Agenda item

Cllr E Seward introduced the report and noted that the Committee were asked to recommend to Council that changes to counterparty limits and the report be approved. It was noted that payments received for the administration of the Central Government Covid support grants had caused the Council to hold more money than usual. The CTA stated that the Finance Team were pleased with how the Council’s investments had fared, considering how the pooled fund had been impacted by the first lockdown period. She added that the £65m received for the Covid support grants had been carefully invested prior to being granted to businesses. She added that despite the impacts of Covid-19, a positive rate of return had been maintained for the Council. 

Questions and Discussion

     i.  Cllr N Housden referred to the potential for negative interest rates to be introduced, and asked what the potential impact of these would be. The CTA replied that the risk of negative interest rates remained relatively low, though it would seriously impact the Council’s liquid funds if introduced. She added that if negatives rates were introduced then the Council would have to reconsider its use of financial instruments, and the Government’s debt management facility would likely be used as back stop. Cllr N Housden suggested that it could be useful for the Committee to consider the issue as a means of risk mitigation, to which the CTA replied that it could be discussed, though the costs of holding money with the Government remained low. It was confirmed that the three main criteria for the Council’s investment strategy were security, liquidity and yield.

    ii.   Cllr G Mancini-Boyle referred to improvements in the exchange rate of the pound against the dollar, and asked if this would have any positive impact on the Council’s investments. The CTA replied that there was no immediate effect, though the Council did hold several funds with global equities that could see some increase in return, though an increase in the capital value was more likely.

  iii.   Cllr G Mancini-Boyle asked if the Council still sought to ensure that its investments were ethical. The CTA replied that the Council’s treasury advisors reviewed each of the Council’s counterparties, and though there were no plans to divest in the short term, new counterparties would be carefully reviewed for the Council’s long-term investment plans.

  iv.   Cllr H Blathwayt referred to the possibility of a vaccine becoming available in the months ahead, and asked whether this would lower the risk of negative interest rates being introduced. The CTA stated that she hoped this would be the case, and that news of a vaccine would also likely raise the capital value of investments.

   v.   Cllr P Heinrich asked for clarification of the Council’s exposure to commercial property markets and what the potential impact of not reaching a trade deal with the EU might be. The CTA confirmed that the Council had very low direct exposure to commercial property markets, though there was some indirect exposure through the Council’s pooled funds, which included one property fund and two multi-asset funds. It was noted that the pooled fund investments were spread nationally to limit risk and local exposure. The CTA reported that whilst the capital value of these investments had decreased, the income streams had held up well, as counterparties had been proactive in collecting up to 95% of rents. In regards to an EU trade deal, the CTA stated that whilst the Council had to remain cautious, it was not yet possible to quantify any impact.

  vi.   Cllr L Withington stated that she had been reassured by the level of return maintained and thanked officers for their hard work.

 vii.   The recommendations were proposed by Cllr P Heinrich and seconded by Cllr G Mancini-Boyle.

RESOLVED

1.     To recommend that Council RESOLVE that The Treasury Management Half Yearly Report 2020/21 is approved.

2.      To recommend that Council APPROVE changes to the Counterparty Limits.