Meeting documents

To consider report of the Director of Resources.

The Council’s Treasury Management Strategy is a key element to the Financial Strategy and the PAG considered a report attaching the Treasury Management Strategy 2012/13 together with the following appendices:

• Appendix A - Revised Policy Statements and CIPFA Code
• Appendix B - The Annual Investment Strategy
• Appendix C - Interest Rate Forecasts
• Appendix D - Economic Background
• Appendix E - Example of Corporate Bond Accounting Treatment
• Appendix F - The Prudential Indicators
• Appendix G - Minimum Revenue Provision

The report, after explaining the various legal requirements under the Local Government Act 2003 and the Local Government Finance Act 1992, reminded the PAG that the investment interest target for 2011/12 had been set at £900,000 which was likely to be under - achieved by £17,000 by the end of the year.

The report went on to set a target for investment returns for 2012/13 of £800,000 as summarised in a table and discussed in more detail in the Treasury Management Strategy 2012/13. The PAG noted that this target was based upon a level of capital balances for 2011/12 of £20m and that the Council will continue to remain debt-free. The Strategy assumed that the current challenging economic situation would continue through 2012/13.

During the discussion of the Strategy, and in particular the revised counterparty matrix as set out in the table in paragraph 4.6, the PAG, after noting that £8 million would become available during 2012/13 for reinvestment, supported the proposal to seek a greater diversification of the investment portfolio by increasing the number of counter parties used and also considering investing in corporate bonds, always having regard to the need to balance risk against the rate of return.

The PAG expressed no appetite to return to the situation of the authority using fund managers as this was not felt to cost effective.

After considering the comments of the PAG the Portfolio Holder has AGREED to RECOMMEND the Cabinet:

1. To adopt the Treasury Management Strategy 2012/13 including:

(i)                 Approving, subject to the proposal above concerning diversification, the revised counterparty matrix as set out in paragraph 4.6 of the Strategy;

(ii)               Approving the following appendices:

·        Appendix B -The Annual Investment Strategy

·        Appendix F- The Prudential Indicators, including the borrowing limits

·        Appendix G - Minimum Revenue Provision to be used in 2012/13.