Agenda item

Treasury Management Strategy


The Financial Services Manager presented the report of the Executive Manager – Finance and Corporate Services for the Council’s Treasury Management Strategy, which provided the group with details of the Capital and Investment Strategy for 2020/21 to 2024/25 focusing on both traditional treasury activity and the Council’s commercial property investments.


The Financial Services Manager explained that the CIPFA Treasury management Code defines treasury management activities as:


‘The management of the local authority’s investments and cash flows, its banking, money market and capital market transactions; the effective control of the risks associated with those activities; and the pursuit of optimum performance consistent with those risks’.


The code also covers non-cash investments such as investments in property and subsidiaries or loans that support service outcomes.


In addition, and in the appendices supporting the report, the Financial Service Manager highlighted the Council’s Treasury Management Strategy which covers:


·         The current economic climate and prospects for interest rates;

·         The Council’s debt and investment projections;

·         The limits and prudence of future debt levels;

·         The affordability impact of the capital programme;

·         The Council’s borrowing and investments linked to the environment, human rights and social agenda;

·         Specific limits on treasury activities;

·         Any local treasury issues.


In respect of commercial investments, The Financial Services Manager explained that CIPFA’s definition of treasury management activities covers all financial assets as well as other non-financial assets which the Council holds primarily for financial returns. The Financial Services Manager advised that all investments require an investment management and risk management framework which is defined in the Council’s Asset Investment Strategy (AIS) within the Capital Programme.

The Capital Prudential Indicators and Treasury Management Strategy provide the position statement and details of the future position of the Council’s Capital, Commercial Investment and Treasury plans. A summary of the Council’s current Commercial Investments was provided as appendices to support the report.

Councillor Stockwood questioned the Council’s Minimum Revenue Provision Policy and why the Council has chosen Option 3 within the CLG guidance regulations, ‘Asset Life Method’, referring to the capital receipts assumptions and Section 106 investments. The Executive Manager – Finance and Corporate Services explained that this option was agreed by Governance Scrutiny and is generally the option most local authorities use, adding that targets are difficult to achieve on monetary earned investments and priority is given to security and liquidity.

Councillor Stockwood also questioned the changes in the Net Book Value of the Investment Property Assets (Appendix ii) and the change between years. The executive Manager – finance and Corporate Services stated he would provide an explanation once he had analysed the figures.

Councillor Virdi asked a specific question in respect of Capital Financing Requirement (CFR), and why these balances were increasing significantly. The Executive Manger – Finance and Corporate Services explained that as the Capital Programme increases so will the Council’s borrowing, and provided examples in Bingham Leisure Centre and the Crematorium.

It was RESOLVED that the Governance Scrutiny Group endorsed the following for approval by Council on 6 March 2020.

·         The Capital Strategy and Prudential Indicators and Limits for 2020/21 to 2024/25.


·         The Minimum Revenue Provision (MRP) Statement.


·         The Treasury Management Strategy 2020/21 to 2024/25 and the Treasury Indicators.


·         The Commercial Investments  Indicators and Limits for 220/21 to 2024/25.

Supporting documents: