Agenda item

The Leader presented the report, advising her Cabinet colleagues that this was a compliance report to confirm that Treasury activities in the first half of 2021-22 in line with the Treasury Strategy previously considered and set by Members. The report compared activity with the year-end position for 2020-21 to indicate the resulting causes.

The report presented the following information:

·        A reminder of the treasury strategy agreed

·        Details of borrowing and investment activity

·        Information regarding wider economic considerations such as the pandemic and the economic climate

·        An update in relation to the International Treasury code on commercial investment funding

The Report concluded with an examination of activity against performance, confirming compliance.

The report was presented to Governance and Audit Committee and was endorsed by them for onward consideration by Cabinet and ultimately Council.

As at 30 September 2021 the level of borrowing decreased by £9.1m on 2020-21 levels to £144m. 

This decrease was in relation to:

·        The repayment of a PWLB loan which matured in the first half of 2021/22.  As at 30 September further borrowing to replenish this loan was not required. This might need to be covered by temporary borrowing before 31 March 2022.

·        The Council had a number of loans which were Equal Instalments of Principal (EIP), which paid back principal over the life of the loan, and the interest associated with the loan went down as the principal outstanding reduced.

·        The level of investments also increased by £4.1m to £28.9m, meaning a decrease in net borrowing of £13.3m during the first half of financial year to £115.1m. 

Included within the investment figure is £13.9m held in the form of cash. This was circa £6m less than year-end but due to the continuing pandemic the Authority continued to keep higher levels of cash than normal that can be made available at very short notice to cover any unexpected calls on cash flow.

Currently there was not much demand for very short term borrowing within the market place, and in September rates on deposits below 14 days with the Debt Management Account Deposit Facility (DMADF) were still very low at 0.01%. The Authority had its investment with other local authorities of £15m with slightly better, but still low interest rates. It was anticipated that investments would reduce during 2021/22 as an alternative to borrowing until we reach the balance of £10m, which would remain invested for compliance with Markets in Financial Instruments and Derivatives Directive (MiFIDII).

As a result of this collective position, no new long-term borrowing was required to be taken out in the first half of the financial year.

it was however anticipated that the Council would need to undertake additional borrowing on a short term basis for the remainder of the year in order to cover normal day to day cash flow activity, although with current capital expenditure forecasts, it was expected that there would be no specific requirement to undertake long-term borrowing this financial year.  External borrowing might still be considered to manage interest rate risks and the Council’s longer term borrowing necessity.

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 continued to comply with the Prudential Indicators set for 2021/22.

Decision:

That Cabinet noted the report on treasury management activities for the period to 30 September 2021 and provided comments to Council.