Issue - meetings

To provide pre-decision scrutiny to the strategy being proposed (report of the Deputy Chief Executive - Corporate Development (S151) enclosed).

Consideration was given to the report of the Deputy Chief Executive – Corporate Development (S151) which asked the Governance and Audit Committee to provide pre-decision scrutiny to the strategy being proposed.

The Interim Treasury and Investment Manager (PSPSL) introduced the report which outlined the following main points:

• Background to the item;

• Appendix A detailed the Treasury Management Policy Statement 2024/25;
• Appendix B detailed the Draft Treasury Management Strategy Statement which included the following areas:
  • Background to the report;
  • Capital Prudential Indicators 2023/24 to 2028/29;
  • Borrowing; and
  • Annual Investment Strategy;
• The following information was appended to Appendix B:

o   Prudential and treasury indicators;

o   Interest rate forecasts;

o   Treasury Management practice 1 – credit and counterparty risk management;

o   Approved countries for investments;

o   Treasury management scheme of delegation; and

o   The treasury management role of the Section 151 Officer.

Members considered the update and made the following comments:

• Members referred to point 2.2 of Appendix B and asked that the 2027/28 Total Capital Financing Requirement calculation be corrected to 99,717.

• Members referred to the historic losses borne by local authorities that had placed investments with Icelandic banks and asked whether SHDC’s approach to investment ensured government protection of council funds.
  • The Interim Treasury and Investment Manager (PSPSL) responded that:
    • Since the Icelandic Financial crash, Link Group’s advice (SHDC’s external treasury management advisors) considered the credit ratings of each financial institution and its parent group where applicable;
    • Link Group monitored the credit default swap prices (cost of insuring against default) of institutions and adjusted maximum investment duration advice where increased risks had become apparent; and
    • Investments were now only placed with institutions from countries which met the Council minimum sovereign criteria.

• Members referred to the recent nationally published data regarding the amount of debt held by local authorities per head of population and noted that different types of debt had not been distinguished. Had SHDC received any comments on the matter?
  • The Interim Treasury and Investment Manager (PSPSL) responded that:

§  He was not aware of any comments or issues;

§  In general, local authority debt had increased and reserve balances had reduced; and

• Members referred to point 2.5 of the report and asked whether the change in accounting rules affected the Council as lessor and/or lessee.
  • The Interim Treasury and Investment Manager (PSPSL) confirmed that the change in rules applied to the Council in its position as both lessor and lessee. The change would impact the Council’s Capital Financing Requirement where it acted as lessee.

• Members referred to point 1 of Appendix B regarding the adequate planning of cashflow and asked how funds were made available ‘when’ and ‘where’ needed.
  • The Interim Treasury and Investment Manager (PSPSL) responded that:
    • The Council held working capital in the form of cash balances in its bank accounts;
    • All expected income and major items of expenditure were planned for the year ahead;
    • Bank statements  ...  view the full minutes text for item 36