Annual Treasury Management Report 2017/18
- Meeting of Audit Committee, Tuesday, 31st July, 2018 6.00 pm (Item 32.)
- View the background to item 32.
The Assistant Director, Financial Services and Revenues (Chief Finance Officer), introduced his report on the Treasury Management activities and performance of the last financial year. To ensure that members are fully aware of the activities undertaken, that Codes of Practice have been complied with and the Council’s strategy has been effective in 2017-18.
Treasury management related to the council’s investments, cash flow, banking, money market and capital market transactions. The purpose of the strategy is to minimise the risks associated with these activities and optimise performance.
The Assistant Director, Financial Services and Revenues (Chief Finance Officer), explained that last year’s actions revolved around funding/external debt. It is our intention to borrow more this year and next, once the statements have been approved next year. There is no need to amend this year’s Treasury management strategy. We will be borrowing more when interest rates are low. We may use our own investments but that remains a future decision.
Councillor Levane asked for clarification on the amounts of individual loans. She questioned whether it was because of the maturity of loans? The Assistant Director, Financial Services and Revenues (Chief Finance Officer), confirmed it was.
Councillor Chowney raised his disappointment that the leader of opposition didn’t call the report for discussion at Council. He said it appeared to be custom in previous years. As neither leader called the report, he said he felt it was unfair on officers who had put the report together. Councillor Rankin said he was not aware of this custom and would raise it with his party.
Councillor Rankin said he was concerned regarding the phrase ‘take view on macro markets’ and ‘borrow as much as can’. He said it is about return, money is not cheap and he was concerned it is not invested. The Assistant Director, Financial Services and Revenues (Chief Finance Officer), said the interest rates were set to go up. If we go to market we have to sell assets to afford. We need to reduce services. We borrowed at 2.5% this year. You have to meet borrowing costs but even so, it is definitely time to be fully borrowed. To do otherwise, you would risk everything.
Councillor Chowney explained that if the opportunity presents itself and sums work out we must borrow. If, say, one of our tenants goes bust, we either let the premises to someone else or build houses. We don’t know what the future holds.
Councillor Rankin said the role of the committee is to look at risks, if the deal goes wrong how do we reverse out of it. The Assistant Director, Financial Services and Revenues (Chief Finance Officer), said we should not borrow in advance of need.
Councillor Levane proposed a motion to approve the report as set out in the resolution below, which was seconded by Councillor Chowney.
RESOLVED (unanimously) to consider the report – no recommendations are being made to amend the current Treasury Management Strategy as a result of this particular review.
The reason for the decision was: To ensure that members are fully aware of the activities undertaken in the last financial year, that Codes of Practice have been complied with and that the Council's strategy has been effective in 2017-18.
Under the Code adopted the Full Council are required to consider the report and any recommendations made.