- Essex Police, Fire & Crime Commissioner

Report reference number:: 005 – 24
Classification:: Not protectively marked
Title of report:: Treasury Management Strategy 2024-25
Area of county / stakeholders affected:: Countywide
Report by:: Austin Page (Financial Accounting and Compliance Manager)
Date of report:: 15/03/2024
Enquiries to:: Neil Cross (Chief Financial Officer)

1. Purpose of Report

This report is seeking approval of the Treasury Management Strategy 2024-25.

2. Recommendations

The Commissioner is asked to approve the Treasury Management Strategy 2024-25 (Appendix
1), with the key points being:

The Treasury Management Strategy includes £8.2m of assumed borrowing to 31 March 2028 to finance the Joint Fleet Workshops project.
The Authority may need to borrow to deliver the 2025/26 capital programme, in addition to the assumed borrowing above.
Loans of £23.5m are held against an approved limit of £40m of debt.
The Authority is unable to repay loans early without significant penalties.
The Authority aims to maintain an investment portfolio of high credit quality investments with a liquid maturity profile.

3. Benefits of the Proposal

Fulfils the Authority’s legal obligation under the Local Government Act 2003 to have
regard to the CIPFA Code.
Allows for the effective management of the Authority’s cash flows, borrowing and
investments, and the associated risks.

4. Background and Proposal

Treasury management is the management of the Authority’s cash flows, borrowing and investments, and the associated risks. The Authority has borrowed and invested substantial sums of money and is therefore exposed to financial risks including the loss of invested funds and the revenue effect of changing interest rates. The successful identification, monitoring and control of financial risks are therefore central to the Authority’s prudent financial management.
The Authority has engaged with Arlingclose, its treasury management advisors, to provide support in producing this strategy. However all decisions relating to treasury management are the responsibility of the Authority.

5. Options Analysis

Alternative options considered and rejected
Alternative investment strategies are considered in the Treasury Management Strategy:

Alternative	Impact on income and expenditure	Impact on risk management
Invest in a narrower range of counterparties and / or for shorter times	Interest income will be lower	Lower chance of losses from credit related defaults, but any such losses may be greater
Invest in a wider range of counterparties and / or for longer times	Interest income will be higher	Increased risk of losses from credit related defaults, but any such losses may be smaller
Borrow additional sums at long-term fixed interest rates	Debt interest costs will rise. This is unlikely to be offset by higher investment income	Higher investment balance leading to a higher impact in the event of a default, however long-term interest costs may be more certain
Borrow short-term or variable loans instead of long-term fixed rates	Debt interest costs will initially be lower	Increases in debt interest costs will be broadly offset by rising investment income in the medium term, but long-term costs may be less certain
Reduce level of borrowing	Saving on debt interest is likely to exceed lost investment income	Reduced investment balance leading to a lower impact in the event of a default, however long-term interest costs may be less certain

priorities and thus jeopardise effective delivery of the plans.

6. Strategic Priorities

The Treasury Management Strategy is an important part of the Authority’s overall strategic financial planning, as it helps to inform and support delivery of the Medium Term Financial Strategy. Adopting a Treasury Management Strategy will deliver on the priorities in the Fire and Rescue Plan, which includes making the best use of our resources, and ensures we are transparent about our cashflow, borrowing and investments.

7. Operational Implications

The Treasury Management Strategy sets out the operational limits on borrowing and investments. It also gives guidance on approved counterparties and sets out prudential indicators which allow the Authority to benchmark its performance.

8. Financial implications

As at March 2023, the Authority held loans of £23.5m and cash available to invest of £16.1m. The strategy minimises the Authority’s exposure to financial risk, such as credit loss, and ensures sufficient cash is held to meet its commitments.
The Authority receives interest in respect of the investments that it can make in accordance with the guidelines set out in the Treasury Management Strategy.

9. Legal implications

Department for Levelling Up, Housing and Communities (DLUHC) guidance issued under the Local Government Act 2003 requires local authorities to have regard to the CIPFA Code. There are no further legal implications arising from this decision

10. Staffing Implications

There are no direct staffing implications arising from this decision.

11. Equality and Diversity implications

This decision will not impact on any of the protected characteristics as defined within the Equality Act 2010.

The actions being taken will not have a disproportionate impact on individuals with protected characteristics (as defined within the Equality Act 2010), when compared to all other individuals and will not disadvantage people with protected characteristics.

Race	N	Religion or belief	N
Sex	N	Gender reassignment	N
Age	N	Pregnancy & maternity	N
Disability	N	Marriage and Civil Partnership	N
Sexual orientation	N

The Core Code of Ethics Fire Standard has been fully considered and incorporated into the proposals outlined in this paper.

12. Risks

A Treasury Management Strategy is an important control measure in ensuring medium-term financial plans are affordable and sustainable. It will enable the service to manage a reasonable level of unexpected financial pressures that may arise. It will also ensure that the service is able to continue with innovation and transformational improvement whilst at the same time ensuring that expenditure is not withheld unnecessarily.
Making investments in the Authority’s own name means that the Authority bears the risk of any counterparty failure. This risk will be managed in accordance with the Treasury Management Strategy.