Agenda item

Mid-Year Report on Treasury Management and Prudential Indicators 2017/18

(Director of Resources) To consider the attached report (AGC-012-2017/18).


The Director of Resources presented the mid-year progress report on the Council’s Treasury Management function and Prudential Indicators, which covered the treasury activity for the first half of 2017/18, and was a requirement of the Chartered Institute of Public Finance & Accountancy (CIPFA) Code of Practice on Treasury Management.


The Director reported that, during the first half of the year, the Council had continued to finance all Capital expenditure from within internal resources. The estimate for the Capital Programme during 2017/18 had indicated expenditure of £38.715million, which would be financed by capital grants, capital receipts, revenue and £3.691million of borrowing. The Capital Programme for the five-year period ending 31 March 2021 had predicted expenditure of £124million, partly funded by borrowing of £24million, with £1.7million available in usable Capital Receipts and £nil million in the Major Repairs Reserve. There had been no breaches of the Authorised Limit (£250million), the Operational Boundary (£240million) or the Maturity Structure of Fixed Rate Borrowing during the period to 30 September 2017.


The Director advised the Committee that the Council had £30.1million under investment as at 30 September 2017, and the average net investment position of the Council had been approximately £35.7million throughout the first half of 2017/18. The Council’s investments as at 30 September 2017 had consisted of £15million in fixed investments and £15.1million in cash and cash equivalents. The importance of carefully monitoring and controlling the Council’s cash flow to ensure enough funds were available each day to cover outgoings was highlighted; this would become more difficult as the Council used up its Capital Receipts and reduced its investment balances.


The Director stated that the Council held loans totalling £185.5million as at 30 September 2017, the majority of which had funded the self-financing of the Housing Revenue Account (HRA). It was anticipated that the Council would require further loans in 2017/18 to fund capital projects such as the Epping Forest Shopping Park. The revised Capital Programme for the five-year period to 2021/22 would be considered by the Cabinet at its meeting scheduled for 7 December 2017.


Finally, the Director added that there had been no breaches of any of the Prudential Indicators relating to Capital Activity, the Indebtedness for Capital Purposes, and the Council’s overall Treasury Position. The Department of Communities & Local Government (DCLG) had recently issued a consultation on borrowing by Local Authorities, as there were concerns that some Councils were borrowing from the Public Works Loan Board to plug funding gaps. The Committee was reassured that any borrowing undertaken by this Council to finance the Capital Programme enabled projects to be delivered which would improve the local economy within the District.


When questioned by the Committee, the Director stated that the vast majority of the non-HRA capital expenditure related to finishing works for the Epping Forest Shopping Park, whilst it was likely that there would be an underspend for the HRA Capital Programme this year as it was expected that phases IV, V and VI of the Council Housebuilding Programme would finish in future years. Tenant’s Right-to-Buy from registered social landlords was currently subject to a large scale trial in West Midlands, and it was a risk that funding after the pilot would have to be provided by Local Authorities. The long-term borrowing was almost entirely for the HRA Self-Financing initiative. The Council did not expect to draw down further long-term borrowing in the immediate future as Capital Receipts would be received, and neither was it expected that interest rates for borrowing money would increase dramatically in the immediate future. The Finance Portfolio Holder highlighted that other Councils had not reached the Decent Homes Standard for their housing stock, so this Council was ahead of its peers in this respect.


The Director informed the Committee that a draft, revised Code of Practice for Treasury Management had been issued by CIPFA and that it did include the possibility for commercial property to be classed as an investment. The DCLG intended to introduce a revised Code from the start of the 2018/19 financial year; however, their proposals diverged in some areas from CIPFA’s and this could potentially delay its introduction.




(1)        That the mid-year progress report on Treasury Management and the Prudential Indicators for 2017/18, and the management of the risks therein, be noted; and


(2)        That none of the Prudential Indicators had been breached during the first half of 2017/18 be noted.

Supporting documents: