Agenda item

Treasury and Capital Strategy 2021/22 to 2025/26

To consider the Treasury Management Strategy for 2021/22 – 2025/26 and the Capital Strategy for 2021/22 – 2033/34.

Minutes:

Summary

The Finance and Resources Portfolio Holder presented a report setting out the Council’s Treasury Management Strategy for 2021/22 to 2025/26 and the Capital Strategy for 2021/22 to 2033/34 which were expected to be approved by Council on 23 February 2021. The report had been updated to reflect the 2021/22 Budget and Capital Programme.

The strategies fulfilled five key legislative requirements relating to the setting of prudential indicators, the Council’s Minimum Revenue Provision (MRP) Policy, the Treasury Management Strategy Statement the Investment Strategy and the Capital Strategy, details of which were provided.

The Portfolio Holder made reference to the significant changes to the economic situation which included the impact of the Covid-19 pandemic on the UK economy and GDP levels, the current Bank of England interest rate of 0.1%, significant increases in public borrowing and the uncertainty and risk surrounding Brexit. He went on to explain two temporary modifications to the Council’s investment strategy relating to counterparty limits, the first allowing the very large sums received from Government for the Covid-19 grants to be lodged with the Council’s principle banker. The second the counter party limit for Money Market funds was increased from £5m to £10m and proposed that both of the changes are made permanent.

The Finance and Resources Portfolio Holder added that it was proposed that a new local prudential indicator for internal borrowing be introduced. He noted that the capital strategy remained relatively unchanged from last year with the long-term view of possible capital expenditure being taken which had helped the Council improve the quality of decision making and prioritisation of certain expenditures.

The Legal, Governance and Democracy Lead Specialist provided an update on the comments of the Overview and Scrutiny Committee where Members raised questions on the increase in Capital Financing Requirement (CFR) and whether this would be reduced after 4/5 years. The Finance and Resources Portfolio Holder agreed to provide a written response to the Overview and Scrutiny Committee’s question regarding CFR.

The Leader asked the meeting if the motion was agreed. There was no dissent.

Decision

RESOLVED – That:-

(1)  the Treasury Management Strategy, Capital Strategies and the authorised and operational borrowing limits within the report be noted and recommended to Council for approval;

 

(2)  the permanent increase to £10 million of the limit for investing with individual Money Market Funds and the disregarding of Government Covid funds when applying the counterparty limit to the Council’s Bankers NatWest be noted and recommended to Council for approval; and

 

(3)  the introduction of a new local prudential indicator for internal borrowing be noted and recommended to Council for approval.

 

Reasons for Decision

These arrangements enable the priorities of the Council Plan to be achieved.  The strategies ensure that the Council has robust arrangements for investing and that it only borrows where it is appropriate and affordable.

Alternation Options Considered and Rejected

No alternative options are proposed; the Treasury Management Strategy, in particular, is driven largely by legislation and external guidance and reflects the 2021/22 budget

Supporting documents: