Agenda item

To submit a report by the Head of Function (Resources)/Section 151 Officer.

The report of the Head of Function (Resources)/Section 151 Officer incorporating the Treasury Management Strategy Statement for 2018/19 was presented for the Executive’s consideration.

The Portfolio Member for Finance reported that the TM Strategy Statement for 2018/19 was scrutinised by the Audit and Governance Committee at its meeting on 13 February, 2018 and was endorsed by the Committee as presented and without further comment. The proposed strategy for 2018/19 has not changed significantly from that in effect in 2017/18. A similar prudent approach in 2018/19 is likely to secure the best value for the Council in the current period of economic austerity meaning that where possible, internal cash balances will be utilised to avoid taking out new borrowing. Despite the recent increase in the base rate, the expectation is that investment rates over the medium term will remain below long- term borrowing rates. The Section 151 Officer will continue to monitor interest rates in financial markets and to adopt a pragmatic approach to changing circumstances, reporting any decisions to the appropriate decision making-body at the earliest opportunity. The Portfolio Member said that there is a proposed change to the Treasury Management Practices (TMPs) which is to increase the minimum cash balance from £6m to £6.5m in accordance with the latest approved reserve policy.

The Head of Function (Resources)/Section 151 Officer said that the Treasury Management Strategy is adopted annually; it sets out the Council’s proposed borrowing and investment arrangements for the year ahead as well as confirming the Minimum Revenue Provision policy. The strategy for 2018/19 continues with the approach taken in 2017/18 that is, to use the Council’s balances instead of borrowing where that is feasible, and to only take out borrowing when there is a specific use for it. The Council will not borrow to invest as the return on investment is considerably lower than the cost of borrowing. It is possible that the strategy may have to be reviewed during the year if there are indications that the base rate is rising faster than predicted; the situation will be kept under review to ensure that the rate the Council pays for borrowing is kept to a minimum. The Strategy as proposed is the best under the prevailing economic circumstances. As well as a change to the TMPs to which the Portfolio Member referred, the MRP policy is being amended which will result in a saving on costs of around £1m to the Council; this has been incorporated as a saving in the revenue budget for 2018/19.

It was resolved –

•  To note the contents of the covering report.

•  To endorse the contents of, and the assumptions and proposals made within the Treasury Management Strategy Statement (including the Prudential and Treasury Management Indicators) for 2018/19 (Annex A to the report).

•  To forward the TM Strategy Statement to Full Council without further comment.

•  To approve the change in TMPs, increasing the minimum cash balance from £6m to £6.5m, to reflect the increase in the minimum general reserve balance.