The Head of Financial Services submitted a report to the City Executive Board on 15 September 2016 which sets out the Council’s treasury management activity and performance for the financial year 2015/2016. 

The report also identifies some reductions in interest rates in 2016/17 and recommends a change to the Treasury Strategy for 2016/17 which is a matter for Council.

The report and appendices are attached. The relevant Executive Board minute is attached later in the agenda.

The Board member will move the recommendation.

Recommendation:

The City Executive Board recommends that Council approve the amendment to the Specified Investments list attached at Appendix 1 and paragraphs 35 – 37 of the report.

Council considered a report to the City Executive Board on 15 September 2016 setting out the Council’s treasury management activity and performance for the financial year 2015/2016. Appendix 1 proposed limits to Money Market Fund investments, AAA rating, of £25m per institution, with a maximum maturity period of ‘liquid’.

Council resolved to approve the amendment to the Specified Investments list attached at Appendix 1 and paragraphs 35 – 37 of the report.

The Head of Financial Services has submitted a report which sets out the Council’s treasury management activity and performance for the financial year 2015/2016.  The report also identifies some reductions in interest rates in 2016/17 and recommends a change to the Treasury Strategy for 2016/17.

Recommendations: That the City Executive Board resolves to:

1.    Note the report

2.    Recommend that Council approve the amendment to the Specified Investments list attached at Appendix 1 (paragraphs 35 – 37 below)

The Head of Financial Services submitted a report which set out the Council’s treasury management activity and performance for the financial year 2015/2016. The report also identifies some reductions in interest rates in 2016/17 and recommends a change to the Treasury Strategy for 2016/17.

Cllr Turner, Board Member for Finance, Asset Management and Public Health presented the report. He said that the Council had done well on the property funds but as a result of Brexit, capital values had reduced but were still significantly above the Council’s purchase price. He was cautious about over-exposing the Council to risk in the property market.

The Head of Financial Services said that a 0.10% base rate was expected.  In terms of internally borrowing, it was better for council to borrow internally as you only forfeit the interest from saving the money in the bank (which is very low at the moment) rather than paying a higher interest rate through external borrowing.

The City Executive Board resolves to:

1.    Note the report

2.    Recommend that Council approve the amendment to the Specified Investments list attached at Appendix 1 (paragraphs 35 – 37 below)

The Head of Financial Services introduced the report and said that the 1.1% return on the Council’s investments represented a good outcome given that the base rate was only 0.5% during 2015/16.

The Panel considered whether there was a case for holding money in equivalent banks located in other jurisdictions.  The Head of Financial Services advised that interest rates were unlikely to be markedly different in other developed countries.  The Panel noted that exchange rates tended to even out any possible gains in the longer run, although there may be some merit in holding money abroad terms of diversifying the Council’s holdings. 

The Head of Financial Services has submitted a report which presents the performance of the treasury management function for the 6 months to 30 September 2015.

Recommendations: That the City Executive Board resolves to:

1.         note the performance of the treasury management function for the six months to 30 September 2015

The Head of Financial Services submitted a report which presented the performance of the treasury management function for the 6 months to 30 September 2015.

The Head of Financial Services presented the report to the Board.  In consideration of the report the Board noted the following points:

·         That the average rate of return on investments was 1.23%, which was 0.23% above the performance target of 1%

·         Forecast investment income is down by £0.136 million, due to interest rates being lower than predicted

·         The merits of increasing investment in property should be looked at in the round

The City Executive Board resolved to:

1.     Note the performance of the treasury management function for the six months to 30 September 2015.

See pages 25 - 42 of the main agenda and revised report attached.

Revised report attached updating only:

o   paragraph 14 of Appendix 2,

o   heading on table 4 and 5

on the recommendation of the Scrutiny Finance Panel and City Executive Board.

City Executive Board decision

The City Executive Board considered the report of the Head of Finance at its meeting on 12 February and resolved to recommend that Council:

1.    Approve the Treasury Management Strategy 2015/16, and adopt the Prudential Indicators 2015/16 – 2017/18 at paragraphs 8 to 37, and Appendix 2.

2.    Approve the Investment Strategy for 2015/16 and investment criteria set out in paragraphs 23 to 37 and Appendix 1.

3.    Approve the Minimum Revenue Provision (MRP) statement at paragraphs 12 to 22 which sets out the Council’s policy on debt repayment.

The Head of Finance has submitted a report which details the Treasury Management Strategy for 2015/16 together with the Prudential Indicators for 2015/16 to 2017/18.

The City Executive Board will consider these reports at its meeting on 12 February and their decisions and recommendations will be reported separately.

Officer Recommendations:Subject to the recommendation of the City Executive Board,Council is recommended to:

1.    approve the Treasury Management Strategy 2015/16, and adopt the Prudential Indicators 2015/16 – 2017/18 at paragraphs 8 to 37, and Appendix 2 of the report;

2.    approve the Investment Strategy for 2015/16 and investment criteria set out in paragraphs 23 to 37 and Appendix 1; and

3.    approve the Minimum Revenue Provision (MRP) statement at paragraphs 12 to 22 which sets out the Council’s policy on debt repayment.

Council had before it the report of the Head of Finance to the City Executive Board on 12 February 2015 detailing the treasury management strategy for 2015/16 and the prudential indicators for 2015/16 to 2017/18, and the decisions and recommendations of the City Executive Board.

Councillor Turner moved and Councillor Price seconded approval of the recommendations to Council in the report.

Council resolved to:

1.    approve the Treasury Management Strategy 2015/16 and adopt the Prudential Indicators 2015/16 – 2017/18 at paragraphs 8 to 37 and Appendix 2;

2.    approve the Investment Strategy for 2015/16 and investment criteria set out in paragraphs 23 to 37 and Appendix 1; and

3.    approve the Minimum Revenue Provision (MRP) statement at paragraphs 12 to 22 which sets out the Council’s policy on debt repayment.

To present recommendations from the Finance Panel on the Treasury Management Strategy 2015/16

Scrutiny Recommendations That the City Executive Board

1. Reword paragraph 14 in appendix 2 and the title of table 5 before Council is asked to approve the Treasury Management Strategy.

2. that the City Council considers all options for refinancing the £20m repayment of its external debt, which is due to be repaid in 2020/21,

3. That the City Council pursues ‘real asset lettings’ at a pace.  This could be both a good investment and one which supports the City Council’s objectives.

4. That the City Council obtains independent advice on its liquidity and borrowing potential.

The Scrutiny Officer submitted a report (previously circulated, now appended) which detailed the recommendations from the Finance Panel on the Treasury Management Strategy 2015/16.

Cllr Simmons, Chair of the Scrutiny Committee presented the report.

Cllr Turner, Board Member for Finance, Asset Management and Public Health agreed the recommendations.

The City Executive Board resolved to AGREED

1. To reword paragraph 14 in appendix 2 and the title of table 5 before Council is asked to approve the Treasury Management Strategy.

2. That the City Council considers all options for refinancing the £20m repayment of its external debt, which is due to be repaid in 2020/21,

3. That the City Council pursues ‘real asset lettings’ at a pace. This could be both a good investment and one which supports the City Council’s objectives.

4. That the City Council obtains independent advice on its liquidity and borrowing potential.

The Head of Finance has submitted a report which details the Treasury Management Strategy for 2015/16 together with the Prudential Indicators for 2015/16 to 2017/18.

Officer Recommendations: That the City Executive Board recommends that Council:

1. Approve the Treasury Management Strategy 2015/16, and adopt the Prudential Indicators 2015/16 – 2017/18 at paragraphs 8 to 37, and Appendix 2

2. Approve the Investment Strategy for 2015/16 and investment criteria set out in paragraphs 23 to 37 and Appendix 1

3. Approve the Minimum Revenue Provision (MRP) statement at paragraphs 12 to 22 which sets out the Council’s policy on debt repayment.

The Head of Finance submitted a report (previously circulated, now appended) which detailed the Treasury Management Strategy for 2015/16 together with the Prudential Indicators for 2015/16 to 2017/18.

Cllr Turner, Board Member for Finance, Asset Management and Public Health presented the report. He explained that because of the low interest rates, It was better for Council to invest in property rather than leave the money in the bank. Work on getting money back from Iceland was on-going.

The City Executive Board resolved to RECOMMEND that Council:

1. APPROVE the Treasury Management Strategy 2015/16, and adopt the Prudential Indicators 2015/16 – 2017/18 at paragraphs 8 to 37, and Appendix 2

2. APPROVE the Investment Strategy for 2015/16 and investment criteria set out in paragraphs 23 to 37 and Appendix 1.

3. APPROVE the Minimum Revenue Provision (MRP) statement at paragraphs 12 to 22 which sets out the Council’s policy on debt repayment.

For the Panel to consider the Treasury Management Strategy 2015/16.

Anna Winship, Financial Accounting Manager, has been invited to present this item.