Decision details

The Committee considered a report by the Chief Financial Officer (circulated previously) regarding the Treasury Management Strategy Statement and Annual Investment Strategy Mid Year Review Report for 2019/20.

The Head of Resources highlighted the following:

·         The Council was required to receive and approve three reports each year which included: Prudential and treasury indicators and treasury strategy (first report), Mid Year Treasury Management report (second report) and an Annual Treasury report (third report).

·         The Council’s investment priorities were security of funds first, portfolio liquidity second and then yield (return).

·         The Treasury Management Strategy Statement for 2019/20 was approved by Council on 25^th February 2019.  The Revised Prudential Indicator for the Capital Financing Requirement 2019/20 had been reduced to £5.4m.  The authorised borrowing limit had increased following the approval of the Leisure Centre project.

·         The table containing revised estimates for capital expenditure and the changes since the capital programme was agreed at the budget followed on from the Performance and Financial Management report for quarter 2 on the agenda. 

·         The total Capital Financing Requirement, underlying need to borrow, had reduced to £5.4m.  The current level of external borrowing of £1.25m would be retained.  Market interest rates would be kept under review.

·         There were no difficulties envisaged for the current or future years in complying with the prudential indicator.

·         The Council’s budgeted investment return for 2019/20 was £70,000. As at 30^thSeptember 2019 £62,203 investment interest was earned in the half-year period.

·         During October 2019, HM Treasury announced, with immediate effect, that it was increasing the margin that applies to new loans from the Public Works Loan Board (PWLB) by 1% on top of usual lending terms. This was in part due to some local authorities substantially increasing their use of the PWLB in recent months, as the cost of borrowing had fallen to record lows.  This had an impact slowing down the levels of borrowing by Local Authorities.

·         Economics and interest rates as detailed in Appendix A.