Agenda item

The Committee received a report of the Corporate Director of Resources that provided information on the Treasury Management outturn position for 2023/24 to aid the responsibility of Audit to ensure the independent and effective assurance over the adequacy of the council’s Treasury Management strategy, policies and practices.   Following consideration of the 2023/24 Treasury Management Outturn an assurance statement provided by the Committee (highlighting any areas of concerns, where applicable) would be included within the report to full Council on 17 July 2024 (for copy see file of Minutes).

Councillor B Kellett asked for further explanation of paragraph 19 of the report which highlighted the Council’s debt that had increased but it was unclear on the net investment and whether this was a good rate of return.

R Davisworth acknowledged that Councillor B Kellett had raised a valid question.  He explained that the Council had taken debt out of £412 million over a number of previous years, which currently sat on the council’s balance sheet, and tended to be locked in at fixed rates, for which the terms and conditions made refinancing of this debt prohibitively expensive.     Investment income was based on short-term cash balances that had been deposited to manage the Council’s liquidity needs.    The Council was currently deferring the need to physically borrow from public funds or other lenders.  While interest rates were high the council could run down cash balances then borrow once the borrowing rates dropped and the lower rates of interest could then be locked in for current and future planned borrowing needs.  

Mr F Barnish referred to paragraph 43 of the report and asked if this was written correctly as the report was deemed to be concluded before the Audit meeting had been held.

R Davisworth advised that the role of the Audit Committee was to proactively scrutinize the Treasury Management arrangements.  The report was to be submitted to full council on 4 July 2024 which had received assurances that Audit had considered the treasury management performance hence the way it had been written.

Mr I Rudd noted that the Treasury Management indicators compiled were positive in every case.  He referred to table 39a that gave the upper limited on fixed interest rate exposure and asked who set the limits.

R Davisworth replied that the levels were set by the Council’s finance department who worked closely with the Asset Management and Treasury Management team.  The team drew upon advice from Link Asset Management, who acted as the Council’s Treasury Management advisers and provided support to the Council to follow best practice.    The Council used Prudential Indicators as part of the annual Treasury and Capital Strategy, to ensure borrowing arrangements were prudent and affordable. 

Mr I Rudd queried if approval was made by full council.

R Davisworth confirmed that approval was made by full council.  The Medium-Term Financial Plan would be refreshed and the Audit would briefed in January/February and asked to scrutinise and challenge the targets and strategy that was reflected in the full report.

Mr I Rudd referred to paragraph 41d of the report that related to gross debt and the capital financing requirement.  He queried if the estimated final figures included the next two financial years or did it look back at 2023/24 plus the year before for 2022/22 plus two years after.

R Davisworth acknowledged that the outturn was positive for the last financial year as the Treasury Management Strategy provided the medium-term outlook that stated where the council was, what the finances looked like at the end of the financial year and what levels of influence there had been in that year, what finance was required for the capital programme and the level of debt that was held.  This would determine what borrowing the council could take out over the next few years and when to maintain cash liquidity that was set out in the projections.  The report reflected what the position was at the end of March that may be similar for future years.

Mr I Rudd asked at looking two years forward what would the debt spend likely to be.

R Davisworth stated it was a dynamic process and once the MTFP was refreshed and the capital programme to top it up as required for repair/replacement schemes known it would create the need for additional borrowing to fund cyclical capital spend and new capital initiatives.  The position would be commented on by the end of year to see what would be approved for 2025. This would be how to create a more medium-term picture report that would not compromise on the decision-making process for the future capital programme. 

Resolved:

That the contents of 2023/24 Treasury Management Outturn Report to provide assurance on the treasury management activity during 2023/24 be considered.