Issue - meetings

Members considered the Draft Treasury Management Strategy 2023/24, Prudential indicators, Minimum Revenue Provision (MRP) Policy, and the capital investment strategy, introduced by the Financial Services Manager and Deputy Section 151 Officer, and present to the committee for scrutiny prior to being presented for approval by Full Council in March.

Prior to the Officer’s presentation, the Chairman sought assurance from the Section 151 Officer with regard to the training requirements. The Officer confirmed that five of the Members sitting on the Committee had received or participated in the required training, in line with constitutional requirements.

The Strategy had been devised against a back drop of economic uncertainty with high levels of inflation and high interest rates not seen for many years. The Authority’s Treasury position was impacted by this in two principal ways, namely he amount it received on invested funds was increasing but the cost of holding debt was higher when it was re-financed. The decisions of when to invest and when to borrow were key to maximising returns and limiting interest costs. The Council’s Treasury Advisers predicted that interest rates would increase in the short term and then reduce in the mid-term. This meant if borrowing was required then it should be undertaken on a short-term basis, allowing refinancing at lower rates. The Strategy contained details of the current economic picture at Appendix C.

The Strategy incorporated the requirements of the new 2021 CIPFA Prudential Code.  For the Authority, new Prudential indicators had been included which reflected the Borrowing Liability Benchmark and which illustrated the lowest risk level for borrowing, Commercial income as a percentage of Net Revenue Expenditure and due consideration was now required to be given to environmental, social and governance (ESG) factors where possible when investing.

The Treasury Management Strategy brought together a number of strategies and policies, these being:-

·       The Borrowing Strategy, which ensured consideration is given to affordability and sustainability for the repayment of debt.

·       The Annual Investment Strategy which was to provide security of the investment, considered liquidity and cashflow requirements, and finally yield, all of which were considered in the context of the Authority’s risk appetite.

·       The MRP policy which determined how the Authority would repay prudential borrowing on an annual basis.

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

Draft prudential and treasury indicators were calculated in December 2022. These would therefore be updated based on the final Capital Programme and Medium-Term Financial Analysis prior to the final version being submitted to Full Council in March 2023. There was one change of note in relation to the Minimum Revenue Provision Policy, and in accordance with expected changes in legislation, namely:

·       A Minimum Revenue Provision charge was to be made on an annual basis to reduce the level of borrowing attributed to commercial investment properties. This was rather than the existing policy of a voluntary revenue position reviewed on an annual basis.

In relation to  ...  view the full minutes text for item 44