Agenda item

To present the report of the Director of Function (Resources)/Section 151 Officer.

The report of the Director of Function (Resources)/Section 151 incorporating a statement on the Authority’s Treasury Management Practices in compliance with the CIPFA Code of Practice on Treasury Management (2017) was presented for the Committee’s consideration.

The Finance Manager reported that the report is presented to ensure that the Council is implementing best practice in accordance with the CIPFA Code of Practice for Treasury Management. The Code recommends that the Council documents its treasury management procedures as Treasury Management Practices (TMPs). Section 7 and schedule 2 of the Code include suggestions on what should be included in authorities’ TMPs. The Council’s current TMPs were completed and approved in 2016.These have been reviewed and updated and they endorse many of the suggestions provided by the CIPFA Code as well as  including a section  (TMP13) on non-treasury investments held by the Council as required by the revised CIPFA Treasury Management Code. The Council’s non treasury management investments are the investment properties which are managed by Property Services.

The Officer provided a brief overview of the 13 listed TMPs and referred to the newly added TMP13 on non-Treasury Management Investments explaining what this practice refers to and highlighting how the other TMPs - with TMPs 1, 2, 5, 6 and 10 being the most relevant - apply to non-treasury management investments. The 2018/19 Statement of Accounts shows that the Council’s investment portfolio was valued at £6m which are mainly industrial units. Both in 2017/18 and 2018/19 there was net income stream from the Council’s investment portfolio.

In response to questions arising on the report, the Committee was advised –

•           That unlike in England where local authorities are invested with a general power of competence that allows them to invest financially in assets such as shopping centres, hotels and cinemas both within and outside their authority area, councils in Wales do not have such powers and would have to use other economic development powers if they were minded to pursue such investments which would in any case be limited to their own areas. The Council’s investment property portfolio does include commercial and industrial units as well as the odd retail property but it is not invested in any larger retail assets.

•           That the Council does not currently have an approved overdraft facility with its bank. The Council regularly reviews and manages its cash flow requirements so that it does not become overdrawn. Also, the banking arrangements have been implemented so that all bank accounts under the corporate contract with NatWest are taken into account when determining the Council’s overall balance. This means that if any account is overdrawn, if the other accounts are in credit to the amount overdrawn or more the Council will not be in an overdraft position. In addition, should it be required the Authority is able to borrow at short notice with the PWLB - such a loan whether short term or longer term would cost less than an overdraft. The Committee took assurance from the fact that a daily cash-flow record of movements and balances is kept and updated morning and afternoon.

•           That with regard to counterparty criteria (TMP1, 1.1.) UK local authorities are not credit rated in the same way as banking institutions. Should the Authority be minded to invest short term with another local authority then it would undertake due process checks on the authority it was making the investment with. Local authorities are in general regarded as a low risk investment; security and creditworthiness have in recent years become priorities for local authorities in making investment decisions.

•           That the specialist Treasury Management Consultants/Advisory Service is provided by  Link Asset Services (formerly Capita Asset Services); their contract ran from 1 April 2016 to 31 March 2019 but with an option to extend for up to 2 years. A contract extension has been agreed and is in effect.

It was resolved –

•           To note the contents of the covering report.

•           To endorse the revised Treasury Management Practices included at Appendix 1 and to forward them to the Executive without further comment.

NO ADDITIONAL ACTION WAS PROPOSED