Agenda Item No. 12(a)

THE VALE OF GLAMORGAN COUNCIL

COUNCIL MEETING: 27 SEPTEMBER 2017

REFERENCE FROM CABINET:  31 JULY 2017

C44     Treasury Management (L) (SCRUTINY COMMITTEE - CORPORATE PERFORMANCE AND RESOURCES) -

Cabinet was presented with the annual review report on Treasury Management 2016/17.

In March 2012 the Council adopted the 2011 edition of the CIPFA Treasury Management in the Public Services: Code of Practice, which required the Council to approve a treasury management strategy before the start of each financial year, a mid year report, and an annual report after the end of each financial year. 

This annual treasury management report had been prepared as required and covered:

• the economy / interest rates in 2016/17;
• the strategy for 2016/17;
• the borrowing outturn for 2016/17;
• investment outturn for 2016/17; and
• compliance with treasury limits and Prudential Indicators

The Section 151 Officer continued to adopt a cautious approach with respect to Treasury Management operations. The Council's primary objectives for the management of its investments are to give priority to the security and liquidity of its funds before seeking the best rate of return. This being the case the Authority placed the majority of funds available for investment purposes with other local authorities. These investments attract a slightly more favourable rate of return than investing with the UK government, but still give priority to the security of funds invested. Funds not placed with other Local Authorities were placed in the 'Debt Management Account Deposit Facility' (DMADF) as these deposits are guaranteed by the British Government. However, these deposits attracted a lower return than those available from placement of funds with either local authorities or commercial banks.

The Council's primary objective for the management of its debt was to ensure its long term affordability. The majority of its loans had therefore been borrowed from the Public Works Loan Board at long term fixed rates of interest. In 2016/17 the Council continued to finance a significant proportion of its capital expenditure from internal resources. The potential reduction of the Council's investment balances at times of elevated credit risk was still considered the most prudent option available to the Authority throughout 2016-2017.

Council approved the Treasury Management Strategy for 2016/17 at its meeting on the 1 March, 2016 minute no. 882 refers.

The Section 151 Officer advised that all treasury management activity undertaken during the financial year complied with the amended approved strategy, the CIPFA Code of Practice and the relevant legislative provisions.

The overall return on investments for 2016/17 was 0.3356%.

This was a matter for Council decision

Cabinet, having considered the report and all the issues and implications contained therein

RESOLVED – T H A T the annual report on Treasury Management 2016/17 be accepted and that the report be referred to Council for approval.

Reason for decision

To accept and refer the report to Council.