Agenda item

Report of the Director – Finance and Corporate Services

The Service Manager – Finance presented the Capital and Investment Strategy Outturn report, which summarised the capital and investment activities during the financial year 2022/23 against the Council’s Capital and Investment Strategy 2022/23-2026/27.

With regard to Treasury Management, the Service Manager – Finance referred to the supporting information within the report and highlighted the prudential and treasury indicators and the impact of capital expenditure during the year. The Group were advised that the re-profiling of expenditure on the Bingham Hub and crematorium reduced the need to borrow in 2021/22, but instead impacted on 2022/23 (£7m), however it was noted that this expenditure can be financed from the Council’s capital resources and internal borrowing, thus mitigating the need to externally borrow.  

The Service Manager – Finance referred to the ratio of financing costs to net revenue streams which is an indicator for affordability and compares net financing costs to net revenue income and highlighted income from investments were exceeding expectations due to rising interest rates throughout the year.

A new indicator that looks at net income from commercial and service investments, for example the crematorium was lower than anticipated due to the delay in the opening of the crematorium.

In relation to the Treasury position on 31 March 2023 the Council’s debt and investment position is managed by the Treasury Team in order to ensure adequate liquidity for revenue and capital activities, security for investments and to manage risks within all Treasury Management activities. The Group were provided with a list of financial institutions and the investments held in each.

The Service Manager – Finance explained that the economic forecast looks favourable in the short term, the Bank of England base rate stands at 5%. The Council continues with prudent investment of treasury balances to achieve both security and liquidity of its investments, whilst achieving the optimum return on its investments.

With regards to asset investments the Group were reminded that due to new Government and CIPFA guidance on Treasury Management the purchase of commercial property purely for profit cannot lead to an increased capital financing requirement, and as the Council’s Asset and Investment Strategy fell within the definition of this guidance, the Council took the decision to no longer invest in property for commercial gain.

The Service Manager – Finance advised the Group that the updated Treasury Management Code requires Local Authorities to document knowledge and skills to ensure that both members and officers dealing with treasury management are trained and kept up to date. With regards to members of Governance Scrutiny Group there will be periodic training sessions on finance issues and reporting and advising the Group of treasury issues at its meetings.

In concluding the Group were advised that all Council investments remain fluid, the economy, monetary measures and the future remain uncertain and will be monitored closely. The Group will be presented a quarterly update showing the Council’s Treasury Management position.

Members of the Group asked specific questions relating investments with the various financial institutions and in particular other authorities and green and social investments and whether the officers could provide a more detailed breakdown to show the Council were doing their best to invest in greener and more ethical companies. The Service Manager – Finance explained such ratings for investments are difficult to measure, the Council is guided by Link the Council’s Treasury advisors who advise on greener investments and confirmed the Council do already hold some investments in ‘green’ funds. It was noted that investments also need to be both secure and liquid.

With regards to training Councillor Wheeler highlighted some of the training delivered during the past year and in particular training delivered before Governance Scrutiny Group on topics that covered the reports at that scrutiny group meeting.

It was RESOLVED that Governance Scrutiny Group agrees the 2022/23 outturn position.