The material relevant to this item is the report on pages 15 to 17 of the Cabinet agenda for 4 February 2020 and pages 1 to 55 of the Cabinet appendices for 4 February 2020.
The following recommendations were made 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.
Minutes:
The Chairman invited Mr Wilding to introduce the item and drew attention to the report which could be found on pages 15 to 17 of the Cabinet agenda for 4 February 2020. She confirmed that there were two recommendations to Council detailed on the agenda front sheet.
Mr Wilding 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.
Further to the February Cabinet meeting Dr O’Kelly requested that all the documents related to the item be amalgamated into one easy to read document. Mr Ward agreed to update the document as necessary.
Mr Plowman requested information on the Coronvirus market reactions. Mr Ward explained that the Coronvirus had been an unforeseen risk although the council has £500,000 in reserves specifically to address fluctuations in fair value of investments. He confirmed that any stock market loses would only be recognised at the point of disposal.
Mr Wilding proposed the recommendations which were seconded by Mrs Lintill.
In a show of hands the Council voted in favour.
RESOLVED