Agenda item

Treasury Management Report


The Leader presented the report.  Before Cabinet was the 2021/22 Outturn on Treasury Management. This report was reviewed by the Governance and Audit Committee, with no comments or observations requiring the Cabinet’s or the Council’s attention were made. From here, it would go to full Council who were responsible for setting the Council’s Treasury Management strategy and the various indicators and limits that managed this activity.

The report explained the Council’s borrowing and investing activities in 2021/22 and its position against the indicators and limits set.

Regarding borrowing, a substantial difference could be viewed relative to the expected position. The Council had a long-term requirement to borrow and in pursuing an internal borrowing strategy, should normally have minimal investments (spare cash) which it invested over the short term.

Due to the on-going impacts of the Covid pandemic, following a second year of significant capital expenditure slippage, the take up of expected borrowing did not materialise. The ‘need’ to borrow was there and would happen but slippage that this had not materialised as quickly as expected.

This second year of significant underspending and the resulting increase in reserves which have yet to be spent also meant that cash resources were much higher than expected. This allowed some small maturing loans to be repaid without re-financing and for spare cash levels to be high and invested.


As outlined in the report, this was a temporary position and as the Council worked to catch up on capital projects and with the financial support linked to Covid now ended, cash resources and investments would reduce, then borrowing resume, in line with requirements over time.

Officers were undertaking a detailed review of the capital programme to gain a better understanding of delivery timescales, and this would be reported to Cabinet in due course.


On the indicators and limits, the report highlighted one area where these were not met, which was unusual.


The indicator related to the Council’s exposure to interest rate changes. Borrowing costs increased if the interest rate increased and our income from investing activities would reduce if the interest rate dropped. 


It could be noted that the issue was highlighted due to a different interpretation of our LOBO (Lender Option Borrower Option) loans as variable interest loans rather than fixed interest rate loans. It was therefore more of a ‘technical’ issue as opposed to one caused by borrowing decisions made. Indeed, the report confirmed that given the nature of these LOBO loans, if the interest rate did increase; the Council would be more likely to make a budgetary saving rather than being exposed to the risk of costs increasing.


Regarding the limit, this breach occurred because amounts invested was much greater than that envisaged when setting the indicator. Again, this was of no concern as the Council’s budget target for interest receivable had not changed and even if rates decreased; it would not impact on that budget.


It should be noted that managing the Council’s cash-flows was particularly challenging over these last two exceptional years, therefore, the Leader thanked the Finance team for their work during this time.



Cabinet noted the report on treasury management activities for the period 2021/22 and would provide comments to Council.

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