Agenda item

The Cabinet is requested to consider the agenda report and its appendix and to resolve to note Chichester District Council’s Treasury Management 2016-2017 Mid-Year Progress Report for the six months to 30 September 2016.

RESOLVED

That Chichester District Council’s Treasury Management 2016-2017 Mid-Year Progress for the six months to 30 September 2016 be noted.

The Cabinet considered the agenda report (copy attached to the official minutes).

The report was introduced by Mrs Hardwick.

Mr Jackson was in attendance for this item.

Mrs Hardwick drew attention to the following matters. The report presented a summary of CDC’s treasury management performance for the first half of 2016-2017. The sums invested by CDC had continued to increase during the first half of 2016, mainly as a result of continued receipts of New Homes Bonus monies and the timing of expenditure on CDC’s capital programme. The balances held at 30 September 2016 (exhibit 1 in para 5.2 of the agenda report) were near the maximum expected during 2016-2017 and the funds available to invest would fall during the remainder of the year due to the timing of council tax and business rates receipts and expected capital expenditure on the redevelopment of 12 Terminus Road. Para 5.3 of the report highlighted the main investment developments over the first half of 2016-2017, showing that CDC’s further investment in the Local Authority Property Fund during September 2016 had brought the total investment up to the maximum in CDC’s guidelines of £10m.

CDC had continued to use Money Market deposits for short-term liquidity and reduced the level of lending to other local authorities due to the poor returns thereby generated. For the first time monies had been invested in Corporate Bonds; such investments were made within the credit rating and terms set out in CDC’s treasury management strategy, most being restricted to £1m for a maximum of six months. Section 8 contained three tables which set out CDC’s performance against bench-marking produced by Arlingclose for security, liquidity and return. Overall there were no exceptions to report and the only red rating related to the initial cost of CDC’s further purchase of shares in the Local Authority Property Fund.  As it was not expected to sell those shares that loss was not expected to be a cost to CDC’s general fund.

The report addressed the need to redefine the definition of ‘principal’ following investment in Corporate Bonds (para 5.18). A banking error had led to CDC being briefly overdrawn but the bank had refunded all of the costs in respect thereof. CDC was considering using its considerable cash resources to make a further investment of up to £7.5m in diversified asset funds and this was expected to be included within CDC’s 2017-2018 Treasury Management Strategy and Policy which the Council would be asked to approve in March 2017. Treasury management strategy training had been arranged for members of the Cabinet and the Corporate Governance and Audit Committee on 13 January 2017. She emphasised the relevance and importance of attending such training in view of CDC’s increasingly sophisticated treasury portfolio and the ongoing economic uncertainty it faced.

Mr Dignum endorsed Mrs Hardwick’s exhortation to attend the forthcoming training.

Mr Jackson provided an overview of CDC’s investment programme in bonds.

There was a consensus among members that the strategy was commendable.

Mr Jackson, Mr Ward and Mrs Hardwick answered members’ questions with regard to the rationale for the short duration (six months) of and the cautious approach to investment in view of economic and political uncertainty.

Decision

At the conclusion of the debate the Cabinet voted on a show of hands unanimously in favour of the recommendation.

RESOLVED

That Chichester District Council’s Treasury Management 2016-2017 Mid-Year Progress for the six months to 30 September 2016 be noted.