Issue - meetings

The report has been prepared to ensure that the content complies with the requirements of the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Code of Practice on Treasury Management 2021.

Section 12 of the Local Government Act 2003 Act provides local authorities with the power to invest for any purpose relevant to its functions, or for the purposes of the prudent management of its finances. Broadly speaking, this means that its cash resources must be invested under the ‘SLY’ principles of Security, Liquidity and then Yield.

[15 minutes]

Upon the invitation of the Chair, the Senior Accountant (Treasury) introduced the report, which was the annual Treasury Management Strategy Statement, and explained there were few changes from the 2023-24 Strategy. It was a requirement of the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Code of Practice on Treasury Management that this document be produced and presented to Members each year.

The table on page 150 included an additional column for estimated outturn as per Quarter 3 budget monitoring. There was an increase from 2022-23 largely due to the Bognor Regis Arcade, the Levelling Up Fund, Alexandra Theatre, Sheltered Accommodation and Stock Development.

Paragraph 2.2 on page 150 stated the Council’s Capital Financing Requirement (CFR) could not rise indefinitely, so minimum revenue provision (MRP) charges had to be made to the revenue and HRA budget. MRP was a statutory charge that the Council were required to set aside from the budget to repay loan debt. The table on page 154 showed how much of Arun’s budgets were used for loan repayments. The Councils MRP policy remained unchanged from 2023/24 and was Option 3 as detailed in Appendix 3, page 172.

Page154 - 155 showed the investments and borrowing, which was almost £14m more in December than at 2022-23 year end. This was largely due to: the timing of the precept payment (January); a levy still not paid to WSCC regarding non-domestic rates (awaiting confirmation of when this will be paid); grants totalling £1.1m only repaid in January 2024.

Some investments have been placed with other local councils for diversification, and all investments held at the end of December 2023 could be seen in appendix 4 on page 175.

Page 156, paragraph 3.2 detailed the Operational Boundary and the Authorised Limit. The Authorised Limit represented a legal limit beyond which external debt was prohibited and this limit needed to be set or revised by Full Council and kept under review. For 2024-25 the Operational Borrowing Limit had been set at £78m and the Authorised Limit had been set at £83m. The Authorised Limit must not be breached. These limits were shown in the chart on page 157, paragraph 3.2.3, along with the CFR and borrowing levels which were below the Operational Boundary and the Authorised Limit.

Page 157 - 158, paragraph 3.3 and appendix 5 showed that the treasury management advisors, LINK, still expected interest rates to fall steadily over the next 3 years, from 5.25 to 3%, which theoretically would make borrowing more affordable.

Page 162, paragraph 4.1 explained the Council’s investment order of priorities would be security first, then liquidity and then yield. Appendix 7 on page 179-180 showed the quality counterparties available to invest with.

Paragraph 4.1 on page 163-164 detailed International Financial Reporting Standards (IFRS 9). Appendix 11 (page 184) had been added to this report to provide the valuation positions of the CCLA Diversified Income Fund and Property Fund at the end of December 2023, the current capital losses and the dividends from inception  ...  view the full minutes text for item 651