Agenda item

To receive a report from the Director of Finance seeking approval of the Council’s Treasury Management Strategy 2019/20.                (Report No:  161)

(Key Decision Reference:  KD:  4829)

Members are asked to note that Cabinet considered the report at their meeting on 13 February 2019 and recommended it to Council. 

Councillor Maguire moved and Councillor Caliskan seconded the report of the Director of Finance on the Treasury Management Strategy 2019/20.  (Report No:  161)

NOTED

1.            That Cabinet had considered the report and recommended it to Council for approval at their meeting on 13 February 2019.

2.            Councillor Maguire’s comments highlighted from the report:  

·         The Strategy determines the cash flow management, use of banks, investments and borrowing strategies for the 2019/20 financial year. 

·         It was a key strategy, apart from but linking into the budget report.  It has been separated out from the main budget report for greater transparency. 

·         There was little change from last year.

·         Loans were made against Council owned properties and on the advice of external advisors.

·         The Council needed to borrow, but limits were set and the Council was well within Capital Finance Requirements.

·         At the end of December 2018 the Council had £804m of borrowing in total: some long term and some short term.  The Council would not borrow in advance of or more than it needed to.

·         There were also £65m of investments. 

·         Cash was kept to a minimum.

3.            The response of Councillor Lee David-Sanders

·         Concern about the amount of borrowing and that if the interest rate were to change rapidly, the Council could be in trouble.

·         Concern that the Council was due to borrow a further £600m and was in danger of hitting or exceeding their borrowing limits.

·         Recent company business plans had been sent back because of concerns about the risks. 

4.            Comments of the majority group: 

a.       A Cabinet Sub Committee shareholder board had been set up to monitor the company business cases and the lending to the Council’s companies.  Governance arrangements had been strengthened. 

b.      The Council had had to strike a balance between the short term borrowing and borrowing to invest in the future. The strategy covered spending in both the short and long term. 

c.      A recent treasury management training session had been well received by members. 

d.      The strategy was highly regulated and fully complaint with CIPFA rules.

e.      Welcome for the more transparent way that the report had been presented

f.       Concern that as 80% of Council funding came from central government, the loss of £178m worth of Government funding since 2010 has meant that services were being stripped of support.

g.      Praise for the sound management of decimated resources.   

h.      Investment in capital improvements support front line services for local residents.   

i.       The strategy has ben externally analysed and passed by the Section 151 officer. 

5.            Comments of the Opposition Group

a.    Acknowledgement that the company governance arrangements were more robust.

b.    Concern that every year borrowing went up, but so did the borrowing limit. 

c.    Concern about capitalised salary costs which added to borrowing pressures.

d.    Concern at what were seen as unsustainable levels of borrowing, a rise from £186m to 1,437m in 21/22 and the increasing levels of interest being paid from revenue sources. This money could have been spent on front line services. 

6.             Summing up of Councillor Maguire

The strategy had been reviewed by external treasury advisors and was within CIPFA guidelines.  It has been set up so that the Council could borrow money to build and invest in the borough, in homes, jobs and front-line services.  This was no different to any other borough in the country. 

Following the debate, the recommendations were put to the vote and agreed with the following result:

For: 40

Against: 13

Abstentions: 0

AGREED

1.         To approve the Treasury Management Strategy 2019/20

2.         To note the economic context and interest rate forecast (Appendices A and B)

3.         To approve the prudential indicators (Appendix D)

4.         To approve the minimum revenue provision statement (Appendix E)

5.         To approve the counterparty list and limits (Appendix F)