Agenda item

To consider the Treasury Management Strategy Statement for 2022-23 for recommendation to Full Council.

The Head of Pensions and Treasury introduced the Treasury Management Strategy Statement for 2022-23 which provided an update on the council’s treasury management activities and performance in the first half of the financial year to 30 September 2021 in accordance with the Chartered Institute of Public Finance and Accountancy (CIPFA) Treasury Management Code of Practice. It was explained that the report was for the Committee to note and that it would be presented to Full Council as required by the Code of Practice.

An overview of the document was given noting that it detailed the Council’s borrowing and investment strategies for the next five years, while identifying risks and controls associated with these processes.

It was noted that the report had been reviewed by the Scrutiny Committee with no formal comments; however, they had asked questions that the officers had agreed to answer in writing to them. It was outlined that the code of practice stated that the strategy should be agreed annually setting out a three year position, but Haringey had decided to cover five years so that the document could be more accurately aligned to the medium term strategy and budget report.

It was noted that the Public Work Loans Board (PWLB), was no longer lending to local authorities who were planning to buy assets for yield. This new policy would not affect Haringey as this was not a practice that Council had pursued previously, therefore allowing the Council to continue to access the PWLB loans going forward.

The context for the report was developed in conjunction with the Council’s consultants Arlingclose and the assumptions for new loans were set at an average of 3%. The need for the Council to borrow were set out in the Capital Financing Requirement at Table 1 of the report. The borrowing strategy was set out at section 4, detailing how the Council intended to finance borrowing. The key issue was around meeting the affordability requirements and achieving cost certainty over the long term. The Treasury Investment Strategy detailed how investments would be made on income that was received in advance of expenditure. The Council’s primary objectives remained achieving security and liquidity before seeking financial return, as required by the code of practice.

In answer to questions from the Committee, the Head of Pensions and Treasury said that the Council would repay Lender’s Option Borrower’s Option (LOBO) loans in line with the Council’s LOBO loans policy and in consultation with the Council’s advisors, Arlingclose. It was important to find the optimum time for repayment; to date there had been no opportunities, that would materially benefit the Council, to repay these loans. In terms of short-term borrowing, 15% of the Council’s debt was made up of short-term loans, which were used on an ad-hoc basis to make up any short-term liquidity needs, for example, for emergency payments. Short-term loans often came from other local authorities and these rates were commonly set lower than bank rates. With interest rates due to increase, there might be potential to repay some loans, if there was this would be reviewed by Treasury Advisors and brought back to this Committee. In addition, the assumption that the winter peak for CPI would be 6% was guidance from BoE, if CPI was higher than this there was a risk that the BoE would raise rates even further.

A Committee member noted that at paragraph 5.3 the wording of ‘has increased’ should be changed to ‘had increased’ due the risks around Covid-19 diminishing relative to other economic trends. The Head of Pensions and Treasury agreed with this, stating that these risks would likely increase if there was another variant.

RESOLVED

1.            To agree the proposed updated Treasury Management Strategy Statement for 2022- 23.

2.            To recommend the proposed updated Treasury Management Strategy Statement for 2022-23 to Full Council for approval.