Questions by Members:

Answers:

What level of investment are we expected to commit before the outcomes of the LGR arrangements are confirmed? Additionally, if the allocated funds are not ultimately required, how will they be managed?

As set out within the budget / two-year financial plan agreed by Full Council in February, the Council will continue to make ‘cash-backed’ investments as necessary over 2026/27 and 2027/28.

The in-principle approach to retaining funding within the Forecast Risk Fund / other ‘pots’ is subject to on-going review over the next two years as it is recognised that investments and other areas of expenditure will need to balance against the Council’s financial obligations to a new Unitary Council from as early as 1 April 2028.

What could the impact on Tendring District Council be during this process?

(Councillor M Stephenson) The key point that is often overlooked is that, regardless of the amount Tendring District Council anticipates transferring at the point of transition, once the new Unitary Authority takes control, it will be responsible for setting its own budgets and determining how those funds are allocated. Our responsibility is to ensure that we leave the Council’s finances in the strongest possible position ahead of that handover. However, we will have no authority over how the money is used once the new organisation assumes responsibility.

Much of the confusion stems from the belief that this is a merger of councils. It is not. Tendring District Council, along with several others, will cease to exist entirely under the new structure.

With regard to the transition to the new Unitary Authority, will they assume responsibility for whatever financial balance we have at the point of handover?

(Councillor M Stephenson) Yes. It is a careful balance between maintaining business as usual, ensuring Tendring is left in the strongest possible position, and meeting our responsibilities to the new Unitary Authority. We are working toward an estimated handover figure based on current operations, but unforeseen circumstances could alter that position. If we leave the equivalent of two or three years’ funding, for example, it will ultimately be for the Unitary Authority to determine how those resources are used.

Can you provide reassurance that Tendring District Council are preparing our budgets and managing expenditure in the best interests of our residents? It is important that the committee feels confident that this Council are making sound and responsible financial management decisions.

(Councillor M Stephenson) Yes. While Tendring District Council remains in existence, so too do the residents and businesses we serve. The Council is currently in a strong financial position, and we will continue to act in their best interests by maintaining that stability and ensuring that we hand over sound finances to the new Unitary Authority

(Richard Barrett) The Audit Committee received the Council’s 2024/25 accounts a couple of weeks ago. Owing to the internal audit issues experienced nationally, there had been a significant gap in external financial scrutiny. We are now fully up to date, and the external auditors have confirmed that our value?for?money arrangements and financial governance are sound, with no matters to report. This should provide a strong level of reassurance.

With regard to the Housing Strategy and our existing stock, is there an intention to reduce the overall level of stock?

Similarly to the GF, the HRA will need to balance the investment in the existing level of stock, developing / acquiring new replacement stock and the level of reserves. Based on this approach, the aim would be to increase the level of stock over coming years wherever possible. As set out in the HRA budget agreed by Full Council in February, due to the long-term certainty of rent increases now confirmed by the Government (covering the next ten years) and the repayment of debt, the HRA business plan is expected to generate surpluses over the coming years, which in turn supports the Council in meeting its financial obligations to a new Unitary Council from as early as 1 April 2028.

With regard to the housing strategy, something that is a concern for when we are going through LGR is our existing stock. What is the outcome of our long-term debt with that and how is that going to be shifted? For example, will it go into the new Unitary Authority? Also, with regard to the stock levels, there are indications in the budget to sell off some of the stock that wasn't up to standard, but that would be below market value. What impact would that have if we want to increase housing stock? And how do we plan to merge our housing stock with other authorities given that some of them do not have any housing stock?

(Councillor M Stephenson) You are absolutely right to raise these concerns. Within our authority we manage three distinct types of housing, whereas neighbouring areas such as Braintree do not hold any housing stock of their own. You are also correct that we have disposed of some properties; in fact, several were taken to auction and achieved significantly higher prices than originally anticipated. These were homes that no longer met the standards we consider acceptable, and the rationale was that if the cost of bringing them up to standard exceeded the value of selling them, disposal was the more responsible option. The capital receipts from those sales are now being reinvested as we explore alternative housing solutions.

In terms of overall stock levels, they have remained relatively stable, but I am happy to provide a written response with precise figures. Regarding our borrowing position, the original loan total was £36 million, which has now reduced to just over £28 million. A portion of that borrowing will remain in place until 2051/52, partly because the real?terms value of money will diminish over that period. The remainder is being financed through internal borrowing—approximately £7 million across two internal funds. This approach has allowed us to benefit from lower interest costs, and the resulting savings within the HRA have created additional headroom to reinvest in our housing assets.

Page 26 refers to a separation between commercial investments and treasury. Could you clarify whether this distinction relates specifically to commercial property, and how residential property is treated within this framework?

(Richard Barrett) For us it is specific to commercial property. The reason for this is that the classification of residential property depends on the intended purpose of its use. When we purchased the property in Clacton, the decision at that time was made on the basis of an investment opportunity.

Where a property is acquired specifically for the purpose of providing social housing, it is not treated as an investment property. Instead, it is considered an addition to our housing stock—a property transaction undertaken to deliver social value rather than to generate an investment return. We do not purchase residential properties for investment purposes; our acquisitions of housing stock are solely for social rent and other non?financial, socially driven objectives.

Page 26 states that "the Strategy now acknowledges potential obligation that we placed on the Council due to emerging legislation around Local Government Reorganisation". Can you clarify what those obligations will be?

(Richard Barrett) Not in significant detail, as the Leader has already addressed many of these points in earlier questions. Our focus relates to the obligations we hold in respect of the new Unitary Council. I have statutory responsibilities as the Section 151 Officer, alongside Lisa Hastings as Monitoring Officer and Ian Davidson as the Head of Paid Service. These duties are statutory and therefore prescribed in law and guide our approach throughout the transition.

As we progress through the process and as the Structural Order becomes clearer, our specific obligations will continue to be refined. However, the central issue remains: how do we ensure that we meet those obligations effectively? The new authority will inherit both debt and liabilities, and it is therefore essential that we hand over a sustainable Housing Revenue Account both from a professional and moral perspective.

Do we currently provide loans to other councils, and if so, what interest rate is applied?

Yes, we do, and the rate achieved broadly reflects the underlying market conditions and the relative ‘safety’ of lending to other Local Authorities. The Council is currently obtaining around the 4% in terms of the most recent transactions.

Would there be an opportunity for Tendring to provide financing support to Town and Parish Councils, enabling them to access loans at favourable rates and, in doing so, help ensure that Tendring is left in a strong financial position?

(Richard Barrett) It ultimately comes down to risk. When we lend to other local authorities, those arrangements are underwritten by Government, which significantly reduces our exposure. That safeguard would not apply in this scenario. Given the potential risk implications, my view is that we should avoid pursuing this at present.

We can, however, undertake a more detailed assessment of the associated risks and legal considerations at a later stage and share those with you. It would not be appropriate to give a definitive position now without that fuller analysis.

On page 50, under heading “5. Borrowing Requirement” the highlighted text states “(over and above any amounts already highlighted in the Business Plan considered by Cabinet)”, can you expand on this please?

There are currently no plans to take on any additional external borrowing in 2026/27. The reference to the business plan highlighted, relates to an historic external loan that is due for repayment in the year. Rather than ‘replace it’ with another external loan, it is proposed to extend the current internal borrowing approach. The loan in question totals £941k.

What is Tendring District Council’s Minimum Revenue Provision?

This relates to the amounts statutorily required to be set aside to repay debt and it applies to both internal and external borrowing. There are various options in terms of how this can be done, with the approach for 2026/27 agreed at Full Council on 25 November 2025. A helpful extract from the report considered by Full Council in November is as follows:

“The Council is required to have a policy on providing a prudent minimum revenue provision which must be approved by Full Council each year.

The duty to make a Minimum Revenue Provision (“MRP”) is an important component of the legislative and regulatory framework which underpins the decision making by local authorities to demonstrate that borrowing is prudent, affordable and sustainable.

Therefore, where local authorities finance capital expenditure with debt, they must set aside an amount of money each year to ensure that debt can be repaid and in deciding whether any capital expenditure is affordable, an authority must consider whether it can meet the cost of the associated MRP charged within its budget.”

The Council’s Annual Minimum Revenue Provision Policy Statement for 2026/27 is:

In accordance with the Local Authorities (Capital Finance and Accounting)(England)(Amendment) Regulations 2003 and having due regard to guidance issued under Section 21 (1A) of the Local Government Act 2003, the Council’s policy for the calculation of MRP for 2026/27 shall be the Capital Financing Requirement Method for supported borrowing and the Asset Life (equal instalment) Method for prudential borrowing.

The total GF MRP budget for 2026/27 is £250k.

The statutory MRP rules do not apply to the HRA.

Would the new waste contract remain viable if Local Government Reorganisation does not proceed? Specifically, given that Reform has indicated it would not comply with the arrangements should it form the next government, how would this affect the contract’s deliverability?

Based on the two-year approach to the budget that was agreed at Full Council in February, the Council will remain in a stable financial position regardless of LGR. This is emphasised via the in-principle / notional approach of holding an amount equal to a multiplier of 2.7 years being retained within the Forecast Risk Fund as of 31 March 2028.

Within the context of the above, the forecast will be developed as part of the usual annual budget setting processes, which would revisit a number of items, such as the waste contract, if necessary, as part of future years’ updates.

What is the annual rental income for the investment property, and how much has been received to date?

The current annual rental income is approx. £237k.

In terms of income received since the property was purchased, a total of just over £1.9m has been received in rental payments to date.