Purpose

The Chartered Institute of Public Finance and
Accountancy’s Treasury Management in the Public Services:
Code of Practice 2021 Edition (the CIPFA Code) requires the
Authority to approve a treasury management strategy before the
start of each financial year.
This report fulfils the Council’s legal obligation under the
Local Government Act to have regard to the CIPFA Code.

Decision

(1) 
To recommend the actions proposed within the Treasury Management
Strategy Statement 2026/27 (Appendix 1 of the
report) to Council.
 
(2) 
To note the Treasury Management Indicators detailed in Appendix 1
of the report.
 

Reasons for the decision

The Local Government Act 2003 requires the
Council to ‘have regard to’ the Prudential Code and to
set Treasury Indicators for the next three years to ensure that the
Council’s capital investment plans are affordable, prudent
and sustainable.
 
The Act therefore requires the Council to set
out its treasury strategy for borrowing and to prepare a Treasury
Management Strategy; this sets out the Council’s policies for
managing its investments and for giving priority to the security
and liquidity of those investments.

Alternative options considered

The Director of Finance (S151
Officer), having consulted the Cabinet Member for Resources,
believes that the above strategy represents an appropriate balance
between risk management and cost effectiveness. Some alternative
strategies, with their financial and risk management implications,
are the table below.
 

Alternative

Impact on income and
expenditure

Impact on risk
management

Invest in a narrower range of counterparties
and/or for shorter times.

Interest income will be lower.

Lower chance of losses from credit related
defaults, but any such losses may be greater.

Invest in a wider range of counterparties
and/or for longer times.

Interest income will be higher.

Increased risk of losses from credit related
defaults, but any such losses may be smaller.

Borrow additional sums at long-term fixed
interest rates.

Debt interest costs will rise; this is
unlikely to be offset by higher investment income.

Higher investment balance leading to a higher
impact in the event of a default; however long-term interest costs
may be more certain.

Borrow short-term or variable loans instead of
long-term fixed rates.

Debt interest costs will initially be
lower.

Increases in debt interest costs will be
broadly offset by rising investment income in the medium term, but
long-term costs may be less certain.

Reduce level of borrowing.

Saving on debt interest is likely to exceed
lost investment income.

Reduced investment balance leading to a lower
impact in the event of a default; however long-term interest costs
may be less certain.