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Report title
Treasury Management Mid Year Report
Meeting
Date
Resources Committee
Authority
4 November 2016
24 November 2016
Report by
Document Number
Director of Finance and Contractual Services
FEP 2662
Public
Summary
This report is submitted in accordance with Financial Regulation 22 which requires that the
statutory finance officer (the Authority’s Director of Finance and Contractual Services) submit a
mid-year monitoring report on the activities of the Authority’s treasury management operation to
the Resources Committee.
Treasury activity, in the first half of the financial year to 30 September 2016, has seen the
Authority’s investments outperform its investment benchmark by 0.27%. At mid year the
Authority had invested balances of £133.71m in the GLA’s Group Investment Syndicate.
The Authority’s loan borrowing level has reduced by £6.5m, from £92.73m as at 31 March 2016
to £86.23m as at 30 September 2016, as Local Authority and PWLB debt has matured in year to
date, with the only borrowing, in year to date, being in the form of a finance lease for the final PFI
Fire station at Dockhead, which became operational in May 2016. All treasury management
activity has been within the boundaries and levels set by the Authority in its Treasury
Management Strategy Statement approved on 17 March 2016 (FEP 2576).
Recommendation
That the report be noted.
Introduction/Background
1.
The Authority’s treasury management function is provided by GLA Group Treasury under a
shared service with the Greater London Authority. The mid year report from Group
Treasury on LFEPA treasury management is attached as appendix A. The report provides
details of all investment and borrowing activities for the period from 1 April to 30 September
2016 and highlights relevant issues currently under consideration by officers. The report also
provides a comparison of the closing investment and debt positions as at 30 September 2016
with the 2016/17 opening position as at 1 April 2016, and a forecast to 31 March 2017 or
beyond where relevant.
2. The Director of Finance and Contractual Services confirms that, throughout the period, all
treasury activities, apart from those breaches reported in the Annual Treasury Management
Outturn report (FEP 2624), have been conducted within the parameters of the Treasury
Management and Annual Investment Strategy for the financial year 2016/17 as approved by
the Authority on 17 March 2016 (FEP 2576), alongside best practice suggested by the
Chartered Institute of Public Finance and Accountancy (CIPFA) and Central Government.
3. Under the treasury management shared service arrangement with the GLA, GLA treasury
officers carry out the Authority’s day to day treasury management function, managing the
Authority’s investments and borrowing activities. Authority officers provide the GLA with
details of the Authority’s daily cash flow requirements and monies are only transferred
between the Authorities as and when required to match Authority need. This way, surplus
funds over and above daily need are held with the Group Investment Syndicate (GIS), the
GLA managed vehicle used by the Authority to manage investment.
4. The Authority’s investment in the GIS, as at 30 September, was £133.7m, which over the
period attracted an average return of 0.61% which was 0.27% higher than the Authority
benchmark for investment return, the benchmark being set at the three month LIBID rate
(0.34%).
5. Authority borrowing principal repaid in the period 1 April to 30 September 2016 amounted to
£6.5m with three loans repaid, one to the London Borough of Hackney for £3m and two
loans totalling £3.5m repaid to the Public Works Loan Board. The Authority entered into a
finance lease (£5.5m) for the last of the PFI stations (Dockhead) which became operational in
May 2016. No other borrowing has taken place in the year to date.
6. The Authority retains a working balance in its own interest earning bank account to cover
unexpected funding requirements. As at 30 September 2016 the balance held on this call
account was £2.835m.
7. The attached report, provided by the GLA Group Treasury, sets out greater detail around the
Authority’s Treasury activity, treasury management indicators as set out in the Authority’s
strategy, with commentary on the Economic Environment and Prospects for Interest Rates.
Head of Legal and Democratic Services comments
8. The Director of Finance and Contractual Services has been appointed by the Authority as the
officer who is responsible under section 127 of the Greater London Authority Act 1999 for
the
arrangements for the proper administration of its financial affairs. The management of the
Authority’s Treasury activities and the regular reporting on the function form part of those
arrangements.
Director of Finance and Contractual Services comments
9. This report is presented by the Director of Finance & Contractual Services and there are no
further comments.
Sustainable Development implications
10. There are no direct environmental or sustainability implications associated with the contents
of this report.
Staff Side Consultations undertaken
11. There are no direct implications associated with the contents of this report requiring
consultation.
Equalities implications
12. There are no direct equalities implication associated with the contents of this report.
List of Appendices to this report:
Appendix A - GLA Group Treasury report
LOCAL GOVERNMENT (ACCESS TO INFORMATION) ACT 1985
List of background documents
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
Treasury Management and Annual Investment Strategy for 2016/17 (FEP 2576)
Local Government Act 2003
The Prudential Code (Revised 2011)
The Prudential Code Guidance Notes (Revised 2013)
Local Authorities (Capital Finance and Accounting)(England) Regulations 2003
Authority Financial Regulations
CIPFA Code of Practice for Treasury Management in Public Services and Cross-Sectoral
Guidance Notes (Edition 2011)
CIPFA Treasury Management - Guidance Notes for Local Authorities Including Police
Authorities and Fire Authorities (Edition 2011)
PWLB Circular no. 149, 4 January 2011 Methodology for Calculating Interest Rates On PWLB
Fixed Rate and Variable Rate Loans
Bank of England Monetary Policy Committee - Monthly Interest Rate Setting Bulletins
14. The Department for Communities and Local Government (DCLG) Guidance on Local Government Investment
Proper officer
Director of
Contact officer
Telephone
Email
Steve Knight
0208555 1200 x31368
[email protected]
Finance and Contractual Services