Issue - meetings
Treasury Management Outturn Quarter 4
Meeting: 25/07/2024 - Audit and Governance Committee (Item 12)
12 Treasury Management Outturn Quarter 4 
PDF 615 KB
Purpose:
To advise members of treasury management activity and the performance of internal
and external fund managers for 2023/24
Recommendation:
That the Audit and Governance Committee resolves to:
1. Note the Treasury Management and performance of internal and external funds for 2023/24.
Invited:
Madhu Richards, Chief Finance Officer
Georgina Dyer, Chief Accountant
Additional documents:
- 2. Annex A, item 12
PDF 365 KB
- 3. West Oxfordshire District Council TM Outturn Pooled Funds Annex B, item 12
PDF 466 KB
Minutes:
Georgina Dyer, Chief Accountant presented the report that advises members of the treasury management activity and the performance of internal and external fund managers for 2023/24.
It was explained that the overall performance of the investments in 2023/24 was favourable, returning interest of £1,726,274 (4.97%) against a revenue budget of £1,227,228 and achieving an unrealised capital gain of £439,475 (3.27%) in the 12 months to 31st March 2024.
The capital value of the pooled funds had increased by £439,475 but continued to be affected by uncertainty in the financial markets. The effect in 2023/24 was mostly positive due to buoyed global equities, resilient economic data and falling inflation.
Pooled funds were intended to be long term investments where short-term fluctuations in capital value were expected but would provide capital appreciation over the long term. After an initial period of caution due to the likelihood of recession, the UK economy fared better than anticipated with a shallow recession, falling inflation and improved consumer confidence providing support for UK equities, with stocks trading at attractive valuations relative to their global peers.
The council has benefitted from a higher revenue return due to sustained high Base Interest Rate to bring inflation back down to 2.5%. 2023/24 incurred unrealised capital gains of £0.439m, these funds are being monitored closely by Arlingclose and they continue to advise that the capital values will recover over the next 2-3 years as gilts and bond revenue return rates start to decline again.
The Council complied with all but one (see section 9.4) of the Prudential Indicators for 2023/24 as set in the February 2023 budget.
Based on various questions and queries from Members the following points were explained:
· A glossary of terms was requested to be added to enable ease of understanding in future.
· The operational level of treasury management was delegated and it was not practical to go back and forth. However, the input from Members for direction on strategy and policy could be discussed during budget time and the strategy papers were updated yearly. Therefore as a Committee, Officers would be directed by Members; however Members would need a high level of understanding and information on all the various aspects.
· If looking at capital projects there needed to be a balance and dependent on various factors including interest rates and revenue return.
· The next steps would be to investigate funds with a better green credential and a table or chart of the current most ethical funds and over a period. Georgina would bring this information to the next meeting.
· Officers have asked Arlingclose to be more proactive in reducing risk.
· Pooled funds are completely liquid and will carry on; the super national do have a maturity date.
Members thanked Officers for the report and also for the Audit and Governance training that was undertaken last week.
RESOLVED that the Audit and Governance Committee AGREED to:
1. Note the Treasury Management and performance of internal and external funds for 2023/24.