Agenda item

Report of the Cabinet Member Finance

The Cabinet Member Finance introduced the report which complied with the CIPFA Code of Practice on Treasury Management as it set out the Council’s Treasury Management Strategy Statement for borrowing and prepared an Annual Investment Strategy for council approval prior to the start of a new financial year.

The Cabinet Member highlighted recommendation 1 which was crucial to the strategy, i.e. that the Council should invest prudently the surplus funds held on behalf of the community giving priority to security and liquidity in investments. He then made the following points :

·         the council had stayed within the Prudential Indicators

·         the S151 Officer had reported that the Capital Financing Requirement guideline had been complied with and no difficulties were envisaged in the future

·         the council was currently maintaining an under-borrowed position. This meant that the capital borrowing need (the Capital Financing Requirement) had not been fully funded with loan debt as cash supporting the Council’s reserves, balances and cash flow had been used as a temporary measure. This was a prudent strategy in the current circumstances as investment returns were low and counterparty risk was relatively high.

·         in terms of investment policy the Cabinet Member highlighted that the aim was to act cautiously due to the uncertain economic situation both nationally and internationally. He emphasised that the council did not solely rely on credit ratings but collected a range of intelligence. The council’s treasury management advisers and officers were constantly monitoring the performance of  investments with the counterparties. There was currently a strong biais towards investing at the short-end of the market with investments only made abroad where they have a minimum rating of AA- and only for durations of up to 1 year.

·         The treasury management budget was cautious in its projection of investment income particularly as the base rate was unlikely to increase in the short term.

The Cabinet Member wished to put on record his thanks to those officers responsible for treasury management matters as well as the Treasury Management Panel and its Chair Councillor Harman. They played an important role in monitoring, scrutinising and approving the report.

RESOLVED (unanimously) THAT the Treasury Management Strategy Statement and Annual Investment Strategy for 2016/17 at Appendix 2 be approved including :

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

2.    That the Prudential Indicators for 2016/17 including the authorised limit as the statutory affordable borrowing limit determined under Section 3 (1) Local Government Act 2003 be approved.

3.    Revisions to the Council’s lending list and parameters as shown in Appendix 3 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 Capita Asset Services and are prudent enough to ensure the credit quality of the Council’s investment portfolio remains high.

4.    For 2016/17 in calculating the Minimum Revenue Provision (MRP), the Council will apply Option 1 in respect of supported capital expenditure and Option 3 in respect of unsupported capital expenditure as per section 21 in Appendix 3.