Agenda item

Treasury Management Half Yearly Report 2019/20

Summary:

This report sets out the Treasury Management activities actually undertaken during the first half of the 2019/20 Financial Year compared with the Treasury Management Strategy for the year.

 

Options Considered:

This report must be prepared to ensure the Council complies with the CIPFA Treasury Management and Prudential Codes.

 

Conclusions:

Treasury activities for the half year have been carried out in accordance with the CIPFA Code and the Council’s Treasury Strategy.

 

Recommendations:

1.    That the Council be asked to RESOLVE that The Treasury Management Half Yearly Report 2019/20 is approved.

 

2.    That the Council be asked to APPROVE changes to the Counterparty Limits.

Reasons for Recommendation:

 

Approval by Council demonstrates compliance with the Codes.

 

 

LIST OF BACKGROUND PAPERS AS REQUIRED BY LAW

(Papers relied on to write the report, which do not contain exempt information and which are not published elsewhere)

 

 

Cabinet Member(s)

Eric Seward

 

Ward(s) affected: All

Contact Officer, telephone number and email: Lucy Hume, 01263 516246, lucy.hume@north-norfolk.gov.uk

Minutes:

The HFAM introduced the report, and informed Members that the Council was generating in excess of £1m per annum from its investments, with an average target of 3.3%. He added that in the past year, some unexpected income was placed in short-term investments, which had lowered the average rate of return. It was confirmed that Arlingclose still provided good, reliable advice to the Council on its investments, and worked closely with the Chief Technical Accountant.

 

Questions and Discussion

 

The Chairman stated that a reduction in interest rates had made treasury management more challenging, but noted that briefings with the external investment advisors had been very helpful, and asked if they could be run again in the future. The HFAM replied that the briefing sessions were still offered, and that he could look to arrange a session in the new year.

 

The Chairman noted that the Council relied on effective treasury management in order to maintain its financial liquidity, and asked if there were any indicators used to monitor this. The HFAM replied that it was useful to have access to short-term borrowing, which was generally cheap, though a 1% increase in rates was significant. He then stated that intra-authority borrowing was an additional option that remained relatively cheap. The Chairman repeated his question regarding a liquidity indicator, and the HFAM replied that in terms of the liquidity target identified on page 69 of the agenda, the Council had not complied. He added that due to the current low cost of borrowing, the Council’s liquidity did not raise any immediate concerns. In addition, the longer the Council could maintain its long-term investments the better, such as those in the LAMIT property fund, with returns of approximately 6%. The Chairman referred to the Council not meeting its liquidity target, and questioned the importance of the target. The HFAM replied that the target would be reviewed in February, alongside a similar CIPFA review. It was reported that the investment training from Arlingclose could also cover these issues. Cllr N Housden referred to page 68 of the agenda, where it was noted that the Council’s credit score had been reduced due to a lack of liquidity, and asked what figure would have to be reached to improve this. The HFAM replied that he would seek clarification and provide a written response.

 

The Chairman referred to table 4 on page 67 of the agenda, noted the  underperformance, and asked if this would lead to general underperformance for the Council’s investments. The HFAM replied that these figures were symptomatic of the short-term investments made as a result of unexpected influx in cash-flow.

 

Cllr J Rest referred to loans of £3.1m given to housing associations on page 66 of the agenda, and asked whether all funds had been drawn. The HFAM replied that they had, and that the Council was now receiving repayments. It was suggested that the loans could potentially be extended to increase returns.

 

It was proposed by Cllr G Mancini-Boyle and seconded by Cllr T Adams that the report be commended to Council.

 

RESOLVED

 

To commend the report to Full Council.

 

Supporting documents: