Agenda item

Treasury Management Report


Before presenting the report, the Leader asked colleagues to accept apologies on behalf of herself and the Head of Finance as the Members Agenda pack had the mid- year position and not the outturn report. The website version was correct.  The Leader had prepared a comprehensive briefing for councillors on the outturn and therefore continued to explain what the outturn position was and what had happened throughout the 2020/21 year on Treasury Management.


The report fulfilled the Councils responsibility to receive and approve an annual treasury management outturn report each year. The report dealt with the outturn for 2020/21 and was reviewed by both Audit Committee and Cabinet where no comments were made.


The report presented the following information:


·              details of capital financing, borrowing, debt rescheduling and investment transactions

·              reports on the risk implications of treasury decisions and transactions

·              details the outturn position on treasury management transactions in 2020/2021 which confirms compliance with the treasury limits set by Council.


The Covid pandemic had an impact on Treasury Management during 2020/21. Since the early days of the pandemic the Council had to monitor a significant increase in cash-flow activities throughout 2020/21, from the making of business grants and the Business Rates Relief Scheme in particular, and also by its own increased costs and lower income level. The Welsh Government provided significant up-front cash-flow support to ensure Councils were adequately financed to administer the business rates and business grants scheme, reimbursed Councils throughout the year for their increased costs and reduced income. Alongside the slippage in the delivery of its own capital schemes and underspending on its revenue budget, this meant cash-flow was more positive than a ‘normal year’ which gave rise to lower borrowing activity and much more short term investing activities.


This did not however, reduce the need of the borrowing commitment the Council had, but did slow down the pace at which that borrowing was taken up towards that commitment level.


Notwithstanding the above, in line with the agreed Treasury Management Strategy, the Council still continued to be both a short-term investor of cash and borrower to manage day-to-day cash flows in 2020/21.


Turning to borrowing activities specifically, the financial year was relatively quiet, as shown in Appendix B to the report:


·        The Council repaid a short-term loan taken out in March 2020 to specifically cash-flow and facilitate early payments of business grants in April. This was reimbursed by the Welsh Government and the loan repaid, as planned in June 2020.

·        In March 2021 the Authority undertook borrowing on a short term basis in order to cover normal day to day cash flow activities.

·        Lastly, a minimal amount of new long-term borrowing was required to be taken out in the second half of the financial year totalling £94k. This borrowing was from ‘Salix’ which was interest free and was linked to a specific energy efficiency project.


Whilst the Council had significant long-term borrowing requirements, the Council continued to follow its current strategy of funding capital expenditure through ‘internal borrowing’ rather than undertaking new borrowing where it could. It could do this because of its ‘cash-backed’ reserves and at 31 March 2021, internal borrowing was approximately £107m which saved, at current interest rate levels, about £2.4m in interest costs annually.


Current estimates within the Council’s cash-flow indicated there was the potential that additional long-term borrowing would be required in the second half of this current financial year to fund the capital programme. Whilst slippage on that was included in the cash-flow forecasts, what actually happened in the year in regard to delivery of projects would influence this significantly. In particular, the major projects within the Band B Education schemes would start the period where longer term borrowing started to be taken out. 


Turning to investing activities, the Council’s strategies in this area of Treasury Management were (i) to be a short term and relatively low value investor, consistent with the pursuit of an ‘internal borrowing strategy’ and (ii) investment priorities should follow the priorities of security, liquidity and yield, in that order.


All investments were currently placed on a temporary basis and were placed in high security institutions, in line with the Council’s other strategy in this area. At the 31 March 2021, £15m was placed with various local authorities and £9.8m with banks and building societies.


Lastly, Prudential Indicators. The Authority measured and managed its exposures to treasury management risks using various indicators which could be found in Appendix B.  The report confirmed the Council complied with the Prudential Indicators for 2020/21, as set in February 2020 as part of the Treasury Management Strategy.


Councillor Jeavons seconded the report.



§  That Council noted and approved that the report on treasury management activities for 2020/21 were in line with the agreed Treasury Management Strategy 2020/21. 

§  The Council noted the comments from Audit Committee on the report.

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