Issue - meetings

To consider the head of finance’s report.  

Cabinet considered the head of finance’s report that presented the draft treasury management strategy for 2013/14.  The report set out the expected treasury operations for the period, comprising four elements required by legislation:

·        The prudential indicators required by the Chartered Institute of Public Finance and Accountancy (CIPFA) Prudential Code for Capital Finance in Local Authorities

• The treasury management strategy in accordance with the CIPFA Code of Practice on Treasury Management.  This set out how the council’s treasury service would support capital investment decisions, and how treasury management would operate day to day.  It set out the limitations on treasury management activity through prudential indicators, within which the council’s treasury function must operate
• The annual investment strategy, which set out the council’s criteria for selecting counterparties and limiting exposure to the risk of loss on its investments.  This strategy was in accordance with the Department for Communities and Local Government’s investment guidance and formed part of the treasury management strategy
• A statutory duty to approve a minimum revenue provision policy for 2013/14

The officers recommended changes to the treasury management strategy for 2013/14 to:

(a)               Raise the limit that could be invested in UK government-backed institutions to £15 million

(b)               Extend the investment period with the council’s own ‘house bank’, the Co-operative Bank plc, to three months duration and to set a limit of £5 million

(c)               Provide the facility to invest £3 million in a pooled property fund

(d)               Add a limit of £5 million for the investment in corporate bonds with a minimum AA- credit rating or equivalent

(e)               Add a limit of £3 million for investment in equities via a pooled fund

(f)                 Provide a limit of £15 million for investment in managed bond funds

(g)               Change the counterparty limits and maturity periods for investments with building societies as set out in table 5 of appendix A to the report

The Audit and Governance Committee had considered this report also.  Cabinet noted that some of its committee members had expressed concerns at the proposal to invest in (c) to (f) above, worrying that the council would be taking unnecessary risks with taxpayers’ money.  However, the majority of committee members believed that the proposed strategy would allow the officers flexibility to place surplus funds, spread risk across a broader range of investment options, and achieve greater returns.  Cabinet noted these comments. 

Cabinet supported the proposed strategy but agreed to keep its effectiveness under review, particularly relating to property investments. 

RESOLVED: To recommend Council to

(a)               approve the treasury management strategy 2013/14 as set out in Appendix A to the head of finance’s report, subject to Cabinet keeping the strategy under review;

(b)               approve the prudential indicators and limits for 2013/14 to 2015/16 as set out in table 2, appendix A to the report;

(c)               approve the annual investment strategy 2013/14 set out in appendix A to the report and the lending criteria detailed in table 5.