Decision details

Matter for Decision: The Council was required by regulations issued under the Local Government Act 2003, to produce an annual treasury report reviewing treasury management activities and the actual prudential and treasury indicators for each financial year.

 

Decision of the Executive Councillor for Finance and Resources 

 

The Executive Councillor resolved:

 

i.       To recommend the report to Council, which included the Council’s actual prudential and treasury indicators for 2013/14.

 

ii.     To recommend to Council the amendments to the Treasury Management Strategy as summarised below:-

 

-        Increase Counterparty limits

-        Increase the limits for investments greater than 1 year.

-        Include other Building Societies on Counterparty list

-        Include suggested foreign banks on Counterparty list

-        Include Investment Commercial Properties on Counterparty list pending a more detailed report on commercial property to the Chair, Executive Councillor and Spokes.

 

Reasons for the Decision: As set out in the officer’s report

 

Any alternative options considered and rejected: As set out in the officer’s report

 

Scrutiny Considerations:

 

The committee received a report from the Section 151 Officer.

 

In response to member’s questions the Section 151 Officer and the Accountant (VAT and Treasury) said the following:

 

i.                    The proposal was to include building societies on the counterparty list with an asset value greater than £5 billion. Building societies that had previously failed had a much lower asset value than this.

ii.                    CCLA managed a pooled property asset vehicle that would seek a return on behalf of the City Council. The annual fee was 0.65% per annum with an approximate 6.5% return on this type of investment. Whilst this would include some local commercial property investments, spreading the risk meant that it could be managed more effectively.

iii.                    Proposals for local based commercial property investments would be managed via the Mid-Year Financial Review (MFR) process.

iv.                    With regards to the expansion of asset classes to include certificates of deposit, the current investment level stood at £7 million. Due to the limited risk it was proposed to increase this.

 

Councillor Cantrill raised concern about the inclusion of commercial property investment on the Counterparty list.  It was suggested that more detail on risk was needed.

 

After some discussion the committee resolved unanimously to amend recommendation ii) as follows (addition underlined):

 

       i.          Recommend the amendments to the Treasury Management Strategy which are summarised below:-

 

-        Increase Counterparty limits

-        Increase the limits for investments greater than 1 year.

-        Include other Building Societies on Counterparty list

-        Include suggested foreign banks on Counterparty list

-        Include Investment Commercial Properties on Counterparty list pending a more detailed report on commercial property to the Chair, Executive Councillor and Spokes.

 

The Scrutiny Committee considered the amended recommendations and endorsed them unanimously.

 

The Executive Councillor approved the amended recommendations.

 

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

 

Not applicable.