Agenda item

To consider the report of the Chief Officer Resources.

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

At the invitation of the Chair, the Chief Officer Resources spoke to the report which provided a summary of the Treasury Management activity undertaken between 1^st April and 30^th September, 2021 in accordance with the CIPFA Treasury Management Code of Practice.  The Chief Officer continued by highlighting the following salient points:

-      The forecast bank rates had been updated since the report had been scrutinised to reflect the impact of the unexpected Bank of England bank rate change which had increased by 0.25% in December 2021.  This increase had previously been expected in the second quarter of 2022.  The table in the appendix of the report had been updated to reflect this change in order to provide Members with the most up to date information that was available.

-      A summary of the activities was detailed in the table at paragraph 5.1.6 of the report and despite the financial climate in relation to the pandemic, the authority had performed well in the first half of the year with regard to its treasury management activities, with investment returns of £13,000 being achieved during that period with an average interest rate of 0.02% which, was above the benchmark rate of -0.8%.  However, this reflected the impact the pandemic was having on bank base rates and in turn the market interest rates offered on investments.

-      The annual budgeted investment interest was £6,000 which had been exceeded in part due to the investment in relation to the railway infrastructure monies.

-      An average interest rate 0.31% had been paid on temporary borrowings during the year against a benchmark rate of 1.7% which had resulted in £49,000 being paid in interest payments for the 6-month period against a £425,000 full year budget.  It was noted that the interest payable for the full year was well in budget and the interest payable by the authority had been minimised as far as possible and this was evidence of good performance.

-      All the treasury management limits and prudential indicators had been complied with during the year and no institutions in which investments had been made during the period had had any difficulties in repaying its interest.  Therefore, the authority had not been exposed to any financial loss as result of the difficult economic climate.

-      The Chief Officer concluded by advising that other financial investment opportunities would continue to be monitored during the remaining part of the financial year and would be reported to Members at the end of the current financial year.

Members were then given the opportunity to raise questions/comment on the report.

The Leader of the Labour Group referred to paragraph 5.2.2 of the report and in particular, the £70m rail loan and sought reassurance and asked whether the Chief Officer Resources was confident that other investment opportunities would become available.

The Chief Officer Resources commenced by stating that she was confident that other investment opportunities would become available.  The Chief Officer advised that over the last year additional opportunities had already been identified alongside the authority’s traditional investment opportunities and alternative investment arrangements made.  The Chief Officer concluded by reiterating that she was convinced that further opportunities would be identified moving forward.

In reply to a question, the Chief Officer confirmed that the rail loan had been categorised as long term borrowing.

A Member advised that the service to Crosskeys had commenced on 13^th December, 2021 and enquired when the Council would be likely to receive the first tranche of income from Crosskeys and other stations along the route, which would help towards the loan repayment.

The Chief Officer Resources advised that as part of the Quadripartite Agreement, the Council would be guaranteed an income stream to repay the loan to Welsh Government over the 50-year period of the loan and the agreement stipulated that the loan repayments did not have to commence until the income had been received by the Council.  However, in terms of the timings when the income was expected to be received, the Chief Officer undertook to pursue the matter and report back accordingly.

It was unanimously,

RESOLVED, subject to the foregoing, that the report be accepted and Option 1 be endorsed, namely that the treasury management activity undertaken during the 2021/22 financial year be noted and the record of performance and compliance achieved during the first half of the 2021/22 financial year be accepted.