Agenda item

With reference to article 17 of the minute of meeting of the former Resources Management Committee of 5 May, 2009, whereby members approved the Treasury Management Policy for the Council; article 11 of the minute of meeting of the former Resources Management Committee of 16 June, 2009; and article 13 of the minute of its meeting of 10 December, 2009, the Committee had before it a report by the Head of Finance which outlined the Treasury Management Policy and Strategy for 2010/11 – 2012/13.

The report explained that Councils were required to have regard to the Prudential Code when carrying out their duties, in accordance with part 7 of the Local Government Scotland Act 2003, that treasury management should be carried out in accordance with good professional practice, and that the Council must comply with the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Code of Treasury Management in the Public Services. The proposed Treasury Management Policy statement was appended to the report. 

The report reminded members that the new investment regulations, prepared by the Scottish Treasury Management Forum Executive and CIPFA, granted authorities additional investment powers. These regulations had now been finalised and approved by the Scottish Government, and that in accordance with them, the proposed Borrowing and Investment Strategy for 2010/11 – 2012/13 was also appended to the report.  This appendix also listed permitted investment instruments identified for use in the financial years 2010/11 – 2012/13. The Council’s Counterparty list was detailed at appendix 3 to the report.

The report further advised that in complying with the Prudential Code, the Council had to set a number of Prudential Indicators, which included a number of Treasury Management indicators for external debt. The report explained that the Prudential Code stated that it would probably not be significant if the operational boundary was breached temporarily on occasions due to variations in cash flow, however, a sustained or regular trend above the operational boundary would be significant and should lead to further investigation and action as appropriate. The report stated that the Council had in place an early warning system to highlight when an indicator was likely to be breached, and no indicators had been breached during financial year 2009/10.  The Head of Finance added that if a breach were to occur, this would be reported to this Committee with an explanation.

The report concluded that HM Treasury had a reserve power to limit local authority borrowing for national economic reasons; legislation specified that any such national limit would be used to protect the country’s economic interest if local borrowing under the Prudential Code were to be unaffordable nationally.  In principle, a national limit could be set at any point during any financial year and any such national limit would be implemented based on local authorities’ outstanding borrowing with all future borrowing being reduced proportionately.  Officers advised that there were no known plans for the introduction of a national limit at this time.

The Committee resolved:-

(i)         to approve the Council’s Treasury Management Policy Statement for 2010/11 to 2012/13;

(ii)        to approve the Council’s Borrowing and Investment Strategy for 2010/11 to 2012/13; and

(iii)       to approve the revised Counterparty list as detailed at appendix 3 to the report.