Magazine article Public Finance

Innovate to Accumulate

Magazine article Public Finance

Innovate to Accumulate

Article excerpt

In an era of ever-tightening funding, innovative approaches to treasury management can provide important opportunities for local authorities. One council's approach has wielded particular returns - as well as the coveted Pensions, Treasury and Asset Management Award at the 2019 Public Finance Awards.

The London Borough of Bromley receives lower-than-a-verage government funding levels and also has a below-average council tax. It is facing growing challenges in delivering income and savings, given that its cost base is already low.

Treasury management resources reflected around £25om-£300m in 2018-19, and the focus has always been on security, liquidity and yield. However, a strategy review of ways of increasing income while managing the overall risk for any longer-term investments, including any liquidity considerations, led the council to consider new opportunities for investment.

In 2012, the director of finance commenced the first review of the authority's asset allocation strategy in over 15 years. A subsequent analysis was completed in April 2017 to reflect changing circumstances.

From there, the council explored alternatives to investments that had previously been based on mainly fixed-term deposits, available from banks, building societies or other local authorities. It then introduced an "alternative investment" allocation of £100m over three to five years.

A fund of £100m was created for acquisition of investment properties without borrowing. …

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