Ms Miriam Adams, Interim Head of Pensions and Treasury provided the Committee with a detailed update on the Treasury Management Strategy Statement, Investment Report and the Capital Strategy Report for 2021-22. Ms Adams explained the three reports were a requirement of the legislation and guidance provided by CIPFA and the DLUHC.

Ms Adams referred to Appendix A, the Treasury Management Strategy Statement, which set out the external and local context. She referred to table 1, the balance sheet summary which detailed the Authority’s investments and borrowings. Ms Adams made reference to paragraph 4.7 and the table demonstrating capital expenditure. She said a key factor for the future was to ensure investment managers managing council’s strategic pooled funds meet the ESG requirements.

Ms Adams drew attention to paragraph 8.2 in the Investment Strategy Report, appendix B and said the table demonstrated the possible forecast and risk exposure on balances for investments and the forecast for future years as well as risk exposure in relation to other non-treasury investments like lending for service purposes. She said the Capital Strategy Report, appendix C was a high-level report which set out the Council’s strategy for capital expenditure. She referred to paragraph 1.4 which summarised how the £299m would be invested.

Ms Adams also referred to the remaining appendices and said the prudential indicators and treasury management statement provided guidance on the treasury management activities that are undertaken and monitored. She said they worked closely with their external treasury advisors, Arlingclose to ensure the investments were sound and provided value for money.

In response to comments and questions from members the following was noted:

• Councillor Edgar stated the reports were helpful. He asked about the capital programme and said the estimated cost rose from £231m in 2021-22 to £299m in 2022-23. He asked why projects seem not to complete on budget and in time, as per the capital strategy.
• Mr Kevin Bartle, Interim Corporate Director for Resources and Section 151 Officer responded saying it was the responsibility of the Project Manager to ensure projects were delivered to the budget set. He acknowledged there was considerable slippage within the capital programme and said the figures provided were a forecast. He said the report had been late coming to the Committee due to deliberations taking longer to be concluded. He said it was important to use the most up to date information possible as this effects projections and indicators. He said the figures are revised daily as part of the work done by Treasury Management.
• Referring to the New Homes bonus money, with forecasts increasing from 3.8m to 16.3m, Councillor Khan asked why there was a big jump. Mr Bartle responded saying there was a misapprehension in respect to this money. He said the government was consulting on the distribution methodology in 2021 and reached a final conclusion to roll over the previous years’ bonus for a year. It was a fortuitous windfall and therefore was not forecast.
• In response to the liability debit of 2.1m, Councillor Khan asked what might be done to mitigate against this. Ms Adams responded stating that the Council had a community role and is required to underwrite and provide guarantees for liabilities. She said the council’s pension liability was long term which could not be resolved immediately.

The Audit Committee RESOLVED to recommend to Council to:

1. Approve and adopt the following policy and strategies:

1.1)    The Treasury Management Strategy Statement contained in Appendix A;

1.2)    The Investment Strategy Report contained in Appendix B;

1.3)      The Capital Strategy Report, which includes the Minimum Revenue Provision (MRP) Policy Statement, contained in Appendix C;

1.4)      The Prudential and Treasury Management indicators contained in Appendix D; and

1.5)     The Treasury Management Policy Statement as set out in Appendix E.