To confirm and sign, as a correct record, the Minutes of the meeting of the Committee held on 2 December 2021. (Appendix ‘A’).

The Minutes of the meeting of the Overview and Scrutiny Select Committee on 2 December  2021 were confirmed and signed as a correct record.

Apologies for absence were received from Councillor S Walsh.

Members are invited to declare any disclosable pecuniary interests or other registrable and non-registrable interests in items on the agenda.

None declared. 

The Committee considered a report on the 2022/23 Treasury Management Strategy, Annual Investment Strategy, Prudential and Treasury Management Indicators and Minimum Revenue Provision Statement.  The four recommendations in the report had been recommended to Full Council on 10 February 2022 by the Corporate Management Committee at its meeting on 20 January 2022. 

The Treasury Management (TM) Strategy was one of the ways in which the Council managed its financial planning, risk management, and governance processes. The TM Strategy placed controls over where, and in what, the Council could invest and borrow and ensured adequate planning for the cash flow requirements of the capital and revenue plans agreed by Members. The TM Strategy set out the framework each year for the Council’s treasury operations and had to cover capital issues and treasury management issues. The Committee agreed to recommend the Council’s Treasury Management Strategy as set out in the report and the Annual Investment Strategy at Appendix ‘A’ to the report which maintained the principle of prudent investment with regard to protecting security and liquidity before making returns or yield. 

The Council had adopted both the CIPFA Treasury Management and Prudential Codes and new versions of these Codes had been published just before Christmas 2021 and the Committee noted the implications for the Council of those Codes. The key objectives of the Prudential Code were to ensure, within a clear framework, that the capital investment plans of local authorities were affordable, prudent and sustainable; that treasury management decisions were taken in accordance with good professional practice; and that local strategic planning, asset management planning and proper option appraisal were supported.  The new Code added that decisions must also be proportionate.

The new Prudential Code applied immediately, with the exception of the reporting requirements which did not take effect until the 2023/24 financial year, although early adoption was recommended.  Officers had incorporated some of the new requirements in the Council’s Capital and Treasury Management Strategies and would look to enhance all future reports with the new reporting requirements once the associated guidance notes had been received.  

The Council’s Treasury advisors had provided a section in the report on the economy and prospects for interest rates. The projections in the report showed that the Base Rate would climb to 0.75% by the end of the next financial year and the Council’s financial plans and Medium Term Financial Strategy had been based upon these projections.  The 2022/23 estimate for investment income and debt interest based upon these projections was noted.

The Council’s Treasury advisors had predicted a first rise in the Base Rate in June 2022.  However, the Bank of England Monetary Policy Committtee (MPC) had agreed to raise the Base Rate by one quarter of one per cent to 0.5% on 3 February 2022.  Furthermore 4 of the 9 MPC members had wanted to increase the Base Rate by one half of one per cent as inflation was now predicted to peak at 7.25 % in April 2022.  This suggested that  ...  view the full minutes text for item 441.