Agenda item

A joint report of the Executive Member for Finance and the Director of Finance and Transformation (S151 Officer) was presented to seek Council approval for the Treasury Management Strategy and Prudential Indicators 2025/26.

The Council was required to approve annually a Treasury Management Strategy and a set of Prudential Indicators, which self-regulated the level of capital financing activities of the Council and the affordability of the capital programme.  These needed to be set on an annual basis to comply with the Local Government Act 2003 and the Chartered Institute of Public Finance and Accountancy (CIPFA) Codes of Practice on Capital Finance and

Treasury Management.

The Treasury Management Strategy was important from both a financial and governance perspective as it set the framework within which the Council managed its borrowing and investments, how it delivered these services, and how it controlled the risks attached to any decisions made.  It also set out the parameters and criteria that governed the day-to-day cashflow management activity and how these impacted on the medium to long term financial planning.  These included achieving value for money from any borrowing undertaken, managing risk, and protecting any resources that had been invested.

The Prudential Indicators were an integral part of the CIPFA Capital Finance Code and demonstrated whether the capital programme was affordable, sustainable, and prudent.   They included the level of capital expenditure over the next four years, how this had been financed, the maximum level of external debt and the cost to the revenue budget.

The Minimum Revenue Provision (MRP) policy governed how the Council planned to account for the repayment of loan principal in relation to its borrowing activities and had a fundamental impact upon the annual revenue cost of borrowing and over the long  term.  The current MRP policy was based on a 2% annuity model in line with many other local authorities.  The Council took the decision during the 2022/23 financial year to review the MRP policy, the effect of which was to achieve improved affordability on an annual basis over the short to medium term, although there were higher revenue charges in 25 – 50 years’ time.

The Council’s underlying need to borrow was measured by the Capital Financing Requirement which was forecast to be £310.197m during 2025/26 rising to £333.295m by the end of 2026/27 and decreasing slightly thereafter.  This resulted in the revenue cost of borrowing as at page 2 of the submitted report. 

Whilst the Council was not an outlier in terms of its level of total debt it was reaching its limit of revenue affordability on borrowing to fund its future capital investment.  The Council would need to prioritise its capital investment decisions over the medium and longer term and secure its financing through third party funds such as contributions and grants and capital receipts from the sale of assets to minimise future borrowing.

The Chair invited the Monitoring Officer to conduct a recorded vote on the recommendations contained in paragraph 2 of the report.

The result of the vote was as follows:

Votes for: (30)

C Cooke (Elected Mayor), Councillors Banks, Blades, Branson, Clynch, Cooke, Cooper, Coupe, Davison, Ewan, Furness, Gavigan, Grainge, Henman, Hill, Hurst, Hussain, Jackson, Jones, Kabuye, Lewis, Mason, Mohan, Morrish, Nicholson, Nugent, J Platt, S Platt, Romaine, Rostron, Smiles, Storey, Tranter, Uddin, Walker, Wilson, J Young, L Young.

Votes against: (0)

Abstentions: (1) Councillor Livingstone.

Following the vote, it was ORDERED that the following recommendations set out a paragraph 2 of the submitted report were approved by Council:

•           The Prudential Indicators and Limits for 2025/26 to 2028/29 relating to capital expenditure and treasury management activity set out in tables 1 to 10 of Appendix 1.

•           The Treasury Management Strategy for 2025/26, which includes the Annual Investment Strategy for that financial year.

•           The Minimum Revenue Provision (MRP) Policy for the 2025/26 financial year.

•           An Authorised Limit for External Debt of £331 million for the 2025/26 financial year.