Agenda item

(Director of Finance & ICT) To consider the attached report (AGC-015-2013/14).

The Principal Accountant presented the annual outturn report on the Council’s Treasury Management function and Prudential Indicators for 2012/13.

The Principal Accountant stated that the Annual Treasury Report was a requirement of the Council’s reporting procedures.  It covered the Council’s Treasury activity and the actual Prudential Indicators for 2012/13. For the Council’s capital activity during the year, the balances for Capital Receipts and the Major Repairs Reserve (£13.9million and £9.8million respectively) were broadly in line with the revised estimate and it was felt that adequate resources were available for the Capital Programme in the medium term. The Council had financed all of its capital activity through capital receipts, capital grants and revenue contributions; there had been no need to borrow to finance the Council’s capital expenditure during the year.

The Principal Accountant reminded the Committee that the Council had borrowed £185.5million during 2011/12 to finance the payment to the Government for the Housing Revenue Account self-financing initiative. The thirty-year financial plan produced to finance the loans continued to be reviewed by Officers with progress reports presented to the Housing Scrutiny Panel. Only 17% of the money had been borrowed at a variable rate; this would be hedged by a corresponding increase in interest earned by the Council’s investments if interest rates rose in the future.

The Principal Accountant reported that the Council’s treasury position at 31 March 2013 totalled £49.1million in balances and reserves. The Council had not breached any of the prudential indicators, as it had only 19% of its investments exposed to variable rates, £12million invested for longer than 364 days, and the amount invested outside of the UK was currently no more than 1.8%.

In summary, the Principal Accountant advised that the Council had continued to finance its capital programme without borrowing, and both the Capital Receipts and Major Repairs Reserve were broadly in line with their revised estimates. Thus, it was concluded that the Council had adequate resources to fund the capital programme in the medium term. It was highlighted that the Council had borrowed £185.5million during 2011/12 to finance the HRA self-financing subsidy, resulting in the Council losing its debt-free status. The Council’s investments were valued at £49.1million as at 31 March 2013 and none of the Treasury Prudential Indicators had been breached during the year.

The Committee noted the report and the Council’s strong position. It was noted that the Finance & Performance Management Cabinet Committee had considered this report at its meeting on 19 September 2013 and had offered no further comment. The Chairman suggested that, in the Capital Expenditure table in paragraph 4 of the report, figures for 2011/12 and 2013/14 should be included to allow the Committee to monitor longer-term capital expenditure. The Director of Finance & ICT acknowledged that some of the capital projects had not been completed on time for a variety of reasons, but the self-financing of the Housing Revenue Account in 2011/12 had made capital resources available for other projects which had taken a little time to get started. The Chairman highlighted the wider scenario of continuing cuts in Local Government expenditure and the role Treasury Management would play in the future. The Committee felt that the risks associated with the Council’s Treasury Management function had been suitably managed during the year.

The Director of Finance & ICT announced two forthcoming training courses that would be of interest to the Committee: Risk Management on 13 November 2013; and Treasury Management on 9 January 2014.

Resolved:

(1)        That the annual outturn report on Treasury Management and the Prudential Indicators for 2012/13, and the management of the risks therein, be noted.