Agenda item

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

 

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

 

Councillor J. Thompson-Hill provided a detailed summary of the report and

Appendices 1 and 2.

 

The Annual TM Report 2015/16, Appendix 1, related to the Council’s investment and borrowing activity during 2015/16.  It provided details of the economic climate during that period and detailed how the Council complied with its Prudential Indicators.  The TM Update Report, Appendix 2, provided details of the Council’s TM activities during 2016/17.

 

The term ‘treasury management’ included the management of the Council’s borrowing, investments and cash flow.  Approximately £0.5bn passed through the Council’s bank accounts every year, and the Council’s outstanding borrowing at 31^st March, 2016 had been £190.17m at an average rate of 4.95% and the Council held £12m in investments at an average rate of 0.61%.

  

It had been agreed by Council in October, 2009 that the governance of TM be subjected to scrutiny by the Corporate Governance Committee (CGC).  Part of this role was to receive an update on the TM activities twice a year and to review the enclosed Annual TM Report for 2015/16.  The TM team would provide reports and training to the CGC in accordance with the timetable included in the report.

TM was a complex area and it had been deemed that the CGC was more appropriate than Council to receive updates so that the required amount of time and commitment could be devoted.  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 included to:-

·                     understand the Prudential Indicators

·                     understand the impact of borrowing on the revenue position

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

·                     ensure the Council always acted in a prudent manner in relation to its TM activities

 

The purpose of the Annual TM Report (Appendix 1) was to:-

 

·                     present details of capital financing, borrowing, debt rescheduling and investment transactions in 2015/16;

·                     report on the risk implications of treasury decisions and transactions;

·                     confirm compliance with treasury limits and Prudential Indicators.

 

The TM update report, Appendix 2, provided details of the following:-

 

·                     External economic environment

·                     Risks

·                     Activity

·                     Controls

·                     Future Activity

 

Good investment and borrowing decisions allowed additional resources to be directed to other Council services, and the Council had consulted with its treasury advisers, Arlingclose Ltd.  TM involved looking after significant sums of cash so it was a vital part of the Council’s work.  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.

 

Council adopted the revised CIPFA Code of Practice on TM in February, 2012.  It was a requirement of that Code that the CGC receive an update on the TM activities twice a year and to review an Annual TM Report.  The Council had approved an ambitious Corporate Plan that involves investing approximately £92m in delivering its priorities over the coming four years.  It was vital that the Council had a robust and effective TM function underpinning this investment and all other activities.

 

TM was inherently risky but the Council monitored and controlled these risks as outlined in the main report. However, it was impossible to eliminate risks completely. The Council’s TM strategy and procedures were audited annually and the latest review had been positive with no significant issues raised.

 

The following responses were provided to issues raised by Members of the Committee:-   

 

-               It was confirmed that the Council did receive regular alerts and updates, on a daily basis, particular reference being made to the impact of Brexit.

-               That the report would be presented to Cabinet in July, 2016.

 

Following further discussion, it was:-

 

RESOLVED – that the Corporate Governance Committee notes:-

 

(a) the performance of the Council’s Treasury Management function during 2015/16, and its compliance with the required Prudential Indicators as reported in the Annual TM Report 2015/16, Appendix 1 to the report.

(b) the contents of the TM update report, Appendix 2 to the report, and

(c) that the report be presented to Cabinet in July, 2016.

     (RW, SG to Action)