DD2180 Treasury Management - Consultancy Advice

Type of decision: 
Director's decision
Code: 
DD2180
Date signed: 
13 November 2017
Decision by: 
Martin Clarke, Executive Director of Resources

Executive summary

MD1634 approved the GLA entering an arrangement to discharge treasury services to the London Borough of Haringey. MD 2156 approved the GLA to contract directly with a Financial Services Market Act 2000 authorised firm for one year to provide certain services relating to the Group Investment Syndicate and the treasury management services being provided by the GLA to the LB Haringey. Meanwhile, changes to local government investment regulations are strongly encouraging the development of an integrated approach to investment management and capital spending. This DD seeks authority to incur expenditure of up to £50,000 on consultancy advice to ensure the GLA’s treasury function is fit for purpose for the new arrangements arising from the expansion of the service to London Boroughs and the need to integrate the approach to treasury investment with the GLA’s wider investment activity.

Decision

That the Executive Director of Resources approves expenditure of up to £50,000 on consultancy advice from Capita, including any of its contractors, to ensure the GLA’s treasury function is fit for purpose for the new arrangements arising from the expansion of the service to London Boroughs.

Part 1: Non-confidential facts and advice

Introduction and background

1.1    MD1634 approved the GLA entering an arrangement to discharge treasury services to the London Borough of Haringey. MD 2156 approved the GLA to contract directly with a Financial Services Market Act (FSMA) 2000 authorised firm for one year to provide certain services relating to the Group Investment Syndicate (GIS) and the treasury management services being provided by the GLA to the LB Haringey.

1.2    The GIS syndics have agreed to admit LB Haringey to the GIS and LB Haringey is in the process of agreeing to formally join the GIS. Arrangements to enter into a contract with the interim FSMA 2000 authorised firm are underway with a view that the first investment transactions through such a firm will take place before the end of this calendar year. The GLA is aware of significant interest and opportunities from other London Boroughs.

1.3    The GLA’s treasury function has grown from managing c£50m of cash and no debt in 2010-11 to currently managing £3bn of cash and more than £4bn of borrowings in 2017-18. The review will establish whether the GLA’s resources and systems are appropriate for the current level of activity and whether the function is fit for purpose and properly positioned to expand as envisaged.

1.4    The GLA has also, principally through its Housing and Land function, begun significant levels of direct investments in property and un-rated organisations, including the establishment of a revolving fund. Other direct investments are made through Regeneration and Green Funds. The review will assist the integration of these activities with the GLA’s overall financial strategy, with the aim of maximising synergies and obtaining clear oversight of overall financial risk and return.

1.5    A detailed specification for the review is set out at the Appendix to this Decision. In summary, it is envisaged that the review would cover the:

•    oversight and governance arrangements;

•    required resourcing levels, and recruitment and retention strategies;

•    integration of treasury and non-treasury investment strategies;

•    compliance and assurance arrangements, including Treasury Management Practices; and

•    systems requirements.

1.6    The GLA’s existing Treasury Advisor, Capita, is well positioned to lead such a review but in view of the complexity and expertise required it is envisaged that Capita would sub-contract certain aspects of the specification to specialist companies. The existing Capita contract allows the GLA to draw down consultancy advice on treasury matters as required.
 

Objectives and expected outcomes

2.1    It is envisaged that the consultancy advice would help determine how the GLA could ensure that the treasury function is fit for purpose for both current activities and the new arrangements proposed.

Equality comments

3.1    Under Section 149 of the Equality Act 2010, as a public authority, the Mayor of London in the exercise of its functions must have ‘due regard’ of the need to eliminate unlawful discrimination, harassment and victimisation as well as to advance equality of opportunity and foster good relations between people who have a protected characteristic and those who do not.

3.2    There are no direct equality implications arising from this Decision. The expansion of the GIS would assist the delivery of pan-London GLA regeneration initiatives, which in turn would help promote the Mayor’s policies on Equality, Diversity, Inclusion, Social Mobility and Social Integration.

Other considerations

N/A

Financial comments

5.1 The estimated costs of up to £50,000 can be contained within the overall Group Finance budget.

Planned delivery approach and next steps

Activity

Timeline

Delivery Start Date

Mid- November

Delivery End Date

Early December


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