To consider the above report

Members considered the Annual Treasury Management Outturn for 2018/19, in accordance with the council’s treasury management practices.

Councillor Hilton explained that this was the first time the report had been presented in September, which is when it should be presented. Members noted that treasury management comprised managing the council’s borrowing to ensure funding of the council’s future capital programme was at optimal cost and investing surplus cash balances arising from the day-to-day operations of the council to obtain an optimal return while ensuring security of capital and liquidity. Councillor Hilton referred Members to the table in paragraph 2.1.2 of the report. He highlighted that the council had loaned £1.76m to the Property Company; so far £100,000 had been paid back. The council had also loaned Achieving for Children £4.81m on a rolling arrangement.

Councillor Werner commented that the report highlighted an increase in borrowing in 2018/19. This would continue in the current and following year, which felt a bit out of control. The CIPFA code required councils to have a plan to manage debt and pay it off over time. He asked if CIPFA was happy with the plans for dealing with the council debt going forward and when the CIPFA review of council finances would be published.

Councillor Hilton explained that some commitments may need borrowing. Any future projects would be robustly scrutinised. No project would go forward which could not be justified. He was putting controls back into the process. The CIPFA report had been requested by the Managing Director, who had received representations for it to be published. He was taking advice on what could be published and when. There was a Member question later in the agenda on the issue which he would answer as fully as he could.

Councillor W. Da Costa commented that as a Corporate Treasurer, he had concerns about the report and the lack of detail, back up and explanation.  Treasury management of a large organization was a rolling programme which needed to show the medium term cash flow to be able to effectively decide where to place deposits and on what durations to place deposits and borrow money. The council needed to understand its treasury management policy with regard to counter-party risk, refinancing risks and exposure to interest rate changes. Councillor W. Da Costa felt there were many issues that are not covered including;

• What was the expected medium cash flow?
• How would cash balances evolve?
• What was the strategy for placing deposits?
• What terms was borrowing made on?
• What were the refinancing risks?
• What margins could be received with other funders?

Councillor W. Da Costa also felt there was a lack of information with regard to the table. He presumed that the cash balances were renewed on a daily basis otherwise, how could the council have placed on deposit and then had repaid to it a third of a billion pounds. In future Members needed enough information to make a decision cognizant of the key factors.

Councillor Hill stated that requests had been made to make the CIPFA report public as it was in the public interest. The council report detailed the borrowing but not how the council would pay off its debts. The Vicus Way project was not wanted and he was concerned that the Maidenhead golf course site was being disposed of cheaply to reduce debt.

Councillor Price commented that she had expected the report to explain the borrowing strategy in words and whether or not it was the right strategy.

Councillor Baldwin commented that Councillor Hilton had stated in the past controls had not existed. He therefore asked when this had started as Councillor Hilton had been in post since May.  Councillor Hilton responded that he had said the new administration would have a different approach to validating its future investments. He would need to ensure all information was correct before being published; he requested Members patience in this respect and they would then see all the information. He confirmed that the figure of a third of a billion was a rolling figure.

Councillor Knowles referred to the treasury limits and prudential indicators in section 2.4. He was aware that in other paperwork the forecast borrowing for the next year was £1.85m yet the authorised limit for external debt was £2m and it would go up slightly with RPI adjustment in the New Year. This was worrying because if the financing costs went up, the figure would potentially break the authorised limit next year.

Councillor Hilton responded that the table related to 2018/19; for 2019/20 the authorised limit was higher. He was confident the limits were in excess of £180m therefore authority would be in place if needed.

Councillor Reynolds commented that Councillor Hilton had asked for patience. Members may be more willing to be patient if there was a brand new Lead Member for Finance, given Councillor Hilton had been in post since May 2019. He felt that nothing had been done since May to afford patience.

Councillor Hilton responded that he had been working diligently on the issues. In time further information would be imparted. The question relating to CIPFA would be answered as fully as possible later in the agenda.

Councillor Targowski commented that the report focused on the past, whereas the administration was focussed on the future. 

It was proposed by Councillor Hilton, seconded by Councillor Targowski, and:

RESOLVED UNANIMOUSLY: That Councilnotes the annual treasury management strategy report and final outturn for 2018/19.