Report of Chief Executive

The Cabinet considered a report of the Chief Executive detailing the treasury management activity for both quarter three and the period from April to December 2016.

Recommended:-

1.    That the Quarter Three Treasury Management Report for 2016/17, be approved.

2.    That The Revised Minimum Revenue Provision Policy 2016/17, as set out at Appendix 3 to the submitted report (the changes to which are set out in Section 14) be approved.

3.    That it be noted that Treasury management activities were carried out in accordance with the CIPFA (The Chartered Institute of Public Finance and Accountancy) Code of Practice for Treasury Management in the Public Sector during the period from April to December 2016.

4.    That it be noted that the loan and investment portfolios were actively managed to minimise cost and maximise interest earned, whilst maintaining a low level of risk.

5.    That it be noted that an average of £49.2m of investments were managed in-house. These earned £0.21m of interest during this nine month period at an average rate of 0.57%. This is 0.34% over the average 7 day LIBID and 0.21% over the average bank base rate.

6.    That it be noted that an average of £13.1m of investments were managed by our former external fund manager. These earned £0.14m of interest during this nine month period at an average rate of 1.37%. This is 1.14% over the average 7 day LIBID and 1.01% over the average bank base rate.

7.    That it be noted that during September 2016 £22.7m was recalled from our former external fund manager and £15m was invested equally across two short dated bond funds and £5m was invested into an enhanced cash fund.

8.    That it be noted that an average of £6.1m was managed by two short dated bond fund managers. This earned £0.22m since it was invested from a combination of an increase in the value of the units and income distribution, giving a combined return of 1.32%.

9.    That it be noted that an average of £1.7m was managed by an enhanced cash fund manager. This earned £0.007m since it was invested at an average rate of 1.60%.

10.That it be noted that an average of £14.7m was managed by two property fund managers. This earned £0.278m during this nine month period from a combination of an increase in the value of the units and income distribution, giving a combined return of 2.50%.

11.That it be noted that the level of borrowing from the Public Works Loan Board (PWLB) (excluding debt relating to services transferred from Essex County Council on 1st April 1998) remained at the same level of £227.8m (Housing Revenue Account (HRA): £77.0m, GF: £150.8m) during the period from April to December 2016.

12.That it be noted that the level of financing for ‘invest to save’ capital schemes increased from £3.21m to £6.78m during the period from April to December 2016.

Reason for Decision

The CIPFA Code of Practice on Treasury Management recommends that Local Authorities should submit reports regularly. The Treasury Management Policy Statement for 2016/17 sets out that reports would be submitted to Cabinet quarterly on the activities of the treasury management operation.

Other Options

There are many options available for the operation of the Treasury Management function, with varying degrees of risk associated with them. The Treasury Management Policy aims to effectively control risk to within a prudent level, whilst providing optimum performance consistent with that level of risk.

Note:- This is a Council Function.

Eligible for call-in to Policy and Resources Scrutiny Committee.

Executive Councillor :- Moring