The Section 151 Officer presented a report in order 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 2011 Edition (the Code) to the report as part of a mid-year review an overview of treasury activities;

·                                   Report on the projected Treasury Management and Prudential Indicators for 2014 -15;

·           Inform Cabinet of the proposed changes to the Investment Strategy 2014-15 included in the Treasury Management Strategy.

The report provided background information and paragraph 4.1.1 outlined the treasury position for the 1^st April to the 30^th September 2014.

The Section 151 Officer reported that the details of the debt maturity on the £96.87m long term borrowing, outstanding as at the 30^th September 2014 were detailed under Appendix A to the report.  It was noted that the long term liabilities figure of £21.26m as at the 30^th September 2014 included £19.54m for the Council’s Private Funding Initiative (PFI) arrangement for the provision of a Secondary School in Maesteg.

She further reported that favourable cash flows had provided surplus funds for investments at the 30^th September 2014 was £24.40m which included accrued interest, or stated as fair value in different instances.

The Section 151 Officer drew Members’ attention to Appendix B to the report which detailed the Treasury Management Strategy and projected indicators for 2014-15.  She reported that no long or short term borrowing had been taken during the period 1^st April to the 30^th September 2014, and it was forecast to remain at that level for the remainder of the financial year 2014-15.  She advised that it was originally forecast that £5m new Public Works Loan Board (PWLB) borrowing would be taken in 2014-15; however this was currently being reviewed and an update would be provided to Cabinet at its meeting in February 2015.

The Section 151 Officer advised that as a result of the mid-year review, it was deemed necessary to make some minor revisions to the Investment Strategy within the Treasury Management Strategy 2014-15, as detailed under Appendix C of the report, to allow for increased flexibility in the constantly changing financial market.  This would allow for increased secure investment opportunities available to the Council.  The proposal is to amend the Investment Strategy to invest in the major UK banks as a precautionary measure, as the credit rating agencies had stated that they plan to review EU banks’ ratings in line with each country’s implementation of the EU Bank Recovery and Resolution Directive commencing in the UK in January 2015, a year ahead of most other countries.  This meant that the UK and other Governments would be less likely to support failing banks.

The proposed changes were detailed under paragraph 4.6.2 of the report, and an extract of the revised Investment Strategy 2014-15, incorporating the proposed changes, are highlighted in Appendix D to the report.

The Section 151 Officer informed Members that the Treasury Management and Prudential Indicators 2014-15 were summarised in Appendix B to the report.

RESOLVED:          That Council:

1.      Approved the changes to the Investment Strategy within the Treasury Management Strategy 2014-15, as highlighted in Appendix D to the report.

2.      Noted the Treasury Management activities for the first half of 2014-15.

3.      Noted the projected Treasury Management and Prudential Indicators for 2014-15.