Agenda item

(a)       That having reviewed the draft Treasury Management Strategy 2020/21, the Committee has no specific issues to be reported to Cabinet on 18 February 2020; and

(b)       That the Treasury Management 2019/20 quarter update be noted.

The Finance Manager (Technical Accountancy) presented the draft Treasury Management Strategy 2020/21 for review and recommendation to Cabinet.  In preparation for the Strategy to be adopted by County Council in February, all Members had been invited to a training session in December 2019.  Also presented for information was the quarterly update on matters relating to the Council’s Treasury Management Policy, Strategy and Practices 2019/20.

There were no changes to the overarching Treasury Management Policy Statement for 2020/21 and only minor changes had been made to the Treasury Management Practices and Schedules.  The report summarised sections of interest from the Strategy which been covered as part of the training session.  As a result of updated investment guidance issued by Welsh Government (WG), the definition of investments in the Strategy had been widened to include non-Treasury Management investments such as loans and non-financial yield bearing investments.  Flintshire’s approach to this additional requirement was to append the non-Treasury Management investments to the Strategy.

As part of the Treasury Management update in Quarter 3 of 2019/20, an inaccuracy was noted on the total annual interest of Public Works Loans Board (PWLB) Fixed Rate Equal Instalment of Principal Loans on the long-term borrowing analysis.

In response to a question from Councillor Collett on the impact of inflation on future borrowing requirements, the Finance Manager said that the forecast was guided by the Capital Programme where some schemes ran over a number of years would have a fixed contract price.  She said there were no concerns about the impact of inflation on the rolling programme of investment.

Sally Ellis asked about oversight on additional work to meet the new requirements from WG.  The Finance Manager spoke about the challenges in complying with disclosures around skills, culture and climate change across the Council, particularly on treasury management investments where security and liquidity were prioritised.  Detailed discussion would take place with Chief Officers to agree the approach which would be reported back to the Audit Committee towards the end of the calendar year.

On the additional requirements for responsible ethical investments, the Chief Executive spoke about changing expectations and he drew attention to the reports available on Clwyd Pension Fund Committee agendas.

Sally Ellis asked about preparations for potential borrowing from sources other than the PWLB.  The Finance Manager said that the Council’s Treasury Management Advisers were comfortable with up to 20% of the portfolio being borrowed on a short-term borrowing basis, allowing sufficient capacity to consider detailed options for long-term borrowing.  Whilst PWLB loans remained a viable option, opportunities to borrow from alternative sources such as pension funds or insurance companies would be explored with the treasury management advisors.

Allan Rainford asked about the prudential indicator for the ratio of financing costs to net revenue stream and was advised that the proportions were just below 5% for the Council Fund and below 25% for the Housing Revenue Account.  The figures were included in the Capital Strategy, approved by Council the previous day, and would be circulated to the Committee.  When asked about adapting to meet the new requirements, the Finance Manager spoke about plans to strengthen training on non-treasury management activities.  On investments in foreign countries, the Finance Manager gave assurances of the safeguards and said that the Council could only invest in sterling.

The Chairman referred to the number of councils on the short-term borrowing portfolio and asked for an example where Flintshire was a counterparty to another council.  The Finance Manager agreed to look at sharing a previous example and she explained the approach to short-term borrowing in order to manage the cashflow position at that point in time.

RESOLVED:

(a)       That having reviewed the draft Treasury Management Strategy 2020/21, the Committee has no specific issues to be reported to Cabinet on 18 February 2020; and

(b)       That the Treasury Management 2019/20 quarter update be noted.