Decision details

The Executive Manager – Finance and Corporate Services and the Financial Services Manager presented a report to summarise the transactions undertaken during the 2017/18 financial year as part of the Treasury Management function. The report also provided information on the Council’s commercial investment activity with regard to the new CIPFA Code ensuring there was both transparency and scrutiny in terms of both treasury and asset investment decision making. The Executive Manager – Finance and Corporate Services advised that the Council is required through regulations issued under the Local Government Act 2003 to produce an annual treasury report reviewing treasury management activities and the actual prudential and treasury indicators for 2017/18. It was noted that the report met the requirements of both the CIPFA Code of Practice on Treasury Management (the Code) and the CIPFA Prudential Code for Finance in Local Authorities (the Prudential Code).

The Financial Services Manager outlined the key actual prudential and treasury indicators detailing the impact of capital expenditure activities during the year. The Financial Services Manager provided information on the Council’s debt and investment position, noting that the investments made in the CCLA Property Fund and with Newcastle City Council were delivering significant returns in a challenging investment market. Councillor Clarke asked why there had been an underspend for the Council’s Capital Programme. The Executive Manager – Finance and Corporate Services advised that all the money allocated for asset investment had been spent. It was noted that the underspend related to the requirement for the reallocation of unspent growth deal funding to support other projects to be approved by the LEP as the money had originally been given to the Council by the LEP for specific projects which were either no longer required (and potential transfer to other projects) or programme slippage.

The Executive Manager advised that Government and CIPFA had recently issued new guidance on Treasury Management activity, which particularly focused on the role of longer-term investments specifically held to make a commercial return and noted that the Council’s Asset Investment Strategy fell within this definition. The Executive Manager outlined the work of the Asset Investment Group’s including current investments and its future plans. The Executive Manager advised that the Council’s current property portfolio had a good spread of risk but noted that no investment was totally risk free. The Executive Manager also advised that moving forward the Asset Investment Group would be looking to take a more varied approach to investments and not just looking at property investment opportunities.

Councillor Mrs Smith asked about the 99-year lease on the Finch Close property and whether this would be written down annually. The Service Manager – Transformation advised that the property would be sold before the lease end. Councillor MacInnes enquired about the provision of training for councillors in commercialism to enable them to increase their understanding and to scrutinise effectively the Council’s commercial investments. The Executive Manager advised that this would be included in the Treasury Management training (to be provided by Arlingclose) scheduled for November 2018. The Chairman noted his disappointment at the level of returns delivered by many of the Council’s investments. The Executive Manager advised that the information on returns included in the report provided a snapshot only of performance and noted that when making investments the primary concerns were security and liquidity rather than yield. The Executive Manager also noted the importance of liquidity so that assets could be accessed immediately if a good investment opportunity arose which would allow investment to be made with current assets rather than by using borrowing.

It was RESOLVED that the Treasury Management Outturn 2017/18 report be approved.