Issue - meetings

This report summarises the council’s treasury management activity during the first half of 2015/16, as required to ensure compliance with CIPFA’s Code of Practice for Treasury Management. The report also covers the council’s Prudential and Performance Indicators for the first half of 2015/16, in accordance with the requirements of the CIPFA Prudential Code.

Declarations of interest:

None.

Witnesses:

Phil Triggs, Strategic Manager (Pensions & Treasury)

Alex Moylan, Senior Accountant

Key points raised during the discussion:

1.    The Strategic Manager (Pensions & Treasury) introduced the report.  He updated the committee that the treasury management advice contract was out to tender and the tendering process would be complete by 1 January 2016.  Two advisors had been shortlisted for interviews.  Members queried whether a new advisor would be able to get to grips with their role given the short time between interviews and signing of a contract.  The Strategic Manager (Pensions and Treasury) confirmed that due diligence would take place if the appointment was to change but stressed the large amount of information provided by the Council during the tender process and the experience of both shortlisted companies.

2.    The Strategic Manager (Pensions and Treasury) confirmed that the Office of the Police and Crime Commissioner for Surrey is satisfied with the council’s management of its cash and that regular discussions take place.

3.    In response to a question about capital borrowing, the Director of Finance confirmed that £90m had been borrowed this year in three lump sums.  This was to address anticipated need at times when interest rates were at historic lows.

4.    The Chairman requested that schools with cash balances incorporated within the council’s balances be informed again that they would receive 0% interest under present arrangements (Recommendations Tracker ref: A41/15).

5.    The Chairman suggested that investment returns were too low and could reflect an overcautious investment strategy.  The Strategic Manager (Pensions & Treasury) confirmed that the failure of Icelandic banks had reduced the risk appetite but pointed out that the rate of return had increased this year.  Discussions will be taking place on increasing the risk appetite of the Treasury Management Strategy for 2016/17.  Options would be shared with the Chairman of the Committee before the Strategy is to be determined by Council in February 2016 (Recommendations Tracker re: A42/15).

6.    In response to a previous request from the Chairman, officers tabled a list of outstanding investments (attached as Annex 1 to the Minutes).  The Chairman requested that this be included in future reports.

7.    Members queried whether the risk rating of Aberdeen had increased given recent news stories about it.  The Strategic Manager (Pensions & Treasury) gave feedback from a recent conference at which the Chief Executive for Aberdeen had spoken. 

Action/Further information to note:

a)    Officers to write to schools with cash balances incorporated within the council’s balances to explain that they would receive 0% interest under present arrangements.

b)    Options for the redrafted Treasury Management Strategy to be shared with the Chairman of Audit & Governance Committee, before it is presented to Council in February 2016.

RESOLVED:

That the committee NOTED the content of the Treasury Management Half Year Report for 2015/16.