards, Portfolio Holder for Finance and Staffing, presented a report which invited the Council to consider increasing the maximum investment limit from the Council’s cash reserves with Ermine Street Housing from £35 million to £45 million, while retaining the maximum investment at 60% of the total investment portfolio.  He outlined the rationale for the proposal and, in particular, emphasised the increased flexibility that would be achieved.

In response to comments that it would have been helpful if the Council’s representatives on Ermine Street Housing Limited had been present for the discussion, Councillor Edwards acknowledged that whilst the Councillors concerned had not been obliged to declare an interest and withdraw from the meeting under the Members’ Code of Conduct, it had been their wish to do so.

Councillor Edwards proposed the recommendations from his Portfolio holder meeting held on 22 August 2017 that the Council:-

            “Increase the maximum investment limit from the Council’s cash reserve with Ermine Street Housing from £35 million to £45 million while retaining the maximum investment with Ermine Street at 60% of the Council’s total investment portfolio.”

Councillor Lynda Harford, Portfolio Holder for Housing, seconded the proposition.

During discussion:-

•           Councillor John Williams commented that the report before Council was dated 22 August 2017 and that the figures dated back to 31 March 2017.  He noted that the report indicated the expectation that the investment would reach £35 million by this quarter but that there was no confirmation within the report that this had happened. He therefore felt that the Council was being asked to make a decision based on out of date information and suggested that it would have been helpful to have been presented with the up to date figures.

•           Councillor Tumi Hawkins queried the valuation of the current assets of Ermine Street’s Property portfolio and other non-current assets which was indicated in the report at £24.7 million and suggested that further clarity and details were required around the valuation of the assets.  She was also concerned that the report did not indicate the level of interest received in respect of the investment and expressed the view that the Council needed all relevant information in order to make an informed judgment.

•           Councillor Aidan Van de Weyer referred to the indication in paragraph 14 of the report that there was a minimal level of risk but was of the view that the information provided on the valuation of the assets did not enable Members properly to evaluate the risk.

•           Councillor Bridget Smith expressed the view that a significant increase in house building in the District might be likely to result in a decline in the value of house prices and consequently in the value of the capital assets of Ermine Street Housing. There was also a concern that if there was a requirement to dispose of the assets of Ermine Street Housing, the Council might not be able to recoup its investments.

•           Councillor Tony Orgee did not consider that increased house building would necessarily reduce house prices, citing the local experience with building on the fringes of Cambridge where house prices had increased rather than decreased.

•           Councillor Lynda Harford supported the proposal commenting that the Council had a record of prudential investment and treasury management and emphasising that the proposal was intended to maximise flexibility.

Responding to the comments during the debate, Councillor Edwards:-

•           Commented that it was important to be mindful of whether investment in Ermine Street Housing should be by way of borrowing or investment from the Council’s own resources.

•           Noted that whilst the report before the Council was from 22 August 2017, more up to date information regarding investments with Ermine Street Housing was available in the reports considered at his Portfolio Holder’s meeting on 21 November 2017. 

•           Reported that details regarding rates of returns on investment were contained in the confidential appendix submitted to his Portfolio Holder’s meeting. 

•           Reminded Members that there was a Service risk register and an Ermine Street Housing risk register.

•           Commented that the proposal, if approved, would provide useful income to support services needed by the District’s residents.

A vote was taken and votes were cast as follows:-

In favour (33)

Councillors David Bard, Val Barrett, Ruth Betson, Francis Burkitt, Brian Burling, Tom Bygott, Grenville Chamberlain, Graham Cone, Pippa Corney, Christopher Cross, Kevin Cuffley, Neil Davies, Simon Edwards, Sue Ellington, Roger Hall, Lynda Harford, Mark Howell, Caroline Hunt, Peter Johnson, Ray Manning, Mick Martin, Raymond Matthews, David McCraith, Des O’Brien, Tony Orgee, Alex Riley, Tim Scott, Ben Shelton, Peter Topping, Robert Turner, Bunty Waters, Tim Wotherspoon and Nick Wright.

Against (13)

Councillors John Batchelor, Anna Bradnam, Doug Cattermole, Philippa Hart, Tumi Hawkins, Sebastian Kindersley, Janet Lockwood, Deborah Roberts, Bridget Smith, Hazel Smith, Ingrid Tregoing, Aiden Van de Weyer and John Williams.

Abstain (1) Councillor Douglas de Lacey.

(Note: Councillors Andrew Fraser and Richard Turner, having each declared a non-disclosable pecuniary interest at Minute 2 above, withdrew from the meeting during discussion and voting on the above item)

Therefore the Council

RESOLVED  That the maximum investment limit from the Council’s cash reserves with Ermine Street Housing be increased from £35 million to £45 million while retaining the maximum investment with Ermine Street at 60% of the Council’s total investment portfolio.