Agenda item

Review of Treasury Management Strategy Activity 1 April - 30 September 2019.

Minutes:

Peter Stuart, Head of Corporate Resourcesintroduced the report to update the Committee on Treasury Management Activity for the half year to 30 September 2019.  He noted that all transactions were in order and the performance of the service has met the requirement of the Service Level Agreement with our shared service provider.  He highlighted that for one day the account balance had been higher than usual as funds had arrived too late to place money in the market.

 

The Chairman suggested a review of the credit worthiness of building societies. The Head of Corporate Resources reminded the Audit Committee that they have been content to lend funds to building societies with assets of at least £1billion.  He advised that this practise is not the same with all local authorities.  If societies are not credit rated some authorities will not lend to them and this reduces their ability to lend on the market.  In response to a Member question the officer advised that the Council is careful in the selection of societies, and they will have minimum capital and mortgages assets of at least £1 billion.  He suggested that the Committee could have more knowledge of the structure of building societies so they could see that the use of them was a prudent way forward for the Council’s finances.  He advised the Chairman that in conjunction with the shared service centre at Adur-Worthing, an appraisal of building societies will be undertaken to reassure the Committee.  He noted that it will not be a lengthy piece of work.  The Chairman thanked the Head of Resources and asked for the loan to capital ratios to be included.

 

A Member queried the profiling of capital risks and asked whether the Committee should be looking forward for a period longer than 6 months for financial protection.

 

The officer advised that this information will be provided in the report which is scheduled for the meeting in March 2020, and the report will look forward including the following year.  He reminded the Members that the report presently before Members looks back and confirms that all activities have been completed as planned.

 

Several Members asked for more information on the investment of £20 million and asked about the effects and implications on next year’s budget.  The Chairman also asked whether receipts are built into next year’s budget.

 

The officer reminded the Committee that it is difficult to accurately predict when receipts will be received.    He confirmed that the Council do not spend money before the funds are actually received.  Tom Clark, Head of Regulatory Services confirmed that a development site had been advertised for sale.  The Head of Corporate Resources advised that the £20 million received will be from the sale of Hurst Farm, Haywards Heath.  The Committee were advised that the sale of the land was on a deferred income basis and income will be received over the next two years.  He noted that the Council had anticipated the funds to be received in one lump sum but developers prefer to pay over a longer time frame.

 

As there were no further questions the Chairman took Members to the recommendation in the report which was unanimously approved.

 

RESOLVED

 

The Committee agreed to recommend to Council:

 

(i)            that no new borrowing has been necessary in the 6 months to 30th September

2019 and the outstanding borrowing has reduced from £16.112m at 31 March 2019 to £10.185m.

 

(ii)        the increase in investments from £25.21m at 31 March 2019 to £31.88m at 30

September 2019 (both figures exclude the £6m investment in the CCLA Local Authorities’ Property Fund).

 

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