The Interim Head of Finance and Section 151 Officer reported on the Treasury Management Strategy 2020-21, which included the Treasury Management Indicators and the Capital Strategy 2020-21 to 2029-30, which included the Prudential Indicators before submitting for approval by Council.

The Interim Head of Finance and Section 151 Officer reported that treasury management and the control of capital expenditure are based in legislation, its treasury management activities are regulated by legislation which provides the powers to borrow and invest as well providing controls and limits on this activity.  Borrowing activity must have regard to the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Prudential Code for Capital Finance in Local Authorities and to operate the overall treasury function with regard to the CIPFA Code of Practice for Treasury Management in the Public Services.  Regulations also contain detailed provisions for the capital finance and accounting controls, including the rules on the use of capital receipts and what is to be treated a capital expenditure.  She stated that the revised Prudential Code placed a new requirement on local authorities from 1 April 2019 to determine a Capital Strategy.  The Capital Strategy contains the Prudential Indicators and the Treasury Management Strategy contain the Treasury Management Indicators.

The Interim Head of Finance and Section 151 Officer reported that the Treasury Management Strategy 2020-21 confirms the Council’s compliance with the Treasury Management in the Public Services: Code of Practice and also fulfils the Council’s legal obligation under the Local Government Act 2003 to have regard to both the CIPFA Code and the Welsh Government Guidance.  The Treasury Management Strategy is an integrated strategy where borrowing and investments are managed in accordance with best professional practice.  She stated that the Council borrows money either to meet short term cash flow needs or to fund capital schemes within the capital programme but loans taken are not associated with particular assets.  The Treasury Management Strategy had been considered and reviewed thoroughly y the Audit Committee. 

The Interim Head of Finance and Section 151 Officer reported that the Capital Strategy 2020-21 to 2029-30 was presented to the Corporate Overview and Scrutiny Committee on 13 February 2020 for information.  It confirms the Council’s compliance with the Prudential Code for Capital Finance in Local Authorities.  The Capital Strategy sets out a framework for the self-management of capital finance and examines the following areas:

· Capital expenditure and investment plans

· Prudential Indicators

· External debt

· Treasury Management

It reports on the delivery, affordability and risks associated with the long-term context in which capital expenditure and investment decisions are made.  The Capital Strategy is linked to the Corporate Plan, Treasury Management Strategy, MTFS and the Asset Management Plan. The Council is planning capital expenditure of £56.434m in 2020-21, and the Interim Head of Finance and Section 151 Officer highlighted the sources of where it would be funded from.    

The Interim Head of Finance and Section 151 Officer summarised the external debt and investment position as at 31 December 2019, the Council held £96.87m of borrowing and £38.95m of investments.  She presented a balance sheet showing forecast changes in borrowing and investments and has been produced using estimates of capital spend and forecasts on useable reserves for the current financial year and the next three years.  The Interim Head of Finance and Section 151 Officer informed Cabinet of changes in the accounting treatment for leases under International Financial Reporting Standard (IFRS) 16 which will have an impact and once known, and updated Treasury Management Strategy will be presented to Council for approval. 

The Interim Head of Finance and Section 151 Officer highlighted the borrowing strategy and outturn and summarised investment strategy and outturn with the main objectives during 2020-21 to maintain capital security; to maintain liquidity so funds are available when expenditure is needed and to achieve the yield on investments commensurate with the proper levels of security and liquidity. 

The Leader highlighted the importance of the cautious approach the Council takes in relation to Treasury Management being mindful of risk when investing.  He was grateful to the Audit Committee for its role in reviewing the Treasury Management Strategy.  The Chief Executive thanked the Interim Head of Finance and Section 151 Officer and team for the level of experience and advice they provide with regard to Treasury Management activity.

RESOLVED:           That Cabinet considered the report and noted that the following would be presented to Council for approval:

·      the Treasury Management Strategy 2020-21 including the Treasury Management Indicators 2020-21 to 2022-23 (Appendix A);

·      the Capital Strategy 2020-21 to 2029-30 including   the Prudential Indicators 2020-21 to 2022-23 (Appendix B);

the Annual Minimum Revenue Provision (MRP) Statement 2020-21 (Appendix B - Schedule A).