Meeting documents

To consider the attached report.

Contact Officer:  Nuala Donnelly 01296 585164

The Authority’s Treasury Management Policy required an annual report to be brought to Council after each year end and a mid year report for the current year.   A synopsis of treasury management activities had been included in the Quarterly Financial Digest submitted to the meeting. 

Members were informed that the amount of money deposited with banks and building societies at the end of September 2019 was £33 million with another £3.2 million held in the two Money Market Funds.  The outstanding balance on borrowings was £18.5m.  As there had been no new borrowing taken out, there had been no change to the Council’s Authorised and Operational Limits.

The impact of the announcement of a single Unitary District Council for Buckinghamshire on the Treasury Management of the Council was being assessed through a working group and would be progressed over the coming months.

The objectives for the Treasury Management team for 2019/20 had been laid out in the Treasury Management Strategy agreed by Council in February 2019.  The main activities continued to be:-

·                    Foremost, to maintain, the security of the Council’s deposits by only depositing with trusted financial institutions and limiting the size and length of deposit with each organisation.

·                    To directly manage a range of deposits in order to provide sufficient flexibility to meet day to day operational needs.

·                    To only undertake new long term borrowing where the business case justifies it.

The Treasury Management team continued to invest money in line with its list of approved (safe) institutions, varying the amounts and length of deposit according to the institution and the cash flow requirements at the time.  Historically, the majority of the Council’s lending had been with Building Societies but over the last year the Council had invested more of it’s portfolio with major UK banks and had also began depositing funds with other Local Authorities as a more secure option. The lending list was monitored throughout the year to take account of any changes within the sector i.e. building society mergers / conversions to banks, and ratings changes.

The Council ability to manage capital spend without additional borrowing had resulted in financial efficiencies and savings on the cost of borrowing.  The variance on income generated had been offset by savings on interest charges due, due to lower than planned level of borrowing.  In the six months of the financial year, a saving of £123,000 was reported on bank charges payable.  Members were informed that the local government landscape for borrowing might change over time.  In early October 2019, Whitehall had announced a whole percentage point increase in the rate of borrowing from the Public Works Loan Board (PWLB), for new loans. This would impact on future borrowing plans by Councils.

Although the levels of investment balances had been reducing, the rates of return earned had been assessed as being above average.  For the 6 months to the end of September 2019, the weighted average rate of return for the Council was 0.85% on investments of £36.2m.  The performance was in line with the model band of all Non-Metropolitan Districts (90 authorities) which ranged between 0.84%-0.94%.  After raising interest rates in August 2018, the Monetary Policy Committee had voted unanimously to hold rates in their subsequent meeting to September 2019.  There were however a number of economic factors e.g. Brexit which could influence interest rate changes over the coming months.

The council continued to operate two Money Market Funds to give the in-house team easy access to surplus funds.  Whilst, Money Market Funds had the highest credit ratings, the interest rates offered were typically 15-25 basis points below those of Fixed term Deposits.  However MMFs offered the most effective fund structure to manage the council’s daily cash flow requirements.

Property Funds still offered some of the best returns on capital.  Investing in a Property Fund was within the strategy but as yet the council had decided not to use them, in part due to the unitary decision.

The Committee had no substantial comments on the mid year report and thanked the in-house team for the efficient manner in which they continued to manage the Council’s funds.

RESOLVED –

That the performance to date against the Treasury Management Action Plan for 2019/20 be noted.