Issue - meetings

The Committee considered the report of the Head of Finance and Resources setting out details of the activities of the Treasury Management function as at 30 September 2015 in accordance with CIPFA’s Code of Practice on Treasury Management in Local Authorities.  It was noted that:

·  All new investments during the first six months of 2015/16 had been short term (less than one year).  As at 30 September 2015, the Council held investments totalling £34.55m.  Income generated on these investments was £116k, and the average rate of return on investments over this period was 0.75%.  The Council had used highly rated institutions to invest its funds and had kept the majority of investments under one year in case funds were needed to fund potential property purchases and to react to potential changes in market rates. 

·  The use of property funds was looked at during 2014/15, but the net returns (after deducting management fees) were judged to be insufficient to justify the level of risk associated with this type of investment and the length of time that funds would have been tied up.  However, due to the increase in returns, the use of property funds was being reviewed again.

·  During the first six months of 2015/16, the Council had to borrow on two occasions for short term liquidity reasons at a total cost of £139.73.

·  The Council’s investment priorities were security of capital, liquidity and yield. The aim was to achieve the optimum return on investments with proper levels of security and liquidity.

In response to questions by Members, the Accountant (Systems) explained that:

·  The Council’s treasury advisor, Capita Asset Services, had provided an interest rate forecast over the period December 2015 – June 2018.  Capita would be reviewing the forecast in December 2015 as there were expectations of a rate increase in the USA which could have a knock on effect on predictions for the UK Bank rate.

·  A key element of the 2015/16 Treasury Management Strategy was the inclusion within the Council’s counter party list of overseas institutions where the country’s sovereignty rating was equal to or better than the UK’s AA+ rating and the institution itself was of a high credit quality.  In this connection, the Council had invested £1m in the Commonwealth Bank of Australia, a highly rated institution, for a period of ten months at a rate of 0.71%.

RESOLVED:

1.  That the mid-year review which has been undertaken of the activities of the Treasury Management function in accordance with CIPFA’s Code of Practice on Treasury Management in Local Authorities be noted.

2.  That no amendments to the current procedures are necessary as a result of the review which has been undertaken of the activities of the Treasury Management function in 2015/16 to date.