Issue - meetings

The Cabinet is requested to consider the agenda report and make the following resolution:

The Cabinet is requested to review and note this summary of treasury management activities and performance for 2018-2019.

RESOLVED

That the summary of the treasury management activities and performance for 2018-2019 be noted.

Mrs Lintill introduced the item. She explained that the report provides a summary of treasury management activity for 2018-19. The Corporate Governance and Audit Committee (CGAC) had also considered the report on 25 July 2019 but made no additional comments.

Mrs Lintill outlined the four main elements of the report:

·       A summary of treasury activity and performance during 2018-19

·       An update on the councils directly owned investment properties

·       A compliance report against the limits and indicators set out in the councils treasury strategy

·       A general update including Brexit preparations and proposals on additional investments using external pooled funds

Mrs Lintill confirmed that the previous request by CGAC for officers to investigate setting an indicator to measure proportionality of commercial income generated by the council is underway but will require further guidance from the Chartered Institute of Public Finance and Accountancy.

Mrs Lintill then highlighted Table 1 which outlines the increase in treasury investments since 2014 which in part had been driven by New Homes Bonus and CIL receipts. She explained that Table 2 shows the position of the council’s external funds as at 31 March 2019. She then confirmed that since the first external investments were made in 2016 the council has earnt £2 million in income to support services.

Mrs Lintill explained that the only item subject to further scrutiny is the net capital loss position on the value of the council’s external funds. She confirmed that the overall trend is positive and the council remains committed to hold funds in the economic cycle. Mrs Lintill drew attention to Section 5 of the report which sets out the present value of the council’s direct property assets. The capital value of the assets remain above the sums originally paid and have generated a 5.6% return.

Mrs Lintill then explained with reference to Appendix C that there had been one reportable exception due to an error in identifying the correct counterparty limit for an investment. The error led to a higher investment being made than permitted by the Council’s Treasury Management Strategy. Mrs Lintill confirmed that the investment was paid back in full and no further incidents have taken place.

Mrs Lintill then outlined the council’s Brexit preparation steps to reduce the risk of a temporary disruption to the international financial system. Further UK domicile market funds have been opened to hold temporary liquidity and a backstop account has been set up with the treasury which has been tested.

Mr Briscoe wished to thank officers for the report.

With regard to section 8.2 of the report Mrs Plant requested a verbal update on the review of the funds. Mr Catlow confirmed that an officer/member meeting had recently taken place with a representative from Arlingclose (the council’s Treasury Management Advisor) to review performance and lessons learnt from the council’s external pool funds. Arlingclose were instructed to come back at the end of September with proposals for future investments.

Decision

The Cabinet then voted unanimously to make the resolution below.

RESOLVED

That the  ...  view the full minutes text for item 40

The Corporate Governance and Audit Committee is requested to consider the 2018-2019 Treasury summarised activity and out-turn position and provide comments to the Cabinet as necessary and nominate a representative to work with the Cabinet Member for Finance, Growth, Place and Regeneration and officers to complete a review the existing external pooled fund investments as requested by Cabinet.

The Committee considered this report circulated with the agenda.

Mr Catlow presented the report. 

He drew members attention to paragraph 6.2 concerning investment activity.  The intention had been to start restructuring the Council’s portfolio and to start thinking about further external pooled investments.  Unfortunately the Council was unable to progress this due to the changing accounting environment and the introduction of IRFS 9 by CIPFA into the 2018-2019 Code and having to wait for the results of Government consultations to decide if the accounting impact in terms of fair value movements on external pooled funds could be reversed, so that the general fund was not affected by fair value movements in external pooled funds.  The Government had passed a regulatory override in January this year, which enabled the Council to update the 2019-2020 Treasury Management Strategy.

Paragraph 8.1 provided details of the Councils compliance with the main 2018-2019 Treasury limits.  There was one reportable exception during the year due to human error where an investment had exceeded the £1 million counterparty limit for one particular bank.

In referring to Paragraph 11, he advised that as the Council had now been in pooled funds for two years a review of the Council’s external fund investments would take place.  A nomination was sought for a member of the Committee to sit on a group to complete the review.

Mr Catlow responded to members’ questions and comments:

·           With regard to the latest Brexit progress, the Council’s preparations on Brexit were to ensure that should there some short term disruption to funds flow the Council had the ability via UK domiciled money funds to maintain sufficient liquidity to maintain cash flow operations until the short term instability was resolved. 

·           Mr Ward confirmed that in terms of Brexit preparations the Council received a small grant to assist the Council prepare for its own Brexit business continuity arrangements.  The provision of medicines was not something that the Council would be involved in.  Other bodies, such as the NHS, had received grants towards their own Brexit preparations.  The purchase of a fuel storage facility at Chichester Contract Services with the Council’s grant of £34,900 was considered by an officer group and was deemed an appropriate use of money.  The purchase would facilitate the continuation of household refuse collections in the event of disruption to fuel supplies and enable other vital Council services to continue. 

RECOMMENDED

1)     That the 2018-2019 Treasury Management Outturn Report be recommended to Cabinet; and

2)    That Mr T Johnson be nominated to work with the Cabinet Member for Finance, Growth, Place and Regeneration and officers to complete a review of the existing external pooled fund investments as requested by Cabinet.