Issue - meetings

Cabinet, at its meeting on 3 February 2017, considered a report on the council’s treasury management strategy (TMS) for 2017/18 to 2019/20 and set out the expected treasury operations for this period.

The Joint Audit and Governance Committee considered the report at its meeting on 23 January 2017 and had not recommended any adjustments to the strategy. 

Cabinet considered that paragraph 4.1 of the property investment policy should be amended to clarify where the council’s property investments could be located.  Cabinet considered that new property acquisitions for investment purposes should not normally be located in the Vale of White Horse district.  Cabinet asked the head of finance to draft appropriate wording to reflect this. 

Cabinet agreed to recommend Council approve the strategy as attached to the report subject to the addition of wording to cover the issue referred to in the previous paragraph.

The report of the head of finance, which Cabinet considered on 3 February 2017, is attached.

RECOMMENDATION: to approve

1.    the treasury management strategy 2017/18 set out in appendix A to the head of finance's report to Cabinet on 3 February 2017, subject to amending paragraph 4.1 of the property investment policy to clarify where the council’s property investments could be located;

2.    the prudential indicators and limits for 2017/18 to 2019/20 as set out in table 2, appendix A to the head of finance's report to Cabinet on 3  February 2017; and

3.    the annual investment strategy 2017/18 set out in appendix A (paragraphs 24 to 63) and the lending criteria detailed in table 5 to the head of finance's report to Cabinet on 3 February 2017.

Council considered Cabinet’s recommendations, made at its meeting on 3 February 2017, on the council’s treasury management strategy and investment strategy for 2017/18 to 2019/20.

The Joint Audit and Governance Committee considered the report at its meeting on 23 January 2017 and had not recommended any adjustments to the strategy.  Cabinet agreed to recommend Council approve the strategy.

RESOLVED: to approve

1.         the treasury management strategy 2017/18 set out in appendix A to the head of finance's report to Cabinet on 3 February 2017;

2.         the prudential indicators and limits for 2017/18 to 2019/20 as set out in table 2, appendix A to the head of finance's report; and

3.         the annual investment strategy 2017/18 set out in appendix A (paragraphs 24 to 63) and the lending criteria detailed in table 5 to the head of finance's report.

To consider the head of finance’s report. 

Cabinet considered the statutory report of the head of finance, which recommended adoption of the treasury management and investment strategy 2017/18 to 2019/20.  The council was required to adopt a strategy each year.  The strategy set out how the treasury service operated and how it would support the council’s capital investment decisions.  It also set limitations on treasury management activity governed by the prudential indicators.  The strategy proposed the following changes:

Table 2 - Prudential Indicators

·         To change the limits on fixed interest rates to 100 per cent from £40 million. 

·        To raise the limits on variable interest rates to £50 million from £30 million.

·        To raise the upper limit for principal sums invested for longer than 364 days to £40 million from £30 million. 

Note that the Section 151 officer has already agreed that the limit on fixed interest rates can be increased from £40 million to £43 million in 2016/17.  This followed a breach of the existing limit during December 2016. 

Appendix A - Minimum revenue provision

·         To approve the change in the minimum revenue provision policy that states that the council will use the “asset life method” to calculate minimum revenue provision as a provision for repayment of borrowing if applicable. 

Annex 2 - Liquidity

·         To simplify the performance measurement in terms of investment liquidity in Annex 2 paragraphs 3 and 4 to focus on maintaining minimum levels of working capital in short term vehicles. 

Cabinet supported the changes, believing that they would allow the council to fund future spending in the most financially advantageous way.  The Joint Audit and Governance Committee had come to the same conclusion.  However, Cabinet considered that paragraph 4.1 of the property investment policy should be amended to clarify where the council’s property investments could be located.  Cabinet considered that new property acquisitions for investment purposes should not normally be located in the Vale of White Horse district.  Cabinet asked the head of finance to draft appropriate wording to reflect this and include the change in the strategy being submitted to Council for approval. 

RECOMMENDED: to Council to 

(a)       approve the treasury management strategy 2017/18 set out in appendix A to the head of finance’s report to Cabinet on 3 February 2017, subject to amending paragraph 4.1 of the property investment policy to clarify where the council’s property investments could be located;

(b)       approve the prudential indicators and limits for 2017/18 to 2019/20 as set out in table 2, appendix A to the head of finance’s report to Cabinet on 3 February 2017; and

(c)       approve the annual investment strategy 2017/18 set out in appendix A (paragraphs 24 to 63) and the lending criteria detailed in table 5 to the head of finance’s report. 

RESOLVED: to

(d)       authorise the head of finance, following consultation with the Cabinet member for finance, to clarify the wording of paragraph 4.1 of the property investment strategy.