Issue - meetings

Report by Chief Operating Officer

40.1     The Cabinet considered a report by the Chief Operating Officer

40.2     It was RESOLVED to note the Treasury Management performance in 2017/18 incorporating the mid year review for the first half of 2018/19.

Reason

40.3     This report updates the Cabinet and fulfils the requirement to submit an annual/half yearly report in the form prescribed in the Treasury Management Code of Practice. Short term lending throughout the period covered achieved returns between 0.46% and 0.92%. The key principles of security, liquidity and yield are still relevant. Officers are currently investigating further opportunities within the strategy to minimise costs and increase investment income. 

28.1     The Chief Finance Officer introduced the report which outlines key issues in Treasury Management performance and the implementation of the Treasury Management Strategy. During the 2017/18 financial year the Council received £1.3 million from investments and repaid £4.8 million of Public Works Loan Board (PWLB) debt. There was no additional borrowing during this period, and there were no further opportunities to repay or restructure debt.

28.2     In the first 6 months of the current financial year (2018/19) the Council has invested £5 million in the CCLA Property Fund. The Council will repay £4.6 million of PWLB debt and £23 million of Lender Option, Borrower Option (LOBO) loans. The Council continues to look for opportunities to increase income, and reduce loans and the ‘cost of carry’ (which is the cost of loans the Council has taken out, less any income earned on deposits). The Treasury Management Strategy will be refreshed as part of RPPR process and a report will be presented to Cabinet in January 2019.

28.3     The Committee discussed the report and asked for clarification on a number of points:

·        The repayment of the PWLB debt did not include any penalty payments as the loans had matured.

·        The repayment of the LOBO loan was made from cash balances and was not financed by further PWLB borrowing.

·        The Chief Finance Officer agreed to provide the Committee with further information on the Council’s ‘cost of carry’ in comparison with other local authorities, and an explanation for the change in interest rates in the table in paragraph 7.1 of appendix D, after the meeting.

28.4     The Committee welcomed the investment in the CCLA Property Fund, which it noted was a very diversified property portfolio. The CCLA Fund had a very good investment strategy and the Chief Finance Officer offered to circulate a copy of due diligence report to the Committee. The Committee asked if the value of the fund fell as part of a mark to market loss, how this would be reflected in the Council’s accounts. The Principal Accountant, Treasury and Taxation responded that at present it is out of scope as there is a statutory override, so the Council would not have to make a provision in its accounts at present. This override will continue for the next five years and then will be reviewed.

28.5     The Committee noted the CCLA investment and asked what the plans were for similar investments to increase income for the Council. The Chief Finance Officer outlined that the CCLA investment is part of a longer term strategy and the Treasury Management Team will look at further opportunities as part of the refresh of the Treasury Management Strategy. Lessons learnt from the CCLA investment will be applied to further work in this area, which will take a staged approach (e.g. a £5 million investment and then another £5 million).

28.6     The Committee RESOLVED to note the Treasury Management performance in 2017/18 incorporating the mid-year review for the first half of 2018/19.