Agenda item

Report of the Cabinet Member Finance

The Cabinet Member Finance introduced the report and explained that under the CIPFA code the council must report annually on its treasury management strategy statement which incorporated the investment strategy and its prudential indicators .

She reported that CIPFA had published new editions of Treasury Management in the Public Services: Code of Practice and Cross-sectoral Guidance Notes and the Prudential Code for Capital Finance in Local Authorities in December  2017. In response to these changes, Council should consider the Treasury Management Strategy for 2018/19 based upon the requirements of the 2011 Code and in line with current governance practices. The changes to the Prudential Code had introduced a requirement for the Council to approve a Capital Strategy with effect from 2018/19.

Since this report had been considered by the Treasury Management Panel and Cabinet, expectations had been raised that further interest rate rises were likely to happen sooner and to a higher level than previously anticipated by markets.

The treasury strategy statement and annual investment strategy formed part of appendix 2 and she drew members’ attention to the revisions made to the lending and parameter list on page 86 table 2.

She reported that during the 2017/18 financial year the council decided to look into alternative investments outside the traditional bank deposits. It currently had £3m invested in the CCLA Property Fund which was generating returns of 4.5%. This had brought an additional £35k over and above the revised 2017/18 investment income budget, and with new investments in other Pooled Funds had seen the expected gross income surplus of £307k for 2018/19.

The Cabinet Member Finance concluded by putting on record her thanks to the Treasury Management team.

The following questions and comments were raised :

·         Following changes to UK legislation to better protect customers and the day-to-day banking services they relied on where did the council’s investments sit  ? The Chief Finance Officer explained that the council’s current accounts were held with Lloyds bank plc and this was therefore considered “retail”.  He undertook to provide a written response to Members with regard to the council’s treasury deposits.

·         A Member commended the quality of the recent presentation by the council’s new treasury advisors Arlingclose at Treasury Management Panel.

·         Members recognised the importance of moving deposits away from the High Street banks as this was not keeping up with inflation. It was acknowledged that changing from a risk averse approach to a more pragmatic approach was necessary to aid the Medium Term Financial Strategy.

·         A question was raised in terms of the item in the treasury report last year with regard to the council’s £30k investment in a local shopping app designed by a seed company. The Leader informed that the council had shared its investment with the BID on a 50:50 basis but having reviewed the success of the app it had decided not to progress the investment further. The Chief Finance Officer undertook to provide a full update to Members on this.

RESOLVED (unanimously) THAT

The attached Treasury Management Strategy Statement, Annual Investment Strategy for 2018/19 at Appendix 2, Lending list at Appendix 2, Table 2 page 6 and MRP policy statement for 2018/19 at Appendix D, be approved  including :

·         The general policy objective ‘that Council should invest prudently the surplus funds held on behalf of the community giving priority to security and liquidity’.

·         That the Prudential Indicators for 2018/19 including the authorised limit as the statutory affordable borrowing limit determined under Section 3 (1) Local Government Act 2003 be approved.

·         Revisions to the Council’s lending list and parameters as shown in Appendix 2, Table 2 page 6 are proposed in order to provide some further capacity. These proposals have been put forward after taking advice from the Council’s treasury management advisers Arlingclose Limited and are prudent enough to ensure the credit quality of the Council’s investment portfolio remains high.