Issue - meetings

Report of the Cabinet Member Finance

Councillors Garnham, Massey and Seacome returned to the chamber. 

The Cabinet Member Finance introduced the Treasury Mid-Term Report, which reported the councils Treasury Management activities for the first half of the current financial year.  He suggested that there was nothing significant to report, given that the investment market was very flat and under these circumstances paying off debt as investments matured, rather than re-investing the money had been made a priority.

It was for this reason that the amount of short-term borrowing had fallen significantly, from £7 million to £2 million, in the 6months between the start of April and the end of September 2012.  It was also one reason why the council’s borrowing costs for the current financial year were projected to be £35,000 under budget, which he considered to be a more than satisfactory situation.

In terms of investments, the overriding concern had continued to be safety.  The council now put money only into the types of investment outlined at point 4 of the report and listened carefully to the advice of its Treasury Adviser, as demonstrated by the shorter deposit durations with investment counterparties in May which were extended again in July.  This was active management that was constantly looking out for changes in the economy and the financial markets, and he felt that it was absolutely right that the council do this.  The council had set up a Safe Custody Account in order to widen the range of investment instruments available.  Given the economic climate at present members could not expect the council’s investment performance to be dazzling, and it wasn’t but nonetheless was achieving a return on investment of 1.13% and projecting investment income to come at around £10,000 over budget in the current financial year.

He was pleased to report that the council continued to recover money from the Icelandic banks and anticipated recovery of 100% of deposits in the Icelandic based banks (Landsbanki and Glitnir) together with the interest up to the time when they failed and expected to recover 85% from the London-based bank KSF.  This had only happened because this council along with other local authorities were prepared to fight for their money in the Icelandic courts, and council Officers, the Local Government Authority and their lawyers Bevan Brittan, all deserved credit for this outcome.

Upon a vote it was unanimously

RESOLVED that in compliance with the requirements of the CIPFA Code of Practice the report be noted.

Report of the Cabinet Member Finance

RESOLVED

To note the contents of the summary report of the treasury management activity during the first six months of 2012/13.

The Cabinet Member Finance introduced the report and explained that due to the difficult economic climate the Council’s investment income had fallen.

He reported the following :

• Short-term borrowing had been reduced from £7 million to £2 million
• Borrowing costs were now estimated to be £35 200 less than budgeted for
• Since the downturn the emphasis for investments has been on safety and security
• Investment income was slightly up at £10 200
• The range of investments had been widened, including in safe custody accounts
• With regard to Icelandic Bank investments 100 % would be recovered from Landsbanki and Glitnir and the accrued interest; approximately 85% would be recovered from Kaupthing Singer and Friedlander i.e. £10.5 million capital and £0.6 million interest which was better than expected and due to the efforts of the LGA

RESOLVED

To note the contents of the summary report of the treasury management activity during the first six months of 2012/13.