DD2180 Treasury Management – Consultancy Advice

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.

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.

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.

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.

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.

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.

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.

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.

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.

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

Sections 1-2 of this report set out that the decision requested of the Director concerns the exercise of the Authority’s general powers, falling within the Authority’s statutory powers to do such things considered to further or which are facilitative of, conducive or incidental to the promotion of economic development and wealth creation, social development or the promotion of the improvement of the environment in Greater London; and in formulating the proposals in respect of which a decision is sought officers have complied with the Authority’s related statutory duties to:

• Pay due regard to the principle that there should be quality of opportunity for all people; and
• Consult with appropriate bodies.

In taking the decisions requested the Director must have due regard to the Public Sector Equality Duty; namely the need to eliminate discrimination, harassment, victimisation and any other conduct prohibited by the Equality Act 2010, and to advice equality of opportunity between persons who share a relevant protected characteristic (race, disability, gender, age, sexual orientation, religion or belief, pregnancy and maternity and gender reassignment) and persons who do not share it and foster good relations between persons who share a relevant protected characteristic and persons who do not share it (section 149 of the Equality Act 2010). To this end, the Director should have particular regard to section 3 (above) of this report.