The Finance Manager to present report F.162 for consideration.

The Group Manager for Finance and Property presented report F.162 in the absence of the Finance Manager, commenting that it built on the strategy set in February 2011. He reported that the council had financed social housing using less capital than projected. Another bonus had come later in the year with the unanticipated £730,639 from the Homes and Communities Agency (HCA). He reminded members that the council did not borrow money, but that leasing obligations appeared under that category on p35, paragraph 3.1. Referring to the table on page 37, paragraph 5.5, he explained that the council had breached the upper limit of £2 million overdraft for one day due to the account not having enough to cover a precept.

He reminded the committee that the council's policy was to secure safe returns over high interest. The council's external cash managers, CDCM, had achieved above average returns, but were given no leeway by the council, which controlled how the money was invested.

He informed members that the end date for the money invested with RBS was 2013, not 2012 (agenda page 47). He then referred back to page 42, paragraph 8.6.5, explaining that theoretically investments over longer time periods represented greater risks.

Answering a question from Cllr Birch he said that the council's treasury advisers had offered to lead a training session for members and would be able to explain the effect of risks arising from bank takeovers.

The Group Manager for Finance and Property then asked to amend the recommendations in the report, explaining that as part of the GO shared service, councils wished to save money by looking at the possibility of using the same treasury adviser. The GOSS partners together with the other districts in the county and the county council had approached three treasury advice companies, who would be giving presentations on 8 and 9 October 2012. Each council would have two elected members on a panel to evaluate those presentations

The additional recommendation would read as follows

c) To appoint the chairman and vice chairman of the Audit Committee to the treasury adviser selection panel for the GO Shared Service and Gloucestershire County Council shared treasury adviser

Cllr Hogan believed that the move might be a good opportunity to drive a better deal and asked whether currently treasury advice fees were fixed or incentive-based.

The Group Manager for Finance and Property said that while individual fees were around £8,000 per year, when added together they amounted to a sizeable amount across the districts and county council.

Cllr Bill Evans asked if the proposed process might lead to the same advisers being chosen, who had advised Cheltenham to invest in Icelandic banks.

The GOSS Head of Finance replied that Cheltenham Borough Council had changed to Arlingclose because it had been the only adviser not giving that advice.  The Forest of Dean District Council's Section 151 Officer had ignored the advice of its adviser in not investing with Icelandic Banks. He then explained that the proposal to share an adviser would be taken through a full procurement exercise with seven clear scoring criteria for the selection panel to use. The emphasis would be 30 per cent on price and 70 per cent on quality, as determined by the selection panel. Bidders had been asked to provide a price for a contract to cover all partners alongside one for an individual council. Each council would still be able to choose its own adviser.

Answering Cllr Frankie Evans, the Group Manager for Finance and Property said that the council would look for a counterparty for the LloydsTSB investment due to end in July about one week beforehand. It would depend what was available from the council's agreed list of counterparties and advice from the treasury adviser. The money previously invested in Santander had been moved to a money market fund for security.

The GOSS Head of Finance confirmed for Cllr Jones that treasury advisers did not make decisions, but gave advice. He added that Arlingclose had told a government select committee that it gave advice, whereas other treasury advisers had only claimed to give information to customers. The proposal sought advice, since information was readily available to all.

RESOLVED -

a)     To approve the actual 2011/2012 prudential indicators in Section 9 of the report;

b)     To note the treasury management activity report for 2011/2012.

c)      To appoint the chairman and vice chairman of the Audit Committee to the treasury adviser selection panel for the GO Shared Service and Gloucestershire County Council shared treasury adviser