Issue - meetings

To consider a report by the Head of Financial Services reviewing performance for the period 1^st April to 30^th September 2011.

Noted the respective levels of performance achieved during April to September 2011 by external fund managers in the matter of the investment of the Council’s capital receipts and approved the revised table and targets for borrowing.

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 achieved during April to September 2011 by external fund managers in the matter of the investment of the Council’s capital receipts.

Members’ attention was drawn to the indicators which are currently used by the Council to measure certain treasury management risks.  Executive Councillors were advised of a proposal to combine the indicators for “Cash flow borrowing” and “Borrowing to fund capital schemes” which would overcome the difficulty of differentiating cash flow borrowing when it is in the Council’s interest to use its own funds or to borrow short to cover capital expenditure.

Having received the views of the Overview and Scrutiny Panel (Economic Well-Being) on the matter and in noting that the Executive Leader had joined the Deputy Executive Leader, Executive Councillor for Resources and the Chairman of the Overview and Scrutiny Panel (Economic Well-Being) on the Consultation on Treasury Matters Group, the Cabinet

RESOLVED

that Council be recommended to note the contents of the report and approve the revised table and targets for borrowing set out in paragraph 7.3.

To consider a report by the Head of Financial Services reviewing Treasury Management performance for the period 1^st April to 30^th September 2011.

(Councillor J A Gray, Executive Councillor for Resources, was in attendance for this item).

Consideration was given to a report by the Head of Financial Services (a copy of which is appended in the Minute Book) containing details of the Council’s Investments for the period 1^st April to 30^th September 2011. The Head of Financial Services reported that the financial market remained uncertain and reminded the Panel that the current strategy sought to invest any surplus funds in a manner that balanced low risk of default by the borrower with a fair rate of interest.

Members’ attention was drawn to the Council’s investment of £5M with Skipton Building Society who had recently been identified by Moody’s, one of the leading credit Agencies, as one of the societies which they considered  would be unlikely to receive Government Support if it got into difficulties. The Head of Financial Services was of the opinion that the Building Society Industry was sufficiently robust and was inclined to protect investors’ interests so that there was no immediate need to change this investment

With regard to the measures which were used to gauge certain treasury management risks, the Head of Financial Services explained the thinking behind the proposal to combine the indicators for ‘Cash flow borrowing’ and ‘Borrowing to fund capital schemes’ as set out in paragraph 7.3 of the report. It had been suggested because of the difficulty of differentiating cash flow borrowing when it was in the Council’s interest to use its own funds from borrowing short to cover capital expenditure. The Panel supported the change.

Members were informed of the Council’s Investments as at 30 September 2011 and received an explanation of the role of the Capital Receipts Advisory Group. They noted that the Membership of this Group would need to be reviewed.

Arising from a question on the Council’s net assets, Members noted that net cash was likely to fall. Details of the net position over the next few years would be presented as part of the report on the Council’s budget in February 2012. Forward borrowing would be considered in light of market conditions. Whereupon, it was

RESOLVED

that the Cabinet be requested to

a)   approve the revised table and targets in paragraph 7.3 of the report now submitted; and

b)  recommend the Council to note the contents of the report by the Head of Financial Services on Treasury Management – Review of Performance.