Issue - meetings

Meeting: 12/01/2021 - Governance and Audit Committee (Item 48)

48 Draft Treasury Management Strategy 2020/21 pdf icon PDF 982 KB

Additional documents:


Members considered a report on the Treasury Management Strategy, Prudential Indicators, Minimum Revenue Provision (MRP) Policy and Capital Investment Strategy to facilitate effective financial management and planning.


The Treasury Management Strategy incorporated the requirements of the latest guidance from the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Ministry of Communities, Housing and Local Authorities (MCHLG).


The Treasury Management Strategy brought together the:


·         borrowing strategy, which would ensure consideration was given to affordability and sustainability for the repayment of debt;


·         The Annual Investment Strategy which was to make sure of providing security of the investment, liquidity and cashflow requirements, and finally yield, all are considered in the context of the Council’s risk appetite;


·         The MRP policy  page which determined how the Authority would repay prudential borrowing;


·         The Committee are also requested to consider the Capital Investment Strategy, which was the framework by which capital investment and financing decisions would be made.


Draft prudential and treasury indicatorswere calculated in November and would therefore be updated based on the final Capital Programme and Medium Term Financial Analysis for the final version of the Treasury Management Strategy.


There are 2 changes of note to investments in commercial property, or ‘non-treasury investments:


1.    In relation to the investment property portfolio, recent changes to the conditions for borrowing from the Public Works Loans Board (PWLB) now excluded being able to borrow for commercial purposes with the primary objective of securing a yield.  This meant that any future acquisitions, subject to legal advice would need to be funded from the Authority’s resources.  At this time it was unclear whether borrowing was allowed for replacement assets and therefore, this element of the strategy would be updated.


2.    In respect of the Minimum Revenue Provision the Authority’s policy has been amended in relation to the Investment Property Portfolio, and a voluntary minimum revision would be considered on a case by case basis.  This would allow any “overpayments” i.e. if the asset sale receipt was in excess of the borrowing outstanding those funds could be “withdrawn” to the General Fund.


This change had been discussed with the Authority’s External Auditors, Mazars, who had previously highlighted within their report received by this Committee in September 2020 a conclusion that the MRP policy be reviewed regularly to ensure that it was justified in relation to MCHLG guidance.  The Council needed to ensure it acted reasonably, that members understand the policy and that any judgements are prudent and that any investments are proportionate.


There had been Treasury Management training open to all Members of the Council held on 7 January.

Following this introduction there were questions and statements from Members of the committee.  Further information was provided:


·         The topic of ethical investing would be explored more and developed in the next year. In terms of acquiring bonds on climate change, the investment value was higher than the funds available;


·         There were £32 million of funds available to be utilised, which included £20 million of borrowing from the PWLB;


·         The  ...  view the full minutes text for item 48