Issue - meetings

To report on the performance of the Treasury Management activity over the past financial year.

(Executive Councillor: Cllr J A Gray)

That the Treasury Management Annual Report 2017/18 be received and noted.

A report by the Head of Resources was presented to the Cabinet (a copy of which is appended in the Minute Book) which reviewed the performance of the Treasury Management activity over the 2017/2018 financial year. 

The Treasury Management Code by the Chartered Institute of Public Finance and Accountancy required the Council to report on the performance of the treasury management function twice a year; the first report being the mid-year review (reported to the Cabinet in November 2017) and the annual report after the financial year end.

Regarding investments it was explained that current interest rates allowed the Council to borrow at low rates both for short-term cash flow purposes and for longer term borrowing. However, there was evidence that rates could start to rise.

The continued low interest rates resulted in few opportunities to make significant returns from investments, particularly in comparison to the returns generated through the Commercial Investment Strategy (CIS).  To illustrate the Cabinet were referred to Appendix E of the submitted report, where the percentage return on the purchase costs relating to CIS assets was listed.  The Executive Councillor Resources explained that it was necessary to continue to progress and develop the CIS.

In response to a question in regards to the transformation agenda and the A14 improvements would have on the District, it was confirmed that these issues were considered with any potential CIS acquisitions. 

Having considered the comments of the Overview and Scrutiny Panel (Performance and Growth) which were circulated separate to the agenda, the Cabinet,

RESOLVED

that the Treasury Management Annual Report 2017/18 be received and noted.

The Treasury Management Annual Report 2017/18 is to be received by the Panel.

With the aid of a report by the Head of Resources (a copy of which is appended in the Minute Book) the Treasury Management Annual Report 2017/18 was presented to the Panel. It was explained that Treasury Management Annual Report is the about the day to day management of the Council’s finances.

It was noted that the Council had loans to Huntingdonshire Regional College and Luminus and that since the loans were established those organisations had both been incorporated into larger organisations. However, it was clarified that those loans are secured against buildings.

Following a question, it was explained to the Panel that it was possible to refinance the loans however the Council would end up paying a penalty to the lender (Public Works Loan Board) to do so. This is particularly the case as the Council is holding loans with long maturity dates.

Members were informed that the aim of Treasury Management is to spread money around in order to mitigate the risk of a counterparty failure. If the Council consolidated the money in one investment then the risk would not be spread and the Council’s entire invested funds would be at risk.

(At 8.52pm, during the consideration of this item, Councillor M S Grice left the meeting.)

(At 8.54pm, during the consideration of this item, Councillor M S Grice entered the meeting.)