Issue - meetings

Treasury Management Strategy 2019/20

Meeting: 14/01/2019 - Audit, Governance and Standards Committee (Item 79)

79 Treasury Management, Investment and Capital Strategies 2019/20 pdf icon PDF 96 KB

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Mr John Owen, Finance Manager, introduced his report setting out the draft Treasury Management, Investment and Capital Strategies for 2019/20.  Mr Owen explained that:


·  The Council had adopted the Treasury Management in Public Services: Code of Practice 2011 Edition (the Code) issued by the Chartered Institute of Public Finance and Accountancy (CIPFA).


·  CIPFA had revised the 2011 edition of the Code in 2017 to ensure that local authorities also take into account the risks involved with non-treasury investments.  The revised Code which would take effect in 2019/20 required local authorities to develop and approve an Investment Strategy and a Capital Strategy setting out the Council’s risk appetite and specific policies and arrangements for non-treasury investments.


·  Treasury Management was concerned with keeping sufficient cash for the authority’s day to day running whilst the other Strategies focused on non-treasury investments and the Capital Programme with regard to the risks and funding.  The Treasury Management Strategy had not changed from the previous year; the approach was to utilise cash balances rather than loan debt to finance the Capital Programme until such time that borrowing was required due to low investment returns and high counterparty risk in the current economic climate.  The Capital Programme would be presented to the Policy and Resources Committee on 23 January 2019, and might be subject to amendments that would, in turn, change the funding profile.


·  The Investment Strategy focused on how the authority assessed risks in relation to non-treasury investments including service loans to support local services and commercial investments (property investment to generate a profit).


·  The Capital Strategy was a high level document linking the Medium Term Financial Strategy, the Treasury Management Strategy and the Investment Strategy together.  It set out the long term context in which capital expenditure and investment decisions were made and considered risk, reward and impact on the achievement of the Council’s priority outcomes identified within the Strategic Plan.


In response to questions, the Officers explained that:


·  The figures set out in the report for capital expenditure were based on the latest bids for capital funding.  As described in the Capital Strategy, a process had been followed over the last few months which had resulted in the previous five year Capital Programme being updated.


·  To summarise, Service Managers submitted proposals in October to include projects in the Capital Programme.  Bids were collated by the Corporate Finance Team which calculated the financing cost.  Each Service Committee then appraised the proposals based on a comparison of corporate priorities.  The Policy and Resources Committee would then consider and recommend the Capital Programme to the Council in February.


·  Oversight of the Capital Programme was through the Policy and Resources Committee, and a report would be submitted to that Committee the following week developing the outline of the Capital Programme set out in the Medium Term Financial Strategy agreed by the Council in December 2018, reconfirming the principles behind the Council’s Capital Strategy, explaining how the Capital Programme would be funded and describing the individual projects included in  ...  view the full minutes text for item 79