Agenda item

The Cabinet is requested to consider the agenda report and its four appendices and to make the following recommendations to the Council:

That the Council approves:

(a)   The Treasury Management Policy and Treasury Management Strategy Statement for 2017-2018 as contained in appendix 2 of the report.

(b)   The Investment Strategy 2017-2018 as detailed in the Treasury Management Strategy Statement.

(c)   The Prudential Indicators and Limits for 2017-2018 included in the report at appendices 2 and 4.

(d)   The Minimum Revenue Provision statement for 2017-2018 included at appendix 4.

RECOMMENDED TO THE COUNCIL

(1)   That the Treasury Management Policy and Treasury Management Strategy Statement for 2017-2018 as contained in appendix 2 to the agenda report be approved.

(2)   That the Investment Strategy 2017-2018 as detailed in the Treasury Management Strategy Statement be approved.

(3)   That the Prudential Indicators and Limits for 2017-2018 included in appendices 2 and 4 to the agenda report be approved.

(4)   The Minimum Revenue Provision Statement for 2017-2018 in appendix 4 to the agenda report be approved.

The Cabinet received and considered the agenda report and its four appendices in the main agenda supplement (copies attached to the official minutes).

In addition to the public copies of the main agenda supplement, hard copies of appendix 1 (pages 49 to 51) in the main agenda supplement were available to those observing the meeting. 

The report was presented by Mrs Hardwick.

Mr Catlow was in attendance for this item. 

Mrs Hardwick explained that CDC was required to approve a strategy and the relevant prudential indicators included in the report by 31 March 2017. The report had been considered by CDC’s Corporate Governance and Audit Committee on 26 January 2017, as a result of which it had been amended to clarify how Community Infrastructure Levy monies were considered as part of treasury management (page 56 of the main agenda supplement) as well as other minor changes. The risk appetite statement (page 53) was unchanged.

The key updates to the strategy (which had been drafted to support the vision outlined to members in the previous month’s treasury managementsession) were outlined in appendix 1 and were to identify (a) core cash requirements and invest those for security and liquidity and (b) long-term surplus funds and invest those for security and return.  The core cash required for liquidity purposes was expected to be invested in a mix of local authority and money market funds in accordance with the limits and terms set out in tables 5 (page 59) and 7 (page 63).  To facilitate the management of longer term pooled funds, the limit on investments in money market funds had been increased from £15m to £20m (still below the maximum amounts recommended by CDC’s treasury management advisor Arlingclose Ltd ie 50% of total investments) and the funds were considered to represent a good balance of security (AAA rated) and liquidity, being available on demand. In consequence the previous target to maintain at least £10m cash available within three months had been removed (para 7.2 in the main agenda supplement), reflecting the improved systems and processes to forecast daily cash needs.

If required, funds could be borrowed for short term operational needs up to the limits in table 3 (page 57). Currently some £15m of funds were invested for periods greater than one year (table 1 on page 54), £10m of which was with the Local Authority Property Fund and earning a consistent return to support revenue balances of around 4.5%.  Officers had focused on long-term cash flow forecasting over the last six months and had identified that CDC could invest between £7.5m and £10m in similar long-term pooled funds; this was consistent with the vision to invest surplus funds for security and revenue return. In order to facilitate such investment changes had been made to the Approved Investment Counterparties (table 5 on page 59), the Non-Specified Investment Limits (table 6 on page 62) and the Limits on Investments Periods (table 11 on page 66). A pooled fund selection day had been arranged in London with Arlingclose at which up to four fund managers would be invited to assist in selecting the most appropriate investment fund for CDC’s surplus funds.

Mr Catlow commented on the very challenging nature of treasury management and CDC’s focus on seeking to diversify in the most prudent way.

Mr Dignum, Mrs Lintill and Mrs Keegan commended the report and the immense value of the treasury management update briefing session for members held the previous month.

Decision

At the end of the discussion members voted unanimously on a show of hands in favour of making the recommendations to the Council meeting as set out below.

RECOMMENDED TO THE COUNCIL

(1)   That the Treasury Management Policy and Treasury Management Strategy Statement for 2017-2018 as contained in appendix 2 to the agenda report be approved.

(2)   That the Investment Strategy 2017-2018 as detailed in the Treasury Management Strategy Statement be approved.

(3)   That the Prudential Indicators and Limits for 2017-2018 included in appendices 2 and 4 to the agenda report be approved.

(4)   The Minimum Revenue Provision Statement for 2017-2018 in appendix 4 to the agenda report be approved.