Issue - meetings

To receive the report on the 2022/23 Treasury Management Update and 2023/24 Treasury Management Strategy. 

The Finance Manager advised Members that the Treasury Management Update and Strategy were legally required to be presented the Audit Committee under the Local Government Act 2003, CIPFA Code of Practice on Treasury Management, (the Code), and the CIPFA Prudential Code for Capital Finance in Local Authorities, (the Prudential Code). Following this meeting the report would also be presented to Cabinet and Full Council.

Members heard that the strategy for 2022/23 remained consistent with that outlined in the 2022/23 Treasury Strategy, which was agreed for approval at Full Council on 3 March 2022 and by the Audit Committee on 25 January 2022. The Strategy was a continuation of that used in recent years which had provided considerable benefits to the Council. The Finance Manager noted that the latest financial monitoring projections indicated a benefit of £3.9m from treasury management during 2022/23 which supported the provision of front line services, opportunities for borrowing when appropriate and the Council’s overall financial position. Based on the recommendation of the Link Group, the Committee heard that the figures set out in the report had allowed for changes to interest rates, in order to create robustness.

The Finance Manager informed the Committee that the Council was expected to need to borrow an additional £125.8m in 2023/24, based on the existing capital programme plans which adopted a flexible approach to borrowing. Members were asked to note that considerations were given to affordability, maturity profile of existing external financing, interest rates and refinancing risk as well as borrowing source, which was usually expected to be other Local Authorities or the Public Works Loan Board, but also included Municipal Investment Loans, the LGA Municipal Bonds Agency, European Investment Bank or commercial sources, and any new opportunities which arose.

The Committee heard that the strategy for any investments was to minimise investments in order to reduce counter-party risk, and to reduce net interest costs as longer-term borrowing rates tended to be greater than the council were able to earn on new investments. The strategy sought to lengthen investment periods, where cash flow permitted, to achieve higher interest rates within acceptable risk parameters.

During the discussion Members noted that a distinction between capital expenditures would be useful so that it could be established assets which will appreciate over time and industrial assets which depreciate over time. The Director: Finance & Human Resources agreed that this distinction was to be included in future reports.

RESOLVED - that:

a.    recommend to Full Council that the treasury management activities to 31st December 2022 as set out in Appendix A be noted;

b.    the Treasury Strategy 2023/24, including the Annual Investment Strategy, the Minimum Revenue Provision Statement, Treasury Management Prudential Indicators be approved; and

c.    the 2022/23 Treasury Management Update Report be approved.