Agenda item

This report provides Governance and Audit Committee with the details of the Council’s treasury management activity for the financial year 2022-2023.

The Deputy Leader introduced the report, informing Members that work had been done to improve the scope of environmental and ethical issues within the Strategy.  The Council had received criticism in the past for investing in Qatar.

The Assistant Director of Finance confirmed that there were no current investments in Qatar Bank.

The Council was required by regulations issued under the Local Government Act 2003 to produce an annual treasury management review of activities and the actual prudential and treasury indicators for 2022-2023.  This report met the requirements of both the CIPFA Code of Practice on Treasury Management, (the Code), and the CIPFA Prudential Code for Capital Finance in Local Authorities, (the Prudential Code).

For the financial year 2022-2023 the Council adhered to the suggested minimum reporting requirements and members received the following reports:

• An annual treasury management strategy in advance of the year which was approved by Council on 3 March 2022

• A mid-year treasury update report which was approved by Governance and Audit Committee on 30 November 2022

• An annual review following the end of the year describing the activity compared to the strategy

The Strategy for 2022/23 was approved by Council on 3 March 2022.  A key element of daily operations focused on comparing current market conditions in conjunction with the Link (the Council’s treasury advisors) credit rating list, using this as a tool for guidance, with the option to deviate from this guidance only when there were clear alternative options available to the Council.  Any decision of this nature was clearly documented for audit purposes.

As of 31 March 2023, the Council had a fixed rate debt of £86.2 million which related to the self-financing of the Housing Revenue Account which took place in 2012 and there were total investments of £69.6 million.  There was a reduction of investments of £20 million over the past year which related to the repayment of the balances of the COVID-19 business grants which the Council was responsible for distributing to eligible businesses.  The Council received a grant of £8.2 million in March 2022 which related to the energy rebate that was distributed to eligible households.

Of the £86.2 million, £3.2 million was short-term debt repaid annually and the balance was considered long-term debt.  There were no liquidity issues.  The Council complied with the policy to not retain more than 35% of investments long-term (over 365 days).  This totalled £3.8 million.

As part of the Prudential Code, the Council set out a number of Prudential and Treasury indicators as part of the treasury strategy.  Treasury Management functions had operated effectively over the year.  All deposits placed had been repaid in a timely manner.  Investment income levels had exceeded the amended budget by £1.4 million which had been higher than anticipated.  Performance indicator levels had all been achieved.

Members raised the following points during discussion:

·            What amount was reserved as cash liquidity?

·            There was £3 million in the local authority property fund, the value of which had temporarily reduced due to performance challenges within the commercial property market.  It was acknowledged that this was a factor to monitor closely.

·            A Member asked for an explanation on the investments in other Local Authorities.

·            Officers were commended for their treasury management investment performance which had produced significantly increased income levels

The Assistant Director of Finance confirmed that a maximum of £19 million was kept in overnight investments as it ensured the Council could meet cashflow liquidity requirements.  The Local Authorities investment had a maturity date attached and was similar to investing in a bank.  Prior to such investments, advice was taken from treasury advisors and such investments were considered amongst the most secure to make.  It was clarified that Local Authorities benefitted from supporting each other.

The Chief Finance Officer added that a long-term view was established when considering the property market and the risk profile was considered robust enough to withstand the current volatility.

It was proposed, seconded, and AGREED:

That the Governance & Audit Committee:

a)         Approved the content of the annual report on the Treasury Management activity for 2022/2023.