Issue - meetings

Cabinet, at its meeting on 4 February 2021, will consider a report on the council’s treasury management and investment strategy for 2021/22.

The Joint Audit and Governance Committee considered the report at its meeting on 26 January 2021 and had not recommended any adjustments to the strategy. 

The committee resolved to recommend Cabinet to approve the treasury management strategy, the prudential indicators and limits for 2021/22 to 2023/24 and the annual investment strategy 2021/22 as set out in the report.

The report of the interim head of finance, which Cabinet will consider on 4 February 2021, isattached.

The recommendations of Cabinet will be circulated to all councillors following the Cabinet meeting.

Council considered Cabinet’s recommendations, made at its meeting on 4 February 2021, on the council’s treasury management strategy and investment strategy for 2021/22.

The Joint Audit and Governance Committee considered the report at its meeting on 26 January 2021 and had not recommended any adjustments to the strategy. Cabinet agreed to recommend Council approve the strategy. 

In introducing Cabinet’s recommendations, the Cabinet member for finance reported that there were no significant changes to the strategy.  However, the report did reflect a significant fall in projections of investment income due to low interest rates that are likely to prevail for some time. As capacity permits, the council would be looking to progress a more proactive treasury management strategy during the coming year to address the budget shortfall.

The view was expressed that the council should consider municipal bonds to raise funds for green investments and invest in green industries which currently had higher yields. However, contrary to this view, others expressed the view that the purpose of the strategy was to maintain the security and liquidity of the funds and investments in such industries could be in conflict with those principles. In response to a question, the Cabinet member stated that a modest amount was outstanding from the agreed settlement with the Icelandic Banks.

RESOLVED: to

1.    approve the treasury management strategy 2021/22, as set out in appendix A to the interim head of finance’s report to Cabinet on 4 February 2021;

2.    approve the prudential indicators and limits for 2021/22 to 2023/24 as set out in appendix A to that report; and

3.    approve the annual investment strategy 2021/22 set out in appendix A, and the lending criteria detailed in table 6 to that report. 

To consider the interim head of finance’s report. 

Cabinet considered the interim head of finance’s report on the treasury management and investment strategy for 2021/22. 

The report had been considered by the Joint Audit and Governance Committee on 26 January 2021.  The committee supported the recommendations to approve the strategy, the prudential indicators and limits, and the annual investment strategy, and recommended this to Cabinet. 

Cabinet agreed, noting that the strategy set boundaries for the council’s borrowing, investments and exposure to loss, as well as setting the prudential indicators.  The strategy prioritised security, then liquidity and finally yield.  There were no significant changes to the strategy.  However, as income was likely to fall due to low interest rates, the council would be looking to progress a more proactive treasury management strategy during the coming year, working together with the capital strategy and the investment strategy. 

RECOMMENDED to Council on 11 February 2021: to

(a)      approve the treasury management strategy 2021/22, as set out in appendix A to the interim head of finance’s report to Cabinet on 4 February 2021;

(b)      approve the prudential indicators and limits for 2021/22 to 2023/24 as set out in appendix A to that report; and

(c)       approve the annual investment strategy 2021/22 set out in appendix A, and the lending criteria detailed in table 6 to that report.