Report of the Head of Strategic Finance

This report informs Members of the Treasury Management Annual Report and Prudential Indicators for 2010/11; to present to Members a mid year review of the Treasury Management function in 2011/12; and to report the Treasury Management Strategy for 2012/13 – 2014/15.

The Committee received a report of the Head of Strategic Finance which informed Members of the Treasury Management Annual Report and Prudential Indicators for 2010/11.  It also provided a mid-year review of the Treasury Management function in 2011/12 and reported on the Treasury Management Strategy for 2012/13 – 2014/15.

The Finance Manager reported that the most important document was the Treasury Management Strategy for 2012/13.  The report included reference to the Council’s debt free status and the recommendation that the Strategy should include the ability for the Council to borrow up to £10 million for longer than a 12-month period.  The officer’s report explained the reasons for the request.  Audit Committee was asked to consider the request and then to make a recommendation to the next Council meeting.

Members asked for further information about the pros and cons of the change from a debt-free status and the consequences of holding the £7 million from the West Hertfordshire Hospitals NHS Trust for the Health Campus development.  One Member also questioned whether the limit should be set higher.

The Head of Strategic Finance responded that there was no advantage in being debt-free other than not needing to repay any debt.  Loans from the Local Enterprise Partnership were interest free and in the short term would earn investment interest. 

With regard to the £7 million from the Hospitals Trust, the Head of Strategic Finance explained that if the road and bridge were not built the money would have to be repaid.  If the road and bridge were built then the Council would not have to repay the money. 

Following a question about the additional £3 million the Head of Strategic Finance advised that this was from the Hertfordshire Local Enterprise Partnership.  The loan was interest free and would be used for infrastructure requirements. 

The Head of Strategic Finance said that the £3 million would remain a debt until it had been repaid.  The risk associated with this was that the Health Campus project would not be viable and there was an insufficient ‘return’ to clear the debt. This was hopefully unlikely. 

The Finance Manager informed the Committee that the limits could be changed at any time and it could be reduced if the level was not required.

RESOLVED –

1.         that the Treasury Management Annual Report and Actual Prudential Indicators 2010/11, Mid Year Treasury Management Monitoring Report 2011/2012, and Treasury Management Strategy Statement 2012/13 – 2014/15 (Appendices 1, 2 and 3) be noted.

2.         that Audit Committee approves each of the key elements of the Treasury Management Strategy Statement (Appendix 3), and recommends these to Council:

·               The Prudential Indicators and Limits for 2012/13 to 2014/15, including the Authorised Limit Prudential Indicator. 

·               The Minimum Revenue Provision (MRP) Statement which sets out the Council’s policy on MRP. 

·               The Treasury Management Strategy 2012/13 to 2014/15 and the Treasury Prudential Indicators.

·               The Investment Strategy 2012/13 and the detailed criteria contained in the Treasury Management Strategy.

3.         that Audit Committee recommends to Council that the facility to borrow up to a maximum of £10m from external parties be approved and that all Treasury Management Strategy Statements be amended accordingly.