Agenda item

Report No: PAS/FH/18/028

The Service Manager (Finance and Performance) presented Report No: PAS/FH/18/028, which:

(a)      Presented the Council’s Annual Treasury Management Report, summarising the investment activities for the year 2017-2018; and

(b)      Provided a summary of the investment activities for the first three months of the 2018-2019 financial year.

(a)    Annual Treasury Management Report 2017-2018

The Council’s Annual Treasury Management Report for 2017-2018 was attached as Attachment 1 to Report No: PAS/FH/18/028.  The report included tables which summarised the interest earned during 2017-2018 on the various treasury investments held by the Council; investment activity during the year; investments held as at 31 March 2018, as well as information on market activities; borrowings; temporary loans; and average rate of return.

The budgeted income from investments in 2017/2018 was £181,000 (average rate of return of 0.75%).  The interest actually earned during the year totalled £118,328 (average rate of return of 0.71%).  This was an under achievement in interest of £62,671 (an under achievement of 0.04% on the average rate of return).

The under achievement of interest earned was primarily due to reduced funds available for investment following the purchase of the Solar Farm at Toggam Farm where internal funds were being used in the short term to save on external borrowing costs.  This combined with the continuing low rates of return offered by our counterparties had resulted in this under achievement.

The Committee scrutinised the Annual Treasury Management Report 2017-2018, and did not raise any questions. 

It was then proposed by Councillor Simon Cole, seconded by Councillor John Bloodworth, and with the vote being unanimous, it was:

          RECOMMENDED:

That, subject to the approval of Council, the Annual Treasury Management Report for 2017-2018, attached as Attachment 1 to Report No: PAS/FH/18/028, be approved.

(b)    Investment Activity 1 April to 30 June 2018

The total amount invested at 1 April 2018 was £16.005m and at 30 June 2018 it was £19.005m.  The increase in balances over the period was due primarily to timing differences in respect of collection of local taxes; Council Tax and Non-Domestic Rates and payments of precepts i.e. to Suffolk County Council, Suffolk Police and central government.

The 2018-2019 Annual Treasury Management and Investment Strategy Statements sets out the Council’s projections for the current financial year.  The budget for investment income in 2018-2019 was £224,000 which was based on a 0.75% target average rate of return on investments.

At the end of June 2018, interest earned during the first quarter amounted to £29,440 (average rate of return 0.66%) against a profiled budget of £56,000, creating a budgetary deficit of £26,559.  The deficit was due to lower cash balances as a result of rephrasing of some income generating projects.   

The report also included for the 2018-2019 budget new assumptions on borrowing for capital projects included within it.  The borrowing was based around seven specific projects:

-        West Suffolk Operational Hub

-        Mildenhall Hub

-        Barley Homes – Loan facility

-        Investing in our Growth Agenda Fund

There was also the long-standing £4.0m loan relating to the Newmarket Leisure Centre, and internal borrowing relating to the purchase of the Toggam Solar Farm.

The report included a summary of the capital borrowing budget for 2018-2019 including carry-forward amounts, and a summary of capital borrowing for quarter one. 

As at the end of quarter one, there had been no requirement to borrow externally over and above the £4.0m Barclays loan.  Therefore the only interest payable in quarter one was the £169,600 relating to this.

The Committee scrutinised the Investment Activity for 1 April 2018 to 30 June 2018, and did not raise any questions. 

There being no decision required, the Sub-Committee noted the quarter one investment activity.