Agenda item

This report presents the draft Treasury Management Strategy (TMS) for 2023/24 for consideration by the Audit & Standards Advisory Committee. Members are asked to note that he final version of the TMS incorporating the views of this Committee will be included in the annual budget setting report to be presented to Cabinet on 6 February 2023.

Amanda Healy, Head of Finance, introduced a report updating the Committee on the draft Treasury Management Strategy (TMS) for 2023/24.  Members were asked to note that the final version of the TMS incorporating the views of the Committee would be included in the annual budget setting report to be presented to Cabinet on 6 February 2023.  In considering the report the Committee noted:

·             The strategy was currently in draft format and would be finalised for inclusion as part of the annual budget setting report due to be presented to Cabinet and Council in February 2023.

·             The Strategy set out the framework for the Council’s Treasury Management activity in 2023/24 and included an outline of the Council’s borrowing strategy and sources of debt finance (including the Liability Benchmark); investment strategy (including types and prescribed limits); Treasury Management Indicators for 2023/24; alternative options & strategies along with an external and local context.

·             The Strategy had been produced in compliance with the CIPFA Treasury Management Code of Practice & Prudential Code for Capital Finance.

The Committee was then invited to raise questions on the report, which are summarised below:

·             Following a Committee query regarding how the Capital Financing Requirement (CFR) was determined, officers confirmed that the CFR was based on an internal calculation designed to measure the underlying need to borrow for capital purposes based on usable reserves and working capital as the main resources available for investment.

·             The Committee sought clarification as to how the authorised borrowing limit had been agreed.  In response the Committee were advised that a number of factors were considered when calculating the authorised borrowing limit, these included looking at the CFR forecast over the next 5 years, the Council’s budget and the funding sources available.

·             The Committee were also keen to consider how levels of borrowing were kept under review, particularly in relation to their impact on the revenue budget and ongoing capital programme requirements given the current volatility in the financial markets and challenging economic context. Officers advised that the Council’s Revenue and Capital budget were subject to regularly quarterly monitoring updates considered by Cabinet and this would also form part of the Council’s main budget setting process in February 2023.  Parallel to this, monitoring was also undertaken through the Treasury Management Mid-Year review process which measured how the Council was delivering against its borrowing requirements.

·             Given the wider economic context and financial pressures impacting on delivery of the TMS further details were sought on any potential slippage as a result of pressures on the Capital Programme.  The Committee noted that in terms of the capital programme annual slippage of up to 10% would be in line with general expectations, however in light of pressures relating to rising inflation combined with the increased cost of borrowing and a shortage of labour and materials adversely impacting on the financial viability of schemes it was anticipated there may be increased slippage in capital programme completion over the next reporting period. Where there were significant risks to capital projects, the Cabinet were informed with regular reporting.

·             Following a Committee question regarding if debt rescheduling was an option that could be taken advantage of in the current financial climate, officers confirmed that debt restructuring opportunities were not currently being considered as an option as the current situation provided better opportunities for additional borrowing, if necessary. The Committee were assured that loans, particularly Lender Option Borrow Option loans (LOBOS) were continually monitored to ensure that any opportunities to gain a financial betterment were actioned.

Having fully considered the report and with no further questions, the Chair thanked officers for the information and update provided and it was RESOLVED to note and endorse the Treasury Management Strategy 2023-24, as detailed within Appendix 1 of the report.