Agenda item
Prudential Indicators, Capital, Treasury Management and Investment Strategies 2024/25 - 2026/27
Report attached.
Minutes:
Members considered a report of Councillor Peter Britcliffe, Deputy Leader of the Council and Portfolio Holder for Resources, providingthe Council’s policy and objectives with respect to treasury management, to explain how it would achieve its objectives and manage its activities; and to agree an investment strategy for 2024/25.
Councillor Britcliffe indicated that this was a largely technical report, which demonstrated compliance with the Chartered Institute of Public Finance and Accountancy (CIPFA) Guidance and Local Government Act 2003.
Approval of the report was not considered to be a key decision.
Reasons for Decision
The Cabinet required an update on the Council’s Capital and Treasury Management activities, and the strategy for the upcoming year.
Treasury Management was defined as follows:
“The management of the Council’s investment and cash flows, its banking, money market and capital market transactions;
The effective control of the risks associated with these activities; and.
The pursuit of optimum performance consistent with those risks.”
The Council was required to operate a balanced budget which meant that cash raised during the year would meet cash expenditure. Part of treasury management was to ensure the cash flow was properly planned with cash available when needed. Surplus monies were invested in line with the Council’s low risk appetite, providing adequate liquidity initially before considering investment return.
The second main function of treasury management was funding the Council’s capital plans. The plans gave a guide to the future borrowing need of the Council. The management of this longer-term cash flow might involve arranging long or short-term loans or using longerterm cash flow surpluses. Occasionally outstanding debt might be restructured to reduce Council risk or meet cost objectives.
The report had been prepared in line with the Treasury Management Code and Guidance (2021) written by CIPFA. In the case of local authorities in England and Wales, the Code was significant under the provisions of the Local Government Act 2003. This required local authorities ‘to have regard (a) to such guidance as the Secretary of State may issue, and (b) to such other guidance as the Secretary of State may by regulations specify’. The Local Authorities (Capital Finance and Accounting) (England) Regulations 2003, in Paragraph 24, required local authorities to have regard to the guidance. Acceptance of this report fulfilled those obligations.
CIPFA had published revised codes on 20th December 2021 and the Council had now adopted the liability benchmark treasury indicator to support the financing risk management of the capital financing requirement.
Appendix 1 of the report comprised the Treasury Management Strategy 2024/25-2026/27 document, which included the following detailed sections:
- Background;
- Prudential Code and Prudential Indicators;
- Capital Expenditure and Capital Financing Requirement;
- International Financial Reporting Standard (IFRS) 16;
- Minimum Revenue Provision;
- Affordability Prudential Indicators;
- Current Treasury Position;
- Expected Movement in Interest Rates;
- External Debt overall Limits;
- External v Internal Borrowing;
- Liability Benchmark;
- Limits on Activity;
- Debt rescheduling;
- Investment Strategy;
- Environmental Social and Governance (ESG);
- Treasury Management Practices (TMP);
- Policy on the use of External Service Providers; and
- Treasury Management Strategy In-Year and Year End Reporting.
Appendix 2 of the report comprised the Council’s Treasury Management Policy Statement 2024/25.
Appendix 3 set out the authority’s Treasury Management Practices 2024/25, comprising the 12 identified TMP areas, as follows:
- Risk Management;
- Performance Management;
- Decision-Making and Analysis;
- Approved Instruments, Methods and Techniques;
- Organisation, Clarity, Segregation of Responsibilities and Dealing Arrangements;
- Reporting Requirements and Management;
- Budgeting, Accounting and Audit Requirements;
- Cash and Cash Flow Management;
- Money Laundering;
- Training and Qualifications;
- Use of External Service providers;
- Corporate Governance.
Appendix 4 provided the Capital Strategy 2024/25, which included information on the following:
- Overview and Scope;
- Capital Expenditure;
- Capital v Treasury Management;
- Service and Commercial Investments;
- Council Objectives;
- Capital Budget Setting Process;
- Monitoring of the Capital Programme Expenditure;
- Multi-Year schemes;
- Funding Strategy and Capital Policies;
- Procurement and Value for Money;
- Partnerships and Relationships with Other Organisations;
- Management Framework;
- Performance Management;
- Risk Management; and
- Other Considerations
There were no alternative options for consideration or reasons
Resolved - That Cabinet agrees to recommend Council to:
(1) Adopt the prudential indicators and limits detailed in the report;
(2) Approve the Treasury Management Strategy, and associated indicators, as set out in Appendix 1 to the report;
(3) Approve the Investment Strategy as set out in Section 13 of Appendix 1 to the report;
(4) Approve the Minimum Revenue Provision Policy for the year 2024/25 – as set out in Section 5 of Appendix 1 to the report;
(5) Approve the Treasury Management Policy Statement for 2024/25 – Appendix 2 of the report
(6) Approve the Treasury Management Practices Statement 2024/25 – Appendix 3 of the report;
(7) Approve the Capital Strategy 2024/25 – Appendix 4 of the report.
Supporting documents: