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Agenda item
Draft Treasury Management, Annual Investment Strategy and Capital Strategy 2023/24
(Simon Jones, Deputy Chief Finance Officer)
(Council Decision)
Decision:
Cabinet recommends full Council that:
A. The Council approve the Treasury Management Strategy, Minimum Revenue
Provision (MRP) Policy, Annual investment Strategy and the Capital Strategy.
B. The strategies listed are updated as necessary during 2023/24 in the light of
changing and emerging risks and the Council’s evolving future expenditure plans
Reasons:
1. The Council seeks to minimise the costs of borrowing and maximise investment income whilst ensuring the security of its investments. The Council continues to make substantial investments in property, housing and energy generation initiatives, and this will continue to involve the Council in taking on additional borrowing.
2. The sums involved are significant and the assumptions made play an important part in determining the annual budget. The CIPFA Treasury Management Code of Practice, previously adopted by the Council, has been revised to take account of the more commercialised approach being adopted by councils and the enhanced levels of transparency required. The Code has represented best practice and helps ensure
compliance with statutory requirements.
3. The Council has the ability to diversify its investments and must consider carefully the level of risk against reward against a background of historically very low interest rates. Investments can help to close the gap in the budget in the years ahead and thus help to preserve services, assist in the regeneration of the town, provide additional housing and enhance the long-term sustainability of the town. However, over reliance on such income streams would involve taking unnecessary risks with the future of the Council and its ability to deliver statutory services.
Minutes:
After further investigation it has been confirmed that the Lower Bexhill Road scheme has been discontinued and there will be no expenditure in 2023/24. The budget papers will be revised to reflect this. As this scheme was going to be fully funded via grant there will be no impact on the budgeted MRP or interest figures.
The Chief Finance officer explained how this report has already been to Audit committee as part of the Budget setting. It was explained how a asset management Strategy is in the process of being created.
The Deputy Chief Finance Officer introduced the report. There is a requirement to agree these by the start of the year. The Treasury Management strategy covers Capital issues and Treasury Management issues. The Capital Strategy brings together all capital spending and identify what it is and how it is funded. It also includes future items such as the Towns Fund expenditure.
There was a Treasury Management training session in January and more training is planned throughout the year. The key principles that we guided by are security, liquidity and yield in that order. The Council Treasury Management activities are guided by the Potential Code and the Treasury Management code with CIPFA publishing in December 2001 revised versions. The Council is required to adopt a new Debt Liability Benchmark Treasury indicator. This is a tool to help the Council manage its treasury activities.
Regarding capital expenditure the council has 31.3m in 23/24 and 15.3m in 24/25. This has meant the Authorise Limit has been revised by £25m to £140m. The Operational Boundary which is the limit which external debt is not supposed to exceed, will also be increased by £25m to £135m
MRP has been reviewed and changes to the policy are likely to result in a 876k reduction. The MRP policy in the Treasury management strategy has been updated to reflect this new suggested approach.
There were no questions for the Officers.
The Councillors debated and discussed the need to review the combination of reserves after the Budget is agreed.
Proposed by Councillor Willis and seconded by Councillor Batsford
RESOLVED (unanimously):
Cabinet recommends full Council that:
A. The Council approve the Treasury Management Strategy, Minimum Revenue
Provision (MRP) Policy, Annual investment Strategy and the Capital Strategy.
B. The strategies listed are updated as necessary during 2023/24 in the light of
changing and emerging risks and the Council’s evolving future expenditure plans.
Reasons:
1. The Council seeks to minimise the costs of borrowing and maximise investment income whilst ensuring the security of its investments. The Council continues to make substantial investments in property, housing and energy generation initiatives, and this will continue to involve the Council in taking on additional borrowing.
2. The sums involved are significant and the assumptions made play an important part in determining the annual budget. The CIPFA Treasury Management Code of Practice, previously adopted by the Council, has been revised to take account of the more commercialised approach being adopted by councils and the enhanced levels of transparency required. The Code has represented best practice and helps ensure
compliance with statutory requirements.
3. The Council has the ability to diversify its investments and must consider carefully the level of risk against reward against a background of historically very low interest rates. Investments can help to close the gap in the budget in the years ahead and thus help to preserve services, assist in the regeneration of the town, provide additional housing and enhance the long-term sustainability of the town. However, over reliance on such income streams would involve taking unnecessary risks with the future of the Council and its ability to deliver statutory services.
Supporting documents:
- Treasury Management Covering Report - Cabinet 30th January 2023, item 502. PDF 160 KB
- Treasury Management Strategy 2023-24 - Draft v2 (Cabinet), item 502. PDF 583 KB
- Capital Strategy 2023-24 v3, item 502. PDF 460 KB
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