(A Small) To consider the attached Treasury Management Strategy (including Investment Strategy) 2022/23 (attached).
The Strategic Director Corporate and Section 151 Officer, A Small, set the context and the relationship between the Treasury Management Strategy, Capital Strategy and the Council’s budget. The Interim Chief Financial Officer, C Hartgrove introduced The Draft Treasury Management Strategy and Investment Strategy 2022/23 and advised the Committee that the overriding position for the year ahead was a further rise in borrowing activity as the Council continued to roll out its capital investment plans and very limited investment activity. As at 31 December 2021 the Council held £265.606m borrowing offset by £24.978m in Treasury Investments. The Council’s Capital Financing Requirement (CFR), which reflected the Councils underlying need to borrow, was rising to meet the needs of the Capital Programme, the estimated actual borrowing would remain below the CFR. The total PWLB borrowing was £234.606m and short-term borrowing form other local authorities was £31.0m, a full breakdown of loans was provided in the report. Cash available and potential returns for investments were both low and were expected to remain low for the duration of the strategy. There was a minimum investment balance of £12m as the core strategy to maintain liquidity.
At the 31 December 2022, £24.978m was held in investments this included an outstanding balance of £4.650m from Qualis, a breakdown of investments was provided in the report. A cautious approach was being taken in relation to investment counterparties and limits, as advised by Arlingclose. Treasury Indicators were detailed in the report and these would be reported to this Committee as per the work programme. The Investment Strategy provided detail on wider investments including commercial investments.
The Vice Chair, Mr Jarvis raised concerns about the Audit and Governance Committee recommending the Treasury Management Strategy and Capital Strategy 2022/23 to 2026/27 for approval to Cabinet due to the complexity of the documents, he suggested that there should be wider deliberation and that this was not part of the governance role. The Section 151 Officer, A Small, detailed the report aimed to provide a complete oversight in relation the strategy for investments and capital expenditure for comment and reaffirmed was not approval for individual spending decisions. He advised that the Treasury Management Strategy and Capital Strategy were governance documents that brought together and set out the risk of the accumulated decisions of Cabinet and Council into one place and as such it was appropriate that this was put before the Audit and Governance Committee. The reports were prepared by professional officers and whilst the Section 151 Officer as the strategic lead on the Council’s finance was content with the documents, the Committee should decide if they were reassured by the advice of officers. Cllr Philip advised that full Council approved the Strategies and this Committee made a recommendation to Council, and the Chair could ask the Constitution Working Group to confirm that the Treasury Management and Capital Strategy should come to this Committee.
Tony Jarivs reaffirmed his position and advised his reservations remained due to the complexity of these strategies, as a consequence he would abstain from the vote on the recommendation to approve the Treasury Management and Capital Strategies to Cabinet.
The Chair stated that he was assured that the content of the report was suitable to be referred to full Council for decision, and other members of the Committee supported that view.
The committee was further advised that :
Short term borrowing from other local authorities was repaid at a fixed date and the figures in this report were accurate as at 31 December 2021.
Maturity dates for all PWLB Loans were detailed in the report. The only variable rate loan of £31.8m would mature on 28 March 2022. This would be refinanced through short term borrowing as interest were rates extremely competitive. This would be regularly reassessed in line with the overall strategy, risk and professional advice from Arlingclose the Councils’ treasury management advisors.
There had been an increase in increase in borrowing , there was not a quantum associated with the amount of debt that was critical, but each individual spending decision took account of the affordability, security and risk associated within that to guard against default.
1. Approved that a briefing session be offered to members on the Treasury Management Strategy, including Investment Strategy and Capital Strategy,
2. Considered and recommended the draft Treasury Management Strategy 2022/23 for approval to Council,
3. Considered and recommended the draft Investment Strategy 2022/23 for approval to Council, and
4. Agreed that delegated authority be given to the Section 151 Officer, in consultation with the Chairman of the Committee, to make any necessary late adjustments to the financial information, as necessitated by finalisation of the Budget for 2022/23, prior to presentation of the final draft Strategy to Council on 24 February 2022.