Agenda item - Treasury Management Strategy Statement and Prudential Indicators for 2010/11 to 2014/15

This report asks the Executive to recommend that Budget Council approve an integrated Treasury Management Strategy Statement, the proposed Prudential Indicators for 2010/11 to 2014/15, adoption of the revised CIPFA Treasury Management Code of Practice, revised Treasury Management Policy Statement, reporting arrangements, Treasury Management Scheme of Delegation and role of the section 151 officer.

Copies of this report will be sent to all Members.

RECOMMENDED: (i)That Council approve:

a) the proposed Treasury Management Strategy for 2009/10;

b) the Prudential Indicators for 2009/10 to 2013/14 (Annex C);

c) the revised CIPFA Treasury Management Code of Practice 2009 (‘the Code’) and revised Treasury Management Policy Statement (Annexes A and B);

d) the Specified and Non-specified Investments Schedule (Annex F);

e) The Scheme of Delegation and the Role of the Section 151 Officer (Annex G).

(ii) That the Financial Regulations be amended to give delegated authority to the Director of Resources to have full discretion to choose the length of the repayment period for all prudential borrowing, as set out in paragraph 35 of the report.

(iii) That the Treasury Management reporting arrangements set out in paragraph 16, table 1, as described by the Code, and the terms of reference in the Constitution, be amended to include the requirement that the Audit & Governance Committee scrutinise the Treasury Management Strategy and Monitoring reports.

REASON: To enable the continued effective operation of the Treasury Management function and ensure that all Council borrowing is prudent, affordable and sustainable.

Members considered a report which asked them to recommend to Council an integrated Treasury Management Strategy Statement, proposed Prudential Indicators for the period 2010/11 to 2014/15 and adoption of the revised Treasury Management Policy and reporting arrangements and Scheme of Delegation.

The Local Government Act 2003 required the Council to set out its treasury strategy for borrowing and to prepare an Annual Investment Strategy. In doing so, the Council must have regard to the CIPFA Prudential Code and set Prudential Indicators for at least the next three years. The Council was also required to formally adopt the CIPFA Treasury Management Code of Practice, which had been revised during 2009 in the light of the Icelandic situation in 2008. A copy of the revised Code was attached at Annex A to the report. The revised Treasury Management Policy Statement, Prudential Indicators for 2009/10 to 2013/14, Specified and non-specified investments schedule and Scheme of Delegation and Role of the Section 151 Officer were attached at Annexes B, C, F and G respectively.

The Council was currently undertaking a series of significant capital schemes that would realise revenue savings over the next 30 years. This capital investment would contribute to a rise in the Council’s underlying need to borrow, from the current level of £113.1m in 2009/10 to over £160.1m in 2014/15. The borrowing strategy aimed to minimise the risks of borrowing large amounts in a single year by giving flexibility to borrow in advance of need, so as to take advantage of favourable interest rates as they arose. It would also enable the monitoring of interest rates for debt compared to investment levels, to ensure value for money. The annual investment strategy reviewed projected interest rates over the next three years and sought to minimise the risks to the Council whilst maximising the returns involved in placing deposits on the money market.