Agenda item

REPORT OF THE SERVICE DIRECTOR – RESOURCES

To consider the Investment Strategy (which replaces the Capital Programme and Treasury Strategy) and recommend to Council the adoption of the Investment Strategy.

RECOMMENDED TO CABINET:

(1)       That Cabinet recommend to Council the adoption of the Investment Strategy (as attached at Appendix A), including the capital programme and prudential indicators;

(2)       That Cabinet recommend to Council the adoption of the four clauses in relation to the Code of Practice on Treasury Management (as detailed in paragraphs 8.17 to 8.23).

REASON FOR DECISIONS:

(1)       To ensure that the capital programme meets the Council’s objectives and officers can plan the implementation of the approved schemes;

(2)       To ensure the Council’s compliance with CIPFA’s code of practice on Treasury Management, the Local Government Act 2003, statutory guidance from the Ministry of Housing, Communities and Local Government and the CIPFA Prudential Code. As well as determining and managing the Councils risk appetite in respect of investments.

Audio Recording – Start time of Item – 47 minutes and 18 seconds

The Service Director – Resources presented the report entitled Investment Strategy (Integrated Capital and Treasury) and drew attention to the following:

Page 101

Appendix A was similar to that seen in September.  Treasury strategy had been combined with Capital Programme.  Shared Internal Audit Service had been passed to carry out a review of the overall investment strategy to ensure it was compliant with all the new guidance and statutory guidance.  Draft report had been published including areas which required change. 

Page 105 – Section 8.4

·         Investment strategy required to consider skills of individuals and committees involved in formulating, implementing or reviewing this strategy.  Finance, Audit and Risk Committee had responsibility of reviewing strategy.  Skills assessment matrix had been sent to committee but responses were still awaited so training could be carried out on a one-to-one basis or as part of an agenda item.

Section 8.11

·         How the Council invested their surplus cash was previously a treasury strategy.  There were proposals around changing the places where investment of surplus cash was made.

Section 8.12

·         Treasury advisors linked asset services had made comments about approach to investments and felt the committee was overexposed to UK building societies.  It was felt that this was overly prudent in relation to the fact that the building societies were unrated but were generally felt to be fairly stable institutions.  UK investments only which limited ability to diversify the investment portfolio. 

Section 8.14

·         They would continue to invest in UK building societies and would continue to make use of an additional report and would limit the investments to a maximum of 60%, a reduction of 15%;

·         They would start to invest in non-UK banks but only where the country rating was ‘AAA’ and institution with a rating of ‘AA-‘ and above;

·         They would invest in any AAA money market fund;

·         Rather than expressing limits as percentage, the percentage would be taken as starting points and they would be converted into numbers (£m) and this would be applied instead to ease administration from the officer perspective and also to aid understanding about limits;

Section 8.16

·         This reflected minor changes in where money could be invested.

Other points of note:

·         Daily management of Treasury, Treasury management practices and policy statement (8.19).

·         Offshore investment was a concern however the ultimate decision was down to the portfolio holder and administration;

·         Page 115 – Reportive Requirements: The committee had a role of responsibility to monitor situations;

Questions were raised my Members in relation to the presentation:

·         Training would possibility take on a general overview training or more specific depending on the responses received;

·         Investments would always be in sterling.

RECOMMENDED TO CABINET:

(1)  That Cabinet recommend to Council the adoption of the Investment Strategy (as attached at Appendix A), including the capital programme and prudential indicators;

(2)  That Cabinet recommend to Council the adoption of the four clauses in relation to the Code of Practice on Treasury Management (as detailed in paragraphs 8.17 to 8.23).

REASON FOR DECISIONS:

(1)  To ensure that the capital programme meets the Council’s objectives and officers can plan the implementation of the approved schemes;

(2)  To ensure the Council’s compliance with CIPFA’s code of practice on Treasury Management, the Local Government Act 2003, statutory guidance from the Ministry of Housing, Communities and Local Government and the CIPFA Prudential Code. As well as determining and managing the Councils risk appetite in respect of investments.