Agenda item

This report sets out the council’s treasury management strategy for 2018/19, as required to ensure compliance with CIPFA’s Code if Practice for Treasury management.

Witnesses:

Nikki O’Connor, Finance Manager

Marcus Ward, Grant Thornton

Key points raised during the discussion:

1.     The Chairman introduced the item and highlighted that on 11 December 2018 County Council agreed that responsibility for approving the annual Treasury Management Strategy Statement (TMSS) would be delegated to the Audit and Governance Committee.

2.     The Finance Manager provided a brief overview of the report and explained that the strategy under consideration was a continuation of the existing strategy which maximised internal borrowing and used short term borrowing to manage cash flow short falls. Officers would continue to assess the appropriateness of the strategy and, if required, there was some provision for long term borrowing. The strategy did not prevent the council from entering into long term borrowing. It was further noted that Members had previously attended training on the Treasury Management Strategy.

3.     The Committee discussed a comment that was raised at the previous County Council meeting which compared the interest income of Tandridge District Council and Surrey County Council. Officers stated that the District Council may have been able to receive a higher income due to having higher cash balances and by utilising different investment options, such as property based investments, but that this strategy meant there was less security on the initial investment. Following further discussion, it was agreed to circulate benchmarking data from similar two-tier local authorities to compare their interest income.

4.     Officers noted that there were inconsistencies in the report when referring to the average investment. 

5.     Members noted that the budget for debt interest paid in 2019/20 was £19 Million. Following discussion, it was noted that a considerable portion of this was from historic long term borrowing.

6.     Officers informed Members that, if required, the Treasury Management Strategy allowed for long term borrowing to be undertaken. In the event of this, the council would be able to borrow from the Public Works Loan Board at short notice.

7.     The Chairman highlighted that the Corporate Overview Select Committee (COSC) held scrutiny of the Treasury Management Strategy within its remit. The strategy was considered at the COSC meeting on 25 January 2019.

8.     Officers informed Members that Private Finance Initiative (PFI) schemes were considered to be a form of borrowing and therefore there was a requirement to be included in the capital financing requirement. It was noted that a list of the PFI liabilities could be found in the council’s statement of accounts.

9.     Members noted that in the event of a “no deal Brexit”, the council would have the ability to invest in UK based Money Market Funds and with the Debt Management Office. It was further noted that the Interim Executive Director for Finance was the Brexit preparation lead for the council.

10.  When discussing the council’s Investment & Debt Portfolio Position, Officers highlighted to Members that £390 million of the £644 million net debt was from long term borrowing from the Public Works Load Board.

Actions/ further information to be provided:

A1/19 - To circulate benchmarking data from similar two-tier local authorities to compare  interest income. – Finance Manager

Resolved:

The Audit and Governance Committee approved the Treasury Management Strategy for 2019/20.