The Group Manager – Chief Accountant presented a report updating the Committee on the outturn position for treasury management activities, the Treasury Management and Prudential Indicators for 2017-18 and to highlight the compliance with the Council’s policies and practices prior to their report to Cabinet and Council.

The Group Manager – Chief Accountant explained that the Committee was responsible for ensuring effective scrutiny of the Treasury Management Strategy and policies.  The Committee had received training to assist them in their function of scrutinising treasury management and investment options available to the Council.  She added that Welsh Government issued revised Guidance on Local Authority Investments in April 2010 which required the Council to approve an Investment Strategy prior to the start of each financial year and this was included in the TMS.

The Group Manager – Chief Accountant reported that the Council has complied with its legislative and regulatory requirements during 2017-18.  The TMS 2017-18 and the Half Yearly Outturn were reported to Council on 1 March 2017 and 1 November 2017 respectively.  The Annual Treasury Management Outturn Report will be reported to Cabinet and Council in September 2018.  She presented a summary the of the treasury management activities for 2017-18 and outlined the Council’s external debt and investment position for 1 April to 31 March 2018.  No long term borrowing was taken in 2017-18 and no debt rescheduling was undertaken as there were no significant savings to be made, however, the loan portfolio will be reviewed during 2018-19. Favourable cash flows have provided surplus funds for investment and the balance on investments at 31 March 2018 was £30.40 million (average interest rate 0.62%). 

The Group Manager – Chief Accountant reported that the Council operated within the treasury limits and Treasury Management and Prudential Indicators as set out in the agreed TMS 2017-18 and also complied with its Treasury Management Practices.  She stated that the treasury management function will be reviewed by the Council’s External Auditors, the Wales Audit Office, during the 2017-18 annual audit which has not yet been completed. In addition to the External Audit work, Internal Audit undertook an audit of the treasury management function during 2017-18 and the audit identified that “based on an assessment of the strengths and weakness of the areas examined, and through testing it has been concluded that the effectiveness of the internal control environment is considered to be sound and therefore substantial assurance can be placed upon the management of risks”. 

The Committee questioned the rationale of an increase in net debt while external borrowing and investment in building societies has decreased and investment in Government (including local authorities) had increased.  The Group Manager – Chief Accountant explained that investment in local authorities is safer and that short-term borrowing had been taken at year end.  She stated that the position at the next quarter would be different. 

The Committee questioned whether the reduction in spend on capital expenditure was attributable to slippage in schemes.  The Group Manager – Chief Accountant stated that the funding of new schools was through capital expenditure and the spend on the new Pencoed Primary School would occur this year. 

The Committee questioned the strategy for funding Band B schools.  The Interim Head of Finance stated that a large part of the capital programme is the funding of Band A and B schools and it was hoped that the Council will have access to schools being funded through the Mutual Investment Model.  The Group Manager – Chief Accountant commented on the Prudential Indicators for Prudence and confirmed that the Council is well within the limits set.  

RESOLVED:            That the Committee noted the annual treasury management activities for 2017 -18.