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Decision details
Treasury Management, Annual Investment Strategy and Capital Strategy 2019/20
Decision status: Recommmend Forward to Council
Is Key decision?: No
Is subject to call in?: No
Decisions:
The Chief Finance Officer presented a report to consider the draft Treasury Management Strategy, Annual Investment Strategy, Minimum Revenue Provision (MRP) Policy and Capital Strategy. These documents set out the arrangements to ensure that there is an effective framework for the management of the Council's investments, cash flows and borrowing activities prior to the start of the new financial year.
The Council has some £46.7 million of debt (as at 1 January 2019), and investments which can fluctuate between £15m and £30m in the year. The level of debt is set to increase to some £78m by 2020/21. No changes to current borrowing limits were being proposed at present. The one significant change proposed was to expand the investment strategy to include an investment of £3m within a Diversified Income Fund.
The Chief Finance Officer explained that the Capital Strategy is a new requirement, and it is likely the Council will be asked to agree a revised one later in 2019/20 once the councils development plans are further advanced, and the borrowing requirements and timings are clarified.
Councillor Chowney thanked Mr Grace and his team for all the work which has gone into preparing these strategies.
Councillor Chowney proposed approval of the recommendations of the report. This was seconded by Councillor Batsford. It was agreed that recommendation 1 be separated from 2, 3 and 4 for the purposes of voting.
RESOLVED (5 for, 2 against) that:
1. The Council approve the Treasury Management Strategy, Minimum Revenue Provision (MRP) Policy, Annual Investment Strategy, and the Capital Strategy.
RESOLVED (Unanimously) that:
2. That the strategies be updated as necessary in 2019/20 in the light changing and emerging risks, the Council’s evolving future expenditure plans, along with further expected guidance on the Codes of Practice and government regulations.
3. That the Financial rules and the Financial Operating Procedures of the Council are reviewed and revised (as necessary) to meet the new requirements of the Code.
4. That the Investment Policy includes the use of CCLA’s Diversified Income Fund with a limit of up to £3m being invested within it (£5m in total with CCLA).
The reason for this decision was:
The Council seeks to minimise the costs of borrowing and maximise investment income whilst ensuring the security of its investments. The Council continues to make substantial investments in commercial property, housing and energy generation initiatives, and this will continue to involve the Council in taking on additional borrowing.
The sums involved are significant and the assumptions made play an important part in determining the annual budget. The CIPFA Code of Practice (2017 Edition), adopted by the Council last year, was released to take account of the more commercialised approach being adopted by councils and the enhanced levels of transparency required. The Code represents best practice and helps ensure compliance with statutory requirements.
The Council has the ability to diversify its investments and must consider carefully the level of risk against reward against a background still of historically low interest rates. Investments can help to close the gap in the budget in the years ahead and thus help to preserve services, assist in the regeneration of the town, provide additional housing and enhance the long term sustainability of the town.
Report author: Peter Grace
Publication date: 10/04/2019
Date of decision: 11/02/2019
Decided at meeting: 11/02/2019 - Cabinet
Accompanying Documents:
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