Monmouthshire County Council Budget Book · The budget is presented in accordance with the internal structure that mirrors the directorate structure set by Cabinet. Within each portfolio

MONMOUTHSHIRE COUNTY COUNCIL

BUDGET BOOK 2014/15

Section 1 Explanatory Notes

Section 2 Reserves & Balances

Section 3 Consolidated Revenue Account (General Fund)

Section 4 Children & Young People Service

Section 5 Social Care & Health Services

Section 6 Regeneration & Culture

Section 7 Chief Executive Management

Section 8 Corporate & Levies Portfolio

Section 9 Capital Programme

Section 10 Treasury Management Strategy & Annual Investment Strategy 2014/15

BUDGET 2014/15

INDEX

BUDGET 2014/15

SECTION 1

EXPLANATORYNOTES

1

Introduction

Standard Subjective Headings

Employee Related

This group includes the cost of employee expenses, both direct and indirect, to the authority.

-

Contributions to employee-related provisions

Premises Related

This group includes expenses directly related to the running of premises and land:

Premises insuranceContributions to premises-related provisions

RatesWater servicesFixtures and fittingsApportionment of expenses of operational buildingsCleaning and domestic suppliesGrounds maintenance costs

EXPLANATORY NOTES

The budget is presented in accordance with the internal structure that mirrors the directorate structure set by Cabinet.

Within each portfolio within the budget book, the directorate budgets are split by division, the budgetary control for which rests initially with the respective Head of Service but ultimately with the respective Chief Officer.

The directorate budgets and their respective statements of service have been structured around the Best Value Accounting Code of Practice (BVACOP).

Further corporate portfolios are required by statute. These reside under the control of the Section 151 Officer of the Authority (Head of Finance - Strategic Leadership Team).

Energy costsRents

Indirect employee expenses

Repairs, alterations and maintenance of buildings

The main items included in each standard subjective heading within revenue cost sections of the statements of service are as follows:

Direct employee expenses salaries, wages, national insurance and superannuation for all employees whether permanent or temporary

2

Standard Subjective Headings (continued)

Transport Related

Supplies and Services

Services

Agency & Contracted

Agency or contracted payments are payments to an external provider or an internal service delivery unit defined as a trading operation which is operating independently, in return for the provision of a service or a subdivision of service.

Expenses

Other local authorities

This group includes all agency and contracted payments to:

Where a service being paid relates to the type of expenditure, for example building repairs, cleaning or catering for clients, then the payment is recorded under the appropriate standard grouping for that type of expenditure. For example, Premises-Related Expenditure (repairs or cleaning) or Supplies and Services (catering).

Joint authoritiesIndependent units within the Council

Equipment, furniture and materialsCatering

Grant Payments and subscriptions

Contributions to provisions

Clothes, uniform and laundry

Communications and computing

Printing, stationery and general office expenses

Private Finance Initiative and Public Private Partnership schemes

Health authoritiesGovernment departmentsVoluntary associationsOther establishmentsPrivate contractorsOther agencies

This group includes all direct supplies and service expenses to the authority:

Transport insuranceContributions to transport-related provisions

This group includes all costs associated with the provision, hire or use of transport, including travelling allowances and home to school transport.

Direct transport costsRechargesContract hire and operating leasesPublic transport

3

Standard Subjective Headings (continued)

Transfer Payments and the Individual Schools Budget

Capital Financing

Operating Lease Rentals

Functions:

Finance

Creditors

Debtors

Personnel Insurance

Loss on impairment of assets

Transfer payments include the cost of payments to individuals for which no goods or services are received in return by the local authority. The individual schools budget relates to delegated budgets pass ported to schools.

This group includes transfer payments to individuals such as:

School children and studentsSocial services clients

This provides the subjective analysis that will record the revenue impact of capital items in the service revenue accounts of the authority:

Housing benefits

Depreciation

These are charges for services that support the provision of services to the public. The charges are apportioned or allocated to the service divisions which they support. Such charges are traditionally defined on the basis of service.

Recharges

Support Services

Amortisation of deferred charges

Customer and client receiptsInterest

Other grants reimbursements and contributions

Income

This group includes all income received by the service from external users or by way of charges or recharges to internal users:

Government grants

The following table provides some of the functions to demonstrate what could be defined as support services. This list is not meant to be exhaustive. Support services are distinguished from internal trading operations such as Property and Contract Services.

PayrollAccommodationLegal Services

Audit Services Office Services

BUDGET 2014/15

SECTION 2

RESERVES ANDBALANCES

4

Introduction

Council Fund

Earmarked Reserves

To provide for the need to make commuted payments for early retirements and redundancies over a maximum period of five years but a recommended period of three years due to the low funding level of the Greater Gwent Fund.

To invest in information technology in support of the organisations outcomes and generation of improved service efficiency, income generation or cost savings

Capital Investment Reserve

Created to accumulate contributions from revenue to finance future capital expenditure.

Priority Investment Reserve

To fund one off investment in the agreed priorities

Redundancy & Pension Reserve

There are two types of reserves which might be described as either available to meet revenue, or, in some cases capital expenditure. These are the Council Fund Reserve or Earmarked Reserves.

The Council Fund is the accumulated revenue reserve of the Authority that has arisen from historic day to day receipts and payments. The balance on the Council Fund may be positive or negative. However, LAAP Bulletin 77 issued by CIPFA, that provides local authority finance directors with guidance on the establishment of local authority reserves and balances, indicates that it is the responsibility of the finance director to advise the Authority about the level of reserves that they should hold.

Earmarked reserves result from events that have allowed monies to be set aside, or surpluses or decisions that have caused anticipated expenditure to be postponed or cancelled. Reserves of this nature are available and can be spent or earmarked at the discretion of the Authority.

Earmarking of revenue reserves can be used to set aside available monies for major anticipated capital schemes for projects or service arrangements the authority may wish to carry out.

Other examples of earmarked reserves include business unit surpluses, service efficiency savings and contingent liabilities (where a provision is not required).

Invest to Redesign Reserve

I.T. Transformation Reserve

Provided below is a description of the principal earmarked reserves held by the Authority:

To fund service redesign to either improve the service, generate income or reduce costs

5

LMS School Balances

Insurance & Risk Management Reserve

To assist in the management of the Council's insurance risks. To meet excesses and administration costs on claims against the Council, to provide cover on self-insured risks and contribute to risk management initiatives.

Treasury Equalisation Reserve

The funds remain under the control of governors at the end of the financial year and are not available to the authority to apply to other purposes. They represent an earmarked reserve which is not available for the Authority to use generally.

Other Reserves

The amount of unspent budgets by authority maintained schools are also usable revenue reserves but have different characteristics to the other usable revenue reserves stated above.

Created from surpluses and deficits on the Authority's external and internal trading account activities and maintained to support and develop these services.

These include a number of other reserves where separate classification is not deemed necessary due to the level of the reserve balance or its nature.

Restricted Use & Trading Reserves

The implementation of single status job evaluation in 2007 was a mandatory requirement arising from the 2005 National pay settlement. The reserve is to cover any potential future costs as a result of the implementation of the Single Status Collective Agreement in Sept 2010 or any equal pay claims for which provision is not in place.

Originally created from rescheduling discounts and premia, intended for use under the concept of prudence to permit a long term view to be taken of treasury decisions.

Securing capital receipts is a vital element of the Councils capital investment strategy. Improving the final disposal value by investment, either in the fabric of the asset or by proper disposal expertise ensures the Council obtains the best possible value for surplus assets. The reserve is used to finance the attributable costs of disposal of authority fixed assets that have struck against revenue, with reduced revenue contributions to capital being made from revenue in the years in which the respective capital receipts are realised and can be applied.

Single Status & Equal Pay Reserve

Capital Receipt Generation Reserve

6

At 1 April 2013

In Year Movement

At 31 March 2014

In Year Movement

At 31 March 2015

£000 £000 £000 £000 £000

7,443 0 7,443 (296) 7,147

1,240 0 1,240 0 1,240 6,203 0 6,203 (296) 5,907

At 1 April 2013

Budgeted Contribution to Reserves

Budgeted Contribution

from Reserves

Budgeted Contribution

to/from Reserves

Estimated Closing Balance

31 March 2014

Estimated Contribution to Reserves

Estimated Contribution

from Reserves

Estimated Closing Balance

31 March 2015

£000 £000 £000 £000 £000 £000 £000 £000

3,119 20 (941) (921) 2,198 40 (572) 1,6671,383 0 0 0 1,383 0 0 1,3831,523 0 (120) (120) 1,403 0 0 1,403

332 0 (189) (189) 143 0 (125) 191,125 0 (201) (201) 924 0 (338) 586

622 0 (331) (331) 291 0 (370) (78)1,592 75 0 75 1,667 0 0 1,6673,450 0 (1,184) (1,184) 2,266 0 (428) 1,8381,552 0 0 0 1,552 0 0 1,552

60 0 0 0 60 0 0 6033 25 0 25 58 25 0 83

259 5 (26) (21) 239 5 (26) 218

15,050 125 (2,991) (2,866) 12,184 70 (1,858) 10,396

37 0 0 0 37 0 0 37384 0 0 0 384 0 0 384(4) 0 0 0 (4) 0 0 (4)

133 0 0 0 133 0 0 133(47) 0 0 0 (47) 0 0 (47)

502 0 0 0 502 0 0 502

22,995 125 (2,991) (2,866) 20,129 70 (2,155) 18,045

I.T. Transformation Reserve

Capital Receipt Generation Reserve

Council Fund

General Revenue Account

of which:School BalancesCouncil Fund (Authority)

Invest to Redesign Reserve

Earmarked Reserves

Total Useable Revenue Reserves

Restricted Use Reserves

Insurance and Risk Management Reserve

Treasury Equalisation Reserve

Chairman's Reserve

Single Status & Equal Pay ReserveMuseums Acquisitions Reserve

Outdoor Education Centres Trading ReserveSchool Library Service Trading Reserve

Capital Investment ReserveRedundancy & Pension Reserve

Youth Offending TeamBuilding Control Trading Reserve

Grass Routes Buses ReserveElections Reserve

Priority Investment Reserve

BUDGET 2014/15

SECTION 3

CONSOLIDATED REVENUE ACCOUNT(GENERAL FUND)

SUMMARY

7

Consolidated Revenue Account (General Fund) Summary

Statement of Service Reference No.

Appropriation Section CRA 1Revenue Budgets for Interest and Investment Income, Interest Payable and Similar Charges, Contributions to/from Earmarked Reserves, Capital Expenditure financed from Revenue and the Charges required under Regulation.

Financing Section CRA 2Revenue budget income from General Government Grants, the Non-Domestic Rate Redistribution, Contributions to/from the General Fund and Council Tax

BUDGET 2014/15

INDEX

8

Subjective Classification Original Revised Original Indicative Indicative Indicative Budget Budget Budget Budget Budget Budget2013/14 2013/14 2014/15 2015/16 2016/17 2017/18£000's £000's £000's £000's £000's £000's

Directly Managed CostsChildren & Young People 51,985 52,109 51,918 52,181 54,124 54,752Social Care & Health 36,339 36,384 36,611 36,231 35,768 35,431Regeneration & Culture 26,667 27,595 24,959 23,105 22,929 22,879Chief Executive Management 17,028 11,027 10,419 10,350 10,423 10,528Corporate Costs & Levies 17,677 17,613 17,865 18,343 18,720 19,253

Single Status 1,171 780 76 0 0 0

Net Direct Total 150,866 145,509 141,848 140,210 141,964 142,844

Indirectly Managed CostsChildren & Young People 6,838 6,838 7,605 7,719 7,835 7,953Social Care & Health 3,000 3,000 3,002 3,048 3,093 3,140Regeneration & Culture 6,950 6,950 7,968 8,088 8,209 8,332Chief Executive Management (5,894) (5,894) (5,257) (5,298) (5,339) (5,380)Corporate Costs & Levies (1,187) (1,187) (1,185) (1,214) (1,263) (1,314)

Net Indirect Total 9,707 9,707 12,134 12,343 12,536 12,732

Net Cost of Services 160,574 155,216 153,982 152,553 154,500 155,576

Appropriation SectionInterest and Investment Income (30) (30) (29) (59) (79) (98)Interest Payable & Similar Charges 3,788 3,813 3,758 3,685 3,835 4,425Contributions to/from earmarked reserves (1,714) (4,144) (1,788) (1,328) (940) (180)Capital expenditure financed from revenue 0 1,279 0 519 519 0Charges required under Regulation (5,044) (4,752) (6,692) (7,133) (7,334) (7,531)Attributable Costs - Fixed Asset Disposal 66 189 125 104 155 50

Amount to be met from government grants and local taxation

157,639 151,570 149,356 148,340 150,656 152,241

Financing SectionGeneral Government Grants (74,755) (74,755) (69,340) (67,090) (67,090) (67,090)Non-Domestic Rate Redistribution (28,377) (28,377) (28,984) (28,462) (28,462) (28,462)Contributions to/(from) General Fund 0 0 (296) 0 0 0Council Tax (54,508) (48,439) (50,736) (52,774) (54,765) (56,824)

Shortfall / (Headroom) Budget 0 0 0 14 339 (135)

Budget Summary 2013/18

9

Sheet No: Appropriation & Financing Service Area Original Revised Original Budget Budget Budget2013/14 2013/14 2014/15£000's £000's £000's

Appropriation Section

CRA1 (a) Interest and Investment Income (30) (30) (29)

CRA1 (c) Interest Payable and Similar Charges 3,788 3,813 3,758

CRA1 (e) Contributions to/from earmarked reserves (1,714) (4,144) (1,788)

CRA1 (g) Capital Expenditure Financed from Revenue 0 1,279 0

CRA1 (i) Charges required under Regulation (5,044) (4,752) (6,692)

CRA1 (k) Attributable Costs - Fixed Asset Disposal 66 189 125

Appropriation Section Total (2,934) (3,646) (4,626)

Financing Section

CRA2 (a) General Government Grants (74,755) (74,755) (69,340)

CRA2 (a) Non-Domestic Rate Redistribution (28,377) (28,377) (28,984)

CRA2 (a) Council Tax - Monmouthshire County Council (44,246) (44,246) (46,116)

CRA2 (a) Council Tax - Gwent Police & Crime Commissioner (8,739) (8,739) (8,995)

CRA2 (a) Council Tax - Community Councils (1,523) (1,523) (1,669)

CRA2 (a) Council Tax - Reduction Scheme 0 6,069 6,044

CRA2 (a) Contributions to/(from) General Fund 0 0 (296)

Financing Total (157,639) (151,570) (149,356)

Total Appropriation and Financing Service Areas (160,574) (155,216) (153,982)


10

Appropriations Section

Interest and Investment Income

Original Revised Year 1 Year 2 Year 3 Year 4Budget Budget Budget Budget Budget Budget2013/14 2013/14 2014/15 2015/16 2016/17 2017/18£000's £000's £000's £000's £000's £000's

Expenditure 0 0 0 0 0 0

Total Expenditure 0 0 0 0 0 0

IncomeInvestment Portfolio Interest 0 0 0 0 0 0Car Loan Interest (5) (5) (4) (3) (2) (2)Cashflow Management Interest (25) (25) (25) (56) (77) (96)Mortgage Interest 0 0 0 0 0 0

Total Income (30) (30) (29) (59) (79) (98)

Net Total (30) (30) (29) (59) (79) (98)

Budget Changes 2013/14 to 2014/15 (30)

Virements 0

Revised Budget 2014/15 (30) (30)

Variance 1

(29)

STATEMENT OF SERVICE 2013-18

Sheet No: CRA 1 (a)

11


Interest Payable & Similar Charges


ExpenditureInterest on External Debt held by MCC 3,775 3,801 3,744 3,669 3,818 4,408Interest on External Debt held by other LAs 0 0 0 0 0 0

Interest on LMS School Balances 8 8 8 8 8 8Interest on Charitable Trust Fund Balances 23 23 23 23 23 23

Amortised Premium on Redeemed Debt 0 0 0 0 0 0

Depreciation Charge 0 0 0 0 0 0

Total Expenditure 3,806 3,831 3,774 3,699 3,849 4,439

IncomeAsset Rentals : Depreciation Charge 0 0 0 0 0 0

3rd Party Debt Reimbursement (18) (18) (16) (14) (14) (14)

Amortised Discount on Redeemed Debt 0 0 0 0 0 0

Amortisation of Gov't Grants Deferred 0 0 0 0 0 0

Total Income (18) (18) (16) (14) (14) (14)

Net Total 3,788 3,813 3,758 3,685 3,835 4,425

Budget Changes 2013/14 to 2014/15 3,788

Virements 25

Revised Budget 2014/15 3,813 3,813

Variance (55)

3,758


Sheet No: CRA 1 (b)

12


Contributions to/from Earmarked Reserves


ExpenditureContributions to Earmarked Reserves

Elections Reserve 25 25 25 25 25 25Grass Routes Buses Reserve 0 5 5 5 5 5Capital Investment Reserve 75 75 0 0 0 0Treasury Equalisation Reserve 0 0 0 0 0 0Invest to Redesign Reserve 0 20 40 20 57 88


IncomeContributions from Earmarked Reserves

To Finance RevenueRedundancy & Pensions Reserve (331) (331) (370) (325) (192) (192)Elections Reserve 0 0 0 0 (100) 0Invest to Redesign Reserve (252) (941) (497) (405) (35) (30)Priority Investment Reserve (824) (1,184) (503) 0 0 0Insurance & Risk Management Reserve (120) (120) 0 0 0 0Capital Receipt Generation Reserve 0 (189) (125) (104) (155) (50)Treasury Equalisation Reserve (201) (201) (338) 0 0 0Grass Routes Buses Reserve (21) (26) (26) (26) (26) (26)Single Status & equal Pay Reserve 0 0 0 0 0 0Invest to Save 0 0 0 0 0 0Building Control Trading Reserve 0 0 0 0 0 0Agile Working Transition Reserve 0 0 0 0 0 0IT Transformation Reserve 0 0 0 0 0 0School Library Service Trading Reserve 0 0 0 0 0 0

To Finance Capital Capital Receipt Generation Reserve (66) (22) 0 0 0 0IT Transformation Reserve 0 (748) 0 0 0 0Priority Investment Reserve 0 (38) 0 0 0 0Capital Investment Reserve 0 (41) 0 (519) (519) 0Invest to Redesign Reserve 0 (430) 0 0 0 0Renewals & Replacement Reserve 0 0 0 0 0 0

Total Income (1,814) (4,270) (1,858) (1,379) (1,027) (298)

Net Total (1,714) (4,144) (1,788) (1,328) (940) (180)

Budget Changes 2013/14 to 2014/15 (1,714)

Virements (2,430)

Revised Budget 2014/15 (4,144) (4,144)

Variance 2,357

(1,788)


Sheet No: CRA 1 (c)

13


Capital Expenditure Financed from Revenue


ExpenditureUse of Earmarked Reserves Contributions

To Finance RevenueCapital Receipt Generation Reserve 0 22 0 0 0 0IT Transformation Reserve 0 748 0 0 0 0Priority Investment Reserve 0 38 0 0 0 0Capital Investment Reserve 0 41 0 519 519 0Invest to Redesign Reserve 0 430 0 0 0 0Museums Reserve 0 0 0 0 0 0

Total Income 0 1,279 0 519 519 0

Net Total 0 1,279 0 519 519 0

Budget Changes 2013/14 to 2014/15 0

Virements 1,279

Revised Budget 2014/15 1,279 1,279

Variance (1,279)

0


Sheet No: CRA 1 (d)

14


Charges required under Regulation


ExpenditureAmortised Premium on Redeemed Debt 112 112 112 112 112 112

Minimum Revenue Provision (General Fund) 4,584 4,876 5,363 5,131 5,107 5,106

Accelerated Minimum Revenue Provision 0 0 0 0 0 0

Amortisation of Government Grants Deferred

0 0 0 0 0 0

Total Expenditure 4,696 4,988 5,475 5,243 5,219 5,218

IncomeRenovation Grant Financing 0 0 0 0 0 0

Depreciation Charge Reversal (9,707) (9,707) (12,134) (12,343) (12,536) (12,732)

Amortised Discount on Redeemed Debt (33) (33) (33) (33) (17) (17)

Total Expenditure (9,740) (9,740) (12,167) (12,376) (12,553) (12,749)

Net Total (5,044) (4,752) (6,692) (7,133) (7,334) (7,531)

Budget Changes 2013/14 to 2014/15 (5,044) (5,044)

Virements 292

Revised Budget 2014/15 (4,752) (4,752)

Variance (1,940)

(6,692)


Sheet No: CRA 1 (e)

15


Attributable Costs - Capital Receipts Generation - Fixed Asset Disposal Costs


ExpenditureAttributable Costs Fixed Asset Disposal - direct

66 189 125 104 155 50

Attributable Costs Fixed Asset Disposal - indirect

0 0 0 0 0 0


Net Total 66 189 125 104 155 50

Budget Changes 2013/14 to 2014/15 66 66

Virements 123

Revised Budget 2014/15 189 189

Variance (64)

125


Sheet No: CRA 1 (f)

16

Financing Section

Revenue Cost Plan:


IncomeGeneral Government GrantsRevenue Support Grant (73,386) (73,386) (68,524) (66,290) (66,290) (66,290)Improvement Agreement Grant (820) (820) (815) (800) (800) (800)Council Tax Support Funding (549) (549) 0 0 0 0

(74,755) (74,755) (69,340) (67,090) (67,090) (67,090)

Non-Domestic Rates Redistribution (28,377) (28,377) (28,984) (28,462) (28,462) (28,462)

Council TaxMonmouthshire County Council (44,246) (44,246) (46,116) (47,767) (49,355) (50,994)Gwent Police & Crime Commissioner (8,739) (8,739) (8,995) (9,381) (9,785) (10,206)Community Councils Precepts (1,523) (1,523) (1,669) (1,669) (1,669) (1,669)Council Tax Reduction Scheme 0 6,069 6,044 6,044 6,044 6,044

Contribution from the General Fund 0 0 (296) 0 0 0

Total Income (157,639) (151,570) (149,356) (148,326) (150,317) (152,376)

Net Total (157,639) (151,570) (149,356) (148,326) (150,317) (152,376)

Budget Changes 2013/14 to 2014/15 (157,639)

Virements 6,069

Revised Budget 2014/15 (151,570) (151,570)

Variance 2,214

(149,356)


Sheet No: CRA 2

BUDGET 2014/15

SECTION 4

CHILDREN & YOUNG PEOPLESERVICE

PORTFOLIO

17

Children & Young People Service Portfolio

School Improvement CYP 1Special Support Services, Pupil Support Services and School Improvement Service

Resources & Performance Management CYP 2Management, Governor Support, Health & Safety, Financial and ICT Services, School Planning, Transport, Admissions, Student Grants and School Meals

Individual Schools Budgets CYP 3Schools Delegated Budgets

BUDGET 2014/15

INDEX OF SERVICES

18

Sheet No: Children & Young People Service Original Revised Original Budget Budget Budget2013/14 2013/14 2014/15£000's £000's £000's

Directly Managed Costs

CYP 1 School Improvement 6,685 6,593 6,258

CYP 2 Resources and Performance Management 1,962 1,972 1,787

CYP 3 Individual Schools Budgets 43,337 43,543 43,872

Net Direct Total 51,985 52,109 51,918

Indirectly Managed Costs

CYP 1 School Improvement 159 159 202

CYP 2 Resources and Performance Management 864 865 980

CYP 3 Individual Schools Budgets 5,815 5,815 6,424

Net Indirect Total 6,838 6,838 7,605

Total Children & Young People Service Areas 58,823 58,947 59,523


19

Service:

Revenue Cost Plan:


Directly Managed CostsEmployee Related Pay 4,647 4,630 3,870 3,898 4,004 4,044Employee Related Other 679 672 642 654 665 676Employee Related Savings (263) (184) (65) (66) (68) (69)Premises Related 233 228 225 230 233 237Transport Related 78 78 92 94 96 97Supplies & Services 7,422 7,324 7,918 8,061 8,440 8,583Agency & Contracted 51,290 51,357 51,969 52,279 53,947 54,606Transfer Payments 0 0 0 0 0 0Capital Financing 0 0 0 0 0 0

Total Direct Expenditure 64,086 64,107 64,652 65,149 67,317 68,176Grant Income (11,757) (11,654) (12,098) (12,316) (12,525) (12,738)Discretionary Fees & Charges 0 0 0 0 0 0Other Income (345) (345) (636) (652) (668) (685)

Total Direct Income (12,102) (11,998) (12,734) (12,968) (13,194) (13,423)Net Direct Total 51,985 52,109 51,918 52,181 54,124 54,752

Indirectly Managed CostsAccommodation Charges 64 64 188 191 194 197Asset Rentals 5,254 5,254 5,798 5,885 5,973 6,062Grounds Maintenance 3 3 3 3 3 3Contract Cleaning 8 8 0 0 0 0Building Maintenance 210 210 179 181 184 187Internal Insurance Premiums 117 117 131 132 134 136Support Services Recharges 1,183 1,183 1,308 1,327 1,347 1,367

Total Indirect Expenditure 6,838 6,838 7,605 7,719 7,835 7,953Indirect Income Recharges 0 0 0 0 0 0


Net Service Total 58,823 58,947 59,523 59,900 61,959 62,705


CHILDREN & YOUNG PEOPLE SERVICEBUDGET SUMMARY

20

Service: School Improvement

Revenue Cost Plan:



Total Direct Expenditure 17,315 17,211 17,516 17,335 17,270 17,454Grant Income (10,605) (10,593) (10,919) (11,116) (11,305) (11,497)Discretionary Fees & Charges 0 0 0 0 0Other Income (25) (25) (338) (347) (355) (364)


Indirectly Managed CostsAccommodation Charges 22 22 82 83 84 85Asset Rentals 0 0 0 0 0 0Grounds Maintenance 0 0 0 0 0 0Contract Cleaning 0 0 0 0 0 0Building Maintenance 0 0 2 2 2 2Internal Insurance Premiums 2 2 2 2 2 2Support Services Recharges 135 135 116 118 120 122

Total Indirect Expenditure 159 159 202 205 208 211Indirect Income Recharges 0 0 0 0 0 0

Net Indirect Total 159 159 202 205 208 211


Original Budget 2013/14 6,844

Virements (93)

Revised Budget 2013/14 6,752 6,752

CYP 1


21

Service: Resources & Performance Management

Revenue Cost Plan:


Directly Managed CostsEmployee Related Pay 2,877 2,768 2,588 2,614 2,749 2,776Employee Related Other 80 78 73 75 76 77Employee Related Savings (209) (130) 0 0 0 0Premises Related 157 153 152 155 157 160Transport Related 73 73 87 89 90 92Supplies & Services 390 376 300 305 310 316Agency & Contracted 66 36 64 65 66 67Transfer Payments 0 0 0 0 0 0Capital Financing 0 0 0 0 0 0

Total Direct Expenditure 3,434 3,353 3,264 3,302 3,449 3,488

Grant Income (1,151) (1,061) (1,179) (1,200) (1,221) (1,241)Discretionary Fees & Charges 0 0 0 0 0 0Other Income (320) (320) (298) (305) (313) (321)

Total Direct Income (1,471) (1,381) (1,477) (1,505) (1,534) (1,562)

Net Direct Total 1,962 1,972 1,787 1,797 1,915 1,926


Total Indirect Expenditure 864 865 980 995 1,010 1,025Indirect Income Recharges 0 0 0 0 0 0

Net Indirect Total 864 865 980 995 1,010 1,025



Virements 10

Revised Budget 2013/14 2,837 2,837

Variance (69)

Revised Budget 2014/15 2,767

CYP 2


22

Service:

Revenue Cost Plan:


Directly Managed CostsEmployee Related Pay 0 151 0 0 0 0Employee Related Other 0 0 0 0 0 0Employee Related Savings 0 0 0 0 0 0Premises Related 0 0 0 0 0 0Transport Related 0 0 0 0 0 0Supplies & Services 0 (72) 0 0 0 0Agency & Contracted 43,337 43,465 43,872 44,512 46,599 47,233Transfer Payments 0 0 0 0 0 0Capital Financing 0 0 0 0 0 0

Total Direct Expenditure 43,337 43,543 43,872 44,512 46,599 47,233Grant Income 0 0 0 0 0 0Discretionary Fees & Charges 0 0 0 0 0 0Other Income 0 0 0 0 0 0

Total Direct Income 0 0 0 0 0 0Net Direct Total 43,337 43,543 43,872 44,512 46,599 47,233

Indirectly Managed CostsAccommodation Charges 0 0 0 0 0 0Asset Rentals 5,233 5,233 5,760 5,847 5,934 6,023Grounds Maintenance 0 0 0 0 0 0Contract Cleaning 0 0 0 0 0 0Building Maintenance 186 186 146 148 150 153Internal Insurance Premiums 34 34 31 31 32 32Support Services Recharges 362 362 486 494 501 509





Virements 207

Revised Budget 2013/14 49,359 49,359

Variance 937


CYP 3


Individual Schools Budgets

BUDGET 2014/15

SECTION 5

SOCIAL CARE & HEALTHSERVICE

PORTFOLIO

23

Social Care & Health Services Portfolio

Adult Services SCH 1Includes services to adults across the County, which seek to enable them to live as independently as possible. Services include Domiciliary care, Resource Centres, Community Meals, a range of Day Services, Aids & Adaptations, Individual Support Services and links with the Voluntary Sector. The service is focussing increasingly on re-ablement, specialist services (e.g. EMI) and forging new partnerships with the voluntary sector.

Community Care SCH 2Includes a range of services to help adults live as independently as possible. Assessment and Care Management teams work closely with individuals and their families to assess needs and where necessary provide a package of care to meets those needs. This may include a range of domiciliary home care services and residential/nursing care. Also offer re-ablement services and support to people with physical, learning, sensory and mental disabilities. A further aspect of the role is ensuring that vulnerable adults are safeguarded via the multi-agency Protection of Vulnerable Adults procedures.

Adult Services Other SCH 3Corporate Costs, Health Alliance, South East Wales Care Partnership

Children's Services SCH 4Services to help the most vulnerable children and families, including Child Protection, Children in Public Care, Home Finding, Youth Justice, Family Centres and Aids & Adaptations for disabled children.

Resources & Performance Management SCH 5Costs associated with supporting the Directorate. Services include IT, Finance, SWIFT and Performance Management.

Commissioning SCH 6The planning and commissioning do adult and children's health and social services for Aneurin Bevan Health Board (ABHB) Monmouthshire locality and Monmouthshire County Council

BUDGET 2014/15

INDEX OF SERVICES

24

Sheet No: Social Care & Health Services Original Revised Original Budget Budget Budget2013/14 2013/14 2014/15£000's £000's £000's


SCH 1 Adult Services 7,224 7,387 7,087

SCH 2 Community Care 19,461 19,467 19,717

SCH 3 Adult Services Other 25 26 25

SCH 4 Children's Services 6,459 6,572 6,956

SCH 5 Resources and Performance Management 1,287 1,063 1,075

SCH 6 Commissioning 1,883 1,869 1,751

Net Direct Total 36,339 36,384 36,611


SCH 1 Adult Services 1,431 1,184 1,374

SCH 2 Community Care 1,367 1,367 1,417

SCH 3 Adult Services Other 10 11 6

SCH 4 Children's Services 967 967 969

SCH 5 Resources and Performance Management (1,128) (874) (1,075)

SCH 6 Commissioning 351 345 311


Total Social Care & Health Service Areas 39,339 39,384 39,614


25

Service:

Revenue Cost Plan:



Total Direct Expenditure 45,201 45,215 45,096 44,893 44,606 44,449Grant Income (5,386) (5,354) (5,003) (5,093) (5,179) (5,267)Discretionary Fees & Charges 0 0 0 0 0 0Other Income (3,476) (3,476) (3,482) (3,569) (3,658) (3,750)


Indirectly Managed CostsAccommodation Charges 187 187 262 266 270 274Asset Rentals 208 208 418 424 430 437Grounds Maintenance 28 28 28 29 29 30Contract Cleaning 83 83 6 6 6 6Building Maintenance 63 63 67 68 69 70Internal Insurance Premiums 32 32 27 28 28 28Support Services Recharges 4,282 4,282 3,847 3,905 3,963 4,023

Total Indirect Expenditure 4,882 4,882 4,655 4,725 4,796 4,868Indirect Income Recharges (1,882) (1,882) (1,652) (1,677) (1,702) (1,728)




SOCIAL CARE & HEALTH SERVICESBUDGET SUMMARY

26

Service: Adult Services

Revenue Cost Plan:


Directly Managed CostsEmployee Related Pay 6,701 6,884 6,645 6,697 6,964 7,033Employee Related Other 147 136 106 108 110 112Employee Related Savings (140) (140) (139) (142) (145) (147)Premises Related 191 191 177 181 184 187Transport Related 87 87 83 85 86 87Supplies & Services 692 580 327 332 314 219Agency & Contracted 729 819 1,101 1,121 1,140 1,159Transfer Payments 0 0 0 0 0 0Capital Financing 0 0 0 0 0 0

Total Direct Expenditure 8,407 8,557 8,300 8,382 8,653 8,651Grant Income (291) (291) (302) (307) (312) (318)Discretionary Fees & Charges 0 0 0 0 0 0Other Income (892) (879) (911) (934) (957) (981)


Indirectly Managed CostsAccommodation Charges 31 31 33 33 34 34Asset Rentals 136 136 250 253 257 261Grounds Maintenance 15 15 16 16 16 16Contract Cleaning 0 0 0 0 0 0Building Maintenance 62 62 55 56 57 58Internal Insurance Premiums 4 4 21 21 21 22Support Services Recharges 1,183 936 999 1,014 1,030 1,045





Virements (84)

Revised Budget 2013/14 8,571 8,571

Variance (110)


SCH 1


27

Service: Community Care

Revenue Cost Plan:


Directly Managed CostsEmployee Related Pay 3,196 3,232 3,304 3,337 3,437 3,471Employee Related Other 139 128 117 120 122 124Employee Related Savings (66) (66) (68) (69) (70) (72)Premises Related 0 0 0 0 0 0Transport Related 0 0 0 0 0 0Supplies & Services 32 28 28 28 29 29Agency & Contracted 19,560 19,560 19,724 19,613 19,240 18,871Transfer Payments 0 0 0 0 0 0Capital Financing 0 0 0 0 0 0


Grant Income (839) (839) (841) (856) (871) (885)Discretionary Fees & Charges 0 0 0 0 0 0Other Income (2,561) (2,574) (2,547) (2,611) (2,676) (2,743)


Net Direct Total 19,461 19,467 19,717 19,562 19,211 18,795






Virements 7

Revised Budget 2013/14 20,835 20,835

Variance 299


SCH 2


28

Service: Adult Services Other

Revenue Cost Plan:


Directly Managed CostsEmployee Related Pay 76 77 78 79 81 82Employee Related Other 0 0 0 0 0 0Employee Related Savings (2) (2) (2) (2) (2) (2)Premises Related 0 0 0 0 0 0Transport Related 0 0 0 0 0 0Supplies & Services 0 (0) 0 0 0 0Agency & Contracted 6 6 4 4 4 4Transfer Payments 0 0 0 0 0 0Capital Financing 0 0 0 0 0 0

Total Direct Expenditure 81 82 81 81 84 85Grant Income (56) (56) (56) (57) (58) (59)Discretionary Fees & Charges 0 0 0 0 0 0Other Income 0 0 0 0 0 0

Total Direct Income (56) (56) (56) (57) (58) (59)Net Direct Total 25 26 25 24 26 26




Net Service Total 35 36 31 31 32 32

Original Budget 2013/14 35

Virements 1


Variance (5)

Revised Budget 2014/15 31

SCH 3


29

Service: Children's Services

Revenue Cost Plan:



Total Direct Expenditure 8,377 8,490 8,511 8,424 8,330 8,441Grant Income (1,918) (1,918) (1,554) (1,582) (1,609) (1,636)Discretionary Fees & Charges 0 0 0 0 0 0Other Income 0 0 (1) (1) (1) (1)



Total Indirect Expenditure 967 967 969 984 999 1,014Indirect Income Recharges 0 0 0 0 0 0

Net Indirect Total 967 967 969 984 999 1,014



Virements 113

Revised Budget 2013/14 7,540 7,540

Variance 386


SCH 4


30

Service: Resources & Performance Management

Revenue Cost Plan:


Directly Managed CostsEmployee Related Pay 823 671 680 687 707 715Employee Related Other 15 14 13 13 13 14Employee Related Savings (14) (14) (14) (14) (14) (15)Premises Related 60 48 49 50 50 51Transport Related 215 161 162 165 168 171Supplies & Services 163 158 157 160 162 165Agency & Contracted 49 49 52 53 54 55Transfer Payments 0 0 0 0 0 0Capital Financing 0 0 0 0 0 0

Total Direct Expenditure 1,311 1,087 1,099 1,113 1,141 1,155Grant Income (14) (14) (14) (14) (14) (14)Discretionary Fees & Charges 0 0 0 0 0 0Other Income (10) (10) (11) (11) (11) (11)

Total Direct Income (24) (24) (24) (25) (25) (26)Net Direct Total 1,287 1,063 1,075 1,088 1,116 1,130


Total Indirect Expenditure 754 1,008 578 587 595 604Indirect Income Recharges (1,882) (1,882) (1,652) (1,677) (1,702) (1,728)

Net Indirect Total (1,128) (874) (1,075) (1,091) (1,107) (1,124)

Net Service Total 160 189 0 (2) 9 6


Virements 29


Variance (189)


SCH 5


31

Service: Commissioning

Revenue Cost Plan:


Directly Managed CostsEmployee Related Pay 506 539 505 510 525 531Employee Related Other 19 17 15 15 16 16Employee Related Savings (11) (11) (11) (11) (11) (11)Premises Related 4 4 4 5 5 5Transport Related 19 19 19 19 20 20Supplies & Services 335 358 688 700 712 724Agency & Contracted 3,293 3,191 2,780 2,625 2,375 2,409Transfer Payments 0 0 0 0 0 0Capital Financing 0 0 0 0 0 0








Virements (20)

Revised Budget 2013/14 2,214 2,214

Variance (151)


SCH 6


BUDGET 2014/15

SECTION 6

REGENERATION & CULTURE

PORTFOLIO

32

Infrastructure & Networks R&C 1

Provides a range of services including Highways Maintenance and Street Lighting, Traffic Management and Transport Policy, Waste & Cleansing, Schools Catering, Grounds Maintenance & Facilities Management, Property Services and Estates Management, Community and School Transport

Public Life & Culture R&C 2

Service aims - to improve the health and well being and quality of life for people in Monmouthshire. We achieve this through the provision of a number of services - providing high quality leisure centres, libraries, museums, public protection and sports development services. We work with a range of partners to support local businesses (e.g.. trading standards and licensing), community groups (sports clubs, village halls) and encourage inward investment through grants and other external funding. We also support other providers, e.g.. theatres and arts, to improve the outcomes for residents, visitors and workers in Monmouthshire.

Planning, Place & Enterprise R&C 3Provides a range of services including Countryside, Building & Development Control, Development Plans and Economic Development. Provision of services to assist with homelessness and preventing homelessness; housing related support; disabled adaptations; telecare and private sector renewal.

Regeneration & Culture Management R&C 4Provision of Admin and Managerial support to the Regeneration and Culture Directorate.

BUDGET 2014/15

INDEX OF SERVICES

REGENERATION & CULTURE PORTFOLIO

33

Sheet No: Enterprise Original Revised Original Budget Budget Budget2013/14 2013/14 2014/15£000's £000's £000's


R&C 1 Infrastructure & Networks 18,530 18,867 17,453

R&C 2 Public Life & Culture 4,755 5,383 4,392

R&C 3 Planning, Place & Enterprise 2,908 3,122 2,888

R&C 4 Regeneration & Culture Management 475 224 226

Net Direct Total 26,667 27,595 24,959


R&C 1 Infrastructure & Networks 2,617 2,617 3,421

R&C 2 Public Life & Culture 2,858 2,847 3,000

R&C 3 Planning, Place & Enterprise 1,474 1,485 1,545

R&C 4 Regeneration & Culture Management 0 0 3


Total Enterprise Service Areas 33,617 34,545 32,928


34

Service:

Revenue Cost Plan:


Directly Managed CostsEmployee Related Pay 24,862 25,930 23,455 23,250 24,174 24,416Employee Related Other 375 374 246 251 255 259Employee Related Savings (494) (471) (463) (472) (482) (492)Premises Related 3,539 3,951 3,798 3,771 3,485 3,544Transport Related 13,241 12,884 12,400 12,508 12,789 12,912Supplies & Services 7,224 8,282 7,474 7,461 7,247 7,370Agency & Contracted 8,000 6,869 5,433 4,530 4,337 4,411Transfer Payments 0 0 0 0 0 0Capital Financing 373 0 0 0 0 0



Indirectly Managed CostsAccommodation Charges 501 501 687 698 708 719Asset Rentals 3,708 3,708 4,892 4,966 5,040 5,116Grounds Maintenance 1,191 1,191 1,280 1,300 1,319 1,339Contract Cleaning 197 197 212 216 219 222Building Maintenance 458 458 483 490 497 505Internal Insurance Premiums 1,073 1,073 1,021 1,036 1,052 1,068Support Services Recharges 4,875 4,875 5,320 5,400 5,481 5,563





REGENERATION & CULTURE SERVICE AREABUDGET SUMMARY

35

Service: Infrastructure & Networks

Revenue Cost Plan:


Directly Managed CostsEmployee Related Pay 14,593 14,997 12,975 12,861 13,469 13,604Employee Related Other 99 110 77 79 80 81Employee Related Savings (294) (264) (252) (257) (262) (267)Premises Related 2,581 2,794 2,621 2,671 2,717 2,763Transport Related 13,125 12,697 12,208 12,312 12,590 12,710Supplies & Services 4,505 4,747 3,825 4,252 4,103 4,173Agency & Contracted 7,559 6,325 4,982 4,072 3,871 3,937Transfer Payments 0 0 0 0 0 0Capital Financing 373 0 0 0 0 0



Indirectly Managed CostsAccommodation Charges 195 195 309 313 318 323Asset Rentals 2,470 2,470 3,342 3,392 3,443 3,494Grounds Maintenance 1,176 1,176 1,259 1,277 1,297 1,316Contract Cleaning 158 158 176 179 182 184Building Maintenance 145 145 130 132 134 136Internal Insurance Premiums 1,038 1,038 969 983 998 1,013Support Services Recharges 2,489 2,489 3,165 3,212 3,260 3,309





Virements 337

Revised Budget 2013/14 21,484 21

Variance (1)


R&C 1


36

Service: Public Life & Culture

Revenue Cost Plan:


Directly Managed CostsEmployee Related Pay 6,018 6,893 6,480 6,423 6,619 6,685Employee Related Other 118 111 95 97 99 100Employee Related Savings (120) (126) (131) (134) (137) (139)Premises Related 827 976 963 881 546 555Transport Related 63 134 119 121 123 125Supplies & Services 1,474 2,177 1,665 1,285 1,137 1,157Agency & Contracted 117 221 107 109 111 113Transfer Payments 0 0 0 0 0 0Capital Financing 0 0 0 0 0 0


Grant Income (1,215) (1,474) (1,458) (1,484) (1,510) (1,535)Discretionary Fees & Charges 0 0 0 0 0 0Other Income (2,527) (3,529) (3,447) (3,567) (3,690) (3,782)


Net Direct Total 4,755 5,383 4,392 3,731 3,298 3,278

Indirectly Managed CostsAccommodation Charges 94 94 147 150 152 154Asset Rentals 1,228 1,228 1,506 1,529 1,552 1,575Grounds Maintenance 8 8 9 9 9 9Contract Cleaning 39 29 36 37 37 38Building Maintenance 303 303 339 344 349 354Internal Insurance Premiums 23 23 45 45 46 47Support Services Recharges 1,163 1,163 918 932 946 960





Virements 617


Variance (1)


R&C 2


37

Service: Planning, Place & Enterprise

Revenue Cost Plan:










Virements 225


Variance ()


R&C 3


38

Service: Regeneration & Culture Management

Revenue Cost Plan:


Directly Managed CostsEmployee Related Pay 399 160 165 163 168 170Employee Related Other 1 1 1 1 1 1Employee Related Savings (3) (3) (3) (3) (3) (3)Premises Related 0 0 0 0 0 0Transport Related 0 0 0 0 0 0Supplies & Services 78 66 64 65 66 67Agency & Contracted 0 0 0 0 0 0Transfer Payments 0 0 0 0 0 0Capital Financing 0 0 0 0 0 0

Total Direct Expenditure 475 224 226 226 232 235Grant Income 0 0 0 0 0 0Discretionary Fees & Charges 0 0 0 0 0 0Other Income 0 0 0 0 0 0

Total Direct Income 0 0 0 0 0 0Net Direct Total 475 224 226 226 232 235






Virements (251)


Variance

Revised Budget 2014/15

R&C 4


BUDGET 2014/15

SECTION 7

CHIEF EXECUTIVE MANAGEMENT

PORTFOLIO

39

Deputy Chief Executive CEO 1To administer the democratic process and to be accountable for local government in Monmouthshire. To deliver corporate services including Citizen Engagement, Community Safety, Personnel, Policy and Improvement.

Democratic Services & Improvement CEO 2To provide a comprehensive legal service to the whole Council to includeensuring the proper exercise of the Council's statutory powers & duties.To advise members & officers on current & new legislation & case-law.Maintaining the Electoral Register and managing elections.Provide the statutory duty to provide a Civil Registration Service for Monmouthshire to include births, deaths, stillbirths, marriages, civil partnerships and citizenship ceremonies.Democratic Services form an essential part of the Council's decision making processes through preparation of agendas, reports and minutes, administrative and research and by providing support to Members including development & training. Statutory duty to hold and maintain Register of Local Land Charges &Register of Commons and Village Greens.

Finance CEO 3To provide accounts and systems which enable the Council to properlymanage its financial affairs within the legislation set by Government by;Supporting the services of the Council with robust and effectivefinancial systems and timely and appropriate financial information andadvice, and support services in relation to payroll and creditor payment services. To provide an internal audit service to the Authority. To provide a council tax, business rate and debtors collection service. To pay benefits and provide a cashiering and support service.

Information Communication Technology CEO 4ICT services are now provided by the Shared Resource Service. The Authority is one of the founding partners in the organisation and this provides the Council with an opportunity to help shape the organisation, maximizes savings and optimises opportunities for Monmouthshire. The SRS vision is one of public sector organisations working together to deliver high levels of efficiency using innovative technologies. The Shared Resource Service delivers a range of services including a state of the art data centre, providing an efficient and resilient server infrastructure, with enhanced levels of availability and support. They provide accommodation for development staff whose pooled expertise will ensure that application software can be used creatively and fully, to exploit its full potential. They also deliver first and second line desktop and user support. Their aim is to manage, maintain, support and develop an efficient information and communications structure to meet the needs of the council.

Transition CEO 5

To support the organisation in its major programme of business transformation as a response to the huge challenges of front line service delivery in times of austerity and reductions in funding. The business transformation agenda incorporates delivery of specific regeneration projects, service re-modelling via lean and systems thinking processes and back office service reviews, together with new ways of delivering services incorporating accommodation utilisation, agile working and engaging in partnerships and collaborations (such as the Shared Resource Service) with the public and private sectors. “the unit also possesses the necessary skill sets to manage major projects (such as the Single Status job evaluation and Equal Pay projects) on behalf of the Council”

BUDGET 2014/15

INDEX OF SERVICES

CHIEF EXECUTIVE MANAGEMENT Services Portfolio

40

Sheet No: Chief Executive Management Original Revised Original Budget Budget Budget2013/14 2013/14 2014/15£000's £000's £000's


CEO 1 Deputy Chief Executive 4,566 4,637 4,164

CEO 2 Democratic Services & Improvement 1,970 1,971 1,857

CEO 3 Finance 8,037 1,979 2,210

CEO 4 Information Communication Technology 2,439 2,441 2,188

CEO 4 Transition 15 0 0

Net Direct Total 17,028 11,027 10,419


CEO 1 Deputy Chief Executive (2,347) (2,346) (2,305)

CEO 2 Democratic Services & Improvement (218) (218) (57)

CEO 3 Finance (896) (896) (712)CEO 4 Information Communication Technology (2,434) (2,434) (2,184)

CEO 4 Transition 0 0 0

Net Indirect Total (5,894) (5,894) (5,257)

Total Chief Executive Management 11,134 5,134 5,162


41

Service:

Revenue Cost Plan:





Indirectly Managed CostsAccommodation Charges 508 508 672 682 692 702Asset Rentals 537 537 1,027 1,042 1,058 1,073Grounds Maintenance 319 319 327 332 337 342Contract Cleaning 13 13 7 7 8 8Building Maintenance 9 9 11 11 11 11Internal Insurance Premiums 12 12 17 17 17 17Support Services Recharges 3,300 3,300 3,159 3,207 3,255 3,303


Net Indirect Total (5,894) (5,894) (5,257) (5,298) (5,339) (5,380)



CHIEF EXECUTIVE MANAGEMENT BUDGET SUMMARY

42

Service:

Revenue Cost Plan:




Grant Income (1,338) (1,488) (1,214) (1,236) (1,257) (1,278)Discretionary Fees & Charges 0 0 0 0 0 0Other Income (1,206) (1,261) (1,531) (1,569) (1,609) (1,649)


Net Direct Total 4,566 4,637 4,164 4,195 4,123 4,150






Virements 71

Revised Budget 2013/14 2,290 2,290

Variance (430)


CEO 1

Deputy Chief Executive


43

Service: Democratic Services & Improvement

Revenue Cost Plan:


Directly Managed CostsEmployee Related Pay 1,758 1,769 1,642 1,659 1,709 1,726Employee Related Other 91 85 84 86 87 89Employee Related Savings (34) (34) (32) (33) (34) (34)Premises Related 0 0 0 0 0 0Transport Related 4 4 4 4 4 4Supplies & Services 143 139 156 158 161 164Agency & Contracted 12 12 8 8 8 8Transfer Payments 0 0 0 0 0 0Capital Financing 0 0 0 0 0 0


Grant Income 0 0 0 0 0 0Discretionary Fees & Charges 0 0 0 0 0 0Other Income (4) (4) (4) (4) (4) (4)

Total Direct Income (4) (4) (4) (4) (4) (4)

Net Direct Total 1,970 1,971 1,857 1,877 1,931 1,951


Total Indirect Expenditure 266 266 321 326 331 336Indirect Income Recharges (484) (484) (378) (384) (389) (395)

Net Indirect Total (218) (218) (57) (57) (58) (59)



Virements 1

Revised Budget 2013/14 1,753 1,753

Variance 47


CEO 2


44

Service:

Revenue Cost Plan:





Indirectly Managed CostsAccommodation Charges 98 98 220 223 226 230Asset Rentals 0 0 0 0 0 0Grounds Maintenance 0 0 0 0 0 0Contract Cleaning 0 0 0 0 0 0Building Maintenance 0 0 0 0 0 0Internal Insurance Premiums 2 2 4 4 4 4Support Services Recharges* 1,404 1,404 1,418 1,440 1,461 1,483


Net Indirect Total (896) (896) (712) (706) (700) (694)



Virements (6,059)

Revised Budget 2013/14 1,083 1,083

Variance 415


CEO 3


Finance

45

Service:

Revenue Cost Plan:


Directly Managed CostsEmployee Related Pay 0 0 0 0 0 0Employee Related Other 0 0 0 0 0 0Employee Related Savings 0 0 0 0 0 0Premises Related 0 0 0 0 0 0Transport Related 0 0 0 0 0 0Supplies & Services 0 (3) 0 0 0 0Agency & Contracted 2,439 2,444 2,188 2,127 2,163 2,200Transfer Payments 0 0 0 0 0 0Capital Financing 0 0 0 0 0 0



Indirectly Managed CostsAccommodation Charges 2 2 6 6 6 7Asset Rentals 433 433 881 895 908 922Grounds Maintenance 0 0 0 0 0 0Contract Cleaning 0 0 0 0 0 0Building Maintenance 0 0 0 0 0 0Internal Insurance Premiums 0 0 0 0 0 0Support Services Recharges* 82 82 69 70 71 72

Total Indirect Expenditure 518 518 957 971 986 1,001Indirect Income Recharges (2,951) (2,951) (3,141) (3,166) (3,191) (3,217)


Net Service Total 5 8 4 (68) (42) (16)


Virements 2


Variance (4)


CEO 4


Information Communication Technology

Service:

Revenue Cost Plan:



Employee Related Pay 116 0 0 0 0 0Employee Related Other 1 0 0 0 0 0Employee Related Savings (2) 0 0 0 0 0Premises Related 0 0 0 0 0 0Transport Related 0 0 0 0 0 0Supplies & Services 1 0 0 0 0 0Agency & Contracted 25 0 0 0 0 0Transfer Payments 0 0 0 0 0 0Capital Financing 0 0 0 0 0 0

Total Direct Expenditure 140 0 0 0 0 0Grant Income 0 0 0 0 0 0Discretionary Fees & Charges 0 0 0 0 0 0Other Income (125) 0 0 0 0 0

Total Direct Income (125) 0 0 0 0 0

Net Direct Total 15 0 0 0 0 0


Accommodation Charges 0 0 0 0 0 0Asset Rentals 0 0 0 0 0 0Grounds Maintenance 0 0 0 0 0 0Contract Cleaning 0 0 0 0 0 0Building Maintenance 0 0 0 0 0 0Internal Insurance Premiums 0 0 0 0 0 0Support Services Recharges* 0 0 0 0 0 0

Total Indirect Expenditure 0 0 0 0 0 0

Indirect Income Recharges 0 0 0 0 0 0




Virements (15)


Variance (0)



CEO 5

Transition

BUDGET 2014/15

SECTION 8

CORPORATE COSTS & LEVIES

PORTFOLIO

47

Corporate Costs & Levies Portfolio

Corporate Management (CM) COL 1Provide for a range of financial services supporting the council, including External Audit Fees, Bank Charges, Corporate Management Costs and Statutory duties.

Non Distributed Costs (NDC) COL 2Provision for past service costs, curtailments, settlements and the share of unused long term unrealisable assets

Precepts & Levies COL 3Community Council and Gwent Police Precepts, Levies for the Fire Service, Coroner, Drainage Boards and Gwent Archives Service

Internal Insurance Account COL 4Insurance provision for the County and Council

Single Status COL 5Provision for single status pay claims

BUDGET 2014/15

INDEX OF SERVICES

48

Sheet No: Corporate Costs & Levies Service Area Original Revised Original Budget Budget Budget2013/14 2013/14 2014/15£000's £000's £000's


COL 1 Corporate Management (CM) 644 580 502

COL 2 Non Distributed Costs (NDC) 719 719 738

COL 3 Precepts & Levies 15,082 15,082 15,430 COL 4 Internal Insurance Account 1,233 1,233 1,195

COL 5 Single Status 1,171 780 76

Net Direct Total 18,848 18,394 17,941


COL 1 Corporate Management (CM) 45 45 0

COL 2 Non Distributed Costs (NDC) 0 0 0

COL 3 Precepts & Levies 0 0 0

COL 4 Internal Insurance Account (1,232) (1,232) (1,185)

Net Indirect Total (1,187) (1,187) (1,185)

Total Corporate Costs & Levies Service Areas 17,660 17,206 16,756


49

Service:

Revenue Cost Plan:

Original Revised Year 1 Year 2 Year 3 Year 4Budget Budget Budget Budget Budget Budget2013/14 2013/14 2014/15 2015/16 2016/17 2017/18

Directly Managed Costs £000's £000's £000's £000's £000's £000's

County Hall Accommodation Charge 410 0 0 0 0 0External Audit Fees 398 398 405 412 419 427Treasury & Bank Charges 68 68 55 56 57 58Agile Working Furniture & Equipment 28 28 108 110 111 113Other Expenditure 14 14 14 15 15 15

Retirement Pensions: Ex GCC/MBC 331 331 370 325 192 192Pensions Recurring (Enhancements) 384 384 363 370 376 382Pension Administration Fees 4 4 5 5 5 5

Precepts & levies 15,082 15,082 15,430 15,894 16,371 16,867

Internal Insurance Account 1,239 1,239 1,202 1,223 1,244 1,265

Single Status 1,171 780 76 0 0 0


Strategic Initiatives (253) 93 0 0 0 0R&R Fund Reimbursements (20) (20) (40) (20) (24) (24)Crematorium Dividend 0 0 (40) (40) (40) (40)External Insurance Premium Recharges (7) (7) (7) (7) (7) (7)Other Income 0 0 0 0 0 0

Total Direct Income (280) 66 (87) (67) (71) (71)

Net Direct Total 18,848 18,394 17,941 18,343 18,720 19,253

Indirectly Managed CostsAccommodation Charges 0 0 0 0 0 0Depreciation 0 0 0 0 0 0Grounds Maintenance 0 0 0 0 0 0Contract Cleaning 0 0 0 0 0 0Building Maintenance 0 0 0 0 0 0Internal Insurance Premiums 0 0 0 0 0 0Support Services Recharges 45 45 11 11 11 11

Total Indirect Expenditure 45 45 11 11 11 11Indirect Income Recharges (1,233) (1,233) (1,195) (1,225) (1,274) (1,325)




Virements (454)

Revised Budget 2013/14 17,206 17,206

(450)Variance

16,756Revised Budget 2014/15


CORPORATE SUMMARY

50

Service:

Revenue Cost Plan:


Directly Managed CostsCounty Hall Accommodation Charge 410 0 0 0 0 0External Audit Fees 398 398 405 412 419 427Treasury & Bank Charges 68 68 55 56 57 58Agile Working Furniture & Equipment 28 28 108 110 111 113 B105Other Expenditure 14 14 14 15 15 15

Total Direct Expenditure 918 507 582 592 602 613

Strategic Initiatives (253) 93 0 0 0 0 B104R&R Fund Reimbursements (20) (20) (40) (20) (24) (24)Crematorium Dividend 0 0 (40) (40) (40) (40)Other Income 0 0 0 0 0 0

Total Direct Income (273) 73 (80) (60) (64) (64)

Net Direct Total 644 580 502 532 538 548






Virements (64)


Variance (123)



Sheet: COL 1

Corporate Management

51

Service:

Revenue Cost Plan:


Directly Managed CostsRetirement Pensions: Ex GCC/MBC 331 331 370 325 192 192Pensions Recurring (Enhancements) 384 384 363 370 376 382Pension Administration Fees 4 4 5 5 5 5

Total Direct Expenditure 719 719 738 700 573 580Grant Income 0 0 0 0 0 0Discretionary Fees & Charges 0 0 0 0 0 0Other Income 0 0 0 0 0 0

Total Direct Income 0 0 0 0 0 0Net Direct Total 719 719 738 700 573 580






Virements 0


Variance 19



Sheet: COL 2

Non-Distributed Costs

52

Service:

Revenue Cost Plan:


Precepts & LeviesSouth Wales Fire Authority Levy 4,338 4,338 4,271 4,348 4,422 4,497Joint Services: Coroner Service 70 70 80 80 80 80Gwent Archives Levy 168 168 172 172 172 172Internal Drainage Board Levies 117 117 117 117 117 117Brecon Beacons National Park 127 127 127 127 127 127Community Council Precepts 1,523 1,523 1,669 1,669 1,669 1,669Gwent Police & Crime Commissioner Precept 8,739 8,739 8,995 9,381 9,785 10,206








Virements 0

Revised Budget 2013/14 15,082 15,082

Variance 349


Sheet: COL 3

Precepts and Levies


53

Service:

Revenue Cost Plan:


Directly Managed CostsInsurance Premium 753 753 738 752 764 777Self Insured Cost Estimate 365 365 365 372 378 384Employee Related Expenditure 89 89 78 80 81 82Other Expenditure 0 0 0 0 0 0Professional Fees 33 33 20 21 21 21Leasehold Flats Policy Payment 0 0 0 0 0 0

Total Direct Expenditure 1,239 1,239 1,202 1,223 1,244 1,265Grant Income 0 0 0 0 0 0External Insurance Premium Recharges (7) (7) (7) (7) (7) (7)

Total Direct Income (7) (7) (7) (7) (7) (7)Net Direct Total 1,233 1,233 1,195 1,217 1,237 1,258


Total Indirect Expenditure 1 1 11 11 11 11Indirect Income Recharges (1,233) (1,233) (1,195) (1,225) (1,274) (1,325)


Net Service Total 1 1 11 2 (26) (55)


Virements (0)


Variance 10



Sheet: COL 4

Internal Insurance Account

54

Service:

Revenue Cost Plan:


Directly Managed CostsSalaries 1,171 780 76 0 0 0

Net Direct Total 1,171 780 76 0 0 0

Net Service Total 1,171 780 76 0 0 0


Virements (390)


Variance (704)



Sheet: COL 5

Single Status

BUDGET 2013/18

SECTION 9

CAPITALPROGRAMME

Including prudential code indicators

66 Capital Programme Index

Capital Programme Portfolio

Scheme Type Reference No.

GENERAL FUND

Asset Management Schemes Cap 1

Regeneration Schemes Cap 2

School Development Schemes Cap 3

Infrastructure & Transport Schemes Cap 4

County Farms Schemes Cap 5

Inclusion Schemes Cap 6

Other Schemes Cap 7

Vehicle Replacement - Purchase Cap 8

PRUDENTIAL CODE INDICATORS Cap 9

BUDGET 2013/18

INDEX OF SCHEMES

67 Capital Budget 2013-14

Scheme Type Original Approved Budget Revised Budget Slippage Revisions Budget2013/14 2013/14 2013/14 2013/14£000's £000's £000's £000's

Asset Management Schemes 2,783 1,049 1,232 5,064

Regeneration Schemes 3,300 6,746 393 10,440

School Development Schemes 3,249 2,422 693 6,364

IT Transformation Schemes 0 612 372 984

Infrastructure & Transport Schemes 4,611 592 380 5,583

County Farms Schemes 273 294 0 567

Inclusion Schemes 850 287 165 1,302

Sustainability Schemes 0 0 236 236

Other Schemes 198 214 0 412

Total Capital Programme 15,265 12,216 3,472 30,953

Funding Stream Original Approved Budget Revised Budget Slippage Revisions Budget2013/14 2013/14 2013/14 2013/14£000's £000's £000's £000's

Supported Borrowing (2,325) 0 0 (2,325)

Unsupported Borrowing (9,044) (7,401) (536) (16,981)

General Capital Grant (1,420) 0 0 (1,420)

Other Grants and Contributions (80) (258) (1,365) (1,703)

S106 Developers Contributions 0 (345) (393) (738)

Insurance Settlement Income (1,970) 0 0 (1,970)

General Fund Capital Receipts (426) (3,612) (580) (4,618)

Revenue Contribution - IT Transformation Reserve 0 (296) (372) (668)

Revenue Contribution - Capital Investment Reserve 0 (41) 0 (41)

Revenue Contribution - Invest to Redesign Reserve 0 (205) (225) (430)

Revenue Contribution - Priority Investment Reserve 0 (38) 0 (38)

Revenue Contribution (Accommodation) 0 0 0 0

Capital Receipt Generation Reserve 0 (22) 0 (22)

Low Cost Home Ownership 0 0 0 0

CRA Revenue Contribution to Capital 0 0 0 0

Total Capital Funding (15,265) (12,217) (3,472) (30,953)

Lease Financed Expenditure: (Vehicles purchased through Purchase, Sale and Leaseback arrangements)

Original Approved Budget Revised Budget Slippage Revisions Budget2013/14 2013/14 2013/14 2013/14£000's £000's £000's £000's

Expenditure:Vehicle Replacement - Purchase 3,085 0 (1,385) 1,700Financed by:Vehicle Replacement - Sale and Leaseback (3,085) 0 1,385 (1,700)

General Fund Capital ProgrammeBudget Summary 2013/18

68 Capital Budget 2013-18

Scheme Type Revised Original Indicative Indicative IndicativeBudget Budget Budget Budget Budget2013/14 2014/15 2015/16 2016/17 2017/18£000's £000's £000's £000's £000's

Asset Management Schemes 5,064 2,148 1,929 1,929 1,929

Regeneration Schemes 10,440 0 0 0 0

School Development Schemes 6,364 2,854 1,376 163 50

IT Transformation Schemes 984 0 0 0 0

Infrastructure & Transport Schemes 5,583 3,991 2,241 2,241 2,241

County Farms Schemes 567 305 301 301 301

Inclusion Schemes 1,302 850 850 850 850

Sustainability Schemes 236 0 0 0 0

Other Schemes 412 190 20 20 20

Total Capital Expenditure 30,953 10,338 6,717 5,503 5,391

Funding Stream Revised Original Indicative Indicative IndicativeBudget Budget Budget Budget Budget2013/14 2014/15 2015/16 2016/17 2017/18£000's £000's £000's £000's £000's

Supported Borrowing (2,325) (2,420) (2,420) (2,420) (2,420)

Unsupported Borrowing (16,981) (3,492) (1,000) (1,000) (1,000)

General Capital Grant (1,420) (1,473) (1,473) (1,473) (1,473)

Other Grants and Contributions (1,703) (1,247) (647) (56) 0

S106 Developers Contributions (738) 0 0 0 0

Insurance Settlement Income (1,970) 0 0 0 0

General Fund Capital Receipts (4,618) (1,747) (698) (76) (538)

Revenue Contribution - IT Transformation Reserve (668) 0 0 0 0

Revenue Contribution - Capital Investment Reserve (41) 0 (519) (519) 0

Revenue Contribution - Invest to Redesign Reserve (430) 0 0 0 0

Revenue Contribution - Priority Investment Reserve (38) 0 0 0 0

Revenue Contribution - Accommodation 0 0 0 0 0

Capital Receipt Generation Reserve (22) 0 0 0 0

Low Cost Home Ownership 0 0 0 0 0

Total Capital Funding (30,953) (10,378) (6,757) (5,543) (5,431)

(Surplus) / Deficit (0) (40) (40) (40) (40)

Lease Financed Expenditure: (Vehicles purchased through Purchase, Sale and Leaseback arrangements)

Revised Original Indicative Indicative IndicativeBudget Budget Budget Budget Budget2013/14 2014/15 2015/16 2016/17 2017/18£000's £000's £000's £000's £000's

Expenditure:Vehicle Replacement - Purchase 1,700 1,500 1,500 1,500 1,500Financed by:Vehicle Replacement - Sale and Leaseback (1,700) (1,500) (1,500) (1,500) (1,500)

General Fund Capital ProgrammeBudget Summary 2013/18

69 Asset MGMT & School Schemes

CAP 1Scheme Type: Asset Management Schemes

Budget Detail:

OriginalBudget2014/15

£ Scheme Description

Scheme Name

Property Maintenance 2,098,090 Maintenance to the fabric and infrastructure of the Authority's buildings as identified in stock condition surveys.

School Kitchens 50,000 To improve kitchen facilities in schools in line with Welsh Assembly Government guidelines

Total Budget 2,148,090

CAP 2Scheme Type: Regeneration Schemes : None in 2014-15

CAP 3Scheme Type: School Development Schemes

Budget Detail:



Scheme Name21st Century School - Raglan Primary 2,712,050 Investment in key priority 21st Century Schools

Thornwell Primary 92,000 New Thornwell Primary School

Access For All 50,000 Minor access improvements at various primary and secondary schools.


STATEMENT OF SCHEMES 2013-18

70 Infrastructure Schemes

CAP 4Scheme Type: Infrastructure & Transport Schemes

Budget Detail:


£

Scheme NameFootway ReconstructionFootway works 248,438 Reconstruct and make safe footways in order

to reduce the number of accidents

Street LightingStreet Lighting - Defective Column Programme 121,463 Replace dangerous columns and cables to

improve the safety of street lights and reduce maintenance required

Street Lighting - Western Power Upgrades 36,435

Street Lighting - Monmouthshire Cable Renewals 16,195

Street Lighting - Painting Programme 8,098 Protect street lights from the environment and thus extend their life and make less obtrusive

StructuresBridge Assessments 40,488

Bridges, Retaining Walls and Culvert Repairs 981,208

Structural Repairs PROW 40,488 Repairs to structures which constitute public rights of way.

Safety FencesSafety Fences 80,975 New fences and repairs to safety fences to

comply with recommended guidelines and increase the safety of activities near fencing

Carriageway ResurfacingResurfacing - Various 2,227,382 Work to restore the condition of worn

carriageways in order to make them safe and in some cases to extend their useful economic lives

Infrastructure - OtherAccessibility Enhancement 40,488 Various upgrades to improve signing &

disabled facilities

Flood Alleviation Schemes 12,146 To provide match funding to compliment WAG contribution for the provision of flood alleviation studies and schemes

Road Safety and Traffic Management Programme 121,463 Various road safety strategies

Implementation & Review of TRO's 8,098 Implementation and review of Traffic regulation orders

Parking Studies 8,098 Various parking studies


Required to comply with statutory obligations to ensure that bridges are safe for use

Upgrades and renewals to cables to improve effectiveness and safety of street lighting

Scheme Description


71 County Farms & Inclusion

CAP 5Scheme Type: County Farms Schemes

Budget Detail:



Scheme NameCounty Farms Maintenance 304,726 Repair and maintenance to County Farms to enable continued use and release assets for investment

Total Budget 304,726

CAP 6Scheme Type: Inclusion Schemes

Budget Detail:



Scheme NameAccess for All 250,000 To ensure that the Authority's operational buildings that are delivering front line services enable equal

access to all.

Renovation Grants 600,000 To Deliver the Authority's Statutory obligation to People with disabilities



72 Vehicle Replacement

CAP 7Scheme Type: Other Schemes

Budget Detail:



Scheme NameArea Management 20,000 To be responsive to the needs of the communities by carrying out small environmental projects in the areas

Non County Farms Fixed AssetsDisposal Costs 170,000

Costs associated with the disposals of non County Farms Fixed Assets


CAP 8Scheme Type: Vehicle Replacement - Purchase

Budget Detail:



Scheme Name

Leasing - To be allocated 1,500,000 For the purchase of vehicles under the Authority's vehicle replacement programme. Vehicle purchases are initially made in the capital programme, following a financial appraisal exercise they are financed by either leasing (sale and leaseback) or by Authority borrowing.



73 Prudential Code

CAP 9

2013/14 2014/15 2015/16 2016/17 2017/18Revised

Capital Expenditure £m £m £m £m £mNon-HRA 23.6 17.8 6.7 5.5 5.4

Ratio of financing costs to net revenue stream % % % % %Non-HRA 5.8 6.4 6.0 5.9 5.9

Incremental Impact on Council Tax £ £ £ £ £Unsupported Borrowing 23.4 17.3 1.9 1.9 1.9Total Impact on Council Tax 23.4 17.3 1.9 1.9 1.9

Capital Financing Requirement £m £m £m £m £mNon-HRA 120.5 115.8 114.1 112.4 110.7

Authorised Limit £m £m £m £m £mLong Term Liabilities 3.0 2.6 2.6 2.6 2.6Borrowing 122.4 134.6 134.0 137.4 140.8

Operational Boundary £m £m £m £m £mLong Term Liabilities 1.3 1.1 1.1 1.1 1.1Borrowing 98.4 113.6 113.0 116.4 119.8

Interest Rate Exposure 2014/15 Maximum Minimum£m £m

Net Variable Rate 45 NAFixed Rate 108 NA

Debt Maturity Structure - Fixed Rate for 2014/15 Lower Limit Upper Limit% %

Under 12 Months 0 501 to 2 Years 0 402 to 5 Years 0 455 to 10 Years 0 30Over 10 Years 0 100

PRUDENTIAL CODE INDICATORS

BUDGET 2014/15

SECTION 11

Treasury Management Strategy & Annual Investment Strategy 2014/15

1

AGENDA ITEM 13a

REPORT 1. PURPOSE:

1.1 To adopt the annual Treasury Management Policy Statement and the Treasury Management Strategy Statement and Investment Strategy for 2014/15 to 2017/18 incorporating the Minimum Revenue Provision (MRP) Statement for 2014/15.

2. RECOMMENDATIONS: 2.1 It is recommended that the proposed Treasury Management Policy Statement for 2014/15 (appendix 2) and proposed Treasury

Management Strategy and Investment Strategy 2014/15 to 2017/18 (appendix 1), including the Minimum Revenue Provision (MRP) Statement for 2014/15, be approved together with the Treasury Limits as required by section 3 of the Local Government Act 2003.

SUBJECT: Treasury Management Policy Statement & Strategy Statement, MRP Policy Statement and Investment Strategy 2014/15

DIRECTORATE: Chief Executive’s Unit MEETING: Council DATE: 27th February 2014 DIVISION/WARDS AFFECTED: Countywide

2

3. KEY ISSUES:

Treasury Management Policy Statement and Treasury Management and Annual Investment Strategy 3.1 Treasury Management is defined as “The management of the local authority’s investments and 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”.

3.2 The Authority pays due regard to CIPFA’s Code of Practice for Treasury Management in the Public Services (the “Code”) and

accompanying Guidance Notes (as revised in 2011) and the Prudential Code for Capital Finance in Local Authorities (as revised in 2011). The Prudential Code for Capital finance in local authorities outlines requirements for the manner in which capital spending plans are to be considered and approved, and in conjunction with this, the development of an integrated treasury management strategy.

3.3 The Prudential Code further requires the Council to set a number of Prudential and Treasury Management indicators. The

attached strategy therefore incorporates the indicators to which regard should be given when determining the Council's treasury management strategy for 2014/15 and indicatively for the subsequent 3 financial years. The Indicators are based on the capital budget proposals being separately approved by Council at its meeting dated 27th February 2014.

3.4 The Council also has regard to the WG Guidance on Local Government Investments. This guidance requires the production of an Investment Strategy in addition to a Treasury Management Strategy, and allows Councils to combine these two strategies into one document. Pages 6 and 7 of appendix 1 contains the Councils proposed Investment Strategy. With regards to investments the Codes and Guidance emphasize an appropriate approach to risk management, particularly in relation to the security and liquidity of invested funds. Authorities are required to demonstrate value for money when borrowing in advance of need and ensure the security of such funds.

3.5 The Code requires that Council approve annually a Treasury Management Policy Statement and a Treasury Management Strategy Statement and Investment Strategy. The Council also has regard to the revised Welsh Government (WG) guidance on Local Government Investments issued in April 2010.

3.6 Furthermore, as a minimum, the Code requires that the Authority formally report on their treasury activities and arrangements at the mid-year point and after the year-end. Audit Committee is identified as being the committee responsible for reviewing update reports on the treasury function, given its overarching role in assessing the risk management arrangements for the Authority.

3

3.7 The Council delegates responsibility for the execution and administration of treasury management decisions to the Head of Finance (S151 officer) who will act in accordance with the Treasury Management policy statement (appendix 2) and treasury management practices and CIPFA’s Standard of Professional Practice on Treasury Management.

3.8 Arlingclose were re-appointed as the Council’s treasury management advisor in April 2011. Arrangements to extend the contract to cover 2014/15 are currently being finalised. The Council is clear as to the services it expects and is provided under the contract. The service provision is comprehensively documented.

3.9 The Council is also clear that overall responsibility for treasury management remains with the Council.

Annual Minimum Revenue Provision Policy Statement 3.10 The annual Minimum Revenue Provision is the mechanism used for spreading the capital expenditure financed by borrowing.

Regulations state that the authority must calculate for the current financial year an amount of minimum revenue provision which it considers to be prudent. In addition there is the requirement for an Annual Minimum Revenue Provision Policy Statement to be drafted and submitted to full Council.

3.11 Authorities are permitted discretion in terms of the charge levied, albeit within certain parameters. A “prudent” period of time for

debt repayment is defined as being one which reflects the period over which the associated capital expenditure provides benefits. Annex C of the attached Treasury Management Strategy and Investment Strategy (Appendix 1) incorporates the Council’s Statement in this regard. Changes influencing proposed amendments to strategy

3.12 To add flexible in securing investment returns, Treasury advisers recommend the inclusion of particular building societies as

additional specified instruments. 3.13 As per the credit outlook section in (Appendix 1) the risk of banking failures has diminished, but not dissipated altogether.

However regulatory change afoot in the UK means that bail outs will be replaced with bank resolution regimes in which shareholders, bond holders and unsecured creditors are ‘bailed in’ to participate in any recovery process. Consequently any investments that we hold in a bank when it fails, would not be secure or guaranteed returned. Our treasury advisers remain comfortable that the limits set in (Appendix 1), table 3 are a suitable level of diversification to mitigate against loss.

4

4. REASONS: 4.1 The Authority is required to produce a Treasury Management Policy and a Treasury Management and Annual Investment Strategy

in order to comply with the Chartered Institute of Public Finance and Accountancy’s Code of Practice for Treasury Management in Public Services (the “CIPFA TM Code”).

4.2 The Authority is required to produce an MRP Policy Statement in order to comply with the Local Authorities (Capital Finance and

Accounting) (Wales) Regulations, last amended in 2009.

5. RESOURCE IMPLICATIONS: 5.1 There are no resource implications directly arising from this report. The medium-term treasury budgets contained within the 2014-

2015 revenue budget proposals being presented to Council on 27th February, along with indicative revenue budgets for 2014-18, have been constructed in accordance with the strategy documents appended to this report.

5.2 There are however some key future financial risks on medium-term treasury budgets concerning:

The number of significant capital receipts in the existing medium-term forecasts, and on which the authority’s internal

borrowing strategy and budgets are based. There will be an adverse financial impact in the event that such receipts do not materialize or are significantly delayed.

The current medium-term capital programme does not factor in commitments towards the future schools programme other

than Raglan. The need for the Authority to finance the full programme through capital receipts or prudential borrowing will have a consequential impact on treasury budgets due to the reduction in capacity to internally borrow and the requirement for additional long term external borrowing, and this has been taken into account in the revenue budget projections.

The strategy states the Authority’s chief objective when borrowing money is to strike an appropriately low risk balance

between securing low interest costs and achieving cost certainty over the period for which funds are required. It presents the option of taking advantage of currently low short-term interest rates possibly at the expense of increasing future borrowing costs. This balance will be monitored regularly in order to decide whether to borrow additional sums at long-term fixed rates in 2014/15 with a view to keeping future interest costs low, even if this causes additional cost in the short-term.

5

It should be noted that as a result of the expenditure plans of the Authority and the forecasts for interest rates in the future, that borrowing costs are expected to rise in the medium/long term even without financing of future schools initiative. Should the balance of the £80m future schools programme be approved they will rise significantly further..

6. EQUALITY IMPACT ASSESSMENT:

There is no equality impact arising directly from this report.

7. SUSTAINABLE DEVELOPMENT IMPLICATIONS:

None 8. BACKGROUND PAPERS:

Appendix 1 – Treasury Management Strategy Statement & Investment Strategy 2014/15 (including MRP policy statement) Appendix 2 – Treasury Management Policy Statement

9. AUTHORS: Joy Robson Head of Finance (S151 Officer) Mark Howcroft Assistant Head of Finance (Deputy S151 Officer)

10. CONTACT DETAILS: Tel: (01633) 644270 Email: [email protected] Tel: (01633) 644740 Email: [email protected]

1

Appendix 1

Treasury Management Strategy Statement 2014/15

Introduction

In March 2005 the Authority first adopted the Chartered Institute of Public Finance code of practice (revised in 2011) which requires the Authority to approve a treasury management strategy before the start of each financial year.

In addition, the Welsh Government (WG) issued revised Guidance on Local Authority Investments in April 2010 that requires the Authority to approve an investment strategy before the start of each financial year.

This report fulfils the Authority’s legal obligation under the Local Government Act 2003 to have regard to both the CIPFA Code and the WG Guidance.

The Authority has borrowed and invested substantial sums of money and is therefore exposed to financial risks including the loss of invested funds and the revenue effect of changing interest rates. The successful identification, monitoring and control of risk are therefore central to the Authority’s treasury management strategy.

External Context

Economic background: The Bank of England’s Monetary Policy Committee (MPC) through its recent forward guidance stated it was committed to keeping policy rates low for an extended period using the Labour Force Survey unemployment rate of 7% as a threshold for when it would consider whether or not to raise interest rates, subject to certain knock-outs. Unemployment was 7.7% in August 2013 and at that time was not forecast to fall below the threshold until 2016, due to the UK’s flexible workforce. In January 2014 the unemployment rate fell to 7.1% but members of the Monetary Policy Committee stated that the 7.0% limit was a threshold not a trigger and that they had no intention to raise interest rates immediately. The MPC is expected to review its forward guidance shortly.

The flow of credit to households and businesses is slowly improving but is still below pre-crisis levels. The fall in consumer price inflation from the high of 5.2% in September 2011 to 2.7% in September 2013 will allow real wage increases (i.e. after inflation) to slowly turn positive and aid consumer spending.

Stronger growth data in 2013 (0.4% in Q1, 0.7% in Q2 and 0.8% in Q3) alongside a pick-up in property prices mainly stoked by government initiatives to boost mortgage lending have led markets to price in an earlier rise in rates than warranted under Forward Guidance and the broader economic backdrop. However, with jobs growth picking up slowly, many employees working shorter hours than they would like and benefit cuts set to gather pace, growth is likely to only be gradual. Arlingclose forecasts the MPC will maintain its resolve to keep interest rates low until the recovery is convincing and sustainable.

In the US, expectations for the slowing in the pace of asset purchases ('tapering') by the Federal Reserve and the end of further asset purchases will remain predominant drivers of the financial markets. After some delay the Fed eventually confirmed in December 2013 tapering of $10bn a month from its current position of $85bn.

Credit outlook: The credit risk of banking failures has diminished, but not dissipated altogether. Regulatory changes are afoot in the UK, US and Europe to move away from the bank bail-outs of previous years to bank resolution regimes in which shareholders, bond holders and unsecured creditors are ‘bailed in’ to participate in any recovery process. This is already manifest in relation to holders of subordinated debt issued by the Co-

2

op which will suffer a haircut on its conversion bail-in to alternative securities and/or equity There are also proposals for EU regulatory reforms to Money Market Funds which will, in all probability, result in these funds moving to a VNAV (variable net asset value) basis and losing their ‘triple-A’ credit rating wrapper. Diversification of investments between creditworthy counterparties to mitigate bail-in risk will become even more important in the light of these developments.

Interest rate forecast: Arlingclose’s forecast is for the Bank Rate to remain flat until late 2016, the risk to the upside (i.e. rates being higher) are weighted more heavily towards the end of the forecast horizon, as the table in Annex A shows shows. Gilt yields are expected to rise over the forecast period with medium- and long-dated gilts expected to rise by between 1.1% and 0.7%.

A more detailed economic and interest rate forecast provided by the Authority’s treasury management advisor is attached at Annex A.

For the purpose of setting the budget, it has been assumed that new investments will be made at an average rate of 0.50%, and that new short-term loans will be borrowed at an average rate of 1.25%.

Local Context

The Authority currently as at 31st December 2013 has £96.2m of borrowing and £13m of investments. This is set out in further detail at Annex B. Forecast changes in these sums are shown in the balance sheet analysis in table 1 below which is in line with the Current 2014/15 Capital MTFP proposals including Raglan School but excluding further ‘Future Schools’.

Table 1: Balance Sheet Summary and Forecast

* finance leases and PFI liabilities that form part of the Authority’s debt

** shows only loans to which the Authority is committed and excludes optional refinancing

Table 2 provides the balance sheet analysis should the Future School program go ahead in line with current proposals. This is for information only.

End of Year Requirement: 2013/14 Estimate

£m

2014/15 Estimate

£m

2015/16 Estimate

£m

2016/17 Estimate

£m

2017/18 Estimate

£m

General Fund CFR 120.5 115.8 114.1 112.4 110.7

Less: External Borrowing (PWLB and LOBO) **

71.9 68.4 66.6 60.6 60.6

Less: Short Term Local Authority Borrowing

20.0 0.0 0.0 0.0 0.0

Less: Other Long Term Liabilities *

1.3 1.1 1.1 1.1 1.1

Cumulative Maximum External Borrowing Requirement

27.3 46.3 46.3 50.7 49.0

Less: Usable reserves 23.9 30.4 41.9 44.9 46.0

Cumulative Net Borrowing Requirement / (Investments)

3.4 15.9 4.4 5.8 3.0

3

Table 2: Balance Sheet Summary and Forecast including whole Future Schools Programme

The underlying need to borrow for capital purposes is measured by the Capital Financing Requirement (CFR), while usable reserves and working capital are the underlying resources available for investment. The Authority’s preferred strategy has been to maintain borrowing and investments below the levels indicated by CFR and Usable Reserves, sometimes known as internal borrowing, subject to holding a minimum investment balance required for operational purposes. However the Authority exhausted its ability to increase internal borrowing in 2012/13 and has since been periodically renewing a balance of short term Local Authority borrowing. At the date of this report the balance of such loans is £23m.

Without the full ‘Future schools’ program, the Authority has a fairly constant level of CFR due to the expenditure in the forward capital programme being offset by MRP payments. Renewal of borrowing as it matures will therefore need to continue through 2014/15.

CIPFA’s Prudential Code for Capital Finance in Local Authorities recommends that the Authority’s total debt should be lower than its highest forecast CFR over the next three years. Table 1 shows that the Authority expects to comply with this recommendation during 2014/15.

To assist with its long-term treasury management strategy, the Authority and its advisers have created a liability benchmark, which forecasts the Authority’s need to borrow over a 50 year period. Following on from the medium term forecasts in tables 1 and 2 above, the benchmark assumes:

capital expenditure funded by borrowing of £3,420,000 a year minimum revenue provision on new capital expenditure based on a 25 year asset life reserves are not utilised after the MTFP window ending 2017/18 income and expenditure increase by 2.5% inflation a year

Liability Benchmark – Including Raglan but excluding other future schools programme

End of Year Requirement: 2013/14 Estimate

£m

2014/15 Estimate

£m

2015/16 Estimate

£m

2016/17 Estimate

£m

2017/18 Estimate

£m

General Fund CFR 120.5 115.8 125.6 123.1 120.4

Less: External Borrowing (PWLB and LOBO) **

71.9 68.4 66.6 60.6 60.6

Less: Short Term Local Authority Borrowing

20.0 0.0 0.0 0.0 0.0

Less: Other Long Term Liabilities *

1.3 1.1 1.1 1.1 1.1

Cumulative Maximum External Borrowing Requirement

27.3 46.3 57.9 61.4 58.7

Less: Usable reserves 24.7 28.3 29.7 20.3 17.6

Cumulative Net Borrowing Requirement / (Investments)

2.6 18.0 28.2 41.1 41.1

4

Liability Benchmark - Monmouthshire County Council

0

20

40

60

80

100

120

140

2013 2018 2023 2028 2033 2038 2043 2048 2053 2058 2063

£m

Loans Borrowed

Liability Benchmark

Loans CFR

Liability Benchmark – Including whole Future Schools Programme

Liability Benchmark - Monmouthshire County Council

0

20

40

60

80

100

120

140

2013 2018 2023 2028 2033 2038 2043 2048 2053 2058 2063

£m Loans Borrowed

Liability Benchmark

Loans CFR

The Liability Benchmark Charts show:

Loans CFR - the Authorities need to borrow for capital expenditure purposes based on budgeted borrowing

Loans borrowed – actual loans taken out excluding short term loans and reducing as current long term loans mature

5

Liability Benchmark – The minimum level of external borrowing required to maintain a minimum level of cash, required for operational purposes.

From this it can be seen that without the extended ‘Future Schools’ program, about £10m of borrowing will be needed over the next one to two years and then again around 2021. This could be satisfied by short term borrowing.

With the extended ‘Future Schools’ program, borrowing will need to be increased by £10m - £45m peaking in 2026. This could be satisfied by a mix of short term and long term borrowing which would depend on interest rates achievable now and forecast into the future.

Borrowing Strategy

The Authority’s existing debt portfolio will total £91.9m as at 31st March 2014 [if no further borrowing is taken between now and year-end], an increase of £9.6m on the previous year, as part of the requirement for funding the capital programme. The balance sheet forecast in table 1 shows that excluding the impact of the future schools programme (Raglan Only) the Authority forecasts to borrow up to an additional £15.9m in 2014/15.

The Authority’s chief objective when borrowing money is to strike an appropriately low risk balance between securing low interest costs and achieving cost certainty over the period for which funds are required. The flexibility to renegotiate loans should the Authority’s long-term plans change is a secondary objective.

Given the significant cuts to public expenditure and in particular to local government funding, the Authority’s borrowing strategy continues to address the key issue of affordability without compromising the longer-term stability of the debt portfolio. With short-term interest rates currently much lower than long-term rates, it is likely to be more cost effective in the short-term to either use internal resources, or to borrow short-term loans instead.

By doing so, the Authority is able to reduce net borrowing costs (despite foregone investment income) and reduce overall treasury risk. Whilst such a strategy is most likely to be beneficial over the next 2-3 years as official interest rates remain low, it is unlikely to be sustained in the medium-term. The benefits of short-term borrowing will be monitored regularly against the potential for incurring additional costs by deferring borrowing into future years when long-term borrowing rates are forecast to rise. Arlingclose will assist the Authority with this ‘cost of carry’ and breakeven analysis. Its output may determine whether the Authority borrows additional sums at long-term fixed rates in 2014/15 with a view to keeping future interest costs low, even if this causes additional cost in the short-term.

It should be noted that as a result of this strategy that borrowing costs are expected to rise in the medium/long term without further future schools. Should the balance of the £80m future schools programme be approved they will rise significantly further.

In addition, the Authority may borrow short-term loans (normally for up to one month) to cover unexpected cash flow shortages.

The approved sources of long-term and short-term borrowing are:

• Public Works Loan Board • UK local authorities • any institution approved for investments (see below) • any other bank or building society authorised by the Prudential Regulation Authority to operate in the

UK

6

• UK public and private sector pension funds (except your local Pension Fund) • capital market bond investors • special purpose companies created to enable joint local authority bond issues.

The Authority has historically raised the majority of its long-term borrowing from the Public Works Loan Board, but it continues to consider other sources of finance, such as local authority loans and bank loans, that may be available at more favourable rates.

The Authority holds £13.6m of LOBO (Lender’s Option Borrower’s Option) loans where the lender has the option to propose an increase in the interest rate as set dates, following which the Authority has the option to either accept the new rate or to repay the loan at no additional cost. All of these LOBOS have options during 2014/15, and although the Authority understands that lenders are unlikely to exercise their options in the current low interest rate environment, there remains an element of refinancing risk. The Authority will take the option to repay LOBO loans at no cost if it has the opportunity to do so.

Short-term and variable rate loans leave the Authority exposed to the risk of short-term interest rate rises and are therefore subject to the limit on the net exposure to variable interest rates in the treasury management indicators below.

Debt Rescheduling: The PWLB allows authorities to repay loans before maturity and either pay a premium or receive a discount in order to achieve an overall saving or reduction in risk. The Authority is unlikely to take advantage of this due to its need to maintain or increase its existing level of borrowing.

Investment Strategy

The Authority holds a varying balance of invested funds, representing balances and reserves held plus income received in advance of expenditure. In the past 12 months, the Authority’s investment balance has ranged between £5 and £28 million with an average investment balance of £16 million. Investment levels are expected to reduce in the forthcoming year as the capital programme progresses.

Both the CIPFA Code and the WG Guidance require the Authority to invest its funds prudently, and to have regard to the security and liquidity of its investments before seeking the highest rate of return, or yield. The Authority’s objective when investing money is to strike an appropriate balance between risk and return, minimising the risk of incurring losses from defaults and the risk of receiving unsuitably low investment income.

The Authority may invest its surplus funds with any of the counterparties in table 3 below, subject to the cash and time limits shown.

7

Table 3 – Investment Counterparties – Specified Investments

Counterparty / Instrument

Instrument limit of

portfolio

Counterparty limit of portfolio

Country Limit

Group Limit Time Limit (Over 1 Year

= Non-Specified)

UK Central Government including Debt Mgt Account Deposit Facility, Gilts and T Bills, irrespective of credit ratings.

100% 100% N/A N/A 5 Years

Any investment with UK Local Authorities (irrespective of credit rating)

100% Lower of £7.5m or 15% of total

investments at the time of deposit

N/A 20% 2 Years

Investments with Banks, Building Societies, Other Organisations and Securities whose lowest published rating from Fitch, Moody’s and Standard and Poor’s is A-

As above but A

As above but A+

75% of total investments at

the time of deposit

For Non-UK 50% of total

investments at time of deposit

Lower of £7.5m or 15% of total

investments per counterparty at the time of deposit for

term deposit element. For instant

call accounts – a limit of £1.5m will

apply if total investments fall

below £10m

N/A 15% of total investments at the time of deposit

Also limit for total of

Negotiable Instruments

held in Brokers nominee accounts: 30% per Broker

1 Year

18mths

2 Years

Deposits with unrated UK Building Societies which have been assessed by our Treasury advisers as comparable with the Building Societies that have an A- credit rating or higher


the time of deposit

£1m N/A 15% of total investments at the time of deposit

1 Year

Money Market Funds with a Constant Net Asset Value (CNAV) or Variable Net Asset Value if assessed by our Treasury advisers as being of high credit worthiness


the time of deposit

10% of total investments rounded

up to the next £m not exceeding 0.50% of MMF size or 2% for Government MMFs.

N/A 15% Under the Same

Management

N/A

Pooled funds without credit ratings if assessed by our Treasury advisers


the time of

£2m per issuer N/A 20% of total investments

N/A

8

as being of high credit worthiness

deposit

Investments with UK Registered Providers (e.g. Housing Associations) where lowest published credit rating is A- or higher

20% of total investments

£2m per issuer N/A 15% of total investments

5 Years

.

There is no intention to restrict investments to bank deposits, and investments may be made with any public or private sector organisations that meet the above credit rating criteria. This reflects a lower likelihood that the UK and other governments will support failing banks as the bail-in provisions in the Banking Reform Act 2014 and the EU Bank Recovery and Resolution Directive are implemented.

In addition, the Authority may invest with organisations including Building Societies, Money market funds and pooled funds without credit ratings, following an external credit assessment and advice from the Authority’s treasury management adviser. Arlingclose do quarterly reviews of MMFs, annual reviews of building societies and regularly review pooled funds for their credit worthiness. This information is made available to the Authority.

Investment vehicles with the counterparties detailed in the table above are all considered to be Specified Investments with the exception of those investments with a maturity of above 12 months.

Investment Limits: The Authority’s revenue reserves available to cover investment losses are forecast to be £18 million on 31st March 2014. Available reserves include the Council Fund balance and earmarked reserves that are not ring-fenced by legislation, excluding Schools reserves, HRA balances and capital receipts.

Our investment balances are expected to be in the order of £0 to £10m during 2014/15 so the investment limits above should restrict the loss in the case of a single default to approximately 8% of available reserves.

A group of banks under the same ownership or a group of funds under the same management will be treated as a single organisation for limit purposes.

Current Account Bank: At the start of the 2013/14 financial year the Authority’s current accounts were held with the Co-operative bank. The Co-operative’s rating meant that the Authority would not consider it as an investment counterparty but continued to use the bank as a current account provider, keeping balances held overnight as close to nil as practical.

There were a number of key events during the year which heightened the risk of banking with the Co-operative so further precautions were taken as per advice issued by Arlingclose, ‘banking with lower rated institutions’. As part of this the Authority set-up a contingency current account with Barclays.

The Co-operative remains a weakly capitalised bank and they are showing no ongoing commitment to the local authority sector. Therefore the Authority made a decision to start an immediate tender process for a new banking provider.

9

Following the competitive tender exercise, Barclays were appointed as the Authority’s main banking provider and all efforts are being made for a complete transition to the new account in time for the commencement of the 2014/15 financial year.

Barclays is currently rated above the minimum A- rating in table 2. Should the credit ratings fall below A-, the Authority will review its use of the Barclays account in conjunction with its Treasury advisors and may chose to reduce overnight balances to nil.

Registered Providers: Formerly known as Housing Associations, Registered Providers of Social Housing are tightly regulated by the Homes and Communities Agency and Welsh Government and retain a high likelihood of receiving government support if needed. The Authority will consider investing with unrated Registered Providers with adequate credit safeguards, subject to receiving independent advice.

Building Societies: The Authority takes additional comfort from the building societies’ regulatory framework and insolvency regime where, in the unlikely event of a building society liquidation, the Authority’s deposits would be paid out in preference to retail depositors. The Authority will therefore consider investing with unrated building societies where independent credit analysis shows them to be suitably creditworthy. The Government has announced plans to amend the building society insolvency regime alongside its plans for wide ranging banking reform, and investments in lower rated and unrated building societies will therefore be kept under continuous review.

Money Market Funds: These funds are pooled investment vehicles consisting of money market deposits and similar instruments. They have the advantage of providing wide diversification of investment risks, coupled with the services of a professional fund manager. Fees of between 0.10% and 0.20% per annum are deducted from the interest paid to the Authority. Funds that offer same-day liquidity and aim for a constant net asset value will be used as an alternative to instant access bank accounts, while funds whose value changes with market prices and/or have a notice period will be used for longer investment periods. The requirement in this Treasury Strategy for Money market funds to have AAA ratings has been removed following EU proposals to stop money market funds from having credit ratings although at the time of writing credit ratings are still in use.

Other Pooled Funds: Table 1 above indicates that the Authority will continue to have substantial cash balances available for investment over the medium term. It will therefore consider using pooled funds containing bonds, equity and property assets that offer enhanced returns over the longer term, but are potentially more volatile in the shorter term. These allow the Authority to diversify into asset classes other than cash without the need to own and manage the underlying investments. Because these funds have no defined maturity date, but are available for withdrawal after a notice period, their performance and continued suitability in meeting the Authority’s investment objectives will be monitored regularly.

Other Organisations: The Authority may also invest cash with other organisations, for example by making loans to small businesses. Because of the higher perceived risk of unrated businesses, such investments may provide considerably higher rates of return. They will however only be made following a favourable external credit assessment and on the specific advice of the Authority’s treasury management adviser.

Risk Assessment and Credit Ratings: The Authority uses long-term credit ratings from the three main rating agencies Fitch Ratings, Moody’s Investors Service and Standard & Poor’s Financial Services to assess the risk of investment default. The lowest available counterparty credit rating will be used as a key measure of credit quality, unless an investment-specific rating is available. Credit ratings are obtained and monitored by the Authority’s treasury advisers, who will notify changes in ratings as they occur. Where an entity has its credit rating downgraded so that it fails to meet the approved investment criteria as in table 3 above then:

• no new investments will be made, • any existing investments that can be recalled or sold at no cost will be, and

10

• full consideration will be given to the recall or sale of all other existing investments with the affected counterparty.

Where a credit rating agency announces that a [A-] rating is on review for possible downgrade (also known as “rating watch negative” or “credit watch negative”) so that it may fall below the approved rating criteria, then only investments that can be withdrawn [on the next working day] will be made with that organisation until the outcome of the review is announced. This policy will not apply to negative outlooks, which indicate a long-term direction of travel rather than an imminent change of rating.

Other Information on the Security of Investments: The Authority understands that credit ratings are good, but not perfect, predictors of investment default. Full regard will therefore be given to other available information on the credit quality of the organisations in which it invests, including credit default swap prices, financial statements, information on potential government support and reports in the quality financial press. No investments will be made with an organisation if there are substantive doubts about its credit quality, even though it may meet the credit rating criteria.

When deteriorating financial market conditions affect the creditworthiness of all organisations, as happened in 2008 and 2011, this is not generally reflected in credit ratings, but can be seen in other market measures. In these circumstances, the Authority will restrict its investments to those organisations of higher credit quality and reduce the maximum duration of its investments to maintain the required level of security. The extent of these restrictions will be in line with prevailing financial market conditions. If these restrictions mean that insufficient commercial organisations of high credit quality are available to invest the Authority’s cash balances, then the surplus will be deposited with the UK Government, via the Debt Management Office for example, or with other local authorities. This will cause a reduction in the level of investment income earned, but will protect the principal sum invested.

Specified Investments: The WG Guidance defines specified investments as those:

• denominated in pound sterling, • due to be repaid within 12 months of arrangement, • not defined as capital expenditure by legislation, and • invested with one of:

o the UK Government, o a UK local authority, parish council or community council, or o a body or investment scheme of “high credit quality”.

The Authority defines “high credit quality” organisations as those having a credit rating of [A-] or higher that are domiciled in the UK or a foreign country with a sovereign rating of [AA+] or higher or those reviewed by the Authority’s Treasury team and the Authorities treasury advisors and deemed to be of equivalent credit worthiness based on other market measures.

MMF’s will continue to be ‘specified investments’ until such point that regulatory change removes the underlying AAA credit rating. At that point they would require re-assessment by our advisers to be classified as ‘specified’ as of high credit quality.

Non-specified Investments: Any investment not meeting the definition of a specified investment is classed as non-specified. The Authority does not intend to make any investments denominated in foreign currencies. Non-specified investments will therefore be limited to long-term investments, i.e. those that are due to mature 12 months or longer from the date of arrangement; those that are defined as capital expenditure by legislation, such as some pooled fund; and investments with bodies and schemes not meeting the definition on high credit quality.

The Authority limits its total Non-specified Investment balance to £6m at any one time.

11

Approved Instruments: The Authority may lend or invest money using any of the following instruments:

• interest-bearing bank accounts, • fixed term deposits and loans, • callable deposits and loans where the Authority may demand repayment at any time (with or without

notice), • callable deposits and loans where the borrower may repay before maturity, • certificates of deposit, • bonds, notes, bills, commercial paper and other marketable instruments, and • shares in money market funds and other pooled funds.

Investments may be made at either a fixed rate of interest, or at a variable rate linked to a market interest rate, such as LIBOR, subject to the limits on interest rate exposures below.

Liquidity management: The Authority uses purpose-built cash flow forecasting spreadsheets to determine the maximum period for which funds may prudently be committed. The forecast is compiled on a pessimistic basis, with receipts under-estimated and payments over-estimated to minimise the risk of the Authority being forced to borrow on unfavourable terms to meet its financial commitments. Limits on long-term investments are set by reference to the Authority’s medium term financial plan and cash flow forecast.

12

Treasury Management Indicators

The Authority measures and manages its exposures to treasury management risks using the following indicators.

Interest Rate Exposures: This indicator is set to control the Authority’s exposure to interest rate risk. The upper limits on fixed and variable rate interest rate exposures, expressed as the amount of net principal borrowed will be:

Existing Level

31.12.13 £m

2013/14 Approved

£m 2014/15

£m 2015/16

£m 2016/17

£m 2017/18

£m Upper limit on fixed interest rate exposure on debt

82.7 83.6 108.0 111.0 114.0 118.0

Variable Interest Rate exposure on Debt

13.5

Variable Interest Rate exposure on Investments

13.0

Upper limit on Net Variable Interest Rate Exposure on Debt & Investments

0.5 45 45 45 45 45

Fixed rate investments and borrowings are those where the rate of interest is fixed for the whole financial year. Instruments that mature during the financial year are classed as variable rate.

Maturity Structure of Fixed Rate Borrowing: This indicator is set to control the Authority’s exposure to refinancing risk. The upper and lower limits on the maturity structure of fixed rate borrowing will be:

Lower Limit for 2013/14

%

Upper Limit for 2013/14

%

Estimated Level at 31/03/14 % - £m

Lower Limit for 2014/15

%

Upper Limit for 2014/15

%

Under 12 months – LOBO’s 0 50

21.46% ‐ £13.6m 0 50

Under 12 months – Other 13.40% ‐ £8.5m 0

12 months and within 24 months 0 40 2.80% ‐ £1.8m 0 40

24 months and within 5 years 0 45 11.51% ‐ £7.3m 0 45

5 years and within 10 years 0 30 14.66% ‐ £9.3m 0 30

10 years and above

0 100

36.17% ‐ £22.9m 0

100

Time periods start on the first day of each financial year. The maturity date of borrowing is the earliest date on which the lender can demand repayment.

Principal Sums Invested for Periods Longer than 364 days: The purpose of this indicator is to control the Authority’s exposure to the risk of incurring losses by seeking early repayment of its investments. The limits on the total principal sum invested in maturities over 364 days will be:

13

Upper Limit for total principal sums invested

over 364 days

2013/14 Approved

£m

2013/14 Revised

£m

2014/15 Estimate

£m

2015/16 Estimate

£m

2016/17 Estimate

£m

2017/18 Estimate

£m

Total 6.0 6.0 6.0 6.0 6.0 6.0

Estimates of Capital Expenditure

The actual capital expenditure (excluding vehicle leasing) that was incurred in 2012/13 and the estimates of capital expenditure to be incurred for the current year and future years that are recommended for approval are:

2012/13 Actual

£m

2013/14 Estimate

£m

2014/15 Estimate

£m

2015/16 Estimate

£m

2016/17 Estimate

£m

2017/18 Estimate

£m Capital Expenditure

21.7 23.6 17.8 6.7 5.5 5.4

The estimate of capital expenditure for the 2013/14 and 2014/15 financial years includes allowance for slippage of expenditure from the 2013/14 capital programme that was forecast at month 8 capital monitoring. The figures above do not include capital expenditure relating to vehicle leasing. As stated in the Capital Programme Budget Proposals the medium term programme has been drafted, and a programme constructed for the next four years. There will be opportunity for the programme to be reviewed annually. Ratio of financing costs to net revenue stream

Estimates of the ratio of financing costs to net revenue stream for the current and future years, and the actual figures for 2012/13 are:

2012/13 Actual

%

2013/14 Estimate

%

2014/15 Estimate

%

2015/16 Estimate

%

2016/17 Estimate

%

2017/18 Estimate

% Ratio of financing costs to net revenue stream

5.80 5.79 6.36 5.95 5.90 5.89

The estimates of financing costs include current commitments and the proposals in this budget report and are based on the actual and anticipated borrowing, net of investments. Capital Financing Requirement

Estimates of the end of year Capital Financing Requirement for the Authority for the current and future years and the actual Capital Financing Requirement at 31 March 2013 are:

14

2012/13 Actual

£m

2013/14 Estimate

£m

2014/15 Estimate

£m

2015/16 Estimate

£m

2016/17 Estimate

£m

2017/18 Estimate

£m Capital Financing Requirement

111.3 120.5 115.8 114.1 112.4 110.7

The Capital Financing Requirement measures the authority’s underlying need to borrow for capital purposes. In accordance with best professional practice, Monmouthshire County Council does not associate borrowing with particular items or types of expenditure, other than under its current policy for determining its Minimum Revenue Provision. The authority has an integrated treasury management strategy (last approved on 28th February 2013 by Council) and has adopted the CIPFA Code of Practice for Treasury Management in the Public Services. The Council manages its treasury position in terms of its borrowings and investments in accordance with its approved treasury management strategy and practices. In day-to-day cash management, no distinction can be drawn between revenue and capital cash. External borrowing arises as a consequence of all the financial transactions of the authority and not simply those arising from capital spending. In contrast, the Capital Financing Requirement reflects the authority’s underlying need to borrow for a capital purpose. CIPFA’s Prudential Code for Capital Finance in Local Authorities includes a key indicator of prudence where Net External Borrowing does not, except in the short term exceed the total of Capital Financing Requirement. This is the case for the preceding year plus the estimates of any Capital Financing Requirement for the current and next two financial years. Net external borrowing is the borrowing budgeted to finance the capital program (Gross External borrowing) offset by the levels of cash and investments.

2012/13

Actual

£m

2013/14

Estimate

£m

2014/15

Estimate

£m

2015/16

Estimate

£m

2016/17

Estimate

£m

2017/18

Estimate

£m

Net External borrowing 74.5 91.9 80.4 67.1 62.5 59.7

Gross External borrowing 82.3 96.4 107.6 111.0 114.4 117.8

Capital Financing Requirement

111.3 120.5 115.8 114.1 112.4 110.7

The Head of Finance, as the Authority’s S151 officer, reports that the Authority had no difficulty meeting this requirement in 2012/13, nor are any difficulties envisaged for the current or future years. This view takes into account current commitments, existing plans, and the proposals in this budget report.

Authorised Limit for External Borrowing

In respect of external debt, it is recommended that the Council approves the following Authorised Limit for its total external debt gross of investments for the next four financial years.

15

2012/13

Actual

£m

2013/14

Estimate

£m

2014/15

Estimate

£m

2015/16

Estimate

£m

2016/17

Estimate

£m

2017/18

Estimate

£m

Borrowing 108.3 122.4 134.6 134.0 137.4 140.8

Other long term liabilities

2.8 3.0 2.6 2.6 2.6 2.6

Total 111.1 125.4 137.2 136.6 140.0 143.4

These limits separately identify borrowing from other long-term liabilities. The Council is asked to approve these limits and to delegate authority to the Head of Finance, within the total limit for any year, to effect movement between the separately agreed limits of borrowing and other long-term liabilities, in accordance with option appraisal and best value for money for the authority. Any such changes made will be reported to the Audit Committee or Council at the next opportunity following the change.

These limits are consistent with the authority’s current commitments, existing plans and the proposals in this budget report for capital expenditure and financing, and with its approved treasury management policy statement and practices. They are based on the estimate of the most likely, prudent but not worse case scenario, with sufficient headroom over and above this to allow for operational management, for example unusual cash movements.

Operational Boundary for External Debt

The Council is also asked to approve the following Operational Boundary for external debt for the same period.

2012/13

Actual

£m

2013/14

Estimate

£m

2014/15

Estimate

£m

2015/16

Estimate

£m

2016/17

Estimate

£m

2017/18

Estimate

£m

Borrowing 84.3 98.4 113.6 113.0 116.4 119.8

Other long term liabilities

1.4 1.3 1.1 1.1 1.1 1.1

Total 85.7 99.7 114.7 114.1 117.5 120.9

The proposed Operational Boundary for external debt is based on the same estimates as the Authorised Limit but reflects the estimate of the most likely, prudent but not worst case scenario, without the additional headroom included within the Authorised Limit to allow, for example, for unusual cash movements and equates to the maximum of external debt projected by this estimate. The Operational Boundary represents a key management tool for in-year monitoring by the Head of Finance. Within the Operational Boundary, figures for borrowing and other long-term liabilities are separately identified. The Council is asked to delegate authority to the Head of Finance, within the total Operational Boundary for any individual year, to effect movement between the separately agreed figures for borrowing

16

and other long term liabilities, in a similar fashion to the Authorised Limit. Any such changes will be reported to the Audit Committee or Council at the next opportunity following the change.

The Council’s actual external debt at 31 March 2013 was £85.7 million, comprising £84.3 million borrowing and £1.4 million other long-term liabilities. It should be noted that the actual external debt is not directly comparable to the Authorised Limit and Operational Boundary, since the actual external debt reflects the position at one point in time.

In taking its decisions on this budget report, the Council is asked to note that the Authorised Limit determined for 2014/15 would be the statutory limit determined under section 3(1) of the local Government Act 2003.

Incremental impact of new capital investment decisions on Council Tax

A key measure of affordability is the incremental impact on the Council Tax, and the Council should consider different options for its capital investment programme in relation to their differential impact on the Council Tax. The incremental impact works on the basis that supported borrowing is funded through Revenue Support Grant. The calculation is therefore determined by establishing the revenue impact of:

Unsupported borrowing – in terms of interest payments and the statutory Minimum Revenue Provision (MRP)

Any revenue savings or costs that have been identified and that will result from capital schemes being delivered

The current capital budget proposals, using current information available, would have the following impact:

2012/13 Actual £ p

2013/14 Estimate

£ p

2014/15 Estimate

£ p

2015/16 Estimate

£ p

2016/17 Estimate

£ p

2017/18 Estimate

£ p Effect on Band D Council Tax

18.30 23.38 17.33 1.92 1.91 1.91

The notable incremental impact in 2014/15 is due to the high level of capital works schemes funded by unsupported borrowing.

Other Items

There are a number of additional items that the Authority is obliged by CIPFA or WG to include in its Treasury Management Strategy.

Policy on Use of Financial Derivatives: In the absence of any legal power to do so, the Authority will not use standalone financial derivatives (such as swaps, forwards, futures and options). Derivatives embedded into

17

loans and investments may be used, and the risks that they present will be managed in line with the overall treasury risk management strategy.

Investment Training: The needs of the Authority’s treasury management staff for training in investment management are assessed every three months as part of the staff appraisal process, and additionally when the responsibilities of individual members of staff change.

Staff regularly attend training courses, seminars and conferences provided by Arlingclose and CIPFA. Relevant staff are also encouraged to study professional qualifications from CIPFA, the Association of Corporate Treasurers and other appropriate organisations.

Investment Advisers: The Authority has appointed Arlingclose Limited as treasury management advisers and receives specific advice on investment, debt and capital finance issues. The quality of this service is assessed at the contract tender stage by comparing to other market leaders and their historical track record. It is then monitored by on-going interaction with internal Treasury personnel. The Authority maintains the quality of the service with its advisors by holding quarterly meetings and tendering periodically.

Investment of Money Borrowed in Advance of Need: The Authority may, from time to time, borrow in advance of need, where this is expected to provide the best long term value for money. Since amounts borrowed will be invested until spent, the Authority is aware that it will be exposed to the risk of loss of the borrowed sums, and the risk that investment and borrowing interest rates may change in the intervening period. These risks will be managed as part of the Authority’s overall management of its treasury risks.

Financial Implications

The budget for investment income in 2014/15 is £25,000, based on an average investment portfolio of £5 million at an interest rate of 0.50%. The budget for debt interest paid in 2014/15 is £3.7 million, based on an average interest rate of 4.1%. If actual levels of investments and borrowing, and actual interest rates differ from those forecast, performance against budget will be correspondingly different.

Other Options Considered

The WG Guidance and the CIPFA Code do not prescribe any particular treasury management strategy for local authorities to adopt. The Head of Finance, the S151 Officer, having consulted the Cabinet Member for Finance, believes that the above strategy represents an appropriate balance between risk management and cost effectiveness. Some alternative strategies, with their financial and risk management implications, are listed below.

Alternative Impact on income and expenditure

Impact on risk management

Invest in a narrower range of counterparties and/or for shorter times

Interest income will be lower Reduced risk of losses from credit related defaults

Invest in a wider range of counterparties and/or for longer times

Interest income will be higher Increased risk of losses from credit related defaults

Borrow additional sums at long-term fixed interest rates

Debt interest costs will rise; this is unlikely to be offset by higher investment income

Higher investment balance leading to a higher impact in the event of a default; however long-term interest costs will be more certain

Borrow short-term or variable Debt interest costs will initially Increases in debt interest costs

18

loans instead of long-term fixed rates

be lower will be broadly offset by rising investment income in the medium term, but long term costs will be less certain

Reduce level of borrowing Saving on debt interest is likely to exceed lost investment income

Reduced investment balance leading to a lower impact in the event of a default; however long-term interest costs will be less certain

19

Annex A – Arlingclose Economic & Interest Rate Forecast [December] 2013

Underlying assumptions: Growth continues to strengthen with the second estimate for Q3 growth coming in at an unrevised 0.8%.

The service sector remains the main driver of growth, boosted by a contribution from construction.

The unemployment rate has fallen to 7.1%. The pace of decline in this measure will be dependent on a slower expansion of the workforce than the acceleration in the economy, alongside the extent of productivity.

The CPI for November has fallen to 2.1%, a much more comfortable position for the MPC. Utility price increases are expected to keep CPI above the 2% target in 2014, before falling back again.

The principal measure in the MPC’s Forward Guidance on interest rates is the Labour Force Survey (LFS) unemployment rate. The MPC intends not to raise the Bank Rate from its current level of 0.5% at least until this rate has fallen to a threshold of 7%.

The reduction in uncertainty and easing of credit conditions have begun to unlock demand, much of which has fed through to the housing market. In response to concerns over a house price bubble, the Bank of England announced a curtailment of the Funding for Lending Scheme, which will henceforth concentrate on business lending only.

The MPC will not hesitate to use macro prudential and regulatory tools to deal with emerging risks (such as curtailing the FLS). Absent risks to either price stability or financial stability, the MPC will only tighten policy when it is convinced about the sustained durability of economic growth.

Federal Reserve monetary policy expectations - the slowing in the pace of asset purchases ('tapering') and the end of further asset purchases - will remain predominant drivers of the financial markets. Tapering of asset purchases will begin in Q1 2014. The US political deadlock over the debt ceiling will need resolving in Q1 2014.

The European backstop mechanisms have lowered the risks of catastrophic meltdown. The slightly more stable economic environment at the aggregate Eurozone level could be undone by political risks and uncertainty in Italy, Spain and Portugal (doubts over longevity of their coalitions). The ECB has discussed a third LTRO, as credit conditions remain challenging for European banks.

China data has seen an improvement, easing markets fears. Chinese leaders have signalled possible monetary policy tightening.

On-going regulatory reform and a focus on bail-in debt restructuring is likely to prolong banking sector deleveraging and maintain the corporate credit bottleneck.

Forecast:

Our projected path for short term interest rates remains flat. Markets are still pricing in an earlier rise in rates than warranted under Forward Guidance and the broader economic backdrop. The MPC will not raise rates until there is a sustained period of strong growth. However, upside risks weight more heavily at the end of our forecast horizon.

We continue to project gilt yields on an upward path through the medium term. The recent climb in yields was overdone given the soft fundamental global outlook and risks surrounding the Eurozone, China and US.

20

Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16

Official Bank Rate

Upside risk 0.25 0.25 0.25 0.25 0.25 0.50 0.50 0.50 0.75 0.75 0.75 1.00

Arlingclose Central Case 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50

Downside risk -0.25 -0.25 -0.25 -0.25 -0.25 -0.25 -0.25 -0.25 -0.25 -0.25

3-month LIBID rate

Upside risk 0.20 0.25 0.30 0.35 0.40 0.50 0.55 0.60 0.65 0.70 0.75 0.80 0.80


Downside risk -0.25 -0.25 -0.25 -0.30 -0.30 -0.30 -0.35 -0.40 -0.45 -0.50 -0.55 -0.55 -0.55

1-yr LIBID rate

Upside risk 0.35 0.30 0.35 0.40 0.45 0.50 0.60 0.70 0.75 0.75 0.75 0.80 0.80


Downside risk -0.25 -0.25 -0.25 -0.30 -0.35 -0.40 -0.45 -0.50 -0.50 -0.50 -0.50 -0.50 -0.50

5-yr gilt yield

Upside risk 0.50 0.75 0.75 0.75 0.85 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00


Downside risk -0.50 -0.50 -0.50 -0.50 -0.55 -0.60 -0.60 -0.60 -0.65 -0.75 -0.80 -0.80 -0.80

10-yr gilt yield

Upside risk 0.50 0.50 0.50 0.65 0.75 0.85 1.00 1.00 1.00 1.00 1.00 1.00 1.00


Downside risk -0.50 -0.50 -0.50 -0.50 -0.55 -0.60 -0.60 -0.60 -0.65 -0.75 -0.80 -0.80 -0.80

20-yr gilt yield

Upside risk 0.50 0.75 0.75 0.75 0.85 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00


Downside risk -0.50 -0.50 -0.50 -0.50 -0.55 -0.60 -0.60 -0.60 -0.65 -0.70 -0.75 -0.80 -0.80

50-yr gilt yield

Upside risk 0.50 0.75 0.75 0.75 0.75 0.75 1.00 1.00 1.00 1.00 1.00 1.00 1.00


Downside risk -0.50 -0.50 -0.50 -0.50 -0.55 -0.60 -0.60 -0.60 -0.65 -0.70 -0.75 -0.80 -0.80

21

Annex B – Existing Investment & Debt Portfolio Position

31/12/2013

Actual Portfolio

£m

External Borrowing:

PWLB – Fixed Rate

PWLB – Variable Rate

Local Authorities

LOBO Loans

Total External Borrowing

44.0

15.3

23.3

13.6

96.2

Other Long Term Liabilities: 1.4

Total Gross External Debt 97.6

Investments:

Managed in-house

Short-term investments

13.0

Total Investments 13.0

Net Debt 84.6

22

Annex C - MRP Statement 2014/15

The Welsh Government’s Guidance on Minimum Revenue Provision (issued in 2010) places a duty on local authorities to make a prudent provision for debt redemption. Guidance on Minimum Revenue Provision has been issued by the Welsh Ministers and local authorities are required to “have regard” to such Guidance under section 21(1A) of the Local Government Act 2003.

The four MRP options available are:

‐ Option 1: Regulatory Method ‐ Option 2: CFR Method ‐ Option 3: Asset Life Method ‐ Option 4: Depreciation Method

Note: This does not preclude other prudent methods.

MRP in 2014/15:

Options 1 and 2 may be used only for supported (i.e. financing costs deemed to be supported through Revenue Support Grant from Central Government) Non-HRA capital expenditure funded from borrowing. Methods of making prudent provision for unsupported Non-HRA capital expenditure include Options 3 and 4 (which may also be used for supported Non-HRA capital expenditure if the Authority chooses).

The MRP Statement will be submitted to Council before the start of the 2014/15 financial year. If it is ever proposed to vary the terms of the original MRP Statement during the year, a revised statement should be put to Authority at that time.

The Authority will apply Option 2 in respect of supported capital expenditure funded from borrowing and Option 3 in respect of unsupported capital expenditure funded from borrowing. There are 2 calculation methods which are available within option 3.

The equal instalment method and

The annuity method – whereby the MRP is the principal element for the year of the annuity required to repay the capital expenditure over the life of the asset

The equal instalment method will tend to be the default calculation, unless the borrowing involves an annuity aspect.

MRP in respect of leases and Private Finance Initiative schemes brought on Balance Sheet under the CIPFA Accounting Code of Practice will match the annual principal repayment for the associated deferred liability.

1

Appendix 2

TREASURY MANAGEMENT POLICY STATEMENT 2014/15

1. INTRODUCTION AND BACKGROUND

1.1 The Council adopts the key recommendations of CIPFA’s Treasury Management in the Public Services: Code of Practice (the Code), as described in Section 5 of the Code.

1.2 Accordingly, the Council will create and maintain, as the cornerstones for effective treasury management:-

A treasury management policy statement, stating the policies, objectives and approach to risk management of its treasury management activities

Suitable treasury management practices (TMPs), setting out the manner in which the Council will seek to achieve those policies and objectives, and prescribing how it will manage and control those activities.

1.3 The Council (i.e. full Council) will receive reports on its treasury management policies, practices and activities including, as a minimum, an annual strategy and plan in advance of the year, and an annual report after its close.

1.4 The Council delegates responsibility for the implementation and monitoring of its treasury management policies and practices to the Audit Committee and for the execution and administration of treasury management decisions to Head of Finance (S151 officer), who will act in accordance with the organisation’s policy statement and TMPs and CIPFA’s Standard of Professional Practice on Treasury Management.

1.5 The Council nominates Audit Committee to be responsible for ensuring effective scrutiny of the treasury management strategy and policies and they will receive the mid year report on Treasury Management activities.

2. POLICIES AND OBJECTIVES OF TREASURY MANAGEMENT ACTIVITIES

2.1 The Council defines its treasury management activities as:

2

“The management of the Council’s investments and 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 This 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, and any financial instruments entered into to manage these risks.

2.3 This Council acknowledges that effective treasury management will provide support towards the achievement of its business and service objectives. It is therefore committed to the principles of achieving value for money in treasury management, and to employing suitable performance measurement techniques, within the context of effective risk management.”

As CIPFA states the policy statement should also include the Council’s high level policies for borrowing and investments:

2.4 The Council’s borrowing will be affordable, sustainable and prudent and consideration will be given to the management of interest rate risk and refinancing risk. The source from which the borrowing is taken and the type of borrowing should allow the Council transparency and control over its debt.

2.5 The Council’s primary objective in relation to investments remains the security of capital. The liquidity or accessibility of the Authority’s investments followed by the yield earned on investments remain important but are secondary considerations.

3. Approach to Risk Management 3.1 This section identifies the risks that the Council faces as a result of it undertaking treasury management activities.

Liquidity risk Credit (or counterparty) risk Interest rate risk Inflation rate risk Exchange rate risk Market risk Refinancing risk Procedural risk Legal and regulatory risk

The Council manages these down to an acceptable level within the regulatory framework through the consideration and application of its Treasury Strategy and appropriate monitoring against agreed prudential indicators and limits.

Documents

Monmouthshire County Council Budget Book · The budget is presented in accordance with the internal structure that mirrors the directorate structure set by Cabinet. Within each portfolio