To report on the Treasury Management performance for 2014/15.

The Head of Finance has submitted a report (previously circulated, now appended) which detailed the performance of the treasury management function for the six months to 30th September 2014.

Cllr Turner, Board member for Finance, Asset Management and Public Health presented the report. He explained that

• Invested money with commercial property funds was getting a 6% return.
• The amount of money in Iceland banks was dwindling.
• We were now following Council’s ethical investment statement.
• Most debt was related to the HRA and the purchase of the Council’s housing stock from the government.

Cllr Tanner noted that all the maturity dates were short term. He asked whether the Council had any longer term deposits. The Head of Finance explained that interest rates are currently forecast to increase in the second quarter of 2015 and it made sense to invest short term to guard against the risk of being caught by interest rate rises. The Council does have £10 million in long term indirect property funds although the interest rates are significantly higher than traditional investments.

Cllr Price noted that the Low Carbon Hub investment proposal had offered quite a high interest rate. He asked whether the Council had looked into any other forms of energy schemes. The Head of Finance explained that these form of investments are classified as ‘non-specified investments’ as the organisations being invested with have no official credit rating and as such they tend to be more risky but offered a higher return. Under the Council’s current Treasury Strategy such investments are limited to 25% of the total portfolio and the Council already held £10 million in indirect property fund non-specified investments.

The Head of Finance explained that these forms of investment fall into a non-specified investment category and these tend to be more risky but offered a higher return. The Chief Executive stated that investing in bonds was a growing area for local authorities. Green energy investments provided a modest rate of return with risks spread over a number of smaller schemes. Possibly the Council should consider using treasury management funds to support some of the strategic objectives, for example to encourage people to purchase property in Oxford. The Executive Director of Organisational Development and Corporate Services explained that there were set limits on different types of investment so that the Council always has  the cash flow to deal with its daily business. While it is possible to look at alternatives the Council needed to be mindful not to put too much into risky investments

Consideration of investing in other vehicles such as Green energy bonds would be considered when the Treasury Management Strategy was reviewed in a few months time.

The City Executive Board resolved to:

·         Note the performance of the treasury management function for 2014/15.

·         Thank officers for the work done