Agenda item

The Cabinet Member for Finance, Growth and Core Services presented a report on the Treasury Management 2022/23 Mid-Year Review.

The review report provided details of the mid-year position for treasury activities and highlighted compliance with the Council’s policies previously approved by the Assembly on 3 March 2022 as part of the Treasury Management Strategy Statement for 2022/23.

The Cabinet Member commented that the focus of the report was on the challenging economic situation for the Borough with increasing inflationary pressures and higher borrowing costs, creating the current cost-of-living crisis which was influenced by not only global factors but also because of the mis-management of the economy by the government driven by the disastrous mini budget. He referenced the effects this had on the Borough’s housing programme, which to date had delivered the most affordable housing provision in London, but where many schemes were now becoming unviable due in part to the steep rise in construction costs.

The report set out the Council’s current investment arrangements and rates of return which remained in the top quartile when compared to its peer group, as well as details of current and future borrowing arrangements, the reduction in cash balances which was due in part to the significant cash receipts secured on a number of commercial sites, the strategy of which supported the objective of maintaining Council services for the benefit of the residents. 

The Assembly therefore resolved to note:

(i)   The Treasury Management Strategy Statement Mid-Year Review 2022/23,

(ii)   The economic update covering the increase in inflation and the potential for an increase in the Bank of England Base Rate,

(iii)   That the value of the treasury investments and cash as at 30 September 2022 totalled £109.2m, and that the Treasury Investment Strategy outperformed its peer group, with a return of 1.27% against an average of 0.95% for London Local Authorities (as at 30 June 2022),

(iv)   That the value of the commercial and residential loans lent by the Council as at 31 March 2021 totalled £168.1m at an average rate of 3.3%, 

(v)   That the total borrowing position as at 30 September 2022 totalled £1,086b with £295.9m relating to the Housing Revenue Account and £791.1m to the General Fund,

(vi)   That interest payable was forecast to be £15.8m against a budget of £15.7m,

(vii)   That interest receivable was forecast to be £7.2m against a budget of £7.5m, representing a deficit of £0.3m,

(viii)   That capitalised interest was forecast to be £9.0m,

(ix)   That Investment and Acquisition Strategy (IAS) income was forecast to be £6.7m against a budget of £7.0m, representing a deficit of £0.3m,

(x)  That the IAS surplus, held in a reserve, was currently £29.3m and was forecast to increase to £37.6m by the end of the year, of which £11.0m was ringfenced for lease and leaseback properties,

(xi)  The post Gateway 4 cashflows, including the impact of Gascoigne East 3B and the pressures on the current pipeline schemes, as outlined in paragraph 9.2 of the report, and   

(xii)   That in the first half of the 2021/22 financial year the Council complied with all 2021/22 treasury management indicators.