Issue - meetings

This report reviews the performance of the council’s treasury management function in 2017/18 and provides an update on Ministry of Housing, Communities and Local Government’s (MHCLG) new Statutory Guidance on Local Government Investments.

The Committee:

(1)            Received the report on the Council’s treasury management performance 2017/18.

(2)            Approved the actual 2017/18 prudential indicators.

(3)            Noted MCHLG’s Statutory Guidance on Local Government Investements.

(4)            Noted the suspension of further out-of-borough investment property acquisitions, where the main purpose is purely to profit, until further guidance or case law is published that clarifies the Council’s related vires.

Note:  Two Councillors abstained from agreeing to note recommendation 4 above.

This report included a detailed review of the performance of the Council’s management function in 2018/18 and provided an update on the Ministry of Housing, Communities and Local Government’s (MHCLG) new Statutory Guidance on Local Government Investments.

It was noted that the Council were using one external fund Manager – Aberdeen Asset Management – to advise on suitable investments to achieve maximum returns within defined risk parameters.  Whilst the Council had invested £7.1m in triple A investments, providing an average rate of return of 0.59%, the Committee was assured that the Council continued to explore alternative investment funds and that presently the percentage return achieved by Aberdeen Asset Management was consistent and satisfactory compared with other fund managers.

The Committee discussed the impact of the MHCLG’s new guidance which stated that ‘authorities must not borrow more than or in advance of their needs purely in order to profit from the investment of the extra sums borrowed’, and it was recognised that alongside the government’s decision to withdraw funding, it would place added financial pressure on the borough.  It was further noted that the new guidance would have a negative impact on the Council’s capacity to increase budgeted revenue income expectations as out of the Borough acquisitions where the intention was purely to profit, would not meet the guidance criteria in terms of borrowing.

Whilst this was disappointing it was pointed out that the Council had undertaken robust discussions with a QC, whose advice was not to risk out of borough purchases until the legal position and Government Guidance had been tested in the courts, and to explore opportunities within the Borough or on the boundaries, where the main purpose of the purchase was regeneration. To that end the Committee was informed that officers were actively seeking opportunities within the Borough and it was hoped to bring further proposals within the next three months.

Having considered the Treasury Management year-end performance, the Committee:

(1)            Received the report on the Council’s treasury management performance 2017/18.

(2)            Approved the actual 2017/18 prudential indicators.

(3)            Noted MCHLG’s Statutory Guidance on Local Government Investments.

(4)            Noted the suspension of further out-of-borough investment property acquisitions, where the main purpose is purely to profit, until further guidance or case law is published that clarifies the Council’s related vires.

Note:  Two Councillors abstained from agreeing to note recommendation 4 above.