The Greenwich Audit and Risk Management Panel met to discuss the Treasury Management and Capital Outturn reports for the 2024-25 financial year, noting the council's strong investment returns and significant capital investments in housing, existing council homes, and local projects. The panel agreed to congratulate the council on its financial stewardship, while also emphasising the need for continued vigilance regarding servicing costs and the importance of a robust, long-term asset management plan.

Treasury Management and Capital Outturn 2024-25

The panel reviewed the Treasury Management and Capital Outturn reports for 2024-25, acknowledging the council's commitment to responsible financial management and strategic investment.

Damon Cook, the Director of Finance, highlighted key achievements, including the Greenwich Green Investment Scheme, which raised £560,000 from residents for local climate projects. He also noted a strong investment return of 4.92% despite a challenging economic environment.

On the capital side, Mr Cook reported a significant investment of £343 million, including £131 million in new homes through the Greenwich Builds Programme and £97 million to improve existing council homes. Investments were also made in a new leisure centre, schools, and carbon neutral initiatives.

Cabinet Member Finance, Resources and Social Value thanked the committee, the chief executive, and the finance team for their work in ensuring the council could deliver its ambitions while maintaining financial guardianship.

Concerns about Inflation and Interest Rates

Dr Susan Blackall raised concerns about the volatility of inflation and interest rates, referencing recent announcements projecting 4% inflation by the autumn. She emphasised the need to monitor the situation closely, as these factors are largely driven by external forces beyond the government's control.

Asset Review and Management

Councillor Dave Sullivan raised questions about the asset review, seeking information on its progress and gains. He also inquired about the management of Section 106 ¹ payments and the plans for the disposal of the old leisure centre, given the imminent opening of the new facility.

Councillor David Gardner, Chair of Audit and Risk Management Panel and Deputy Mayor, added that while there were key capital priorities, some assets came left field rather than part of some sort of broader asset management plan . He said that the panel was keen to see good financial governance, and that asset management was part of that.

Mr Cook clarified that specific asset disposals are a matter for the executive and scrutiny, while the Audit and Risk Management Panel's role is to assess the overall risks around the capital programme. He noted that a scrutiny subpanel reviews Section 106 arrangements and that an infrastructure funding statement is produced annually.

Debt Servicing Costs and Borrowing Strategy

Councillor Christine May inquired about the revenue cost of servicing the council's debt, its trend over time, and comparative figures for the Capital Financing Requirement (CFR), debt, and under-borrowing from the previous financial year. She also asked whether the increase in debt should be a cause for alarm.

Mr Cook responded that total interest costs had increased by £4 million over the 2024-25 period, but that this was small in terms of the overall budget. He added that the increase in debt was split between housing and the general fund, and that all of this was forecast at the beginning of the year when the treasury management strategy and prudential indicators were set.

He explained that the council maintained an under-borrowed position during 2024/25, using internal resources to reduce exposure to high interest rates. However, the borrowing strategy would shift to external borrowing as balance sheet resources decrease, particularly through the Public Works Loan Board (PWLB), which offers discounted rates for housing-related borrowing.

Green Investment Scheme

Councillor May sought more detail on how the funds raised through the green investment scheme were being spent, requesting better communication with bondholders about the specific projects their money was supporting.

Julian Gocool, the Accountancy Business Change Manager, said that a newly appointed sustainability officer would address communication needs for both the first and second launches of the scheme. He said that the first launch was earmarked for decarbonising the Eltham Centre, while the second would focus on decarbonising schools and electrifying the fleet.

Councillor Sullivan asked for data on how widely the scheme was spread, i.e. how many people had invested in it. Mr Gocool said that he would provide an update on both the first and second launches, and noted that there were currently 174 investors in the second launch.

Impact of Capital Investments on Revenue

Councillor May questioned what the impact had been of the council's major investments in terms of revenue savings. She asked whether new homes and temporary accommodation had led to revenue savings, and whether investments in existing council homes and leisure facilities had reduced costs or increased revenues.

Mr Cook said that it would be possible to give some indicative figures, but that some of the benefits would be intangible. He agreed to provide key headline points for each project to help answer the question.

Councillor Gardner noted that investments in temporary accommodation and Greenwich Builds had eliminated the use of hotels for temporary accommodation, significantly reducing homelessness spending.

Capital Programme Variances

Councillor May asked about the reasons for significant variances in the schools and early years programme, specifically regarding the Hargood Road SEND scheme.

Michael Horbatchewskyj, the Accountancy Business Change Manager, clarified that the main variance was related to the Hargood Road SEND scheme, where the project team managed to deliver earlier than anticipated, and that it was purely a timing issue and not due to the project going over budget.

Action Log

Dr Blackall referred to the action log from a previous meeting, and in particular to item seven, regarding the breakdown of client satisfaction scores. She noted that the composite score for the lowest scoring directorate contained lower scores against items five, six and seven, which seemed to be areas that could lead to them not being able to respond very well. She said that this pointed to some of the underlying reasons why some of these departments are having trouble doing their actions.

The Head of Financial Governance, Insurance & Risk said that Dr Blackall's comments were noted, and that they were looking at trying to get to the bottom of that by speaking with the service area concerned to understand the reasons why.

Dr Blackall said that there could be very different reasons for the client satisfaction score, and that perhaps they needed to dig in a bit with clients as well. She suggested that it might be useful to do a couple more deep dives at the next meeting.

Councillor Williams had previously suggested that the panel should come back to the right to buy process with housing at some stage, to look at whether further steps had been taken to reduce the level of fraud.