The Head of
Finance introduced the Annual
Treasury Management Strategy Statement (TMSS) 2022/23 Report (previously
circulated) which showed how the Council would manage its investments and its
borrowing for the coming year and sets out the Policies within which the Treasury
Management function operate.
Treasury Management Update Report provided details of the Council’s Treasury
Management activities during 2023/24 to date.
The Head of Finance reminded members it had been agreed by
Council on 27 October 2009 that the governance of Treasury Management be
subjected to scrutiny by the Governance and Audit Committee. Part of this role
was to receive an update on the Treasury Management activities twice a year. It
was stressed the importance of Treasury Management in the finance department
and the Council.
Members were reminded of the three priorities considered when
money safe (security);
sure that the money comes back when it is needed (liquidity);
sure a decent rate of return is achieved (yield).
He stressed to members Denbighshire County Council did not
have cash to invest to make yield to support budget gaps. The authority did
have cash flow which was closely managed by the finance team. Often funds are
borrowed in advance of need and are invested on a short term timeframe. The
same with some grant funding the authority received. Thus meaning a small
return would be made.
Security and Liquidity were the key factors for
Members were guided to the table included in the covering
report which detailed the frequency of updates presented to the committee.
Appendix 2 - Treasury Management Update Report set out the borrowing strategy
of the authority. 3.2 of the appendix illustrated that the authority would likely
be required to take out additional borrowing. The main reason for the increase
in borrowing was due to the Rhyl Flooding scheme. The project would have to be
funded by the authority to later reclaim the funds from Welsh Government.
rates were currently high, this impacted gilts and borrowing costs. It is
expensive to borrow at the present time. The authority did try to borrow short
term and when possible from other authorities.
with Arlingtonclose Ltd as when best to borrow and for term lengths continued.
Further guidance and information was
provided on the following:
Borrowing or investing by nature was risky. Denbighshire’s risks
were around making sure investments were secure. A number of rules for
investing have to be met. There was always a risk as when best to lock in
borrowing. Continued close working with treasury advisors to advice when best
to make monetary decisions supported the decisions of officers.
Overspends were possible were avoided. Overspends were figures of
overspends over the 12 month period. It was essential to keep in mind the
amount of Council reserves was being used to fund the overspends.
Arlingtonclose Ltd were the Treasury Management consultants based
in London. Every 3 years they have to go through the procurement process to be
tendered the contract.
Welsh Government have provided the authority with a lot of help
since 2019. Recently support regarding the waste depot in Denbigh and extra funding
was gratefully received.
HRA Ratio percentage against the non HRA Ratio was quite a
difference. The Head of Finance informed members finance Section 151officers
across Wales were looking at the difference. It had become more of a focus was
due to the pressure of HRA to increase capital spending. It was different to the
Council fund borrowing as the income stream was 100% funded from the tenants.
That funding stream had to be used for the benefit for the tenants. Finance officers
had done some benchmarking in this area. The authority was in the middle of
authorities in terms of the amount of borrowing. HRA funding was ring fenced.
The Capital Plan had two strands of work, 1- Reviewing the process
and 2- understanding the capital need moving forward. The financial outlook for
2024/25 and 2025/26 had got worse. It was a project for looking at support and
help to review the budget position. It was vital to look at the Capital Plan
when savings are needed. Which may result in a delay to some projects. At this
point nothing had been resolved.
Members were in full support of further training on Treasury Management.
And suggested further training with Arlingtonclose Ltd. be sought.
A review of the money laundering policy had begun, with a draft of
the new policy available. It was currently awaiting the decision as where best
it be placed for rectification.
Head of Finance encouraged members to contact him direct with any specific
areas of Treasury Management they want covered in future training sessions.
Chair thanked the Head of Finance for the detailed report and discussion.
RESLOLVED, that the Committee note the performance of
the Council’s Treasury Management function during 2022/23 and its compliance
with the required Prudential Indicators as reported in the Annual Treasury
Management Report 2022/23.That members note the TM update report for
performance to date in 2023/24 and confirm it has read, understood and
taken account of the Well-being Impact Assessment as part of its consideration.