Agenda item

Report of Director of Corporate Services (attached)

A representative of the Director of Corporate Services presented the report on the council’s draft annual Treasury Management Strategy for 2022-23.  In presenting the report, she referred to the background and strategy for the management of the council’s cash flows and its resources in order to support the provision of effective services by the council and noting that much of the management is routine and short term in nature whilst some will cover the medium and longer term.  She added that there were significant dependencies with other financial strategies and plans including the Capital Strategy and Medium-Term Financial Plan.

She explained that the Treasury Management Strategy was a framework within which decisions were made daily in managing council’s funds and makes no specific investment or borrowing recommendations.  She added that the framework describes the types of issues that the council needed to consider at the appropriate time for example regulatory requirements and the council’s approach to risk.

In explaining the report, she referred to the regulations and guidance with which the council is obliged to follow to remain compliant with Codes of Practice issued by the Chartered Institute of Public Finance and Accountancy (CIPFA) and noted that workshops and a glossary had been provided to members to aid understanding of a technical area of the council’s operations.

She noted the key areas covered by the report including the management of cash flows; future borrowing plans and an overview of investment decisions and added that there were no material changes planned in the strategy for next year.  She explained that the council was taking a balanced view in relation to treasury management performance and that treasury management activity would be reported during the year to the Audit Committee.  Future reports would contain details of in-year activity and performance and an outturn report.  In addition to routine meetings and reviews, activities were monitored monthly by the Section 151 Officer and the Executive Member for Corporate Services.

Members asked for and received clarification on the use of Tradition Limit as an approved counterparty; the impact of negative interest rates in respect of investment; the facilitation of regular benchmarking programs by Airlingclose and the comparison with local authorities; independent benchmarking; the selection criteria for longer term assets and the related visibility and benchmarking of performance; the treasury management risk register and counterparty risk; the differentiation of the categories of risks on the risk register including the impact of the understanding of those involved in capital projects on the work of the finance team and treasury management; gross external debt and the capital borrowing requirement and the inclusion of the impact of inflation in the capital strategy.

The Director of Corporate Services undertook to review the criteria considered when a decision was made to divest out of an asset and the risks associated with capital losses in these cases and to report this to members.  She also undertook to meet further with members to consider their questions surrounding the interplay between the capital financing requirement, treasury management, inflation and the treasury management risk register.

Resolved: that the contents of the report summarising the Treasury Management Strategy for 2022/23 and its associated impacts be noted.