Issue - meetings

Treasury Management Strategy 2018/19

Meeting: 15/01/2018 - Audit, Governance and Standards Committee (Item 75)

75 Treasury Management Strategy 2018/19 pdf icon PDF 93 KB

Additional documents:

Minutes:

Mr John Owen, Finance Manager, introduced his report setting out the draft Treasury Management Strategy for 2018/19, including the Treasury Management and Prudential Indicators.

 

Mr Owen explained that:

 

·  The Strategy was based upon a proposed Capital Programme for 2018/19 to 2022/23 which would be discussed by the Policy and Resources Committee on 24 January 2018, and might be subject to amendments.

 

·  The Council had not changed its stance from 2017/18 and would continue to run down balances to fund the Capital Programme until such time that prudential borrowing was needed.  On the assumption that the Capital Programme would be fully spent, the Council might be in a borrowing position by the end of 2018/19.

 

·  Most investments would be short term (less than a year), but there was a provision for longer term investments (£5m) if rates were appealing.

 

·  Upon the advice of Arlingclose, the Council’s Treasury Management advisers, he wished to make the following amendments to the Treasury Management Strategy Statement (Appendix A) and the Prudential Indicators (Appendix C):

 

Appendix A – Pages 15-16 – Table showing Non-Specified Investment Limits – Amend second line to read:

 

Total investments without credit ratings or rated below A- except UK Government and Local Authorities - £5m

 

Appendix A – Page 16 – Table showing Investment Limits – Increase the cash limit in respect of negotiable instruments held in a broker’s nominee account from £5m to £10m per broker.  Arlingclose felt that this restricted the Authority when using different financial instruments these provide.

 

Appendix C – Amend to include reference to the Gross Debt and the Capital Finance Requirement Indicator.  The purpose of this indicator was to ensure that borrowing required was only used for the Capital Programme and not for revenue purposes.  The Gross Debt should not exceed the Capital Financing Requirement.

 

·  CIPFA had revised the Prudential Code which took into account non-treasury investments and had changed the wording of Treasury Management Practices which would require an amended Strategy to be reported to the Committee probably mid 2018/19.

 

During the ensuing discussion, Members drew attention to the following typographical errors in the Treasury Management Strategy Statement:

 

Page 10 – Amend the figure in the first line of the second paragraph to read £5.547m.

 

Page 10 – Amend the second word of the second line of the penultimate paragraph to read “forgone”.

 

In response to questions, the Officers explained that:

 

·  The capital expenditure prudential indicator was a summary of the Council’s capital expenditure plans that were known about at this stage.  The capital expenditure forecast of £5.025m as at 2021/22 would increase nearer that time.

 

·  The interest rate forecasts provided by Arlingclose did have upside and downside risks.  The assumption was that interest rates would remain constant for a period of time, but they could go up.  The Council was currently maintaining an under-borrowed position.  This meant that the Capital Financing Requirement had been funded using cash supporting the Council’s reserves, balances and cash flow as a temporary measure rather than through loan  ...  view the full minutes text for item 75