Agenda item

To receive the Treasury Management Strategy 2022-2025.

The Committee considered the Treasury Management Strategy 2022-2025.

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

·       The Committee had received the Mid Year report in November 2021.

·       Councillor Sargeant referred to the graph detailing the Capital Funding Programme 2022/23 to 2024/25, and questioned whether the CIL and S106 forwarded funding was expected to continue beyond 2022/2023.  The Interim Assistant Director Finance indicated that this represented the CIL that was currently being funded in advance of receiving, and could be subject to change.

·       With regards to capital assets, such as Carnival Pool car park, Councillor Shepherd-DuBey questioned whether the impact of losses to property values had been taken into consideration and what impact they would have on the Strategy.  The Interim Assistant Director Finance commented that the immediate effect of a loss on the valuation would not affect the General Fund.  An adjustment was made so that the Revenue Account properly reflected the financial rather than the accounting position.  The Chief Accountant indicated that a revaluation exercise would be carried out as part of the accounts.  Any losses or gains would be at the point that an asset was disposed of, in terms of realisable losses or gains.

·       Councillor Shepherd-DuBey stated that some local authorities were not charging Minimum Revenue Provision (MRP) on debt related to certain assets.  Whilst some authorities were making Minimum Revenue Provision for commercial investments funded by borrowing, some were still not paying MRP regarding borrowing related to borrowing associated with investment assets or capital loans.  The statutory guidance was clear that financing for investment assets and capital loans required the provision to be made.  She asked what the Council was doing to prepare for these changes and what the implications would be for revenue and services.  The Interim Assistant Director Finance advised that the current provision was in line with the regulations which allowed for the Chief Financial Officer to make a prudent provision.  There was currently a consultation to change those arrangements, which would finish on 8 February.  Officers were feeding into this. 

·       In response to a question from Councillor Ross regarding the rate of inflation, the Interim Assistant Director Finance, indicated that future borrowing could become more expensive as interest rates grew.  Advice from external partners around future borrowing was being sought.  Inflation could affect the cost of capital programmes.  Monitoring was being undertaken and contingencies were being built into a number of the capital programmes.

·       In response to a question from Councillor Shepherd-DuBey, the Interim Assistant Director Finance stated that the Strategy and approach were kept under review and would be changed as required.  The Chief Accountant added that with regards to the Town Centre regeneration, all the income generated was covering the financing costs so there was no impact to the tax payer.  It was forecasted that this income would be in excess of financing costs over the next few years and would contribute returns to the General Fund.  The Deputy Chief Executive added, that with all the supported borrowing where the Council was undertaking a scheme that paid for the costs of the financing, and often generated income in addition to that, Officers kept the performance under review.  If it was not achieving its intended return, this would be factored into future Medium Term Financial Plans.

RESOLVED:  That the Audit Committee support the Treasury Management Strategy 2022-2025 and recommend to Council to:

1)               approve the Treasury Management Strategy as set out in Appendix A including the following additional appendices;

a)    Prudential Indicators (Appendix B)

b)    Annual Investment Strategy 2022/23 (Appendix C)

c)     Minimum Revenue Provision (MRP) policy (Appendix D)

2)               note the cumulative financial impact on the Council of its borrowing activities equates to a net credit to the general fund for the taxpayer of £42.70 per band D equivalent at end of 2022/23 and noting this credit increases to £62.47 at the end of 2024/25.