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Treasy Management, Invetsment and Capital Strategies 2022/23

Meeting: 17/01/2022 - Audit, Governance and Standards Committee (Item 72)

72 Treasury Management, Investment and Capital Strategies 2022/23 pdf icon PDF 185 KB

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The Finance Manager introduced his report setting out the draft Treasury Management, Investment and Capital Strategies for 2022/23.  It was

noted that:


·  The Strategies were based upon the proposed Capital Programme which totalled £233m over the next five years and would be discussed at the meeting of the Policy and Resources Committee on 19 January 2022.


·  The proposal for next year was to utilise balances as far as possible and to increase short-term and long-term borrowing to support the Capital Programme.


·  The Capital Programme was escalating, and potential external borrowing would increase over the next five years to approximately £216m with a capital financing requirement of £274m.  It was anticipated that next year’s borrowing would increase by £20m and the operational and authorised limits for external debt were set at £57m and £67m respectively.  The Council was also looking into forward borrowing options due to low interest rates in the borrowing markets.


·  Treasury investments were likely to fluctuate between £10m and £55m next year.


·  Investments would be short-term, but there was provision in the strategy to invest £2m for over a year if rates became favourable and the funding was available at the time.


·  There would be a balance of £1.2m at the end of 2022/23 in respect of service loans, including provision of £1m for Maidstone Property Holdings Limited to undertake refurbishments to various properties it currently leased from the Council.


·  In response to a question at the last meeting, it was considered that using the Government’s Debt Management Office (DMO) in place of money market funds would be more of an administrative burden for no extra financial gain.  The DMO did not offer accounts which would allow the Council to recall funds daily to meet its cash flow liabilities.  Fixed term deposits were required.  Rates were around 0% while money market funds were gradually increasing.  Money market funds were AAA rated funds whilst the DMO was currently AA-.


In response to questions, the Director of Finance and Business Improvement advised the Committee that:


·  He would be happy to meet with Members to discuss the Strategies in more detail.  The length of the report reflected the additional requirements put on Councils regarding the reporting of treasury management following the Icelandic banking crash.  However, he would look at how the information might be summarised in an easily digestible form in future.  Table 2 on page 111 of the agenda showed how it was planned to fund capital expenditure in each year as projected from 2022/23 onwards, including the use of the Council’s own resources and external borrowing.  The Council was obliged to ensure that any borrowing was sustainable so, for example, in the case of the affordable housing programme, which was the biggest component, the Officers would be putting a business case to Members showing how the borrowing could be supported through the revenue generated from that housing.


·  There were no plans to show as separate figures the self-financing elements of capital projects.  The risk associated with the deliverability of  ...  view the full minutes text for item 72