Agenda item

7.1  The Assistant Head of Finance presented the key points in the report to the Committee. The current programme ran from 2023/24 to 2027/28. In line with the rolling programme management approach, the next iteration of the five-year programme ran from 2024/25 to 2028/29. The next iteration of the programme predominantly comprised of annual recurring allocations and a number of ongoing schemes from the existing programme.

7.2  The report included both the Capital and Treasury Management Strategies which, at their core, (i) confirmed the Capital Programme, as part of the Capital Strategy and (ii) the borrowing limits and other indicators which governed the management of the Council’s borrowing and investing activities, as part of the Treasury Management Strategy.

7.3  The Assistant Head of Finance referred to questions included in the report which were points for consideration by the Committee as set out in paragraph 8.

7.5  Governance arrangements had also been strengthened around the capital programme, introducing from this year a capital assurance group of senior officers monitoring the capital programme and ongoing projects.

7.6  A new accounting standard will be adopted from 1 April 2024 which requires Local Authorities to treat lease arrangements as capital expenditure rather than revenue, which will allow for capital value of lease payments not yet made.

7.7     The Capital Strategy also sets out the long-term context (10 years) in which capital decisions are made. It demonstrates that the Council’s approach to taking capital and investment decisions is in line with service objectives, whilst considering risk, reward, and impact. It also demonstrates that these decisions are taken whilst having proper regard to stewardship of public funds, value for money, prudence, sustainability, and affordability.

7.7     The liability benchmark graph included in the report gave a long-term impression on where long-term internal borrowing was heading and demonstrated that there was an increased borrowing need and over the next 12-18 months, there was a significant refinancing need.

7.8     There was a Head of Finance Summary review also within the report.

Comments of Committee Members:

7.9  The Chair noted that the Capital Strategy met the requirement of assuring the committee. 

7.10   The Chair referred to loans coming up for renewal, and asked if there was a likelihood that this would be on a short-term basis or if there was a better rate for long-term borrowing. The Assistant Head of Finance advised that short-term borrowing would only be considered for short-term need, and they look to replace on a long-term basis and consult with advisers on where interest rates might be heading.

7.11   Mr Reed considered that this was a good report, and it gave him confidence as a Newport resident that it was being well-run and well-thought-through.

Recommendation:

Governance and Audit Committee was asked:

§  To provide comment on the Capital Strategy (Appendix 2), including the draft Capital Programme (shown separately in Appendix 1), and the borrowing requirements/limits needed to deliver the new programme.

§  To provide comment on the Treasury Management Strategy and Treasury Management Indicators, the Investment Strategy, and the Minimum Revenue Provision (MRP) policy for 2024/25. (Appendix 3)

As part of the above the Committee

§  Noted the increasing debt, and corresponding revenue cost of this, in delivering the Capital Programme, and the implications of this over both the short and medium to long term with regard to affordability, prudence and sustainability.

§  Noted the Head of Finance recommendation to Cabinet and Council that borrowing needs to be limited to the extent that it meets the objective of stabilising, and ideally reducing, the Council’s Capital Financing Requirement, and the recommended prudential indicators on borrowing limits to achieve this.