Agenda item

To receive the report from the Head of Finance.

The committee received the treasury management mid-year monitoring report for 2023/24, presented by the head of finance. The report outlined that, as a result of interest rates staying high for longer than expected, earnings from investments were also higher than expected. The head of finance then confirmed to the committee that the councils had stayed within all counterparty limits and prudential indicators.

The committee discussed some of the figures in the report, including the amounts brought back from the differing investments, and how the figures related to each other.

In response to a question about how much total income was represented by investment income, the head of finance informed the committee that the councils net revenue budgets were around £17-20m, with £5m originally estimated investment income for South Oxfordshire District Council in 2023/24 and £3m for the Vale of White Horse District Council. He also noted that these figures changed over time and that he did not believe that returns would remain at these levels in perpetuity.

As income from the high interest rates reduced, some members indicated that the council’s finance team may feel pressured to increase the rate of return to compensate, potentially leading to them taking greater investment risks than they would do under normal circumstances and the committee asked for assurances against this type of situation. The head of finance confirmed that, although the councils were not risk averse, they remained within the limits presented by their treasury management and investment strategy and only ever lent to those on the counterparty list. In addition, he emphasised that the priority for the council was security, liquidity, then yields, and so making sure this was understood by officers and members should prevent excess risks. In response to a point about ensuring that officers had sufficient training, it was mentioned that this would be brought out in the internal audit for the team.

On the income the councils receive from rents, and in response to a question as to how the councils could analyse rates of rental income moving forward the head of development and corporate landlord informed members about the annual valuations and strategic property review work that is undertaken and that the asset management plan would be included in the reviewed corporate plan. The head of finance also added that they would review the best way to report the results of the strategic property review back to members.

The committee then debated the governance arrangement for scrutinising assets like community facilities and funds from central government for asylum housing. As these assets were not considered property held for investments, they were not included in the treasury management reports. The head of finance added that the council’s scrutiny committee had the delegated authority to assess these types of financial matters, a point confirmed by the Vale of White Horse District Council Cabinet Member for Finance and Property, Councillor Andrew Crawford. They also noted that these assets would come to the Joint Audit and Governance Committee through the statement of accounts, but not their regular performance which would go to the Scrutiny Committee. Overall, the committee agreed that Constitution Review Task Group should examine the councils’ governance arrangements to ensure that finance and property assets were being effectively scrutinised in a cohesive way. The head of finance also agreed to examine this point, gather evidence about what other councils do, and report back to the committee during the item about examining the committees’ terms of reference currently scheduled for the meeting in September 2024.

Finally, members discussed the returns against inflation and asked if that could be included in future reports so that the actual rates of return could be easily examined.

Overall, the committee was satisfied with the report and that the councils were carrying out their treasury management practices in accordance with the strategy and policy.

South Oxfordshire District Council RESOLVED:

1. to note the treasury management mid-year monitoring report 2023/24.

2. that they are satisfied that the treasury activities are carried out in accordance with the treasury management strategy and policy.

And that they recommend that the Cabinet:

3. to consider the comments from the Joint Audit and Governance Committee and recommend that the council approve the report.

And that they recommend to the Constitution Review Task Group:

4. to consider the comments from the Joint Audit and Governance Committee and examine if the governance arrangements for councils’ scrutiny of financial matters was appropriate and effective.

Vale of White Horse District Council RESOLVED:

1. to note the treasury management mid-year monitoring report 2023/24.

2. that they are satisfied that the treasury activities are carried out in accordance with the treasury management strategy and policy.

And that they recommend that the Cabinet:

3. to consider the comments from the Joint Audit and Governance Committee and recommend that the council approve the report.

And that they recommend to the Constitution Review Task Group:

4. to consider the comments from the Joint Audit and Governance Committee and examine if the governance arrangements for councils’ scrutiny of financial matters was appropriate and effective.