Issue - meetings

To scrutinise the Draft Treasury Management Strategy Statement prior to adoption by Full Council in accordance with the Council’s Constitution (Part 4, Section 1).

The Committee received the report as set out.  Nicola Webb and Kevin Bartle provided an overview of the process and a brief outline of the main points.

NOTED

·          The Treasury Management Strategy Statement (TMSS) outlined what the Council did with their cash.  It sets out the rules, regulations and parameters on how to invest and how to borrow.  Members are involved in these decisions.

·          The TMSS was presented at three different meetings of the Council – the Corporate Committee formulated the strategy, OSC scrutinised, and full Council would then agree the strategy.

·          Members requested that a training session be arranged, so that Members would be better equipped to scrutinise the TMSS.

Nicola Webb and Kevin Bartle took questions from the Committee:

·          Following the events with the Icelandic Bank, all boroughs follow the CIPFA code of practice in formulating a Treasury Management Strategy.

·          The Council used its’ revenues, for example Council Tax, as security against borrowing as opposed to using assets, which was not allowed for local government.

·          The strategy of internal borrowing has saved a significant amount of money as money is not being lent by the PWLB (Public Works Loan Board) where the interest paid on the money was high compared to the interest gained on the money once it had been borrowed and was sitting in the Council’s account.

·          Legacy debts were still being paid; these debts have high interest rates attached to them and the Council was unable to get out of these without paying hefty premiums.  Should the private bank attempt to raise the interest rate on the loan then the council would be able to get out of the loan.

·          In the current climate, the Council was lucky to gain 0.5% interest on investments, where previously this had been 6/7%.  At the same time, there was currently not much available to invest.

·          The list of parties which the Council could lend to, based on a criteria, was listed in Annex 5 of the report.  There was only one change from last years list – Santander, as whilst it is a British bank, it has a Spanish parent and this was therefore considered a greater risk.

·          The criteria for investing Council funds was proposed to continue to be A-, which must be achieved across the credit reference agencies outlined in the report.  A- was still considered to be a good credit rating.

·          Central government gave money to Haringey to pay off Private Finance Initiatives (PFI), which was essentially a grant and therefore cost neutral to the Council.

·          The team responsible for the Council’s finances on a day to day basis checks the Council’s account each morning.  If a grant had been received then they consider investing the money with consideration of the cash balance sheet, which includes aspects such as payroll.  Market movement, treasury advisor views, share prices, business news and various other sources are also considered when making these decisions.  This also includes looking at insurance premiums, for example, if they increase then further investigation  ...  view the full minutes text for item 179