Agenda item

To consider a report by the Chief Finance Officer (copy enclosed) on the Councils TM functions and activities, and outlines the likely impact of the Corporate Plan on the strategy and on the Prudential Indicators.

 

A report by the Chief Finance Officer (CFO) had been circulated previously.

The Chief Accountant (CA) explained that the Treasury Management Strategy Statement (TMSS), Appendix 1, indicated how the Council would manage its investments and its borrowing for the coming year, and set the policies within which the Treasury Management (TM) function operated.  The report also outlined the likely impact of the Corporate Plan on this strategy and on the Prudential Indicators.  The TM Update Report, Appendix 2, provided details of the Council’s TM activities during 2015/16.

 

It was explained that the figures contained in the TMSS were draft and would be updated prior to approval by Council, based on the latest Capital Plan and Housing Stock Business Plan in February, 2016. 

 

The Chartered Institute of Public Finance and Accountancy’s Code of Practice on Treasury Management, the “CIPFA TM Code”, required the Council to approve the TMSS and Prudential Indicators annually.  The Corporate Governance Committee was required to review the report before its approval by Council on the 23^rd February, 2016. 

 

The Committee would receive an update on the TM activities twice annually and TM involved looking after the Council’s cash, which was a vital part of the Council’s work, as approximately £0.5bn passed through the Council’s bank account annually.  At any one time the Council had at least £10m in cash so an assurance was required that the best rate of return possible was achieved without putting the cash at risk, which was why money was invested with a number of financial institutions.

 

When investing, the Council’s priorities were to:-

 

·                     keep money safe (security);

·                     make sure that they get the money back when we need it (liquidity);

·                     make sure they get a decent rate of return (yield).

 

The TMSS for 2016/17 had been set out in Appendix 1.  The report included Prudential Indicators which set limits on the Council’s TM activity and demonstrated that the Council’s borrowing was affordable.

 

With regard to Prudential Indicators, the Council Fund indicators were based on the latest proposed capital bids and block allocations, and these would be updated prior to the report being submitted to Council for approval on the 23^rd February, 2016.                                                                                                                                                         

The Housing Revenue Account indicators had been calculated based on the latest estimates from the Housing Stock Business Plan, but would be revised prior to submission to Council once the final Housing Stock Business Plan had been agreed.  The individual Prudential Indicators recommended for approval had been set out in Appendix 1 Annex A.

 

The CA invited Members attention to the following areas incorporated in Appendix 1 to the report:-

 

·                     Minimum Revenue Provision Statement

·                     Council Fund Ratio

·                     Capital Financing Requirement and total debt

·                     The implications of the PFI element and reduction of cash held

·                     Approved Investment Counterparties and Limits

·                     Training Requirements

 

In reply to a question from Councillor S.A. Davies, Councillor Thompson-Hill and the CA provided details of the Council’s current and historic borrowing arrangements, rates and costs.

 

Mr P. Whitham highlighted the issue of the provision of Member Training as referred to on Page 38, 8.1.1 of Appendix 1.  The HLHRDS made reference to the various methods adopted for the provision of training, and explained the importance of making sure that adequate information was provided to the respective Members to ensure an understanding of the relevant processes.  Members agreed that a training session on Treasury Management be delivered 30 minutes prior to the next meeting of the Committee, which had a business item pertaining to Treasury Management, and that the invitation to attend be extended to all Members.

 

The following responses were provided to questions presented by Mr P. Whitham:-

 

-                     It was agreed that further details pertaining to the abolition of the PWLB could be provided when available.

-                     Confirmation was provided that the Council’s banking arrangements were subject to the Procurement Strategy.

-                     The Capital Monitoring report was presented to Cabinet.

-                     Details of the implementation of REPOs could be included in the Members Training session in September, 2016, following the receipt and clarification of details.

-                     The Audit Review to be undertaken in February, 2016 to be presented to Committee in April, 2016.

 

Following further discussion, it was:-

 

RESOLVED – that the Corporate Governance Committee:-

 

(a)           receives and notes the TMSS for 2016/17 and the Prudential Indicators for 2016/17, 2017/18 and 2018/19 (Appendix 1).

(b)           notes the TM update report (Appendix 2).

(c)            agrees a training session on Treasury Management be delivered and that the invitation to attend be extended to all Members.

(d)           requests that further details pertaining to the abolition of the PWLB be provided when available.

(e)           agrees that the Audit Review to be undertaken in February, 2016 be presented to Committee in April, 2016, and

(f)             requests that details of the implementation of REPOs be included in the Members Training session in September, 2016.

     (RW, SG, IB to Action)