Issue - meetings

Executive Member for Investment and Companies.

RESOLVED that the Executive approves the Commercial Strategy Part 2.

The Executive Member for Investment and Companies, Councillor Archer, explained that Part 2 of the Commercial Strategy had been developed in recognition of the continuing financial challenges faced by the Council. Building on Part 1 agreed last year, Part 2 would provide detail about the implementation of the Council’s commercial activity, in particular investment activity.

Councillor Archer explained that, due to changes to the local government borrowing regime, the Council was no longer able to invest purely for yield, and therefore the Council’s commercial approach would need to be different in the future.

Part 2 of the Strategy proposed:

·       Ensuring that existing income streams from the Council’s assets, which provide income of around £4million, would be maintained and, where possible, increased.

·       That assets that were not generating income would be repurposed, redeveloped, or disposed of.

·       That the Council would continue to develop or redevelop assets to deliver the Council’s corporate objectives, whilst also securing new income streams.

·       Investment in new assets, where these would contribute to the Council’s corporate priorities, secure income or help deliver savings.

·       A project pipeline would assist in resource planning and income forecasting.

In terms of commercial services activity, the proposed Part 2 explained that the Council would continue to develop activity in areas where the Council already trades, introduce new trading activity, and explore opportunities to take a more commercial approach to the Council’s non-statutory fees and charges.

Councillor Archer explained that the proposed Part 2:

·       Explained how the Council would ensure decisions are robust, evidence based and transparent. It did not introduce changes to formal governance structures.

·       Confirmed arrangements for regular reporting on commercial income, project progress and asset portfolio performance

·       Recognised the need to develop in-house commercial skills and buy in expert advice and expertise in some cases.

The Overview and Scrutiny Committee had considered the proposed Part 2 and, as a result of their observations, Councillor Archer:

·       Confirmed that the Strategy would be amended to provide clarity that performance reporting and updates would be taken formally to meetings of the Commercial Ventures Executive Sub-Committee, and

·       Explained that he, and the Leader, were committed to ensuring that the Council had the skills in place to deliver the Council’s commercial plans.

The Chairman of the Overview and Scrutiny Committee, Councillor Harrison, explained that the Committee had scrutinised Part 2, and were of the view that it was realistic, and it was hoped commercial income would fill the budget gap. The Commercial Strategy Scrutiny Panel had highlighted the need for effective commercial governance and the importance of learning lessons from the past and from other local authorities. It was important to ensure the Council had the right skills to instigate the Strategy.

In response to questions from other Visiting Members, it was confirmed:

·       That the Commercial Strategy would work alongside the Housing Strategy

·       That the environmental implications of commercial property-related and service-related activity would be fully considered within business cases and through the decision-making process, and the Strategy recognised the opportunities that existed for combining  ...  view the full minutes text for item 51

That the Committee:

1.     Notes the Commercial Strategy Part 2 Report and Annex 1 and the Summary of the O&S Commercial Strategy Scrutiny Panel meeting on 2 November 2021 (Annex 2); and

2.    Provides any observations for consideration by the Executive.

The Committee received the Commercial Strategy Part 2 Report and its Annexes 1 to 6 and the Summary of the O&S Commercial Strategy Scrutiny Panel which met on 2 November 2021 (Annex 2).

Councillor Archer, Portfolio Holder for Investments & Companies, introduced the Commercial Strategy Part 2 report (Funding our Services: A Commercial Strategy Part 2 – Explaining the Reigate and Banstead approach to commercial investment). This followed on from the Commercial Strategy (Part 1) which set the direction for the Council’s commercial activity and was approved by Executive in November 2020.

Part 2 of the Strategy set out the current approach, taking into account the challenges of the current financial position, latest borrowing rules and experiences with commercial activity to date. The ‘Plan on a Page’ Summary in the published agenda pack (p143) set out the proposed commercial approach. This includes to maintain existing income streams from our assets (currently around £4m a year); to grow income from these assets and also develop new income streams, such as repurposing poorly performing assets; to invest in new assets to deliver corporate objectives and income/savings; to continue to sell or trade services; and to take a more commercial approach to non-statutory fees and charges.

It was noted that the draft strategy approach was reviewed thoroughly by Panel Members at the O&S Commercial Strategy Scrutiny Panel in November with opportunity for further consultation on the final document. The final strategy was due to be approved by Executive on 16 December.

Commercial Strategy Scrutiny Panel Chair, Councillor Walsh, gave a verbal update of the Panel’s discussions on 2 November. This included the need to learn from past commercial decisions both at Reigate and Banstead and in other local authorities. He highlighted the importance of effective commercial governance and oversight including robust business cases which were monitored as schemes developed.

In conclusion, Councillor Walsh recommended that the skills required for instigating, development of and managing commercial ventures by the Council isthoroughly reviewed and secured so that the Borough has all the necessary skills to undertake and successfully deliver the strategy.

Members discussed and made observations on the following areas:

Commercial skills – Members strongly supported the points raised by the Panel that the Council must ensure it has access to appropriate commercial skills, awareness and expertise for the strategy to succeed. This included drawing in additional expertise if needed such as use of external advisors to support in-house staff or provide specialist advice to oversee certain commercial projects.

Learning from experience – Members commented that it was important that lessons were learned, from previous projects and analysis of business cases. Best practice included listening to residents’ feedback from previous projects. Taking an evidence-based approach and applying the Council’s project management framework, including risk management, as set out in the report, was recognised as important to be able to deliver the income generation activities to build financial resilience as set out in the Corporate Plan, Reigate and Banstead 2025.

Environmental and  ...  view the full minutes text for item 52