Agenda and minutes

 Apologies were received from Councillor Tejan.

To approve the record of the meeting held on 5 October 2022.

The record of the meeting held on 5 October 2022 was agreed and signed by the Chairman as correct.

 There were none.

Members are invited to disclose any Disclosable Pecuniary Interests or Other Significant Interests in accordance with the Member Code of Conduct. Guidance on this is set out in agenda item 4.

Disclosable pecuniary interests

There were none.

Other significant interests (OSIs)

Councillor Gulvin declared an OSI in agenda item 5 (Treasury Management Strategy Mid Year Review Report 2022-23) because he is a Director of Medway Development Company Ltd (MDC) and he is also the Chairman of the subsidiary company Medway Development Company (Land and Projects) Ltd.

He relied on a dispensation to take part and vote in any discussion.

Other interests

There were none.

This report gives an overview of treasury management activity since 1 April 2022 and presents a review of the Treasury Strategy approved by Council on 24 February 2022.

This report provided an overview of treasury management activity since 1 April 2022 and presented a review of the Treasury Strategy approved by Council on 24 February 2022.

The Finance Business Partner - Technical Accounting advised the Committee that work continued to balance the need to smooth the debt maturity profile whilst minimising costs for the revenue account. To achieve this the Council continued to use short term borrowing. Short term borrowing was £70 million on 31 March 2022. The amount repayable before 31st March 2022 had fallen  to £20 million on 3 November 2022 due to a combination of repayments and replacement longer term loans being secured.

Borrowing remained within the Capital Financing Requirement (CFR) and cash investment was also low, this had impacted upon the return on investment, however, this was day to day cash, investment returns remained within expectations.

The recent rise in interest rates had caused a projected overspend on borrowing costs of approximately £700,000, as set out in paragraph 5.5 of the report.

Members then raised a number of questions and comments which included:

Lender Option Borrower Option (LOBO) – In response to a question whether any providers had made contact regarding the potential for the early redemption of loans, the Finance Business Partner - Technical Accounting reported that he had received one exploratory phone call from a provider, however there had not been an offer. If such an offer was received the Council would consider whether it was in its interests to make early repayment.

In response to a further question, what would be the response if providers asked for early repayment, the Council would consider refinancing if it was beneficial, for example, to smooth out the debt maturity profile. The aim would be that repayments would better match the Minimum Revenue Provision (MRP).

Debt Maturing in 2025 – In response to a question whether there was a plan in place for the high level of debt maturing in 2025, the Finance Business Partner - Technical Accounting stated the Council would consider at that time whether to pay the loans if it had the available monies or refinance.

Interest rates – In response to a question whether the Council had considered longer term borrowing due to changes in interest rates, the Finance Business Partner - Technical Accounting stated it was difficult to predict the cash flow accurately over the longer period and any decision would be dependent on the Capital Programme. He advised that there is a cost to holding borrowed funds before they were needed. The Capital Strategy was being considered and this would help inform any decision.

Capital Finance Requirement (CFR) – In response to a question regarding the CFR and debt to turnover ratio, the Finance Business Partner - Technical Accounting reported the CFR would rise when the Council invested. In the Annual Treasury Management Strategy report the Council reviewed the ratio of debt costs to net income of the authority for the HRA and the general fund, both of those  ...  view the full minutes text for item 339.