Agenda item

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 borrowing limit of £45.92m

·         With regard to investment returns, the Council held £20.5m in investments at 31 March, and a budgeted return expectation of £357k. Due to matters already reported, the performance of the markets was lower than planned and the Council was currently anticipating a shortfall of £104k against that expected return due to circumstances beyond the Council’s control

·         The Council was meeting the requirements of the CIPFA Code of Practice on Treasury Management and the CIPFA Prudential Code for Capital Finance in Local Authorities

 

Councillor Orson seconded the motion and reserved his right to speak should this be required.

 

During debate the following points were noted :

 

·         Confirmation was provided that the deficit was due to the reduced interest rates throughout that period.

 

·         The risk of investments in town and city properties and in coal and other fossil fuels was highlighted and it was requested that these concerns be taken into consideration going forward.

 

·         Paragraph 4.8.1 of the Cabinet report was highlighted which set out how the Council was looking to support homelessness by drawing on reserves. This was a positive example of how the Council was working towards delivering on one of its key aims within the Corporate Strategy.

 

Councillor Orson reiterated his seconding of the report and did not wish to speak further.

 

RESOLVED

 

That Council:

 

(1)   Notes the mid-year position on treasury activity for 2020-2;

(2)   Approves the mid-year position on the prudential indicators for 2020-21;

(3)   Notes the potential for borrowing to be undertaken to be initially financed through internal borrowing.

 

(26 for, 2 abstentions)