Babergh and Mid Suffolk District Councils
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Agenda item

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.

 

 

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  Funds would continue to be withdrawn as existing loans were paid off and alternative solutions explored.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 the Council had complied with all the Treasury Management’s indicators for this period.

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