Agenda item

Treasury Management Strategy 2023-24


The Chief Officer, Finance Performance and Change presented the Treasury Management Strategy 2023-24 (Appendix A to the report), which included the Treasury Management Indicators, for 2023-24 to 2025-26.


She explained that the Treasury Management functions of the Council were regulated by the Local Government Act 2003. This provided authorities with the powers to borrow and invest as well as providing controls and limits on this activity. The Council had to approve a Treasury Management Strategy before the start of each financial year which set out the Councils and Chief Financial Officer’s responsibilities, delegations and reporting arrangements.


The Chief Officer, Finance Performance and Change explained that the Council undertook its treasury management activities in accordance with the Chartered Institute of Public Finance’s prudential code which had been updated to reflect changes in an increasingly complex environment and to complement changes to regulations. The Council had an integrated Treasury Management Strategy where borrowing and investments were managed in accordance with best professional practice. The Council would look to borrow money if needed to either meet short term cash flow needs or to fund capital schemes approved within the capital programme. Therefore, any actual loans taken were not generally associated with particular items of expenditure or assets.


The Chief Officer, Finance Performance and Change explained that the Council was exposed to financial risks including the potential loss of invested funds and the revenue effect of changing interest rates. The successful identification, monitoring and control of risk were therefore central to the Treasury Management Strategy. Should anything change significantly, a revised strategy would be presented to Council for approval. She added that the ongoing impact on the UK of the war in Ukraine, together with higher inflation, higher interest rates, uncertain government policy and a deteriorating economic outlook, would be major influences on the Council's Treasury Management Strategy for 2023-2024.


The Chief Officer, Finance Performance and Change reported that as at the 31st of December 2022, the Council held £99.8 million of borrowing and £94.05 million of investments. It was anticipated that the Council might need to borrow during the next three years however, this position could change should capital schemes not progress as anticipated, further schemes added to the capital programme that were not fully funded by grant or revenue contributions, or new schemes added which required additional debt financing. When borrowing money, the Council's primary objective was to strike an appropriately low risk balance between securing low interest costs and achieving certainty of those costs over the period for which funds were required. The strategy outlined the major objectives for the Council with regards to borrowing in 2023-24.


The Chief Officer, Finance Performance and Change explained that they had changed the strategy going forward based on comments that they had received from elected Members. The new strategy proposed that there was a reduced limit on what they could place with other local authorities and they were also proposing to reduce the time over which that money could be invested. During the coming financial year, Council would receive reports as required in the Code of Practice. These included an annual Treasury Management Strategy, a mid-year monitoring report and an annual Treasury Outturn report.


A Member referred to some councils around the country that were taking a higher degree of risk and getting themselves into trouble and asked if the authority was confident that the changes that had been made to the strategy were sufficient to protect against those situations. The Chief Officer, Finance Performance and Change replied that treasury management activities had inherent risk built into them and the strategy was trying to minimise that as much as possible. The changes that they were proposing went close to reducing that risk.


A Member referred to the loan to Thurrock Council of £8 million, £5 million of which was due to be repaid in May and asked if the Chief Officer, Finance Performance and Change could clarify the position. The Chief Officer, Finance Performance and Change replied that this was one of the risks they faced however there was a very strong process in place to make sure that they made all the relevant due diligence checks before that money was deposited anywhere and they would have regular updates in relation to that particular investment. Some repayment was due during the current financial year and they were assured that both of those payments would be made on the date on which they were due.


A Member asked if they reviewed on a regular basis, what programmes would move forward within the next two years and if not, what money could be moved back into the mainstream budget to alleviate the other problems they were facing.


The Chief Officer, Finance Performance and Change replied that the Capital Programme was submitted regularly and therefore regularly reviewed. With regards to individual schemes, they asked for updates from project managers on a very regular basis with regards to likely spend and the profile of that spend. Schemes would not sit in the Capital Programme if there was an issue with them or if the scheme was not going to be delivered and any funding that was earmarked to that scheme would then be released. They could then reallocate that money, if they were satisfied that the scheme would not take place, to support other capital schemes that were coming online. Reserves could only be used once, so they could not be used to prop up the revenue budget over a period of time.


RESOLVED:                That Council approved the Treasury Management Strategy 2023-24 including the Treasury Management indicators 2023-24 to 2025-26 (Appendix A of the report).


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