At its meeting on 30 July 2018, the Joint Audit and Standards Committee considered Paper JAC/18/3 – Joint Annual Treasury Management Report 2017/18.
The recommendations set out in the report were accepted.
It was RECOMMENDED TO COUNCIL
(1) That the Treasury Management activity for the year 2017/18 be noted. Further, that it be noted that performance was in line with the Prudential Indicators set for 2017/18.
(2) That it be noted that Babergh District Council Treasury Management activity for 2017/18 was in accordance with the approved Treasury Management Strategy, and that, except for one occasion when the Council exceeded its daily bank account limit with Lloyds by £120k, as mentioned in Paragraph 4.6 of Paper JAC/18/3, the Council has complied with all the Treasury Management Indicators for this period.
Note – It is a requirement of the legislation that the Annual Treasury Management Report is submitted to the Full Council for noting.
Minutes:
52a.1 Councillor Jenkins introduced the report and MOVED the recommendations in the report. The report was seconded by Councillor Patrick.
52a.2 Commenting further Councillor Jenkins informed Council that the report had been presented and discussed at the Joint Audit and Standards Committee meeting on 30 July 2018, there were no changes to the report as a result of this meeting.
52a.3 The report covered the year to 31 March 2018 and provided details of the performance and decisions taken throughout the year. It demonstrated that the Council’s performance was in line with the Prudential indicators set for 2017/18 and was in accordance with the approved treasury management strategy and that except for one occasion when the council exceeded its daily bank account limit with Lloyds by £120K, the Council had complied with all the treasury management indicators for this period.
52a.4 Councillor Hinton asked where the increased borrowing of nearly £20m had actually been spent and also queried under the investment activity on table 4 Paragraph 1.2 of the report why the CCLA balance at 31/3/18 was was £5 million and yet under page 3.51 the long- term investment return illustrated the value of those investments was now only £4.927 million?
52a.5 In response the Section 151 Officer said that the increase in borrowing was as a result of the Council starting the investment in CIFCO during 17/18 that table was talking about net borrowing but there were adjustments in there around useable reserves and working capital so there were other elements that make up the £20m in total other than just the borrowing itself. So that is the net position, there is another table on page 33 table 4.6 of the report which illustrates the absolute change in the borrowing. This shows that the actual borrowing has increased from just under £93m to £98m so actual borrowing rose by £5.5m. The question about CCLA and the difference between the £5m and the £4.9m. £5m was the cash that we invested up front in CCLA, the figure on page 40 was the current value of the units that the Council owns, so as with property itself units in property funds do go up and down but that will obviously be a long term investment so the Council certainly won’t cash the units in while they are less than what was paid for them. The reason the Council invested in the CCLA was around the income stream that the Council gets back from having those units. So, there will be some change in the capital value of our investment but it is the net income stream that the Council has invested in.
52a.6 Councillor McCraw questioned why on page 37 the investment position showed both Babergh’s treasury investment and Mid Suffolk’s treasury investment as being almost identical except for one thing. The position for the percentage invested in banks and money market funds appeared to be reversed between the two councils and asked why that was case and if this was of any significance?
52a.7 The Section 151 Officer in her response stated that this was simply a timing issue and reflected the position at the 31st March 2018. As the Councils had a Joint Investment Strategy it was simply what cash was available and what could be invested on that day.
52a.8 Councillor Bavington asked when the council exceeded its daily bank account limit with Lloyds by £120K had the Council spent money on interest payments that it shouldn’t have?
52a.9 In response Councillor Patrick stated the excess was that there was more money put on the account than should have been put on the account. The Council didn’t borrow money, it was not deducted. It was unfortunately a timing issue but too much money was put on the account therefore the limit was exceeded, but the Council did not owe interest on it.
It was Resolved: -
(i) That the Treasury Management activity for the year 2017/18 be noted. Further, that it be noted that performance was in line with the Prudential Indicators set for 2017/18.
(ii) That Babergh District Council Treasury Management activity for 2017/18 was in accordance with the approved Treasury Management Strategy, and that, except for one occasion when the Council exceeded its daily bank account limit with Lloyds by £120k, as mentioned in Paragraph 4.6 of the report, the Council has complied with all the Treasury Management Indicators for this period be noted.
Supporting documents: