Agenda item

Treasury Management Strategy and Capital Strategy 2019/20


The Committee considered the Treasury Management Strategy and associated Annual Investment Strategy and the Minimum Revenue Provision Policy for 2019/20 along with the Capital Strategy for 2019/20.


Revised reporting had been required for the 2019/20 reporting cycle due to revisions of the MHCLG Investment Guidance, the MHCLG Minimum Revenue Provision (MRP) Guidance, the CIPFA Prudential Code and the CIPFA Treasury Management Code. The primary reporting changes included the introduction of a capital strategy, a longer-term focus to the capital plans being provided, and greater reporting requirements surrounding any commercial activity undertaken under the Localism Act 2011.


The Principal Accountant (HRA & Exchequer) drew Members attention to key points in the Treasury Management Strategy 2019/20 on pages 19-57 of the report.


·         On page 23, section 4 the Capital Prudential Indicators for 2019/20 to 2021/22 were listed and leading down to the table on page 24, Members noted that previously Capital Expenditure used to report against Non-HRA and HRA. Following the introduction of the new prudential and treasury management code the table now splits across three categories: Non-HRA, HRA and Commercial Activities. In terms of the report the Commercial activities covers expenditure incurred via the property and land acquisition programme and things such as the Brookvale accommodation developments, it doesn’t cover the St Georges Centre or other streams like the Woodville’s

·         The table at paragraph 4.4,  showed the net financing need for every year shown in the report; 2017/18 and 2018/19 were fully covered from internal borrowing but from 2019/20 onwards there will be a mix of internal borrowing and new external borrowing undertaken to support the Capital Programme

·         Starting on page 27, section 6 of the report refers to the external debt forecast for the Council, in 2018/19 GBC are expecting actual gross debt to be just under 94 million, the debt increases slightly in 2019/20 and backs down again in subsequent years. The drop for 2020/21 will be due to the repayment of the £8 million stock debt 

·         The Council is projected to as maintain an under borrowed position throughout the report, the actual debt is below the capital financing requirement which demonstrates long term affordability

·         A new indicator has been introduced on page 29 to demonstrate the percentage of total external debt related to commercial activity. In 2019/20 £5.9 million is expected to be borrowed to carry out works at Dering Way and to deliver the office accommodation at Brookvale

·         On page 33, section 13, the report listed the details of the Affordability Prudential Indicators which were required to assess the affordability of the capital investment plans. For the Capital Programme, an indicator has been added at the top of page 34 to show the level of income from commercial properties purchased through the Property Acquisition Programme in relation to net revenue spend. 


The Principal Accountant (HRA & Exchequer) advised that the Capital Strategy was a new requirement and it linked in with the Treasury Management Strategy. Member’s attention was directed to section 12 in the Capital Strategy 2019/20 on page 69 of the report which gave Members a more detailed look at the proposed Capital Programme for 2019/20 to 2023/24.


The Director (Corporate Services) added that he was very happy with the Treasury Management Strategy as it reflected the new requirements

Concern was raised by a Member over paragraph 8.2 on page 67 of the report; how did the Council hold onto the funds that were contributed by developers and ensure it was spent on the earmarked item.


The Assistant Director (Corporate Services) advised that the Council holds a schedule of all monies received, what the money had been earmarked for and if it had been spent. That removed the exposure the Council could face from a developer if a request was received to see if the money was spent correctly.  Finance and Planning worked together very closely and provided the information that Members saw in the Budget Monitoring report about those balances that were outstanding.


Resolved that Members recommend to the Full Council that:


1)         The Treasury Management Strategy for 2019/20 as set out in Appendix 2 be agreed.


2)         Delegated authority be given to the Director (Corporate Services), in consultation with the Chair of the Finance and Audit Committee, to amend the prudential and treasury indicators as necessary as a result of the budget approved by Full Council on 26 February 2019.


3)         The Minimum Revenue Provision (MRP) calculation on all new capital expenditure as set out in Section 5 of the Treasury Management Strategy Statement be approved for 2019/20 and beyond in accordance with the Authority’s Capital Programme.


4)         The Annual Investment Strategy for 2019/20 as set out in Section 14 of the Treasury Management Strategy Statement be agreed


5)         The Capital Strategy for 2019/20 as set out in Appendix 3 be agreed.


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