Issue - meetings

This report reviews the performance of the council’s treasury management function in 2016/17

The Committee:

(1)          Received the report on the Council’s treasury management investment performance 2016/17;

(2)          Approved the actual 2016/17 prudential indicators.

The Committee received and considered a report which reviewed the performance of the Council’s treasury management function in 2016/17.

It was noted that, as part of its financial strategy, the Council maintained revenue reserves and provisions (Minute 6 refers).  However, it also retained cash balances from other sources such as S106 funds and creditors which meant that the amount of funds available for investment (£28.9m in 2016/17) would be in excess of the amounts held in reserves and balances.

It was further noted that the final outturn position showed an increase in income of £52,000 on what was reported in the half year report received by the Financial Policy Panel in October 2016.  This was because the assumption is always made that more of the capital programme would have been spent and the average annualised return on investments was better than anticipated.

Whilst it was noted that the Council had done well on its own internally managed fixed interest investments, the Council was locked into these and could not access these funds prior to their maturity date.  The main benefit of using external fund managers was that risk to the Council could be minimised through the diversification of holdings.

The report highlighted that the Council had complied with the requirement to keep net borrowing below the relevant CFR in 2016/17 and no difficulties were envisaged for the current or future years.  This view took into account current commitments and plans in the budget report.  The Committee was assured that any increase in borrowing above the current agreed level would need to be approved by Council.

It was currently envisaged that the fund manager would be able to achieve investment returns at around 0.9% for 2017/18.  This compared to an anticipated return built into the budget of 1.25%.  However, it was anticipated that overall income from investments this year would come in on budget due to the Council retaining higher levels of funds to invest than expected when setting 2017/18 budget.

Accordingly the Committee:

(1)          Received the report on the Council’s treasury management investment performance 2016/17;

(2)          Approved the actual 2016/17 prudential indicators.