Agenda item

TREASURY MANAGEMENT STRATEGY 2010/11 - MID-YEAR REVIEW

The Director for Corporate Support will submit the Treasury Management Strategy 2010/11 - Mid-Year Review.

Minutes:

The Assistant Director for Finance, Assets and Efficiencies gave an overview of the report and its highlights which included that the City Council –

 

·              had reduced its overall borrowing by £6.977m

·              had repaid a debt of £33.9m to Devon County Council

·              was currently only investing in UK institutions and for periods of no longer than 12 months

·              was forecasting a favourable revenue outturn of £0.139m

·              was continuing to challenge Icelandic investments through the Local Government Association and Bevan Brittan

It was also reported that, in looking forward, the Council would –

 

·              consider making investments of up to 2 years in order to benefit from higher interest rates

·              upon the advice of our professional advisors, look to increase its counter-party list to include top credit rated organizations outside of the UK

·              optimise short term borrowing rates

·              continue to balance risk versus return

In response to questions raised, Members were advised that -

         

(a)

 

cash projection updates were done daily as part of an automated process linked to the Council’s creditors/payroll system;

 

(b)

 

the Council had had to pay part year interest repaying the Devon debt.  This transaction was financially beneficial for Plymouth, generating a full year revenue saving of approximately £150k, whilst giving the Council flexibility of managing the debt itself;

 

(c)

 

the availability of a version of the November 2010 revised Treasury Management Practices, highlighting changes from the previous version, would be made available to the Committee;

 

(d)

 

the Council had a policy of paying suppliers in line with agreed terms of trade and service standards and was performing well in this regard;

 

(e)

 

instructions for banking of receipts were set out in the Council’s Financial Regulations, however, it was acknowledged that this could be improved and a piece of work was currently being undertaken to help tighten up the income collection process.  Officers would investigate the delay in processing cheques through the Lord Mayor’s Parlour;

 

(f)

 

the Council’s Treasury Management advisors, Arlingclose, had been appointed in January 2009, shortly after the collapse of the Icelandic banks.  The Council had not made any long-term financial investments since this appointment as its policy response was to keep investment maturities to a maximum of 12 months;

 

(g)

 

there were still a few longer-term investments in the system, made before October 2010, that exceed 12 months in duration, for example a sum of £3m invested in Barclays at a rate of 7.1%;

 

(h)

 

Regarding Icelandic investments, no calculations had been done to estimate what would have been received had the money been invested at the current interest rates.

 

Agreed –

 

(1)

 

that with regard to (c), (d), (e) and (h) above, Officers provide to Committee Members -

 

·              a copy of the revised Treasury Management Practices showing the changes

·            figures relating to performance against the agreed terms of trade with creditors

·            a written response to the delay in processing cheques received by the Lord Mayor’s Parlour

·            a written response on how much interest could have  been received from the Icelandic bank investments

(2)

 

that the report be noted and commended to Full Council in accordance with Treasury Management Practice (TMP) note 6;

 

(3)

 

the updated Treasury Management Practices as outlined at Appendix 3 to the report.

 

Supporting documents: