Decision details

The Committee were asked to scrutinise the Draft Treasury Management Strategy with a view to recommending its inclusion within the Medium Term Financial Plan. 

Two key changes were presented for Members’ consideration these being as follows: -

• The Borrowing Strategy, which was previously restricted to borrowing purely for capital investment which would generate future revenue income streams and/or capital receipts in addition to meeting the costs of borrowing, being expanded to include any investment where resources could be identified which could fund the cost of borrowing.  It was considered that such schemes may provide social and economic value (ie) for regeneration schemes or be for service or asset improvement (ie) operational buildings, IT systems etc. All borrowing would remain affordable and sustainable over the long term.  The borrowing strategy had therefore been amended to reflect this.

• The Strategy now also included an increase to the maximum investment limit within the Local Authority Property Fund from £2m to £4m.  This was a longer term investment option.  Based on current cashflow projections over the medium term this amount of money was available for investment in excess of years.  Members were made aware however, that the fund value (capital investment) could go down as well as up.

Short term investments currently did not offer great returns so were not the favoured option presently.  Liquidity and security were higher considerations over yield.

Members asked a number of pertinent questions particularly around the implications of the borrowing strategy going forward.

Members sought indication as to whether the countyparty list was being affected by the Government removing its support for some banks and lenders. Officers advised it did create some limitations for example the Council could only currently invest in UK Banks and only for short term investments due to the ratings.  Greater use was therefore being made of money marketing funds, however the Council wanted to make longer term investments in order to generate greater returns and would therefore be looking at bonds for example.

Officers confirmed the return on the LAPAF was currently around 5% and had been advised this was achievable for the foreseeable future.  It was noted however the redemption price could fluctuate.

RESOLVED that

(a)          having scrutinised the draft Treasury Management Strategy it be                 RECOMMENDED to Full Council for inclusion within the Medium                 Term Financial Plan; and

(b)          the Treasury Management practises be acknowledged.