The Interim Head of Finance and Section 151 Officer presented a report, the purpose of which was to comply with the requirement of the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Treasury Management in the Public Services: Code of Practice (the Code), to provide an overview of treasury activities as part of a mid-year review; report on the projected Treasury Management Indicators for 2010-20 and sought approval of Treasury Management activities for the period 1 April 2019 to 30 September 2019.

The Interim Head of Finance and Section 151 Officer reported that Treasury management is the management of the Council’s cash flows, borrowing and investments, and the associated risks.  The Council is exposed to financial risks including the loss of invested funds and the revenue effect of changing interest rates.  Treasury risk management at the Council is conducted within the framework of the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Treasury Management in the Public Services: Code of Practice 2017 Edition (the CIPFA Code) which requires the Council to approve a Treasury Management Strategy (TMS) before the start of each financial year.  While Arlingclose provide advice to the Council on treasury management.

The Interim Head of Finance and Section 151 Officer reported that the interest rate views incorporated in the Council’s TMS 2019-20 were based upon officers’ views supported by a forecast from Arlingclose.  When the TMS 2019-20 was prepared in January 2019, due to the anticipated short time for a Brexit withdrawal deal to be agreed and the possibility of an extended period of uncertainty over the possible outcome, Arlingclose’s central case scenario was forecasting a 0.25% rise in the Bank Rate during 2019-20 to take official UK interest rates to 1.00% by December 2019.  The Bank Rate started the financial year at 0.75% and the current forecast is that the Bank Rate will remain at this level beyond the end of the financial year-end.

The Interim Head of Finance and Section 151 Officer summarised the external debt and investment position as at 30 September 2019, the Council held £96.87m of external long term borrowing and £43.75m of investments.  She highlighted the borrowing strategy and outturn in that it was forecast the Council would need to borrow £16m in 2019-20.  There would be no long term borrowing requirement in 2019-20 due to additional grants being received in the last quarter of 2018-19 and a change in the capital programme for 2019-20.  The Interim Head of Finance and Section 151 Officer summarised investment strategy and outturn with the main objectives during 2019-20 to maintain capital security; to maintain liquidity so funds are available when expenditure is needed and to achieve the yield on investments commensurate with the proper levels of security and liquidity.  The balance on investments at 30 September 2019 was £43.75m.  She summarised the investments profile from 1 April to 30 September 2019; the Treasury Management indicator for Principal Sums invested for periods longer than a year and the position on long term investments. 

A member of Council questioned whether consideration had been given to alternative models of investment as favoured by other local authorities.  The Interim Head of Finance and Section 151 Officer confirmed there a number of investment initiatives, the Council’s first consideration will always be security before yield, however the Council is exploring different initiatives and models.

A member of Council questioned the strategy of lending to other local authorities.  The Interim Head of Finance and Section 151 Officer stated that inter-lending amongst local authorities is a recognised and secure form of investment.               

RESOLVED:                  That Council:-

(1)Approved the treasury management   activities for the period 1 April 2019 to 30 September 2019;

(2)         Noted the projected Treasury Management and Prudential Indicators for 2019-20 against those approved in the Treasury Management Strategy 2019-20.