Decision details

Treasury Management Strategy Statement and Treasury Investment Strategy 2020/21

Decision Maker: Cabinet

Decision status: For Determination

Is Key decision?: Yes

Is subject to call in?: Yes

Purpose:

Treasury risk management at the Authority is conducted within the framework of the Chartered Institute of Public Finance and Accountancy’s Treasury Management in the Public Services: Code of Practice 2017 Edition (the CIPFA Code) which requires the Authority to approve a treasury management strategy before the start of each financial year. This report fulfils the Authority’s legal obligation under the Local Government Act 2003 to have regard to the CIPFA Code.

Decision:

RESOLVED (unanimously) that the Cabinet agreed to:

 

2.1  Recommend the actions proposed within the Treasury Management Strategy Statement (Appendix 1) to February Council.

 

The Cabinet also agreed to:

 

2.2  Note the Treasury Management Indicators detailed in Appendix 1 and delegate authority for updating the indicators prior to approval at Full Council on 25th February 2020 to the Chief Finance Officer and Cabinet Member for Resources, in light of any changes to the recommended budget as set out in the Budget Report elsewhere on the agenda for this meeting.

 

2.3  Note that any comments made by the Corporate Audit Committee at their meeting on the 6th February 2020 will be reported to Full Council on the 25th February 2020.

Reasons for the decision:

This report is a statutory requirement. Treasury risk management at the Authority is conducted within the framework of the Chartered Institute of Public Finance and Accountancy’s Treasury Management in the Public Services: Code of Practice 2017 Edition (the CIPFA Code) which requires the Authority to approve a treasury management strategy before the start of each financial year. This report fulfils the Authority’s legal obligation under the Local Government Act 2003 to have regard to the CIPFA Code.

Alternative options considered:

The Chief Financial Officer, having consulted the Cabinet Member for Resources, believes that the above strategy represents an appropriate balance between risk management and cost effectiveness.  Some alternative strategies, with their financial and risk management implications, are the table below.

 

Alternative

Impact on income and expenditure

Impact on risk management

Invest in a narrower range of counterparties and/or for shorter times.

Interest income will be lower.

Lower chance of losses from credit related defaults, but any such losses may be greater.

Invest in a wider range of counterparties and/or for longer times.

Interest income will be higher.

Increased risk of losses from credit related defaults, but any such losses may be smaller.

Borrow additional sums at long-term fixed interest rates.

Debt interest costs will rise; this is unlikely to be offset by higher investment income.

Higher investment balance leading to a higher impact in the event of a default; however long-term interest costs may be more certain.

Borrow short-term or variable loans instead of long-term fixed rates.

Debt interest costs will initially be lower.

Increases in debt interest costs will be broadly offset by rising investment income in the medium term, but long-term costs may be less certain.

Reduce level of borrowing.

Saving on debt interest is likely to exceed lost investment income.

Reduced investment balance leading to a lower impact in the event of a default; however long-term interest costs may be less certain.

 

Report author: Gary Adams

Publication date: 13/02/2020

Date of decision: 13/02/2020

Decided at meeting: 13/02/2020 - Cabinet

Effective from: 21/02/2020

Current call-in Count: 0

Accompanying Documents: