The Chief Financial Officer introduced the report and explained that the Council was required by CIPFA to produce annual Prudential Indicators and a Treasury Management Strategy Statement on the likely financing and investment activity.  He explained that the report would be submitted to Council on 10 October 2018.

The Chief Financial Officer stated that there had been no breaches of the Council’s strategy.  He drew Members’ attention to paragraph 2.6 in the report which outlined the Council’s budgeted income, and income received.  He explained that the CCLA Property Fund investment had been highly successive for the Council, resulting in the Council achieving well in the actual income received.  The Chief Financial Officer reported that the Council had still not undertaken any borrowing, and as such was debt-free.

In response to a Member’s question on the ‘downgrading’ of risk, as outlined in paragraph 2.19, and how this would be achievable in an uncertain market, the Chief Financial Officer explained that Money Market Funds ensured that investments had good liquidity.  In response to a further question, the Chief Financial Officer explained that the financial advisers for the Council were reviewed every five years, and the next review was due in 2020.

A Member asked how the lack of debt was sustainable, when there was no borrowing?  The Chief Financial Officer explained that a weekly update report was submitted to the Chairman of the Audit Committee, the Cabinet Member for Finance and Performance and the Chief Executive.  He advised that, with the construction of the leisure element of the regeneration in Sittingbourne, there might need to be some borrowing in this financial year, which would likely be short-term, at less than 1% interest.

A Member questioned the risk of relying on rental income from the Sittingbourne Town Centre regeneration to fund capital financing costs, and whether there were any business incentives, i.e. rent reductions?  The Chief Financial Officer explained that the income received, was hugely higher than debt costs, so there was a huge net saving/gain.  He added that no companies coming into the Retail Park were getting rent incentives.  The Chief Financial Officer further explained that there were significant rent-free periods for new businesses in the Retail Park, and he was confident that the Council could handle the interest rates, and that it was a manageable risk.

The Head of Audit Partnership confirmed that the agreement that treasury management duties were passed to the Investments Section at Kent County Council, as set-out in paragraph 1.5 of the report, was included in the Audit Plan agreed at the meeting in March 2018.

In response to further questions, the Chief Financial Officer advised that the Council had not invested in bonds.  He also acknowledged that this report was ‘late’, going to Council in October 2018.  However, it had not been possible to submit it earlier to Council as no Council meetings had been scheduled for August and September.

The Chief Financial Officer agreed to check whether the investments set-out in paragraph 2.10 were book cost investments.

Recommended:

(1)      That the Treasury Management Stewardship report for 2017/18 be approved.

(2)          That the Prudential and Treasury Management Indicators within the report be approved.