STANSTED MOUNTFITCHET PARISH COUNCIL INVESTMENT POLICY 2024-25
Replaces the Annual Investment Strategy
Amended and adopted by the Council 10th April 2024
ANNUAL INVESTMENT STRATEGY 2024-25
1 INTRODUCTION
This Strategy has been produced with regard to the Statutory Guidance issued by the Secretary of State for the Department for Communities and Local Government under Section 15(1) (a) of the Local Government Act 2003. Extant guidance was issued by MHCLG in 2018.
The Parish Council acknowledges the importance of prudently investing surplus funds held on behalf of the community. All investments will be made in line with the Council’s financial procedures and observations or advice received from the Council’s internal and external auditors, supported as necessary by advice from the Council’s financial advisors.
The Council will ensure it has adequate though not excessive cash resources, overdraft or standby facilities to enable it at all times to have the level of funds available which are necessary for the achievement of its service objectives.
2 INVESTMENT OBJECTIVES
The Parish Council’s investment priorities are the security of reserves and liquidity of its investments. The Council will aim to achieve the optimum return on its investments commensurate with proper levels of security and liquidity. All investments will be made in sterling. The Department for Communities and Local Government maintains that borrowing of monies purely to invest, or to lend and make a return, is unlawful and this Parish Council will not engage in such activity. Where external investment managers are used, they will be contractually required to comply with the Strategy. The Council will aim to achieve the optimum return on its investments commensurate with the proper levels of security and liquidity. Returns will be monitored by the F&GP Committee.
Investment Strategies approved after 1 April 2018 must also be in line with the Government’s “Statutory Guidance on Local Government Investments” which in particular includes much detail on the provision of loans.
The Council will invest as much of its balances as considered appropriate in low risk products in order to achieve the principles above. The Public Sector Deposit Fund has been identified as a low risk, high liquidity option. The Parish Council will consider the potential performance of lower liquidity investments on an annual basis at the time that it reviews its Investment Strategy.
3 SPECIFIED INVESTMENTS
Specified investments offer high security and high liquidity. All such investments should be in sterling and with a maturity of no more than one year. Such short-term Investments made with the UK Government or a local authority or parish council will automatically count as specified Investments.
The Council, for prudent management of its treasury balances may use
- Treasury Deposits with UK clearing banks
- Local Authorities or other Public Authorities
- CCLA Investment Management
- Other approved public sector investment funds
The Council shall only invest with banks/building societies which it defines as “High Credit Quality”.
4 NON-SPECIFIED INVESTMENTS
These investments have a greater potential risk, such as investment in stocks and shares and the Parish Council will not participate in such investments, which are considered not to offer the level of security and liquidity required.
5 EXTERNAL BORROWING STRATEGY
The Parish Council acknowledges the importance of borrowing funds and the financial impact on the Council and the local community. The Council will agree borrowing for specific capital projects (as defined in section 16 of the 2003 Act), and gain approval for borrowing by sending an application to the National Association of Local Councils (NALC). All borrowings must be approved by full council.
The Parish Council will ensure the following criteria are met when considering requesting a borrowing approval:
- The borrowing should only be used for the purpose of capital expenditure as defined by Section 16 of the Local Government Act 2003.
- Any unallocated balances, including, where appropriate, capital receipts beyond those required for the prudent financial management of the Council, should be used in the project for which the borrowing is required.
- The Parish Council should have a realistic budget for the servicing and repayment of the debt, taking into account the future effect on the Council’s precept and cash flow.
- The Council must not mortgage or charge any of its property as security for money
The Parish Council will pursue the best possible terms when borrowing but will generally use the Public Works Loan Board (PWLB). The Parish Council considers that the fixed term rates offered by the PWLB are relatively inexpensive and that PWLB loans are most likely to offer stability for the financial planning of the Council.
The Parish Council will determine the period of each loan which should not exceed the period for which the expenditure is forecast to provide benefit to the Council i.e. useful life of the asset.
6 GOVERNANCE AND RISK
There will be due regard to the Financial Services Compensation Scheme and the Parish Council will aim to spread ‘specified investments’ over a range of different providers in such a way as to limit exposure and minimise risk.
The Parish Council will monitor the yield on investments by having regard to the general financial, economic and political environment nationally.
All resolutions relating to investments will be noted in the minutes.
7 LIQUIDITY OF INVESTMENTS
The Parish Clerk, as Responsible Financial Officer, and as instructed by the Finance and General Purposes Committee, will determine the period of time for which funds may prudently be committed and will operate the account along with the Chair and Vice Chair of the F&GP Committee.
An Investment should be regarded as commencing on the date the commitment to investment is entered into, rather than the date on which the funds are paid over to the counterparty.
8 AUTHORISATION, INVESTMENT REPORTS AND RESPONSIBILITY
Investments will be authorised by the Chair and Vice-Chair of the Finance and General Purposes Committee in consultation with the Responsible Finance Officer and reported at the following meeting of the Council or the Finance and General Purposes Committee, whichever is first. The Council is ultimately responsible for its investments and forecasts for the coming financial year will be accounted for when the budget is prepared.
The RFO is authorised to place on investment a sum of up to £300,000 on a medium-term basis (up to 90 days) to improve the return to the Council.
9 REVIEW AND AMENDMENT
This Investment Strategy is to be reviewed by the Parish Council at its Annual Meeting held in May.
The Parish Council reserves the right to make variations to the Strategy at any time, subject to the approval of the Full Council. Any variations will be minuted and made available to the public.
10 PUBLICATION
The approved Annual Investment Strategy will be published on the Parish Council’s website.