To enable the Committee to review the Annual Treasury Strategy for 2019/20, including the Prudential and Treasury Indicators. (REPORT WILL FOLLOW ON IN DUE COURSE).
The Committee’s comments were sought on the Annual Treasury Strategy for 2019/20 (including the Prudential and Treasury indicators).
It was reported that on 5 February 2019, the Finance and Corporate Resources Portfolio Holder had agreed the Annual Treasury Strategy for 2019/20 (including the Prudential and Treasury Indicators) for consultation with the Resources and Services Overview and Scrutiny Committee.
Members were aware 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 those documents had been issued in December 2017.
The Committee was informed that the revised guidance issued in 2017 also required the Council to update its Capital Strategy annually. Rather than produce two separate documents and as they were closely linked the Capital Strategy had been combined with the Treasury Strategy in one document.
It was reported 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.
Similarly, 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.
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 Committee was reminded that 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. If credit ratings remained at their current low levels it was likely that a significant proportion of the Council’s investments would continue to be in Government securities such as Treasury Bills or with other Local Authorities. However, other ‘quality’ investment opportunities would be explored in consultation with the Council’s external advisors in order to maximise returns on investments within a continuing and overall risk-averse approach.
A copy of the report submitted to the Portfolio Holder together with the proposed Annual Capital and Treasury Strategy for 2019/20 (including the Prudential and Treasury Indicators) was attached as an appendix to item A.2 of the Report of the Deputy Chief Executive.
The Head of Finance, Revenues & Benefits Services informed the Committee that as the 2018/19 Annual Treasury Strategy had already reflected many of the new requirements only minor updates had been necessary for the 2019/20 Strategy, namely the inclusion of the Capital Strategy within the combined document. No other significant changes were proposed in the Annual Capital and Treasury Strategy for 2019/20 with limited amendments in areas such as the general economic outlook and
interest rate forecasts, with the Council maintaining a very low risk appetite approach to its treasury activities.
RESOLVED that the Committee both notes the contents of the Annual Capital and Treasury Strategy for 2019/20 and agrees that it does need to submit any comments for the Cabinet’s consideration.