Agenda item

Following the adoption of the new capital and investment strategy for 2018-19, the Committee noted that the annual treasury management report now encompassed capital and non-treasury investments.  The amended format met the requirements of the revised Prudential and Treasury Codes of Practice and the Ministry of Housing, Communities, and Local Government (MHCLG) updated Investment Guidance.

The Committee considered the report in its revised format, which had included:

·        a summary of the economic factors affecting the approved strategy and counterparty update

·        a summary of the approved strategy for 2017-18

·        a summary of the treasury management activity for 2017-18

·        compliance with the treasury and prudential indicators

·        non-treasury investments

·        capital programme

·        risks and performance

·        Minimum Revenue Provision (MRP)

·        details of external service providers

·        details of training

The Committee was informed that total expenditure on the General Fund capital programme in 2017-18 had been £13.9 million, which was less than the revised budget by £20.2 million.  Details of the revised estimate and actual expenditure in the year for each scheme were set out in Appendix 3 to the report. Although the budget for Minimum Revenue Provision (MRP) had been £1.229 million, the outturn had been £573,852, due to slippage in the capital programme in 2016-17.

Councillors noted that the Council’s investment property portfolio stood at £147.4 million as at 31 March 2018.  Rental income had been £9.17 million, and income return was 6.59% against the benchmark of 4.2%.

The Council’s cash balances had built up over a number of years, and reflected the strong balance sheet, with considerable revenue and capital reserves.  Officers carried out the treasury function within the parameters set by the Council each year in the Capital and Investment Strategy.  As at 31 March 2018, the Council held £133.6 million in investments, of which £43.5 million was short term borrowing.

Longer-term borrowing was undertaken in line with the Council’s liability benchmark and the capital programme.  The Council had £241.6 million borrowing at 31 March 2018, of which £43.5 million was short-term borrowing for cash purposes.

The report had confirmed that the Council had complied with its prudential indicators, treasury management policy statement, and treasury management practices for 2017-18. 

The Committee noted that the slippage in the capital programme had resulted in a lower Capital Financing Requirement than estimated. Interest paid on debt had been lower than budget, due to the variable loan rate being reset lower than expected.

The yield returned on investments had been lower than estimated, but the interest received was higher due to more cash being available to invest in the year – a direct result of the capital programme slippage.

In considering the report, the Committee made the following points:

(a)   The table in paragraph 9.10 of the report showing the current portfolio of non-treasury investments should be substituted with the table shown in Appendix 2 to the report (Guildford BC Investment Property Fund Portfolio Report for 2017-18) on pages 84 and 85.

(b)   In Appendix, the text accompanying the red portion of the pie chart on page 87 (outcome of property review) should read:

“Does need not meet criteria”

(c)   The aggregate figure quoted in paragraph 9.11 and in Appendix 2 in respect of the capital value of the Council’s investment property portfolio (£144,619,500) was incorrect and should read £147.4 million as referenced in the Executive Summary of the report.

The Committee, having noted that the outturn report would also be considered by the Executive at its meeting on 19 June 2018, and by full Council on 24 July 2018

RESOLVED: That, subject to the corrections to the Investment Property Fund Portfolio Report referred to above, the following recommendations to Council be endorsed:

(1)         That the Treasury Management Annual Report for 2017-18 be noted.

(2)         That the actual prudential indicators reported for 2017-18, as detailed in Appendix 1 to the report submitted to the Committee, be approved.

Reason:

To comply with the Council’s treasury management policy statement, the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on treasury management and the CIPFA Prudential Code for Capital Finance in Local Authorities.