Babergh and Mid Suffolk District Councils
Democratic Services

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Decision details

Decision Maker: Babergh Council, Mid Suffolk Council

Decision status: Recommendations Approved

Is Key decision?: Yes

Is subject to call in?: No

Purpose:

To note the TM activity for the first six months of 2019/20 in accordance with the approved TM strategy

Decisions:

18.1    The Senior Financial Services Officer introduced paper JAC/19/10 detailing the performance and effects of decisions taken in the first 6 months of the 2019/20 financial year.

 

18.2    The Senior Financial Services Officer also pointed out the following key aspects of the report.

·         Banking activities undertaken were within the daily bank account limits.

·         Each Council has reduced its short-term debt. Babergh by £989k and Mid Suffolk by £2.67m.

·         Mid Suffolk lent a further £4.9m to Gateway 14 Ltd, which was financed from available short-term money market funds.

·         All investment activities undertaken were in accordance with the approved counterparty list.

·         The councils’ investment activities including average returns can be found at Appendix C of the report.

·         Both Councils made another investment of £2m each in a higher yielding strategic pooled fund (Investec Diversified Income Fund)

·         Investment by both Councils in Funding Circle has reduced as unallocated funds have been reclaimed and existing loans repaid. For Babergh this was £191k of the £405k previously invested and for Mid Suffolk it was £183k of the £398k.  Leaving the balance at 30th September as £214k for Babergh and £215k for Mid Suffolk.

·         Both councils are compliant with the upper limits for interest rate exposure. The investment activity undertaken for the half year was done so in priority order of security and liquidity over yield as prescribed in the Treasury Management Strategy.

 

 

18.3    The Senior Finance Services Officer also informed members that there were errors in the tables within the report relating to the performance of the new Investec Investment, these were in Appendix C, paragraph 2.1.8, table 6.4 – in Babergh’s table the average rate of return should be 4.65% nor 6.20% and in Mid Suffolk’s table both the interest received amounts should be £0.31m.

 

18.4    Councillor Muller enquired if there was a plan to continue to reduce the amounts invested in the Funding Circle.

 

18.5    The Assistant Director – Corporate Resources stated that the plan was to reduce the amount being invested in the Funding Circle to zero.

 

18.6    Councillor Caston asked if the monies where being invested in alternative funds such as Investec etc.

 

18.7    The Assistant Director – Corporate Resources stated that those monies were being invested in five other funds to spread the risk.

 

18.8    Councillor Matthiessen enquired if spreading the risk and removing the monies from Funding Circle and investing in five other funds was more work.

 

18.9    In response the Assistant Director – Corporate Resources stated that as these were long term investments there it did not create any more work.

 

18.10  Councillor Matthissen also enquired if the monies being invested in Gateway 14 were also long term investments.

 

18.11  The Assistant Director – Corporate Resources replied that the Gateway 14 investment was thought to be short term and that as Gateway 14 was developed and sold off the monies would be returned.

18.12  Councillor Matthissen voiced his concerns regarding the plots being sold off.

 

18.13  Councillor McCraw asked if the possibility of flattening the Babergh borrowing peak in the chart on page 335 of the papers was being explored.

 

18.14  The Assistant Director -Corporate Resources in response stated that it was not possible to do anything about this currently as it was a fixed rate borrowing.

 

18.15  Councillor McCraw asked if opportunities to flatten the peak of borrowing without incurring penalties could be investigated.

 

18.16  The Assistant Director – Corporate Resources stated that she would like to flatten the peak and would do so if possible.

 

18.17  Councillor Hurren enquired if investment monies were a balance of running services

 

18.18  The Senior Financial Services Officer stated that surplus cash was invested into money market funds and other short-term funds.

 

18.19  Councillor Caston asked for clarification if brokers were a vehicle to invest or used for advice.

 

18.20  The Senior Financial Services Officer  stated that they were more like a vehicle to invest.

 

18.21  Councillor Caston enquired if there was a system in place to review investments regularly?

 

18.22  The Assistant Director – Corporate Resources replied that early warnings were received in weekly emails and that the Council was very proactive in monitoring these.

 

18.23  Councillor Hurren enquired if there was a fee for advice

 

18.24  In response the Assistant Director – Corporate Resources  confirmed that there was.

 

18.25  Councillor Caston enquired if there was a fee for investing.

 

18.26  In response the Assistant Director – Corporate Resources Katherine Steel replied that no fee was paid for transactions.

 

The recommendation to both Councils was Proposed by Councillor Hurren and Seconded by Councillor Matthissen.  By Unanimous Vote.

 

It was RESOLVED:-

 

(1)       That the Treasury Management activity for the first six months of 2019/20 as set out in the report and Appendices be noted.

 

(2)       That it be noted that both Councils’ Treasury Management activity for the first six months of 2019/20 was in accordance with the approved Treasury Management Strategy, and that the Council has complied with all the Treasury Management indicators for this period.

Report author: Sue Palmer

Publication date: 26/02/2020

Date of decision: 27/01/2020

Decided at meeting: 27/01/2020 - Joint Audit and Standards Committee

Accompanying Documents: