Agenda item

To consider the Treasury Management Strategy 2023-26.

The Committee received the Treasury Management Strategy 2023-26.

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

·       The Assistant Director Finance advised the Committee of the proposal to change the minimum credit rating from High to Upper Medium.  The Council had worked with external experts on this and the rating was still within recommended safety limits.  This change would allow greater flexibility and for the Council to manage its cash more robustly.

·       The Chair asked why the change in credit rating had not been undertaken before.  The Assistant Director Finance indicated that this area was kept under constant review.

·       Councillor Davies asked for an example of an investment in the upper medium range, which would not have been previously possible.  The Assistant Director Finance commented that the change in rating would increase the number of organisations that the Council could use.

·       Mike Drake stated that the list of loans and their maturity dates, was helpful.

·       With regards to the table on the General Fund, on page 157 of the agenda, Mike Drake questioned how 2023/24 and 2024/25 figures agreed.  The Assistant Director Finance agreed to check this.

·       Councillor Smith added that on p158 it referred to the General Fund Capital Programme having an estimated shortfall of £28million over three years, but that this was not reflected in the tables.  The Chief Accountant explained that the £28million was the difference between the table setting out the Capital Programme budget and the table setting out how the Council proposed to fund this, and was the capital funding gap across the three years.  Officers would check the figures and report back to Members.

·       With regards to Minimum Revenue Provision (MRP), Councillor Gee felt that the Council’s MRP approach did not comply with the understanding of the current statutory guidance which stated that all debt associated with investing should be provided for.  The Council did not charge on the loan capital in WBC Holdings and only provided 10% of assets that could be disposed of for appreciation, a maximum 15 years asset life.  Thurrock Council which had experienced severe financial challenges now provided for everything.

·       The Deputy Chief Executive commented that MRP was a complex and fluid area.  He clarified that there was not a statutory requirement to provide in the way stated in the Thurrock Council statements.  The current statutory provision sat under the prudential code, which referred to a prudent provision determined by the Section 151 Officer.  The new prudential code which would be enacted in April 2023 still stated this.  The Deputy Chief Executive commented that his biggest concern around changes to MRP was around Strategic Development Locations and forward funding the infrastructure to unlock the development.  Under the most extreme interpretation this would no longer be possible.  However, the Government, during the consultation process, which had begun over 2 years ago, had indicated that it did not want to generate unintended consequences for Councils, particularly around development, regeneration, and housing provision.  Members were reminded that there had been two consultations over two years, and that no new regulations had come in during that period.  The earliest any changes would be made would be April 2024.

·       In response to a question from Councillor Gee regarding MRP and capital loans, the Deputy Chief Executive re-emphasised that Treasury Management advisors and the Council’s External Auditors were satisfied with the Council’s approach.

·       Councillor Smith referred to a table detailing expenditure type and the WBC MRP charging policy (p162 of the agenda) and stated that it would be helpful to have information on any departures from Department for Levelling Up, Housing and Communities principles. 

·       The Assistant Director Finance added that at the March 2022 committee meeting a report was presented on the closing of the accounts.  The report contained confirmation from the Council’s External Auditors that they were satisfied that the Council was acting within the arrangements for MRP.

·       The Chair took the Committee through items on the agendas for the next Committee meeting on 13 March.

RESOLVED:  That the Committee supports the Treasury Management Strategy 2023-2024 and recommends to Council to:

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

·       Prudential Indicators (Appendix B)

·       Annual Investment Strategy 2023/24 (Appendix C)

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