§ Mr. Clifton-BrownTo ask the Secretary of State for the Environment what guidelines are issued to local authorities about the use of financial derivatives. [1681]
§ Sir Paul BeresfordThe Department has not issued guidelines to local authorities about the use of financial derivatives. Local authorities are under a general fiduciary duty to their taxpayers to act prudently in investing funds. They should also have regard to the capital finance regulations and professional treasury management codes, as appropriate. Capital finance and approved investment regulations provide a strong incentive for authorities to make only very secure investments such as bank and building society deposits or gilts.