Agenda item

This report presents the draft Treasury Management Strategy for 2026/27.

Oliver Simms (Head of Finance for Capital and Treasury) and Amanda Healy (Deputy Director Investment & Infrastructure) introduced a report, presenting the draft Treasury Management Strategy (TMS) for 2026-27 for consideration by the Committee with it noted that the final version of the TMS including the views of the Committee was due to be included in the annual budget setting being presented to Cabinet and Full Council in February 2026.

Prior to considering the report, the Chair invited Minesh Patel (Corporate Director Finance & Resources) to provide a brief update (as additional context) on the overall financial position of the Council. Members were advised that when the Committee last met in September, one of the key issues identified had been the outcome of the Government’s Fair Funding Review on which the Government had recently published a policy statement setting out their response to the consultation.

Having reviewed the response provided, it was clear the government had taken note of lobbying, including that of the Council, around the need to more clearly take account of the impact on levels of deprivation and housing costs across specific areas.  Whilst the outcome to the consultation had therefore been positive, further details were now awaited in terms of the impact on the provisional local government settlement and understanding of any multi-year settlement position, which was expected the week commencing 15 December 2025.

Having thanked Minesh Patel for the update provided the Chair then invited Oliver Simms to introduce the Strategy, which members were advised set out the framework for Treasury Management activity in 2026-27 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 2026/27, alternative options and strategies along with an external and local context and Capital Financing Requirement (CFR), with the draft Strategy included in Appendix 1 of the report.

In considering the Strategy members noted:

·            Key emerging points as follows:

Ø   The growth in Council debt to fund the capital programme as detailed within Table 1 of the Strategy.

Ø   The outline of the Council’s capital programme based on the Period 6 forecast as detailed within Table 2 of the Strategy.

Ø   The outline of the Borrowing Strategy as set out in section 34 of the Strategy.

Ø   The outline of the Treasury Investment Strategy as set out in paragraph 50 of the Strategy including Investment limits and approved counterparties.

Ø   The Treasury management prudential indicators are set out in paragraph 79 of the Strategy.

At the request of the Chair, officers advised they would ensure the co-opted members of the Committee were provided with a copy of the final Treasury Management Strategy included within the Council's 2026-27 Budget Report.

Members were advised that the strategy remained unchanged in substance from the previous year, focusing on what the Council's Treasury Advisors termed a "little and often" strategy whereby the Council borrowed regularly from the PWLB, inter-authority market or other sources in relatively small amounts (typically around £5-10 million) with varying maturity profiles to ensure loans did not all mature at the same time.This approach sought to balance affordability and prudence against risk in relation to fluctuations in interest rates given the long-term nature of the capital programme.  Members were advised that officers maintained regular discussions with Treasury Advisors on optimal borrowing timing enabling them to act quickly to take advantage of market and interest rate conditions with it noted that the Strategy had been produced in compliance with the CIPFA Treasury Management Code of Practice & Prudential Code for Capital Finance.

The Chair thanked Oliver Simms for the outline provided and then invited the Committee to raise any questions, which are summarised below:

·            In highlighting the reference to reputational risk associated with investment undertaken with certain counterparties within section 76 of the Strategy, examples were sought on the nature and type of investment activity this might relate to, including the issue of divestment.  In response, officers explained that the focus on this matter had predominantly involved the portfolio of investment linked to other local authorities, as an example, linked to other authorities which had needed to issue s114 notices.  As a result, members were advised officers continued to monitor the financial health of any counterparties identified as being at potential risk due to these implications. Whilst local authorities were backed by central government providing security, and there had not necessarily been significant changes in credit quality of counterparties, the reputational impact of such transactions had caused significant reputational risk across the sector and officers had felt it necessary to highlight this within the Strategy.

·            Clarification was also sought in relation to the details within Table 11 of the Strategy regarding alternative treasury strategies and the way this reflected the Council’s borrowing appetite and profile.  It was also requested whether there were monetary examples showing the impact of options such as reducing borrowing on debt interest or savings through forecast modelling. Officers explained that the alternative strategies were included for information and reference purposes. Given the unpredictability demonstrated over recent years, the Treasury Management Strategy sought to provide alternative options for different situations that might arise, ensuring clarity on how the Council would react if required. The overall strategy set parameters for how the authority would undertake borrowing and investment transactions, with the Council's stance on execution in different situations outlined as a guide.

As there were no further questions the Chair thanked Oliver Simms and Amanda Healy for presenting the Strategy and responding to the Committee's comments. In recognising the importance of the Strategy, the Committee RESOLVED to note and endorse (on the basis of its consideration at the meeting) the draft Treasury Management Strategy 2026/27 as detailed in Appendix 1 of the report prior to its inclusion within the Annual Budget Report for Cabinet and Full Council in February 2026.