To consider the Executive Head of Finance’s Report No. FIN2004
(copy to follow) which sets out the Treasury Management Strategy and
Non-Treasury Investment Strategy 2020/21, Prudential Indicators for Capital
Finance and the Minimum Revenue Provision Statement for 2020/21.
Minutes:
The Committee considered the Executive Head of Finance’s Report No. FIN2004, which set out the proposed Treasury Management Strategy and Annual Non-Treasury Investment Strategy for 2020/21, including the borrowing and investment strategies and the Minimum Revenue Provision Statement. The Executive Head of Finance apologised that the Report had only become available earlier that day and acknowledged that this did not give Committee Members sufficient time to read the document. It was pointed out that Councillors would have further opportunities to discuss the Report as it was also being submitted to Cabinet on 4th February and to Council on 20th February, 2020.
It was noted that the Chartered Institute of Public Finance and Accountancy had conducted reviews of the Prudential Code and the Treasury Management Code of Practice in 2017 and that the Ministry of Housing, Communities and Local Government had also issued revised guidance on Local Government Investment. The Treasury Management Strategy Statement for 2020/21 and the Non-Treasury Investment Strategy had been prepared in accordance with this guidance.
Arlingclose advice continued to indicate that the Council should diversify investment risk by spreading smaller amounts over an increasing number of counterparties wherever possible. The Council was progressively incurring further borrowing and Arlingclose had advised that, in the circumstances of some current investments reaching their maturity date, the Council should replace them with long-term pooled funds. This strategy allowed for the maintained level of principal sums to be invested during a period when borrowing was increasing.
The Committee noted that the Council had incurred prudential code borrowing in 2018/19 in the sum of £45.58m in relation to its capital expenditure. Further borrowing to support the financing of the Council’s approved capital programme for the year 2019/20 would also be required. The Council would commence the 2020/21 financial year in a position where investment holdings continued to remain significant (although less than in previous financial years) but it would also be carrying significant accumulating debt. There would be an inevitable requirement to incur some further borrowing to service capital expenditure in future years.
It was advised that careful observation of the “gross debt against capital financing requirement” indicator would need to be undertaken progressively throughout the financial year. Where a material change to the proposed strategies during the year was required, a revised strategy would be presented to the Council before the change was implemented.
During discussion, it was noted that the current value of property investment held by the Council was £110.78m with the intention of a further £15m to be invested during 2020/21. In respect of the Minimum Revenue Provision (MRP) Statement, it was noted that the Council was planning to make a voluntary MRP overpayment of £0.45m to reduce the revenue charges in later years. The Committee was advised that the potential impact of Brexit was covered in the Risk Register
RESOLVED: That the
Cabinet be advised that this Committee supported:
(i)
the
Treasury Management Strategy and Annual Borrowing Strategy, as set out in
Appendix A to the Executive Head of Finance’s Report No. FIN2004;
(ii)
the
Annual Non-Treasury Investment Strategy, as set out in Appendix B; and
(iii)
the
Minimum Revenue Position Statement, as set out in Appendix C.