Chair of Joint Audit and Standards Committee
At its meeting on 27 January 2020, the Joint Audit and Standards Committee considered Paper JAC/19/10 and accepted the recommendations as set out in the report:
Recommendation to both Councils
(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.
Note: It is a requirement of the Code of Practice on Treasury Management that full Council notes the Half-Year position.
Minutes:
214a.1 Councillor Hurren introduced the report and said that this was the joint Treasury management report covering the position for the first six months of the financial year 2019/20. It provided details of the performance, effects of decisions taken during that period and confirms compliance with the Council’s treasury management policy.
214a.2 The report explained in more detail the factors affecting the strategy and activities, including the regulatory framework, economic conditions, interest rate and liquidity risk.
214a.3 Interest rates during the year continued at very low levels, and the Bank of England Rate remained at 0.75%.
214a.4 Even though leaving the EU was delayed until 31 January 2020 a key concern was the limited transitionary period following exit date, which would maintain and create additional uncertainty over the next few years. Adding to that, the ongoing dispute about the imposition of tariffs between the US and China contributed to a slowdown in the global economy during 2019.
214a.5 Councillor Hurren then outlined the point in the report including:
1. Banking activities undertaken were within the daily bank account limits.
2. Each Council has reduced its short-term debt. Babergh by £989k and Mid Suffolk by £2.67m.
3. Mid Suffolk lent a further £4.9m to Gateway 14 Ltd, which was financed from available short-term money market funds.
4. All investment activities undertaken were in accordance with the approved counterparty list.
5. The councils’ investment activities including average returns can be found at Appendix C of the report on page 187.
6. Both Councils made another investment of £2m each in a higher yielding strategic pooled fund (Investec Diversified Income Fund)
7. 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.
8. Both councils were 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. He referred to 1.2 in Appendix A P 179.
214a.6 He continued that he could reassure Members that the Council’s money and other peoples in our control never stands still and was always earning if possible. For this he would have to pay tribute to the small but very dedicated team.
214a.7 Councillor Hurren MOVED Recommendations 3.1 and 3.2 in the report, which was SECONDED by Councillor Ward.
214a.8 Councillor Hinton was concerned that report was perhaps a little bit historical with regards to the financial markets due to the Covid-19 Pandemic and the effect this would have for the Council.
214a.9 Councillor Hurren responded that there currently there were no figures for the effect of the Covid-19 Pandemic.
214a.10 The recommendations were put to Members for voting and the vote was CARRIED.
It was RESOLVED: -
1.1
That the Treasury Management activity for the first
six months of 2019/20 as set out in this
report and Appendices be noted.
1.2 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.
Supporting documents: