To receive a report from the Treasury and Investment Manager, PSPS Limited.

Sean Howsam - Treasury and Investment Manager, PSPS Limited was in attendance to present Members with the Draft Treasury Management Policy and Treasury Management Strategy Statement, Minimum Revenue Provision Policy Statement and Annual Investment Strategy 2025/26, pages 61 to 108 of the Agenda refer. 

A copy of the Council’s Treasury Management Strategy Statement was included at Appendix 1 and the Treasury Management Strategy Statement, Minimum Revenue Provision Policy and Annual Investment Strategy 2025/26 at Appendix 2, pages 67 to 108 of the Agenda refer. 

The Treasury and Investment Manager, PSPS Limited advised Members that the report was the Draft Treasury Management Policy and Strategy Statement for the 2025/26 financial year and was included as part of the Budget Setting Report that was submitted to Executive Board and Council for approval.

Members were advised that the report was being presented to the Executive Board on 20th February 2025 prior to its submission to Council on 5 March 2025 and that the Report referred to a key element of the Council’s Governance Framework and represented an important contribution to the evidence trail in support of the Annual Governance Statement 2025/26.

Members were invited to put their comments and questions forward.

·       In reference to Paragraph 2.2 - The Council's borrowing need (the Capital Financing Requirement (CFR)) and the work being undertaken to calculate the full value of lease liabilities, a Member queried the timescale for conclusion of the work, page 75 of the Agenda refers.  In response, the Treasury and Investment Manager, PSPS Limited advised Members that lease accounting had changed due to changes in government legislation and that as part of the Council’s year end accounting process for 2025 lease liabilities would now be displayed on the balance sheet each year. 

·       In reference to the table on the Council’s cumulative CFR projections, a Member queried the reasoning for the large increase in CFR movement for 2027/28, page 75 of the Agenda refers.  In response, the Section 151 Officer explained to Members that the projection included the cost for the replacement of waste vehicles and that there was a clear pattern in the Council’s capital programme for when waste vehicles needed to be replaced.

·       A Member queried the methods used for generating and calculating forecasts in terms of inflation.  In response, the Treasury and Investment Manager, PSPS Limited advised Members that the Council made forecasts for inflation as part of the budget setting process which included underlying assumptions.

·       A Member commented on the lack of investment risk benchmarking and queried the considerations for undertaking formal benchmarking exercises.  In response, the Treasury and Investment Manager, PSPS Limited advised Members that investments had been benchmarked in the past by Link Group and that benchmarking had not been continued as frequently due to many authorities investing in similar areas.  The Committee were assured that benchmarking risks were adequate, and that Members could request a review on the way in which risks were assessed.

·       A Member queried the Council’s relationship with Link Group.  In response, the Treasury and Investment Manager, PSPS Limited advised Members that Link Group were the Council’s external treasury advisors.

·       In relation to Table 5.1.1 Capital expenditure, a Member noted the decreasing funds for Towns Fund project and queried the way in which the funding was drawn down whilst balancing the risks of ensuring that there were enough funds to make payments, page 95 of the Agenda refers.  In response, the Section 151 Officer advised Members that the Towns Fund was paid in advance which enabled investment income while waiting for contracts to proceed.  Members were further advised that there was a mixture of up front and post project funding available and that the government was mindful of cashflow impacts on authorities that required external funding.

·       A Member queried whether the government would return to providing retrospective grant money in the future.  In response, the Section 151 Officer advised Members that the ability of authorities with modest sized revenue accounts to handle large deployments of cash required careful management and that the government was aware of cashflow concerns.

·       In reference to Environmental, Social and Governance Considerations (ESG), a Member queried when considerations would form into a more established strategy, page 102 of the Agenda refers.  In response, the Treasury and Investment Manager, PSPS Limited advised Members that work was ongoing and that the Council was working in consultation with its external treasury advisors which had recently changed ownership.

·       In reference to the AAA ratings for Approved countries for investments, a Member queried whether the Council had any investments in Denmark in light of the effects from the new American Administration, page 103 of the Agenda refers.  In response, the Treasury and Investment Manager, PSPS Limited advised Members the Council currently held no investments with Denmark and that while a rating reduction was not anticipated, credit ratings were regularly monitored by the Council’s external treasury advisors.

·       A Member queried whether Canada should be placed in the same risk concern through association.  In response, the Treasury and Investment Manager, PSPS Limited assured Members that future investment positions would be reconsidered should any changes occur.

·       A Member queried whether there was a parallel rating system for ESG.  In response, the Treasury and Investment Manager, PSPS Limited advised Members that no other rating system was currently available in the credit rating criteria that covered the environmental, social and governance considerations, however Members were advised that the Section 151 Officer had the overall discretion to decide where to invest.

·       A Member commented that the Council should be given credit for using ESG considerations when deciding where to invest.  In response, the Section 151 Officer assured the Committee that the views and concerns on where to invest would be highlighted to the new Section 151 Officer.

There were no further questions or comments.

Following which it was,

RESOLVED

That the report be noted.