Issue - meetings

2.10pm

Report from the Director of Finance

The report contains the annual Treasury Management Strategy Statement and Annual Investment Strategy for 2018/19 in compliance with the CIPFA Code of Practice. The report sets out the borrowing and investment strategies for 2018/19 and relevant background information.

The Committee is RECOMMENDED to:

a)         endorse the Treasury Management Strategy for 2018/19 as outlined in the report;

b)        note that due to the early timing of this report, Prudential Indicators i to vi have not been included in Appendix A as they are dependent on updates to the 2018 capital programme. Full indicators will be included when the report is considered by Council in February.

RESOLVED to:

a)    endorse the Treasury Management Strategy for 2018/19 as outlined in the report, with two recommendations to Cabinet. The Committee considered that the strategy does not have ambitious targets for getting a higher return on investments that could be achieved through a less cautious approach; and, the Committee resolved to investigate whether the Council should consider Environmental, Social and Governance (ESG) investments in the future.  In addition, the Committee asked for the Strategy to be amended to reflect that during 2018/19 a review of the risks to Treasury Management resulting from Brexit will be undertaken. The Committee recommends that

                      i.        the strategy be amended to clarify the intent to adopt a less cautious approach, with a more ambitious target stated for any return on investments.

                    ii.        a paragraph be inserted to reflect the Committee will be investigating the impact of including Environmental, Social and Governance (ESG) investments in the future;

b)    note that due to the early timing of this report, Prudential Indicators i to vi have not been included in Appendix A as they are dependent on updates to the 2018 capital programme. Full indicators will be included when the report is considered by Council in February.

Mr Chapple introduced the report.  He stated that the Council now has the facility to deal in asset-backed securities.  A new Code of Practice will be published in the middle of 2018 following this year’s consultation.

Officers responded to issues raised by Members as follows:

·         The risk associated with the loan to OxLEP is considered to be low because it is linked to expected income from business rates.

·         Whether the Council borrows under the PWLB’s new Certainty Rate depends on other rates and would be decided by the Treasury Management Strategy Team and reported to this Committee and Cabinet.

·         The Council is legally obliged to have treasury advisors.  Sometimes the Council’s Strategy Team takes a different view, such as on base rates.

·         Setting higher targets would have implications for the Council’s budget if they are not reached.

·         Using investment strategy to pursue socially beneficial outcomes would be a decision for the budget process and not for Treasury Management.

Members agreed to recommend to Cabinet that the Strategy be amended to include a commitment to investigate whether the Council should consider Environmental, Social and Governance (ESG) investments.  It was also agreed that there should be a reference to reviewing the risks associated with Brexit and that the targets for return on investments should be higher to reflect a more ambitious approach.

RESOLVED to:

a)            endorse the Treasury Management Strategy for 2018/19 as outlined in the report, with two recommendations to Cabinet. The Committee considered that the strategy does not have ambitious targets for getting a higher return on investments that could be achieved through a less cautious approach; and, the Committee resolved to investigate whether the Council should consider Environmental, Social and Governance (ESG) investments in the future.  In addition, the Committee asked for the Strategy to be amended to reflect that during 2018/19 a review of the risks to Treasury Management resulting from Brexit will be undertaken. The Committee recommends that

                   i.          the strategy be amended to clarify the intent to adopt a less cautious approach, with a more ambitious target stated for any return on investments.

                  ii.          a paragraph be inserted to reflect the Committee will be investigating the impact of including Environmental, Social and Governance (ESG) investments in the future;

b)           note that due to the early timing of this report, Prudential Indicators i to vi have not been included in Appendix A as they are dependent on updates to the 2018 capital programme. Full indicators will be included when the report is considered by Council in February.