Agenda Item No.



Matter Which the Chairman has Decided Is Urgent by Reason of the Need to Allow Cabinet to Consider the Views of the Scrutiny Committee in Tandem with the Report on Treasury Management











The Section 151 Officer took Members through the mid year report which was   required under the CIPFA Treasury Management in the Public Services: Code of Practice.  By way of background, he explained that the Council had approved the 2012/13 Treasury Management Strategy in March 2012 and assured Members that all treasury management activity undertaken during the period in question complied with the approved strategy, the CIPFA Code of Practice and the relevant legislative provisions.  The Council’s investment strategy was to secure the best return on its investments whilst having regard to capital security.  The Council’s borrowing strategy estimated that it would borrow £5,995,000 of new external loans to support the capital programme for 2012-13.  He confirmed that Officers, together with treasury advisers, would continue to monitor prevailing interest rates and market forecasts and adopt a pragmatic approach to borrowing.


He indicated that the details in paragraphs 10 to 16 of the report under the heading of “economic review / interest rate prospects” had been provided by the Council’s treasury advisers and covered the period to September 2012.  Reference was made therein to the European situation as well as the fact that the U.K. recession continued into quarter two.  The August Inflation Report showed that the Bank of England expected little economic growth in the current year and a gradual recovery in 2013.  Further more, the recent downward trend in the CPI inflation rate allied with the apparent synchronised global downturn led by the Eurozone had pushed market expectations for a rise in interest rates out to at least 2014. The latest central forecast from the Council’s treasury management advisers were shown in paragraph 16 of the report, the risks to forecast remaining heavily to the downside.


Under the heading of “Interim Report” summaries were shown of the treasury management transactions undertaken by the Council during the first half of the current financial year.  Paragraph 17 contained tables illustrating the monies borrowed/ repaid during the period together with the investments made.  Members noted that external interest at an average rate of 5.62% (amounting to £2,803,462) had been accrued on those loans in the period and interest, at an average rate of 0.25% (amounting to £125,917) had been earned from investments.  Members were also informed that the position in relation to the Debt Management Strategy would be reviewed following the announcement of a new Public Works Loan Board (PWLB) certainty rate                                  from 1st November.


As regards Treasury Management Indicators by which the Council measured its exposure to treasury management risks, details of the following indicators as at 20th September 2012 were set out in paragraph 22 of the report:

Interest Rate Exposure

Maturity Structure of Borrowing

Principal sums invested for periods longer than 364 days.


RECOMMENDED – T H A T the Treasury Management mid year report for the period 1st April to 30th September be noted together with the latest Treasury Management Indicators and referred to Cabinet.


Reason for recommendation


To present the report as required by the aforementioned Code of Practice together with an update of the Treasury Management Indicators."




Attached as Appendix - Report to Scrutiny Committee (Corporate Resources): 13th November, 2012