Issue - meetings

The Leader’s Portfolio

To consider report FIN/527 of the Head of Corporate Finance, which was referred to the meeting of the Overview and Scrutiny Commission held on 28 June 2021.

RESOLVED

That the Cabinet:

a)         approves the actual 2020/21 Prudential and Treasury Indicators as set out in report FIN/527;

b)      notes the Annual Treasury Management Report for 2020/21.

Reasons for the Recommendations

The Council’s financial regulations, in accordance with the CIPFA Code of Practice for Treasury Management, requires an annual review following the end of the year describing the activity compared to the Strategy.  Report FIN/527 complies with these requirements.         

The Leader presented report FIN/527 of the Head of Corporate Finance. The CIPFA Code of Practice for Treasury Management recommends that councillors be updated on treasury management activities regularly and the report ensured the Council was implementing best practice in accordance with the Code.  The report provided details of the outturn position for treasury activities and highlighted compliance with the Council’s policies previously approved by councillors.  It was acknowledged it was a more challenging time for investments, but Council officers were doing exceptionally well at bringing in investment income.

The Cabinet noted that regulations required treasury management policy to be reviewed annually.  It was noted that the Council’s financial decisions for 2020/21 were taken in line with the Ethical Investment Policy.

Councillor T Belben presented the Overview and Scrutiny Commission’s comments on the report to the Cabinet following consideration of the matter at its meeting on 28 June 2021, which included:

·         Acknowledgement that due to the Covid-19 pandemic, expenditure had been lower and capital projects had not progressed as anticipated over the last year. 

·         The high level of uncertainty had impacted the ability to make significant rate of return.  Whist the amount of income remained uncertain, in the longer term it was hoped cash flows would stabilise.

·         Acknowledgement that the Treasury Strategy prioritises investments accordingly whilst providing an appropriate balance between security, liquidity, yield and ethical considerations.  Even if the yield was negative, these considerations still needed to be adhered to.

·         Recognition that the internally managed funds had earned an average rate of return of 0.58%.  Whilst there was support for this good investment performance, the average balances were lower than budgeted for a variety of reasons (budget set pre-pandemic, business rates equalisation reserve and capital programme not progressing as anticipated).

RESOLVED

That the Cabinet:

a)         approves the actual 2020/21 Prudential and Treasury Indicators as set out in report FIN/527;

b)      notes the Annual Treasury Management Report for 2020/21.

Reasons for the Recommendations

The Council’s financial regulations, in accordance with the CIPFA Code of Practice for Treasury Management, requires an annual review following the end of the year describing the activity compared to the Strategy.  Report FIN/527 complies with these requirements.         

To consider report FIN/527 of the Head of Corporate Finance.

The Commission considered report FIN/527 with the Leader of the Council, Head of Corporate Finance and the Chief Accountant. The CIPFA Code of Practice for Treasury Management recommends that Councillors be updated on treasury management activities regularly and the report ensured the Council was implementing best practice in accordance with the Code.  The report provided details of the outturn position for treasury activities and highlighted compliance with the Council’s policies previously approved by Councillors.

During the discussion with the Leader of the Council, Head of Corporate Finance and Chief Accountant, the following points were expressed:

·         Acknowledgement that due to the Covid19 pandemic, expenditure had been lower and capital projects had not progressed as anticipated over the last year. 

·         The high level of uncertainty had impacted the ability to make significant rate of return.  Whist the amount of income remained uncertain, in the longer term it was hoped cash flows would stabilise.

·         Clarification offered on the maturity structure together with number of detailed holdings.

·         Acknowledgement that the Treasury Strategy prioritises investments accordingly whilst providing an appropriate balance between security, liquidity, yield and ethical considerations. Even if the yield was negative, these considerations still needed to be adhered to.

·         Recognition that the internally managed funds had earned an average rate of return of 0.58%. Whilst there was support for this good investment performance, the average balances were lower than budgeted for a variety of reasons (budget set pre-pandemic, business rates equalisation reserve and capital programme not progressing as anticipated).

·         Acknowledgement that it was prudent to have sufficient funds in the business rates equalisation reserve.   

·         Concern that should another lockdown be forthcoming, there would be an increase in individuals requiring support. It was recognised that sensible decisions would be required in the future to protect long term investments.

·         Explanations were sought and obtained on the details provided within appendices.

·         It was felt that it would be beneficial to receive the detailed holdings table as part of a spreadsheet to allow further analysis to take place.

RESOLVED

That the Commission notes the report and requests that the views expressed during the debate, are fed back to the Cabinet through the Commission’s Comment sheet.