Agenda Item No. 14(a)

THE VALE OF GLAMORGAN COUNCIL

COUNCIL: 26^TH SEPTEMBER 2018

REFERENCE FROM CABINET: 16^TH JULY 2018

“C365             TREASURY MANAGEMENT CLOSING REPORT 2017/18 (L) (SCRUTINY COMMITTEE – CORPORATE PERFORMANCE AND RESOURCES) -

Cabinet was presented with the annual review report on Treasury Management 2017/18.

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 report had been prepared as required and covered: 

• the economy / interest rates in 2017/18;
• the strategy for  2017/18;
• the borrowing outturn for 2017/18;
• investment outturn for 2017/18;
• 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 were 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 attracted a slightly more favourable rate of return than investing with the UK government, but still gave 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 were 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 2017/18 the Council continued to finance a significant proportion of its capital expenditure from internal resources.  The potential reduction of the Councils investments balances at times of elevated credit risk was still considered the most prudent option available to the Authority throughout 2017/18.

Council approved the Treasury Management Strategy for 2017/18 at its meeting on 1^st March, 2017, (minute no. 861 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 2017/18 was £244,424 at a rate of 0.33%.

This was a matter for Executive 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 2017/18 be accepted and that the report be referred to Council for approval.

Reason for decision

To accept and refer the report to Council.”