Issue - meetings

Treasury Management Annual Review 1st April 2019 to 31st March 2020

Meeting: 11/09/2020 - Corporate Overview Scrutiny Committee (Item 9)

9 Treasury Management Annual Review 1st April 2019 to 31st March 2020 pdf icon PDF 660 KB

To consider the report of the Chief Officer Resources.

Additional documents:

Minutes:

Consideration was given to the report of the Chief Officer Resources.

 

The Chief Officer Resources spoke to the report which provided Members with the opportunity to scrutinise the Treasury Management activities carried out by the Authority during the 2019/2020 financial year under delegated powers by the Chief Officer Resources. The Chief Officer referred Members to the performance information and data and advised that during 2019/2020 the Authority took £10m in long term debt from other public authorities (PWLB) to replace maturing loans or to finance capital expenditure.

 

In the past few years the credit rating agencies had downgraded a number of financial institutions as they no longer meet the Authority’s required approval criteria. However, the Chief Officer advised that in the current financial climate the Authority had performed well in terms of Treasury Management and outlined the key points:-

 

·          Investment returns of £61,000 had been achieved with an average interest rate of 0.46%. This was slightly lower than the benchmark rate of 0.54% but reflected that the Authority cannot invest in counterparties that pay higher rates due to credit rating reductions. This was in line with the Authority’s risk averse policy whereby the security of the capital sum was the number one priority at the expense of more competitive investment returns.

 

·          An average interest rate of 1.09% has been paid on temporary borrowings against a benchmark of 1.00%, minimising as far as possible the interest payable by the Authority. This was despite the increase in market rates following the 1% increase to PWLB rates in October 2019 – this evidenced good performance.

 

·          All of the Treasury limits and Treasury Management prudential indicators set for the financial year had been complied with during the year.

 

·          No institutions in which investments were made during the period had any difficulty in repaying investments and interest in full. Therefore, the Authority was not exposed to any financial loss as a result of the difficult economic climate.

 

A Member referred to the investment returns which had been achieved and asked if the lower rate would result in any future budget implications.

 

The Chief Officer Resources advised that there were no anticipated budget pressures from the lower rate achieved, however now officers had a better understanding of the impact of the PWLB changes this would be included in plans going forward. The Chief Officer added that if any budget pressures emerged they would be reported to Members accordingly.

 

The Committee AGREED that the report be accepted and Option 2, namely Members scrutinised the treasury management activity undertaken during the 2019/2020 financial year and no comments were provided prior to its submission to full Council.