Agenda item

Report of the Cabinet Member Finance

The Cabinet Member Finance introduced the report and explained that treasury had changed immensely over the last few years with movement away from deposits in high street banks and diversifying treasury management into new areas.

The Council’s treasury management strategy for 2018/19 was approved in February this year. Key to the strategy was the successful identification, monitoring and control of risk. She reported that CIPFA published new versions of the Prudential Code for Capital Finance in Local Authorities and the Treasury Management Code of Practice but had yet to publish the local authority specific Guidance Notes to the latter. The Ministry for Housing Communities and Local Government published its revised Investment Guidance which came into effect from April 2018.

The Cabinet Member explained that the updated Prudential Code included a new requirement for local authorities to provide a Capital Strategy, which was to be a summary document to be approved by full council covering capital expenditure and financing, treasury management and non-treasury investments. This capital strategy would be submitted to council for approval in February 2019.

The Cabinet Member then summarized the economic update for the first six months provided by the council’s treasury advisors and which was outlined in the report.

The following other points were highlighted :

·         The treasury management summary position from April to September showed that the council had net borrowings of £53.569  arising from its revenue and capital income and expenditure.

·         The councils strategy to fund a number of capital asset purchases had been the use of temporary borrowing and then take long term borrowing from the Public Works Loan Board. At the back end of September the Council took out 38 Maturity loans with the PWLB for £43.083m to fund the purchase of several commercial properties within the Borough. The loans were taken out over 3yrs to 40yrs with the average rate of 2.57%. This had saved £940k in interest over the life of the borrowing when compared to the original business cases.

·         During the six month period the council’s investment balance ranged between £16.625m and £65.234m due to timing differences between income and expenditure.

·         In February this year the Investment income for 2018/19 was budgeted to be £328,200. The average cash balances representing the council’s reserves and working balances, was £25.154m during the period this report covers. It anticipated an investment outturn of £477,700 at a rate of return of 2.03% for this financial year. Estimated surplus for investment income was £149.5k for the financial year.

·         Net loans and investments were estimated to be £593,500 over the original budget but after aligning budgets with the business cases for the commercial properties purchased the estimated year end will come in on budget.

Finally, the Cabinet Member wished to thank all officers who worked tirelessly to ensure that the council achieved the best possible from its investments and borrowings.

Members also wished to congratulate the Cabinet member and officers for proactively managing the balanced treasury portfolio. CBC set an example to other authorities by investing in the town.

In response to whether the Cabinet Member could comment on the council’s investment in some aggressive property funds and the risks associated with this the Cabinet Member replied that whilst the council was risk aware it was not risk averse. The Treasury Management Panel had an important role to play in challenging how the council was managing the risk.

RESOLVED (unanimously) THAT

the contents of the summary report of the treasury management activity during the first six months of 2018/19 be noted.