Agenda item

To receive an update from the Investment and Treasury Manager which provides an update on the Treasury Management activities undertaken for the first half of the 2018/19 financial year.

Consideration was given to a report by Karen Tonge (Treasury Manager), which detailed the Council's treasury management activities for the first half of 2018/19 to 30 September 2018, comparing activity to the Treasury Management Strategy for 2018/19 that had been approved by the Leader of the Council and Executive Councillor for Resources and Communications on 20 March 2018.

The quarterly update report was presented in the form of a quarterly bulletin that would cover the main issues arising to 30 September 2018 in the following areas:

·       interest rate review, economic overview and revised interest rate forecast;

·       annual investment strategy / authorised lending list changes during the quarter;

·       Investment position and comparison with strategy.

·       Borrowing and debt rescheduling position and comparison with strategy; and

·       Other treasury management issues arising during period.

The quarterly bulletin report was detailed at Appendix A to the report and was presented to the Board by the Treasury Manager.  During the discussion of Appendix A the following points were noted: -

·       The base rate had increased by 0.25% to 0.75% on 2 August 2018 and both short term and long term rates had risen accordingly;

·       The latest interest forecast from Link Asset Services in November 2018, as detailed on page 78 of the agenda pack, had been developed on the assumption that there would be an agreement between the United Kingdom (UK) and the European Union (EU) on the UK's withdrawal from the EU.  The potential impact on the economy of a no agreement was discussed by the Board;

·       The Council had continued to outperform the investment benchmark by lengthening the weighted average maturity of the fund.  As of 29 November 2018, the Council's investment position performance annualised was at 0.9%.  It was also highlighted that the weighted average maturity figure for English counties, as detailed on page 79 of the agenda pack, should read 99 and not 15;

·       No external borrowing had been undertaken to date;

·       The cost of the Council's borrowing at 30 September 2018 was 4.12%, the Council's internal borrowing level stood at £82.152m at 31 March 2018 with £21.946m of internal borrowing being carried forward in 2018/19, along with capital expenditure and borrowing requirement underspends;

·       Temporary borrowing of £5m was outstanding at 30 September 2018, taken to cover predicted liquidity shortfalls at a cost neutral level;

·       A capital strategy was being formulated to meet the requirements of the new Prudential Code 2017 and would align with the 2019/20 Budget Report;

·       It was also highlighted that treasury management training for members had been arranged for 31 January 2019, which would include guidance on the Capital Strategy;

·       A member of the Board highlighted an article in the Financial Times relating to the Danske Bank's alleged involvement in a money laundering operation; and

·       The Board requested that the figures contained within Appendix A also included an explanatory footnote to aid the Committee's understanding of the information.

RESOLVED

(1)  That the report be noted.

(2)  That the Executive Support Councillor for Resources and Communication            be requested to pass on the comments of the Board to the Leader of the         Council and Executive Councillor for Resources and Communication.