Agenda item

Report of the Director of Finance

The Committee received a report which set out the Council’s Treasury Management Strategy Statement which included Prudential Indicators, Minimum Revenue Provision Policy Statement and Annual Investment Strategy 2018/19.  The views of the Committee were sought and it was noted that any comments would be included in the report to Cabinet.  Updated information was tabled and the Committee was informed that further changes could be necessary prior to submission of the report to Cabinet.

The Director of Finance outlined the content of the report and drew particular attention to the revised Prudential and Treasury Management codes issued by CIPFA in December 2017 which required all local authorities to prepare a Capital Strategy report from April 2019.  It was envisaged that the strategy would be considered by this Committee prior to submission to Cabinet and Council.  Information was awaited as to whether the code would be prescriptive or provide overarching areas that the officers would populate.  The Chair offered his assistance if required.

In addition, the Director of Finance highlighted the most significant changes in the updated information circulated at the meeting.  These figures filtered through the tables and did not affect strategy. Particular attention was drawn to:

·                     the rephasing of regeneration capital expenditure and funding.  In response to a question it was noted that there was a small quantum change;

·                     the increase in HRA due to the lifting of the debt cap.  In response to a question as to additional funding and its impact, it was noted that the money would be ring fenced in the HRA account and would be primarily for building new properties and investment in current stock.  The requirement was for at least a balanced budget and in practice there was a surplus.  It was noted that the central finance team would challenge to ensure sustainability.

In response to questions, Member were informed that:

·                     the ratio of financing costs to revenue stream was not benchmarked as the ratio was different for each Authority.  The key thing was whether it was affordable within the budget;

·                     the authorised limit for external debt was set by Cabinet and related to capital financing requirement that had yet to be borrowed.  With regard to the regeneration programme, the model was funded by rental income from the properties so was ultimately cost neutral;

·                     monthly monitoring ensured that borrowing was within the operational boundary.  Any change to the limits required Council approval and could only change annually.  There was a requirement on officers to report any likelihood of a breach;

·                     the Council had reduced the capital programme by 25%, hence the reduction in financing costs.

In order to assist Members’ understanding of the key assumptions behind the strategy, the Director of Finance undertook to signpost information from the Cabinet report.  It was noted that there was the opportunity for the Committee to review the position and raise any concerns three times a year.  A further report would be submitted to the Committee prior to the setting of the Capital Strategy.

RESOLVED:  That the Treasury Management Strategy Statement for 2018/19 be noted.