Decision details

Councillor Peter Butlin (Deputy Leader – Finance and Property) introduced the report explaining that the Treasury Management Strategy is an annual report that explains how and where the County Council manages its resources. Officers were commended for the report which was considered to be clear and understandable.

Cabinet’s attention was drawn in particular to page 30 of the document pack and the proposal for the early payment of pension fund contributions. This, it is expected, will lead to a gross saving of £4.7m in total cash contributions and provide a net one-off saving of £3.3m.

Regarding ethical investment (Section 8, Page 33) the meeting was informed that whilst this is a strong aspiration, the treasury management function is controlled by statute and the first priorities of the treasury must remain security, liquidity and yield.

Councillor Izzi Seccombe (Leader of the Council and Chair of Cabinet) reminded members that the matter before them is to be considered by Council in March 2020.

In response to the report, Councillor Jerry Roodhouse (Leader of the Liberal Democrat Group) questioned what the money saved by early payment of pension fund contributions would be used for. In addition, he asked what percentage of the pension fund is invested in companies in Warwickshire.

Councillor Richard Chattaway (Leader of the Labour Group) sought clarification over the risks around early payment of pension fund contributions. He observed that pension funds in London are shifting to an ethical basis and counselled that Warwickshire should not get left behind in this.

Councillor Seccombe reminded the meeting that the Warwickshire Pension Fund is now part of a larger pool of funds and as such its influence on investment decisions has changed in nature.

Councillor Butlin noted the role of the Local Pension Board in informing decisions on ethical investment. He added for Councillor Roodhouse that page 2 of appendix 2 includes a list of local companies that the County Council invests in.  Any savings will be used for the running of services.

In response to a question from Councillor Chattaway, Richard Ennis (Interim AD Finance) explained that decisions regarding early payment have yet to be confirmed. A final piece of advice is awaited. This concerns the optimum time to enter the market. If the timing is wrong, then the Council could lose out financially. Due to this uncertainty it would not have been appropriate to include it in the 2020/21 budget. It was emphasised to Cabinet the money being discussed is not a bonus.

In closing, Councillor Butlin observed that the £3.2m discussed had not featured in any group’s budget.

Resolved:

That:

1.         Cabinet recommends to the County Council that the Treasury Management Strategy for 2020/21 be approved and that its provisions have effect from 1st April 2020.

2.         Cabinet recommends to the County Council that the Investment Strategy for 2020/21 is approved.

3.         Cabinet recommends that the County Council requires the Strategic Director of Resources to ensure that gross borrowing does not exceed the prudential level as specified in Appendix 1 Annex B, taking into account current commitments, existing plans, and the proposals in the budget report.

4.         Cabinet recommends that the County Council delegate authority to the Strategic Director of Resources to undertake all the activities listed in Appendix 1 Annex H of the published report.

5.         Cabinet recommends that the County Council requires the Strategic Director of Resources to implement the Minimum Revenue Provision Policy as specified in Appendix 1 Annex I.

6.         Cabinet recommends that the County Council requires the Strategic Director of Resources to enact an early payment of pension fund contributions subject to the conditions set out at Section 7.24 of the Treasury Management Strategy being met.