Medway Council Approves Treasury Management Strategy for 2026/27

Medway Council has approved its Treasury Management Strategy for the 2026/27 financial year, following consideration by the Audit Committee and Cabinet. The strategy outlines how the council will manage its investments, cash flows, borrowing requirements, and capital funding for the year ahead.

The Treasury Management Strategy incorporates the council’s Treasury Management Policy Statement, Annual Investment Strategy, and Minimum Revenue Provision Policy. According to the council, treasury management involves “the management of the local authority’s investments and cash flows, its banking, money market and capital market transactions; the effective control of the risks associated with those activities; and the pursuit of optimum performance consistent with those risks”.

Financial Planning and Borrowing

The strategy sets out the council’s approach to funding its capital plans, which determine the council’s borrowing needs. The council is required to operate a balanced budget, ensuring that cash raised during the year meets cash expenditure. Surplus monies are invested in low-risk counterparties commensurate with the council’s risk appetite.

Debt repayment is projected to peak over the next two to three years, with the council prioritising short-term loans on the advice of treasury advisors. The council will continue to explore opportunities for significant asset disposals, which could be used to reduce debt levels. As interest rates fall, the council plans to spread the debt maturity profile to manage financial risk more effectively.

Strategic Considerations

During committee discussions, members raised concerns about increasing debt levels. The council’s debt increased by £80 million in the current financial year, with a planned increase of £120 million forecast for 2026/27. The Chief Operating Officer acknowledged this rise, noting that it is linked to growth in the council’s assets and capital investment programmes.

The strategy reflects updated Minimum Revenue Provision (MRP) guidance introduced in 2024, which specifically addresses the council’s position regarding the MRP and loans to subsidiaries. This represents a significant change to the council’s approach to managing long-term debt obligations.

The council will continue to consider a mixture of funding sources for new borrowing, including the Public Works Loans Board and other local authorities, utilising the most advantageous interest rates available. The strategy ensures the council maintains adequate liquidity whilst managing investment counterparty exposure effectively.

Key Takeaways

• Medway Council approved its Treasury Management Strategy setting out borrowing, investment, and cash management plans for 2026/27
• Debt repayment is forecast to peak within the next two to three years before declining as asset disposals provide additional receipts
• The strategy incorporates updated MRP guidance from 2024 and reflects council priorities for managing capital investment and financial risk

What This Means for Kent Residents

The Treasury Management Strategy ensures Medway Council manages public finances prudently, balancing the need for capital investment in services and infrastructure with responsible debt management. The council’s focus on maintaining adequate liquidity and managing investment risk aims to protect the authority’s financial position for the long term.