Agenda item

Treasury Management Report


This report included both the Capital Strategy and Treasury Management Strategy for approval by the Council and (i) confirmed the capital programme, as part of the Capital Strategy and (ii) the various borrowing limits and other indicators as part of the Treasury Management Strategy. In addition, the report spelled out the increasing costs of funding the Council’s external borrowing and the medium to long term affordability challenge of this.   The revenue impact of both strategies were included within the Medium Term Financial Projection (MTFP) which were approved separately by Cabinet as part of the 2020/21 budget report.


Good progress was made in bringing forward some key schemes to date e.g. Transporter Bridge, Neighbourhood Hubs, City centre re-development, new schools. The current capital programme included some c£186m of already approved projects and c£16m of further capital headroom for further projects - £202m total of investment in the city, which delivered on key priorities.


Summary of Recommendations


The Capital Strategy and Treasury Management Strategy detailed further in this report outlined the current capital programme to 2024/25 (this was the original capital 5 year programme to 2022/23 which was extended by 2 years for projects whose completion spanned beyond the 5 years), links to treasury management decisions and a long-term view which highlighted the challenges facing the authority for future capital decisions.


Treasure Management Borrowing Strategy


The capacity for further internal borrowing reached capacity and would reduce over the medium to long term. In 2020/21 the Council was expected to undertake external borrowing both for the refinancing of maturing loans and to fund the existing capital programme; it would remain as much ‘internally borrowed’ as was possible and increase actual external borrowing only when needed to manage its cash requirements. However, the Council may, where it felt necessary to mitigate the risk of interest rate rose, undertaking borrowing early to secure interest rates within agreed revenue budgets. This would be done in line with advice from our Treasury Advisors.


Commercial Activities


Section 6 of the capital strategy detailed the commercial activities of the Council, including the approval of a £50m investment fund for investments in commercial properties, which was built into the borrowing limits being set in this report. While currently this fund was not been utilised, the future use of the fund


Chair asked for more narrative when reading through the report.


Members raised the following queries:


•Has any money been spent

•When did it happen October 2019

The Committee commented that it was not clear why there was a requirement to review the investment fund when there was a 1% increase in the PWLB rates, and furthermore, how a relatively small increase would have such a large impact.  It was therefore advised that this comment should be taken on board and reflected in the report to Cabinet.


Treasury Management Strategy


The Council is involved in two types of treasury activity:


*Borrowing long-term for capital purposes and short term for temporary cash flow


*Investment of surplus cash

This requires Council to agree affordable borrowing MTFP linked to that borrowing.

Borrowing strategy remains unchanged.

Investment strategy £10m required to sit with the Council



The Committee suggested that their comments on the Capital Strategy could be stronger, in that it did not put a defined figure on how much the borrowing should be reduced.  The Committee therefore wanted this comment reflected in report to Cabinet.

Supporting documents: