Agenda item

That the draft Treasury Management Mid Year Report 2013/14 be noted.

The Finance Manager - Technical Accountancy introduced an update on matters relating to the Council’s Treasury Management Policy, Strategy and Practices 2013/14 to the end of September 2013.  In summarising the key points of the mid year report, she advised that performance during this period was generally on track with expectations made in the Treasury Management Strategy approved by the Committee earlier in the year.  An update was also provided on preparations for the Treasury Management Strategy 2014/15 and current status of Landsbanki investments.

The Chair referred to the annual Treasury Management training session arranged for 27 January 2014 and urged members to contribute topics for discussion.

In response to a query from Councillor Haydn Bateman on the £83.3m maximum investments that the Council had on deposit at any one time, the Finance Manager explained that this was made up of a number of reserves which would be affected by cashflow timings and that the balance was higher during early months of the year before reducing.  When asked about the average surplus, the Finance Manager would provide a separate response but added that this figure would vary at different times of the year and between one year to another.  When the Single Status/Equal Pay reserve was utlised, the balance would reduce and the liquidity would have to be managed to ensure cash was available when needed.  This would be included in the breakdown within the Treasury Management Strategy for 2014/15 to be submitted to the next meeting of the Committee.

Following explanation on the availability of a higher rate of interest applied to an investment with the Bank of Scotland taken out over a year ago, the Finance Manager agreed that this example could be included in the training session.

The Finance Manager agreed to follow up a request made by Councillor Glyn Banks for a breakdown of information on the Debt Maturity Profile graph in the report.  When asked about the potential for borrowing at the present time, she explained that due to current rates, the advice would be to spend reserves within the system prior to any new borrowing.  Once the Single Status/Equal Pay reserve was depleted, a view would be taken on an appropriate time to borrow in the most cost-effective way.

Following a question from Councillor Ron Hampson on the use of Single Status/Equal Pay reserve, the Chief Executive said that these were only used to meet one-off costs such as projected costs for settlement of equal pay liability, ‘backpay’ and pay protection, together with some contingency for risks over the next two years as part of the adopted Single Status Agreement.  Any additional costs after this time would become a pressure for the Council in-year and had been included in the Medium Term Financial Plan.  The Head of Finance added that this Reserve would deplete over time in accordance with the strategy agreed by Council in October and that adjustments would be made accordingly in cashflow projections.

Councillor Bateman asked if there were any restrictions on the number of investment counterparties.  The Finance Manager replied that there were no such limits although criteria needed to be followed on the credit rating of counterparties, length and amount of investments which were set by the Council and approved by the Committee.  She pointed out that a high number of counterparties resulted in greater competition and a better spread of risk to achieve a balance on portfolios and risk to a level that was comfortable.

Councillor Tim Newhouse suggested that the training session incorporate examples of where debt on outstanding loans attracted high rates of interest and why it was not economical to reschedule these.

In response to a question from Mr. Paul Williams on debt profiling, the Finance Manager said that the Treasury Management Strategy for 2014/15 would include a section on the movement and tracking of reserves through debt and that this would be covered in the training session.

RESOLVED:

That the draft Treasury Management Mid Year Report 2013/14 be noted.