Treasury Management Mid Year Review 2020/21
- Meeting of Audit, Governance and Standards Committee, Monday 16th November, 2020 6.30 pm (Item 148.)
- View the background to item 148.
The Finance Manager presented his report setting out the activities of the Treasury Management function for the first six months of the 2020/21 financial year in accordance with CIPFA’s Code of Practice on Treasury Management in Local Authorities. The Finance Manager advised the Committee that:
· The Treasury Management Strategy for 2020/21 was approved by the Council in February 2020 and the key aim was to keep investments short term and to use cash balances to fund the Capital Programme in the short term due to low investment returns and high counterparty risk in the current economic climate. All investments so far this year had been kept within money market funds and notice accounts which could be called upon immediately or with a short notice period.
· As at 30 September 2020, the Council held £10.43m of investments (£11.025m at the start of the year) and the investment portfolio yield for the first six months of the year was 0.33%.
· As at 30 September 2020, the Council also had short-term external borrowing of £9m from other local authorities. This was likely to increase throughout the year due to the escalation of the Capital Programme.
· The Council’s borrowing had been kept under review during the first half of the year to see whether it would be prudent to lock in long-term borrowing to spread the risk of refinancing and to lock in a long-term low rate. It had been decided to wait for the results of the Government’s consultation on revised PWLB lending terms before committing to anything long term. In the meantime, given current interest rate forecasts, the risk of losing the opportunity to borrow at low rates by waiting appeared to be low.
· During the first six months of the financial year 2020/21, the Council had operated within the prudential and treasury indicators set out in the Treasury Management Strategy Statement and in compliance with its Treasury Management Practices.
In response to questions, the Finance Manager advised the Committee that:
· Short-term borrowing was anything less than one year and was used to help fund the Capital Programme, but consideration was being given to locking in some longer-term rates to coincide with the length of projects within the Capital Programme to spread the risk of refinancing.
· Investments fluctuated throughout the month as a result of the Council’s role as billing authority in the collection of Business Rates and Council Tax, fluctuations in cash balances from these sources, payments being due to preceptors, funding of the Capital Programme and other expenditure. It was the Council’s strategy to use cash balances where possible.
· The Council had borrowed from North Yorkshire County Council to coincide with the acquisition of the Lockmeadow Leisure Complex. The rate was locked in at 0.97% which was favourable at the time. The maturity date was 20 November 2020, but the loan had been rolled over for a further six months at 0.12%. The Council would be looking at locking in longer-term borrowing very soon.
1. That the position regarding the Treasury Management Strategy as at 30 September 2020 be noted.
2. That no amendments to the current procedures are necessary as a result of the review of activities during the first six months of 2020/21.
- Treasury Management Mid Year Review 2020/21, item 148. PDF 103 KB View as HTML (148./1) 76 KB
- Appendix A - Investments-Borrowing 30th September 2020, item 148. PDF 27 KB
- Appendix B - Prudential and Treasury Indicators, item 148. PDF 34 KB