To approve the Treasury Management Outturn for 2016/17.

Council considered a report which provided detail of the treasury management outturn for 2016/17. The cabinet member financial management and ICT introduced the report and explained that there had been compliance through the year with the treasury management strategy. The council had taken advantage of lower cost short term loans which had reduced the amount of interest payable during the year. The volatility in the Public Works Loan Board rates had allowed for the replacement of some short term loans with longer term arrangements, at a lower rate of interest payable. During the year the amount of interest received by the council was less than expected due to council maintaining a lower cash balance to reduce reliance on loans.

The comments of members and the responses provided are as follows:

·         Concern was expressed regarding the current level of debt, the interest payable on that debt and the decreasing level of assets. It was commented that longer term plans were required to address the issue. In response it was confirmed that the level of debt at the council was within statutory limits and the current medium term financial strategy had identified the disposal of assets up to 2019 to reduce the level of borrowing. The importance to the council’s finances of identifying quality capital projects through the capital expenditure programme was also highlighted.

·         It was suggested that the proceeds of the sale of the tenanted farms should be allocated to developing student accommodation. It was confirmed that projects were being developed to allow the council to realise good levels of return on investments and a commercial development partner would be appointed shortly to oversee this work.

·         A query was raised regarding the greater level of flexibility announced by government to allow local councils to undertake additional borrowing against capital assets. Further details regarding the implications of this initiative to Herefordshire Council were sought. It was confirmed that the borrowing position of the council was under constant review. When proposals for capital investment were produced there was consideration of how to secure borrowing and at that stage an assessment of the implications to the council was undertaken. Greater flexibility around financing would be considered in a review of the treasury management strategy with any changes or formal proposals reported to Council.

·         The concerns expressed by a local MP over the level of debt at the council in 2003 were raised. The significant increase in the level of debt since this time was noted and comment was invited from the cabinet member. In response it was confirmed that the council had managed its borrowing within statutory and prudential limits.

·         The capital receipts generated during the year were questioned and further detail on those assets sold during the previous year was sought. It was also requested that detail of the percentage of the overall assets sold in 2016/17 be provided. It was confirmed that detail would be sent to members.

RESOLVED – that the treasury management outturn (at appendix one) for 2016/17 is approved.