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Decision details

Treasury Management Half Yearly Update Report 2018/19

Decision Maker: Executive Councillor for Finance and Resources

Decision status: Recommendations Approved

Is Key decision?: Yes

Is subject to call in?: No

Purpose:

The Executive Councillor is asked to recommend this report to Council, which includes the Council’s estimated Prudential and Treasury Indicators 2018/19 to 2021/22.

Decision:

Matter for Decision

The Council had adopted The Chartered Institute of Public Finance

and Accountancy (CIPFA) Code of Practice on Treasury Management (Revised 2017).

 

The Code required as a minimum receipt by full Council of an Annual Treasury Management Strategy Statement – including the Annual Investment Strategy and Minimum Revenue Provision Policy – for the year ahead, a half-year review report and an Annual Report (stewardship report) covering activities in the previous year.

 

Decision of the Executive Councillor for Finance and Resources

Recommend Council to:

  i.  Approve the report to Council, which included the Council’s estimated Prudential and Treasury Indicators 2018/19 to 2021/22.

  ii.  Approve a £5m limit on secured bonds with local businesses subject to due diligence as highlighted in paragraph 8 of the officer’s report.

  iii.  Update the Minimum Revenue Provision (MRP) Policy to state that no MRP will be required if this bond is secured, but this would be reviewed at least annually.

  iv.  Agree the principle of investing up to £5m in a bond issued by Allia Limited, and delegate to the Head of Finance the final decision on the appropriateness of this investment, once detailed due diligence has been completed as set out in paragraph 8.9 of the Officer’s report;

  v.  Increase the counterparty limit for Barclays Bank Plc by £10m to £35m; and;

  vi.  Reduce the Money Market Fund (MMF) counterparty limit by £10m to £5m for each fund, with a total MMF limit of £20m (and to continue using MMFs that are rated AAA).

Reason for the Decision

As set out in the Officer’s report.

 

Any Alternative Options Considered and Rejected

Not applicable.

 

Scrutiny Considerations

The Committee received a report from the Head of Finance. She updated the Committee with reference to paragraph 8 of the report that investment in local bond and money market reforms there were proposals for reducing the level of investment in these and counteract this by investing in Barclays.

 

The Committee made the following comments in response to the report:

i.  Allia Limited looked like a positive investment and asked whether there was any way to measure community investment or benefit to Cambridge.

ii.  Saw that Allia Limited had approached the Council, and asked whether the council could advertise to other companies who might want to undertake this approach.

iii.  Commented that there was a detailed opportunity with Allia Limited and asked for the advantages and disadvantages of the two investment options.

iv.  Referred to the £5 million contained in recommendation 2.4 and queried whether this was a limit or the scale of the investment.

 

The Head of Finance made the following comments in response to Members’ questions:

i.  There was a community benefit with the Allia Limited investment and there were ways of measuring social value.

ii.  Each investor would have their own investment needs this approach may not suit other investor’s needs.

iii.  With regards to the Allia Limited investment, the re-financing option had a slightly lower risk compared with the redevelopment option, therefore would expect the redevelopment option to have a higher return due to the higher risk involved.

iv.  The council would only be looking to invest up to £5 million and therefore would not be the sole investor as Allia was looking for twice this amount. Consideration would need to be given to who the other investors were.

 

Executive Councillor for Finance and Resources commented that Allia Limited had a record for enabling employment, this was not a long term investment but was a 5 year plan which he wanted to explore and fulfil.

 

The Committee resolved unanimously to endorse the recommendation.

 

The Executive Councillor approved the recommendation.

 

Conflicts of Interest Declared by the Executive Councillor (and any Dispensations Granted)

No conflicts of interest were declared by the Executive Councillor.

 

 

Publication date: 05/04/2019

Date of decision: 08/10/2018