To propose the Draft Treasury Management Strategy and Prudential Indicators for 2009/10.

The Acting Cabinet Member for Resources presented the report on the 2009/10 Draft Treasury Management Strategy and Prudential Indicators and stated it was an important part of the way Council finances were managed. The Council must ensure it conforms with the key recommendations of CIPFA’s Treasury Management code of practice.  

Cabinet was reminded that effective treasury management made a significant contribution to the Council achieving business and service objectives and that the Council’s already strict policy would be tightened even further whilst there was the current banking crisis.

The Leader of the Alliance Group raised a question on the total debt of the authority of £144m at the end of year.  The Director of Resources advised that borrowing was at £116m and added that due to low interest rates the level of interest on borrowing was very low, with short term rates of less than 1%.  Because of the current financial situation, part of the policy was to finance capital activity through internal borrowing, outlined on page 284 of the report; thereby allowing borrowing next year to remain at £116m but with the possibility of taking out supported and possibly unsupported borrowing if rates were to be attractive.  Currently very low interest rates were available, which could be used to the benefit to the authority.  The Director added that the aim for next year was not to increase borrowing beyond the £116m.

The Chairman of the Strategic Monitoring Committee thanked the Director for his explanation, but observed that the effect of borrowing on the Band D Council Tax rate was estimated to involve a rise from £26.68 to £97.36 in 2011/12.

RESOLVED

         THAT Cabinet recommends to Council that:

a)      the Prudential Indicators detailed in Appendix 1, which includes the draft Capital Programme, be endorsed;

b)     the Treasury Management Strategy in Appendix 2 be endorsed;

c)      it be recommended to Council that the borrowing limits outlined in Appendix 2 be approved; and

d)     the Council’s Minimum Revenue Provision Policy for 2009/10 in Appendix 4 be approved.