Councillor Clarence Barrett presented the report of Stephen Wild to Cabinet detailing the London Borough of Havering’s Report on the performance of the treasury management function.  This report needs to go to full Council at least twice yearly (mid-year and at year end).

The final 2016/17 Treasury position is set out in Appendix 1 of the report.

The Authority has borrowed and invested substantial sums of money and is therefore exposed to financial risks including the loss of invested funds and the revenue effect of changing interest rates.

The Authority will aim to achieve the optimum yield on investments commensurate with acceptable levels of security and liquidity.  The investment performance for 2016/17 was detailed as follows:

The UK bank rate fell to 0.25% in August 2016 keeping short term money market rates at historically low levels.

The Authority had £212.7 million of loans and £00.9 million of investments at year end.

The Authority appointed Arlingclose Limited as treasury management advisers.  Officers receive specific advice on investment, debt and capital management throughout the year on a daily basis.  This is augmented by a quarterly strategy review meeting with the S 151 Officer and the Lead Cabinet Member for Finance.  The s151 Officer has a duty of due diligence and this is part of the statutory role.  All investments are considered in the light of professional advice.

Proposed changes to the 2017/18 TMSS are set out in the report.  Officers and the Treasury Adviser constantly scan the market to identify suitable investment opportunities and the need to do this is important to ensure investment income budget targets are to be met.

The proposed changes are requested to ensure officers have the scope to investigate investments that will bring higher returns than are currently available in the strategy. 

Cabinet:

• NOTED the final 2016/17 Treasury Position set out in the report.

• NOTED the treasury and prudential indicators as set out in Appendix 3 of the report; and

• RECOMMEND Full Council consider this report and approve the proposed changes to the 2017/18 Treasury Management Strategy Statement (TMSS) as set out in Appendix 4 of the report.

Reasons for the Decision:

• The Chartered Institute of Public Finance and Accountancy’s Treasury Management Code (CIPFA’s TM Code) requires that Authorities report on the performance of the treasury management function to Full Council at year end.

Other Options Considered:

• The other option was to not report the performance of the treasury function and request approval of the amendments to the 2017/18 Treasury Management Strategy. However, as this would be in breach of CIPFA’s TM Code, which was not appropriate.