Spelthorne continues to focus on financial sustainability - 6 February 2023

Monday 6 February

Spelthorne Borough Council has published its Annual Commercial Property 2022 Report publication1 which highlights that its commercial property portfolio generated £50.6m in income in 2021-22, of which nearly £9m went towards Council services that so many residents rely on.

The Council started its investment policy2 in 2016 to make up government funding shortfall and avoid cutting services. The income provides important revenue to the Council's finances and enables it to deliver services which many authorities can no longer afford to provide. This includes community centres, meals on wheels, community transport, grants to voluntary organisations and independent living services.

It is over five years since the Council acquired its last investment asset and the focus continues to be managing the existing portfolio and maintaining income levels to deliver regeneration and service delivery across the Borough.

The annual income received more than cover interest, annual paying down of loans and maintenance and year to date have achieved an income collection rate of 98.5% for 2022 - 23.

The fund also supplements the robust financial reserves (sinking fund) to ensure that council taxpayers are protected against any future dips in rental income. The remaining £8.9m is then added straight to our Council budget. This contribution to Council finances compares favourably to the money Spelthorne received in 2022 from business rates (£2.7m), Council Tax3 (£8.5m) and government grants (£2.6m).

Despite the long-term impacts of the pandemic and other external factors such as the war in Ukraine and the cost-of living crisis, the Council maintains its strong position in the market, with only 9% of our rental space vacant, as our properties and tenants are both of a high-quality. The Council retains its long-term commitment to its property assets and is not looking to sell any of them. This means any temporary reduction in value of the properties will not deviate from our strategy to focus on the rental income provision that supports service delivery. 

Cllr John Boughtflower, Leader of the Council and Chair of Corporate Policy & Resources Committee, said: "Our commercial property assets are the biggest contributor to the Council budget and without them, we would be unable to fund all the discretionary services that our most vulnerable residents desperately need.

"We manage the portfolio in a sensible way and engage with the many different agencies on our approaches to financial strategies and outcomes, taking on board any recommendations. This authority will continue to manage risk and future financial performance so that we can deliver on our priorities."

Over the last few years, the Council has prioritised its engagement with external government agencies and sought feedback on how we have continued to grow our financial sustainability. This has included a Local Government Association (LGA) Finance Peer Review in 20204, a full LGA Corporate Peer Challenge5 undertaken at the end of 2022 and workshops and visits with government agencies, as well as the Chartered Institute of Public Finance and Accountancy (CIPFA) and the National Audit Office.

Most recently, the Council has been holding productive discussions with The Department for Levelling Up, Housing and Communities and are taking part in an external capital review. This will focus on the Council's Capital Strategy, governance arrangements and how the authority will continue to effectively manage risks associated with holding investment assets - particularly through its sinking funds strategy, which, by the end of March 2023 will hold approximately £37m in reserve.

Editors' notes

1 Read the Annual Commercial Property 2022 in full at Commercial Assets

2 Details of properties, investments, 2021-23 Capital strategy and FAQs at Property investments 

3 Council Tax information Council Tax

4 Financial Peer Review report and action plan

Corporate finance peer challenge 2020

5 2022 Corporate Peer Challenge findings and report Corporate finance peer challenge 2022