Agenda item

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).

George Bruce – Head of Treasury and Pensions – and Kevin Bartle – Assistant Director, Finance – introduced the Treasury Management Strategy Statement (TMSS).  Nicholas Keeling and Laura Wingham from Arlingclose (Treasury Management Advisors) were also present.

The TMSS was a three year future looking plan.  This report had been considered by the Corporate Committee, and comments made by Overview and Scrutiny would be fed back to Corporate Committee for final approval, and then the report would be ratified at Full Council.

NOTED the discussion and responses provided to the Committee:

·               Treasury Management would not be responsible for making decisions with regards to selling or renting properties in order to raise revenue.  TM worked within the boundaries of political decisions, and gave advice based on Council policies.

·               The Council had borrowed £30m less than last year, which saved over £1m in interest payments.

·               The plan was to not borrow long-term, and to run down cash balances.  Any borrowing that was required could be by short-term loans, with minimal interest.

·               Internal borrowing had enabled millions of pounds in interest payments to be saved.

·               The quantum of cash available for investment had reduced substantially and cash was mainly invested for the short term.

·               There were a number of factors taken into consideration when looking at banks – credit rating, market measures.  The list of recommended banks was reviewed on a monthly basis.

·               There were two main changes to the investment policy outlined in the report:

-       The introduction of ‘non-specified’ investment for banks which were not the highest quality.  ‘Specified’ investment for banks of the highest quality.  The minimum rating had been increased to AA- for the specified investment category and any which fell below this rating were now classed as non-specified.  The overall minimum credit rating which the Council would invest with had remained the same – the change was structural to allow differentiation between the quality.

-       Concept of investing in non-UK banks, but only where the country was AAA rated and the bank was A- rated.  There currently wasn’t any intention to invest with these over the next 12 months, but it was felt to be appropriate to include these within the framework.  The reason for the change was that UK banks were not necessarily of the highest quality compared to other banks globally and it was beneficial to have greater diversification in investment opportunities.

·               Overseas banking was monitored on a daily basis with updates provided by Arlingclose.  Monitoring was done on the same basis as UK banks, for example, looking at regulations and ensuring that there was a safe environment and considering Credit Default Swaps and share prices.

·               An internal audit took place every year, and was carried out by Deloitte.  Treasury Management was also audited on an annual basis.

·               Credit Union investment was considered as high risk and was therefore dealt with as bad debt provision.

The Committee had no amendments to make to the report and it was agreed that the report be referred on to the Corporate Committee.

The Chair thanked all for attending.