Agenda item

Treasury Management Report 2019/20 and the 2018/19 Mid-Year Review

To consider and review the 2018/19 Mid-Year Review Report and to review the Treasury Management Report for 2019/20.


Calvin Orr, Head of Finance and Business Services attended the Committee and presented the 2018/19 Mid-Year Review Report and the Treasury Management Report for 2019/20 and explained that:

·         The report was brought annually to the Governance and Audit Committee (G&A) and filled 2 criteria. 

    • The Mid-Year Review outlined the Treasury Management activities for the first 9 months of 2018/19 to Dec 2018.
    • It updated Members on the Council’s investment position and provided commentary on the economic indicators.  It outlined the current position, looked at the economic impact of the last couple of months and how the Council’s decisions had been affected.
  • The current economic conditions were difficult to predict with so much uncertainty as a result of BREXIT and wider changes in the wider economic world. This may result in central banks across the world taking no further action in terms of interest rates until this uncertainty subsided
  • Total investments were at about £10million.
  • Investment funds were triple A rated.
  • Largely, the investments were one day maturity which meant the investment could be readily accessed.
  • One fund was a 2 day maturity.  This was a T+1 account which offered a higher rate of return.  About £4-5million was in this account to provide a higher yield.


The current Council debt was outlined. 

  • It was pointed out that the Council used to be debt-free and managed a large investment portfolio, but was now borrowing to reflect the infrastructure investment in last 4 to 5 years.
  • Short-term borrowing was maintained in the region of 3 to 6 months to meet the Council’s immediate cash flow.
  • Longer term capital investment was funded from PWLB loans that went out to 40 years at low rates.


The second element of the report was the Treasury Management Report for next year (2019/20) which outlined the Treasury Strategy, investment criteria and the Minimum Revenue Provision (MRP) policy. 

  • Very little had changed. 
  • The investment criteria had not changed in the last 4 to 5 years. 
  • The Council had only invested in money market funds, all of which were triple A rated.


The Minimum Revenue Provision policy was explained, in particular, the timings needed explanation.

  • Normally the Treasury Management strategy would go to the Executive in December for review and endorsement to Council. This year, the Council’s Treasury advisors had provided further advice regarding the MRP policy adopted by the Council.
  • In relation to the Council’s policy on commercial property investment, guidance last year from CIPFA asked to consider the risk with this investment policy and the Council decided to set aside 10% on the element of the risk on those commercial properties. 
  • It was considered however that it would be better to set it aside as Voluntary Revenue Provision (VRP) rather than MRP which could be brought back into the accounts if needed and provided the Council with flexibility. 
  • The change was being made before the Executive had seen it.
  • The Committee was not seeing what the Executive saw in December 2018 and was being asked to endorse a strategy not yet seen by the Executive.


In response to questions from Members, Calvin Orr, Head of Finance and Business Services explained that:

  • Risks associated with BREXIT had been considered within the document.
  • A no deal BREXIT was considered a relatively small risk and interest rate projections had been based on that.
  • BREXIT was in the risk register.
  • Projections looked at 3 to 5 year interest rate moves.
  • Projections were based on some form of BREXIT deal being agreed.
  • The risk of a no deal BREXIT was assessed as quite low.
  • If there was a no deal BREXIT, interest rates might go up and inflation might go up. Interest rates might also get cut.
  • It was their assessment that there would be a BREXIT deal within 6-9 months.




2.1          That the Committee consider and review the Mid-Year Review Report.

2.2          That the Committee agree that the Mid-Year Review Report be circulated to all Members of the Council.

2.3          That the Committee review the Treasury Management Report for 2019/20 prior to its approval by Council and endorse the changes outlined in paragraph 5.15

Supporting documents: