Agenda item

Treasury Management Annual Report

A Report from the Cabinet Member for Finance and Housing is attached.

Minutes:

Steve Kenyon, Interim Executive Director of Resources and Regulation submitted a report from the Cabinet Member for Finance and Housing.

 

The report provided information on the Council’s debt, borrowing, and investment activity for the financial year ending on 31st March 2018 in conformity with the CIPFA Code of Practice for Treasury Management.  The successful management of the Council’s borrowing and investments is central to the Council’s financial strategy, both in the short term and in ensuring a balanced debt profile over the next 25 to 60 years. 

 

The overall strategy for 2017/18 was to finance capital expenditure by running down cash/investment balances and using shorter term borrowing rather than more expensive long term loans. The taking out of longer term loans (1 to 10 years) to finance capital spending would only then be considered if required by the Council’s underlying cash flow needs.

 

Debt decreased slightly during the year, £194,510 million at 31st March 2018 compared to £195,682 million at 31st March 2017. The average borrowing rate rose slightly from 3.95% to 3.96%. Investments at 31 March 2018 stood at £21,250 million, compared to £18,550 million the previous year. The average rate of return on investments was 0.24% in 2017/18 compared to 0.58% in 2016/17

 

Those present were given the opportunity to ask questions and make comments and the following points were raised:-

 

  • Councillor Nicholas Jones asked whether Councillor O’Brien and Steve Kenyon were happy with how the current investments that the Council had were performing.

 

Steve reported that the Council did take guidance from brokers in relation to investments and these brokers were taken from an approved list of institutions.

 

It was explained that it was recognised that returns were low at the current time but this was still more than the Council would receive if the money was in the bank.

 

  • Councillor Smith referred to the investments and the fact that they were all low risk commercial properties and asked whether the Council would consider more medium risk investments.

 

It was explained that all investments had to be weighed up in relation to their return possibilities; if it was a low risk investment with a small return it was better than a medium risk investment with a return of not very much more.

 

  • Councillor Bayley referred to the guidance received from brokers with relation to investments and asked how the arrangement worked.

 

Steve reported that the Council employed brokers who advised on a range of investment opportunities which could be day to day investments or longer term. The brokers were employed through a procurement contract and were taken from an approved list of institutions.

 

  • Councillor Caserta referred to Section 106 money and stated that this could be used to fund affordable housing opportunities.

 

Councillor O’Brien explained that the Section 106 money had for many years been used to fund the empty property returns scheme which had proved very successful. There were a lot of factors that effects the use of 106 money as it often comes with a lot of strings attached.

 

  • Councillor Nicholas Jones referred to the investment in relation to Plymouth City Council and asked what this was.

 

Steve explained that this had been a short term investment which had been carried out over 3 months.

 

It was agreed:

 

That in accordance with CIPFA’s Code of Practice on Treasury Management, the report be noted.

 

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Supporting documents: