Issue - meetings

The Cabinet Member for Finance, Growth and Core Services introduced the Treasury Management Annual Report for 2021/22 which set out the key areas of performance during the year. 

The Cabinet Member alluded to the major, world-wide factors impacting the UK economy and commended the Council’s prudent approach to borrowing and vigorous assessment of investment opportunities which, coupled with the excellent work of the Treasury Management team, had resulted in the Council outperforming its targets and benchmarks in a number of areas during 2021/22. Key highlights within the report included:

·   Total treasury investments held at 31 March 2022 was £154.9m (2020/21: £210.12m);

·   Total cash held at 31 March 2022 was £1.7m (2020/21: £29.0m);

·   Total loans and equity held at 31 March 2022 was £148.3m (2020/21: £139.2m);

·   Net General Fund Interest for 2021/22 was £3.4m above the projected level, with £1.9m transferred to the Investment Reserve and £1.4m offset against an underperformance in the Council’s Investment and Acquisition Strategy (IAS);

·   The Council’s average treasury interest return for 2021/22 was 1.39%, which was 1.27% higher than the average London Peer Group return of 0.21%;

·   The Council’s average return on its commercial and property loans was 4.42% for 2021/22 (2020/21: 4.46%);

·   Interest payable for 2021/22 totalled £37.3m (2020/21: £31.8m);

·   The Council made £140.0m of long-term General Fund borrowing in 2021/22 at an average rate of 1.41% and an average duration of 44.4 years;

·   The total long-term General Fund borrowing at 31 March 2022 was £720.5m (2020/21: £600.4m);

·   The value of short-term borrowing at 31 March 2022 was £63.0m (2020/21: £67.5m);

·   Total Council borrowing at 31 March 2022 was £1.276bn (excluding internal HRA borrowing of £35.9m) and was within the 2021/22 Operational Boundary limit of £1.7bn and Authorised Borrowing Limit of £1.8bn; and

·   The Council operated within and complied with all treasury limits and Prudential Indicators during 2021/22.

In response to questions, the Cabinet Member advised that borrowing was likely to continue; however, it would be taken on a case-by-case basis as to whether projects were viable or not.  The Cabinet Member further advised that short-term borrowing was in relation to ensuring the smooth running of the Council.

In response to further questions, the Cabinet Member advised that the Council was confident of reversing the under-achievement against the Investment and Acquisitions Strategy; however it was noted that the Council was relying more on commercial income to achieve that aim due to delays in residential projects as a consequence of increasing costs and the ongoing impact of the Covid-19 pandemic. 

The Assembly resolved to:

(i)   Note the Treasury Management Annual Report for 2021/22;

(ii)   Note that the Council complied with all 2021/22 treasury management indicators;

(iii)   Approve the actual Prudential and Treasury Indicators for 2021/22, as set out in Appendix 1 to the report; and

(iv)   Note that the Council borrowed £140.0m from the PWLB in 2021/22.

The Cabinet Member for Finance, Growth and Core Services introduced the Treasury Management Annual Report for 2021/22 which set out the key areas of performance during the year. 

The Cabinet Member alluded to the major, world-wide factors impacting the UK economy and commended the Council’s prudent approach to borrowing and vigorous assessment of investment opportunities which, coupled with the excellent work of the Treasury Management team, had resulted in the Council outperforming its targets and benchmarks in a number of areas during 2021/22.  Key highlights within the report included:

·  Total treasury investments held at 31 March 2022 was £154.9m (2020/21: £210.12m);

·  Total cash held at 31 March 2022 was £1.7m (2020/21: £29.0m);

·  Total loans and equity held at 31 March 2022 was £148.3m (2020/21: £139.2m);

·  Net General Fund Interest for 2021/22 was £3.4m above the projected level, with £1.9m transferred to the Investment Reserve and £1.4m offset against an underperformance in the Council’s Investment and Acquisition Strategy (IAS);

·  The Council’s average treasury interest return for 2021/22 was 1.39%, which was 1.27% higher than the average London Peer Group return of 0.21%;

·  The Council’s average return on its commercial and property loans was 4.42% for 2021/22 (2020/21: 4.46%);

·  Interest payable for 2021/22 totalled £37.3m (2020/21: £31.8m);

·  The Council made £140.0m of long-term General Fund borrowing in 2021/22 at an average rate of 1.41% and an average duration of 44.4 years;

·  The total long-term General Fund borrowing at 31 March 2022 was £720.5m (2020/21: £600.4m);

·  The value of short-term borrowing at 31 March 2022 was £63.0m (2020/21: £67.5m);

·  Total Council borrowing at 31 March 2022 was £1.276bn (excluding internal HRA borrowing of £35.9m) and was within the 2021/22 Operational Boundary limit of £1.7bn and Authorised Borrowing Limit of £1.8bn; and

·  The Council operated within and complied with all treasury limits and Prudential Indicators during 2021/22.

Cabinet Members referred to the cost-of-living crisis, spiralling costs of building projects and the rise in the Bank of England base rate, all of which impacted on the delivery of the Council’s Medium Term Financial Strategy and Treasury Management Strategy and had the potential to push the UK economy into recession.  In that regard, the Cabinet Member for Finance, Growth and Core Services stressed the importance of the Council maintaining appropriate levels of reserves and for the Government to step up to support local authorities and their residents.

Cabinet resolved to recommend the Assembly to:

(i)  Note the Treasury Management Annual Report for 2021/22;

(ii)  Note that the Council complied with all 2021/22 treasury management indicators;

(iii)  Approve the actual Prudential and Treasury Indicators for 2021/22, as set out in Appendix 1 to the report; and

(iv)  Note that the Council borrowed £140.0m from the Public Works Loan Board in 2021/22.