Agenda item

The Executive was reminded that the Council’s investment portfolio comprised of funds available for longer-term investment, and short term investments sufficient to meet cash flow requirements.  Investment income was a significant source of income which was used to maintain services.

The Executive received a report which fulfilled the Council’s legal obligation, under the Local Government Act 2003, to have regard to both the Chartered Institute of Public Finance and Accountancy’s Treasury Management in the Public Services: Code of Practice and the Department for Communities and Local Government Guidance on Local Authority Investments.

The Council had invested substantial sums of money and was therefore exposed to financial risks including the loss of invested funds and the revenue effect of changing interest rates.  The successful identification, monitoring and control of risk were, therefore, central to the Council’s Treasury Management Strategy.

In accordance with the CLG Guidance, any changes to levels of investments and borrowing, or to the interest rates forecasted which resulted in changes to the approved treasury management indicators, would be reflected in relevant future reports for the Executive and the Council to consider.

The budget for investment income in 2017/18 was £300,000, based on an average investment portfolio of £25 million, at an interest rate of 1.2%.  The budget for external debt interest paid in 2017/18 is £2.8m, based on an average debt portfolio of £124 million, at an average interest rate of 2%.  It was noted that if actual levels of investments, borrowing and interest rates differed from those forecast, this would affect actual performance against budget. 

Funding for the proposed corporate capital programme for 2017/18 – 2019/20 would need to be funded by borrowing or out of revenue due, as the Council did not hold any capital receipts.

Recommended to Council the adoption of the following:

(i)              the Treasury Management Strategy for 2017/18 as set out in the report;

(ii)            the Treasury Management Indicators for 2017/18 at Annex A to the agenda report; and

(iii)          the Minimum Revenue Provision Policy Statement and Estimated Minimum Revenue Provision Payment Table at Annex F to the agenda report.