Agenda item

Item includes the Minimum Revenue Provision Policy Statement, Annual Investment Strategy and Prudential Indicators.

The Committee received a report outlining the proposed Treasury Management Strategy for 2021/22 including the Minimum Revenue Provision Policy Statement, Annual Investment Strategy and Prudential Indicators together with linkages to the Capital Strategy.  Part of the Treasury Management operation is to ensure that cash flow is adequately planned to deliver the Council’s requirement to operate a balanced budget, with cash being available when it is needed.  The second main function of Treasury Management is the funding of the Council’s capital plans, guiding the borrowing needs of the Council to ensure that the Council can meet its capital spending obligations.

The Council is, pursuant to regulations supporting the Local Government Act 2003, required to ‘have regard to’ the Prudential Code and to set Prudential Indicators for the next three years to ensure that the Council’s capital investment plans are affordable, prudent and sustainable. The Council is also required to produce an annual Treasury Strategy for borrowing and to prepare an Annual Investment Strategy setting out the Council’s policies for managing its investments and for giving priority to security and liquidity of those investments.

The Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on Treasury Management 2017 (the Code) also requires the receipt by full Council of a Treasury Management Strategy Statement.  The proposed Strategy for 2021/22 covered two main areas. 

Firstly, Capital issues addressing

·         capital expenditure plans and the associated Prudential Indicators; and

·         the Minimum Revenue Provision (MRP) Policy Statement.

Secondly, Treasury Management issues addressing

·         the current Treasury position;

·         Treasury Indicators which limit the treasury risk and activities of the Council;

·         prospects for interest rates;

·         the Borrowing Strategy;

·         the Policy on Borrowing in Advance of Need;

·         debt rescheduling;

·         the Investment Strategy;

·         the Creditworthiness Policy; and

·         the Policy regarding the use of external service providers.

The report presented an outline of the implications and key factors in relation to each of the Capital and Treasury Management issues and made recommendations with regard to the Treasury Management Strategy for 2021/22.  The report further included an economic background commentary updated to reflect the latest position, especially in relation to the UK leaving the European Union on 31^st December 2020.

The report was presented to the Committee to allow consideration of the proposed Treasury Management Strategy report before it is considered further in the budget setting process, with any comments being incorporated into the report to be presented to Cabinet and Council when those bodies consider the 2021/22 budget.

The practice of some local authorities to purchase property for investment, along with the Government’s current views on this, was noted.  In this regard, the Council’s recent purchase of the Spindles Shopping Centre was queried.  The Committee was advised that this purchase was part of a regeneration scheme and not a purchase made principally as an investment activity, notwithstanding that the Shopping Centre would be a Council asset and recorded on the asset register as such.  The Council’s debt levels were considered, noting the treatment of external capital debt and Private Finance Initiative debt, and a comparison considered with an authority that had invested heavily in property related investments. 

RESOLVED that the report and following matters be commended to Cabinet and to Council –

·         the Capital Expenditure Estimates as per paragraph 2.1.2 to the submitted report;

·         the Minimum Revenue Provision policy and method of calculation as per Appendix 1 to the submitted report;

·         the Capital Financing Requirement Projections as per paragraph 2.2.4 to the submitted report;

·         the projected treasury position as at 31 March 2021 as per paragraph 2.3.3 to the submitted report;

·         the Treasury Limits as per section 2.4 to the submitted report;

·         the Borrowing Strategy for 2021/22 as per section 2.6 to the submitted report;

·         the Annual Investment Strategy as per section 2.10, including risk management and the creditworthiness policy at section 2.11, to the submitted report; and

·         the level of investment in specified and non-specified investments detailed at Appendix 5 to the submitted report.