Issue - meetings

To receive the Treasury Management Stratey 2021/24.

The Assistant Director Finance presented the Treasury Management Strategy 2021/24.

During the discussion of this item, the following points were made:

·       The report formed part of the Council’s budget setting process and was forward looking.

·       In the prudential limits it was the Council’s parameters for borrowing and investing by the Finance Treasury Team that the Committee was asked to review.

·       The style of presentation had changed to make the report less technical and more easy to read.

·       Members were informed that an addendum of some additional changes had been circulated. 

·       He commented that the series of ratios of financing costs to net revenue streams detailed on page 59 of the agenda has also been amended.  They were now 1.03%, 0.36% and 0.30%.  The first one (1.03%) was based on a firm recommended budget to Council and the other two were based on the indicative budget and would be revised and reviewed prior to the following year’s Medium Term Financial Plan.

·       The Assistant Director Finance highlighted the following key changes to the Strategy which were to enhance the options available to the treasury team for daily management of cash funds, short term investing and borrowing.

Ø  The option to be able to open a deposit account, with our transactional bank provider which will increase capacity to invest money in the short term (increase liquidity), particularly during current times of cashflow uncertainty.

Ø  To increase the money market (liquid funds) limit from £5million to £10million which will increase capacity to invest money in the short term (increase liquidity), particularly during current times of cashflow uncertainty.

Ø  The option to issue a local authority bond to raise borrowing as an alternative to traditional markets such as PWLB.

·       Councillor Burgess asked about the net benefit from borrowing figure, which represented a change in Treasury Management reporting.  At previous Committee meetings Members had been told that the net cost of borrowing was £7.52 per taxpayer, but now the cost of borrowing created a net benefit of £13.64.  She questioned what relevance the treasury investment income had to the cost of borrowing.  The Assistant Director Finance commented that it had moved to £13.64 because when the Treasury Management Mid Year report had been produced it was only taking out the cost of borrowing and the cost of borrowing was based on the budgeted costs of debt finance within the budget.  The amount that had come in from the invest to save and income generation projects had been extracted.  The whole impact effects of those projects had not been included.  A more realistic position would be to show not just the amount of money that the projects had generated to offset the debt financing cost, but the whole benefit to the Council.  Providing more information provided a fuller, more transparent picture of the Council’s situation.

·       It was prudent to offset the treasury investments because there were two potential budget lines within the Treasury department: the cost of borrowing and the return on investment.  When establishing the net  ...  view the full minutes text for item 42