83 JAC/18/8 HALF YEAR REPORT ON TREASURY MANAGEMENT 2018/19 PDF 747 KB
Chair of Joint Audit and Standards Committee
At its meeting on 12 November 2018, the Joint Audit and Standards Committee considered Paper JAC/18/8, the Half Year Report on Treasury Management for 2018/19.
A revised Page 19 to Paper JAC/18/8 was circulated at the meeting, showing a corrected breakdown for the Mid Suffolk Treasury Investment Portfolio (Paragraph 1.5 of Appendix C). Paper JAC/18/8 provided a comprehensive assessment of Treasury Management activities for the first six months of 2018/19 and Members were asked to make recommendations to both Councils to note the Mid Year position, as required by the CIPFA Code of Practice on Treasury Management.
It was RECOMMENDED TO BOTH COUNCILS:
That the Treasury Management activity for the first six months of 2018/19 as set out in Paper JAC/18/8 and Appendices (Appendix C as amended by replacement page 19 circulated at the meeting) be noted.
It was RECOMMENDED TO MID SUFFOLK COUNCIL:
That it be noted that Mid Suffolk District Council Treasury Management activity for the first six months of 2018/19 was in accordance with the approved Treasury Management Strategy, and that the Council has complied with all the Treasury Management Indicators for this period.
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Minutes:
83.1 The Section 151 Officer introduced the report and highlighted that a revised breakdown for the Mid Suffolk Treasury Investment Portfolio (paragraph 1.5 of Appendix C) had been tabled.
83.2 The report itself explained in detail the factors affecting the Strategy and activities including the regulatory framework, economic conditions, interest rates and liquidity risk.
83.3 Councillor Norris informed Council that he had requested that the table on page 39 of the report illustrating the valuation of the Council’s investments provided a prior evaluation on the same date to give a better understanding of the long- term trend and sought confirmation that this would be included in future reports.
83.4 The Section 151 Officer confirmed that this would be available in the next report.
83.5 Councillor Matthissen asked if all members could have an itemised list of the Public Works Boards loans showing which projects they were loaned for and the interest rates and repayment dates including CIFCO and Gateway 14.
83.6 In response the Section 151 Officer agreed that a list could be provided, however, the list would not be directly linked to particular projects because of when the actual loan was taken out, this was divorced from the Capital Programme, loans were not taken out at the time the expenditure was incurred as treasury management was measured on a day to day basis.
83.7 Councillor Matthissen asked how this was reconciled with the Companies’ House information where it showed various loans secured against various properties?
83.8 In response the Section 151 Officer stated that the Council had to put a debenture on the properties to secure the loans, however, the Council’s financing activities were separate, so as a purchase was made for CIFCO, the Council would not necessarily take out a loan on that same day because cash flows were managed as a totality across all of its activities, including the General Fund, companies and HRA fund.
83.9 Councillor Field asked a question relating to long term borrowing being at 2.99% on page 33 of the report and the projected UBS investment yield and if there were any concerns around this, he also sought clarification on why the maturity structure was so different between the two Councils?
83.10 In response the Section 151 Officer stated that in terms of the long-term borrowing detailed on page 33 of the report, the 2.99% was the average overall of the PWLB loans. In terms of the return on the UBS investment, the 3.91% would need to be clarified, but the Council was getting interest back at a higher rate than the long- term debt was costing. With respect to the maturity structure of the two Councils there were two different officer groups at the times the loans were taken out, hence why there were different decisions made in terms of the repayment for these loans.
83.11 Councillor Stringer queried why there was no mention of the significant risk register in the report?
83.12 In response the Section 151 Officer stated that as ... view the full minutes text for item 83
87 JAC/18/8 HALF YEAR REPORT ON TREASURY MANAGEMENT 2018/19 PDF 747 KB
Chair of Joint Audit and Standards Committee
At its meeting on 12 November 2018, the Joint Audit and Standards Committee considered Paper JAC/18/8, the Half Year Report on Treasury Management for 2018/19.
A revised Page 19 to Paper JAC/18/8 was circulated at the meeting, showing a corrected breakdown for the Mid Suffolk Treasury Investment Portfolio (Paragraph 1.5 of Appendix C). Paper JAC/18/8 provided a comprehensive assessment of Treasury Management activities for the first six months of 2018/19 and Members were asked to make recommendations to both Councils to note the Mid Year position, as required by the CIPFA Code of Practice on Treasury Management.
It was RECOMMENDED TO BOTH COUNCILS
That the Treasury Management activity for the first six months of 2018/19 as set out in Paper JAC/18/8 and Appendices (Appendix C as amended by replacement page 19 circulated at the meeting) be noted.
It was RECOMMENDED TO BABERGH COUNCIL
That it be noted that Babergh District Council Treasury Management activity for the first six months of 2018/19 was in accordance with the approved Treasury Management Strategy, and that the Council has complied with all the Treasury Management Indicators for this period.
Additional documents:
Minutes:
87.1 The Deputy Section 151 Officer introduced the report and informed Council that at its meeting on the 12 November, the Joint Audit and Standards’ Committee considered Paper JAC/18/8. A revised page was circulated at the meeting showing a corrected breakdown for Mid Suffolk’s Treasury Investment Portfolio and this was included in paragraph 1.5 Appendix C page 37 in the papers. The report explained in more details the factors affecting the strategy and activities including the regulatory framework, economic conditions, interest rates and liquidity risk. Banking activities were undertaken within the daily bank account limits. Babergh reduced its short- term debt by £3m. All investment activities undertaken were in accordance with the approved counterparty list. Investments by both councils in Funding Circle had reduced as unallocated funds had been reclaimed. For Babergh this was £208K out of the £638K previously invested. Funds would continue to be withdrawn as existing loans were paid off and alternative solutions explored. The Council had complied with the upper limits for interest rate and exposure. The investment activity undertaken for the year was done so in priority order of security and liquidity over yield as prescribed in the Treasury Management Strategy. There were no amendments to the recommendations.
87.2 Councillor Ward MOVED the recommendations in the report which Councillor Simon Barrett SECONDED.
87.3 Councillor Hinton drew attention to page 32 of the report and stated that where the report mentioned net borrowing it should read net liabilities.
87.4 The Deputy Section 151 Officer thanked Councillor Hinton for his valid point.
87.5 Councillor Busby sought clarification on Table 1 and Table 2 in the report as to why the net borrowing figures did not match in the two tables?
87.6 In response the Deputy Section 151 Officer informed Council that the top table reflected the balance sheet summary that included useable reserves as well as any borrowing that was required to be made. The table below that, reflected the actual borrowing that the Council had at the moment.
87.7 Councillor Bavington referred to the chart in 1.6 on page 43 of the report and the maturity structure of the borrowing of Babergh and Mid Suffolk and sought confirmation that Babergh’s borrowing would be substantially lower than Mid Suffolk’s because of the way Babergh had structured its borrowing in the first place.
87.8 In response the Deputy Section 151 Officer confirmed that when the money was due to be repaid Babergh had two options on how to repay it, they could either use their reserves to repay the loan or they could take out another loan. If it was the first option then Babergh would be in a better position.
It was Resolved: -
(i) That the Treasury Management Activity for the first six months of 2018/19 as set out in paper JAC/18/8 be noted.
(ii) That it be noted that the Babergh District Council Treasury Management Activity for the first six months of 2018/19 was in accordance with the approved Treasury Management Strategy and that ... view the full minutes text for item 87
18 JAC/18/8 HALF YEAR REPORT ON TREASURY MANAGEMENT 2018/19 PDF 747 KB
Assistant Director - Corporate Resources
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