The Finance Manager introduced his report setting out details of the activities of the Treasury Management function for the 2021/22 financial year in accordance with CIPFA’s Code of Practice on Treasury Management in Local Authorities and in the context of the economic environment over the past 12 months.  It was noted that:

·  The Treasury Management Strategy Statement was approved by the Council on 24 February 2021, and the key elements were to:

Utilise cash balances rather than loan debt to finance the capital programme in the short term and to review borrowing options during the year for longer-term financing;

Diversify the current portfolio as much as possible to reduce counterparty risk; and

Keep investments short so that they can be called upon for liquidity purposes.

·  During 2021/22, the Council’s investment balances had ranged between £14.37m and £70.2m.  The average investment balance for the year was £44.5m.  The Council held investments totalling £38.75m as at 31 March 2022 which was an increase on the previous year due to slippage within the capital programme and the influx of Government grant funding.

·  Investment income for the year totalled £71.8k against a budget of £100k.  Investment rates had improved throughout the year as bank rate started to rise, but investments had been kept short term for liquidity purposes.

·  Total loan debt at the end of the year was £9m due to £2m being repaid.  £5m was transferred to long-term borrowing with the PWLB due to rates being advantageous at the time and to mitigate refinancing and interest rate risk. 

·  Due to rising interest rates and the need for future borrowing to fund the existing 5-year capital programme, the Council had entered into an agreement with Aviva Life and Pensions UK Ltd to forward borrow £80m to bring some certainty into borrowing rates.  The funds would be available during 2023/24 (£40m), 2024/25 (£20m) and 2025/26 (£20m) and the rate had been agreed at 2.89% over a 50-year term.  50-year rates with the PWLB were currently 3.57%.

·  All Prudential and Treasury Indicators had been complied with throughout the year.

In response to questions:

·  The Finance Manager confirmed that the 21/22 Prudential Code included guidance on ethical investments and would be considered in due course.

·  The Director of Finance and Business Improvement explained how the forward borrowing arrangements were accounted for in the financial statements.

RESOLVED:

1.  That the review of the financial year 2021/22 in accordance with CIPFA’s Code of Practice on Treasury Management and the Prudential and Treasury Indicators be noted.

2.  That no amendments to the current treasury management procedures are necessary as a result of the review of activities in 2021/22.