Agenda item

To consider a report by the Chief Finance Officer (copy enclosed) on the Treasury Management activities (copy enclosed).

 

A report by the Chief Finance Officer (CFO), on Treasury Management (TM), had been circulated previously.

 

It was CFO explained by the Annual TM Report 2014/15, Appendix 1, was about the Council’s investment and borrowing activity during 2014/15.  It also provided details of the economic climate at that time and indicated how the Council complied with its Prudential Indicators.  The TM Update Report, Appendix 2, provided details of the Council’s TM activities during 2015/16. 

 

The term ‘treasury management’ included the management of the Council’s borrowing, investments and cash flow.  Approximately £0.5bn passes through the Council’s bank accounts every year.  The Council’s outstanding borrowing at 31^st March, 2015 was £144.77m, at an average rate of 5.40%, and the Council held £28.6m in investments at an average rate of 0.62%.

         

It had been agreed by Council that the governance of TM be subjected to scrutiny by the Corporate Governance Committee.  Part of the role being to receive an update on the TM activities twice a year and to review the Annual TM Report for 2014/15.

 

The TM team would provide reports and training to the Corporate Governance Committee in accordance with the timetable incorporated in the report.  It was explained that TM was a complex area which took time to understand fully and regular updates were provided. It had therefore been deemed that the Corporate Governance Committee was more appropriate than Council to receive these updates so that the required amount of time and commitment could be devoted to this area.

 

The Committee was required to have a certain level of understanding in this area and this was achieved through regular updates and training sessions.

 

The role of the Committee in the TM process included:-

 

·                 To understand the Prudential Indicators

·                 To understand the impact of borrowing on the revenue position

·                 To understand the wider drivers impacting on the Council’s TM activities

·                       To ensure that the Council always acts in a prudent manner in relation to its TM activities

 

The purpose of the Annual TM Report had been incorporated in Appendix 1, and the TM update report, Appendix 2, provided details pertaining to:-

 

·                           External economic environment

·                           Risks

·                           Activity

·                           Controls

·                           Future Activity

 

TM was a vital part of the Council’s work which involved looking after significant sums of cash.  It required a sound strategy and appropriate controls to safeguard the Council’s money, to ensure that reasonable returns on investments were achieved and that debt was effectively and prudently managed.  The Council had adopted the revised CIPFA Code of Practice and it was a requirement of that Code for the Committee receive an update on the TM activities twice a year, and to review an Annual TM Report.

 

The CFO referred to the implications arising from the Banking Reform Act 2014, implemented in January, 2015, and explained that banks were no longer able to rely on government bail-outs if they got into difficulty.  He also made reference to the Capital Financing Requirement and the PFI transaction pertaining to County Hall, Ruthin, and provided details of the projected savings to be achieved.  Members agreed that an update report on the PFI transaction be presented to the November, 2015 meeting of the Committee.

 

Following further discussion,

 

RESOLVED – that Corporate Governance Committee:-

 

(a)             receives and notes the contents of the report.

(b)             notes the performance of the Council’s Treasury Management function during 2014/15 and its compliance with the required Prudential Indicators as reported in the Annual TM Report 2014/15, Appendix 1.

(c)            notes the TM update report, Appendix 2, and

(d)            requests an update report on the PFI transaction be presented to its  November, 2015 meeting.

         (RW to Action)