ANNUAL TREASURY MANAGEMENT REVIEW 2016/17

Annex 2: Report Guidance

Overall Treasury Position

The Overall Treasury Position table shows the Council’s debt and Capital Financing Requirement (CFR) split between its General Fund (GF) and Housing Revenue Account (HRA). The HRA is a ‘ring-fenced’ account for local authority housing.

The CFR represents the Council’s aggregate borrowing need (the element of the capital programme that has not been funded). The Council’s debt should not normally be higher than its CFR as explained in section 2 of Annex 1.

Borrowing Repayments

PWLB is the Public Works Loan Board which is a statutory body operating within the UK Debt Management Office, an Executive Agency of HM Treasury. PWLB’s function is to lend money from the National Loans Fund to local authorities, and to collect the repayments.

The Council has the following types of fixed rate loan with the PWLB:

·         Annuity: fixed half-yearly payments to include principal and interest.

·         Equal Instalments of Principal: equal half-yearly payments of principal together with interest on the outstanding balance.

·         Maturity:  half-yearly payments of interest only with a single payment of principal at the end of the term.

Financing Costs as a Proportion of Net Revenue Stream

This shows (separately for HRA and GF) the percentage of the Council’s revenue stream that is used to finance the CFR (net interest payable and Minimum Revenue Provision (MRP)).

MRP is the annual resource contribution from revenue which must be set against the CFR so that it does not increase indefinitely.

Borrowing and Investments

Borrowing limits – there are various general controls on the Council’s borrowing activity (operational boundary, authorised limit, fixed and variable interest rate exposures, and maturity profiles).

General controls on the Council’s investment activity, to safeguard the security and liquidity of its investments, include:

·         Creditworthiness of investment counterparties.

·         Counterparty money limits.

·         Counterparty time limits.

·         Counterparty country limits.

·         Limits on the Council’s fixed and variable interest rate exposures.

·         Minimum size of the Council’s bank overdraft facility.