To agree the Annual Capital and Treasury Strategy for 2021/22 (including Prudential and Treasury Indicators) for submission to Council on 29 March 2022, subject to consultation with the Resources and Services Overview Scrutiny Committee.

RESOLVED that Cabinet agrees that -

a)     the Annual Capital and Treasury Strategy for 2022/23 (including Prudential and Treasury Indicators) be submitted to Full Council for its approval, subject to consultation with the Resources and Services Overview and Scrutiny Committee; and

b)     the Portfolio Holder for Corporate Finance and Governance be authorised to explore potential borrowing options associated with the redevelopment of the Honeycroft site for inclusion within the Annual Capital and Treasury Strategy that would be presented to Full Council on 29 March 2022.

Cabinet gave consideration to a report of the Corporate Finance & Governance Portfolio Holder (A.5) which sought its approval of the Annual Capital and Treasury Strategy for 2021/22 (including Prudential and Treasury Indicators) for submission to Council on 29 March 2022, subject to consultation with the Resources and Services Overview Scrutiny Committee.

Members were reminded that the Local Government Act 2003 and supporting regulations required the Council to set out its treasury strategy for borrowing, and to prepare an Annual Investment Strategy (as required by Investment Guidance subsequent to the Act) that set out the Council’s policies for managing its investments and for giving priority to the security and liquidity of those investments, “having regard” to the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Prudential Code and the CIPFA Treasury Management Code of Practice.

Cabinet recalled that the current editions of the above codes that the Council’s capital and treasury activities reflected had been issued in December 2017. These included the requirement to publish a Capital Strategy, which from 2019/20 had been combined with the Treasury Strategy into one document, and which was required to be updated / approved annually.

Cabinet was informed that CIPFA had published revisions to both of the above codes in December 2021, but as part of the associated announcements, they had confirmed that they would not be fully implemented until the 2023/24 financial year. Local Authorities therefore did not have to amend or revise the Capital and Treasury Strategy for 2022/23. However, CIPFA had stated that Local Authorities should make their best endeavours to adhere to the new provisions and not undertake any new investments which would not be consistent with those changes.

It was reported that, although the revised codes would be reflected in future years, there were no changes included within the proposed Capital and Treasury Strategy for 2022/23 that conflicted with the aforementioned request to ensure new investments followed the new provisions.

The proposed Annual Capital and Treasury Strategy for 2022/23 was before the Cabinet, as set out in Appendix A to item A.5 of the Report of the Corporate Finance & Governance Portfolio Holder.

Members were made aware that the Capital Strategy element of the combined document covered the various elements surrounding capital investment decisions and the key criteria that investment decisions should be considered against.

Members were further informed that the Treasury Strategy element of the combined document covered the various elements that satisfied the requirements of the various codes that governed the borrowing and investment activities of the Council and had been prepared in the light of advice received from the Council’s Treasury advisors and reflected the relevant codes and guidance.

The Prudential and Treasury indicators were included as an Annexe to the combined strategy and were therefore included within the aforementioned Appendix A.

Cabinet was advised that, under the Prudential Code, the Council had freedom over capital expenditure as long as it was prudent, affordable and sustainable. The Prudential Indicators either measured the expected activity or introduced limits upon the activity, and reflected the underlying capital appraisal systems and enabled the Council to demonstrate that it was complying with the requirements of the Prudential Code.

Members were reassured that the Council’s investments would be undertaken in accordance with its Treasury Management Practices. These had been expanded to include the use of non-specified investment in property to yield both rental income and capital gains from 2016/17. If credit ratings remained at their current extremely low levels it was likely that a significant proportion of the Council’s investments would continue to be in Government securities such as with other Local Authorities. Issues such as the business rates grant process associated with COVID 19, continued to demonstrate the need to maximise flexibility in the range of counterparties the Council used plus rates paid by the Debt Management Office had again been negative during Autumn 2021.

It was reported that, as was always the case, other ‘quality’ investment opportunities would always be explored during the year, in consultation with the Council’s external advisors, in order to maximise returns on investments within a continuing and overall risk-averse / aware approach.

Cabinet was informed that it had been initially proposed by Officers to seek the Portfolio Holder for Corporate Finance and Governance’s agreement to the Strategy for submitting to the Resources and Services Overview and Scrutiny Committee as part of the required consultation process. However, due to continuing work pressures, including those associated with on-going COVID 19 related activities and the extended Statement of Account process, a revised timescale was proposed. It was therefore now proposed to seek the Cabinet’s initial agreement to the Strategy via this report and then to ask the Resources and Overview and Scrutiny Committee to consider it at their meeting due to be held on 21 March 2022. Any comments that the Resources and Overview and Scrutiny Committee had would be submitted directly to the Full Council meeting on 29 March 2022 where Council would be asked to consider and approve the Strategy.

The Portfolio Holder felt that the above reflected a pragmatic approach to ensure that the Strategy could be approved ahead of the financial year it related to. However, it was also recognised that if the comments of the Resources and Overview and Scrutiny Committee required further exploration / investigation, then they could be considered and reported back to Full Council at a later date, where potential in-year revisions to the Strategy could be considered.

Having duly considered all of the information, proposals and advice contained in the Corporate Finance & Governance Portfolio Holder’s report and in order to enable this matter to be submitted to Full Council in accordance with the requirements of the Council’s Constitution:-

It was moved by Councillor Neil Stock OBE, seconded by Councillor Lynda McWilliams and:-

RESOLVED that Cabinet agrees that -

a)     the Annual Capital and Treasury Strategy for 2022/23 (including Prudential and Treasury Indicators) be submitted to Full Council for its approval, subject to consultation with the Resources and Services Overview and Scrutiny Committee; and

b)     the Portfolio Holder for Corporate Finance and Governance be authorised to explore potential borrowing options associated with the redevelopment of the Honeycroft site for inclusion within the Annual Capital and Treasury Strategy that would be presented to Full Council on 29 March 2022.