Agenda item

3:10

Report by the Chief Finance Officer (AG5)

The report contains the annual Treasury Management Strategy Statement and Annual Investment Strategy for 2015/16 in compliance with the CIPFA Code of Practice.  The report sets out the borrowing and investment strategies for 2015/16 and relevant background information.

When the report is considered by Cabinet on 27 January it will be RECOMMENDED to RECOMMEND to Council to:

(a)          approve the Prudential Indicators for 2015/16, 2016/17 and 2017/18 as set out in Appendix A;

(b)          approve the Minimum Revenue Provision Policy for 2015/16 as set out in Appendix B;

(c)          approve the Treasury Management Strategy Statement & Annual Investment Strategy 2015/16;

(d)          approve the use of new instruments;

(e)          continue to delegate the authority to withdraw or advance additional funds to/from external fund managers to the TMST;

(f)           approve the continued delegation of changes required to the Annual Treasury Management Strategy Statement & Annual Investment Strategy to the Chief Finance Officer in consultation with the Leader of the Council and Cabinet Member for Finance;

(g)          approve the Draft Treasury Management Policy Statement as set out at Appendix E.

The Committee considered a report (AG6) which set out the Annual Treasury Management Strategy Statement and Annual Investment Strategy for 2015/16 in compliance with the CIPFA Code of Practice.  The report set out the borrowing and investment strategies for 2015/16 and the relevant background information.

Mr Gosling reported that the borrowing strategy in 2015/16 outlined the requirement to prudentially borrow on behalf of the Oxfordshire Local Enterprise Partnership for project funding from 2015/16 onwards. This would be repaid through the retained business rates of the Local Enterprise Partnership.

He further reported that maturing debt would continue to be repaid upon maturity and would not be replaced. There was £6m of PWLB debt scheduled to repaid in 2015/16. The full borrowing strategy was set out from paragraph 46 of the report.

A recent development, not included in the report, was the announcement that HM Treasury were taking the necessary legislative steps to abolish the Public Works Loan Board (PWLB) over the coming months. It had been stressed that this development was being taken to address the governance of the PWLB and that it would have no impact on existing loans held by local authorities or the government’s policy on local authority borrowing. Borrowing from the successor was expected to be as straight forward as it was currently.

A consultation document was expected in due course and the treasury management team would continue to monitor the situation.

The Annual Investment Strategy for 2015/16 was included from paragraph 70 of the report. The strategy was based on an average base rate of 0.625% and assumed an average return of 0.7%. 

Three new instruments have been added to the strategy - reverse repos, covered bonds and registered providers. An explanation of each was provided from paragraph 79. These would provide greater options for diversification in response to the upcoming implementation of banking reform legislation, which would result in bail-in risk for unsecured investments.

In response to Members questions regarding the level of change in Policy, Mrs Baxter reported that the biggest change was the impact of the EU bail-in provisions and the addition of the new instruments which allowed the Council the flexibility to respond to the impact of potential changes in ratings given to banks.

In response to a statement from a Member regarding the importance of non-specific investments being ethical, Mrs Baxter stated that she had a fiduciary duty. It was her responsibility to maximise returns rather than look at whether investments were ethical or not.

Members expressed concerns regarding the County Council becoming the accountable body for the LEP by default and the associated risks and over the monitoring of the LEP and how this was being done.  A Member further questioned whether the Growth .Board was a public meeting.

Mrs Baxter reminded the Committee that she was bringing an item to the February Meeting of the Committee on the accountability of the LEP where the concerns raised would be covered and that the Growth Board was a public meeting.

Councillor Mathew moved and Councillor Lilly seconded the following Motion:

“to write to the Leader of the Council to convey its concerns regarding the ability of the Growth Board and Local Enterprise Partnership to take on liability that we have no control over but for which we have liability (especially in light of term 6.2 (Quorum & Safeguard) in the draft terms of reference for Oxfordshire Growth Board.”

Following debate, the motion was put to the vote and it was carried by 6 votes to 3.

RESOLVED:  (by 6 votes to 3)

to write to the Leader of the Council to convey its concerns regarding the ability of the Growth Board and Local Enterprise Partnership to take on liability that we have no control over but for which we have liability (especially in light of term 6.2 (Quorum & Safeguard) in the draft terms of reference for Oxfordshire Growth Board.

6.0Quorum & Safeguard

“6.2 Where the effect of a particular proposition, if adopted by the Committee, would be to give rise to contractual or financial implications for any constituent authority, then a protocol will be established where the expectation would be that the vote of the member appointed by that constituent authority, in favour of the proposition, would be required. In respect of other matters, all other voting will be on a normal majority basis. “