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Capital Strategy and Treasury Management

Purpose of Report

The Capital Strategy gives a high-level overview of how capital expenditure, capital financing and treasury management activity contribute to the provision of a Fire and Rescue Service along with an overview of how associated risk is managed and the implications for future financial sustainability. It summarises the overall processes and procedures that govern the purchase and financing of assets in order to enhance members’ understanding of these sometimes technical areas. The report also includes the Prudential Indicators and Treasury Strategies that need approval by the Fire and Rescue Authority.

Executive Summary

The revenue and capital budgets for 2020/21 were approved by the Fire and Rescue Authority at its meeting of the 16 December 2019. Members approved a net revenue budget of £35.9m for 2020/21 with a further £4.1m approved for capital expenditure. The Capital Strategy has been prepared using the relevant data contained in the revenue and capital budgets approved by Members and from various policies and procedures that are in place to manage the purchase and financing of assets.

The Capital Strategy is outlined within appendix A with supporting appendices to provide the detailed information with regards the Prudential Indicators for 2020/21 to 2022/23 and the strategy to be followed regarding borrowing and investing the Authority’s funds in the financial year 2020/21.

The appendices set out:-

overall Capital Strategy (Appendix A);

a list of prudential indicators as required by the CIPFA Prudential Code for Capital Finance in Local Authorities (Appendix B);

the Treasury Management Strategy outlining the strategy to be followed regarding short and long-term borrowing for 2020/21 in accordance with the CIPFA code of Practice on Treasury Management (Appendix C);

the strategy to be followed regarding the investment of Fire and Rescue Authority funds (Appendix D); and

Minimum Revenue Provision Statement (Appendix E).

Observations from the Audit Committee

This report was presented to the Audit Committee on the 27 January 2020 in order for its members to review the contents before submission to the Fire and Rescue Authority. The Audit Committee is tasked with ensuring effective scrutiny of the treasury management strategy and policies and based on its findings make recommendations to the Fire and Rescue Authority. Following a presentation highlighting the key areas of the report Members of the Audit Committee recommended the report for approval by the Fire and Rescue Authority.

Recommendations

That Members approve each of the five key elements of the report as set out below:

  • the overall Capital Strategy in Appendix A;
  • the Prudential Indicators set out in Appendix B;
  • the Treasury Management Strategy for 2020/21 set out in Appendix C;
  • the Investment Strategy at Appendix D;
  • the Minimum Provision Policy at Appendix E.

Information

The strategies in the report have been prepared using guidance from the Treasury Management advisors, Arlingclose, used by Conwy County Borough Council which has the responsibility for the Fire and Rescue Authority Treasury function.

IMPLICATIONS

Wellbeing Objectives

This report links to NWFRA’s long-term well-being objectives. Ensures that the purchase of assets to support front line service delivery is prudent, affordable and sustainable. Ensures there is sufficient investment in infrastructure to enable the service to provide emergency responses and prevention work well in to the future.

Budget

Budget is set annually for capital financing in line with the Treasury report.

Legal

The regulatory framework is set out in the appendices to the report.

Staffing

None

Equalities/Human Rights/Welsh Language

None

Risks

Investment of surplus funds – there is a risk that the financial institution in which the Service’s funds are invested could fail with a loss of part of the principal invested. However, one of the purposes of the report is to mitigate this risk.

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