Issue - decisions
Treasury Management Strategy 2012/13
Cllr Robinson presented report F.153, explaining that it concerned how the council looked after its investments and any borrowing. He added that the Audit Committee and Cabinet had already considered the report, which included complex but important recommendations put together under the CIPFAS code of practice. The council sought safe institutions for investments and there was an opportunity to invest with other local authorities, which surprisingly offered a better risk than other places. He invited the Group Manager for Finance and Property to explain specific points.
The Group Manager emphasised that while prudential indicators had to be in place to control borrowing, the council did not borrow any money. Changes from the previous year included a tighter definition of part-nationalised bank (agenda page 45), the inclusion of treasury bonds and security bonds from AAA rated institutions. There was also the possibility for alternative investment to complement the council's work on areas such as housing, and a report would be presented to the Cabinet in May. Also the possibility to borrow at low fixed rates were an option, but would need to be agreed by the Cabinet.
Cllr Birch, Audit Committee Chairman, said that the committee considered treasury management at all of its meetings. The Audit Commission had commended the council's strategy with no qualification, which represented the best report for many years.
Cllr Thomson asked if the strategy was the responsibility of Full Council or the Cabinet.
Cllr Robinson replied that the Cabinet considered options for better outcomes, but would need to consult widely to gain a strategic direction and broad feedback.
The Solicitor to the Council clarified that Full Council was responsible for setting strategy, such as borrowing limits and capital expenditure, and that the Cabinet made decisions within that strategic framework.
Cllr Thomson asked how spending reserves was controlled, given that the council had over £4 million in reserves.
The Solicitor to the Council explained that there were many controls. The Audit Committee had an important role in overseeing the strategy and the Group Manager for Finance and Property would report to Full Council, if he were unhappy.
Cllr Winship expressed unease at being expected to vote on a report that she did not fully understand and suggested that the language be more layman-friendly. She asked for clarification on agenda page 42, paragraph 17.4.
The Group Manager for Finance and Property and that there would be specific training from the council's advisers before one of the next two Audit Committee meetings, to which all members were welcome. He explained that at present borrowing was more expensive than lending so only suitable where the council had a guaranteed return.
The chairman added that there had been a useful training session earlier in the month, but realised that some members had been unable to make it.
Cllr Molyneux commented that the report dealt with complex issues and that the council was lucky to have excellent officers who managed treasury work. He cited the group manager's actions to withdraw investment with Icelandic banks before they collapsed. He also commended Cllrs Robinson and Birch for taking the time to fully understand the issues involved. He believed that to invest locally within the community could attain a good return while at the same time improve the local economy, but the matter would need to be looked at closely. He believed that these important decisions would be ideal for cross-party work and as part of that he would seek to involve the shadow cabinet.
Cllr Hogan commented that individual investment decisions had to be taken by officers, who had an eye on changing conditions. He believed that the role of elected members was to set the rules and let the officers operate them. Currently the rules were set to reflect caution and safety.
Cllr Bill Evans said that there was merit in the leader's views. He suggested that the council might look at the county council's model of having an investment committee, assisted by officers.
The chairman believed that the council's Audit Committee was doing an excellent job in monitoring treasury management.
Cllr Molyneux confirmed that the Cabinet was not involved in day-to-day decisions, but looked at longer term investment opportunities.
The Group Manager for Finance and Property clarified that on agenda page 53, paragraph four, there should have been a bullet point before the word Liquid.
Summing up, Cllr Robinson said he had been impressed by the questions asked about the important matter of what the council did with its money. While it was a relatively small amount of free capital it was important to invest it wisely and he would continue to trust the Group Manager for Finance and Property and his team to implement the cautious strategy.
Cllr Robinson proposed and Cllr Molyneux seconded the recommendations as at the agenda.
RESOLVED - to adopt
a) the Treasury Management Strategy for 2012/2013 to 2014/2015 contained in Annex B of report F.153.
b) the prudential and treasury indicators and limits for 2012/2013 to 2014/2015 contained in Annexes A, B and B2 of report F.153.
c) the Minimum Revenue Provision (MRP) statement at paragraph 14 of Annex A of report F.153, which sets out the Council’s policy on MRP.
d) the Authorised Limit prudential indicator contained at paragraph 14 of Annex B to report F.153.
e) the Investment Management Strategy for 2012/2013 contained in paragraphs 28 to 33 of Annex B of report F.153.
f) the detailed criteria included in paragraph 44 of annex b of report F.153.
Voting was as follows.
For (48) – Norman Stephens, Roger Yeates, Jim Connell, Gethyn Davies, Brian Jones, Brian Edwards, James Bevan, Judy Davis, Frankie Evans, Carole Allaway Martin, Marrilyn Smart, Len Lawton, Peter Ede, Marion Winship, Gabriella Kirkpatrick, Roy Birch, Arthur Thomas, Julia Gooch, Ian Whitburn, Dave East, Maria Edey, Philip Burford, Clive Elsmore, Andrew Gardiner, Paul Hiett, Graham Morgan, Max Coborn, Frank Baynham, Bill Osborne, Paul McMahon, Roger Sterry, David Thomson, Bill Evans, Bernie O’Neill, Don Pugh, Bruce Hogan, Val Hobman, Lynn Sterry, Di Martin, Jackie Fraser, Helen Stewart, Terry Glastonbury, Terry Hale, Diana Edwards, Martin Quaile, Patrick Molyneux, Brian Robinson, Jane Horne