Decision details

Recommend the report to Council, which includes the Council's estimated Prudential and Treasury Indicators 2020/21 to 2023/24. Also, to revise any counterparty limits as applicable.

Matter for Decision

The Council has adopted The Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on Treasury Management (Revised 2017).

 

The Code of Practice requires as a minimum receipt by full Council of an Annual Treasury Management Strategy Statement – including the Annual Investment Strategy and Minimum Revenue Provision Policy – for the year ahead, a half-year review report and an Annual Report (stewardship report) covering activities in the previous year

 

This half-year report has been prepared in accordance with the Code and covers the following: -

 

·    The Council’s capital expenditure (Prudential Indicators);

·    A review of compliance with Treasury and Prudential Limits for 2020/21;

·    A review of the Council’s borrowing strategy for 2020/21;

·    A review of the Treasury Management Strategy Statement and Annual Investment Strategy;

·    A review of the Council’s investment portfolio for 2020/21; and;

·    An update on interest rate forecasts following economic news in the first half of the 2020/21 financial year.

 

In line with the Code of Practice, all treasury management reports have been presented to both Strategy & Resources Scrutiny Committee and to full Council.

 

Decision of Executive Councillor for Finance and Resources to recommend to Council to

     i.         Approve the Council’s estimated Prudential and Treasury Indicators 2020/21 to 2023/24 as detailed in Appendix A of the officer’s report.

 

Reason for the Decision

As set out in the Officer’s report.

 

Any Alternative Options Considered and Rejected

Not applicable.

 

Scrutiny Considerations

The Committee received a report from the Head of Finance. She advised that the capital numbers within the report reflected figures in the General Fund (GF) and Housing Revenue Account (HRA) Medium Term Financial Strategies (MTFS) relating to the proposed 1000 homes 10-year capital plan and the L2 Orchard Park development loan.

 

The Committee made the following comments in response to the report:

      i.         Asked whether the council had experienced any cashflow problems during lockdown as he was aware that other local councils had experienced cashflow problems because of the collection of business rates and council tax.

    ii.         Referred to Appendix D of the officer’s report which showed the current interest rates and noted that due to economic stimulus the rates were low at the moment. Referred to item 7.5 and noted that cash balances had protected the council from certain challenges. He assumed that target inflation rates would be kept at 2% and asked whether there were any steps the council could take to protect the real term value of investments.

 

The Head of Finance said the following in response to Members’ questions:

      i.         The council had not experienced any cashflow issues because the Government had brought forward significant cash payments particularly in relation to business rates relief. Cashflow was monitored daily and it was not likely that there would be any cashflow issues until the implementation of the capital plan which wasn’t until the new financial year.

    ii.         When treasury investment was undertaken, officers were encouraged by CIPFA guidance to think about investments in a three stage hierarchy, the first stage was the security of the investment, then liquidity and then yield. The security of capital sums was the most important consideration and the risks of investments had to be considered very seriously. Referred to problems which had arisen with the Icelandic bank loans.

 

The Committee unanimously resolved to endorse the recommendation.

 

The Executive Councillor approved the recommendation.

 

Conflicts of Interest Declared by the Executive Councillor (and any Dispensations Granted)

No conflicts of interest were declared by the Executive Councillor.