RECOMMENDED THAT COUNCIL
approve the updated Treasury Management Strategy attached at Appendix A to the report which sets the policy framework for the Council’s treasury management activity, including (i) the Treasury Management Policy Statement, (ii) Minimum Revenue Provision Policy and (ii) Treasury Indicators.
To approve the updated Treasury Management Strategy attached at Appendix A to the report which sets the policy framework for the Council’s treasury management activity, including (i) the Treasury Management Policy Statement, (ii) Minimum Revenue Provision Policy and (ii) Treasury Indicators.
Members considered a report reviewing the Treasury Management Strategy and considering a refreshed version, recommended by Cabinet.
Councillor John Williams, Lead Cabinet Member for Finance, presented the report. He drew Members’ attention to changes in the borrowing rules for the Public Works Loan Board (PWLB) which came into effect in November 2020, shown in red text on the report for ease of reference. These changes required the Section 151 officer to give an assurance when borrowing that the Council had reasons other than primarily for yield and that no other commercial asset was being bought for this reason, including from reserves, for the following three years. The Council’s investment strategy enabled compliance with the new rules and by not pursuing Stream 1 investments he was confident the Council could take on board these rules going forward. The new rules were not retrospective so did not affect existing loans such as that to Ermine Street. Moreover, when need for refinancing arose, existing Stream 1 purchases would be eligible for PWLB support, even if the original money had been spent on property primarily for yield. The Medium Tern Financial Strategy required finding £5 million in the coming four years some of which would be found from new investments, and this aim continued to be achievable. The Investment Strategy was being revised accordingly and would be brought before Members in due course. Councillor John Williams asked Members to approve the updated Treasury Management Strategy.
Councillor Brian Milnes, Lead Cabinet Member for Environment Services and Licensing, seconded the proposal. He said the question of interest rates would become more prominent, including the prospect of negative interest rates, and it was important to be aware of the potential impact.
Councillor Sue Ellington said she was concerned that at a time of significant change in the national economic scene, the Council was investing and continuing to borrow at this level. The Council had once never borrowed; debt could burden the Council.
Councillor Heather Williams referred to liquidity and said the lesson from the pandemic was that cash was needed, for example, to pay staff. Borrowing should not be seen as a piggy bank. She asked what were the daily and weekly threshholds for liquidity.
Councillor John Williams said he was happy to provide Councillor Heather Williams with a list the Council’s short-term liquidity, and she could have asked for any information before this meeting. The figure for three months was adequate at £7 million, and it was scaremongering to suggest otherwise.
Responding to Councillor Sue Ellington, Councillor John Williams said the table at annex B of the report set out the portfolio and external borrowing, and aside from the PWLB, the Council had no long-term borrowing at the moment, because it had used its cash reserves for commercial investments. There was a need to start borrowing but it was wrong to suggest this was beyond means.
Councillor Heather Williams said, as a point of explanation, she had asked for the liquidity target on daily and weekly basis three times.
The Chair said Councillor John Williams had offered to provide these figures.
A vote was taken and votes were cast as follows:
In favour (24):
Councillors Henry Batchelor, John Batchelor, Anna Bradnam, Martin Cahn, Nigel Cathcart, Gavin Clayton, Claire Daunton, Douglas de Lacey, Clare Delderfield, Peter Fane, Neil Gough, Bill Handley, Tumi Hawkins, Pippa Heylings, Alex Malyon, Peter McDonald, Brian Milnes, Dawn Percival, Judith Rippeth, Bridget Smith, Hazel Smith, Aidan van de Weyer, John Williams, Eileen Wilson.
Councillors Ruth Betson, Shrobona Bhattacharya, Tom Bygott, Grenville Chamberlain, Graham Cone, Sue Ellington, Mark Howell, Deborah Roberts, Bunty Waters, Heather Williams, Richard Williams, Nick Wright.
Councillor Geoff Harvey.
Council RESOLVED to
Approve the updated Treasury Management Strategy attached at Appendix A to the report which set the policy framework for the Council’s treasury management activity, including (i) the Treasury Management Policy Statement, (ii) Minimum Revenue Provision Policy and (iii) Treasury Indicators.