Lancashire County Council Logo
My location

Your location enables us to provide information about services in your area.

Treasury management

Policies, objectives and approach to risk management of our treasury management activities

Our treasury management activities

Our treasury management activities are:

  • the management of our investments and cash flows,
  • our 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. 

Risk appetite

Our appetite for risk in terms of its treasury management activities is low. A premium is placed on the security of capital in terms of investment and on the maintenance of financial stability in terms of the costs of borrowing.

Risk management

We regard 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 how the actions taken and the financial instruments entered into result in reduced risk exposure for us.

Value for money

We acknowledge that effective treasury management provides support towards the achievement of our business and service objectives. We are therefore committed to the principles of achieving value for money in treasury management, and to employing suitable comprehensive performance measurement techniques, within the context of effective risk management.

Borrowing policy

We greatly value revenue budget stability and therefore, all other things being equal, will borrow the majority of its long-term funding needs at long-term fixed rates of interest. However, short-term and variable rate loans may be borrowed to either offset short-term and variable rate investments or to provide value for money. We will also constantly evaluate debt restructuring opportunities of the existing portfolio.

We will set an affordable borrowing limit each year in compliance with the Local Government Act 2003, and will have regard to the CIPFA Prudential

Code for Capital Finance in Local Authorities when setting that limit. It will also set limits on its exposure to changes in interest rates and limits on the maturity structure of its borrowing in the treasury management strategy report each year.

Cash backing of reserves

We are committed to the prudent management of our finances. In pursuit of this objective we should ensure that we hold investment balances sufficient to meet the value of those balance sheet items such as reserves and provisions which will be drawn down as cash. These investment balances will have due regard to the anticipated timing for the drawdown of the cash backed reserves and provisions.

Investment policy

Our primary objectives for the investment of our surplus funds are to protect the principal sums invested from loss, and to ensure adequate liquidity so that funds are available for expenditure when needed. The generation of investment income to support the provision of local authority services is an important, but secondary, objective.

We will have regard to the Communities and Local Government Guidance on Local Government Investments and will approve an investment strategy each year as part of the treasury management strategy. The strategy will set criteria to determine suitable organisations with which cash may be invested, limits on the maximum duration of such investments and limits on the amount of cash that may be invested with any one organisation.

Treasury management strategy

Treasury Management Strategy 2014/15 (203 KB PDF)