Agenda item

Treasury Management Strategy Statement and Annual Investment Strategy for Treasury Investments 2021/22

(To receive a report by Karen Tonge, Treasury Manager, which invites the Board to consider a report on the Treasury Management Strategy Statement and Annual Investment Strategy for Treasury Investments 2021/22, which is due to be considered by the Leader of the Council on 11 March 2021. The views of the Board will be reported to the Leader of the Council as part of his consideration of this item)

Minutes:

Consideration was given to a report from the Treasury Manager, which invited the Board to consider the Treasury Management Strategy Statement and Annual Investment Strategy for Treasury Investments 2021/22, which was due to be considered by the Leader of the Council on 11 March 2021. The views of the Board would be reported to the Leader of the Council as part of his consideration of this item.

 

The report recommended the approval of the Treasury Management Strategy Statement for 2021/22, including the Annual Investment Strategy Statement for Treasury Investments 2021/22 and the Minimum Revenue Provision Policy Statement contained within the Statement for the year ahead.

 

Since the report had been published there had been a number of minor changes resulting from the change in long term interest rate forecast that Link Asset Services had made following a recent Bank of England meeting. Amended reports had been circulated prior to the meeting to reflect these changes. Long term borrowing rates had risen by around 0.50% in  response to the intimation from the Bank of England (BoE) at its meeting that it planned to spread the current £150bn tranche of QE over the whole year and had led to a bit of a sell-off in the gilt market. It was suggested that it would not be a big surprise if the BoE applied more downward pressure on yields, in the near-term, if it felt the market had become overly exuberant in its noting of the Bank’s future intentions. The changes affected the following parts of the report: paragraphs 2.2.2  Graph and narrative; 2.2.6  Borrowing Interest Rates narrative; 2.3.5 Target Borrowing Rates; Annex A  Interest Rate Forecasts from Link Annex B Economic Outlook from Link. Despite these changes there was no change to the Borrowing Strategy at paragraph 2.3.6.

 

The Treasury Management Strategy Statement was an annual statement that set out the expected treasury activities for the forthcoming year 2021/22. These activities included the Council's expected borrowing and treasury investments, cashflows and banking. Annual strategies for the Council's borrowing and treasury investments were included as part of the report, as well as the Council's Minimum Revenue Provision Policy Statement and the Annual Investment Strategy for Treasury Investments which set out the Council's policies for investing its surplus cash for the year ahead taking into account the risks involved.

 

It was reported that CIPFA (Chartered Institute of Public Finance and Accountancy) had recently issued a number of consultations on Treasury Management and borrowing codes. CIPFA was looking to strengthen the codes as a result of the Covid-19 pandemic and the increasing complexity of transactions. The consultation and proposals were welcomed and it was noted that the new codes would impact on the function in the next year.

 

Chris Scott, Link Asset Services, commented on the highlights of the report and indicated that the strategies set out in the report was sensible and appropriate to help manage the Treasury function. There had been a good performance in Quarter 3. He reassured the Board that the strategies were robust and reflected what had been learnt over the past year. The strategies could react to any unforeseen circumstances and were compatible with the Council's risk appetite. 

 

The following points were confirmed:

 

·         Training for members on Treasury management responsibilities had been included in the Councillor induction programme.

·         There was flexibility in the strategies to react to any unforeseen changes over the coming year, such as in response to the Covid-19 pandemic. Interest rate forecasts were closely monitored and reacted to if changed.

·         Link Asset Services reassured the Board that the strategies were robust and reflected what had been learnt over the past year. The strategies could react to any unforeseen circumstances and were compatible with the Council's risk appetite. 

 

RESOLVED:

 

1.    That the Board support the recommendations to the Leader of the Council, as set out in the report and outlined above;

2.    That a summary of the comments made be passed on to the Leader of the Council as part of his consideration of this item.

 

Supporting documents:

 

 
 
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