Church Crkham Parish Cuncil Treasury and Investment Plicy 1. Plicy Backgrund 1.1 Church Crkham Parish Cuncil s Treasury and Investment plicy and its assciated strategy are cnducted in accrdance with: i) The Lcal Gvernment Act 2003 (the Act) and supprting regulatins. This requires the Cuncil t prepare an Annual Investment Strategy which sets ut the Cuncil s plicies fr managing its investments and fr giving pririty t the security and liquidity f thse investments. ii) The statutry guidance n lcal gvernment investments (issued subsequent t the Act) which requires the prductin f an Annual Investment Strategy and gives guidance n hw this shuld be cmpleted. 1.2 It is uncmmn fr a parish cuncil t hld investments ther than in the frm f easily accessible bank depsits r ther shrt-term savings accunts. These are ften used t maximise incme frm cash balances during the financial year. 1.3 The legislatin and assciated guidance is ptinal fr parish cuncils where investments are nt expected t exceed 500,000 and n actin is required belw 10,000. Where the investment exceeds 500,000, the guidance is mandatry. Safety f the principal shuld be the fremst bjective f any investment prgram. Investments shuld be undertaken in a manner that seeks t ensure the preservatin f capital. The gal shuld be t mitigate credit risk and interest rate risk. Church Crkham Parish Cuncil was created by Hart District Cuncil n 1 April 2010. The parish currently cntains 4201 dwellings. The Crkham Park develpment has prvided assets in the frm f a cmmunity centre, alltments and several recreatinal pen spaces. Under the S106 agreement sums f mney will be prvided t cver the management and maintenance f these assets fr up t 20 years. These sums can be identified by area r asset and the mney held must be used fr thse. 2. Definitins 2.1 Investments all investments f mre than ne year in duratin, these will nt be included in the Cuncil s reserves, they will be included in the asset register 2.2 Treasury - all cash depsits held in bank and building sciety accunts, including bnds f up t 12 mnths duratin. 2.3 Specified investments - sterling investments f less than 1-year maturity, with bdies r schemes with a minimum high credit rating at time f investment. Page 1 f 9
2.4 Nn-specified investments investments nt meeting the definitin criteria f specified investments. 3. Objectives: In accrdance with the statutry guidance Church Crkham Parish Cuncil s investment pririties are: i) T invest prudently having regard t the security f investments. ii) T maintain liquidity in the investment prtfli t meet the cuncil s spending plans. iii) T seek the ptimum return n investments cnsistent with the prper levels f security and liquidity. The risk appetite f this cuncil is lw in rder t give such pririties, s whilst aiming t achieve the ptimum return the cuncil must be mindful t the security f its investments. Annual Investment Strategy Where investments exceed 500,000 the statutry guidance requires a cuncil t frmulate an annual investment strategy, t be apprved by Full Cuncil prir t the start f the financial year t which it refers, t ensure that the cuncil has prperly assessed the risks f cmmitting funds t lng term investments The strategy cvers bth specified Investments and nn-specified investments as detailed abve. Maximum depsit - A maximum f n mre than 50% f ttal reserves may be depsited with any ne financial institutin, subject t the appendix. Any exceptin t the maximum limits must be agreed at Full Cuncil. In a Plicy Statement (PS9/15) issued in May 2015 the Prudential Regulatin Authrity f the Bank f England annunced that the Financial Services Cmpensatin Scheme nw cvers Small Lcal Authrities i.e. thse authrities with an annual budget f up t 500,000 Eurs. The plicy statement des nt state whether the term budget refers t incme r expenditure, s it is therefre prudent t assume that bth incme and expenditure need t be under the 500,000 Eurs threshld t qualify 1. Thse cuncils nt qualifying as Small Lcal Authrities are nt eligible fr prtectin under the scheme 2 Types f investment subject t the financial institutin criteria detailed in the appendix the Cuncil may depsit nn S106 funds in the fllwing accunts: depsit accunts business bnds Public Sectr Depsit Fund 1 NALC Financial Tpic Nte F08-15 4 Sept 2015 2 NALC Financial Briefing F07-14 3 June 2014 Page 2 f 9
Mney market accunt. S106 funds may be depsited in the fllwing types f accunts: Depsit accunts Business bnds. CCLA prducts i.e. Public Sectr Depsit Fund and Lcal Authrity Prperty Fund Credit ratings f all financial institutins, with which the Cuncil has current and depsit accunts, are t be reviewed annually and t be reprted t the Finance & Plicy Cmmittee each January. Investment preferences Investment fund type Required Favured Neutral Disliked Excluded Cash Sterling US dllars Envirnmentally respnsible/ ethical funds Gegraphical lcatin Africa Emerging markets Eurpe excl UK Eurpe incl UK Far East Nrth America Pacific Rim UK Equities All cmpanies Smaller cmpanies Managed funds Active Passive Prperty Crprate / Fixed Interest Bnds Gilts Tlerable investment fall / timescale Investment values may fall, the table belw shws the tlerable level f lss Nil Up t 5% 5% - 10% Over 10% Fr up t 1 year 1 5 year perid 5 10 year perid Mre than 10 years Page 3 f 9
S106 Funds Cashbks fr the S106 funds will be maintained separately t the Cuncil s precept cashbks. S106 funds shuld be depsited in bank accunts separate t thse used fr the day-t-day Cuncil payments. Cmmunity Centre S106 funds Fllwing the cmpletin f the build f the cmmunity centre the remainder f the S106 funds prvided fr the prject will be accunted fr via cashbk 3 S106 funds. Recrds will be maintained t shw the amunt in reserve fr these funds. Other S106 funds. Church Crkham Parish Cuncil will be receiving S106 funds fr the maintenance and management f the pen spaces at Crkham Park. The ttal annual expected S106 expenditure as agreed in the budget shuld be held in a S106 depsit accunt. Funds shuld be transferred frm this accunt t the S106 current accunt each mnth as required t cver the cst f maintenance. Sufficient S106 depsit accunts may be pened t meet the maximum depsits limits as stated abve. The transfer shuld be carried ut by the RFO and reprted with the mnthly finance reprt. The remainder f the funds shuld be depsited as detailed abve. Funds shuld be released n an annual basis s that they equal the same value in real terms ver the life f the agreement. The RFO will maintain recrds f expenditure fr each categry f S106 funds i.e.: Open Spaces (bth frmal and infrmal) Play Areas Alltment / SANGS car park Sandy Lane car park Alltments Public Art Cmmunity Centre (if applicable) Page 4 f 9
Appendix : Financial institutins the Parish Cuncil may depsit funds with: I. Institutins shuld meet at least 2 f the 3 apprpriate credit ratings criteria in relatin t the term f the depsit at the time f making the depsit. Required ratings: Type Shrt term maturities f less than 1 year. Lng term maturities up t 5 years. Minimum rating Fitch Mdy s S&P F1 P-1 A-1 A A3 A Definitin Strng capacity t meet financial cmmitments. Lw t medium risk. Numeral indicates higher end f rating Strng capacity t meet financial cmmitments, but smewhat susceptible t adverse ecnmic cnditins and changes in circumstances. Lw t mderate risk II. Church Crkham Parish Cuncil currently has a current accunt and tw depsit accunts with Unity Trust Bank. Payments frm precept funds are made frm the current accunt. One depsit accunt is used t hld the Alltment Depsits. The ther may be used t hld precept funds and ther nn-s106 incme t a maximum limit as detailed abve. Unity has a very strng liquidity psitin, and therefre des nt need t brrw mney frm the inter-bank markets r frm any ther rganisatin t fund its day t day activities. This is the reasn that the bank has nt had t purchase a credit rating frm a third-party rating agency. Such ratings are required t facilitate interbank brrwing, and as Unity des nt brrw mney frm ther banks, it des nt require a credit rating. Unity is a bank specialising in the prvisin f banking services t charities, vluntary rganisatins, scial enterprises, Trades Unins and ther nt-fr-prfit rganisatins. This business is less vlatile than that undertaken by many UK banks and as such has nt been impacted t any material degree by sme f the situatins faced by ther banks. Unity has a full banking licence, is regulated by bth the Financial Cnduct Authrity and the Prudential Regulatin Authrity and is a member f the British Bankers Assciatin. Prcedure fr making a depsit I. RFO t identify an apprpriate depsit accunt, business bnd r mney market fund with a financial institutin that fits the cuncil s criteria listed belw. Any bnds shuld be capital sum guaranteed. Page 5 f 9
II. Apprval f Full Cuncil is required if the depsit is with a financial institutin that the Cuncil des nt have an accunt with. (Apprval t be minuted.) III. Apprval is delegated t the Chair f Finance and ne ther member f the Finance & Plicy cmmittee if the depsit is with any f the Cuncil s existing bankers (Apprval t be registered by the signing f an agreement detailing the depsit t be made). IV. The RFO actins the pening f the accunt and the setting up f the bank mandate fr Cuncil members. V. A minimum f three Cuncillrs t be included n each mandate. VI. The RFO actins the depsit / transfer f funds. VII. At the end f the depsit term the RFO has delegated authrity t mve the funds int anther bnd with the same financial institutin prvided that that institutin meets the criteria belw. Bank transfers. Delegated authrity is given t the RFO t make transfers between accunts f the same bank. Transfers between banks will require mvement by cheque, requiring tw members signatures. Details f all transfers shuld be prvided t cuncil with the mnthly finance reprt. Page 6 f 9
TRACKED AMENDMENTS Changes t plicy July 2017: Types f investment subject t the financial institutin criteria detailed in the appendix the Cuncil may depsit nn S106 funds in the fllwing accunts: depsit accunts business bnds Public Sectr Depsit Fund Mney market accunt. Clause 20.1a f the S106 agreement states that the parish cuncil is bliged upn receipt t place all sums received in an interest-bearing accunt r in separate accunts at the cuncil's discretin, therefre S106 funds may be depsited in the fllwing types f accunts: Depsit accunts Business bnds Cmmunity Centre S106 funds Fllwing the cmpletin f the build f the cmmunity centre the remainder f the S106 funds prvided fr the prject will be accunted fr via cashbk 3 S106 funds. Recrds will be maintained t shw the amunt in reserve fr these funds. Change: T: Frmal Open Spaces Infrmal Open spaces Open spaces (Frmal & Infrmal) Changes t plicy Nvember 2017: Maximum depsit - A maximum f 700,000 may be depsited with any ne financial institutin, subject t the minimum required rating as per the ratings in the table in the appendix. TO Maximum depsit - A maximum f n mre than 50% f ttal reserves may be depsited with any ne financial institutin, subject t the appendix Financial institutins the Parish Cuncil may depsit funds with: I. Institutins shuld meet the required rating at the time f making the depsit Page 7 f 9
TO I. Institutins shuld meet at least 2 f the 3 apprpriate credit ratings criteria in relatin t the term f the depsit at the time f making the depsit. Changes t Plicy January 2018: Remve frm Annual Investment Strategy maximum depsit - The Parish Cuncil is nt cvered under the current Financial Services Cmpensatin Scheme. Add In a Plicy Statement (PS9/15) issued in May 2015 the Prudential Regulatin Authrity f the Bank f England annunced that the Financial Services Cmpensatin Scheme nw cvers Small Lcal Authrities i.e. thse authrities with an annual budget f up t 500,000 Eurs. The plicy statement des nt state whether the term budget refers t incme r expenditure, s it is therefre prudent t assume that bth incme and expenditure need t be under the 500,000 Eurs threshld t qualify 3. Thse cuncils nt qualifying as Small Lcal Authrities are nt eligible fr prtectin under the scheme 4 Changes t Plicy Nvember 2018: Additin t Types f Investments S106 funds: CCLA prducts i.e. Public Sectr Depsit Fund and Lcal Authrity Prperty Fund Changes t Plicy February 2019: 1. Remval f statement: Clause 20.1a f the S106 agreement states that the parish cuncil is bliged upn receipt t place all sums received in an interest-bearing accunt r in separate accunts at the cuncil's discretin, therefre 2. Additin f Investment preferences table Tlerable investment fall / timescale table 3. Updates t text: Frm: The parish cntains 3260 dwellings and will expand t include 972 being built at Crkham Park. 3 NALC Financial Tpic Nte F08-15 4 Sept 2015 4 NALC Financial Briefing F07-14 3 June 2014 Page 8 f 9
The develpment will als prvide assets in the frm f a cmmunity centre, alltments and several recreatinal pen spaces. T: The parish currently cntains 4201 dwellings. The Crkham Park develpment has prvided assets in the frm f a cmmunity centre, alltments and several recreatinal pen spaces Page 9 f 9