Issue - meetings

This report gives and overview of treasury management activity since 1 April 2020 and presents a review of the Treasury Strategy approved by Council on 20 February 2020.

Discussion

This report provided details of the mid-year review of the Treasury Management Strategy 2020/21 in accordance with the Chartered Institute of Public Finance Accountancy’s (CIPFA) Code of Practice for Treasury Management.

The report had been considered by the Cabinet on 22 September 2020 and by the Audit Committee on 24 September 2019 and their comments were set out in sections 9 and 10 of the report respectively.

The Leader of the Council, Councillor Jarrett, supported by the Deputy Leader and Portfolio Holder for Housing and Community Services, Councillor Doe, proposed the recommendations set out in the report.

Decision:

The Council noted the report.

Councillors Bowler, Browne, Cooper, Curry, Maple, Murray, Osborne, Paterson, Prenter and Price requested that their votes in favour of the decision be recorded in accordance with Council Rule 12.6.

This report gives and overview of treasury management activity since 1 April 2020 and presents a review of the Treasury Strategy approved by Council on 20 February 2020.

Discussion:

This report provided details of an overview of treasury management activity since 1 April 2020 and presented a review of the Treasury Management Strategy approved by Council on 20 February 2020. An addendum report was tabled at the meeting following a request from the Cabinet, which had considered the same report on 22 September 2020 that an expansion in the detail of the Capital Financing Requirement shown in the summary of the report, be provided to the Audit Committee. The addendum report provided this additional information accordingly.

The Finance Business Partner – Corporate Services advised the Committee of the key issues in the report, including an explanation as to the additional information in the addendum report, with particular reference to the capital financing requirement (CFR) which was shown as being £1,899,000 higher than shown in the main report; the table in the addendum report assumed that the recommendations of the Cabinet to Council on 8 October 2020 to fund £1,899,000 of the forecast overspend from borrowing would be approved, increasing the CFR accordingly.

Members then raised a number of questions and comments which included:

Housing Infrastructure Funding (HIF) – in response to a question on whether the HIF funds (£170M) would be included in the Council’s investment portfolio, the Chief Finance Officer confirmed that this funding would not be included in the investment portfolio. He explained that the Council would draw down funding following expenditure by the Council, which, overall would create an overall capitalised interest cost of approximately £400,000. Following discussion on this point, during which some concern was expressed, the Chief Finance Officer confirmed that the HIF Project Team were working to the overall funding taking account of this cost.

In response to a question on the Committee’s request at the last meeting for a report on the process for how the HIF monies would be spent, the Chief Finance Officer undertook to check this and to ensure that a report would be produced accordingly.

Short term borrowing – in response to a question on the continued reliance of short term borrowing, the Finance Business Partner – Corporate Services advised that he hoped that the Government would normalise the Public Loans Work Board (PWLB) borrowing rates by the beginning of the next financial year. This would help to reduce the reliance on short term borrowing.

Counterparty limits – in response to a question on whether there was any benchmarking information on the suspension of counterparty limits and whether Members should be concerned as to the suspension of these limits, the Chief Finance Officer advised that such an exercise had not been undertaken. However, some other Local Authorities may have been in a similar position regarding cash flow given the injection of cash from the Government in the form of Covid-19 grants leading to a cash surplus. He further advised that subsequent funding from the Government to support Local Authorities during the pandemic now required the Council to claim funds back which could lead to a cash deficit.  ...  view the full minutes text for item 275

Background

This report presented the mid-year review of the Treasury Management Strategy 2020/2021, which had been approved by Full Council alongside the Capital and Revenue Budgets on 20 February 2020. This report would also be considered by the Audit Committee on 24 September 2020 prior to final consideration at Full Council on 8 October 2020.

The report included an economic update for the first part of 2020/2021 and reviews of: the Treasury Management Strategy Statement and Annual Investment Strategy; the Council’s Investment Portfolio and Borrowing Strategy for 2020/2021; any debt rescheduling undertaken during 2020/2021 and; compliance with Treasury and Prudential Limits for 2020/2021.

With reference to the key indicators table included in the summary of the report on page 211 of the agenda, concern was expressed that the table was potentially confusing as capital expenditure and external borrowing had been included on a year basis, but the capital financing requirement had not been. It was requested that the table be revised accordingly ahead of the report being presented to the Audit Committee.

Reasons:

In accordance with the Chartered Institute of Public Finance Accountancy’s (CIPFA) Code of Practice for Treasury Management, there should be a review of the Treasury Management Strategy at least half yearly.