The Committee considered the report of the Head of Finance and Customer Services setting out details of the activities of the Treasury Management function for the 2011/12 financial year.  It was noted that:-

·  The level of investments as at 31 March 2012 was lower than originally estimated due to the provisional assessment being overestimated.

·  All new investments throughout the year had been on a short term basis (less than one year) with the exception of the £3m core cash set aside for longer term investments.  This had been invested with Lloyds TSB Bank for one year at a rate of 2.1%.

·  Despite investments being at a lower level than expected, the investment income (£312k) was higher than budgeted (£250k) due to the Council receiving premium rates on short term investments from institutions, including Lloyds TSB Bank.

·  The Council had borrowed short term funds on two occasions due to liquidity reasons.  This was permitted within the Treasury Management Strategy.

·  The Council had agreed to increase the limits with UK institutions and AAA institutions and this had decreased the Council’s level of risk exposure to lower credit rated organisations.

In response to questions by Members, the Head of Finance and Customer Services explained that the transfer of the Council’s banking arrangements to Lloyds TSB Bank had no impact insofar as the Council’s investments were concerned and that the borrowing had occurred due to the timing of grant payments being misjudged.  The situation had been reviewed and arrangements put in place to prevent it happening again.

RESOLVED:

1.  That the review of the financial year 2011/12 which has been compiled in accordance with the Code of Practice on Treasury Management, as adopted by this Authority, be noted.

2.  That no amendments to current procedures are necessary as a result of the review of Treasury Management activities in 2011/12.