The Chief Officer - Finance, Performance and Change presented to Council for approval, the Treasury Management Strategy 2022-23 (Appendix A), which included the Treasury Management Indicators, and the Capital Strategy 2022-23 to 2031-32 (Appendix B), which included the Prudential Indicators, and the Annual Minimum Revenue Provision Statement 2022-23 (Section 7 of Appendix B). She explained that both treasury management and the control of capital expenditure were regulated by legislation. The legislation provided local authorities with the powers to borrow and invest as well as providing controls and limits on this activity. The Prudential Code for Capital Finance in Local Authorities included a requirement for the Council to approve a Treasury Management Strategy before the start of each financial year which set out the Council’s and Chief Financial Officer’s responsibilities, delegation and reporting arrangements. In addition, local authorities were required to determine a Capital Strategy which demonstrated that the authority took capital expenditure and investment decisions in line with service objectives and properly took account of stewardship, value for money, prudence, sustainability and affordability when making these decisions.

The Chief Officer - Finance, Performance and Change summarised the two documents. With regard to the Treasury Management Strategy 2022-2023, the ongoing impact on the UK of the pandemic, together with higher inflation, higher interest rates following the Bank of England’s increase in interest rates in December 2021 and then again more recently in February 2022, and the impact of the UK leaving Europe would be major influences on the Council’s Treasury Management Strategy for the coming financial year. As at the 31st of December 2021, the council held £96.87 million of borrowing and made £77.5 million of investments. The external debt and investment position was shown in Table 1 within the Treasury Management Strategy. She explained that the Treasury Management Strategy highlighted that the Council would have a new borrowing need over the coming three years to fund the proposed capital programme. With short term interest rates currently much lower than long term rates, it was likely to be more cost effective in the short term to use internal resources to fund expenditure. The strategy was clear that they would take the most appropriate form of borrowing depending on the prevailing interest rates at the time. The borrowing need would be monitored on an ongoing basis and any new borrowing would be considered alongside any changes in the capital programme that might affect the level of borrowing required. Any significant changes within these proposals would be reported to Cabinet, Governance and Audit Committee and Council as appropriate.

The Chief Officer - Finance, Performance and Change explained that her Majesty's Treasury issued revised lending terms for public works loan board borrowing by local authorities in November 2020. The Public Works Loan Board would be the major source of any borrowing that the Council undertook. Under these new requirements, as Section 151 Officer, she would be required to confirm the capital expenditure plans did not include an intention by the authority to borrow to invest primarily for financial return and she confirmed that the Council would not intend to invest in this way.

The Chief Officer - Finance, Performance and Change explained that at the end of December 2021 the council had £77.5 million of investments The Council's main objective when investing money was to strike an appropriate balance between risk and return, to minimise the risk of incurring losses from defaults and the risk of receiving unsuitably low investment income. The Council could invest surplus funds with approved counterparties and as detailed in table six of the Strategy. During 2022-23, Council would receive reports as required in line with the requirements of the Code of Practice. These included an Annual Treasury Management Strategy, a midyear monitoring report and an Annual Treasury Out turn report.

The Chief Officer - Finance, Performance and Change summarised the Capital Strategy for the period 2022-23 to 2031-32. This strategy gave a high level overview of how capital expenditure, capital financing and treasury management activity contributed to the provision of services. This document was presented to Council as an integral part of the council's budget and policy framework. It linked with the Corporate Plan, the Treasury Management Strategy, the MTFS and the Council's Asset Management Plan. She added that the plan detailed how any proposed investments in land and buildings would require the completion of a full feasibility study to evaluate the practicality of the capital project, and to assess its deliverability before the council invested time and money into that project. There were a number of significant areas that would need financing going forward, including economic recovery, decarbonisation and homelessness. As already reported to Council previously, there were also other financial pressures arising as a result of the pandemic and Brexit, which were being seen in existing tender prices, and it was anticipated this would continue for some time going forward. The pressures also included supply chain difficulties leading to higher prices and delays in schemes being completed.

The Chief Officer - Finance, Performance and Change explained that the strategy also referred to the changes with regards to the ability to borrow from the Public Works Loan Board, and authorities would be asked to confirm that there was no intention to buy investment assets primarily for yield in the current or the next two financial years. Whilst this did not preclude the Council investing in commercial activities, investing in assets solely for yield would prevent the Council from accessing PWLB borrowing. As the Council would need to borrow to support the 21st century schools band B programme and the wider capital programme this would prevent the Council investing in land or property purely to achieve a financial return. Section three of the strategy contained details which outlined the robust process in place to approve, manage and monitor capital projects. Quarterly capital monitoring reports were prepared for Cabinet and Council which included details of any variances between projects as well as projections of likely year end spend. The proposed capital investment programme for the period 2022- 23 to 2031 - 32 was detailed in the strategy. This detailed how the programme would be funded which included the use of general capital funding provided by Welsh Government, the use of capital receipts and borrowing.

The Chief Officer - Finance, Performance and Change concluded that each year the Council had to set aside a provision for repaying external debt. This was known as the Minimum Revenue Provision. The MRP needed to be approved by Council before the start of each financial year.

The Mayor thanked the Chief Officer - Finance, Performance and Change and her colleagues for all the reports and the hard work leading up to today.

RESOLVED:                 Council approved:

·           the Treasury Management Strategy 2022-23 including the Treasury Management Indicators 2022-23 to 2024-25 (Appendix A);

·           the Capital Strategy 2022-23 to 2031-32 including the Prudential Indicators 2022-23 to 2024-25 (Appendix B);

the Annual Minimum Revenue Provision (MRP) Statement 2022-23 (Appendix B – Section 7).