Agenda item

To receive the Treasury Management Strategy report by Head of Service Finance and Audit (copy enclosed) for the Governance and Audit committee to approve the annual Treasury Management Strategy for 2025/2026 and the quarterly update for 2024/25.

The Head of Finance and Audit (HFA), alongside the Lead Member for Finance, Performance and Strategic Assets, introduced the Treasury Management Strategy Statement 2025/26 and the Treasury Management Update Report Q3 2024/25 reports (previously circulated).

The Treasury Management Strategy Statement (TMSS) shows how the Council would manage its investments and borrowing for the coming year. It also sets the policies within which the Treasury Management ™ function operates. The TM Update Report provides details of the Council’s TM activities during quarter 3 of 2024/25.

The Council was responsible for its treasury management decisions and activities, which involved looking after the Council’s cash. This was a vital part of the Council’s work because approximately £0.5bn passes through the Council’s bank account every year.

The re’ort's graphs show the levels of the Council’s borrowing and investment balances over the last three years. The first chart shows the Council’s borrowing has increased over this period. The second chart shows a decrease in the amount of money available for investment. Both are aligned with forecasts and linked directly to the Council’s Capital Plan.

Referring to the TM update report, the HFA gave members a quick background to the report before opening to take questions from members: The impact on the UK from the government’s Autumn Budget, slower interest rate cuts, modestly weaker economic growth over the medium term, together with the impact from President-elect Trump’s second term in office and uncertainties around US domestic and foreign policy, would be significant influences on the Authority’s treasury management strategy for 2025/26. Members were also informed that the next TM report would be discussed at the April committee meeting.

Members discussed the following further –

• Members highlighted the graph in Appendix One, which showed a spike in 2066; officers responded by stating that the matter related back to 2015/16 and the buyout of the housing stock subsidy, which was about releasing Housing Revenue Account fund from paying the subsidy to central government, and freeing funds to improve the quality of housing stock. 
• Lay Member Nigel Rudd felt that there was still a little disconnect between the council strategy, programming, and treasury management. Fundamentally, the ability to borrow to fund capital works was quite crucial. The impact of those decisions on the authority's revenue account was significant, as I’ll return to the next item: Governance and Audit (GAC), which was the delegated authority to review on behalf of the council treasury management arrangements. I’m unsure whether GAC currently receives or considers the capital strategy statement/rep reports the produce with the council; they tend to go to the cabinet and the council. Was there a disconnect in the process that needed to be looked at. Responding to the query, the HFA informed members that the capital scrutiny group discussed capital matters; some members of the GAC were members; they combed through the details of each business case and the impact revenue costs; the question warranted further discussion between the HFA and the Corporate Director: Governance and Business; to ensure that the GAC had more background on the treasury matters within the Council. Lay Member Nigel Rudd responded by thanking the HFA for the response and saying that he did not wish for the GAC to undertake assessment work of the capital programme; however, the GAC needed to act as a shield of protection around decisions relating to treasury management. It was also raised whether the HFA has had any correspondence with ArlingClose regarding treasury management. The matter was ongoing. ArlingClose has contacted the HFA, and the matter was delayed due to the workload of the HFA, which has yet to respond to them.
• The borrowing limit was raised; temporary loans from other authorities were included with the limit on borrowing.
• Members and the HFA agreed that GAC members should receive annual treasury management training.

Nigel Rudd proposed an amendment to the recommendations within the report: officers should bring a report back to the GAC to consider the options regarding the level of information and timing of decisions about the capital plan and its impact on the revenue budget.

The committee agreed on the amendment.

RESOLVED that 

1. The committee reviewed the TMSS for 2025/26 and the Prudential Indicators for 2025.26, 2026/27 and 2027/28.
2. The committee noted the TM update report.
3. The committee confirms that it has read, understood and taken account of the Well-being Impact Assessment (Appendix 3) as part of its consideration.
4. Officers should bring a report back to the GAC to consider the options regarding the level of information and timings of decisions that should be brought back to the GAC in relation to the capital plan and the impact on the revenue budget.