Agenda item

Gary Adams presented the report and reminded Members it had been to Cabinet and Council in November 2020.  He ran through the headlines:

·  The investment performance portfolio was £67 million at the end of September, with an average interest rate of 0.5% which was above the benchmark rate.

·  Overachievement was due to the CCLA property fund with 3.43% return, the rest of the investments were short-term.

·  Borrowing of £15 million was taken at the start of the financial year, in light of Covid-19, to ensure sufficient liquidity.  This was a pro-active approach.

·  The economic outlook was very well documented going forward, Arlingclose’s interest rate forecast was for no change up to 2023 with more risk to the downside.

·  HM Treasury had published its response to the PWLB consultation and it would prevent access to PWLB loans to fund assets purchased primarily for yield.

Questions followed:

·  In respect of John Barker’s question about the potential for negative interest rates, Gary Adams responded that negative interest rates had not been seen and the Bank of England was consulting with financial institutions on this to see if systems could cope.

·  In response to John Barker asking about payback of the long-term debt like the PWLB loans, Gary Adams explained that the Council had a long-term borrowing requirement and as interest rates were currently low there would be penalty charges for any repayment.  Short-term borrowing had more flexibility in terms of repayment.

·  Following questions from Councillor Lucy Hodge, Gary Adams stated the increase in the reserves was related to the receipt of government Covid grant support at the end of March and the release of contingency funding for SEND following confirmation from the DFE that this should be funded by the Dedicated Schools Grant.  In respect to the increase in investments held in money market funds, Gary Adams explained that this was to maintain liquidity and gives flexibility.  There were also restrictions with counterparties that could be used for investments in line with Arlingclose guidance taking into account current market conditions.

·  With regard to a question from Councillor Colin Blackburn about group loans of £15 million, Gary Adams responded that actual borrowing taken would depend on cash flow and the length of the loan requirements. Some of the loans were short-term, for example in respect of the Riverside flats development, the loan would be repaid as the flats were sold.  Assurance was given that although the £15 million disclosure on the group loans was not in the right table, it was included in the accounts.

·  Gary Adams confirmed that central government money in respect of grants was coming to the Council with no issues.  As to whether the level of application was as expected this would be seen over the next few months.

On a motion from Councillor Andy Furse, seconded by Councillor Colin Blackburn it was

RESOLVED that

1)  The Treasury Management Report to 30th September 2020, prepared in accordance with the CIPFA Treasury Code of Practice be noted; and

2)  The Treasury Management Indicators to 30th September 2020 be noted.