Agenda item

Report with Appendices 1 – 4 Attached.

The Portfolio Holder for Resources (Councillor Joyce Plummer) submitted a report setting out the Council’s policy and objectives with respect to treasury management, explaining how it would achieve its objectives and manage its activities; and to agree an investment strategy for 2019/20. 

The Minimum Revenue Provision Policy Statement 2019/20 and the Treasury Management Policy Statement 2019/20 were attached to the report as Appendices 1 and 2 respectively.  The Treasury Management Practices 2019/20 were set out in Paragraph 14 of the report and Appendix 3.  The Capital Strategy 2019/20 was set out in Appendix 4 of the report.

The Prudential Code for Capital Finance in Local Authorities was a professional code which set out the framework for self-regulation of capital spending and financing.  It allowed councils to invest in capital projects without any limit as long as such investment was affordable, prudent and sustainable.  The Code was produced by Cipfa and required the Council to agree and monitor a minimum number of prudential indicators (including limits and statements) which related to affordability, prudence, capital expenditure, external debt and treasury management.  The indicators were purely for internal use and were not designed to be used as comparators between councils.

The Council was also required to set out its Treasury Management and Investment Strategy for borrowing and investment activities and the effective management of associated risks, in accordance with the Chartered Institute of Public Finance and Accountancy (Cipfa) Code of Practice on Treasury Management in Public Services, as revised or supplemented by Cipfa from time to time.

The following aspects were addressed in the report:-

v  Prudential Code and Prudential Indicators

v  Capital Expenditure and Capital Financing Requirement

v  Estimated Capital Expenditure

v  Minimum Revenue Provision

v  Affordability Prudential Indicators

v  Treasury Management Strategy 2019/20 – 2021/22

v  External Debt Overall Limits

v  External v Internal Borrowing

v  Limits on Activity

v  Debt Rescheduling

v  Investment Strategy

v  Treasury Management Practices

v  Policy on the Use of External Service Providers

v  Treasury Management Strategy In-Year and Year End Reporting

Approval of the report was not deemed a key decision.

Reasons for Decision

(1)        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 those activities and the pursuit of optimum performance consistent with those risks.

(2)        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 preferences.

(3)        The second 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 that 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.

(4)        The report had been prepared in line with the Treasury Management Code and Guidance (2017) written by the Chartered Institute of Public Finance and 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.  That required local authorities ‘to have regard (a) to such guidance as the Secretary of State might issue, and (b) to such other guidance as the Secretary of State might by regulations specify’.  Paragraph 24 of the Local Authorities (Capital Finance and Accounting) (England) Regulations 2003 required local authorities to have regard to that guidance and acceptance of the report fulfilled those obligations.

There were no alternative options for consideration or reasons for rejection.

Resolved                               -   That Council be recommended to:-

                                                   (i)      Adopt the prudential indicators and limits detailed in the report;

                                                   (ii)     Approve the Treasury Management Strategy and associated indicators, as set out in Section 8 of the report;

                                                   (iii)    Approve the Investment Strategy, as set out in Section 13 of the report;

                                                   (iv)    Approve the Minimum Revenue Provision (MRP) for the year 2019/20, as set out in Appendix 1 of the report;

                                                   (v)     Approve the Treasury Management Policy Statement 2019/20, as set out in Appendix 2 of the report;

                                                   (vi)    Approve the Treasury Management Practices Statement 2019/20, as set out in Appendix 3 of the report

                                                   (vii)   Approve the Capital Strategy 2019/20, as set out in Appendix 4 of the report.