Agenda item

Annual Report on the Treasury Management Service and Actual Prudential Indicators for 2016/17

Minutes:

The Executive received the annual report summarising treasury management performance during 2016/17 and demonstrating compliance with the Prudential Indicators.

 

Members were reminded that the Council was heavily dependent on investment income to support its current revenue expenditure.  Although treasury income returns had decreased slightly in 2016/17, this had been against a backdrop of a continuing low interest rate environment nationally coupled with the redemption of investments to repay borrowing.

 

On the advice of the Council’s Treasury advisors the Council, in order to take advantage of low interest rates, had continued to borrow short term from other public bodies rather than longer term from the Public Works Loans Board (PWLB).  The Council’s advisors had indicated that although interest rates were unlikely to increase significantly within the next 2 years, the Council should seek to fix for the longer term so to minimise interest rate risk.

 

Although the PWLB offered easy access to funds it did not necessarily offer the lowest rates for longer term borrowing and rates could only be fixed on the day they were borrowed. The Council had been advised that potentially the market was able to offer better rates as local authorities were viewed favourably and that they were in the market to offer a fixed rate borrowing option for a time in the future. This would mean that the Council would be able to continue to take advantage of low short term rates but be able to minimise the risk of rate rises in the future.  Although going to market would have an initial cost this would be more than recovered in interest savings over the life of the loan. It was therefore proposed that treasury consultants be engaged to go to market and that the costs involved be met savings.

 

RESOLVED

 

(i)              to note the report on Treasury Management including compliance with the 2016/17 Prudential Indicators; and

 

(ii)            that Treasury Consultants be appointed by the Executive Head of Finance in consultation with the Chief Executive to negotiate borrowing opportunities with other providers with the cost being funded from interest savings. 

 

RECOMMENDED to Full Council that compliance with the Prudential Indicators for 2016/17 be noted.

 

 

Supporting documents: