Agenda item

That the Treasury Management Strategy for 2014/15, as set out in Appendix A to the report, be approved.

The Assistant Director Finance & Audit introduced the Treasury Management Strategy 2014/15 which set out how the Council proposed to manage its total treasury risk of £285m in 2014/15.

Members were advised that any adjustments in interest rates could have a significant impact on the borrowing and investment position, however it was noted that the independent advice was that interest rates were expected to remain low in the coming year.  The Assistant Director summarised the borrowing and investment strategies as set out in the document and drew Members attention to the proposals to diversify the Council’s investment portfolio, whilst ensuring the appropriate balance between maximising investment income and minimising risk.  It was projected that £1.3m of additional investment income could be achieved as a result of the opportunities set out in the strategy including investments in building societies, Registered Providers (formerly Housing Associations), and pooled funds.

Members commented that £125m of the total £182m of borrowing related to Public Works Loan Board loan to make payment to the Government to gain control of the Council’s housing assets in 2011/12 as part of reforms to the HRA subsidy system.  It was noted that this resulted in the Council receiving rental income and control of assets of 6,900 Council houses which brought with it greater freedoms and flexibilities in terms of managing the stock and bringing forward new development.

The Cabinet welcomed the new ethical investment policy as set out in section 16 of the strategy and the fact that the Council had now received 97% of its deposits in Icelandic banks.  They discussed a number of other aspects of the Strategy including the links to the Capital Strategy and potential options to mitigate any future rises in interest rates on the Council’s borrowings.  Following due consideration, it was agreed to recommend the strategy to Council.

Recommended –  That the Treasury Management Strategy for 2014/15, as set out in Appendix A to the report, be approved.