Issue - meetings

To receive and consider report /08 of the Joint Head of Finance, Ridgeway Shared Service Partnership. 

Introduction and Report Summary

The Council’s Treasury Management Policy requires a report to be made on Treasury Management performance in the previous financial year.  It is also required by the CIPFA Treasury Management Code of Practice as embodying sound financial management.

The purpose of this report is to detail the Council’s cash investment performance in the financial year 2007/08 and to raise any treasury management issues.  Property investment return is included in the 2007-08 Annual Financial Out-turn monitoring report which is also on this agenda.

The Contact Officer for this report is Steve Lawrence, Principal Accountant (Technical), telephone 01235 540321. email address:

steve.lawrence@whitehorsedc.gov.uk

Recommendations

(a)       to note the return on cash invested during 2007/08 and the balances of the funds at 31 March 2008; and

(b)       to note the prospects for the return on cash investments in 2008/09. 

(Time: 3.24pm to 3.30pm)

(Councillor Richard Farrell declared a personal interest in this item 12 and in accordance with Standing Order 34 he remained in the meeting during its consideration.) 

The Executive received and considered report 52/08 of the Head of Finance regarding the Council’s Treasury Management performance in 2007/08.  The report detailed the Council’s cash investment performance in the financial year; property investment return was included in the 2007-08 Financial Outturn monitoring report considered earlier in the meeting (report no. 51/08, minute Ex.45 refers).

Members noted that higher than expected interest rates had meant that the return on cash invested was higher than expected in 2007/08.  However, increasing volatility and uncertainty in the economy was making it harder than usual to forecast investment income returns.  The Council’s in-house investment income in the year amounted to £575,503 on an average balance of £9.7m - an average return of 5.93%.  At the end of March 2008 the cash managed showed a balance of £1.83m.  The return for the external fund managers, Investec, achieved a gross rate of return of 5.86% after fees—an improvement on the previous year. 

The actual investment income achieved in 2007/08 exceeded the original budget forecast by £74,240 (5%); actual outturn of £1.556m compared to £1.482m in the original budget.  This was due to interest rates rising higher than expected, balances held were higher than expected, and the economic uncertainty and “banking crisis” meant that the upward differential between market interest rates and bank rate was much greater than usual. 

The Executive concluded that the Treasury Management Strategy was proving to be adequate and there were no treasury management issues to raise at this time.  Members once again congratulated the in-house team for its performance and noted that the external fund manager’s performance was equal to other investment companies. 

RESOLVED

(a)        that the return on cash invested during 2007/08 and the balances of the funds at 31 March 2008 be noted; and

(b)        that the prospects for the return on cash investments in 2008/09 be noted.