Agenda item

Report attached.

Members considered a report of Councillor Vanessa Alexander, Portfolio Holder for Resources and Council Operations, setting out the proposals for the Council’s policy and objectives with respect to treasury management, and explaining how it would achieve its objectives and manage its activities; and agreement to an investment strategy for 2026/27.

Councillor Alexander provided a brief introduction to this report, outlining the four key documents provided.

Councillor Khan noted that there might be a veto to borrowing more money in the buikd up to transferring to a new unitary authority.  He asked if there would be any opportunity to borrow more money.  The Leader referred to earlier responses on the question of borrowing.  The Council would set a balanced Budget and would only borrow if there was a significant project that needed to be undertaken.  The £1.5m Pride in Place funding and other grants had helped to remove the need for additional borrowing.  Councillor Alexander reiterated that the situation would be kept under review and that consideration would be given to anything suitable that arose.

Approval of the report was not deemed a key decision.

Reasons for Decision

The proposed Treasury Management Strategy and associated appendices, comprising the following documents, were attached to the report:

• Minimum Revenue Provision Policy Statement 2026/27;
• Treasury Management Policy Statement 2026/27; and
• Treasury Management Practices 2026/27.

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 the report fulfilled those obligations.

CIPFA had published revised codes on 20^th December 2021 and the Council now adopted the liability benchmark treasury indicator to support the risk management of the capital financing requirement.

Appendix 1 of the covering report comprised the Treasury Management Strategy 2026/27-2028/29 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 Strategy 2026/27 – 2028/29;

• 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 2026/27.

Appendix 3 set out the detail of the authority’s Treasury Management Practices 2026/27, comprising the 12 identified TMP areas, as follows:

TMP1       Risk Management;

TMP2       Performance Management;

TMP3       Decision-Making and Analysis;

TMP4       Approved Instruments, Methods and Techniques;

TMP5       Organisation, Clarity, Segregation of Responsibilities and Dealing Arrangements;

TPM6       Reporting Requirements and Management;

TMP7       Budgeting, Accounting and Audit Arrangements;

TMP8       Cash and Cash Flow Management;

TMP9       Money Laundering;

TMP10     Training and Qualifications;

TMP11     Use of External Service Providers;

TMP12     Corporate Governance.

Appendix 4 provided the Capital Strategy 2026/27, 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 2026/27, as set out in Section 5 of Appendix 1 to the report.

(5)   Approve the Treasury Management Policy Statement for 2026/27, as set out at Appendix 2 of the report.

(6)   Approve the Treasury Management Practices Statement 2026/27 as set out at Appendix 3 of the report.

(7)   Approve the Capital Strategy 2026/27 as set out at Appendix 4 of the report.