Question

Can a council invest in fixed rate savings bonds.They offer no risk as opposed to our investments in 'low risk' funds.

Answer 1

Councils can choose where to invest their reserves but need to be mindful of the following in this order

• The security of its reserves
• The liquidity of its investments
• The yield obtained from any investment

As long as the account offers FCSC protection and meets the above, then I cannot see why not.  They need to have an investment policy ideally that details the above reasoning.

Comments

Thank you , that makes so much sense to me. With rising interest rates I just feel we could be more flexible within those parameters, but unsure if there are rules that I don't know about re: councils.

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We are constantly told it’s not allowed for Parish Councils to invest in anything over 12 months so I assume that’s untrue
I can’t imagine how much value Parish Councils lose every year by having large sums in current accounts and excessive reserves

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Right now, as an individual, I can get 2.8% on a one year savings bond, and we know the BoE rates are predicted to double in the next year, hence my query. What I don't know is whether these rates are available to councils.

Answer 2

The guidance to be considered / applied prior to investment is as detailed at the link:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/658420/Draft_guidance_on_Local_Government_Investments.pdf

I’d suggest para 42 is of particular importance  

Has everybody got / read the NALC Joint Panel on Accountability and Governance Practitioners’ Guide March 2022?

Essential reading and it touches upon “investments” at para 1.11