Issue - meetings

The item was introduced by Chris Norton (Head of Investments, Audit, Insurance, and Risk). He said investment and borrowing balances had been kept within the limits set out in the Investment Strategy. Base rates were at 5.25 per cent, although it was currently anticipated that rates would drop over the next couple of years. The Council currently had higher rates of return because interest rates were high. However, investments were held in low risk, high credit rated investments so returns would fall as interest rates went down. Going for high risk, high return investments was contrary to treasury management policy which prioritised liquidity and security before yield. The largest proportion of investments were made in other local authorities. Internal borrowing had been lower than expected due to capital slippage and higher than anticipated use of reserves. However, this was preferable to external borrowing and there was currently no requirement for this to be done.

Responding to a question from Councillor Sinclair, Chris Norton said costs were built into the Medium-Term Financial Strategy. Figures shown in the report outlined what the financial requirements were, but these were covered by the MTFS. Financing would be done internally using the Council’s own balance sheets unless there was a requirement for additional funding from external sources. Rob Powell said that when the budget was set, benchmarks relating to borrowing and debt were set against other local authorities. The Council was not an outlier in this respect.

Responding to a question from Councillor Feeney, Chris Norton said the investment figures included in the report showed those that were made using fixed rate terms. The Council’s aim was to operate with £100million of liquid funds. The bank deposits referenced in the report were an example of a liquid asset.

Responding to a question from Councillor Sinclair, Chris Norton said the liability benchmark was a CIPFA standard that in any case aligned with the Council’s treasury management and investment strategies.

Members noted the contents of the report.