Issue - meetings

(Director of Resources) To consider the attached report (AGC-008-2017/18).

The Director of Resources, Mr Palmer introduced the annual outturn report on the treasury management and prudential indicators for 2016/17. This was a requirement of the Council’s reporting procedures. It covered the treasury activity for 2016/17 and confirmed that there were no breaches of policy during the year.

It was noted that:

·         The Council had planned to borrow to finance the capital programme. However, an underspend on the programme and the availability of sufficient cash had allowed the external borrowing to be deferred.

·         The risk involved with the Capital Activity is the impact on reducing the balances of financial reserves to support the capital programme. This risk has the following potential consequences: loss of interest; loss of cover for contingencies; financial strategy becoming untenable in the long run; service reductions required; and Council Tax increases required.

·         The Council’s underlying need to borrow is called the Capital Financing Requirement (CFR).  This figure is a gauge for the Council’s debt position. The Council has borrowed £185.456m to finance the payment to Government for Housing Self-Financing.  This resulted in the Council’s CFR becoming an overall positive CFR (HRA and Non-HRA). No further borrowing was incurred in 2016/17.

The Council did not breach any of the following indicators:

(a)        the Maximum Upper Limit for Fixed Rate Exposure during 2016/17 was 83% for Debt and 61% for Investments (limit set at 100%) and Maximum Upper Limit for Variable Rate Exposure during 2016/17 was 17% on Debt and 39% on Investments (limit set at 25% and 75% respectively);

(b)        the maximum amount of the portfolio being invested for longer than 364 days was £0m (limit set at £15m); and

(c)        the maximum limit set for investment exposure per country outside of the UK was £5m. Average £2m in Sweden. Standard Life MMF is domiciled in Guernsey, so is also Non-UK. Average £5m.

Interest Rate Risk – the risk of fluctuations in interest rates. The Council     allows a maximum of 75% of its investments to be invested in variable rates, and the remainder are in fixed rate deposits.  This allows the Council to receive reasonable rates, whilst at the same time, gives the Council flexibility to take advantage of any changes in interest rates.

The Council has continued to finance its capital programme through the use of internal resources. Whilst the capital receipts reserve had been fully exhausted, it was anticipated that future right to buy sales would fund some part of the programme, and the Major Repairs Reserve would be available to support the on-going capital maintenance of the housing stock, before the need to borrow arises sometime late into the 2017/18 programme. The Council did not breach any of the treasury prudential indicators during the year.

Councillor Knapman asked for an update on the shopping centre as its one of the two main risks that had been identified. Mr Palmer noted that we had incurred some delays around the highways works and difficulty with the County Council. These issues have all been resolved now. Several  ...  view the full minutes text for item 21

(Director of Resources) To consider the attached report (FPM-009-2017/18).

The Director of Resources presented the Annual Outturn Report on the Treasury Management and Prudential Indicators for 2016/17.

The Director of Resources reported that annual treasury report was a requirement of the Council’s reporting procedures and covered the treasury activity for 2016/17, and the actual Prudential Indicators for 2016/17.During the year, the Council had financed all of its capital activity through capital receipts, capital grants, other revenue reserves and revenue contributions. There had been no additional borrowing in the year to add to the £185.456m taken out previously through the Public Works Loan Board (PWLB) which financed the payment in relation to the self-financing of the HRA. The Council had achieved its targets for its treasury and prudential indicators and would be considered by the Audit and Governance Committee on 18 September 2017.

Resolved:

(1)          That the Treasury Management Outturn Report for 2016/17 be noted; and

(2)          That the outturn for Prudential Indicators shown within the appendices attached be noted.

Reasons for Decision:

The report was presented for noting as scrutiny was provided by the Audit and Governance Committee, who make recommendations on amending the documents, if necessary.

Other Options Considered and Rejected:

Members could ask for additional information about the CIPFA Codes or the Prudential Indicators.