Decision details

Treasury Management Report - July 2019

Decision status: Recommendations Approved

Is Key decision?: No

Is subject to call in?: No


Council approved the Council’s 2019/20 Investment Strategy in February 2019 (Minute CB18/66 refers).   The Investment Strategy required regular reports to be presented to this Committee on the Council’s treasury management activities. Members were also reminded that investment activity was also reported through the Members’ Bulletin. In managing its treasury management activities, the Council followed the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Code of Practice on Treasury Management (revised 2017). 


The report provided an update on a number of areas as follows:


           The Council’s treasury advisors, Link Asset Services, had provided their view on the current economic climate and their outlook for the remainder of 2019/20, which was appended to the report. 

           The Council made its own investments through the use of call and deposit accounts with major financial UK institutions.  The Council had also invested £5 million in the Churches, Charities, Local Authorities’ (CCLA) Property Investment Fund.  A further £3 million was invested into the HERMES Property Investment Fund. 

           The Council held £31,796,676 of investments at 31 July 2019. The total income from investments was estimated at £164,819, slightly behind the profiled budget to July 2019 of £170,666, with an average rate of return on investments of 1.64%.

           There was £12,045 million of borrowing at 31 July 2019 and the Capital Financing requirement was £16.217 million.

           The Council had recently invested in the economic regeneration of Rother through its Property Investment Strategy (PIS) and Members were updated with the expected income from the non-Treasury Investments.

           The budget for rental income from all investment properties was £1,939,000.  This was made up of £970,000 for the existing assets and £969,000 for the properties purchased through the PIS.  The estimated outturn for 2019/20 was £1,650,267 a shortfall of £288,918.  This equated to a 6.6% gross return on the value of all properties including those purchased under the PIS.


The investment activity during the year conformed to the approved strategy, and the Council had no liquidity difficulties. The investment environment for treasury activities remained very difficult with absolute returns continuing to be very low. The diversification into Property Funds had increased the net overall return but did come with a greater degree of capital risk than other investments and was less liquid. The Council’s PIS had regeneration at its heart and it was planned to generate returns in excess of 2% (net of borrowing costs), which was greater than predicted for treasury investments. This came with greater risk due to the commitment to repaying borrowing and the direct operational risks of managing property. 


RESOLVED: That the report be noted.

Publication date: 13/03/2020

Date of decision: 23/09/2019

Decided at meeting: 23/09/2019 - Audit and Standards Committee

Accompanying Documents: