Agenda item

The attached report gives details of performance against the Council’s Treasury Management Strategy for 2022/23.

Cllr Mark Elliott introduced the report, moved the officer recommendation and made the following statement:

“Just to provide some context, this is an information report on Treasury Management performance for the last year in line with the Chartered Institute of Public Finance and Accountancy Code of Practice which requires council to approve an annual Treasury Management report within 6 months of the end of the financial year. 

So, it's a backward-looking report, detailing how the council's savings and borrowing performed over the financial year from April 2022 to March 2023.

Treasury management is obviously a vital part of the council's financial activity and whilst it can seem a dry topic, sound and successful treasury management is a major part of the bedrock on which the council's finances are built.

Looking at our investment performance – the average rate of interest earned across the portfolio was 2.09% but that obviously hides some volatility. It's important to remember this period starts in April 2022, when the economic environment was very different - prior to the disastrous period of Trussanomics and the KamaKwasi budget in the early Autumn.  Bank of England Base Rate increased to 4.25% from 0.75% over the year with Bank of England interest rate action remaining robust in line with their remit for tackling inflation. This trend has continued with rates now 5% following further increases as inflationary pressures remained elevated.

The average return has continued to increase during the year from around 1% in April to just below 4% in March, as the Bank of England interest rate rises over the period fed through to our investments. 

The report highlights the impact on the investment market of persistent inflation, increasing interest rates and risk of recession which has led to decrease in the valuation of the Council’s strategic long terms investments which reduced from £10.3m to £8.8m over the year. However, this change does not directly impact on the revenue position of the Council as there is currently a statutory override in place. Under the current rules any movement would only affect the revenue position if the investments were sold - and these are long term investments, so that is not our intention.

Turning to borrowing - at the end of the year our total borrowing was £210m - a reduction of around £9m from the start of the year.  This is because we didn't take out any new borrowing during the year, and obviously principal capital repayments continued on our long-term Annuity Public Works Loan Board loans, and some shorter-term borrowing was repaid as loans reached maturity.

Overall - an underspend of £2.8m was achieved in respect of interest and capital financing, as result of higher than budgeted investment income, a delay in borrowing and savings on Minimum Revenue Provision due to capital spend reprofiling.

Finally - The report includes performance against all the indicators set in the Treasury Management Strategy and confirms that these are all within approved limits.  I'd like to commend officers on both the production of the report and more importantly on their sound handling of the council’s investments over the period.”

Cllr Matt McCabe seconded the motion noting that Local Authorities have been affected by the current economic situation.

Cllr Kevin Guy highlighted the sound financial management of the Liberal Democrats in difficult circumstances.

RESOLVED (unanimously):

(1)  To note the Treasury Management Report to 31^st March 2023, prepared in accordance with the CIPFA Treasury Code of Practice.

(2)  To note the Treasury Management Indicators to 31^st March 2023.