Agenda item

The Cabinet is requested to consider the agenda report and its appendices and make the following resolutions and recommendation to Council as set out below:

1.    That Cabinet considers the Treasury Management Policy Statement, the Treasury Management Strategy Statement, the Investment Strategy and relevant Indicators for 2020-21.

2.    That Cabinet considers the Council’s Capital Strategy for 2020-21 to 2024-25.

3.    That the documents in 2.1 and 2.2 are recommended to Council for approval.

*RECOMMENDED TO THE COUNCIL

That having considered the comments from the Corporate Governance & Audit Committee, Cabinet recommends to Council:

1.    That the Treasury Management Policy Statement, the Treasury Management Strategy Statement, the Investment Strategy, and the relevant Indicators for 2020-21, as amended be approved and;

2.    The Capital Strategy for 2020-21 to 2024-25 be approved.

Mr Wilding introduced the report. He explained that the council is required by both the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Ministry of Housing and Local Government (MHCLG) to approve a Treasury Management Strategy, an Investment Strategy and Capital Strategy each year. He drew attention to new section to the Treasury Management Strategy (page 14 of the Supplement to the agenda pack). The new section to read as follows:

Ethical Investments

Statutory guidance issued by CIPFA and MHCLG makes it clear that all treasury investments must adopt security, liquidity and yield (SLY) principles; ethical issues then play a subordinate role to those priorities. Nevertheless, there are a growing number of financial institutions and fund managers promoting Environmental, Social and Governance (ESG) products. The Director of Corporate Services will consider such investments when deemed appropriate within the Council’s overall treasury management policies, objectives and the risk management framework set out in this document.

Mr Wilding outlined a number of other changes to the draft Treasury Management and Investment Strategy (the page numbers referenced relate to the small figures in the agenda pack):

• On page 6, the figures in table 2 now include Forecast CIL balances.
• On page 7, a new section on proportionality has been included.
• On page 9 and 10: The limit on non LAPF pooled funds has been increased from £25 million to £30 million and a new investment vehicle, Real Estate Investment Trusts (REITs) included with an investment limit of £4 million.
• On page 14, Table 5 increased Treasury Investment Limits for each type of investment.
• On page 16, Table 6 increased limits for external debt.

Mr Wilding added that last year the council was required to publish a Capital strategy for the first time. The Strategy is 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. The Capital Strategy for 2020/21 to 2024/25 remains unchanged from last year except for updated figures in the tables.

Mr Wilding explained that the Treasury Management, Investment and Capital Strategy were reviewed by the Corporate Governance an Audit Committee on 23 January 2020 and the Committee made the following recommendations:

• In the Treasury Management Strategy, a new section on Ethical, Social and Governance Investments should be included at the end of the section on pooled funds on page 12.  A copy of this has been distributed to members of the Cabinet.
• Before making a potential investment decision with respect to Real Estate Investment Trusts (REIT) officers will after obtaining the appropriate professional advice consult the Cabinet Member for Financial Services and the chairman of the Corporate Governance and Audit Committee

Officers were also asked for clarification on the CIL figures used for Table 2 detailed on page 6 of the agenda pack and the New Homes Bonus figures on page 4 of the Capital Strategy. Officers amended the New Homes Bonus figures for publication in the Cabinet agenda.

With regards to table 2 on page 8 of the supplement to the agenda pack Mrs Plant commented that she would like to receive further information about the external investments pooled fund in due course. With reference to page 34 of the pack she then requested clarification on why the total investment figure had significantly reduced. Mr Ward explained that table 2 on page 8 demonstrates the forecast the cash flow position which ensures that the council is not over committed long term. Mr Catlow added that the council is currently in a position where it does not need to borrow to finance the capital programme demonstrating that investment is affordable.

Members requested clarification on why there is no figure relating to Community Infrastructure Levy (CIL) in 2023. Mr Catlow explained that the figures are forecasts prepared by officers responsible for the CIL scheme and are only intended to be a rough cash flow estimate sufficient for the purposes of demonstrating our long term investing position.

With reference to page 12 Mrs Lintill asked for a definition of REITs . Mr Catlow explained that it is a vehicle to finance the purchase of property investment. Mr Ward went on to provide an example of an organisation which is being considered for possible investment by the Council. That particular REIT purchases and adapts property in order to lease them to Registered Social Landlords (RSLs) for residents in need of additional support. The RSL guarantees the rental income to the REIT by way of enhanced Housing Benefit and so represents both a good financial investment, and also provides some social benefit as well.

With regard to a query from Mrs Plant about the abbreviation ESG after the meeting Mr Catlow was able to confirm that the E stands for Environmental. Ethical is the umbrella term that is applied to Environmental, Social and Governance standards.

Decision

The Cabinet then voted unanimously to make the recommendations below.

RECOMMENDED TO COUNCIL

That having considered the comments from the Corporate Governance and Audit Committee Cabinet recommends to Council:

1.    That the Treasury Management Policy Statement, the Treasury Management Strategy Statement, the Investment Strategy, and the relevant indicators for 2020-21 as amended be approved and;

2.    The Capital Strategy for 2020-21 to 2024-25 be approved.