Decision details

Treasury Management Update

Decision status: Recommendations Approved

Is Key decision?: No

Is subject to call in?: No


Cabinet had approved the Council’s 2019/20 Investment Strategy in February of this year; this required regular reports to be presented to the Committee on the Council’s treasury management activities. Investment activity was also reported to Members through the monthly Members’ Bulletin.  The report had been prepared in compliance with 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 made the most of its investments through the use of call and deposit accounts with the major financial UK institutions.  In addition to this, the Council had invested £5m in the Churches, Charities, Local Authorities’ (CCLA) Property Investment Fund and £3m in the HERMES Property Investment Fund.

           The Council held £32,083,554 of investments as at 30 November 2019. There was £12,045m of borrowing at 31 July 2019 and the Capital Financing requirement was £16.7m.

           The total income from financial investments was estimated at £492,000 with an average rate of return on investments of 1.89%. This was slightly below the annual budget of £512,000.

           During 2019/20, the Council had maintained an under-borrowed position, meaning that the need for borrowing, (the Capital Financing Requirement), was not fully funded with loan debt, as cash supporting the Council’s reserves, balances and cash flow was used as an interim measure. This strategy was prudent as investment returns were low and minimising counterparty risk on placing investments also needed to be considered.

           The total spend and funding of the Capital Programme for 2019/20 was summarised in the report, the total funding being £17.9m.

           The Council continued to invest in the economic regeneration of Rother through its Property Investment Strategy (PIS).  The budget for rental income from all investment properties was £1,939,000; the latest estimated outturn for 2019/20 was £1,531,200 a shortfall of £408,550.  This equated to a 6.6% gross return on the value of all properties including those purchased under the PIS.

           New guidance on non-treasury investments had been published by CIPFA, which was currently being reviewed.  A report would be brought back to the Audit and Standards Committee.


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 planned to generate returns in excess of 2% (net of borrowing costs), which was greater than predicted for treasury investments.  Members requested details of the Council’s investment properties; these would be included in a future report.


RESOLVED: That the report be noted.

Publication date: 13/03/2020

Date of decision: 09/12/2019

Decided at meeting: 09/12/2019 - Audit and Standards Committee

Accompanying Documents: