Assembly received this report introduced by the Corporate Director of Finance and Resources (CDFR), who advised that regulations had placed a greater onus on Members to review and scrutinise treasury management policy and activities.
The CDFR referred Members to the key points in the report, namely:
Ø Investment income for the year was £1.2m;
Ø There had been no General Fund borrowing in 2011/12 to finance the capital programme as, in line with part of the 2011/12 treasury management strategy, the Council had relied on internal borrowing;
Ø £265.9m of external borrowing had been required as part of the Housing Revenue Account (“HRA”) self-financing settlement;
Ø The Council breached the maturity structure for borrowing maturity of fixed rate borrowing as a result of taking advantage of low interest rates available for the HRA self-financing settlement;
Ø The Council had not breached its revised 2011/12 authorised borrowing limit of £465m and had complied with all other set treasury and prudential limits.
In response to Members' questions, the CDFR advised that:
1. She had delegated authority in relation to the authorised borrowing limit of £465m and had not breached that limit.
2. With regard to the accuracy of LIBOR reporting by Barclays, the Council did not deal with Barclays; however, the Treasury Management Consultants were working to ascertain whether or not the Council had any liabilities in this connection and if there were issues, these would be reported back to Assembly.
3. Regarding Treasury Management Costs, Scottish Widows' costs were higher than those internally.
4. Additional investment would be made through Investec as they were outperforming the internal rate of return.
5. The diversification of part internal and part external investment was considered to be a worthwhile strategy.
6. The Council does not lend to commercial and external organisations, though the use of Building Societies was under consideration and the Council does invest in Nationwide Building Society. The interest rates received were dependent on the length of the investment, i.e. from as short as overnight or for as long as a year, and were agreed at the outset of the investment.
7. The interest rates on the borrowing, which had been made in five tranches, were 4.3% to 4.9%.
The CDFR further confirmed that she would provide Members with a written note explaining Fixed and Variable Interest Exposure.
Assembly agreed to:
a) Approve the actual 2011/12 prudential and treasury indicators in the report;
b) Approve the increase in maturity structure of fixed rate borrowing from 60% to 100%;
c) Note the Treasury Management Annual Report for 2011/12;
d) Note that the Council complied with all 2011/12 treasury management indicators with the exception of the maturity structure for borrowing maturity of fixed rate borrowing;
e) Note the £265.9m borrowed by the Council in 2011/12 as part of the Housing Self Financing reforms;
f) Note that the Council did not borrow in 2011/12 to finance its capital programme but utilised internal cash in line with its strategy.