Agenda item

To submit the report of the Director of Function (Resources)/Section 151 Officer.

The report of the Director  of Function (Resources)/Section 151 Officer incorporating the David Hughes Chartable Estate and Anglesey Further Education Trust Annual Report  and Accounts for 2023/24 was presented for the Executive’s consideration. It is a requirement of the Charity Commission that the annual accounts are approved by the Executive as the Trusts’ responsible body.

Councillor Robin Williams, Deputy Leader and Portfolio Member for Finance and Housing presented the report outlining the background of the Anglesey Further Education Trust, its legal status and the different elements within it. The report also provides a summary of the Trust’s financial performance in 2023/24 and updates members on the progress made to distribute more of the Trust’s funds to meet the charitable purposes of the Trust. In October 2019 the Executive determined to allocate a one-off sum of £55,280 to each secondary school, funded from the  Anglesey Further Education 1/3 Restricted Trust Fund, to cover the cost of  Learning Coaches. The Executive also approved an allocation of an additional £8,000 per secondary school to provide grants for financially disadvantaged students. The grants were to help students obtain places at colleges and universities and/or purchase books and equipment required for their first year of courses. The total cost of £40,000 was funded by the Anglesey Further Education 2/3 Restricted Trust Fund. Section 5 of the report details how schools utilised these funds in 2023/24.

Councillor Robin Williams highlighted the reliance of the Further Education Trust Fund on the David Hughes Charitable Estate to generate surpluses which are subsequently transferred to the Further Education Trust Fund. While the return on the traded investments is good the performance of the Charitable estate’s investment properties is very poor, showing negative  returns in 2022/23 and 2023/24. This is because of restrictive tenancy agreements that have hindered rents from increasing significantly over time coupled with rising maintenance costs due to the deteriorating condition of the properties. As a result,  the David Hughes Charitable Estate has failed to make a contribution to the Anglesey Further Education Trust in the past two years having generated no surplus. This means that the Trust has not been able to provide support to the current and former pupils of the Council’s five secondary schools which is its primary purpose. Without a change in strategy in relation to the David Hughes Charitable estate this situation is likely to persist. This challenge was previously identified in March 2024 when the Executive authorised Officers to examine options to maximise income from the estate to safeguard the long-term viability of the Anglesey Further Education Trust Fund for the benefit of Anglesey’s young people. However, due to capacity issues, no progress has been made in implementing this recommendation. The Executive is now asked to authorise the commissioning of external assistance to conduct the necessary review.

The Director of Function (Resources)/Section 151 Officer confirmed that the David Hughes Charitable Estate investment properties are not generating sufficient income to cover day to day repair costs or produce a surplus. A point will eventually  be reached where significant capital investment will be required to maintain the properties at a lettable standard. The report outlines the aims of the proposed review, which will examine the current tenancy agreements, the revenue and capital investment requirements and the existing investment policy to identify options for generating greater returns on the Trust’s investments relating  both to the David Hughes Charitable Estate and the Anglesey Further Education Trust. The Further Education Trust Funds accounts for 2023/24 will be published on the Charity Commission’s website once they have been signed off on the completion of the audit.

The Chair emphasised the importance of the Council as the sole trustee of the Anglesey  Further Education Trust in ensuring that its purposes are effectively fulfilled namely, to provide support to the current and former pupils of the Council’s five secondary schools. To achieve this it is vital to maximise income flow from the David Hughes Charitable Estate to the Trust.

The Executive agreed on the necessity of the review and queried the timeline for its completion and reporting.

The Chief Executive advised that a meeting with Finance and Property services had been held during which it was agreed to establish a working group operating under clear terms of reference. The group will include the Chief Executive, Section 151 Officer and Property service officers. It is anticipated that the review will be conducted in two parts. The first phase will focus on establishing baseline information which will involve specialist input regarding land valuation in relation to the estate. The second phase will explore potential investment opportunities. The aim is to have the first phase underway by the summer.

It was resolved –

• To approve the Draft Annual Report and Accounts for the Anglesey Further Education Trust for the year 2023/24. (Appendix A to the report).
• To delegate to the Director of Function (Resources)/Section 151 Officer the authority to sign the Final Annual Report and Accounts and file with the Charity Commission upon satisfactory completion of the audit.
• To authorise the Director of Function (Resources)/Section 151 Officer to commission an external review of the operation and investment options in respect of both Trusts.