Agenda item

Report of the Corporate Director for Finance and Recourses

Glenn Hammons, Interim Finance Lead – Technical Finance, presented the draft Treasury Management and Capital Strategy 2024/25 for Audit Committee’s consideration. The following information was highlighted:

a)  As part of the constitution, Audit Committee is required to scrutinise, review and monitor the Treasury Management Strategy. The Capital Strategy has also been provided as both documents link together.

b)  There are a number of key changes to the Treasury Management Strategy which reflect the application for EFS and budget being considered by City Council on 04 March 2024. These include the Council’s capital financing requirements, temporary borrowing needs, and the Council’s forecast cash flows.

c)  The Capital Strategy also reflects EFS and in particular it reflects prioritisation of the use of capital receipts, support for repayment of any EFS, incorporates temporary changes to the Voluntary and Debt Repayment Policy in order to provide some flexibility in the event of short term borrowing requirements as a result of EFS, and the non-treasury management investments appendix has also been updated to reflect best practice.

d)  The report also provides an update on treasury management activity in the current financial year and outlines how the Council is repaying external loans and borrowing. Members noted that four loans in total that have been repaid.

During the discussion and in response to questions from the Committee, the following points were made:

e)  The Committee queried the schedule of commercial investments, and whether there are plans to ascertain up-to-date valuations as the last valuations were done in March 2022. It was explained that they will be re-valued as it is a requirement when the Strategies are updated.

f)  The Committee agreed that it was hard to compare last year’s Treasury Management Strategy with the revised version. They requested that the report pack be updated to better assist the Committee.

g)  The introduction of the Voluntary and Debt Repayment Policy prohibited the Council in undertaking any borrowing in relation to capital expenditure. Because of the EFS application and in order to transact that, the Council needs to be able to dispose of assets or borrow to pay for that capital expenditure and thus the Voluntary and Debt Repayment Policy has been temporarily lifted.

h)  The Committee discussed section 4 of the report which lists the number of service investments. Members queried as to whether some of those should be fully provided against, such as Robin Hood Energy and the Castle Trust given that both companies are now in liquidation. It was explained that to be transparent about the Councils treasury investments, it is required that these are reported and listed in the non-treasury activities section. Members commented that in the way it is written, it reads as though the plan is to fully recover them.

Resolved:

1)  To note the draft Treasury Management Strategy 2024/25.

2)  To note the draft Capital Strategy 2024/25.

3)  To note the council has repaid £58m of long-term loans early during the year 2023/24 which has been authorised under the Section 151 Officers delegated treasury authority. Further details will be published in the Treasury Outturn report 2023/24 (Section 5).

4)  To request a refinement to the Capital Strategy, Annex C, Section 4 to better set out which Service Investments in the Register of Service Investment table have been impaired by the Council.