Treasury management policy statement and investment strategy 2020/21

1.         Introduction

This Policy sets out the Council’s treasury management procedures for prudently investing surplus cash balances held from time to time whilst observing its duty of care to the community.

The Strategy complies with the requirements under section 15(1)(a) of the Local Government Act 2003, and the third edition of guidance that takes effect from 1st April 2018.

2.         Investment objectives

The Council’s investment priorities are as follows, in the following ranking order:

  1. The security of the cash sum invested.
  2. Availability of the cash sum invested to meet the cash flow needs of the Council.
  3. Achieving good levels of interest (yield) on investment.

This means that the Council will aim to achieve the best return on its investments commensurate with proper levels of security and liquidity.

The Department for Communities and Local Government has advised that borrowing of monies purely to invest or to lend and made a return, is unlawful and the Council will not engage in such activity.

3.         Specified investments

Specified Investments are, by definition in the Guidance note, those offering high security and high liquidity, made in Sterling and maturing in no more than 1 year. Such short term investments made with the UK Government or a local authority to Town/Parish Council will automatically be Specified Investments, as will those with bodies or investment schemes of "high credit quality".

For the prudent management of its cash balances, maintaining sufficient levels of security and liquidity, the Council will use Deposits with UK banks, UK building societies, UK local authorities or other UK public authorities and the debt management agency of HM Government

4.         Long term investments

Long term investments are defined in the Guidance note as greater than 12 months and require that, should any Council wish to invest for periods greater than 12 months, it must identify the procedures for monitoring, assessing and mitigating the risk of loss of invested sums.

The Council does not intend to hold any long term investments.

5.         Non-specified investments

These investments have greater potential risk – examples include investment in the money market, stocks and shares.

Given the unpredictability and uncertainties surrounding such investments, the Council will not use this type of investment.

6.         Liquidity of investments

The maximum period for which funds may prudently be committed, so as not to compromise liquidity, shall be 1 year.

The Treasurer will determine the maximum periods for which funds may prudently be committed so as not to compromise liquidity.

7.         Review and amendment of the investment strategy

The strategy will be reviewed annually. The Annual Strategy for the coming financial year will be prepared by the Treasurer and presented for approval to the Finance Committee which will then make a recommendation to the Full Council.

The Council does not employ in-house or externally any financial advisors but will rely on information which is publicly available.

Variations to the Strategy can be made at any time, subject to the approval of the full Council. Any variations will also be made available to the public.