Purpose and scope
The purpose of this policy recognises the importance of prudently investing any temporary surplus funds held on behalf of SALC member councils. It sets out our objectives, practices and reporting arrangements for effective management and control of treasury activities and associated risks.
Responsibilities
The SALC Board owns this policy and will review annually and update as necessary. On a day-to-day basis all members of the team shall be responsible for following procedures and processes and highlighting any updates or amendments necessary to ensure continual improvement.
Investment objectives
When considering investment options, SALC’s priorities will be centred on:
-
security of reserves (protecting the capital sum from loss)
-
liquidity of its investments (keeping the money readily available for expenditure when needed)
-
return – depending on the investment options available at the time, and
-
where possible, consideration of ethical investment opportunities that seek to contribute positively to the environment taking into account yield .
Specified investments
Specified investments are those offering high security and liquidity, made in Sterling and with a maturing of no more than a year. Such short-term investments will automatically be Specified Investments as will those with bodies or investment schemes of “high credit quality”.[1]
For the prudent management of its treasury balances, maintain sufficient levels of security and liquidity, SALC will use deposits with UK Banks, UK Building Societies, UK local authorities or other UK public authorities.
[1] A credit rating agency is defined in Statutory Guidance on Local Government Investments (3 rd edition) as one of the following three companies: Standard and Poor’s, Moody’s Investors Service Ltd and Fitch Ratings Limited
Non-specified investments
These investments have greater potential risk and given the unpredictability and uncertainties surrounding such investments, SALC will not use this type of investment.
Liquidity of investments
Subject to retaining no less than three months’ average working capital requirement in current and deposit accounts giving immediate access, the SALC CEO will determine the amounts and maximum period for which funds may be prudently invested, in accordance with non-specified investments as above, so as not to compromise liquidity.
The placement of surplus funds shall be delegated to the CEO and reviewed annually by the SALC Board as part of the budget-setting process.
Credit ratings will be monitored at annually and if the credit rating falls during that period, the CEO in consultation with the Chair of the SALC Board, shall decide on appropriate action.
Long-term investments
Long-term investments are defined in Statutory Guidance [2] as greater than 12 months and requires that any investment greater than 12 months must be accompanied by procedures for monitoring, assessing and mitigating the risk of loss of invested sums.
SALC does not current hold any funds in long-term investments. No long-term investments are envisaged during the financial year 2024-25.
Changes to this policy
This is a controlled document and is the responsibility of the SALC Board and is reviewed annually.