An investment strategy drawn up by Gosport Borough Council is showing a healthy return on the property the authority has snapped up – but the authority is reliant on it to fund everyday services.

The balance of treasury management investments is expected to average £6m to £7m during the 2025/26 financial year, an investment strategy report said.

It added that the contribution that these investments make supports effective treasury management activities, helping the council to fulfil its objectives.

The council has six stated objectives in its corporate strategy that includes: improving Gosport’s high street, town centre and waterfront; improving its heritage and natural coastal environment; creating jobs; providing residents with affordable housing; providing arts, play, sports and leisure; enriching communities; and for people to live healthy and happy lives.

Gosport Borough Council’s full council meeting on March 26 unanimously approved the investment strategy.

The report said there are two reasons the council has money to invest. The first is due to a surplus of cash as a result of its day-to-day activities, for example, when income is received in advance of expenditure, known as treasury management investments. The second is when there is profit made on funds that are a commercial investment for a financial return, such as its portfolio of properties.

These properties are leased out to generate income. The report added that no new properties have been bought during 2024/25.

The council’s property holdings are estimated at a value of £9.519 million, as of March 31, 2024.

The report also provides an indication of how dependent the council is on investments properties income to fund council services. Its forecast for 2024/25 is 1.91 per cent, and estimates the following: for 2025/26, 2.14 per cent, for 2026/27, 2.17 per cent, for 2027/28 is 2.50 per cent and for 2028/29 is 2.35 per cent.

The investment decisions are the responsibility of the council’s finance team which also uses third-party advisors such as Arlingclose which is its treasury management advisor. 

The borough treasurer, the head of finance and the group accountant are qualified accountants. 

“The local authority typically receives its income in cash, e.g. from taxes and grants before it pays for its expenditure in cash, e.g. through payroll and invoices. It also holds reserves for future expenditure,” the report said.

“These activities, plus the timing of borrowing decisions, can lead to a cash surplus which is invested in accordance with guidance from the Chartered Institute of Public Finance and Accountancy (CIPFA).”

Local authority finances have various financial rules and regulations to oversee investment strategy finance. It includes the Prudential Code and the Public Services Code of Practice which states the investment strategy must be approved at a full council meeting.