The Leader of the Council presented report of the Head of Corporate Finance which set out that the strategy covered two main areas: treasury management issues and capital related matters. It was noted that the Council was required under statute to produce a Treasury Management Strategy.
It was confirmed that the treasury management element, as referred to, ensures that the Council’s cash flow was adequately planned, with cash being available when it was needed to operate a balanced Budget. Whilst surplus monies were invested in low risk counterparties or instruments commensurate with the Council’s low risk appetite, providing adequate liquidity initially before considering investment return.
Whilst the capital element provides a guide to the borrowing need of the Council, essentially the longer term cash flow planning ensures that the Council can meet its capital spending obligations. That management of longer term cash may involve arranging long or short term loans, or using longer term cash flow surpluses. On occasion any debt previously drawn may be restructured to meet Council risk or cost objectives.
The Cabinet was informed that the Council’s investment priorities were security first, portfolio liquidity second and then yield (return). The Council’s ethical investment policy was also considered when investments were sought.
Councillor Rana presented the Overview and Scrutiny Commission’s comments on the report to the Cabinet following consideration of the matter at its meeting on 3 February 2020.
Councillor B Smith spoke as part of the discussion on the report, noting that the reason that there was no capital expenditure for her portfolio was due to the nature of the areas covered by her remit, which were more revenue based functions.
That Full Council be recommended to approve:
a) the Treasury Prudential Indicators and the Minimum Revenue Provision (MRP) Statement contained within Section 5 of report ;
b) the Treasury Management Strategy contained within Section 6 of report ;
c) the Investment Strategy contained within Section 7, and the detailed criteria included in Appendix 3 of report .
Reasons for the Recommendations
The Council’s financial regulations, in accordance with the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice for Treasury Management, requires a Treasury Management Strategy to be approved for the forthcoming financial year. The Local Government Act 2003 and supporting regulations requires Council to have regard to the Prudential Code and to set prudential indicators to ensure that the Council’s capital investment plans are affordable, prudent and sustainable. Report complies with these requirements.