Issue - meetings

The Cabinet is requested to consider the agenda report and its six appendices in the agenda supplement and to make the following recommendation to the Council:

RECOMMENDATION TO THE COUNCIL

That the Council approves:

(a)   The Treasury Management Policy Statement, the Treasury Management Strategy Statement and Investment Strategy for 2019-2020, incorporating the temporary limits established in appendix 6 to the agenda report.

(b)   Chichester District Council’s capital strategy for 2019-20 to 2023-24.

(c)   The prudential indicators and limits for 2019-2020 included in appendix 2 of the report.

(d)   The investigation by officers whether to set an indicator to measure the proportionality of commercial income generated by Chichester District Council and, if so, to recommend a suitable indicator for inclusion in Chichester District Council’s 2020-2021 treasury strategy.

RECOMMENDATION TO THE COUNCIL

a)    That the Treasury Management Policy Statement, the Treasury Management Strategy Statement and Investment Strategy for 2019-20, incorporating the temporary limits established in appendix six be approved.

b)    That the Chichester District Council Capital Strategy for 2019-20 to 2023-24 be approved.

c)     That the prudential indicators and limits for 2019-20 included in appendix 2 be approved.

d)    That the investigation by officers as to whether to set an indicator measuring the proportionality of commercial income generated by Chichester District Council, and if so, to recommend a suitable indicator for inclusion in the Chichester District Council’s 2020-21 Treasury Strategy, be approved.

This item was presented by Mr Wilding. Mr Catlow (Group Accountant) was also in attendance.

Mr Wilding explained that the council is required to approve a Treasury Management Strategy. This year both the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Ministry of Housing and Local Government (MHCLG) have updated the framework within which the council conducts treasury management and other investing activities. The subtext for these updates is to impose a greater focus on risk management and governance for non-treasury investments which are increasingly being made by some councils.

The key changes are:

·       Treasury Management now covers investments made for service and/or commercial reasons.

·       The council is now required to publish a capital strategy as an overview of how capital expenditure, capital financing and treasury management activity contribute to the provision of local services and how associated risk is managed by the council.

Mr Wilding outlined the main focus of the council’s Treasury Operation over the next year which will be to evaluate and seek to make further prudent investments in external pooled funds. To facilitate this the ceiling for external pooled funds which the council can invest in has been increased from £20 million to £35 million. The council has already invested approximately £18 million which means a further £17 million could be invested. Mr Wilding explained that this could potentially generate a further £500,000 of revenue income per year.

Mr Wilding explained that, whilst the Treasury Management Strategy confirms the intention for the council to remain debt free, it proposes an increase in the operational and authorised limits for external debt. These are to ensure that sufficient liquidity is available given the possibility of unexpected events occurring (for example taxation receipts not being received on time). These limits for external debt are being raised to £10 million and £20 million respectively. The Strategy also states who the council can borrow from, although in practice should the need arise the council would most likely borrow from another Local Authority or the PWLB which is in effect part of the UK Government. Mr Wilding reassured members that there are pre-arranged dealer instructions in place before a lender can release funds to the council. These specify who can request the loan, who can authorise the loan and to which bank account the funds can be transferred. Counterparty limits have been increased from £5 million to £6 million each to reflect the expectation that the council will manage an average fund balance of £60 million during 2019-20.

Mr Wilding confirmed that the Treasury Management Strategy was reviewed by the Corporate Governance and Audit Committee on 10 January 2019. The Committee made a recommendation relating to the setting of a target level of commercial income that cannot be exceeded by the council. This is a recommendation included in the informal commentary supporting the MHCLG’s statutory guidance. The Committee have recommended that further work is carried out this year to determine if such a limit is desirable and if so  ...  view the full minutes text for item 651