To receive the report of the Corporate Director, Resources providing the Treasury Management Mid-Year Report for 2016/17.

The Council considered the report of the Corporate Director, Resources providing the Treasury Management Mid-Year Report for 2016/17.

DECISION: 

That the Council note:

1.            The treasury management activities and performance against targets for the six months to 30 September 2016.

2.            The Council’s investment balance of £406.85m as at 30 September 2016 of which £131.62m was invested with money market funds (MMF) and £105m invested with UK Banks and Building Societies as set out in Appendix 1 to the report.

3.            The Council’s position on prudential indicators as set out in Appendix 2 to the report.

(Action by:  Zena Cooke, Corporate Director, Resources)

The Council considered the report of the Corporate Director of Resources submitting the Mid - Year Review and Activities of Treasury Management Strategy and Investment Strategy for 2016/17 for noting.

The recommendations set out in the report were put to the vote and were agreed. Accordingly it was:

RESOLVED that the Council note:

1.    The treasury management activities and performance against targets for the six months to 30 September 2016.

2.    The Council’s investment balance of £406.85m as at 30 September 2016 of which £131.62m was invested with money market funds (MMF) and £105m invested with UK Banks and Building Societies as set out in Appendix 1 to the report.

3.    The Council’s position on prudential indicators as set out in Appendix 2 to the report.

The Audit Committee considered the Treasury Management Mid-Year Review and Activities Treasury Management Strategy and Investment Strategy 2016/17 report, presented by Neville Murton, Service Head Finance & Procurement.

Neville Murton, Service Head Finance & Procurement highlighted the following:

·       All treasury management activities were executed by authorised officers within the parameters agreed by the Full Council;

·       All investments were made to counterparties on the Council’s approved lending list and within agreed limits;

·       There was no short term or long term borrowing raised during the period to 30 September 2016;

·       From the beginning of financial to 30 September 2016, the Council earned an average investment return of 0.77% on short term lending, outperforming the rolling average 7 day LIBID rate of 0.29%;

·       The Treasury Management Strategy, Investment Strategy and Minimum Revenue Provision reports were included in the Budget Pack that was presented to Full Council on 24 February 2016. The 2015/16 Outturn report was approved by Full Council on 21 September 2016;

·       UK GDP Growth rates in 2013 of 2.2% and 2.9% in 2014 were strong but 2015 was disappointing at 1.8%, though it still remained one of the leading rates among the G7 countries. Growth improved in quarter 4 of 2015 from +0.4% to 0.7% but fell back to +0.4% in quarter 1 of 2016 before bouncing back again to +0.7% in quarter 2. The referendum vote for Brexit in June this year delivered an immediate shock fall in confidence indicators and business surveys, pointing to an impending sharp slowdown in the economy;

·       During this financial year, two variable rate, market loans have been reclassified as fixed rate market loans. This is because on the 22^nd June 2016, Barclays Bank decided to waive their right to change the applicable interest rate of loans. As a result of this waiver, the loans effectively become fixed rate loans at their current interest rates of 4.25% for the £4.5m loan with maturity date of 23/09/2077 and 4.37% for the £13m loan with maturity date of 23/09/2077; and

·       As at the 30 September 2016, no Public Works Loans Board (PWLB) loans matures.

The Chair, Councillor Candida Ronald enquired where the LOBO loans were up to and that Tower Hamlets was looking good against the other benchmarking clubs.

Neville Murton informed the Committee that the LOBO loans were still ongoing and there were no write-offs and according to the loan portfolio identified at paragraph 3.7.3 of the report it will continue to be monitored. He also stated that Tower Hamlets is above the model weighted average rate of return when looking at 1, 2 & 5 year products.

Councillor Chris Chapman enquired if targets are reviewed, by going reasonably low or more robust in order that targets are met.

The Committee agreed to:

1.     Recommend the report to Council;

2.     Note the treasury management activities and performance against targets for the six months to 30 September 2016;

3.     Note the Council’s investment balance of £406.85m as at 30 September 2016 of which £131.62m was invested with money market  ...  view the full minutes text for item 4