Agenda item

Agenda item

Trafod adroddiad Cyfarwyddwr y Gwasanaethau Cyllid a Digidol. 

Cofnodion:

The report of the Service Director Democratic Services & Communications provided Members with the opportunity to scrutinise the 2021/22 Capital Strategy Report and 2021/22 Treasury Management Strategy Report which were both approved by Council on the 10th March 2021.

 

The Head of Finance, Education and Financial Reporting presented the contextual information which impacts upon Treasury Management decisions having it’s purpose and content defined by the Prudential Code for Capital Finance in Local Government.

 

The Head of Finance, Education and Financial Reporting advised that the report references the 3 year capital programme, also approved by full Council on 10th March, of just over £116M. Of this investment, £33M is funded by borrowing, the remainder being funded by other sources such as grants, capital receipts, third party contributions or revenue contributions. Key considerations for Treasury Management include the value and timing of the Council’s borrowing.

 

It was reported that the Council pays due regard to three key areas when setting the Capital Programme, that plans are affordable, sustainable and prudent, as defined by the Prudential Code and indicators are set to assist with this process (as set out within the report). It was further clarified that within these indicators, the Authorised Limit is set which prohibits any borrowing beyond this limit. Indicators are monitored, reported and scrutinised in the half year and full year Treasury Management Reports and also reported in the quarterly performance reports.

 

The Head of Finance, Education and Financial Reporting presented the Treasury Management Strategy which set out the Council’s borrowing strategy, investment strategy and Minimum revenue provision (MRP) strategy.

 

In presenting the Strategy, committee was advised that in November 2020 HM Treasury reduced the rates of the Public Works Loans Board (PWLB) by 1%, thereby reversing the previous increase in October 2019 which has enabled improved affordability for capital programmes. Clarification was provided regarding the Council’s borrowing requirement to fund the 21/22 capital programme, which 

is currently £19.3M. It will continue to maximise its internal borrowing from other public bodies on a short-term basis which proves more cost effective and reduces the counterparty risk.

 

The Head of Finance, Education and Financial Reporting explained that the PWLB are now no longer able to lend to local authorities who are planning to buy investment assets primarily for profit or solely for exploiting commercial gains. This Council’s risk averse approach ensures that any investments are subject to considerations of security, liquidity and finally yield (return) and the cash investments will continue to be held with other public sector bodies or the government’s own Debt Management Office. The Head of Finance, Education and Financial Reporting advised that this approach is supplemented by approving lending to organisations where appropriate due diligence is undertaken, and security arrangements put in place and currently £6.65M is invested in such arrangements.

 

In conclusion, the Head of Finance, Education and Financial Reporting drew Members attention to the policy approved by Council on Minimum Revenue Provision (MRP)and explained that these loans need to be repaid over time by charging them to revenue budgets, the charge is known as MRP and are in line with Welsh Government’s statutory guidance.

 

Following consideration of the report it was RESOLVED to acknowledge the information contained within the report as set out below:

 

Appendix 1:

2021/22 Capital Strategy Report incorporating Prudential Indicators.

 

Appendix 2:

Treasury Management Strategy incorporating Investment Strategy, Treasury Management Indicators and Minimum Revenue Provision (MRP) Statement for 2021/22.

 

 

 

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