Agenda item

This report presents the Council’s Treasury Management Strategy for the 2024/25 financial year. The Treasury Management Strategy incorporates within it the Treasury Management Policy Statement, Annual Investment Strategy and Minimum Revenue Provision Policy.

Discussion:

The Finance Business Partner – Technical Accounting introduced the report and highlighted that it was based upon the current Capital Programme, any changes in the programme would result in changes to the forecast position such as the Minimum Revenue Provision.

The Finance Business Partner – Technical Accounting reported that the Council continued to operate within the Capital Finance Requirement, this confirmed the Council did not borrow to meet revenue costs.

The Council was not borrowing for longer than necessary as shown by the CIPFA liability benchmarking and the Debt Maturity Profile shows the Council is not locked into current high interest rates.

The Finance Business Partner – Technical Accounting noted there were no proposed significant changes to Treasury Management Practices.

The following issues were discussed:

Borrowing in lieu of business rates – it was noted that borrowing in lieu of business rates was planned to increase and it was queried whether income from business rates was also expected to increase. The Finance Business Partner – Technical Accounting explained that spending on Capital Projects would likely increase receipts from business rates.

Refinancing Loans – in response to a question whether the Council had difficulty refinancing its loans the Finance Business Partner – Technical Accounting confirmed the Council had no problem refinancing its loans. The Local Authority loan market had reduced; however the Council could borrow from the Public Loans Works Board (PLWB), which was borrowing from central government which, at presented was often cheaper than borrowing from other local authorities. The advantage of the local authority market for borrowing was that it can be arranged in one day, whereas PLWB take a week to arrange. The PLWB lends to all Councils at the same rate.

Council balance – in response to a question how the Council ensures it has enough day to day cash in hand available, the Finance Business Partner – Technical Accounting stated that the Council aimed to hold around £10m as a cash balance at any one time.

Borrowing in lieu of other recipients – further detail was requested related to the Council borrowing in lieu of income from capital, the NHS and rents. The Chief Operating Officer explained the Council had borrowed to invest in Innovation Park Medway to encourage businesses to set up at that location. The infrastructure costs of developing Innovation Park Medway could be paid at a later date with capital receipts received from that investment. This arrangement was put in place prior to recent national economic changes and business case for the project was currently being reviewed.

Borrowing in lieu of NHS grants was related to the development of the Healthy Living Centre in Chatham and borrowing in lieu of rents related to the HRA programme and the former Debenhams site. The borrowing will be serviced through rent receipts.

Environmental, Social and Governance Policy (ESG) – in response to a query whether an ESG Policy Had been developed the finance business partner – Technical Accounting explained that there was a requirement to give regard to ESG, however, a detailed policy was not in place because the Council invest very little save for monies to MDC and Kyndi. The Council does not have the resources to investigate the investment policies of banking or property companies it invests in.

Market Risk Management – Further explanation was requested of paragraph 1.88 of the Treasury Management Practices, the Chief Operating Officer confirmed the market risk management was a proxy for testing credit worthiness of the institutions that the Council invest in. The Finance Accounting Partner added that when depositing into banks he would check the banks credit worthiness however, all deposits are short term so the risk to the Council is low.

Decision

1.1   The Committee considered this report, noted its contents and passed comments to Cabinet and for consideration and recommendation to Full Council for approval.

1.2   The Committee agreed to send the self assessment to Overview and Scrutiny Chairpersons with an accompanying note regarding training.