PAPER E

 

AUDIT COMMITTEE - 28 JULY 2005

 

PRUDENTIAL INDICATORS

 

REPORT OF THE CHIEF FINANCIAL OFFICER

 

 

PURPOSE

 

1.                  To monitor the Prudential Indicators agreed by the Council at its budget setting meeting on the 22nd February 2005.

 

ACTION REQUIRED BY COMMITTEE

 

2.                  To note the current borrowing and investment levels compared with the Prudential Indicators.

 

SUMMARY

 

3.                  The Prudential framework for self management of capital finance requires the setting of prudential indicators to support and record local decision making in respect of capital finance, external debt and treasury management.  The currently approved indicators are set out in Appendix A to this report.

 

CONTENT

 

4.                  At the 31st March 2005 the Council’s total external borrowing stood at £144,450,190 and it held £44,950,000 invested in advances to other parties.  The Council’s Capital Financing Requirement (CFR) is the sum borrowed to finance its past capital expenditure decisions and this amounted to £143,634,128 at the 31st March 2005.

 

4.1       The approved CFR for the 2005/06 financial year is £164,793,000.  The total authorised limit for external borrowing and other long term liabilities is £191,000,000, and this includes a 10% contingency to cover any potential emergency situation.

 

4.2       There has currently not been any further external borrowing in the current financial year.  The external borrowing position is monitored monthly by the Chief Financial Officer and Financial Services Manager (who have delegated responsibility for Treasury Management) and with continued uncertainty about the direction of the next movement in interest rates a decision to take no further borrowing was taken.

 

4.3       The Council’s level of external investments over this period has remained around the level as at 31st March 2005, with approximate £50 million currently invested.  Capital expenditure in the current year has so far has been able to be funded through generally favourable cash flow.

 

FINANCIAL/BUDGET IMPLICATIONS

 

5.                  The revenue implications of the required external borrowing to fund the capital programme has been provided for in the annual revenue budget.

 

LEGAL IMPLICATIONS

 

6.                  The Prudential Code was designed by the Chartered Institute of Public Finance and Accountancy (CIPFA), and is regarded as mandatory guidance associated with the Local Government Act 2003.

 

EVALUATION/RISK MANAGEMENT

 

7.                  The CIPFA Code of Practice for Treasury Management and the approved Treasury Strategy are the instruments that provide for the identification, management and control of risk associated with the Council’s treasury management activity.

 

RECOMMENDATIONS

 

8.                  That the current position on external borrowing and associated prudential indicators be noted.

 

BACKGROUND

 

CIPFA Code of Practice for Treasury Management

CIPFA Prudential Code

 

APPENDICES

 

Appendix A – Prudential Indicators

 

Contact Point : Mr G Hughes. 

                                    Tel. No. (01983) 823604

                                    [email protected]

 

 

Paul Wilkinson

Chief Financial Officer

 

Councillor Jilly Wood

Cabinet Member for Resources, Audit and Customer Champion