Agenda item

Report of Head of Financial Services.

Copy of Cabinet report attached.

The Principal Accountant introduced a report to seek the panel’s views regarding the treasury management framework proposals for 2011/12, prior to them being considered by full council.

It was advised that at its meeting on 15 February 2011, Cabinet had considered a report entitled ‘Treasury Management Strategy 2011/12’. In line with the updated (2009) CIPFA Treasury Management Code of Practice, the panel had been explicitly named as responsible for scrutiny of the treasury management function, including review of the annual strategy.

Given the timing of Budget and Performance Panel meetings it had unfortunately not been possible to provide for scrutiny of the treasury management proposals prior to them being considered by Cabinet. However any recommendations arising from this panel could be reported to Budget Council on 2 March.

The Principal Accountant summarised the key points of the 2010/11 Treasury Management Progress Report, which outlined activities undertaken in pursuance of those strategies during the financial year up to the end of quarter 3.

The panel considered the Treasury Management Strategy 2011/12 to 2013/14 which was appended to the report. The current position and the investment forecast regarding Icelandic investments was outlined to the panel.

The panel considered scenarios for the period 2011/12 to 2013/14, and the potential impact they could have. The report considered the impact of scenarios relating to Icelandic Bank Investments, Luneside East, and South Lancaster. These situations were still being monitored and further reports would be brought to the panel as appropriate.

The panel were advised of the Medium-Term Rate estimates which were based on expected movement in interest rates. It was advised that further reports would be brought to the panel should the situation depart from the assumptions used in the estimates.

The Investment Strategy 2011/12 to 2013/14 was outlined to the panel, the primary objective of the strategy was to safeguard the re-payment of principal and interest of its investments, the second objective was ensuring adequate liquidity, and the third objective was achieving investment returns.

The Principal Accountant outlined the criteria for providing a pool of high credit quality investment counterparts. These were outlined in detail in the report.

Members asked questions regarding the planned implementation of self-financing for council housing from April 2012 as part of the Localism Bill. It was advised that the proposals may involve the council taking on around £30M debt, in return for the housing subsidy system being withdrawn.

The panel discussed the importance of ensuring that members received adequate training given that more responsibility would be required under the new guidelines. Members agreed that it would be beneficial to action this following the local elections in May when panel members may change.

Resolved:

That the report be noted.