Decision details

Purpose: to recommend the strategy to Council 

Cabinet considered the statutory report of the head of finance, which recommended adoption of the treasury management and investment strategy 2017/18 to 2019/20.  The council was required to adopt a strategy each year.  The strategy set out how the treasury service operated and how it would support the council’s capital investment decisions.  It also set limitations on treasury management activity governed by the prudential indicators.  The strategy proposed the following changes:

Table 2 Prudential Indicators

·      To raise the authorised limit for external debt to £30 million.

·      To raise the operational boundary for external debt to £25 million from £5 million.

·      To change the limits on fixed interest rate investments to 100 per cent from £100 million

·      To raise the limits on variable interest rate investments to £50 million from £30 million

·      To remove the detailed limits on investments to maturity where they are split into bands of one to two years of £70 million, two to five years of £50 million and more than five years of £50 million, retaining the limit on principal sums invested for longer than 364 days to £70 million.

Table 5 Counterparty Limits

·      To change the maximum maturity date on investments with institutions with a minimum rating F1+/A+ to 4 years from 3 year

·      To change the maximum maturity date on investments with institutions with a minimum rating F1+/AA- to 3 years from 4 years

Annex 2 Liquidity

·      To simplify the performance measurement in terms of investment liquidity in Annex 2, paragraphs three and four to focus on maintaining minimum levels of working capital in short term vehicles

Cabinet supported the changes, believing that they would allow the council to fund future spending in the most financially advantageous way.  The Joint Audit and Governance Committee had come to the same conclusion. 

RECOMMENDED: to Council to 

(a)       approve the treasury management strategy 2017/18 set out in appendix A to the head of finance’s report to Cabinet on 1 February 2017;

(b)       approve the prudential indicators and limits for 2017/18 to 2019/20 as set out in table 2, appendix A to the head of finance’s report; and

(c)       approve the annual investment strategy 2017/18 set out in appendix A (paragraphs 23 to 66) and the lending criteria detailed in table 5 to the head of finance’s report.