Treasury Management

Introduction

Newbury Town Council’s Financial Regulations state that the sum total of reserves; ‘must always be in the range of between three and six months’ annual revenue expenditure.’ This means that we regularly have appropriate surplus funds available and it is important that such funds are invested prudently with due regard to the Council’s fiduciary responsibility to the Council Tax payers and to the priority for security and liquidity of those investments.

Currently the Council’s funds are automatically dealt with by NatWest, and interest is applied to any excess funds which the Council holds. The payment account is cleared down daily so the maximum interest rate is gained on any excess funds.  Additionally, it has been agreed by the Council to place £250,000 into the CCLA Deposit Fund.

The Town Council is required by the Local Government Act 2003 to determine an annual Investment Strategy and must have regard to “Guidance on Local Government Investments 2010. This strategy must be approved by the full Council but may be varied from time to time as circumstances dictate. The Strategy will be a public document as defined by the Freedom of Information Act 2000.

Investment Strategy
All of the Town Council’s investments will be Specified Investments which means that:

    a) All investments will be made in sterling and any payments or repayments will also be made in sterling, with UK registered institutions only;
    b) All investments will be short term investments not to exceed 12 months;
    c) All investments will be made with a body or an investment scheme which has been awarded a high credit rating by a credit rating agency;
    d) A credit rating agency will be taken as one of the following:
    Standard and Poor’s;
    Moody’s Investors Services Ltd;
    Fitch Ratings Ltd.

A high credit rating will be defined as ‘A’ ‘High Credit Quality’, referring to the Long Term grade issued in relation to an institution.

Credit ratings will be monitored regularly and if the rating falls consideration will be given at the next Council meeting of the appropriate action to be taken.

External Borrowing
No borrowing approval is required for temporary loans or borrowing by way of an overdraft. However, in order to borrow to fund capital expenditure approval must first be given by the Department for Communities and Local Government. The process to be followed and the criteria applied in deciding whether or not approval should be forthcoming are detailed in the Guide to Parish and Town Council Borrowing in England jointly published by the Department and NALC.

Current External Borrowing–
The Council’s existing borrowing as at 1 April 2016 totals £17,500 with the Public Works Loans Board, which is being repaid at a rate of £5000 per annum at an interest rate of 5.5%. The Council does not anticipate any further external borrowing to be undertaken during 2016/17.