Agenda item

2021/22 Treasury Management Year End Report


The Leader presented the 2021/22 Treasury Management Year End Report. This report was reviewed by both the Governance and Audit Committee and Cabinet and no comments or observations requiring the Council’s attention were made. It was being presented at this meeting in line with full Council’s responsibility 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 investment activities in 2021/22 and its position against the indicators and limits set.

Regarding borrowing, a substantial difference can 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 meant that this did not materialise as quickly as expected.

This second year of significant underspending and the resulting increase in reserves, 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 now works to catch up on capital projects and with the financial support linked to Covid now ended, the council should firstly see cash resources and investments reduce, and 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; this would be reported 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 increase if the interest rate increases and our income from investing activities would reduce if the interest rate dropped. 


Regarding the indicator however, it was noted that the issue was highlighted due to a different interpretation of the Council’s 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; it was more likely to make a budgetary saving rather than being exposed to the risk of costs increasing.


Regarding the limit, this breach occurred because the amount 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 did not change and even if rates decreased; it would not impact on that budget.


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


Councillor D Davies seconded the report


Comments from Councillors:


Councillor Routley referred to page 52, section 9 in the report where it stated that no investments supported Russian Institutes directly and therefore asked were there any investments that were indirectly supporting Russian Institutes. The Leader advised that the appropriate officer would provide a written response.


Councillor Routley observed that under other debt activity, capital finances were raised for Glan Usk School and the Southern Distributor Road. The statement of accounts showed a liability of £39M to pay the operator and therefore asked could the finances be broken down between the School and the SDR.  The Presiding Member allowed the question on this occasion and advised that a written response would be provided by the appropriate officer.



That Council noted and agreed the report on treasury management activities for the period 2021-22.

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