Agenda item

Report attached.

The Cabinet considered a report of Councillor Noordad Aziz, Deputy Leader and Portfolio Holder for Transformation, Education and Skills, and Councillor Vanessa Alexander, Portfolio Holder for Resources and Council Operations, setting out the 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 2025/26.

Councillor Aziz provided a brief introduction to the report.

The Leader of the Council welcomed Martin Dyson, Executive Director – Resources, to his first Cabinet meeting following his illness and thanked him and his Finance Team, particularly Jody Spencer-Anforth, Head of Finance, for their dedicated work in producing the various Budget papers.

Approval of the report was not deemed 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:

“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 longer

term 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 The Chartered Institute of Public Finance & Accountancy (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 this guidance.  Acceptance of this report fulfilled those obligations.

CIPFA had published revised codes on 20^th 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 covering report comprised the Treasury Management Strategy 2025/26-2027/28 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 - Leasing;
• Minimum Revenue Provision;
• Affordability Prudential Indicators;
• Treasury Management Strategy2025/26 – 2027/28;

• 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 detail of the authority’s Treasury Management Practices 2025/26, comprising the 12 identified TMP areas, as follows:

1. Risk Management;
2. Performance Management;
3. Decision-Making and Analysis;
4. Approved Instruments, Methods and Techniques;
5. Organisation, Clarity, Segregation of Responsibilities and Dealing Arrangements;
6. Reporting Requirements and Management;
7. Budgeting, Accounting and Audit Requirements;
8. Cash and Cash Flow Management;
9. Money Laundering;
10. Training and Qualifications;
11. Use of External Service providers;
12. Corporate Governance.

Appendix 4 provided the Capital Strategy 2025/26, 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 2025/26 – as set out in Section 5 of Appendix 1 to the report;

(5)  Approve the Treasury Management Policy Statement for 2025/26 – Appendix 2 of the report

(6)  Approve the Treasury Management Practices Statement 2025/26 – Appendix 3 of the report;

(7)  Approve the Capital Strategy 2025/26 – Appendix 4 of the report.