Agenda item

(Director of Resources) To consider the attached report (FPM-007-2014/15).

The Director of Resources presented the outturn report in respect of the Council’s Treasury Management and Prudential Indicators for 2013/14. The Committee noted that the annual treasury report was a requirement of the Council’s reporting procedures and covered treasury activity and performance against the prudential indicators for the last year.

The report provided Members with a summary of the Council’s treasury management activity during 2013/14, during which time all of the targets for treasury and prudential Indicators had been achieved.  The Committee noted that the Council had financed all of its capital activity in 2013/14 through capital receipts, capital grants and revenue contributions, and that no additional borrowing had been added to the £185.456m taken out in 2011/12 in relation to the self-financing of the Housing Revenue Account.

The Director of Resources reported that Council’s overall treasury position for 2013/14 showed £185.456m as total external debt and total investments at £58.7m, which had resulted in net investment position for the year of £126,756m. Members were also advised that further dividends of 16.7% (£420,000) had been received since 1 April 2013 in respect of the Council’s Icelandic investments, which had taken the return to 94% of the investment made. 

The Committee considered a possible revision to the Council’s Treasury Management Strategy Statement for 2014/15 to 2016/17, to permit lending by the Council, for the purpose of supporting the provision of local services by its main service contractors. Members noted that the system of ‘prudential borrowing’ introduced by the Local Government Act 2003, allowed local authorities to invest in contracted functions through the provision of loans to service providers. As relevant service contractors would always be subject to rigorous financial checks before the award of a contract by the Council, the Director of Resources considered that prudential borrowing activities for appropriate loans would be of low-risk to the authority, which would be further reduced by the imposition of a charge over any assets purchased with loans that were made available to contractors.

The Director of Resources reported that the new waste management contractor (Biffa Waste Management) had expressed interest in entering into a loan arrangement with the Council as part of the contract mobilisation process, in order to facilitate the procurement of a new waste management vehicle fleet. If agreed, finance provided in respect of such an arrangement would be secured on the vehicles to be purchased.

The Committee was requested to consider whether the existing Treasury Management Strategy Statement should be amended to permit appropriate lending activity with the Council’s largest service contractors, and noted that the Audit and Governance Committee would also consider this aspect of the treasury management outturn report at its meeting on 25 September 2014.

RESOLVED:

(1)       That the outturn position for the Council’s Prudential Indicators for 2013/14 be noted;

(2)       That the Treasury Management Outturn Report for 2013/14 be noted; and

RECOMMENDED:

(3)       That subject to the concurrence of the Audit and Governance Committee,  a recommendation be made to the Council to change the Treasury ManagementStrategy Statement for 2014/15 to 2016/17 to permit lending to service providers with which theCouncil is in a contractual relationship (e.g. the Waste Management Contractor).

Reasons for decision:

The report is presented for noting as scrutiny is 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.