Agenda item

Treasury Management Strategy for 2016/17 to 2018/19

Report of the City Treasurer


7.1     The Council is required under the Local Government Act 2003 (as amended) and other regulations to approve an Annual Treasury Management Strategy to cover:  Borrowing Strategy, Investment Strategy and set Prudential Indicators together with borrowing limits for the next three years.  In addition, the Council must approve an annual Minimum Revenue Provision Statement.


7.2     The City Treasurer, provided a Powerpoint presentation on the key issues set out in the report.


7.3     The Committee considered the draft strategy and asked questions and explored options in relation to the proposed investment and borrowing strategies.


7.4     The Committee noted that the average rate of return on investments for the first half of 2015/16 was 0.62%.  Members asked whether the current approach to risk control limited the Council’s investment return.  The City Treasurer advised that the Council’s current approach was to be very prudent where it might be more advantageous to adopt an approach of being appropriately risk aware.  He advised that officers had been actively considering a variety of initiatives, predominantly focusing on active risk management of the portfolios.


7.5     The City Treasurer was asked whether such an approach could include developing the Council’s property assets in partnership with commercial operators or lending funds to other local authorities at a better rate of return than it was currently achieving.  He stated that the Council had yet to explore the alternative investment options but that initiatives such as the former should be explored.  He was aware that other local authorities did participate in inter-local authority lending given the relative security that such organisations offer.


7.6     The City Treasurer was referred to the fact that other public sector organisations such as Transport for London (TfL) have more diverse investment strategies and it was suggested that the Council would benefit from examining some of these approaches.  Mr Mair informed the committee that he was due to meet with TfL in the near future and that he would take the opportunity to speak to them about their strategy.


7.7     Mr Mair was asked how the government’s proposed changes relating to the devolution of business rates to local authorities would affect the strategy.  He explained that the proposals would be taken into account in developing the strategy.  He advised that the government aimed to end core funding to local authorities by 2020.  Councils would be expected to be fully self-funding.  One of the ways that this was to be achieved would be by allowing councils nationally to retain all locally raised business rates.  The Council currently collected nearly £2 billion of business rates annually which accounted for 8% of all business rates collected in England.  He stated that in reality the changes would be phased in from 2020 and that there would still be redistribution of the rates collected.  Therefore, the proposals were unlikely to significantly assist the Council in its savings requirements over the next 4 years.  He advised that the Council was working with the Department for Communities and Local Government to inform the process and would apply to be granted pilot status should this prove possible.  If granted this could provide a one-off benefit for the authority


7.8       RESOLVED:


1.     That the report be noted.


2.     That it be noted that the Council will be asked to approve:


(i)    The proposed Treasury Management Strategy including Borrowing and Annual Investment Strategy;

(ii)   The Minimum Revenue Provision Policy;

(iii)  The Prudential Indicators; and

(iv) The Investments schedule (Appendix 1).


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