Agenda item

Report to Follow.

The Committee received the annual Treasury Management Strategy Statement report, a requirement of the CIPFA Code of Practice on Treasury Management. It covered the treasury activity for the financial year 2019/20.

The Council’s treasury activities were strictly regulated by statutory requirements and a professional code of practice (the CIPFA Code of Practice on Treasury Management), which included the requirement for determining a treasury strategy on the likely financing and investment activity for the forthcoming year.

The appendix attached to the report showed the Treasury Management Strategy Statement 2019/20 in accordance with the revised CIPFA Treasury Management Code and the revised Prudential Code.

The Principal Accountant, Mr Bell, noted that the Council still continued to reduce its balances to fund the Capital Programme enabling the Council to save money by not borrowing; this strategy would remain as is for the near future. He noted that table 2 had changed slightly. This gave a benchmark on how much headroom there was to fund capital projects or capital expenditure into the future.

Recently the Council has had advice from their treasury advisors giving an insight on what was going on in high level talks on Brexit and the reduction of balances required to retain our professional status. CIPFA was also progressing on the new paper to tackle the issues surrounding local authority borrowing in advance of the need to fund the purchase of investment properties.

Councillor Knapman asked about the borrowing risk indicated in the report and the plan to reduce our borrowing indicated in the table on page 4 of the agenda. He indicated the last item ‘major repairs reserve’ which clearly showed big changes, could this be explained. The Chief Finance Officer, Mr Maddock said that the figure quoted was internal borrowing, the general fund borrowing from the HRA. It showed that revenue was fairly constant over the period at about £14 to 15million. As time goes on they will be trying to bring the major repairs reserve balance down a little, traditionally it had high balances, supplemented with revenue contributions from the HRA. It was a balancing act using money from the repairs reserve and the Housing Revenue Account; overall spending on revenue and capital was fairly constant over the period.

Councillor Knapman commented that this was more of a strategic decision. He then asked about Luxembourg and why  was this a good place to invest. The Principal Accountant said that this was one of our money market funds with Standard Life Investments, which was bought out by Aberdeen Investments who are mainly based in Luxembourg, so that’s why it’s there. Councillor Knapman asked if we were confident that Luxembourg was a safe haven. He was told that it was, but officers were also looking to diversify the funds balances.

The Chairman said that the Committee was generally satisfied with the report but added that the Committee would like any future reports provided in good time and not as a supplementary.

Ms Nanayakkara asked what happened if the UK came out of the EU without a deal and Brexit had adverse implications on the credit worthiness of some of the banks that currently fitted within our policy. When would we be notified of that and when would we have the opportunity to revise any policy decision in regards to its treasury management. She was told that the Council’s Treasury Advisors were normally very quick to react and would advise us as soon as possible so that we could, hopefully, pull out in good time.

The Chief Finance Officer added that last week we had our treasury advisors holding a training session for members where they talked about Brexit. Their initial view was that as long as we left with a deal it would not adversely affect us dramatically.

Councillor Knapman said that the investment limits we have shows that we were a prudent Council and that we were on the right lines.

RESOLVED:

That the Treasury Management Strategy Statement for 2019/20, be endorsed.