Agenda item

[Alison Shannon, Chief Accountant, to present report]

The Chair invited Alison Shannon, Chief Accountant, to present the report.

The Chief Accountant advised the panel the treasury management activity report was presented to Cabinet in November 2022 and then to Council in December.

The report detailing the Council’s treasury management activity is being presented to the panel for information and comment. The Chief Accountant advised the panel that comments will be fed into the final draft that will be presented to Cabinet.

The Chief Accountant explained the background to the treasury management strategy and advised that the Council’s activities are underpinned by the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Treasury Management Code of Practice (Code).

The Code requires a nominated body be responsible for ensuring effective scrutiny of the Council’s treasury management strategy and policies, the Resources and Equality Scrutiny Panel fulfils this role. The treasury management strategy is reviewed annually.

The Chief Accountant gave a definition of the term ‘Treasury Management’ and the six elements covered by the strategy report.

The Chief Accountant advised the panel that the Council can only borrow to fund its capital programme and that this is supported by other funding such as grants and capital receipts, from the sale of assets. The Council is under a statutory duty to keep under review how much can it afford to borrow to ensure that it is affordable and also fund the capital programme.  The Chief Accountant advised the panel that the Council’s strategy is to use cash balances (described as internal borrowing) first to fund capital expenditure to avoid the need for external borrowing.

The Chief Accountant commented on the changes to the Treasury Management Code of Practice and Prudential Code that CIPFA introduced in December 2021 which were aimed at strengthening the requirements for skills and training and applying restrictions on borrowing for investments not specifically for treasury management purposes. The required changes to the Code that apply to the Council will be incorporated into the strategy from April 2023.

TheChief Accountant commented that the changes to the Code have not affected the way the Council currently manages the capital programme or treasury management activities.

The Chief Accountant gave further details about the Council’s policy towards borrowing and investments.

The Chief Accountant gave a summary of the Council’s performance against five prudential indicators detailed in the presentation.

The panel were invited to comment on the report and presentation.

The panel queried the average interest rate payable for borrowing and the amount forecast to be spent on interest payments in 2022- 2023.

The Chief Accountant advised the panel that all Council loans are set at a fixed rate. The borrowing rates charged by Public Works Loans Board (PWLB) change on a regular basis and is uses as a basis to forecast future interest rate changes. The Chief Accountant advised the panel that total interest cost payments 2022 – 2023 is £27 million - £11.5m (Housing Revenue Account) and £15.6m (General Fund).

The panel discussed the rationale for borrowing and how it supports the delivery of the Council’s strategic priorities. The Director of Finance advised the panel that Council borrowing is used for investment in assets such as schools to maintain them at a good standard and to invest in new digital technological developments referred to in the previous agenda item discussion. The Director of Finance added that some investments in property also generate income which is used to meet borrowing costs.

The panel thanked the presenter for the report.

Resolved:

The panel agreed to note the treasury management activity for the second quarter of 2022-2023 as detailed in the report and presentation.