Treasury Management Policy & Strategy 2015-16 (Agenda item 10)
- Meeting of Treasury Management Policy (Annual Report) & Internal Audit Plan (Annual report), Governance and Audit Committee, Friday, 13th February, 2015 10.00 am (Item 10/15)
- View the background to item 10/15
Report of the Executive Director of Place.
The Finance Manager presented the report.
Appendix A of the report outlined the recommendations to Full Council.
Mr Ludlow had tendered questions and observations on various matters in relation to the Treasury Management Policy & Strategy and the report would be amended accordingly.
A summary of the main changes and key issues were highlighted as follows:
· No change to the MRP policy
· No change to counterparty limits.
· Due to the timing of writing the report, all information on the Capital Programme had been based on the budget being presented to Cabinet on 24th February 2015.
· Following a successful retendering exercise involving all the Norfolk Authorities including the County Council, Breckland Council went live with Barclays Bank on 3rd February 2015. The Council had an investment account with Barclays of up to £5m and as a result of changing banks, on any one day the Council could hold balances with Barclays in excess of the £5m limit per counterparty that was allowed. In accordance with the Treasury Management Policy, balances were managed on a pragmatic basis. Whilst interest rates were low, it was more cost effective to leave balances in Barclays rather than incur bank charges to transfer funds to an alternative bank that earns less interest than the bank charge. Therefore, the Council could maintain its Barclays investment plus hold reasonable balances for operational purposes. This arrangement would be kept under review and should the credit rating of Barclays drop, this could lead to a more cautious approach as had been adopted with the Co-op where balances were kept to a minimum.
The Council was due to consider a report on the LABV project on 26th March 2015 that could have an impact on the Treasury Policy or Strategy documents. Any changes to this Treasury Policy resulting from the LABV report would be included in the report to Council 26th March 2015 and the documents would be updated accordingly.
Mr Ludlow asked if the Policy being agreed was subject to approval of the LABV project. The Finance Manager explained that this had to be included in the report at this time as it would not be coming back to the Audit Committee.
Referring to page 38 of the agenda, Mr Ludlow asked if the date reflected under the MRP Policy Statement was a statutory date and related to PFI. Members were informed that this wording would be changed before Full Council.
Mr Ludlow also asked for the word ‘marginally’ to be explained in terms of counterparty ratings highlighted in the second paragraph on page 46 of the agenda. The Finance Manager advised that this was how Capita Assets Services set its colour coding model which they could change –the word ‘marginally’ related to the small difference between an AAA counterparty rating and an AAA minus counterparty rating.
The Executive Director of Place mentioned the investment returns that had recently been announced by the Bank of England and asked the Finance Manager if the updated information would be available for the Full Council meeting. Members were informed that the Finance Team received regular updates from the Treasury Management Advisors, the budget would be changed and the latest forecast would be presented. In response to a question, it was noted that the Finance Team had a sensitivity analysis built into their work for such occasions.
Subject to aforementioned amendments, it was
RECOMMENDED to Council that the following documents be approved:
a) the Treasury Management Strategy 2015-16 to 2017-18 at Appendix A ;
b) the Minimum Revenue Provision (MRP) statement contained within Appendix A which sets out the Council’s policy on MRP;
c) the Prudential Indicators and limits contained within Appendix A;
d) the Investment Strategy 2015-16 (Appendix B) and the detailed criteria included in Appendix B1; and.
e) the Treasury Management Policy at Appendix B2.
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