Decision details

This report outlines the proposed Treasury Management Policy and Strategy for 2016/17 as required by the Chartered Institute of Public Finance and Accountancy (CIPFA) Treasury Management Code of Practice. It includes the County Council's borrowing and investment strategies, the updated strategy on the use of financial derivatives and the new proposed minimum revenue provision policy, together with the treasury management prudential indicators which seek to ensure that the Council's borrowing levels remain both sustainable and affordable. 

The MRP policy incorporates changes which propose that the MRP, with respect to repaying the pre 2007 debt is over 50 years rather than a 4% reducing balance and changing the post 2007 debt to an annuity basis are implemented. Attached as Appendix C is the revised MRP policy for approval.

Approval of the Treasury Management Policy and Strategy is a matter reserved to the Full Council.

Damon Lawrenson, Interim Director of Financial Resources, presented a report setting out details of the proposed Treasury Management Policy and Strategy for 2016/17 and which included the County Council's borrowing and investment strategies, the updated strategy on the use of financial derivatives and the new proposed minimum revenue provision policy, together with the treasury management prudential indicators.

It was noted that minor amendments to Appendix B of the report were required, with the net borrowing total 31/12/015 on page 25 being £469.88m, not £429.94m, and with revised paragraphs under the table on page 29 to read:

"The County Council's borrowing requirement as at 31 March 2016 including short term renewals is expected to be £619.089m, and is forecast to fall to £567.262m by March 2019 assuming the current debt portfolio will need to be renewed. In addition, the County Council may borrow for short periods of time to cover unexpected cash flow shortages.

The County Council's borrowing position over the coming years includes the needs to provide cash flow support for the Preston, South Ribble and Lancashire City Deal to cover the gap between the construction of infrastructure and the payment over of contributions from other organisations including the government and developers. It is estimated that some £28m of borrowing will be required in 2016/17. This borrowing is temporary.

There are a range of options available for the borrowing strategy in 2016/17"

Resolved: That:

  (i)  the treasury management policy as set out at Appendix 'A' be recommended to Full Council for approval.

  (ii)  the treasury management strategy for 2016/17 as set out at Appendix 'B', including the amendments circulated, be recommended to Full Council for approval.

 (iii)  In respect of the new minimum revenue provision set out at Appendix 'C', Full Council be recommended to:

a.  Approve the Capital Financing Requirement method and the Asset Life method (Equal Charge approach) for expenditure funded from borrowing incurred in 2015/16 and future years.

b.  Charge to revenue a sum equal to the repayment of any credit liability.

c.  Approve the proposed treatment of assets constructed under the Preston, South Ribble and Lancashire City Deal and Homes and Community Agency Local Infrastructure Fund, subject to annual review.

d.  Implement the changes to the  MRP policy from 2015/16.