To agree the Annual Capital and Treasury Strategy for 2025/26 (including Prudential and Treasury Indicators) for submission to Council on 20 May 2025.

RESOLVED that the Annual Capital and Treasury Strategy for 2025/26 (including Prudential and Treasury Indicators) be recommended to Full Council for its approval, acknowledging that consultation with the Resources and Services Overview and Scrutiny Committee will be undertaken during 2025/26, subject to inclusion within that Committee’s Work Programme.

Cabinet considered a report of the Corporate Finance and Governance Portfolio Holder (A.3) which sought Cabinet’s agreement of the Annual Capital and Treasury Strategy for 2025/26 (including Prudential and Treasury Indicators) for submission to Council on 20 May 2025.

Cabinet was 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 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 2025/26 was set out in Appendix Ato the Portfolio Holder’s report (A.3) and it continued to reflect the various changes set out in the latest Codes mentioned above.

Members were informed 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.

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 latest codes and guidance.

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

Members were advised that, under the Prudential Code, the Council had freedom over capital expenditure if 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.

Cabinet was reassured that the Council’s investments would be undertaken in accordance with its Treasury Management Practices (TMPs). Those included the use of non-specified investment in property to yield both rental income and capital gains. The Codes referred to above required clear separation of commercial investments from treasury investments. As the Council only had one such investment, which was clearly identified within the Strategy and the TMPs, in continuing the approach adopted last year, it was not proposed to produce a separate suite of Investment Management Practices for that purpose.

As is 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.

Cabinet was reminded that in terms of the reporting process associated with the attached strategy, this would ordinarily be based on obtaining the agreement of the Portfolio Holder for Corporate Finance and Governance for consultation with the Resources and Services Overview and Scrutiny Committee, following which it would be submitted to Cabinet and then onto Full Council. However, due to the timetable of meetings and the continuing work pressures, including those associated with clearing the backlog of outstanding Statement of Accounts that had been due to external audit delays, a revised timescale was proposed.

It was therefore now proposed to seek Cabinet’s agreement to the strategy via this report along with a recommendation for it to be presented to Full Council in May 2025 for approval and adoption. In terms of consulting with the Resources and Overview and Scrutiny Committee, it was proposed to undertake this as early as possible in 2025/26, subject to this being included within the Committee’s Work Programme.

It was felt that the above reflected a pragmatic approach to ensure that the strategy could be approved ahead of the financial year it related to or as soon as possible thereafter. However, it also recognised that if the Resources and Overview and Scrutiny Committee had any comments, which could also require further exploration / investigation, then they could be considered and reported to Full Council at a later date, where potential in-year revisions to the Strategy could be considered.

Cabinet was informed that although at a limited level at the current time, the strategy now acknowledged the potential impact from local government reorganisation, which included the requirement to take such matters into consideration as necessary, which also complemented the wider decision making proposals agreed by Full Council at its meeting on 25 March 2025 and the highlight priorities agreed by Cabinet on 17 March 2025.

To support the process of ensuring that a Capital and Treasury Strategy for 2025/26 was approved by Full Council before 1 April 2025 or as soon as possible thereafter:-

It was moved by Councillor M E Stephenson, seconded by Councillor Barryand:-

RESOLVED that the Annual Capital and Treasury Strategy for 2025/26 (including Prudential and Treasury Indicators) be recommended to Full Council for its approval, acknowledging that consultation with the Resources and Services Overview and Scrutiny Committee will be undertaken during 2025/26, subject to inclusion within that Committee’s Work Programme.