Issue - meetings

This report reviews the performance of the Council’s treasury management function in 2014/15 and seeks changes to the treasury management strategy.

The Committee received and considered a report which reviewed the performance of the Council’s Treasury Management function in 2014/15 and which sought changes to the Treasury Management Strategy.

The Committee was informed that the Financial Policy Panel had received an interim report on performance last year. The purpose of this function, in accordance with the CiPFA Code, was to look a security and liquidity before yield. Investment rates were extremely low – the average annualised return on investments for 2014/15 was 0.85%.  However, this return compared extremely favourably to the benchmark.  Interest rates were not expected to rise until at least 2016.  Annexe 2 to the report set out the Prudential Indicators which the Council had a statutory responsibility to produce.

The report highlighted that the 2014/15 Treasury Management Strategy approved by the Strategy and Resources Committee included a risk management approach to investment of funds and returns. An amendment was required to this Strategy as changes by ratings agencies had reduced the number of eligible counterparties in order to allow Offices to maintain the ability to make investments in line with the Council’s overall investment priorities of low risk, liquidity and returns.

The Committee approved:

(1)      the actual 2014/15 prudential indicators as set out in Annexe 2 to the report; and

(2)      the following amendments to the Treasury Management Strategy:

·         when assessing suitability of individual counterparties reference to the lowest common denominator would be removed;

·         that the Council would be allowed to invest in unrated building societies with assets in excess of £1 billion to a maximum investment of £2.5 million for a maximum duration of one (1) year.

In so doing, the Committee noted that:

·         Lending money did not form part of this particular strategy and capital investment would be a separate policy decision which would need to be taken by members;

·         Officers were in the process of exploring other types of investment that could potentially increase yields without significantly increasing the risk to the capital invested but no decisions would be taken on this without further reference back to members;

·         The £1,000 credited to the Community Safety Partnership Fund was the interest received on the funds held.  This was an active fund and could not be released for other purposes.