Agenda item

Report of the Treasurer (RC/16/1) attached.

The Committee received for information a report of the Treasurer (RC/16/1) that set out the treasury management activities of the Authority for the third quarter of the current financial year (2015-16) to December 2015.  The Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice for Treasury Management advocated that public authorities should receive a report on treasury management activities at least twice a year and preferably quarterly.  This report therefore provided the Authority with the assurance required that it was compliant with the Code of Practice.

Cecelie Booth, representing Capita – the Authority’s Treasury Management Adviser – was present at the meeting and she gave an overview of the economic background against which the Authority was operating together with an overview of performance to date as measured against the approved Treasury Management Strategy.  The key points made were:

·        The United Kingdom (UK) Gross Domestic Product (GDP) growth rates in 2013 and 2014 of 2.2% and 2.9% respectively were the strongest of any G7 country, with the 2015 UK growth rate predicted to be a leading rate in the G7 again. 

·        performance during the third quarter of the current financial year demonstrated a prudent approach to investment decisions, with priority being given to security and liquidity over yield in accordance with the Authority’s current investment priorities;

·        the Service had outperformed the LIBID 3 benchmark return of 0.45% with a performance of 0.49%, giving a return to quarter 3 of £90,719;

·        no Prudential Indicators had been breached;

·        the level of external borrowing was £25.8m.

Reference was made to the point that the Authority currently pursued a low risk approach to its investment portfolio whilst there were opportunities for higher investment returns available.  The Committee had requested at its previous meeting on 19 November 2015 (Minute *RC/8 refers) that consideration be given diversification of the investment portfolio into higher risk/higher yield instruments and specifically, to consider Property Funds and Peer to Peer lending. 

Cecilie Booth responded that, as the Authority’s investment advisers, Capita would encourage the Authority to look at the opportunities available and to consider amending the Treasury Management Strategy to include provision for higher risk investments in due course.  However, since the concept of Property Fund investment was relatively new, there was a limited history on the potential default position available to guide the Authority’s potential level of risk and thus, the Committee expressed the view that the Treasury Management Strategy should not be amended at this stage.

Councillor Greenslade MOVED and was seconded by Councillor Yeomans:

            “that Officers be requested to explore in greater detail  the options   that may          be viable for the Authority in terms of a higher risk investment strategy and a    report thereon be submitted to the next meeting of the Resources             Committee”.

The motion was then put to the vote and was CARRIED (5 for, 0 against, 1 abstention).

RESOLVED

(a)         that the performance in relation to the treasury management activities         of the Authority for 2015 -2016 (to December) be noted; and,

(b)         that Officers be requested to explore in greater detail  the options that         may be viable for the Authority in terms of a higher risk investment       strategy and a report thereon be submitted to the next meeting of the       Resources Committee”.