Agenda item

To receive a report showing how the Council will manage its investments and its borrowing for the coming year and sets the policies within which the Treasury Management function operates (copy attached).

The Lead Member for Finance, Performance and Strategic Assets along with the Head of Finance introduced the Treasury Management report (previously circulated).

 

Members were guided through the papers and the attached papers. The report contained the Treasury Management Strategy statement 2024/25. It was a requirement to approve a Treasury Management Strategy for the forth coming year, the scrutiny was completed by Governance and Audit prior to Full Council for approval. Also included was the quarterly Treasury management update.

 

Members had been in receipt of training provided by Arlingclose ltd the treasury management advisors. The Head of Finance confirmed she would arrange a copy of the slides be made available for the new committee members and if required a meeting with one of the finance team to answer any questions. It was hoped the training was useful for all Members. 

 

The Treasury Management Strategy 2024/25, had no material changes to previous years. It was a continuation of what the finance team had been doing. It was required that a number of aspects were included in the strategy including an investment strategy, prudential indictors and the minimum revenue provision.

The investment strategy took a prudent approach, that was in the main to invest any surplus cash available with the UK debt management office. The Treasury Management Strategy statement would include the requirement, detailing who the authority could invest with, the duration and any limits.

The borrowing strategy had been included and was a continuation of previous years’ strategies. A long term borrowing requirement was in place due to the capital programme. The strategy was to monitor interest rates to lock in longer term interest rates at the optimal time.

The minimum revenue provision, detailed how the authority repaid borrowing through the revenue account. This was unique for local Governments there were no changes being proposed for this year.

 

Details of the reporting that would be completed during the year were included.

There were a number of appendices attached to the Treasury Management Strategy statement of which the Head of Finance guided Members through. 

 

The quarterly update provided Members with up to date information on how the current years strategy was progressing. Since the last update, interest rates had fallen which resulted in some long term borrowing being taken. Dialogue with Arlingclose had taken place prior to the borrowing being drawn down. Members heard £26million had been taken from the Public Works Loan Board to fund on-going capital commitments.

The UK Infrastructure Bank offered finance to local authorities across the UK for high-value and complex economic infrastructure projects. Officers stated they were currently applying to borrow from the UKIB to fund the coastal defence schemes.  

 

It was noted an internal audit had been completed in December 2023. A high level of assurance was received.

The Chair thanked the Lead Member and Head of Finance. He also thanked the officers for arranging the training with Arlingclose. In his opinion he felt it was very informative and beneficial to the Governance and Audit Members role in Treasury Management. He suggested that in future reports the Well-being Assessment could be omitted from the papers to make reading easier.

 

In response to members questions the following areas were discussed in greater detail:

·         Information around the timescale of the borrowing from UK Infrastructure Bank would be circulated to Members. It was hoped the funding applied for would be received in the coming months.

·         Interest rates do make a difference to cash flow. A revenue support grant was received from Welsh Government monthly which helped support certain items such as payroll for employees. Any investments the authority had were invested to maximise yield. The authority did not chase the rate of interest, the authority invested securely and in a way that if the funds were needed the authority had access to it.

·         Although yield on investments was higher the cost of borrowing was also higher and outweighed the yield from investments.

·         There were 2 major flood defence schemes. The total cost of those schemes was in excess of £90million. It was a requirement to complete to protect a number of residential and commercial properties. The authority was committed to those schemes. The schemes were 85% funded by Welsh Government and 15% by the local authority. The scheme is set that Denbighshire County Council borrow the total amount required for the schemes to be later reimbursed by Welsh Government through the revenue support grant. Legal agreements were in place that provided a degree of protection. Welsh Government would pay back the required amount over a period of 25 years.  

·         The flood defence scheme was Denbighshire’s asset.   

·         There were clear links between the authorities borrowing and capital. The capital strategy report was fairly new that had been introduced by CIPFA. The Head of Finance confirmed she would look into if the Governance and Audit committee would benefit from having sight of the Capital related Prudential Indicators.  

·         Further detail and information on the medium term capital strategy would be provided in the future. There had been changes to the medium term strategy during the budgetary process which Members would be made aware of in the next update report.

·         The Head of Finance was unaware the contract between the authority and Arligclose was specific in that it stated who to contact regarding any concerns if the Section 151 Officer was not available. She stated she would take that forward and discuss with Arligclose to ensure they were aware of who to contact.

·         In the opinion of the Head of Finance, she felt sufficient resources would be available to cope with sudden changes in market conditions. Treasury Management was a skilled area of finance which did require specific training.

·         The table detailed within the Treasury Management Strategy Statement and Investment Strategy was in relation to the net position of borrowing and investments. It indicated all borrowing could be fixed with limiting exposure to variable rates.

 

RESOLVED that;

     I.        the Committee reviews the Treasury Management Strategy Statement for 2024/25 and the Prudential Indicators for 2024/25, 2025/26 and 2026/27.

    II.        That members note the Treasury Management update report.

  III.        That the Committee confirm that it has read, understood and taken account of the Well-being Impact Assessment.