Agenda item

Treasury Management Policy and Strategy 2023-24 (Agenda item 11)

Report of Councillor Phil Cowen, Executive Member for Finance, Revenues & Benefits.


The Chairman pointed out that under this item there was an appendix that was private & confidential and if Members wished to discuss this in more detail, a vote would have to be taken to go below the line and would be taken as the last item on the agenda.


It was agreed that no discussion was required in terms of the private & confidential appendix and the meeting remained in public session.


The Executive Member for Finance, Revenue & Benefits introduced the report. This report was for Members to recommend to Full Council and it outlined the Council’s prudential indicators for 2023/24 and 2025/26.  Item 1 of the report provided the background and identified why the Council was doing this, why it had to do it and the procedures subsequently identified how the Council had gone about it.  He asked Members to note the key elements of the Prudential Code that had to be addressed and most importantly, at section 1.3, it confirmed that a balanced budget had to be produced.


The Accountancy Manager then presented the report.  The report contained relatively few changes since July 2022 when Members last considered the Treasury Management Policy and Strategy.


The main changes were highlighted.


The maximum amount that the Council could invest in secure counterparties for up to one year or more was currently £7.5m but was now being recommended that where these secure counterparties were non-UK banks, the Country limit set at £5m for all investments, should be raised to £7.5m to ensure consistency of investments.


The Council was still not expecting to borrow externally over this time period but borrowing internally would be required to fund the Capital Programme and would be repaid overtime.


The table on page 94 of the agenda pack that the returns on the Council’s investments for next year would be just over 6% in terms of the Council’s revenue stream due to the level of interest rates.


Attention was then drawn to page 99 of the agenda pack, where based on the estimates in the report and the 10 year capital programme, a liability benchmark had been developed to cover the next 10 years. The dotted red line was the key line to note as this was the liability benchmark which was negative for the next 10 years and the reason for this was that the investments were expected to exceed the Council’s external borrowing.


Mr Fowler, the Independent Lay Advisor referred to table 2 on page 90 of the agenda pack and asked why there was such a leap in the capital receipts and reserves column from this year to next.


Members were informed that the Council current had a major asset sale that was expected to happen at some point in 2023/24.  The Chairman stated that the key here was that this was only an estimate.


Councillor Birt referred to page 131 of the agenda pack, the interest rate forecast. He was aware that there had been some huge changes in this forecast compared to previous reports.  The report that had been presented in June 2022; showed that the peak rate had been 2% where this report was 4.5%.  He had asked the same question back then, and asked again, what was the confidence level in the Link Group forecast and would this Council be making any budgetary plans for inflation and interest rates to be higher.  The budgetary consequences of higher inflation meant that it made the services that this Council delivered more expensive, and he had noticed that the inflation increase had already been set in the budget to 3% but this report was providing an indication that inflation was going to be higher than that.   He asked for comments on this matter.


The Accountancy Manager explained that the interest rates had increased much faster over the last 12 months than had been expected but a comparison was produced.  In terms of when the budget was set, inflation estimates and the forecast on inflation that the Treasury produced were taken into account and had been factored into the budget setting process.


The Chairman stated that advice was taken from external parties such as Link who were experts in this field.


The Executive Member for Finance, Revenue & Benefits pointed out that the key word was forecast, and that was what budgeting was all about and the Council had to draw on the information available from the experts in this field.  He reminded Members that this report was not about the budget as this would be discussed elsewhere at other meetings.


Councillor Monument referred to page 83 of the agenda pack, 3rd paragraph where it said ‘ where the treasury strategy is meeting strategy’ and felt that there must be a word missing.  Also, at the bottom of the table on page 105, she had noticed that it said, ‘approval will be based on individual circumstances without further reference to the Governance & Audit Committee’ and asked for the meaning of this.


In response to the first query, the word ‘performance’ had been inadvertently omitted and would be corrected.  As far as the latter query was concerned, it was explained that this would not be brought back to this Committee every time the Council invested.


In response to a final query raised at the bottom of page 107 of the agenda pack, it was noted that the word ;we’ would be Council Officers.


The recommendations were proposed and seconded, and it was


RECOMMENDED to Council that:


1.     the Treasury Management Strategy 2023-24 to 2025-26 at Appendix A of the report beapproved;


2.     the Minimum Revenue Provision (MRP) statement contained within Appendix A of the reportwhich sets out the Council’s policy on MRP be approved;


3.     the Prudential & Local Indicators and limits contained within Appendix A of the report(Tables 1-11) be approved;


4.     the Investment Strategy 2023-24 (Appendix B) of the report and the detailed criteria included in Appendix B1 be approved; and


5.     the Treasury Management Policy at Appendix B2 of the report be approved  

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