Agenda item

(Director of Resources) To consider the attached report (AGC-012-2014/15).

The Principal Accountant (Treasury Management) presented the mid-year progress report on Treasury Management and Prudential Indicators, which covered the treasury activity for the first half of 2014/15, and was a requirement of the Chartered Institute of Public Finance & Accountancy (CIPFA) Code of Practice on Treasury Management.

The Principal Accountant reported that, during the first half of the year, the Council had continued to finance all capital expenditure from within internal resources. The revised estimate for the Capital Programme during 2014/15 had indicated expenditure of £26.452million, which would be financed by capital grants, capital receipts and revenue. The Capital Programme for the three-year period ending 31 March 2017 had forecasted expenditure of £60million, with £1.8million available in usable capital receipts and £4.1million in the Major Repairs Reserve. Therefore, it was considered that adequate resources existed for the Council’s Capital Programme in the medium term.

The Principal Accountant advised the Committee that the Council had £62.1million under investment at 30 September 2014, and the average net investment position of the Council had been approximately £62million throughout the first half of 2014/15. The Council’s investments as at 30 September 2014 had consisted of £38.3million in fixed investments, £13.8million in variable investments and £10million in long-term investments. The Council had also received a further dividend from the administrators of the Heritable Bank; the Council had now received 94% of the value of its deposits. It was anticipated that further dividends would not be received until all outstanding litigation had been settled and the administration process had been completed.

The Principal Accountant stated that the Council held loans totalling £185.47million at 30 September 2014, which had funded the self-financing of the Housing Revenue Account. It was not anticipated that the Council would require further loans in 2014/15, but it was expected that a further £20million would be borrowed in 2015/16. The timing and exact amounts of this borrowing was still uncertain as it depended on the progress with various economic development schemes and the Council’s share of developments in St John’s Road, Epping and the Epping Forest Shopping Park in Debden. The Public Works Loans Board would be the Council’s preferred source of borrowing in 2015/16, given the transparency and controls that it continued to provide, and this additional borrowing would not exceed the Council’s authorised limit of £230million for total borrowings.

Finally, the Principal Accountant added that there had been no breaches of any of the prudential indicators relating to capital activity, the indebtedness for capital purposes and the Council’s overall Treasury position.

The Committee welcomed the report and noted that the Council was getting a good return with minimal risk from its investments, and that the interest rates were declining for long-term loans from the Public Loans Works Board. The Director of Governance confirmed that the proposed capital expenditure for the two schemes in Epping and Debden had been agreed at the last meeting of the Council.

Resolved:

(1)        That the mid-year progress report on Treasury Management and the Prudential Indicators for 2014/15, and the management of the risks therein, be noted.