Agenda item

Report attached.

Councillor Joyce Plummer, Portfolio Holder for Resources, provided a report setting out proposals for the Council’s policy and objectives with respect to treasury management, to explain how it will achieve its objectives and manage its activities; and to agree an investment strategy for 2020/21.

Councillor Plummer highlighted that the purpose of the report was to set the limits on how the Council used its cash and the limits on both borrowing and investments.  The Council intended to live within its means and did not wish to increase borrowing unnecessarily.  It intended to repay debt whenever it could.  The report also highlighted that interest rates were currently low.  Included in the report were the Minimum Revenue Provision (MRP) for year 2020/21, the Treasury Management Policy Statement 2020/21 and the policy on capital expenditure.

Approval of the report was not a key decision.

Reason for Decision

Treasury management is 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
• And the pursuit of optimum performance consistent with those risks.

The Council is required to operate a balanced budget which means that cash raised during the year will meet cash expenditure.  Part of treasury management is to ensure the cash flow is properly planned with cash available when needed.  Surplus monies are invested in line with the Council’s low risk preferences.

The second function of treasury management is funding the Council’s capital plans.  The plans give a guide to the future borrowing need of the Council.  The management of this longer term cash flow may involve arranging long or short term loans or using longer term cash flow surpluses.  Occasionally outstanding debt may be restructured to reduce Council risk or meet cost objectives.

The report has been prepared in line with the Treasury Management Code and Guidance (2017) written by The Chartered Institute of Public Finance & Accountancy (Cipfa).  In the case of local authorities in England and Wales, the Code is significant under the provisions of the Local Government Act 2003.  This requires 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 require local authorities to have regard to this guidance.  Acceptance of the report fulfils those obligations.

The report included further details in respect of the following matters:

• The Prudential Code and Prudential Indicators;
• Capital Expenditure and the Capital Financing Requirement;
• Minimum Revenue Provision;
• Affordability Prudential Indicators;
• Treasury Management Strategy 2020/21 – 2022/23 (Current Treasury Position; Expected Movement in Interest Rates; Borrowing and Debt Strategy  2020/21 – 2022/23);
• External Debt Overall Limits;
• External v Internal Borrowing;
• Limits on Activity (Treasury Management Indicators; Proposed Limits for Maturity Structure of Borrowing);
• Debt Rescheduling;
• Investment Strategy;
• Treasury Management Practices (TMP);
• Policy on the Use of External Service Providers; and
• Treasury Management Strategy In-Year and Year-End Reporting.

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

Resolved                          -    That the Cabinet agrees to recommend the Council:

(1)    To adopt the Prudential Indicators and Limits detailed in the report.

(2)    To approve the Treasury Management Strategy, and associated indicators, as set out in Section 8 of the report.

(3)    To approve the Investment Strategy as set out in Section 13 of the report.

(4)    To approve that the Minimum Revenue Provision (MRP) for the year 2020/21 – Appendix 1.

(5)   To approve the Treasury Management Policy Statement 2020/21 – Appendix 2.

(6)   To approve the Treasury Management Practices Statement 2020/21 – Appendix 3.