5
The Committee received the Leader of the Council and Cabinet Member with responsibility for Resources' report ES/0142. Councillor Cook, the Assistant Cabinet Member for Resources, introduced the report by reminding Members that the Treasury Management Policy Statement for 2018/19 required an Annual Report and Mid Year report to be produced by the 30 September 2019. He added that the report reviewed performance of the treasury management function, including prudential indicators in 2018/19 and incorporated a mid year review of 2019/20.
It was noted that in 2018/19:
- Suffolk Coastal District Council investments totalled £66.89m as at 31 March 2019, made up of £50.5m short term investments, £7.39m long term investments with £9m in cash at bank. Interest received on investment balances during the year totalled £0.55m.
- Waveney District Council investments totalled £46.39m as at 31 March 2019, made up of £31m short term investments, £2.39 long term investments and £13m of cash at bank. Interest received on investment balances during the year totalled £0.41m.
- Both Councils had operated within their approved Prudential Indicator Limits for 2018/19.
Members were informed that Suffolk Coastal had remained debt free during this period but the debt portfolio for Waveney was £87.57m of which £77.4m was attributable to the HRA which included £68.30m of Self-Financing loans taken out in 2011/12. The General fund loans totalled £10.17m.
The following summary for 2019/20 to date was also noted:
- Investments totalled £109.36m as at 31 August 2019.
- Interest received to 31 August 2019 totalled £0.34m.
- The Council operated within its approved Prudential Indicator Limits to date.
- The Council had healthy cash balances in 2018/19.
Reference was made to the fact that the Annual Report and Mid Year Report was required to be reported to Full Council by 30 September 2019 and it was noted that, although the documents had been ready in time, there had not been an opportunity to present them as they had to be considered by the Audit and Governance Committee first and the September meeting had been cancelled. It was pointed out that this delay in presenting the documents was evident by the fact that the Economic Outlook section of the report was now out of date and, of course, there were likely to be changes post the election on 12 December 2019.
In relation to the Investment Policy, the Assistant Cabinet Member stated that consideration was given in all decision making to security first, liquidity second and yield/return third to ensure that the Council did not lose money and had enough cash. He added that the main objective was to have enough money but this was only possible once we were satisfied that security and liquidity were in place.
Clarification was sought on when investments were looked at to ensure that they remained ethical and the Assistant Cabinet Member responded that funds were constantly under review with advice sought from the Council's Treasury Advisor, Arlingclose on borrowing and if an investment became inappropriate the Council could look to switch.
A query was raised as to why the loan figures had reduced and the Assistant Cabinet Member reported that the figures were reviewed constantly as loans were paid off throughout the year and also investments could come to maturity during that period. He reassured Members that, if it was feasible to repay loans from reserves, the Council would do so.
The Chairman suggested that, in future, a third column be added to the table on page 14, paragraph 4.3 to show the percentage return so that Members could make further comparisons. He also suggested that the Committee might want to look at the long term investments in more detail at a future meeting to understand why, in particular, the Council was only receiving a small increase in the interest rate on its 3-24 month investments.
In addition, the Chairman queried why more money was not being invested in the Property Investment Fund given it was giving a 4.69% interest rate which was a much better rate of return than the other investments. The Assistant Cabinet Member pointed out that, whilst it was likely extra funds would be invested in the Property Fund, having more money in one investment also increased the risk.
A query was raised in relation to the Council's banking arrangements and the Assistant Cabinet Member reported that the contract would be reviewed when it expired in 2 years’ time.
RESOLVED
1. That the Annual Report on the Council's Treasury Management activity for 2018/19, incorporating the Mid Year review for 2019/20, be noted.
2. That the Prudential Indicators Outturn position for 2018/19 in Appendix A & B be noted.