Agenda item

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

The Head of Finance introduced the report to present to Council the Treasury Management Mid Year Report for 2013/14 for approval. 

The report reviewed the activity and performance of the treasury management operations during the period 1^st April to 30^th September 2013 and compared them with the Treasury Management Strategy.  The Audit Committee and Cabinet had considered the report and the key points of the report were detailed.  The Head of Finance advised that work on developing the Treasury Management Strategy for 2014/15 was well advanced and the draft strategy was to be considered at the meeting of Audit Committee the following day.  

Councillor Mike Peers referred to the treasury management training that had been provided recently where the Council’s long term borrowing of £172.1m had been described as significant.  It accrued interest payments of £9.306m per year with an average interest rate of 5.41%.  Councillor Peers queried whether restructuring of some of the loans could be considered to reduce the interest payments to reduce the cost to the Council in view of the financial challenges facing the Council and asked if the Chair of Audit could raise the issue In Audit’s consideration of Treasury Management.  The Head of Finance recognised that £172.1m was a significant sum but it was important to balance this with the value of the Council’s asset portfolio and be mindful that it was there because of previous policy decisions.  The Head of Finance went on to explain that restructuring of debt was considered where appropriate but reminded Members that repaying loans through restructuring would result in fees for early repayment of the debt which could overall increase the short term burden on the revenue account.  She added that the borrowing had been undertaken to invest in infrastructure as part of Flintshire and predecessor Council’s Capital Programme decisions and that the payments for the majority of loans were supported through the revenue support grant by funding from Welsh Government.

As Chair of the Audit Committee, Councillor Alison Halford thanked officers for the treasury management training and confirmed that she would speak to Councillor Peers about the points he had raised. 

In response to a query from Councillor Nancy Matthews on the investments with the Icelandic banks, the Head of Finance said that the current expectation was that the principle borrowing of £3.7m made by the Council would be returned.  Councillor Matthews also asked whether the debt maturity profile shown in the report showed each column as a separate loan.  The Head of Finance explained that loans would have been for a number of projects in the capital programme and the profile showed when the loans were due to mature. 

Councillor Richard Jones referred to the breach of the investment criteria as a result of an investment of £7m and asked what was in place to ensure that this did not happen again.  The Head of Finance referred to paragraph 7.03 where the breach was reported and explained that more stringent procedures and training had been put in place to ensure that this did not reoccur.

In response to a query from Councillor Clive Carver about maturing loans, the Head of Finance advised that she would ask the Finance Manager to provide a response following the meeting.               

RESOLVED:

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