Agenda item

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

The report of the Director of Function (Resources)/Section 151 Officer incorporating the Treasury Management Strategy Statement for 2021/22 was presented for the Executive’s consideration.

The Portfolio Member for Finance reported that the report is presented to ensure that the Council is implementing best practice with regard to its treasury management operations in accordance with the CIPFA Code of Practice for Treasury Management.

The Director of Function (Resources)/Section 151 Officer advised that the CIPFA Treasury Management Code and the TM Strategy set the parameters for the Council’s borrowing and investment decisions and activities to ensure that in the case of the former, they are affordable and in the case of the latter, that they are prudent. The Statement was scrutinised by the Audit and Governance Committee at its 9 February, 2021 meeting and was accepted without additional comment. In terms of updates to the Statement, there are no proposed amendments to the core principles and policies of the 2020/21 Statement.

The Statement sets out the Council’s borrowing position and strategy and at Table 4 shows the impact of the Council’s expenditure plans and the Minimum Revenue Provision charge on the Capital Financial Requirement (CFR) and level of external and internal borrowing. The Council is currently maintaining an under-borrowed position which means that the capital borrowing need (CFR) has not been fully funded with loan debt as cash supporting the Council’s reserves, balances and cash flow has been used as a temporary measure. Whilst this approach is prudent as investment returns are low and counterparty risk is still an issue that needs to be considered, as part of the strategy the ability to externally borrow to repay the reserves and balances if needed is important. A flexible approach to the choice between internal and external borrowing is needed. The Council will not borrow in advance of its needs in order to profit from the investment of the extra sums borrowed; any decision to borrow in advance will be within the CFR estimates and will be considered carefully having regard to the factors outlined in section 6.4 of the Statement. Opportunities for debt re-scheduling are likely to be few as there remains a large difference between early redemption rates and new borrowing rates.

The Council’s investment priorities will be the security of its investments first, liquidity second and return on investment third meaning that the Council will only invest with highly creditworthy counterparties based on credit rating information provided by Link Asset Services, the Council’s treasury advisors who use a wide array of information in their creditworthiness services. The Council in its investment policy will have regard to CIPFA and Welsh Government guidance on the management of risk.

The governance arrangements for treasury management is set out in section 8 of the report and include decision making roles and responsibilities and reporting arrangements. The Prudential and Treasury Management indicators against which treasury management activities and performance will be measured are set out in full in Appendix 11 to the report.

It was resolved –

·        To accept and note the Treasury Management Strategy for 2021/22 and to forward the Strategy to the Full Council without further comment.

·        To note the increase in transaction limits in Appendix 8 (point 4 of the report).