Issue - meetings

The Portfolio Holder for Corporate Governance, Finance and Resources to submit a report providing a summary of the treasury activities to the end of September 2021 and covering the actual position to date on the Prudential Indicators in accordance with the Prudential Code.

Cabinet:

1)    RECOMMENDED to Council that the mid-year position on treasury activity for 2021-22 be noted;

2)    RECOMMENDED to Council that the mid-year position on the prudential indicators for 2021-22 be approved.

Dawn Garton, Director for Corporate Services introduced the report, the purpose of which was to provide a summary of the treasury activities to the end of September 2021 and cover the actual position to date on the Prudential Indicators in accordance with the Prudential Code.

Mrs Garton highlighted that the report would be presented to Council on 16 December.  The pandemic continued to impact on investment returns but the Council was performing well in comparison to other local authorities.  The report referenced the current Prudential Code consultation, which aimed to address risks arising from commercial property acquisitions and Members would receive an update on the outcome when this was known.  This was likely to have a significant impact on treasury management operations as well as strategy.

Councillor Ronnie de Burle, Portfolio Holder for Corporate Governance, Finance and Resources highlighted that the report detailed the Council’s position in relation to regulatory codes of practice and demonstrated how well its treasury management activities were performing.  It continued to be a difficult time for treasury management activities, with the pandemic continuing to impact on investment rates and returns.  However, the Council’s investment performance (at 0.30%) was consistently above that of other local authorities.  These figures were evidenced by the benchmarking undertaken, which included many councils with additional resources.

Councillor de Burle reiterated concern about changes resulting from consultation on the Prudential Code.  Full implications would be shared with Members at the earliest opportunity.

(DECISION: NON-KEY)

Cabinet:

1)    RECOMMENDED to Council that the mid-year position on treasury activity for 2021-22 be noted;

2)    RECOMMENDED to Council that the mid-year position on the prudential indicators for 2021-22 be approved.

Reasons for the recommendations

The Treasury Management Code requires the Council to provide a mid-year update on Treasury Management activities to the Council. It is a requirement that Treasury Management performance is scrutinised during the year prior to consideration by the Council which falls within Cabinet’s remit.

To facilitate the decision making process and support capital investment decisions the Prudential Code requires the Council to agree and monitor a minimum number of prudential indicators.

To receive a report from the Cabinet on recommendations referred to the Council

Councillor de Burle, Portfolio Holder for Finance and Resources, moved the recommendations and provided a brief introduction as follows:

·         The mid-year Treasury Management report was a requirement of the Council’s financial reporting procedures

·         It provided a summary to Council of Treasury Management activities to the end of September 2020

·         Treasury Management was the process of managing funds which were not currently needed which could be put to good use by being invested to generate income

·         Officers customary success had contributed significantly over recent years

·         Capital investment decisions were guided by two codes; the CIPFA Code of Practice on Treasury Management and the CIPFA Prudential Code for Capital Finance in Local Authorities. Through these regulations issued under the Local Government Act 2003, the Council was required to rigorously apply both in its treasury management activities and that additionally the Council was to receive a regular report on the outcomes of those activities

·         The report included 2 appended documents; being the Treasury Management Report which included an overview of the prevailing conditions, the recommendations and  Appendix A being the  Treasury Management Statement

·         In the Treasury Management Report, items 4.0 to 4.7, dealt with prevailing conditions for example a summary of the Covid 19 impact on the Council’s investments

·         Members may be interested to note at paragraph 4.8.1 there was a proposal was being developed for Members’ consideration for a £1m investment to reduce cost pressures on the homeless budget to provide a better service as outlined

·         With regard to Appendix A, the Treasury Management Statement, it stated that CIPFA issued revised management codes which came into effect in the 2021 fiscal year which strengthened the control of public finance to protect financial sustainability, provision of services and management of risk

·         The Council operated to achieve a balanced budget and part of the treasury management operation sought to ensure that cash flow was properly managed to secure that outcome

·         At 3.1, there was a wide ranging economic update which was still being largely influenced by the Covid situation and was uncertain. There was a lot about the quantity of easing and potential for unemployment. The most optimistic point was that the forecast showed by quarter 3 in 2022, the economy was expected to expand quickly and the CPI to be above 2%

·         At 3.2, there was reference to public works loan interest rates where there were marginal 2% loans in the longer term loans over the two years, March 2021 to March 2023 and lower investment returns in the UK and around the world’s markets

·         5.1 set out the position on prudential indicators the revised estimate on capital expenditure with HRA and non-HRA raising the bar by about £800k over the original estimates

·         5.2 explained how that change would be met from resources the Council had access to being capital receipts, capital grants, capital reserves and revenue

·         5.3 and 5.4 indicated that the Council’s capital funding requirement should not change from the original estimate of £31.49m which was well within the Council’s authorised  ...  view the full minutes text for item 61