Agenda item

To agree the Annual Capital and Treasury Strategy for 2023/24 (including Prudential and Treasury Indicators) for submission to Council on 2 March 2023.

RESOLVED that Cabinet –

a)     agrees the Annual Capital and Treasury Strategy for 2023/24 (including Prudential And Treasury Indicators) and that it be submitted to Council for approval; and

b)     undertakes the necessary consultation with the Resources and Services Overview and Scrutiny Committee as early as practicable in 2023/24.

Cabinet considered a report of the Corporate Finance & Governance Portfolio Holder (A.9), which sought its approval of the Annual Capital and Treasury Strategy for 2023/24 (including Prudential And Treasury Indicators) for submission to Council on 2 March 2023.

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. Revised editions of both documents had been issued in December 2021, which would come into force in 2023/24.

It was reported that the Capital Strategy continued to be combined with the Treasury Strategy into one document, which was required to be updated / approved annually. The proposed Annual Capital and Treasury Strategy for 2023/24 was set out in Appendix A to the Portfolio Holder’s report and it reflected the various changes set out in the latest Codes mentioned above.

Cabinet was 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 also 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 it reflected the latest codes and guidance.

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

Members were 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. The Council’s investments would be undertaken in accordance with its Treasury Management Practices. Those had been expanded to include use of non-specified investment in property to yield both rental income and capital gains from 2016/17. The new Codes required clear separation of commercial investments from treasury investments. As the Council only had one such investment, which would be clearly identified within the Strategy and the TMPs, a separate suite of Investment Management Practices was not proposed to be produced.

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

In line with the delegation set out within the Council’s Constitution, the Portfolio Holder for Corporate Finance and Governance would agree the Strategy for submitting to the Resources and Services Overview and Scrutiny Committee as part of the required consultation process. However to accommodate the current programme of meetings and continuing work pressures, which included those associated with the external audit of the Council’s Statement of Accounts for 2020/21, a revised reporting timescale was proposed.

It was therefore now proposed to seek Cabinet’s agreement to the Strategy via this report for recommending to Full Council on 2 March 2023. The associated consultation exercise with the Resources and Services Overview and Scrutiny Committee would then be undertaken as early as practicable in 2023/24.

The above reflected a pragmatic approach to ensure that the Strategy could be approved ahead of the financial year it related to, which was a key requirement within the associated Code of Practice. However, it was also recognised that if the Resources and Services Overview and Scrutiny Committee had any comments / recommendations, they could be reported back to Cabinet / Full Council at a later date in the year when potential in-year revisions to the Strategy could be considered.

In order to ensure that a Capital and Treasury Strategy for 2023/24 was approved by 1 April 2023:-

It was moved by Councillor G V Guglielmi, seconded by Councillor Porter and:-

RESOLVED that Cabinet –

a)     agrees the Annual Capital and Treasury Strategy for 2023/24 (including Prudential And Treasury Indicators) and that it be submitted to Council for approval; and

b)     undertakes the necessary consultation with the Resources and Services Overview and Scrutiny Committee as early as practicable in 2023/24.