Agenda item

The Group Accountant presented the report and advised the Committee that the Annual Treasury Outturn Report looked backwards at 2016/2017 and covered:

·         The 2016/2017 Treasury Outturn.

·         Compliance with Treasury Limited.

·         Outturn Summary.

Additional supporting information:

·         Appendix 1 – Investments as at 31 March 2017.

·         Appendix 2 – Borrowing as at 31 March 2017.

·         Appendix 3 – Prudential Indicators.

·         Appendix 4 – Treasury Benchmarking Group.

·         Appendix 5 – The Economy 2016/2017.

The Committee was invited to ask questions, a summary of which is set out below.

The Group Accountant responded to questions relating to the Council’s investments and the advice received from the Treasury Advisors.

The Group Accountant provided clarification on paragraph 3.3 and explained that the Council obtained advice from the Treasury/Sector/Capita and followed their method to invest in the market and highlighted the 3 credit rating agents.

The Group Accountant and Leader, Councillor Long responded to questions and comments on AAA rating.

The Executive Director responded to questions from Councillor Collop on Gaywood Community Centre.  Councillor Collop commented that he would discuss the Community Centre in more detail outside of the Panel meeting.

Following questions on the actuals figures as at 31 March 2017, the Group Accountant explained that the differences related to the housing projects and the new road off Edward Benefer Way to Lynnsport.

In response to questions relating to paragraph 2.2, the Group Accountant explained that the Council’s received advice from Sector, but the Council could if it so wished take more risk with investment and management of debt.  The Leader, Councillor Long advised that Cabinet took different approaches to utilise funds in order to achieve a better return and gave an example of housing development rather than traditional ways of investment..

The Executive Director explained that every year the Treasury Strategy set the parameters in which the Council operated.  In March 2017, the Audit Committee received the proposed Investment Strategy which set out options on using funds which were different from traditional investments.

In response to questions as to why the Council’s actual borrowing had reduced from £17m to £13m, and Capital expenditure increasing from £11m to £19m, the Group Accountant explained that the gap was funded from internal reserves and used for cash flow for housing development on a short term basis.  It was explained that the Council could borrow £13m on a long term basis.  The Executive Director advised that not all funding was obtained solely from borrowing, but from a combination of reserves, grants, assets and borrowing.  Capital receipts received during 2016/2017 helped to fund the capital expenditure.  The Leader, Councillor Long added that the Council always had liquid assets for day to day operational purposes.  The property investment in King’s Lynn provided a safe and sound investment, but provided no guarantee.  The importance of having a balanced portfolio was highlighted.  The Council had a technical limit in that it could not borrow more than what it could afford to borrow.  The Executive Director provided the Committee with details relating to the Council’s Investment Strategy.

The Executive Director explained that some of the Council’s money was invested in banks on a short term basis.

In response to question as to why the Council borrowed at a higher rate, the Executive Director explained that the Council had previously taken out 70 year loans.  The Group Accountant that the Council remained tied in to the loans for another 60 years and early repayment of those loans would incur penalties.  The Executive Director added that the loan term loans were taken out during the stock transfer period and it had considered to be a competitive long term loan at a comparable interest rate.  The Executive Director undertook to forward the information in a table format to the Audit Committee.

Following questions from the Chairman, Councillor Pope on investments end dates and the £8m now available to reinvest.  The Group Accountant explained that the money would be held on a short term basis and invested in the money market and also be used for corporate projects, details of which were reported in the Monthly Monitoring Reports.

The Chairman, Councillor Pope thanked the Group Accountant for presenting the report.

AGREED: The Audit Committee noted the Actual Treasury Outturn 2016/2017.