To recommend that the Committee:
(i) notes the Commercial Strategy: Part 1, as approved by the Executive at its meeting of 19 November 2020 and set out in Annex 1.
(ii) makes any observations to the Portfolio Holder for Investment and Companies on the Commercial Strategy: Part 1 and to support the ongoing development of Part 2 of the Commercial Strategy.
Members discussed the Commercial Strategy – Part 1 report which sets the scene on what the Council is aiming to achieve. Part 2 of the strategy will come to Overview and Scrutiny next year. Part 2 of the report will set out the specific types of investment and the information the Council is relying on to make commercial decisions and the appropriate governance around decision-making.
Councillor T. Archer, Portfolio Holder for Commercial and Investments, introduced the report. He said Part 1 of the Commercial Strategy set out why it was important to have the current income streams and the clear principles for making ethical decisions, underpinned by relevant and robust assessment of business cases. There was to be an annual action plan with its performance published each year and discussed at Overview and Scrutiny. The strategy went to Executive on 19 November and was presented to this Committee for comments and observations.
Members discussed the following areas:
· Changes to government guidance – it was noted that in the Chancellor’s Spending Review, he introduced new rules for obtaining funding from the Public Works Loan Board (PWLB). Guidance will be provided to support local authorities to determine if a proposed project is an appropriate use of PWLB loans. It was noted that in this Borough the investments were considered carefully to make sure that there would be a good commercial return as well as a social benefit such as regeneration of an area which would benefit businesses and residents.
· New posts for the Commercial Directorate – the Budget included two new posts to work in the Commercial Strategy arena as the current directorate was comprised of the Director, Company Secretary and PMO/admin support. The Council needed to invest and make sure the right team was in place to grow and fill the revenue gap by developing sound commercial activities. It was felt this was a sensible investment given the size and scale of the Council’s commercial ambitions.
· Short-term income opportunities – Members noted that many of the projects were longer-term projects such as the proposed Crematorium and Horley Business Park. In the short-term there were existing commercial assets and the Council was looking to make sure it was getting the best return from these assets. There was work underway to increase income from the Revenue and Benefits service provided to other organisations. The fees and charges review will also bring about additional revenue. It was noted that the Commercial Ventures Executive Sub-Committee had looked at a number of investments and had declined a large number as not right for the Council.
· Setting targets and yields – Members asked about setting targets in terms of assets and yields. This would be contained in Part 2 of the Commercial Strategy and will reflect appropriate market yields for the Council. It was confirmed in a written answer that finance, housing and commercial were all working together to ensure that the Housing Delivery Strategy, Capital Investment Strategy and MTFP and the Commercial Strategy were all aligned to ensure that if there is an opportunity to delivery housing, build a capital asset for the long term and create an income stream, that objective is achieved.
· Social return on investment – Members asked about the social return in the commercial strategy to balance both for maximum commercial benefit as well as a positive service to the community, such as the Crematorium. It was confirmed that social return is taken into account to get the balance right, so it is not purely a commercial return but right for the Borough’s economic, environmental and social wellbeing.
RESOLVED – that:
(i) the Commercial Strategy – Part 1 as approved by the Executive at its meeting on 19 November 2020 and set out in Annex 1 be noted;
(ii) the observations of the Committee be noted by the Portfolio Holder for Investment and Companies on the Commercial Strategy: Part 1 and that the ongoing development of Part 2 of the Commercial Strategy be supported.