Issue - meetings

Members of the Committee heard from the Financial Services Manager, who introduced the report and explained that the Draft Treasury Management Strategy had been written against the backdrop of economic uncertainty, with factors including the new US President; the continuing war in Ukraine; sluggish economic growth in the UK; as well as government bond yields at high levels. Reduced levels of inflation alongside falling interest rates were highlighted, which, it was explained, had impacted the authority’s treasury position. The Manager continued, explaining that the amount the authority received on invested funds had increased, whilst the cost of holding debt was higher when it was refinanced. Additionally, it was explained, the decisions of when to invest and when to borrow were key to maximising returns and limiting interest costs. It was noted that the Council’s treasury advisors had predicted interest rates would continue to fall in 2025 and settle to a more stable position in 2026/27; this meant if borrowing was required then it should be taken on a short-term basis, which could then be refinanced when lower rates were available.

The Manager then explained that the strategy incorporated requirements of the 2021 Chartered Institute of Public Finance and Accountancy (CIPFA) Prudential Code. It was emphasised that the report had brought together several strategies and policies, firstly, the borrowing strategy, ensuring consideration was given to affordability and sustainability for the repayment of debt. Secondly, the annual investment strategy, intended to provide security of the investment, consider liquidity and cash flow requirements; finally, yield, all of which were considered in the context of the authority’s risk appetite. It was explained that the medium-term revenue provision provided a policy which detailed how the authority would repay prudential borrowing on an annual basis; the Committee was also requested to consider the Capital Investment Strategy, which was the framework by which capital investment and financing decisions would be made. The Manager continued, adding that draft prudential and treasury indicators had been calculated in December 2024, therefore they would be updated based on the final capital programme and medium-term financial analysis for the final version of the report, which would be brought before Council in March 2025. The Financial Services Manager stated that the Minimum Revenue Provision Policy was fully compliant with current regulations.

Regarding investments, it was explained, the counterparty lists within the strategy were the latest information supplied by Mitsubishi UFJ Financial Group, Inc (MUFG), formerly known as Link Treasury Services, and would be updated as the information became available, or ratings changed.

The Manager continued the presentation, explaining that the treasury function was carried out in line with the Treasury Management Code of Practice and the Prudential Code. It was highlighted that the treasury management function was last audited in 2021, and was given a high assurance rating in relation to its procedures and risk management. The Treasury Management training that Members had received prior to the Committee meeting was noted, and the presentation concluded with a summary of the report recommendations.

The  ...  view the full minutes text for item 117