Purpose

The report considers the Treasury
Management Strategy and Investment Strategy for 2026/27, prior to its
submission to the Council for approval.

 

Regulations require the Council
to prepare and formally approve both the annual Treasury Management Strategy
and Investment Strategy. The latest document updated for 2026/27 is attached as
Appendix A to the report for consideration by the Executive before being submitted
to Council for approval.

 

In the past 12 months, the Council’s
investment balance has ranged between £17 million and £40 million, lower
levels are expected in the forthcoming year due to capital programme
expenditure.  The Council expects to be a
long-term borrower and new treasury investments will therefore be made
primarily to manage day-to-day cash flows using short-term low risk instruments.  The existing portfolio of strategic pooled
funds will be maintained to diversify risk into different sectors and boost
investment income.

 

Borrowing levels are
expected to be £70.5million at the end off 2026/27, compared to £70.6 in the
last strategy.  The Council has
previously raised all of its long-term borrowing from
the Public Works Loan Board (PWLB) but will consider long-term loans from other
sources.

 

Some minor amendments have been
made to the Approved Counterparties in paragraph 13 where the time limit
for secured investments has been reduced from 25 years to 10 years and the
counterparty limit for local authorities and government entities has been
increased from £4 million to £5 million.

 

Additional text has also been
added to paragraph 17 b) to take into account Local
Government Reorganisation.  The
counterparty limit for loans to local authorities will be increased to an
unlimited amount where (a) the government has announced that this Council will
merge with the borrowing authority and (b) the loan is scheduled to be repaid
after the expected date of the merger.

 

The Council has maintained a reserve
of £500,000 to mitigate the impact of the statutory override on
accounting for gains and losses on pooled investment funds which has been
extended until 1 April 2029, as unrealised losses on pooled investment funds
are required to be recognised in the General Fund.

Decision

RESOLVED that the Executive:

 

(a) 
endorses
the draft Treasury Management Strategy and Investment Strategy for 2026/27, with
the agreement of a cap of £5 million for counterparty loans for local
authorities, attached as Appendix A to the report; and

 

(b) 
agrees
to submit the Strategy to Council for approval.