Agenda item

The purpose of the report is to approve the:

·         revised Treasury Management Policy

·         2016/17 Treasury Management Strategy

·         2016/17 Investment Strategy

·         and the Prudential Indicators to 2018/19.

Recommendation

The Executive recommends to the Council that the 2016/17 Treasury Management Policy, the 2016/17 Treasury Management Strategy, the Annual Investment Strategy for 2016/17, and the Prudential Indicators to 2018/19 be approved.

The Executive has agreed to RECOMMEND to the COUNCIL that the 2016/17 Treasury Management Policy, the 2016/17 Treasury Management Strategy, the Annual Investment Strategy for 2016/17, and the Prudential Indicators to 2018/19 be approved.

[This item is recommended to the Council for decision and is not subject to the call-in procedure]

[Reason: to approve the proposed Treasury Management Framework for 2016/17]

124.1  Treasury management is the management of the Council’s investments and cash flows, its banking, money market and capital market transactions, the effective control of the risks associated with those activities and the pursuit of optimum performance consistent with those risks.

124.2  For Waverley Borough Council this means collecting around £130m per annum and managing a similar amount of revenue expenditure, together with an average investment of around £65m each day invested in financial markets and, with the introduction of HRA Self-financing in 2012/13, it now also includes borrowing of £192m.

124.3  The latest revision to the code by CIPFA in November 2011 incorporates the implications of the new HRA Self-Financing framework and tightens up on the requirements for the management of risk.  These changes were incorporated in Waverley’s Policy and originally approved in February 2012.

124.4  The code requires local authorities to maintain their Treasury Management Policy in accordance with the code, and any of its revisions, and with legislation. It also requires local authorities to determine their Treasury Management strategies and Investment strategies on an annual basis and their Prudential Indicators on an annual basis. 

124.5  CIPFA has produced this Code and the accompanying guidance notes to help satisfy nine main purposes:

i.          To assist public service organisations in the development and maintenance of firm foundations and clear objectives for their treasury management activities, and thereby to add to their credibility in the public eye.

ii.         To emphasise the over-riding importance of effective risk management, as the foundation for treasury management in all public service bodies.

iii.        To provide transparency for treasury management decisions including the use of counterparties and financial instruments that individual public service organisations intend to use for the prudent management of their financial affairs.

iv.       To encourage the pursuit of value for money in treasury management, and to promote the reasoned use, development and appreciation of appropriate and practical measures of performance.

v.         To enable CIPFA members to fulfil their professional and contractual responsibilities to the organisations they serve and, in accordance with the members’ charter, “to maintain and develop the professional competence of both themselves and those they supervise”.

vi.       To help facilitate a standardisation and codification of treasury management policies and practices in the public services.

vii.      To assist those involved in the regulation and review of treasury management in the public services, particularly those charged with the audit of the same

viii.      To foster a continuing debate on the relevance and currency of the statutory and regulatory regimes under which treasury management in the various parts of the public services operates.

ix.       To further the understanding and confidence of, and to act as a reference work for, financial and other institutions whose businesses bring them into contact with the treasury management activities of public service organisations.

124.6  The key documents in line with the requirements of the Code are approved by Council annually as follows:

·           Treasury Management Policy Statement is included at Annexe 1 and sets out the headline objectives of the Treasury Management function.

·           Treasury Management Strategy 2016/17 is included at Annexe 2 and  sets out the way in which Waverley’s policy objectives for Treasury Management will be achieved and the high level approach to borrowing and investment. As required by the Code, the Strategy includes a statement of Waverley’s Treasury Management Practices (TMPs) which set out specific areas of note and how they will be dealt with.

·           Annual Investment Strategy 2016/17 is included at Annexe 3 and sets out how Waverley’s investments will be managed, in accordance with the Treasury Management Strategy, and how this will help achieve Waverley’s TM policy objectives. This Strategy is required by local government investment regulations.

124.7  The Local Government Act 2003 requires local authorities to comply with CIPFA’s Prudential Borrowing Code. This in turn requires local authorities to agree a specified set of prudential indicators relating to their investment and borrowing activities.  Waverley’s Prudential Indicators are in line with the requirements of the Code and the current conditions which are included at Annexe 4.  The prudential indicators are intended to support decision-making and are ways of targeting and measuring performance.  

124.8  The Corporate Overview and Scrutiny Committee considered the report at its meeting on 26 January 2016 and had no additional observations to be circulated to the Executive.

124.9  The Executive now

            RECOMMENDS that

            60.       the 2016/17 Treasury Management Policy, the 2016/17 Treasury Management Strategy, the Annual Investment Strategy for 2016/17, and the Prudential Indicators to 2018/19 be approved.

[Reason: to approve the proposed Treasury Management Framework for 2016/17]