Mid-Year Treasury Management Report
(Report of the Head of Finance & Procurement – Anthony Thomas)
Mr Anthony Thomas (Head of Finance & Procurement) delivered a Presentation on the Mid-Year Treasury Management Report and explained why we prepare the report and went through the treasury management activities including the projections for the current financial year and the projected prudential indicators.
Mr Thomas explained the Capital Programme performance comparing the Original and Revised Budgets with an increase in Budget of £2,326,500. Spend was projected to be £3,544,000 lower than the Approved Revised Budget. The reasons for the variance to the Approved Revised Budget were also shown in a graph which illustrated £3,000,000 Property Investment Strategy which was approved by Council on 16 October 2018 and Mr Thomas said at present the Council is in the process of recruiting an estates management team that will be integral to the delivery of this strategy. Capital Receipts were projected to be higher than budget due to Disabled Facilities grant repayments and the Council’s share of Bromford Right to Buy Receipts. Capital Funding would reflect the projected Capital Programme performance and therefore borrowing would be lower than the Revised Approved Budget.
It was queried if there was to be a review of the Capital Programme as the only capital for Burntwood seemed to be Sankey’s Corner Environmental Improvements and it did not seem equitable, could the Burntwood equitable share be looked at as there is a lot of money in Lichfield City Centre. Mr Thomas advised that the Strategic (O&S) Committee would be considering the Draft Capital Programme and Capital Bids at their meeting on 22 November 2018.
The Balance Sheet Projections reflect lower spend on the Property Investment Strategy together with lower borrowing. The projected year-end balance of investments was 322,186,000 compared to the Budget of £20,911,000.
Borrowing need and its financing reflected the lower projected spend on the Property Investment Strategy.
At 30 September 2018 the Council had £31m of investments with the value of the Property Investment now showing a “book loss” of £90,930 compared to the projected balance on the Earmarked Reserve of £95,083.
Mr Thomas stated that at the end of the financial year last year there was a difference of opinion between ourselves and the External Auditors although this would be overcome through a statutory override. The statutory override has been provided by MHCLG for a 5 year period although CIPFA are still advocating a permanent override.
The yield of our investments compared to other Authorities demonstrated that we are slightly lower than other districts and more spread than others and the evidence shows we are much more secure.
Mr Thomas explained the new requirements of the Treasury Management Code and Prudential Code which states it will be possible to delegate responsibility for detailed Treasury Management Policies to this committee and the updated Prudential Code requires the completion of a Capital Strategy that will need to be approved by Full Council with scrutiny by this committee. Discussion took place around the Capital Strategy content and it was questioned if this document would sit with the MTFS and therefore go to Strategic (O&S) Committee. Mr Thomas said he was happy to do this and offered to look at this with the Chairman of Strategic (O&S) Committee.
The risks associated with the Capital Strategy were discussed and it was deemed that this should be a corporate risk on the risk register.
RESOLVED:- (1) The Report was reviewed and noted;
(2) The projected 2018/19 prudential indicators contained within the report were noted; and
(3) The requirement to produce a Capital Strategy that will need to be approved by Full Council was also noted.