Docstoc

_Attachment 23_Proposed Changes to the Treasury Management

Document Sample
_Attachment 23_Proposed Changes to the Treasury Management Powered By Docstoc
					COUNTY COUNCIL

Date: 2 FEBRUARY 2011
________________________________________________________________________

Proposed Changes to the Treasury Management Policy

Report of the Corporate Director of Finance

Executive Member: Councillor Andrew Tebbutt, Executive Member for Corporate
Resources
________________________________________________________________________

Purpose of Report

The purpose of this paper is to request the approval of changes to the current treasury
management policy, recently approved by the Audit Committee at a meeting convened on
24th November 2010.

It is a requirement of CIPFA Treasury Management in the Public Services Code of
Practice (the Code) that this Council formally adopts the Code and any recommended
changes to the treasury management policy are required by the Code to be approved at
Full Council.

Recommendations

The County Council is requested to endorse the resolutions of the Audit Committee,
as detailed below:

RESOLVED that

         (1)       the revised prudential indicator limits for other long term liabilities be
                   approved, as outlined in Para 5 of Appendix A.

         (2)       the revised limits and authorised counterparty list set out in Annex A and
                   referenced in Para 8 of Appendix A. The fully revised policy statement and
                   investment strategy in Appendix B and C be approved.

This report should be read in conjunction with the report and attachments submitted to the
Audit Committee on 24th November 2010, which are attached at Appendix A, B and C.

Report Author             Steven Mason, Corporate Director of Finance
                          (01670) 533104
                          Steven.Mason@northumberland.gov.uk




                                                    1
Executive Report – 29th January 2010
BACKGROUND PAPERS

24th November 2010 – Audit Committee                  Treasury Management Performance Report
                                                      from 1 April 2010 to 30 September 2010 –
                                                      Appendix A

24th November 2010 – Audit Committee                  Revised Treasury Management Policy –
                                                      Appendix B




IMPLICATIONS ARISING OUT OF THE REPORT

Policy                                 The further development of Treasury Policy reflects the
                                       developing policy and priorities of the current
                                       Administration.

Finance and value for money            The changes are intended to enhance the Council‘s
                                       ability to maximise its investment income on resources
                                       not currently in use and will be reflected in the Medium
                                       Term Financial Plan, 2011/12 to 2014/15.

Human Resources                        The proposals have no impact upon staffing.

Property                               There are no property implications.

Equalities                             There are no impacts relating to the Council‘s ability to
                                       comply with its equality duties including duties under the
                                       Disability Discrimination Acts 1995 and 2005.

Risk Assessment                        The change in policy is designed to reduce the risk of
                                       potential loss of investment monies, through extending
                                       the number of counterparties available, while ensuring
                                       they are all appropriately rated from a credit risk
                                       perspective whilst maximising the investment return from
                                       the range of counterparties available. The investment
                                       priority continues to be security and liquidity rather than
                                       yield, which is a secondary aim.

Crime & Disorder                       This report has given careful consideration to the
                                       implications of Section 17 of the Crime and Disorder Act
                                       1998 and the duty it imposes.

Customer Considerations                Providing effective and efficient customer service
                                       remains a key priority of the new Unitary Council. Any
                                       increase in interest income may be utilised to protect
                                       unnecessary cessation of critical service delivery, in
                                       these particularly challenging times.

Sustainability                         There are no sustainability implications.


                                                  2
Executive Report – 29th January 2010
Consultation                           This report and the proposals contained within it have
                                       been subject to approval by the Audit Committee of the
                                       County Council during November 2010 and are now
                                       public documents. The overall budget including
                                       enhanced investment income proposals, has been the
                                       subject of extensive consultation throughout December
                                       2010 and into January 2011.

Wards                                  All Divisions




                                                  3
Executive Report – 29th January 2010
Appendix A




AUDIT COMMITTEE
Date: 24 November 2010
________________________________________________________________________
TREASURY MANAGEMENT PERFORMANCE REPORT FROM 1 April 2010 to
30 SEPTEMBER 2010
Report of the Corporate Director of Finance
Executive Member: Councillor Andrew Tebbutt - Executive Member for Corporate Resources
________________________________________________________________________

Purpose of Report
This report presents the Treasury Management activities for the first half of the financial
year in compliance with CIPFA‘s revised Code of Practice for Treasury Management
issued November 2009. The Code suggests that members should be informed of Treasury
Management activities at least twice a year, but preferably quarterly. This report therefore
ensures this Council is embracing Best Practice. The report also suggests some changes
to the 2010/11 Treasury Management policy.

Recommendations

It is recommended that
1) Members receive the report and note the performance of the Treasury Management
     function; and
2) The Corporate Director of Finance seeks approval of the revised prudential indicator
     limits for other long term liabilities; and
3) The Corporate Director of Finance seeks approval of the revised limits and authorised
     counterparty list set out in paragraph 8 (referenced to Appendix A) with the fully revised
     policy statement and investment strategy in Appendix B and C.

Key Issues

This Treasury Report covers the:
    1. Council‘s treasury position as at 30 September 2010;
    2. Change in Treasury Management consultants;
    3. Economy and interest rates in 2010-11;
    4. Strategy followed in 2010-11 to date;
    5. Prudential Indicators position;
    6. Long term borrowing for 2010-11;
    7. Investment activity in 2010-11;


                                               4
Executive Report – 29th January 2010
    8. Proposed changes to the current policy statement.
_________________________________________________________________
Report Author             Steven Mason, Corporate Director of Finance
                          Steven.mason@northumberland.gov.uk (01670) 533104




                                                5
Executive Report – 29th January 2010
                         TREASURY MANAGEMENT PERFORMANCE REPORT
                           FROM 1st April 2010 to 30th SEPTEMBER 2010


1.     Treasury Position as at 30 September 2010
       The Council‘s debt and investment position at the beginning and the end of the period
       was as follows:

                                       30th September       Rate/    31st March 2010 Rate/
                                       2010 Principal       Return   Principal       Return
              -Public Works
                                             £129m           3.91%        £75m         4.28%
              Loan Board
              -Market                        £159m           4.21%       £174m         4.22%
              Total Debt                     £288m           4.08%       £249m         4.24%
              Investments
              excluding
              Impaired
              deposits:
            -In-House                        £109m           1.13%        £41m         1.82%
              Total
                                             £109m           1.13%        £41m         1.82%
              Investments

2.     Change in Treasury Management consultants
       The Council‘s contract with Sector Treasury Management Consultants ended in April
       2010. Following a tender exercise where two companies (Sector and Butlers) put in
       bids, Butlers were awarded the contract on the basis of price.
       Since commencing their contract they have reassessed the lending credit criteria
       used by the Council and recommended some changes in the current policy
       statement, the details of which can be found in section 8.
       In October the Council was notified that Sector are taking over Butlers, but the
       Council will still receive Butlers reports and deal with former Butlers personnel who
       have been transferred across to Sector.
3.     The Economy and Interest rates
3.1. The 2010/11 Economy
       The Emergency Budget delivered on the 22 nd June which unveiled plans by the new
       Chancellor to severely tighten fiscal policy. According to the new (and independent)
       Office for Budget Responsibility cyclically adjusted net borrowing – the portion of
       borrowing that will not disappear with economic growth – will now fall from 8.7% of
       GDP in the fiscal year just gone to 0.8% in 2014-15.

       The Budget directed the bulk of the fiscal tightening at households and the public
       sector instead of private companies, and one of the key measures was a rise in the
       standard rate of VAT from 17.5% to 20%, to take effect in January 2011.



                                                        6
Executive Report – 29th January 2010
       Subsequent to the period end the results of the Comprehensive Spending Review
       were announced on the 20th of October. In summary the level of savings required by
       local government over the next four years far exceeded expectations.

3.2. 2010/11 Interest Rates
       The Monetary Policy Committee (MPC) continued to keep the Base Rate on hold at
       0.5% and to maintain its stock of asset purchases. The Bank of England‘s quarterly
       Inflation Report in July also projected inflation to be below the 2% target at the two
       year horizon, suggesting that rates will remain on hold for a considerable period.

       The Council‘s Treasury Advisers, Butlers, provided the following forecast:

       Butler’s interest rate forecast – October 2010

                                        Now    Q/E    Q/E      Q/E    Q/E      Q/E      Q/E
                                               Dec   March    June    Sept     Dec     March
                                                2010 2011     2011    2011     2011     2012
                                                %      %        %      %        %         %
        Base rate                      0.50   0.50   0.50    0.75    1.00     1.25     1.50

        Money rates
        3 months                       0.72   0.70   0.70    0.90    1.20     1.50     1.70
        6 months                       1.02   1.00   1.00    1.10    1.40     1.80     1.90
        12 months                      1.45   1.50   1.50    1.70    2.00     2.50     2.70
        PWLB rate
        5 years                        1.81   2.40   2.60    2.80    3.00     3.20     3.40
        20 years                       3.91   4.20   4.40    4.60    4.80     4.90     5.00
        50 years                       4.09   4.20   4.40    4.70    4.90     5.00     5.10


           There is considerable uncertainty in all forecasts due to the difficulties of
            forecasting the timing and amounts of quantitative easing reversal, the tough cuts
            outlined in the Emergency Budget, speed of recovery of banks profitability and
            balance sheet position, changes in the consumer saving ratio, rebalancing of the
            UK economy in terms of export and import etc
           The balance of risks is weighted to the downside
           There is still some risk of a ―double dip‖ recession.
           Post September the Comprehensive Spending Review raised the average
            interest rates on all new PWLB loans to an average of 1% above the
            government‘s cost of borrowing with immediate effect (previously the rate was
            equal to the government‘s cost of borrowing). This is not reflected in the table
            above.

4. Strategy followed in 2010-11 to date
    The Treasury Management Strategy Statement (TMSS) for 2010/11 was approved by
    Council on 10 February 2010. The strategy was based on the expectation that Base
    Rate would remain at 0.5% until September 2010, when it would begin to rise slowly.

    The Council aimed to achieve the optimum return (yield) on investments whilst
    remaining within the authorised levels of security and liquidity. The risk appetite of this


                                                 7
Executive Report – 29th January 2010
    Council is low in order to give priority to security of its investments particularly following
    the collapse of the Icelandic banks.

    The Council avoided locking itself into longer term deals while investment rates are
    down at historically low levels, and utilised its business reserve accounts and short-
    dated deposits (overnight to three months) in order to benefit from the compounding of
    interest.

    New borrowing was taken out at the beginning of the year, partly to replace borrowing
    which was repaid at a discount during 2009/10; partly to repay borrowing maturing
    during 2010/11; and partly to fund the capital programme. The Council‘s borrowing
    strategy was based upon the following information:

        The expectation that rates would gradually increase during the year so it would be
         advantageous to time new long term borrowing for the start of the year when 25
         year PWLB rates remained low;
        The expectation that PWLB rates on loans of less than ten years duration would be
         substantially lower than longer term PWLB rates offering a range of options for new
         borrowing which would spread debt maturities away from a concentration in long
         term debt.

5. Prudential Indicators position

    During the previous financial year the Council operated within the treasury limits and
    Prudential Indicators set out in the Council‘s annual Treasury Strategy Statement, with
    the exception of other long term liabilities, which is made up of the outstanding liability
    for finance leases, provisions and deferred capital receipts. After the prudential
    indicators had been set for the 2010/2011 financial year the waste PFI scheme was
    brought onto the balance sheet which included a £13.3 million finance lease element
    which has taken the actual for the year over the set limit. Initial calculations also show
    that a finance lease with a value of £13.4m will arise on the balance sheet in the
    current financial year arising from a fire PFI scheme. Further to this a number of
    finance leases will be recognised in the current period arising from accounting
    differences between UK Accounting Standards and International Financial Reporting
    Standards which the council must report under in in its 2010/11 Statement of Accounts.
    The combination of these new factors will require the limits to be increased by
    approximately £20 million. It is therefore proposed that the operating boundary and
    authorised limit on other long term liabilities be increased as follows:


      Prudential Indicator             Current limit          Proposed limit     Actual to date


      Operating boundary                    £29,700,000            £59,200,000     £38,843,254



      Authorised boundary                   £32,670,000            £62,000,000     £38,843,254




                                                          8
Executive Report – 29th January 2010
6. Long term Borrowing 2010-11
    As highlighted in section 1 the balance of outstanding debt has increased from £249m
    to £288m, and the average debt portfolio interest rate has moved from 4.24% to
    4.08%. The change is due to:
        Repayment of £6.04m maturing PWLB debt with an average rate of 4.17%.
        £60m new PWLB Loans were entered into which have an average rate of 3.48%
         (detailed below).


                Amount                 Rate (%)         Date taken out      Length of loan
              (£ millions)
                     10                  3.25           22nd April 2010      6 years
                     10                  3.84           27th April 2010      8 years
                     10                  3.95            6th June 2010       9 1/2 years
                     15                  3.51           28th June 2010       9 years
                     15                  3.03           28th June 2010       7 years


        A three month LOBO ―holiday‖ whereby the Council repaid a £15 million Royal
         Bank of Scotland loan on 16th July 2010 on the condition that a new loan would be
         issued at the same rate and maturity date commencing 19th October 2010. The only
         difference being that the interest on the new loan is three monthly instead of six
         monthly. This saved the Council £164,560 in interest payments.


    The table below shows the activity during the first half of the year.

                           Long Term Loan activity to 30TH September 2010

                      Type of Loan                              Market      Balance of Long
                                                                 Loans         term Debt
                                                  PWLB          LOBO’s           (£’000)
      Activity                                    (£’000)       (£’000)
                                                  75,312        173,600
      Balance 1 April 2010                                                      248,912
      New borrowing                               60,000            -           60,000
      Loans maturing in year                      (6,000)           -           (6,000)
      Annuity / EIP principal repayment               (40)          -            (40)
      Repayment to achieve LOBO
      “holiday”                                                 (15,000)       (15,000)

      Balance 30 September 2010                   129,272       158,600         287,872




                                                  9
Executive Report – 29th January 2010
7. Investment activity in 2010-11

    Investment rates available in the market are at an historical low point. The average
    level of funds available for investment purposes in the first half of 2010/11 was £99.39
    million. These funds were available on a temporary basis, and the level of funds
    available was mainly dependent on the timing of precept payments, receipt of grants
    and progress on the Capital Programme.

    As highlighted in section 1 the average investment portfolio interest rate has fallen over
    the course of the year from 1.82% to 1.13%, and the level of investment went up by
    £68m. The fall in the average rate is mainly due to the investments which had been
    entered into in April 2009 for a year matured and shorter dated, lower yield investments
    were entered into. The average rate achieved is still greater than the half year average
    LIBOR Rates shown in the table below:


                                   LIBOR            Average rate (%)
                                   7 Day            0.550
                                   1 month          0.565
                                   3 months         0.714
                                   6 months         0.922

    The table below shows the investment profile based on the length of the investment on
    inception. The graph shows that the Council‘s use of call accounts has declined, being
    due to the banks altering the terms of these accounts to fit in with new Financial
    Services Authority (FSA) requirements. The graph also shows that the profile split of
    investments has moved from one to three month fixed term investments towards six
    month fixed term investments. This increases the liquidity risk slightly but provides the
    Council with higher interest figures to meet budget requirements.

    If investments with 12 month fixed terms were taken out the return would be expected
    to be higher. It is proposed that the council‘s Treasury Management Policy be
    amended to allow the use of 12 month fixed term investments.




                                              10
Executive Report – 29th January 2010
                                                                    Investment analysis
                                      90
                                      80
               amount invested (£m)

                                      70
                                      60
                                      50
                                      40
                                      30
                                      20
                                      10
                                      0
                                             Pd1            Pd2              Pd3              Pd4              Pd5       Pd6

                                                                                Month

                                            up to 1 month         1 - 3 moths            Call a/c          MMF       3-6 moths



    As stated in the strategy the Council‘s current risk appetite is low and investment is
    only made in high credit institutions and institutions that are nationalised or part
    nationalised within the UK.

    The graph below shows the maturity of existing investments as at 30 th September
    2010.


                                              Marurity profile of investments as at 30/09/10
                                      £40
       Investment amount




                                      £35
                                      £30
                                      £25
              (£m)




                                      £20                                                                Series1
                                      £15
                                      £10
                                       £5
                                       £0
                                            October   November    December         January    February       March

                                                                     Month



    The charts below show the breakdown of the investments as at 30th September 2010,
    split by sector and by credit rating. A list of investments entered into between 1 April
    2010 and 30th September 2010 can be found in Appendix D.




                                                                             11
Executive Report – 29th January 2010
                              Investments as at 30th September 2010 by Sector

                                                            UK Bank Call
                                                           account, 4.60%


                                                                        Money market
                                                                        Funds, 18.00%




                                                                            Building societies,
                                                                                  11.05%

                          UK Banks fixed
                           term, 66.29%




                           Investments as at 30th September 2010 by credit rating




                                                                    Nationalised and part
                                                                     nationalised banks
                                                                    (AA- and A+), 33.16%


                    UK Banks / Building
                      societies AA-,
                         48.83%




                                                             Money market Funds
                                                                AAA, 18.01%




8. Proposed changes to the current policy statement
    Following a review of the Council‘s lending criteria by Butlers and senior finance staff
    and in order to enhance the rates received on investments it is proposed to amend the
    Treasury Management Policy statement as follows:




                                                    12
Executive Report – 29th January 2010
             Approve the changes to the existing policy detailed in Appendix A. In summary
              changes have been proposed to extend the maximum lending periods and
              maximum group and individual limits of those banks which meet the council‘s
              existing lending criteria.
             Approve the revised Prudential Indicators which have been amended to reflect
              increases required for PFI finance lease adjustments and any further expected
              finance lease adjustments arising from the Council‘s conversion to reporting its
              statement of accounts on an International Financial Reporting Standards basis.

         The above have been reflected in the revised proposed Treasury Management Policy
         document. Shown in Appendix B and C.

         Consideration has also been given as to whether to invest in gilts and bonds however
         the current rates do not appear to be competitive and therefore such a move has not
         been proposed.



BACKGROUND PAPERS

     Treasury Management Policy Statement 2010/2011 (attached as Appendix B

     IMPLICATIONS ARISING OUT OF THE REPORT

     Policy                                 All transactions were carried out having regard to the
                                            Treasury Management Policy statement 2010/11, the
                                            Annual Investment Strategy: Financial year 2010/11,
                                            CIPFA‘s Treasury Management In the Public Services:
                                            Code of Practice and the 2010/11 Prudential Indicators.

     Finance and value for money            The financial implications of the 2010/2011 investment
                                            transactions have been taken into account within the
                                            outturn for 2010/2011.

     Human Resources                        There are no direct personnel implications

     Property                               There are no property implications.

     Equalities                             Effective financial and performance          management
                                            supports equality and diversity

     Risk Assessment                        The report highlights the principle financial risks within
                                            the Treasury Management function. The identification,
                                            monitoring and control of risk are the prime criteria by
                                            which the effectiveness of the County Council‘s treasury
                                            management activities will be measured. Accordingly,
                                            the analysis and reporting of treasury management
                                            activities will focus on their risk implications for the
                                            Council. The investment priority is security and liquidity
                                            rather than yield, which is a secondary aim.



                                                      13
     Executive Report – 29th January 2010
Crime & Disorder                       This report has given careful consideration to the
                                       implications of Section 17 of the Crime and Disorder Act
                                       1998 and the duty it imposes.

Customer Considerations                There are no customer consideration implications

Sustainability                         There are no sustainability implications

Consultation                           This report has been discussed with the Executive
                                       Member for Corporate Services

Wards                                  All Divisions




                                                 14
Executive Report – 29th January 2010
APPENDIX B


                                   Northumberland County Council
                     Revised Treasury Management Policy Statement 2010/11

1. Scope of the Statement

    1.1. This statement covers the following activities:

          i)       Managing the County Council‘s cash flow;
          ii)      Monitoring the activity of the money markets;
          iii)     Making arrangements for the lending of surplus monies or borrowing to cover
                   cash deficiencies.

2. Policies and Objectives

    2.1. Northumberland County Council defines its treasury management activities as: The
         management of the organisation‘s cash flows, its banking, money market and
         capital market transactions; the effective control of the risks associated with those
         activities; and the pursuit of optimum performance consistent with those risks.

    2.2. Northumberland County Council regards the successful identification, monitoring
         and control of risk to be the prime criteria by which the effectiveness of its treasury
         management activities will be measured. Accordingly, the analysis and reporting of
         treasury management activities will focus on their risk implications for the
         organisation.

    2.3. Northumberland County Council acknowledges that effective treasury management
         will provide support towards the achievement of its business and service
         objectives. We are therefore committed to the principles of achieving best value in
         treasury management within the context of effective risk management, and to
         employing suitable performance measurement techniques, for example
         comparison with other members of the CIPFA Treasury management
         benchmarking club.

3. Responsible Officers

    3.1 The activities will be undertaken by the Senior Accountant responsible for treasury
        management activities within the Business Support section of the Resources
        department. If absent, another Senior Accountant (or above), within Business
        Support section will undertake these activities.

          These officers are responsible to the Corporate Director of Finance.

          Each officer concerned will receive appropriate training and guidance on their
          duties and the constraints within which they operate.


                                                15
Executive Report – 29th January 2010
4. Formulation of Strategy

    4.1. Cash flow forecasts will be prepared and updated covering a number of
         timescales as follows: -

          i)    Medium Term: - At present a one year rolling cash flow is produced, with the
                intention of extending this up to four years.

          ii)   Annually: - An annual profile of the County Council‘s receipts and payments in
                order to determine the longer term lending/borrowing requirements and allow
                the main financial transactions of the Authority to be controlled and monitored.

          iii) Monthly: - A day-to-day profile of the receipts and payments over each
               calendar month in order to more accurately anticipate the short-term
               requirements.

          iv) Daily: - An accurate and detailed forecast of each day‘s transactions in order
              to arrive at a balance to lend / borrow on that day.

5. Treasury Management Practices

    5.1. The County Council has adopted the recommended form of words defining the
         Council‘s treasury management practices (TMPs), contained in and in compliance
         with CIPFA‘s Treasury Management in the Public Services: Code of Practice and
         the Prudential Code for Capital Finance in Local Authorities 2003. These practices
         are as follows:

           TMP1           Risk management
           TMP2           Best value and performance measurement
           TMP3           Decision-making and analysis
           TMP4           Approved instruments, methods and techniques
           TMP5           Organisation, clarity and segregation of responsibilities, and dealing
                          arrangements.
           TMP6           Reporting requirements and management information
           TMP7           Budgeting, accounting and audit arrangements
           TMP8           Cash and cash flow management
           TMP9           Money laundering
           TMP10          Training and qualifications
           TMP11          Use of external service providers
           TMP12          Corporate governance.

    5.2. The Council follows CIPFA‘s suggestions on the specific details of the systems and
         routines to be employed and the records to be maintained which take the form of
         schedules to the TMPs. These comply with the Code of Practice and can be found
         in ANNEX 3.




                                                  16
Executive Report – 29th January 2010
6. Investment of Surplus Monies

    6.1. Close contact will be maintained with the money market to ascertain the most
         favourable interest rates on offer to achieve best value from the return on surplus
         monies available.

    6.2. Treasury Management staff must agree all investments with the Director of
         Resources or in his absence the Head of Financial Management or Head of
         Financial Services.

    6.3. Temporary loans will only be made to organisations on the approved list of
         borrowers as detailed at Annex 1. Any changes to the list must be approved by the
         Director of Resources, in consultation with the Executive Member for Corporate
         Services.

    6.4. Fully Nationalised banks in the UK have credit ratings which do not comply with
        the credit criteria used to identify banks with high credit worthiness, as they are no
        longer separate institutions in their own right. They do however effectively take on
        the creditworthiness of the Government itself i.e. deposits made with them are
        effectively being made to the Government, and as such have the highest ratings
        possible.

    6.5. Individual loans or aggregate of loans to one organisation should comply with the
          following limits:

            Type of organisation       Minimum Credit Rating      Max Amount     Max Period
                                             Criteria
                                         Fitch           Moody
            UK Local Authorities          N/A             N/A    N/A           12 mths

            DMO                           N/A             N/A    £50m          12 mths

            Nationalised and semi-        N/A             N/A    £25m (£50m    12 mths
            nationalised banks                                   in total)
            Money Market Funds            AAA             Aaa    £25m (£50m    n/a
                                                                 in total)
            U.K. Clearing Banks /      ST: F1+      ST: P-1      £25m (£50m    12 mths
            Building Societies         LT : AA+     LT: Aa2      in total)
                                       Indiv: C/D   FSR: B- or
                                       Support: 2   C-

            U.K. Clearing Banks /      ST: F1+      ST: P-1      £12m(Group    12 mths
            Building Societies         LT : AA-     LT: Aa3      limit £25m)
                                       Indiv: C/D   FSR: B- or
                                       Support: 2   C-




                                                    17
Executive Report – 29th January 2010
            Type of organisation         Minimum Credit Rating      Max         Max Period
                                               Criteria            Amount
                                           Fitch          Moody

            U.K. Clearing Banks/        ST: F1       ST: P-1      £5m(Group     1 mth
            Building Societies          LT: A-       LT: A2       limit £25m)
                                        Indiv: C/D   FSR: C-
                                        Support: 3

            Non UK banks                Following individual      £10m          6 mths
                                        approval from the Risk
                                        Appraisal Panel

    6.6. Investments are to be arranged through one of the following: -

           i)      The Council‘s bankers, i.e. The Co-operative Bank plc;
           ii)     One of the Council‘s approved brokers which are currently as follows: -

                       Martin Brokers (UK) Ltd
                        26-28 Frederick Street
                        Edinburgh
                        EH2 2JR

                       Sterling International Brokers Ltd
                        10 Chiswell Street
                        London
                        EC1Y 4UO

                       ICAP Europe Ltd
                        2 Broadgate
                        London
                        EC2M 7UR

                       Tullett Prebon (UK) Limited.
                        155 Bishopsgate,
                        London, EC2N 3DA

                       Tradition (UK) Ltd
                        Beaufort House,
                        15 St Botolph Street,
                        London, EC3A 7QX

           iii)    Direct with banks and financial institutions on the approved list of borrowers.

   6.7 All cash investments should be arranged by telephone call to the above
       organisations and the borrower concerned will confirm each transaction. An
       authorised CHAPS payment form is then input into the Co-operative Bank‘s
       electronic Financial Director system by the Cashiers section. A confirmation that
       the transaction has been completed is then printed from the electronic Financial
       Director system.

                                                     18
Executive Report – 29th January 2010
   6.8 Certificates of Deposit will be traded through a CREST account which is fully
       electronic via the internet.

7. Borrowing Requirements

    7.1. The money market will be monitored in conjunction with the prevailing Public
         Works Loans Board rates and the most advantageous arrangements selected to
         overcome temporary cash deficiencies due to an unfavourable cash flow position.

    7.2. Any money borrowed over periods in excess of one month must be approved by
         the Director of Resources.

    7.3. All borrowing on the money market will, under normal circumstances, be conducted
         through the approved brokers listed at 6.6. On occasion however, it may be
         necessary due to the small amounts involved to deal directly with individual
         lenders. Similarly, loans can be arranged directly with the Public Works Loans
         Board.

    7.4. There is not the constraint of adhering to an approved list of lenders as in the case
         of arranging temporary loans. Monies can be borrowed from any sources identified
         by the Council‘s brokers.

    7.5. All borrowing is arranged by telephone, each transaction must be confirmed in
         writing on a daily basis.

8. Implementation of the Policy Statement

     8.1 The continued implementation of the above policy and procedures is the
         responsibility of the Corporate Director of Finance, who is authorised to arrange
         the necessary borrowings within the limits set out in the Prudential Indicators.

     8.2 The adequacy of the policy statement will be monitored and reports requesting
         amendments to the statement will be produced when changes are thought to be
         necessary. The changes will be made in consultation with the Executive Member
         for Corporate Resources, whose role relates to the policy and associated risks.
         Any policy changes will be reported to the Audit Committee, which will be attended
         by the Executive Member for Corporate Resources.

     8.3 The Corporate Director of Finance will submit the following reports: -


                                                      Council/ Committee/
                     Area of Responsibility                                            Frequency
                                                      Officer
                   Adoption of the new version of
                   the Code of Practice and Cross-   Executive / Full council   Initial adoption in 2010
                   Sectoral Guidance Notes.
                  Treasury Management Strategy
                                                                                Annually before the start
                  / Annual Investment Strategy /     Executive / Full council
                                                                                of the year
                  MRP policy




                                                     19
Executive Report – 29th January 2010
                                                                               Updated along with the
                   Treasury Management
                                                    Executive / Full council   annual strategy and
                   Practices
                                                                               plan.
                                                                               Annually before the
                   Scrutiny of treasury                                        start of the year
                                                    Audit Committee
                   management strategy                                         (commencing for
                                                                               2011/12 strategy)
                   Treasury Management Strategy
                   / Annual Investment Strategy /   Executive / Full council   Mid year
                   MRP policy – mid year report
                                                                               Annually by 30
                   Annual Treasury Outturn Report   Executive / Full council   September after the
                                                                               end of the year
                                                    Incorporated within the
                                                    Budget Monitoring
                   Treasury Management
                                                    report and reported        Quarterly
                   Monitoring Reports
                                                    separately to Audit
                                                    Committee
                   Scrutiny of treasury
                                                    Audit Committee            Quarterly
                   management performance
                   Treasury Management Strategy
                   / Annual Investment Strategy /
                                                    Executive / Full council   Ad- hoc
                   MRP policy – updates or
                   revisions at other times




                                                    20
Executive Report – 29th January 2010
ANNEX 1

                                         List of Approved Borrowers
                    (Organisations to whom Northumberland County Council will lend money)

Criteria for Approved Counterparty List (refer to Annex 2).
(Note: All criteria within each band must be met)
     Minimum Credit              Max Amount     Max          Organisation           Group
     Rating Criteria                           Period
   Fitch     Moody
 UK Local Authorities
    N/A       N/A                      N/A    12 mths                                           N/A

 DMO
   N/A                N/A              £50m   12 mths

 Nationalised & Semi-Nationalised banks
    N/A        N/A        £25m      12 mths                  Lloyds TSB             Lloyds Banking Group.
                        (£50m in
                          total)                          Bank of Scotland plc      Lloyds Banking Group.
                                                          National                  Royal Bank of Scotland
                                                          Westminster Bank          Group plc
                                                          Royal Bank of             Royal Bank of Scotland
                                                          Scotland                  Group plc
                                                          Ulster Bank Ltd           Royal Bank of Scotland
                                                         (UK registered /           Group plc
                                                         regulated)
 Money Market Funds
                                                             Barclays Global Investors sterling liquidity first
 AAA              Aaa            £25m                        fund
                                 (£50m in                    Standard Life Investments Sterling liquidity fund
                                 total)                      Gartmore cash management cash reserve funds
                                                             plc sterling
                                                             Goldman Sachs Sterling Liquid Reserves Fund
                                                             Invesco Aim Sterling Liquidity Portfolio.
                                                             Ignis Liquidity Funds

 U.K. Clearing Banks / Building Societies

 ST: F1+          ST: P-1        £25m         12 mths
 LT : AA+         LT: Aa1        (£50m in
 C/D              FSR: C-        total)
 Support: 2




                                                        21
Executive Report – 29th January 2010
     Minimum Credit              Max Amount      Max          Organisation              Group
     Rating Criteria                            Period
   Fitch      Moody
 U.K. Clearing Banks / Building Societies
                                                              HSBC                      HSBC Holdings PLC
 ST: F1+          ST: P-1        £15(Group      12ths         Santander UK plc;         Banco Santander SA
 LT : AA-         LT: Aa3        limit £30)                   Cater Allen               Banco Santander SA
 C/D              FSR: C-                                     (unconditionally
 Support: 2                                                   guaranteed by
                                                              Santander UK plc but
                                                              not rated in own right)
                                                              Alliance & Leicester      Banco Santander SA
                                                              plc
                                                              Barclays Bank             Barclays Plc
                                                              Nationwide BS

 ST: F1           ST: P-1        £12m           6 mths        Citibank International    Citigroup Inc
 LT: A            LT: A2         (Group limit                 plc
 Indiv: C/D       FSR: C-        £25m)
 Support: 2                                                   Clydesdale Bank           National Australia Bank Ltd
                                                              (Yorkshire Bank is
                                                              trading arm of
                                                              Clydesdale Bank)
                                                              Bank of Butterfield
                                                              (Uk) Limited
                                                              Sumitomo Mitsui
                                                              banking Corp. Europe
                                                              Ltd.
 ST: F1           ST: P-1        £5m                          Coventry BS
 LT: A-           LT: A2         (Group limit   3 mths        Leeds BS
 Indiv: C/D       FSR: C-        £25m)                        Credit Suisse First       Credit Suisse Group
 Support: 3                                                   Boston International
                                                              HFC Bank Ltd              HSBC Holdings PLC
 Organisations below credit criteria – to be used             Chelsea BS
 if their credit ratings improve                              Newcastle BS
                                                              Norwich and
                                                              Peterborough
                                                              Nottingham BS
                                                              Principality BS
                                                              Skipton BS
                                                              West Bromwich BS
                                                              Yorkshire BS
                                                              Co-operative Bank         Co-operative Bank (The)
 Non UK Banks
 Following individual            £10m                         Commonwealth Bank of Australia
 approval from the                                            National Australia Bank Ltd
 Risk Appraisal Panel                                         Australia and New Zealand Banking Group Ltd
                                                              Royal Bank of Canada
                                                              Bank of Montreal
                                                              Bank of Nova Scotia
                                                              Canadian Imperial Bank of Commerce
                                                              Toronto Dominion Bank
                                                              BNP Paribas (France)


                                                         22
Executive Report – 29th January 2010
                                            Credit Agricole SA
                                            Societe Generale
                                            Deutsche Bank AG
                                            DBS Bank Ltd
                                            United Overseas Bank Ltd
                                            Nordea Bank AB
                                            Svenska Handelsbanken AB (publ)
                                            Northern Trust Company
                                            The Bank of New York Mellon




                                       23
Executive Report – 29th January 2010
                                                                         ANNEX 2
                                       Explanation of credit ratings


The Credit Ratings quoted in this report are Fitch and Moody ratings (leading global rating
agencies). They provide a simple system of gradation by which relative creditworthiness of
securities may be noted i.e. the ability of an entity to meet financial commitments such as
interest, or repayment of principal, on a timely basis. Ratings are not a guarantee that
default will not occur.

Rating Symbols

Gradations of creditworthiness are indicated by rating symbols, with each symbol
representing a group in which the credit characteristics are broadly the same.

Moody - The Moody‘s rating scale runs from a high of Aaa to a low of C, and comprises of
21 notches. It is divided into two sections, investment grade and speculative grade. The
lowest investment grade rating is Baa3. The highest speculative grade rating is Ba1.


Fitch - The Fitch rating scale runs from a high of AAA to a low of D, and comprises of 21
notches. It is divided into two sections, investment grade and speculative grade. The
lowest investment grade rating is BBB. The highest speculative grade rating is BB. Thus,
the use of credit ratings defines their function: "investment grade" ratings (international
long-term 'AAA' - 'BBB' categories; short-term 'F1+' - 'F3') indicate a relatively low
probability of default, while those in the "speculative" or "non-investment grade" categories
(international long-term 'BB' - 'D'; short-term 'B' - 'D') may signal a higher probability of
default or that a default has already occurred.

   Fitch rating            Moody rating              Risk
   Long term ratings (maturities of one year or greater)
   Investment Grade
   AAA                     Aaa                       Highest rating, representing minimum
                                                     credit risk
   AA+, AA, AA-            Aa1, Aa2, Aa3             High grade
   A+, A, A-               A1, A2, A3                Upper medium grade
   BBB                     Baa1, Baa2, Baa3          Medium grade
   Speculative Grade
   BB+, BB, BB-            Ba1, Ba2, Ba3             Speculative elements
   B+, B, B-               B1, B2, B3                Subject to high credit risk
   CCC, CC+, CC,CC-        Caa1, Caa2, Caa3          Bond of poor standing
   DDD                     Ca                        Highly speculative, or near default
   D+, D                   C                         Lowest rating, bonds typically in default,
                                                     little prospect for recovery of principal or
                                                     interest
   Short term ratings (maturities of less than one year)
   F1+                     Prime- 1 (P-1)            Highest quality
   F1                      Prime-2 (P-2)
   F2, F3                  Prime-3 (P-3)
   B-D                     Not Prime




                                                  24
Executive Report – 29th January 2010
Absence of a Rating

Where no rating has been assigned or where a rating has been withdrawn, it may be for
reasons unrelated to the creditworthiness as in the case of some Building Societies, where
the issue or issuer belongs to a group of securities or entities that are not rated as a matter
of policy. (Credit ratings agencies are paid by the individual bank or building society to
produce credit ratings. Some organisations decide that they do not want to be rated at all
or by more than one rating agency.)

Withdrawal may occur if new and material circumstances arise, the effects of which
preclude satisfactory analysis, for example, if there is no longer available reasonable up-
to-date data to permit a judgment to be formed, or if a bond is called for redemption.

Changes in Rating

The credit quality of most issuers and their obligations is not fixed and steady over a
period of time, but tends to undergo change. For this reason changes in ratings occur so
as to reflect variations in the intrinsic relative position of issuers and their obligations.

A change in rating may thus occur at any time in the case of an individual issue. Such
rating change should indicate some alteration in creditworthiness, or that the previous
rating did not fully reflect the quality of the bond as now seen. The user of ratings should
keep close and constant check on all ratings — both high and low — to be able to note
promptly any signs of change in status that may occur.

Limitations to Uses of Ratings

Obligations carrying the same rating are not claimed to be of absolutely equal credit
quality. In a broad sense, they are alike in position, but since there are a limited number of
rating classes used in grading thousands of bonds, the symbols cannot reflect the same
shadings of risk which actually exist.

As ratings are designed exclusively for the purpose of grading obligations according to
their credit quality, they should not be used alone as a basis for investment operations. For
example, they have no value in forecasting the direction of future trends of market price.
Market price movements in bonds are influenced not only by the credit quality of individual
issues but also by changes in money rates and general economic trends, as well as by the
length of maturity, etc. During its life even the highest rated bond may have wide price
movements, while its high rating status remains unchanged.

The matter of market price has no bearing whatsoever on the determination of ratings,
which are not to be construed as recommendations with respect to "attractiveness". The
attractiveness of a given bond may depend on its yield, its maturity date, as well as on its
credit quality, the only characteristic to which the rating refers.

Since ratings involve judgements about the future, on the one hand, and since they are
used by investors as a means of protection, on the other, the effort is made when
assigning ratings to look at "worst" possibilities in the "visible" future, rather than solely at
the past record and the status of the present. Therefore, investors using the rating should
not expect to find in them a reflection of statistical factors alone, since they are an
appraisal of long-term risks, including the recognition of many non-statistical factors.

                                               25
Executive Report – 29th January 2010
Credit ratings are, and must be construed solely as, statements of opinion and not
statements of fact or recommendations to purchase, sell or hold any securities. Each
rating or other opinion must be weighed solely as one factor in any investment decision
made by or on behalf of any user of the information, and each such user must accordingly
make its own study and evaluation of each security and of each issuer and guarantor of,
and each provider of credit support for, each security that it may consider purchasing,
selling or holding.




                                          26
Executive Report – 29th January 2010
                                                                          ANNEX 3


           TREASURY MANAGEMENT PRACTICES – SCHEDULES


This section contains the schedules which set out the details of how the Treasury
Management Practices (TMPs) are put into effect by the County Council.

TMP1 RISK MANAGEMENT
1.1      LIQUIDITY

1.1.1 Amounts of approved minimum cash balances and short-term investments
         The Treasury Management section shall seek to ensure that there is £50,000 to
         £100,000 credit balance in the Council‘s main bank accounts at the close of each
         working day, in order to minimize the amount of bank overdraft interest payable,
         and maximize the amount of credit interest receivable. Borrowing or lending shall
         be arranged in order to achieve this aim.

1.1.2 Details of:
         a) Standby facilities
            The County Council has four instant access call accounts, where monies can be
            invested or withdrawn as required on the same day.

         b) Bank overdraft arrangements
            A £1.1m overdraft at 1% over base has been agreed as part of the bank tender.
            The overdraft is assessed on a group basis for the Councils accounts.

         c) Short-term borrowing facilities
            A £1.1m overdraft at 1% over base has been agreed as part of the bank tender.
            The overdraft is assessed on a group basis for the Councils accounts.

         d) Insurance/guarantee facilities
            See TMP 1.8.3

1.2      INTEREST RATE

1.2.1. Details of approved interest rate exposure limits
       Please refer to annual treasury strategy

1.2.2 Trigger points and other guidelines for managing changes to interest rate
      levels
      Please refer to annual treasury strategy which will outline views for the year.

1.2.3 Minimum/maximum proportions of variable rate debt/interest
      Maximum proportion of interest on borrowing which is subject to variable rate
      interest. permissible is 50%
      Minimum proportion of interest on borrowing which is subject to variable rate
      interest permissible is 0%


                                             27
Executive Report – 29th January 2010
1.2.4 Minimum/maximum proportions of fixed rate debt/interest
      Minimum proportion of interest on borrowing which is subject to fixed rate interest
      permissible is 50%
      Maximum proportion of interest on borrowing which is subject to fixed rate interest
      permissible is 100%

1.2.5 Policies concerning the use of financial derivatives and other instruments for
      interest rate management.

         a). Forward dealing (agreeing to invest money at a future date)
             Consideration will be given to dealing from forward periods dependant upon
             market conditions. All forward dealing should have the approval of the either the
             Director of Resources; Head of Financial Management; or the Head of Financial
             Services.

         b). Callable deposits
             Callable deposits are permitted subject to approval from the Director of
             Resources.

         c). LOBOS (borrowing under lender‘s option/borrower‘s option)
             Uses of LOBOs are considered as part of the borrowing strategy. Any money
             borrowed for periods in excess of one month must be approved by either the
             Director of Resources; Head of Financial Management; or the Head of Financial
             Services.

1.3      EXCHANGE RATE

1.3.1 Approved criteria for managing changes in exchange rate levels

         Exchange rate risk will mainly arise from the receipt of income or the incurring of
         expenditure in a currency other than sterling. Northumberland County Council rarely
         deals with foreign currency so an exposure to exchange rate risk will be extremely
         minimal.

         Where there is a contractual obligation to receive income or make a payment in a
         currency other than sterling at a date in the future, forward foreign exchange
         transactions will be considered, with professional advice. Unexpected receipt of
         foreign currency income will be converted to sterling at the earliest opportunity
         unless the Council has a contractual obligation to make a payment in the same
         currency at a date in the future. In this instance, the currency will be held on deposit
         to meet this expenditure commitment.

1.4      INFLATION

1.4.1. Details of approved inflation exposure limits for cash investments/debt -
       During the current period of low worldwide inflation there is little requirement for an
       active consideration of the impact of inflation. The key consideration is that
       investments reap the highest real rate of return, with debt costing the lowest real
       cost, consistent with other risks mentioned within this section.



                                                28
Executive Report – 29th January 2010
1.4.2. Approved criteria for managing changes in inflation levels - Inflation both
       current and projected will form part of the debt and investment decision-making
       criteria both within the strategy and operational considerations.


1.5      CREDIT AND COUNTERPARTY POLICIES

1.5.1. CRITERIA TO BE USED FOR CREATING/ MANAGING APPROVED
       COUNTERPARTY LISTS/LIMITS
         a) Suitable criteria for assessing and monitoring the credit risk of investment
            counterparties will be formulated and a lending list comprising time, type, sector
            and specific counterparty limits will be constructed.
         b) Treasury management staff will add or delete counterparties to/from the
            approved counterparty list in line with the policy on criteria for selection of
            counterparties. The complete list of approved counterparties will be included in
            the annual report, mid year report, or where necessary an ad hoc report to
            Council.
         c) Credit ratings will be used as supplied from at least two of the following credit
            rating agencies: -
                  Fitch Ratings
                  Moody‘s Investors Services
                  Standard & Poor‘s
         d) Treasury Management Consultants provide a weekly update of all ratings
            relevant to the council.
         e) No lending is allowed without prior approval.
         f)    We do not invest in subsidiaries that do not have a credit rating in their own
               right unless they are the subsidiary of an approved group and have a full
               parental guarantee. I
         g) The maximum value of any one investment will be £50 million.

1.5.2. APPROVED METHODOLOGY FOR CHANGING LIMITS AND ADDING /
       REMOVING COUNTERPARTIES

         Credit ratings for individual counterparties can change at any time. The Corporate
         Director of Finance is responsible for applying the credit rating criteria detailed in
         the Treasury Management Policy Statement for selecting approved counterparties.
         Any counterparties on the approved list will no longer be used if their credit ratings
         drop below the minimum criteria. Any new counterparties must be approved by the
         Executive prior to use. This is delegated on a daily basis to staff in the treasury
         management function.

         The Corporate Director of Finance will also adjust lending limits and periods when
         there is a change in the credit ratings of individual counterparties or in banking
         structures e.g. on mergers or takeovers in accordance with the criteria set out in the
         Treasury Management Policy Statement. This is delegated on a daily basis to staff
         in the treasury management function.


                                                29
Executive Report – 29th January 2010
1.6      REFINANCING

1.6.1. DEBT/OTHER CAPITAL FINANCING MATURITY PROFILING, POLICIES AND
       PRACTICES

         Any debt rescheduling is likely to take place when the difference between the
         refinancing rate and the redemption rate is most advantageous and the situation
         will be continually monitored in order to take advantage of any perceived anomalies
         in the yield curve. The reasons for any rescheduling to take place will include:

         a) The generation of cash savings at minimum risk;
         b) To reduce the average interest rate;
         c) To enhance the balance of the long term portfolio (amend the maturity profile
            and /or the balance of volatility).
         d) To reduce the risk associated with the investment of surplus funds.

         The Corporate Director of Finance has delegated authority, in consultation with the
         Executive Member for Corporate Resources, and following discussions with
         external audit, to reschedule current long-term debt and to arrange the necessary
         borrowings within the following remit: -

          a)       The maximum amount of outstanding borrowing shall be as stated in the
                   prudential indicators.

          b)       Within that sum the maximum amount of short term borrowing is 25%

          c)       The limit on the proportion of borrowings on which interest is payable at
                   variable rates is 50%

         The Council will seek to limit refinancing exposure by ensuring that no more than
         25% of the loan portfolio matures in any one year.

1.6.2. PROJECTED CAPITAL INVESTMENT REQUIREMENTS

         A four year plan for capital expenditure for the Council is produced. The capital
         plan will be used to prepare a four year revenue budget for asset rentals which
         include loan charges of principal repayments, interest and expenses. These take
         account of the plans for capital expenditure, loan repayments and forecasts of
         interest rate changes.

1.6.3. POLICY CONCERNING LIMITS ON REVENUE CONSEQUENCES OF CAPITAL
       FINANCING.

         The Prudential Code supports local authorities in determining their Capital
         Programmes, within the clear framework that the plans are affordable, prudent and
         sustainable. To demonstrate that local authorities fulfil these criteria the Code sets
         out indicator that must be used.
         A number of these Prudential Indicators are relevant to setting an integrated
         treasury management strategy. The indicators are set on a rolling basis, for the
         forthcoming financial year and two successive financial years.


                                                30
Executive Report – 29th January 2010
1.7      LEGAL AND REGULATORY

1.7.1. REFERENCES TO RELEVANT STATUTES AND REGULATIONS

         The treasury management activities of the Council shall comply fully with legal
         statute and the regulations of the Council. These are:

         a) CIPFA‘s Treasury Management Code of Practice (revised 2009)
         b) The Prudential Code for Capital Finance in Local Authorities 2003 (revised
            2009)
         c) CIPFA Guide for Chief Financial Officers on Treasury Management in Local
            Authorities
         d) CIPFA Standard of Professional Practice on Treasury Management
         e) Local Government Act 2003
         f) The Non Investment Products Code (formerly known as The London Code of
            Conduct) for principals and broking firms in the wholesale markets.
         g) Council‘s Constitution relating to Contracts
         h) Council‘s Finance and Contract Rules
         i) Council‘s Scheme of Delegations

1.7.2. PROCEDURES FOR EVIDENCING THE ORGANISATION’S
       POWERS/AUTHORITIES TO COUNTERPARTIES

         The Council will prepare, adopt, and maintain, as the cornerstone for effective
         treasury management:-

         a) A Treasury Management Policy Statement, stating the overriding principles and
            objectives of its treasury management activities; and
         b) The Annual Investment Strategy

1.7.3. REQUIRED INFORMATION FROM COUNTERPARTIES CONCERNING THEIR
       POWERS/AUTHORITIES

         Lending shall only be made to counterparties on the Authorised list.
         Northumberland County Council hold letters verifying that the approved brokers are
         regulated by the Financial Services Authority under the provisions of the Financial
         Services and Markets Act 2000, under which Local Authorities are classified as
         market counterparties.

         Building Societies are members of Building Society Association and are governed
         by Building Society Act 1986.

         Banks are regulated by the Financial Services Authority under the provisions of the
         Financial Services and Markets Act 2000.

1.7.4. STATEMENT ON THE ORGANISATION’S POLITICAL RISKS AND
       MANAGEMENT OF SAME.

         The Corporate Director of Finance shall take appropriate action with the Council,
         the Chief Executive and the Leader of the Administration to respond and manage
         appropriately political risks such as change of majority Group, Leadership etc.


                                              31
Executive Report – 29th January 2010
1.8      FRAUD, ERROR AND CORRUPTION, AND CONTINGENCY MANAGEMENT

1.8.1. DETAILS OF SYSTEMS AND PROCEDURES TO BE FOLLOWED, INCLUDING
       INTERNET SERVICES

         a) Authority:
            Loan procedures are defined in the Council‘s Financial Regulations.
            The Scheme of Delegation to Officers sets out the appropriate delegated levels.
            All loans and investments, including PWLB, are negotiated by authorised
            persons within the Resources department.

         b) Occurrence:
            Detailed register of loans and investments is maintained on Excel spreadsheets
            in the Treasury Management section. This is checked to the ledger balance.
            Adequate and effective cash flow forecasting records are maintained to support
            the decision to lend or borrow.
            Written confirmation is received from the lending or borrowing institution
            All transactions placed through the brokers are confirmed by a broker note,
            showing details of the loan arranged.

         c) Completeness:
            The loans register is updated to record all lending and borrowing. This includes
            the date of the transaction, interest rates etc.

         d) Measurement:
            The calculation of repayment of principal and interest notified by the lender or
            borrower is checked for accuracy against the amount calculated by the Treasury
            Management officer.
            The Treasury Management section calculates periodic interest payments of
            PWLB and other long term loans. This is used to check the amount paid to
            these lenders.

         e) Timeliness:
            The Treasury Management spreadsheet / diary prompts the treasury
            management officer that money borrowed or lent is due to be repaid.

         f) Regularity:
            Lending is only made to institutions on the Approved List.
            All loans raised and repayments made go directly to and from the Council‘s
            bank account.
            Authorisation limits are set for every institution, see Treasury Management
            Policy statement.
            Brokers have a list of named officials authorised to perform loan transactions.
            There is adequate insurance cover for employees involved in loans
            management and accounting.
            There is a separation of duties in the Section between the repayment of a loan
            and its authorisation.
            The bank reconciliation is carried out regularly from the bank statement to the
            financial ledger.



                                              32
Executive Report – 29th January 2010
         g) Security:
            The Financial Director system can only be accessed by a password.
            Payments can only be authorised by an agreed bank signatory. The list of
            signatories having previously been agreed with the current provider of our
            banking services.

         h) Substantiation:
            A quarterly reconciliation is carried out matching transactions from the loans
            cards to the financial ledger codes.

1.8.2. EMERGENCY AND CONTINGENCY PLANNING ARRANGEMENTS

         If the Treasury Management PC fails, Financial Director can be accessed via
         another PC. All spreadsheets are held on the shared drive and therefore can be
         accessed by other PC‘s if necessary. If the Electronic Banking System fails cash
         balances can also be obtained via a fax from the Co-op Bank, and CHAP
         payments, which are normally given input directly into Financial Director, can be
         faxed to the bank for processing.

1.8.3. INSURANCE COVER DETAILS.

         The Council has ‗Fidelity‘ insurance cover with Zurich Municipal. This covers the
         loss of cash by fraud or dishonesty of employees. The excess for Fidelity
         guarantee is £2500. The Council also has a ‗Professional Indemnity‘ insurance
         policy with Griffiths & Armour Professional Risks which covers loss to the Council
         from the actions and advice of its officers which are negligent and without due care.
         This cover is limited to £5 million for any one event with an excess of £25,000 for
         any one event.

         The Council also has a ‗Business Interruption‘ cover as part of its property
         insurance with Zurich Municipal

1.9      MARKET VALUE OF INVESTMENTS

1.9.1. DETAILS OF APPROVED PROCEDURES AND LIMITS FOR CONTROLLING
       EXPOSURE TO INVESTMENTS WHOSE CAPITAL VALUE MAY FLUCTUATE
       (GILTS, CDS, etc.)

         In order to minimise the risk of fluctuations in capital value of investments, capital
         preservation is set as the primary objective

TMP 2 BEST VALUE AND PERFORMANCE MEASUREMENTS

2.1      METHODOLOGY TO BE APPLIED FOR EVALUATING THE IMPACT OF
         TREASURY MANAGEMENT DECISIONS

         Northumberland County Council is a member of the CIPFA benchmarking club and
         has participated in their information gathering exercise since 2002/2003.
         Comparisons will be made with a number of other authorities of a similar value of



                                               33
Executive Report – 29th January 2010
         debt. Our Treasury Management consultant will carry out a regular health check of
         our Treasury Management function.

2.2      POLICY CONCERNING METHODS FOR TESTING BEST VALUE IN TREASURY
         MANAGEMENT,

2.2.1 Frequency and processes for tendering
      Tenders are normally awarded on a five yearly basis. The process for advertising
      and awarding contracts will be in line with the Council‘s Contract Standing Orders.

2.2.2 Banking services
      Banking services will be tendered for every 5 years to ensure that the level of prices
      reflect efficiency savings achieved by the supplier and current pricing trends.

2.2.3 Money-broking services
      The Council will use money broking services in order to make deposits or to
      borrow, and will establish charges for all services prior to using them. An approved
      list of brokers will be established which takes account of both prices and quality of
      services.

2.2.4 Consultants’/advisers’ services
      This Council‘s policy is to appoint professional treasury management consultants.


2.2.5 Policy on External Managers (Excluding Superannuation Funds)
      The Council‘s current policy is not to use an external investment fund manager to
      manage a proportion of surplus cash. This will be kept under review.

2.3      METHODS TO BE EMPLOYED FOR MEASURING THE PERFORMANCE OF
         THE ORGANISATION’S TREASURY MANAGEMENT ACTIVITIES

         Performance measured against Annual Treasury Strategy Statement targets.
         a) Compliance to CIPFA Code of Treasury Practice.
         b) Expenses contained within approved budget.
         c) Review of benchmarking club data.

2.4      BENCHMARKS AND CALCULATION METHODOLOGY:

2.4.1 Debt management
      Average rate on all external debt
      Average period to maturity of external debt
      Average rate on external debt borrowed in previous financial year

2.4.2       Investment.
            The performance of in house investment earnings will be measured against 7 day
            LIBID, (London Inter-Bank Bid Rate). Performance will also be measured against
            other local authority funds with a similar benchmark.


TMP 3 DECISION-MAKING AND ANALYSIS



                                             34
Executive Report – 29th January 2010
3.1         FUNDING, BORROWING, LENDING, AND NEW INSTRUMENTS/
            TECHNIQUES:

3.1.1       Records to be kept

            All loan transactions are recorded on loan cards and a spreadsheet. Full details
            of the procedures to follow are covered in the notes of guidance.
            The following records will be used relative to each loan or investment:

            Daily cash projections.
            Telephone/e-mail rates.
            Dealing slips for all money market transactions – including rate changes.
            PWLB loan schedules.
            Temporary loan receipts.
            Brokers confirmations for deposits/investments

3.1.2       Processes to be pursued

            Cash flow analysis.
            Maturity analysis.
            Ledger reconciliations
            Review of borrowing requirement.
            Monitoring of projected loan charges and interest and expenses costs.
            Review of opportunities for debt rescheduling.

3.1.3    Issues to be addressed.
3.1.3.1. In respect of every decision made the organisation will:

            a) Above all be clear about the nature and extent of the risks to which the
               organisation may become exposed.
            b) Be certain about the legality of the decision reached and the nature of the
               transaction, and that all authorisations to proceed have been obtained.
            c) Be content that the documentation is adequate both to deliver the
               organisation‘s objectives and protect the organisation‘s interests, and to
               deliver good housekeeping
            d) Ensure that third parties are judged satisfactory in the context of the
               organisation‘s creditworthiness policies, and that limits have not been
               exceeded
            e) Be content that the terms of any transactions have been fully checked against
               the market, and have been found to be competitive.

3.1.3.2 In respect of borrowing and other funding decisions, the organisation
        will:

            a) Evaluate the economic and market factors that might influence the manner
               and timing of any decision to fund
            b) Consider the merits and demerits of alternative forms of funding, including
               funding from revenue, leasing and private partnerships
            c) Consider the alternative interest rate bases available, the most appropriate
               periods to fund and repayment profiles to use



                                               35
Executive Report – 29th January 2010
            d) Consider the ongoing revenue liabilities created, and the implications for the
               Council‘s future plans and budgets.

3.1.3.3 In respect of investment decisions, the organisation will:

            a)     Consider the optimum period, in the light of cash flow availability and
                   prevailing market conditions.
            b)     Consider the alternative investment products and techniques available,
                   especially the implications of using any which may expose the organisation
                   to changes in the value of its capital.


TMP 4 APPROVED INSTRUMENTS, METHODS AND TECHNIQUES


4.1      APPROVED ACTIVITIES OF THE TREASURY MANAGEMENT OPERATION

         a) Borrowing;
         b) Lending;
         c) Debt repayment and rescheduling;
         d) Consideration, approval and use of new financial instruments and treasury
            management techniques;
         e) Managing the underlying risk associated with the Council‘s capital financing and
            surplus funds activities;
         f) Managing cash flow;
         g) Banking activities.


4.2      APPROVED INSTRUMENTS FOR INVESTMENTS
         All investments will comply with the Local Authorities Capital Finance Approved
         Investment Regulations 1990 SI 426 and subsequent amendments. The
         instruments used will be:

         a)   Term deposits with banks and building societies.
         b)   Term deposits with the Debt Management Account Deposit Facility (DMADF)
         c)   Term deposits with other Local Authorities
         d)   Term / instant access deposits with Money Market Funds
         e)   Deposits in instant access reserve accounts with banks.
         f)   Callable products with banks

4.3      APPROVED BORROWING TECHNIQUES

         a) LOBO‘s

4.4      APPROVED METHODS AND SOURCES OF RAISING CAPITAL FINANCE

         Finance will only be raised in accordance with the Local Government and Housing
         Act, 1989, and within this limit the Council has a number of approved methods and
         sources of raising capital finance. These are:

         On Balance Sheet                                   Fixed       Variable

                                                36
Executive Report – 29th January 2010
         PWLB                                                            
         EIB                                                             
         Market (long-term)                                              
         Market (temporary)                                              
         Market (LOBOs)                                                  
         Stock issues                                                    
         Local temporary                                                 
         Local Bonds                                          
         Overdraft                                                        
         Negotiable Bonds                                                
         Internal (capital receipts & revenue balances)                  
         Commercial Paper (an unsecured and unregistered
         short-term obligation issued to investors who have
         temporarily surplus cash)                            
         Medium Term Notes                                    
         Leasing (not operating leases)                                  
         Other Methods of Financing
         Government and EC Capital Grants
         Lottery monies
         PFI/PPP
         Operating leases

         All forms of funding will be considered dependent on the prevailing economic
         climate, regulations and local considerations. The Corporate Director of Finance
         has delegated powers in accordance with Financial Regulations, Standing Orders,
         and the Scheme of Delegation to Officers Policy and the Treasury Management
         Strategy to take the most appropriate form of borrowing from the approved sources.


TMP5 ORGANISATION, CLARITY AND SEGREGATION OF RESPONSIBILITIES, AND
     DEALING ARRANGEMENTS

5.1      LIMITS TO RESPONSIBILITIES/DISCRETION AT COMMITTEE/EXECUTIVE
         LEVELS

         a) Full Council will receive and approve reports on treasury management policies,
            practices and activities, the annual treasury management strategy and annual
            report on debt rescheduling.
         b) The Corporate Director of Finance will be responsible for amendments to the
            organisation‘s adopted clauses (see Appendix 3), treasury management policy
            statement and treasury management practices.
         c) The Corporate Director of Finance will approve the segregation of
            responsibilities.
         d) The Corporate Director of Finance will receive and review external audit reports
            and put recommendations to the Audit Committee.
         e) Approving the selection of external service providers and agreeing terms of
            appointment will be decided by the Executive and the Corporate Director of
            Finance in accordance with Financial Regulations.




                                                     37
Executive Report – 29th January 2010
5.2      PRINCIPLES AND PRACTICES CONCERNING SEGREGATION OF DUTIES

         a) The Corporate Director of Finance in consultation with the Executive Member
            for Corporate Resources, and following discussions with external audit
            authorise all new long-term borrowing.
         b) Transactions relating to pre-existing agreements are delegated to the senior
            accountant responsible for treasury management.
         c) Short-term borrowing and investment are authorised by the Corporate Director
            of Finance, Head of Business Support, or Head of Administration and
            Transactional Services.

5.3      TREASURY MANAGEMENT ORGANISATION CHART

                  Corporate Director of
                           Finance
                           |
                 Head of Business Support
                           |
                 Business Support
                 Manager
                           |
                 Senior Accountant

5.4      STATEMENT OF DUTIES/RESPONSIBILITIES OF EACH TREASURY POST

5.4.1. Executive Member for Corporate Resources

         a) The Executive Member has primary political responsibility for Treasury
            Management policy and will be regularly briefed on Treasury Management
            performance and proposed policy changes by the Director of Resources.

         b) The Executive Member has the right to recommend to the Corporate Director of
            Finance that a particular transaction should go to the Risk Appraisal Panel.

         c) The Executive Member‘s attendance at Audit Committee will ensure full
            involvement in policy changes

5.4.2. Corporate Director of Finance

         a) Corporate Director of Finance:
             i) Recommend clauses, treasury management policy / practices for approval,
                 reviewing the same on a regular basis, and monitoring compliance.
             ii) Submit treasury management policy reports as required.
            iii) Submit budgets and budget variations in accordance with Financial
                  Regulations and guidance.
            iv) Review the performance of the treasury management function and promote
                  best value reviews.
            v) Ensure the adequacy of treasury management resources and skills, and
                  the effective division of responsibilities within the treasury management
                  function.


                                             38
Executive Report – 29th January 2010
              vi) Ensure the adequacy of internal audit, and liaising with external audit.
              vii) Recommend on appointment of external service providers in accordance
                   with council standing orders.

         b) The Corporate Director of Finance has delegated powers through this policy to
            take the most appropriate form of borrowing from the approved sources, and to
            make the most appropriate form of investments in approved instruments.

         c) The Corporate Director of Finance may delegate his power to borrow and invest
            to members of his staff. The Head of Shared Services, Business Support
            Manager, and Senior Accountants responsible for treasury management must
            conduct all dealing transactions, or staff authorised by the Corporate Director of
            Finance to act as temporary cover for leave/sickness. All transactions must be
            authorised by a named officer above.

         d) The Corporate Director of Finance will ensure that the Policy is adhered to, and
            if not will bring the matter to the attention of elected Members as soon as
            possible.

         e) Prior to entering into any capital financing, lending or investment transaction, it
            is the responsibility of the Corporate Director of Finance to be satisfied that the
            proposed transaction does not breach any statute, external regulation or the
            Council‘s Financial Regulations

         f) It is also the responsibility of the Corporate Director of Finance to ensure that
            the Council complies with the requirements of The Non Investment Products
            Code (formerly known as The London Code of Conduct) for principals and
            broking firms in the wholesale markets.

5.4.2 Senior Accountants responsible for treasury management

         The responsibilities of this post will be: -

         a)   Execution of transactions.
         b)   Adherence to agreed policies and practices on a day-to-day basis.
         c)   Maintaining relationships with third parties and external service providers.
         d)   Monitoring performance on a day-to-day basis.
         e)   Identifying and recommending opportunities for improved practices.

5.4.3. Chief Executive

         The responsibilities of this post will be to ensuring that the Corporate Director of
         Finance reports regularly to the Executive on treasury policy, activity and
         performance.

5.4.4. Head of Legal Services (in the role of monitoring officer)

         The responsibilities of this post will be: -




                                                  39
Executive Report – 29th January 2010
         a) Ensuring compliance by the Corporate Director of Finance with the treasury
            management policy statement and treasury management practices and that
            they comply with the law.
         b) Being satisfied that any proposal to vary treasury policy or practice complies
            with law or any code of practice.
         c) Giving advice to the Corporate Director of Finance when advice is sought.

5.4.5. Internal Audit

         The responsibilities of Internal Audit will be: -

         a)   Reviewing compliance with approved policy and procedures.
         b)   Reviewing division of duties and operational practice.
         c)   Assessing value for money from treasury activities.
         d)   Undertaking probity audit of treasury function.

5.5      ABSENCE COVER ARRANGEMENTS

         In the absence of the senior accountants responsible for treasury management,
         another accountant in the Financial Management section with treasury
         management training / experience will perform the daily cash flow tasks.

5.6      DEALING LIMITS

         Persons authorised to deal are identified at 5.4.1 above and dealing limits are as
         the Scheme of Delegation for Officers.

5.7      LIST OF APPROVED BROKERS

         A list of approved brokers is maintained within the Treasury Management section
         and a record of all transactions recorded against them.

5.8      POLICY ON BROKERS’ SERVICES

         It is Council‘s policy to divide business between brokers.

5.9      POLICY ON TAPING OF CONVERSATIONS

         It is not Council policy to tape brokers‘ conversations

5.10     DIRECT DEALING PRACTICES

         The Council deals direct if appropriate contacts are established, and if it is
         advantageous to the Council.

5.11     SETTLEMENT TRANSMISSION PROCEDURES

         For each transaction a CHAPS form is completed and signed by an agreed bank
         signatory. The transfer is then processed by Cashiers, through the Financial
         Director banking system. This is to be completed by 3.30 pm on the same day.



                                                 40
Executive Report – 29th January 2010
5.12     DOCUMENTATION REQUIREMENTS

         For each deal undertaken a record should be prepared giving details of dealer,
         amount, period, counterparty, interest rate, dealing date, payment date(s), broker,
         credit ratings. This should be reviewed and authorised by either the Corporate
         Director of Finance, the Head of Business Support or the Head of Administration
         and Transactional Services. A loans card is then completed and the details input
         into a spreadsheet.

5.13     ARRANGEMENTS CONCERNING THE MANAGEMENT OF THIRD-PARTY
         FUNDS.

         The Council holds money on behalf of children with a care order, who have been
         awarded Criminal Injuries Compensation. This money is deposited in a National
         Savings Trust Account in the child‘s name. Refer to the relevant policy on dealing
         with these accounts.


TMP 6 REPORTING REQUIREMENTS AND MANAGEMENT INFORMATION
     ARRANGEMENTS

6.1      ANNUAL REPORTING REQUIREMENTS BEFORE THE START OF THE YEAR

         a) The Treasury Management Policy statement and practices sets out the specific
            expected treasury activities for the forthcoming financial year. This strategy will
            be submitted to the Council for approval before the commencement of each
            financial year.
         b) In compliance with s45 of the Local Government and Housing Act 1989. The
            Council must approve:
              i) The overall borrowing limit,
              ii) A ‗short-term‘ borrowing limit
              iii) The maximum proportion of interest payable on borrowings that is subject to
                   variable rates of interest.

6.2      REPORTING REQUIREMENTS DURING THE YEAR

         a) A mid year review of the policy statement
         b) Quarterly monitoring reports on treasury management activities and risks
         c) Any variations to the agreed Treasury Management policies and practices will
            be reported to the Council at the earliest practicable meeting

6.3      ANNUAL REPORTING REQUIREMENT AFTER THE YEAR END

         An annual report will be presented to the Council at the earliest practicable meeting
         after the end of the financial year, but in any case by the end of September. This
         report will include the following:-
         a) Transactions executed and their revenue effects ;
         b) Report on risk implications of decisions taken and transactions executed;
         c) Monitoring of compliance with approved policy, practices and statutory /
             regulatory requirements;


                                               41
Executive Report – 29th January 2010
         d) Performance report
         e) Report on compliance with CIPFA Code recommendations.

TMP 7 BUDGETING, ACCOUNTING AND AUDIT ARRANGEMENTS

7.1      STATUTORY/REGULATORY REQUIREMENTS

         The accounts are drawn up in accordance with the Code of Practice on Local
         Authority Accounting in Great Britain that is recognized by statute as representing
         proper accounting practices.

7.2      ACCOUNTING PRACTICES AND STANDARDS

         Due regard is given to the Statements of Recommended Practice and Accounting
         Standards as they apply to Local Authorities in Great Britain. The Council adopts in
         full the principles set out in CIPFA‘s ‗Code of Best Practice and Guide for Treasury
         Management in the Public Services‘ (the ‗CIPFA Code and Guide‘), together with
         those of its specific recommendations that are relevant to this organization‘s
         treasury management activities.

7.3      SAMPLE BUDGETS / ACCOUNTS

         The senior accountant responsible for treasury management will prepare an annual
         budget for treasury management function, which will bring together all the costs
         involved in running the function, together with associated income.

7.4      LIST OF INFORMATION REQUIREMENTS OF EXTERNAL AUDITORS.

         a) Reconciliation of loans interest and premiums paid to financial ledger by loan
            type.
         b) Maturity analysis of loans outstanding.
         c) Annual Treasury Report.
         d) Calculation of Revenue Interest.
         e) Analysis of accrued interest, (interest earned/due up to year end but not
             receivable/payable until the new year) .


TMP 8 CASH AND CASH FLOW MANAGEMENT

8.1      ARRANGEMENTS FOR PREPARING/SUBMITTING CASH FLOW STATEMENTS

         Cash flow projections are prepared annually, monthly and daily. The annual and
         monthly cash flow projections are prepared from the previous years daily cash flow
         records, adjusted for known changes in levels of income and expenditure and also
         changes in payments and receipts dates.

8.2      CONTENT AND FREQUENCY OF CASH FLOW BUDGETS

         Dedicated Schools Grant – Monthly
         Formula grant – various
         Other Government grants - various


                                              42
Executive Report – 29th January 2010
         Council Tax - various
         Payroll – various
         Creditor payments - daily
         Teachers Pensions - monthly
         Income Tax – monthly
         PWLB interest – various
         Precept payments - various
         Leasing instalments - various

8.3      LISTING OF SOURCES OF INFORMATION

         Estimated cash flow details are compiled using:

         Schedule of Payment of Revenue Support Grant and National Non-domestic rates,
         DCLG

         Schedule of Payment of the Dedicated Schools grant. DCSF.

         Council Tax / Revenues payments dates and amounts,

         Notifications from the Financial management section of any significant grants
         expected during the year.

         Schedule of payroll payment dates supplied by the Employee services section,
         Resources department, with an estimated amount based on the previous years
         payments. The actual amounts will be available from Cashiers a few days before
         payment is due.

         PWLB Payments, spreadsheet within Financial Management / Treasury
         Management folder.

         NNDR payments, Accounts Payable section, Resources department, with an
         estimated amount based on the previous years payments

         Details of precept payments, Financial Management section.

         An estimated figure for creditor payments, based on previous patterns of
         expenditure. More accurate figures can be obtained two days before payment
         based on the Creditor BACs figure, and notification of any large cheques due,
         supplied by the Accounts Payable section.

8.4      BANK STATEMENTS PROCEDURES

         Bank statements are received via a Financial Director File & loaded into Axis
         Income Management System (AIM). All transactions on the bank statement pass
         through a validation process which will then allocate them to the appropriate fund or
         general ledger code if the reference meets the validation requirements. All items
         that fail validation pass to exceptions and are allocated manually, once
         codes/remittance advices are received. Expenditure transactions are divided into
         BACS payments which are uploaded into our financial system via a file; payments


                                              43
Executive Report – 29th January 2010
         by CHAPs, Direct Debits, standing orders and Imprest accounts are input via a
         journal into the financial system by the Financial Management section.

8.5      PAYMENT SCHEDULING AND AGREED TERMS OF TRADE WITH CREDITORS

         Our policy is to pay creditors within 30 days of the invoice date and this effectively
         schedules the payments.

8.6      ARRANGEMENTS FOR MONITORING DEBTORS / CREDITORS LEVELS

         a) The Accounts Receivable section gets a daily report of outstanding debtors and
            takes appropriate action regarding outstanding debt. Monthly reports are send
            to the Head of Financial Management
         b) The Accounts Payable section provides monthly statistics of invoices paid to the
            Head of Financial Management as well as quarterly and annual reports.

8.7      PROCEDURES FOR BANKING OF FUNDS

         All money received by an officer on behalf of the Council will without unreasonable
         delay be paid to the Corporate Director of Finance to deposit in the Council‘s bank
         accounts. No deductions may be made from such money save to the extent that
         the Corporate Director of Finance may specifically authorise.

8.8      PRACTICES CONCERNING PREPAYMENTS TO OBTAIN BENEFITS

         All prepayments must be authorised by the Corporate Director of Finance.


TMP 9 MONEY LAUNDERING

9.1      PROCEDURES FOR ESTABLISHING IDENTITY / AUTHENTICITY OF LENDERS

         The Council does not usually accept loans from individuals. All material loans are
         obtained from the PWLB, other local authorities or from authorised institutions
         under the Banking Act 1987: (the Financial Services Authority (FSA) is responsible
         for maintaining a register of authorised institutions. This register can be accessed
         through their website on www.fsa.gov.uk).

9.2      METHODOLOGIES FOR IDENTIFYING SOURCES OF DEPOSITS

         In the course of its Treasury activities, the Council will only lend money to or invest
         with those counterparties that are on its approved lending list.

TMP 10 TRAINING AND QUALIFICATIONS

10.1     Staff qualifications.

         The daily treasury management function will be performed by a qualified accountant
         or a senior accountant (unqualified) holding or working towards a Certificate in
         International Treasury Management Public Finance, under supervision of a qualified
         accountant.

                                               44
Executive Report – 29th January 2010
10.2     Staff training

         New staff will receive in-house on the job training before they commence their
         duties. Existing staff will attend treasury management seminars, at least annually,
         to keep up to date with changes in regulations and current practices. Additional staff
         training needs will be identified as part of the training needs analysis undertaken
         during staff Performance Development Review.

10.3     The Corporate Director of Finance

         The Corporate Director of Finance is committed to professional responsibilities
         through both personal compliance and by ensuring that relevant staff are
         appropriately trained.

10.4        Member Training

            All members should have an appropriate level of training within a year of taking
            office, to be refreshed annually. This will be carried out in-house in conjunction
            with the Council‘s Treasury Management advisors. A specialist session for Audit
            Committee members using external Treasury Advisors was held on 30 TH April
            2009.


TMP 11 USE OF EXTERNAL SERVICE PROVIDERS

11.1        DETAILS OF CONTRACTS WITH SERVICE PROVIDERS, INCLUDING
            BANKERS, BROKERS, CONSULTANTS, ADVISERS

        a) Banking services

              i) Name of supplier of service is the Co-operative Bank plc.         The branch
                 address is:

                   1st Floor
                   Norfolk House
                   84-86 Grey Street
                   Newcastle upon Tyne
                   NE1 6BZ
                   SORT Code: 08-90-06

              ii) Contract commenced 1 April 2006.
              iii) The Co-operative Bank plc have been awarded the contract for the new
                   unitary authority commencing 1st April 2009 which runs for 5 years until 31st
                   March 2014
              iv) Cost of service is variable depending on schedule of tariffs and volumes
              v) Payments are paid quarterly in arrears

              vi) Contact Name and address:

                   John Harrison


                                                45
Executive Report – 29th January 2010
                   Manager Public Sector & Community Development
                   North East Business Centre
                   90 Grey Street
                   Newcastle upon Tyne
                   NE1 6BZ

         b)        Money-broking services

                   Name of supplier of service:
                   i) Martin Brokers (UK) plc
                      26-28 Frederick Street
                      Edinburgh, EH2 2JR

                   ii) Sterling International Brokers Ltd
                       10 Chiswell Street
                       London, EC1Y 4UQ

                   iii) ICAP Europe Ltd
                        2 Broadgate,
                        London, EC2M 7UR

                   iv) Tullet Prebon (UK) Limited
                       155 Bishopsgate,
                       London,EC2N 3DA


                   v) Tradition (UK) Ltd
                       Beaufort House,
                      15 St Botolph Street,
                      London, EC3A 7QX

         c)        Consultants’/advisers’ services

                   Treasury Consultancy Services
                   i) Name of supplier of service is Sector Treasury Services Limited. Their
                      address is:
                         17 - 19 Rochester Row
                         Westminster
                         London
                         SW1P 1QT

                        Website: www.sector-group.com


                   ii) Contract commenced initially on 1 May 2003 for 3 years and then was
                        extended for a further 4 years.
                   iii) Cost of service is £15,000 per year
                   iv) Payments due half yearly on 1 November and 1 May.


         d)        Leasing Consultancy Services


                                                    46
Executive Report – 29th January 2010
                   Chrystal consulting. This contract passed across from Blyth Valley Borough
                   Council initially to 31 March 2010. A one year extension has been sought as
                   the consultants are currently engaged in analysis which overlaps into
                   financial year 2010/11.

         e)        External Fund Managers

                   None at present.

         Other Consultancy services may be employed on short term contracts as and
         when required.

11.2 PROCEDURES AND FREQUENCY FOR TENDERING SERVICES
     See TMP2


TMP 12 CORPORATE GOVERNANCE

12.1 LIST OF DOCUMENTS TO BE MADE AVAILABLE FOR PUBLIC INSPECTION

       Annual accounts
       Annual Budget
       4 Year Capital Plan
       Treasury Management Policy
       Treasury Management Strategy
       Annual Treasury Report
       Access to minutes at libraries




                                                47
Executive Report – 29th January 2010

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:5
posted:7/24/2011
language:English
pages:47