Agenda item

The Cabinet is requested to consider the agenda report and its three appendices and to make the proposed resolution set out below:

That the Treasury Management activity and performance for 2017-2018 to date together with any comments made by Corporate Governance and Audit Committee be noted.

RESOLVED

That the Treasury Management activity and performance for 2017-2018 to date together with any comments made by Corporate Governance and Audit Committee be noted.

The Cabinet received and considered the agenda report and its three appendices.

Mrs Hardwick presented the report.

Mr Catlow was in attendance for this item.

Mr Dignum first of all began by reminding the Cabinet and other CDC members who were present as observers about the treasury management training session on 8 December 2017. He, and later Mrs Hardwick, strongly encouraged members (particularly those who sat on the Cabinet and the Corporate Governance and Audit Committee (CGAC)) to attend this very valuable workshop.

Mrs Hardwick said that the report presented a summary of CDC’s treasury activity for the first half of 2017-2018.  A slightly fuller version of this report had been presented to the CGAC on 23 November 2017, which had noted the direction taken so far, the challenges faced for the future and their impact on a future strategy.Those challenges were summarised in para 3.3 with further details in appendix 2.  The greatest challenge was to respond to the new Prudential Code and the Regulatory Guidance that were expected to be issued early in 2018. The aforementioned forthcoming treasury management training session would cover those regulatory changes together with the wider environment within which treasury decisions were made.  

As to 2017-2018, treasury funds had risen to around £60m and CDC had continued to use money market deposits for short term liquidity while reducing the level of lending to other local authorities due to the poor returns offered. The current quarterly return for internal investments of 0.52% in para 5.2 was in line with the return received by other district and borough councils in the benchmarking data.  

Longer term investments had increased following a further investment in external pooled funds (similar to unit trusts) early in the financial year.  The return to date for investment in the Local Authority Property Fund and the new external pooled funds was set out in paras 5.4 and 5.5 respectively. 

The return on CDC’s property portfolio was estimated at 7.82%. However, this did not take into account any income and expenditure for 2017-2018 and Estates officers were developing a system to monitor and report the performance of CDC’s investment properties going forward.

Two tables in section 5 of the report set out CDC’s performance against Security and Liquidity benchmarking.  Overall there were no exceptions to note although the Treasury team was not seeking to increase CDC’s use of bank deposits over the short term to ensure that the proportion of funds exposed to bail-in remained below the average of other district/borough councils.

Three exceptions to Treasury guidelines during the first half year were listed in section 6 of the report.  These had been reviewed for learning points and procedures had been reviewed to ensure that required improvements were made.

Appendix 1 contained a summary of CDC’s external advisor’s latest economic commentary, which dealt with the present economic and credit outlook.

She thanked Mr Catlow and his colleagues for their hard work in treasury management.

Mr Catlow did not wish to add to Mrs Hardwick’s introduction.

Mr Catlow responded to members’ comments and questions on points of detail with respect to (1) the first report from M and G which had been received the previous day and had yet to be fully considered but (a) it was noted that the rate of return for the six-month period was lower than anticipated and this would be clarified and (b) the capital growth statement had not yet been provided; (2) the reason for exceeding the unsecured building society deposit limit with the national Counties Building Society in July 2017 (page 77) was due to human error and steps had been taken to ensure it would not be repeated; and (3) the reason for the external funds capital losses  recorded in the Return table in section 5 of the report (page 77). 

Decision

The Cabinet voted on a show of hands unanimously in favour of making the resolution below.     

RESOLVED

That the Treasury Management activity and performance for 2017-2018 to date and the comments made by the Corporate Governance and Audit Committee be noted.