Agenda item

Report FSD23014

The report summarised treasury management activity during the third quarter of 2022/23.  Investments as at 31st December 2022 totalled £388.7m (£442.9m at 31^st December 2021) and there was no outstanding external borrowing. The report also included the Treasury Management Strategy and the Annual Investment Strategy for 2023/24, which were required by the CIPFA Code of Practice for Treasury Management in the Public Services to be approved by the Council. The report also included prudential indicators and the MRP (Minimum Revenue Provision) Policy Statement, both of which required the approval of Council. For clarification, the Council was required by statute to agree and publish prudential indicators, primarily to confirm that the Council’s capital expenditure plans were affordable and sustainable. The report ensured that the Council was implementing best practice and complying with the requirements of the CIPFA Code of Practice for Treasury Management.

In response to a question the Director of Finance explained that the key issues for credit ratings were around risk and reward.  The aim of the changes proposed in the report were to provide more options for investment, although there was risk and Members had to be comfortable with any risks.  The Director of Finance confirmed that the aim was to keep investments until redemption dates.

Noting that now was not the time for any Council to be taking more risks, Councillor Adams, on behalf of the Labour Group, proposed the following amended recommendations:

2.1. The Resources, Commissioning and Contracts Management Portfolio Holder is requested to: 

(a) note the Treasury Management performance for the third quarter of 2022/23. 

(b) recommend that Council agrees to adopt the Treasury Management Statement and the Annual Investment Strategy for 2023/24 including: 

(i)  the Prudential Indicators for the period 2023/24 to 2025/26 

(ii)  the Minimum Revenue Provision (MRP) policy statement 

(iii)  revised minimum credit-ratings for Housing Associations (A-) and Corporate Bonds (A-) 

2.2. Council is requested to: 

1. (a)  note the Treasury Management performance report for the third quarter of 2022/23 
2. (b)  agree to adopt the Treasury Management Statement and the Annual Investment Strategy for 2023/24 including: 

(i)  the Prudential Indicators for the period 2023/24 to 2025/26 

(ii)  the Minimum Revenue Provision (MRP) policy statement 

(iii)  revised minimum credit-ratings for Housing Associations (A-) and Corporate Bonds (A-) 

Amendment 2: We propose that the council agrees an addition to its Treasury Management Statement and the Annual Investment Strategy for 2023/24:

That any new investments should be in countries or territories classified as “Free” or “Partly Free” by Freedom House. No investments should be made in countries or territories classified as “not free”.

In relation to credit ratings, the Chairman suggested a compromise proposal of minimum BBB+ (rather than BBB-).

In considering the second amendment, the question was raised around whether it was right to exclude countries on that basis.  The Director of Finance confirmed that all the Council’s investments were sterling based and FCA regulated as such protections were in place and the Council was able to achieve a better return.

In relation to the proposed amendments, consensus was reached that the minimum credit rating should be BBB+ and that in relation to Freedom House, Officers should be asked to further investigate.

RESOLVED: That the Portfolio Holder be recommended to

1.  Note the Treasury Management performance for the third quarter of 2022/23.

2.  Recommend that Council agrees to adopt the Treasury Management Statement and the Annual Investment Strategy for 2023/24 including:

(i)  the Prudential Indicators for the period 2023/24 to 2025/26

(ii)  the Minimum Revenue Provision (MRP) policy statement

(iii)  revised minimum credit-ratings for Housing Associations (BBB+) and Corporate Bonds (BBB+)