Agenda item

Treasury Management Strategy Statement 2020/21

A report from the Executive Director – Resources is attached. (Key decision – reference number 5027)

(Report No.192)



Councillor Mary Maguire (Cabinet Member for Finance and Procurement) introduced the report of the Executive Director – Resources (No.192) setting out the Council’s proposed Treasury Management Strategy Statement (TMSS) for the period 2020/21 to 2022/23, and Annual Investment Strategy (AIS) for the year ended 31 March 2021, together with supporting information.




1.            That this report should be considered in conjunction with the Council’s indicative capital programme, as detailed in Minute No.6 above.


2.            That the Annual Treasury Management Strategy Statement sets out the Council’s strategy for ensuring that: its capital investment plans were prudent, affordable and sustainable; the financing of the Council’s capital programme and ensuring that cash flow was properly planned; and, cash balances were appropriately invested to generate optimum returns having regard to security and liquidity of capital, as set out in the report.


3.            That the report set out detailed projections regarding funding, payments and investments whilst mitigating and controlling identified risks. External expert treasury management advisers were used as appropriate. The Council was projecting £1.032bn of funding (grants, capital receipts, reserves and revenue contributions); this meant it had a net £1.222bn growth in borrowing. Overall, the Council had adopted a prudent approach to its treasury management strategy as set out in the report.


4.            That the capital programme had been based on a 3.5% interest rate and the capital projects were appraised on this basis. However, the Council had borrowed at a lower rate recently and had swapped short term for long term loans, which de-risked the programme.


5.            That that Statement made it clear that all projects should have a plan to pay down borrowing. This could be seen in Chart 1 of the report where borrowing was reducing quickly in the 2030s. Meridian Water borrowing was intended to be paid off by 2043/44, when capital receipts generated by the development would be used to pay off other borrowing or finance other capital schemes.


6.            That the Council was lobbying the GLA for more grant in relation to its affordable housing.


7.            Members recognised that the Strategy was forward looking and represented the Council’s ambitions for future investment in the Borough. The thorough work and detailed reports presented to the Cabinet were acknowledged. The Strategy aligned with the Council’s corporate priorities and was a significant investment in the Borough including housing provision and economic growth. It reflected the Council’s commitments and planned how they would be achieved. The Strategy would be regularly updated and presented to Members for consideration and approval.

Alternative Options Considered: The Council was bound by legislation to have regard to the CIPFA requirements for treasury management. If the Council were to deviate from those requirements, there would need to be some good reason for doing so. If was not considered that there was any such reason, having regard to the need to ensure that the Council’s capital investment plans were affordable, sustainable and prudent.


The strategies and policy statement put forward in the report were considered the best methods of achieving the CIPFA requirements. Whilst it might be possible to adopt variations to the strategies and policy statement, this would risk failing to achieve the goals of affordability, sustainability and prudence.


DECISION: The Cabinet reviewed the draft Treasury Management Strategy and recommended the six listed items below for full Council consideration and approval at the February 2020 Council meeting;


1.            To agree the Treasury Management Strategy Statement for 2020/21.


2.            To note the economic context and interest rate forecast (as detailed in Appendices A and B of the report).


3.            To agree the Prudential Indicators set out in Appendix D of the report.


4.            To agree the Minimum Revenue Provision Statement (Appendix E of the report).


5.            To agree Counterparty List and Limits set out in Appendix F of the report.


6.            To note the plans to develop options for financing the ten-year capital programme and report to Cabinet in December 2020, as per section 4 of the report, next steps. In the interim the Cabinet Member for Finance and Procurement would be regularly updated and, progress would be reported in the formal treasury reports (outturn and mid-year)


Reason: It was consistent with the requirements of treasury management specified by CIPFA, to which the Council was required to have regard under the Local Government Act 2003 and regulations made under that Act, for the Council to produce three strategy statements to support the Prudential Indicators which ensure that the Council’s capital investment plans were affordable, sustainable and prudent. The three documents that the Council should produce were: High Level Capital Strategy; Treasury Management Strategy, including prudential indicators; and, Investment Strategy.

(Key decision – reference number 5027)

Supporting documents: