Issue - meetings

By way of a report by the Head of Financial Services, to receive the annual report on treasury management 2010/11.

Noted the respective levels of performance for the year ending 31st March 2011 by fund managers in the investment of the Council's Capital Receipts.

A report by the Head of Financial Services was submitted (a copy of which is appended in the Minute Book) which reviewed the respective levels of performance for the year ending 31st March 2011 by fund managers in the investment of the Council's Capital Receipts.

In accordance with the Chartered Institute of Public Finance and Accountancy's Treasury Management Code of Practice, Executive Councillors received the views of the Overview and Scrutiny (Economic Well-Being) Panel on the matter. 

Having acknowledged that the Council had performed well with regard to the returns it had achieved on its investment in the year, the Cabinet

RESOLVED

  that the contents of the report be noted prior to its submission to the Council.

To comment on a report by the Head of Financial Services prior to its consideration by the Cabinet.

(Councillor T V Rogers, Executive Councillor for Resources and Customer Services, was in attendance for this item).

With the assistance of a report by the Head of Financial Services (a copy of which is appended in the Minute Book) the Panel considered the Council’s performance for the year ending 31^st March 2011 in the investment of its reserves.

Having been acquainted with the Council’s Strategies for both borrowing and investing funds in the current year, the Panel noted that the performance of the funds in a year when rates had remained very low had been good, with both the benchmark and the budgeted investment interest having been significantly exceeded.

In considering the contents of the report and having been reminded that, in December 2008, the Council borrowed £10M in advance of its need for the funds over a 50 year period, Members noted that the return from the investment of these monies had been greater than the cost of the monthly repayments. A Member inquired whether there was any scope to lend money to other authorities at a still higher rate; however, it was explained that it was unlikely that other authorities would pay more than the rates currently asked by the Public Works Loan Board.

Members were advised that the Council had needed to borrow on average £3M during the year to manage its cash flow. This reflected the fact that there were extreme fluctuations during the year, which resulted from the fact that the Council collected precepts on behalf of other local bodies and also had to pay out the levies to those authorities in addition to the payment of salaries and meeting the cost of capital expenditure on a monthly basis.

With regard to paragraph 3.1 of the report, Members queried why there had been a reduction in the average interest rates that had been paid on investments during the year. The Panel was informed that this was attributable to the fact that investments, which had been made at higher rates in previous years, had matured and only lower rates were now available.

The Panel discussed the Authority’s Strategy for long-term borrowing and noted that the capital programme for the next 5 years assumed an expenditure of approximately £23M plus any slippages from individual years. The Head of Financial Services explained that provided the Council could demonstrate that it had the capacity to afford the repayments, there was no limit to the level of borrowing which could be undertaken by an individual Council. Having been advised that following the reduction of the Council’s reserves over the last few years all investments were now being managed in-house, it was

RESOLVED

that the Treasury Management Annual Report 2010/11 be endorsed for submission to the Cabinet.