Issue - meetings

The Chairman of the Corporate Policy and Resources Committee, presented the report which sought approval of the Mid-Year Treasury Report 2022/23.

The report had been presented to the Corporate Policy and Resources Committee, where it had been fully considered and debated and stood referred to Council for approval.

Members were advised that there had been no breach of prudential indicators and the mid-year review had been undertaken, taking into account changes to the Capital Programme and forecasts of cash flow requirements including investing and borrowing estimates.

The report provided an update of the treasury management prudential indicators, as required in the prudential code and Local Government Act and set revised indicators for the remainder of the year.  The table at paragraph 4.3 of the report set out how these revisions and their impact on the cost of council tax and financing costs, in relation to the net revenue stream.

Members noted the key revision as the Capital Financing Requirement, this reflected the Council’s borrowing need for 2022/23, and had increased from £38.241m to £39.068m due to a change in the opening balance of the Capital Financing Requirement, after closing the accounts for 2021/22. 

The Council was currently holding around £20m of investments on a regularly monthly basis at the mid-year point, this was in the main due to additional grants from Government, however the Councils cashflow had been revised and by year end balances were expected to be lower. 

The report also indicated that the Council’s external borrowing may need to increase in the short term to smooth peaks and troughs in cashflow.

Finally, the report gave an update on the wider economy and interest rate forecasts, provided by the Council’s external Treasury advisors Link Asset Services.

Debate ensued and a question was raised in relation to the table on page 77 of the reports pack, headed Prudential indicator for Capital Expenditure. Members noted that there appeared to large difference between the original and revised estimate, particularly in respect of “Our People” and “Our Places”.  Members sought indication as to the reasons for this and whether this should be cause for concern.

In responding, the Section 151 Officer advised Members that in respect of “Our Place” this was due to delays and delivery on the LUF programme, but undertook to provide greater detail to all Members outside of the meeting in coming weeks.

Responding to comments around whether asset disposal should be considered given the nature of financial markets, the Section 151 Officer, reminded Members that, some assets generated an income which could be used for revenue reasons and allowed for a balanced budget.  If an asset was sold, whilst it would generate a one-off capital receipt, accounting regulations would only allow for that money to be used for capital expenditure going forward.   As such it was balancing act, ensuring the Council had access to the right types of fund at any one time.

Having been moved and seconded it was

RESOLVED that the recommendation from the Corporate Policy and  ...  view the full minutes text for item 129

Members considered a report which provided the Mid-Year update for Treasury Management Indicators in accordance with the Local Government Act 2003.

The report sought to update the Committee on progress against the Treasury Management Strategy which was approved by Council in March 2022 for 2022/23 financial year, and was compliant with the CIPFA Code of Practice on Treasury Management.

It was acknowledged that the report had been written during a time of much change in the national political situation, and during a period of economic turbulence, with there having been an increase to the base interest rate since the report had been published.

The report identified that interest rates had been rising and were forecast to rise further resulting in the Council receiving additional investment income, demonstrated in the quarter two budget monitoring report, to be considered later in the evening, and was due to budgets having been set when rates were at historically low levels. Members also noted that increased rates did also mean that the Council would find borrowing costlier if it was required to source funds.

Section four of the report highlighted the movements in the Council’s prudential indicators.  Changes had arisen as a result of the Council closing its accounts for 2021/22 after the original strategy had been written and due to a revised capital programme for 2022/23, again outlined in the quarter two budget monitoring report referred to earlier.

The report concluded with an economics update which had been supplied by the Council’s Treasury Advisors, Link Asset Services, and which was useful in understanding the national and international context the Council was operating within when undertaking its treasury activities.

Members referenced the usefulness of economic forecast information, particularly during current economic turbulence.  Understanding the UK, and indeed the global economic outlook was important for everyone, not just for setting Council budgets, but also to residents in making personal decisions about their finances.  Its public nature was therefore much welcomed. 

It was suggested that in future the recommendations be more specific in identifying what the changes to prudential indicators were and indicating the relevant sections of the report, as had been the case historically, as this would aid with both Elected Members and the public’s understanding.

RESOLVED that the report and treasury activity be noted and it be RECOMMENDED to Council that the changes to the Prudential Indicators (Section 4.3 of the report) be approved.