Issue - meetings

The Cabinet Member for Finance, Growth and Core Services introduced the Treasury Management Annual Report for 2022/23 which set out the key areas of performance, borrowing levels and other treasury management issues.

Key highlights within the report relating to the 2022/23 activities and performance included:

·  Total Council borrowing (excluding internal HRA borrowing) was £1,547.7m;

·  The Council did not breach its 2022/23 Operational Boundary limit of £1,600m or its Authorised Borrowing Limit of £1,700m, and complied with all other set treasury and prudential limits;

·  Total treasury investments held was £54.0m (2021/22: £154.9m);

·  Net General Fund interest income was a surplus of £6.5m compared to a budget of -£5.2m, an outperformance of £11.7m;

·  £7.0m of the outperformance from interest income was transferred to the Investment Reserve, with the remaining balance used to cover shortfalls in the Investment and Acquisition Strategy (IAS);

·  Investment income from the Council’s IAS totalled £1.5m (2021/22: £4.3m) compared to a budget of £6.1m, an underperformance of £4.6m (covered by the outperformance in interest);

·  The Council’s average return on its commercial and property loans was 3.65% (4.42% for 2021/22);

·  Interest payable totalled £40.9m (2021/22: £37.4m), consisting of £13.5m for PFI / Finance leases, £11.0m for the HRA and £16.4m for the General Fund;

·  The Council borrowed £30m of medium-term General Fund borrowing at an average rate of 0.77% and an average duration of 2.4 years;

·  The total long-term General Fund borrowing was £729.9m, comprising of market loans, Public Works Loan Board (PWLB), Local Authority, European Investment Bank and other loans;

·  The value of short-term borrowing totalled £165.3m;

·  HRA borrowing totalled £295.9m of long-term debt and £30.6m of internal borrowing;

·  A loan impairment of £2.4m was made in 2021/22 against the loan to Barking and Dagenham Trading Partnership (BDTP) relating to the purchase of London East UK (LEUK), as outlined in paragraph 7.9 of the report; and

·  A further impairment of £7.74m was required for 2022/23 relating to additional capitalised interest on the LEUK loan and two working capital loans to BDTP, as outlined in paragraph 7.10 of the report.

The Cabinet Member also referred to the expected increase of up to 0.5%, to 5%, in the Bank of England base rate, which was likely to result in a shift in the Council’s borrowing strategy towards short-term borrowing for the time being.  He also alluded to a range of measures being implemented to ensure that income from new developments and other investments was realised without unnecessary delays.

The Assembly resolved to:

(i)  Note the Treasury Management Annual Report for 2022/23;

(ii)  Note that the Council complied with all 2022/23 treasury management indicators;

(iii)  Approve the actual Prudential and Treasury Indicators for 2022/23, as set out in Appendix 1 to the report; and

(iv)  Note that the Council borrowed £140.0m from the PWLB in 2022/23.

The Cabinet Member for Finance, Growth and Core Services introduced the Treasury Management Annual Report for 2022/23 which set out the key areas of performance, borrowing levels and other treasury management issues. 

Key highlights within the report relating to the 2022/23 activities and performance included:

·  Total Council borrowing (excluding internal HRA borrowing) was £1,547.7m;

·  The Council did not breach its 2022/23 Operational Boundary limit of £1,600m or its Authorised Borrowing Limit of £1,700m, and complied with all other set treasury and prudential limits;

·  Total treasury investments held was £54.0m (2021/22: £154.9m);

·  Net General Fund interest income was a surplus of £6.5m compared to a budget of -£5.2m, an outperformance of £11.7m;

·  £7.0m of the outperformance from interest income was transferred to the Investment Reserve, with the remaining balance used to cover shortfalls in the Investment and Acquisition Strategy (IAS);

·  Investment income from the Council’s IAS totalled £1.5m (2021/22: £4.3m) compared to a budget of £6.1m, an underperformance of £4.6m (covered by the outperformance in interest);

·  The Council’s average return on its commercial and property loans was 3.65% (4.42% for 2021/22);

·  Interest payable totalled £40.9m (2021/22: £37.4m), consisting of £13.5m for PFI / Finance leases, £11.0m for the HRA and £16.4m for the General Fund;

·  The Council borrowed £30m of medium-term General Fund borrowing at an average rate of 0.77% and an average duration of 2.4 years;

·  The total long-term General Fund borrowing was £729.9m, comprising of market loans, Public Works Loan Board (PWLB), Local Authority, European Investment Bank and other loans;

·  The value of short-term borrowing totalled £165.3m;

·  HRA borrowing totalled £295.9m of long-term debt and £30.6m of internal borrowing;

·  A loan impairment of £2.4m was made in 2021/22 against the loan to Barking and Dagenham Trading Partnership (BDTP) relating to the purchase of London East UK (LEUK), as outlined in paragraph 7.9 of the report; and

·  A further impairment of £7.74m was required for 2022/23 relating to additional capitalised interest on the LEUK loan and two working capital loans to BDTP, as outlined in paragraph 7.10 of the report.

The Cabinet Member also referred to the expected increase of up to 0.5%, to 5%, in the Bank of England base rate, which was likely to result in a shift in the Council’s borrowing strategy towards short-term borrowing for the time being.  He also alluded to a range of measures being implemented to ensure that income from new developments and other investments was realised without unnecessary delays.

Cabinet resolved to recommend the Assembly to:

(i)  Note the Treasury Management Annual Report for 2022/23;

(ii)  Note that the Council complied with all 2022/23 treasury management indicators;

(iii)  Approve the actual Prudential and Treasury Indicators for 2022/23, as set out in Appendix 1 to the report; and

(iv)  Note that the Council borrowed £140.0m from the PWLB in 2022/23.