The report of the Assistant Director Finance and Technology (Deputy Section 151 Officer) is attached.

Contact:  Ben Jay (01743) 250691

The Committee received the report of the Assistant Director Finance and Technology - copy attached to the signed Minutes – which set out the borrowing and investment outturn for 2022/23 plus the Treasury Limits and Prudential Indicators.  The Executive Director of Finance (Section 151 Officer) reported that all the appropriate CIPFA regulations and indicators had been followed (included within the Appendices) and that the treasury team had outperformed the benchmark by a very small percentage (0.03%) and achieved a return of 1.81%.

The Executive Director of Finance (Section 151 Officer) reminded the Committee that they were tasked with the requirement to oversee the treasury approach and to understand and ensure they were comfortable with the investments that were made.  In terms of the performance, the Executive Director of Finance (Section 151 Officer) stated that where we had a market where the interest rates were increasing over a short period of time, by definition, performance would be reduced as although we had investments for up to 12 months, they would have been made by rates that appeared strong at the time and then if interest rates moved very quickly in that 12-month period, which is what has been seen over the last 12 months, then they become less competitive but we are fixed until the end of that period.

The Executive Director of Finance (Section 151 Officer) reported that the Council had not undertaken any external borrowing in the 2022/23 financial year and although there had been an element of that in the treasury strategy should it be needed but in terms of the delivery of the capital programme and the cash flow within the authority, the Council had not needed to borrow.  They may look to borrow in the next financial year as the cash balances had started to reduce, which had been expected for a while, so from a cash flow point of view they may need to replace some borrowing.

The Executive Director of Finance (Section 151 Officer) drew attention to the debt maturity over the coming years, set out on page 3 of the report and reiterated that the Council had not undertaken any debt rescheduling for a number of years.  In response to a query, the Executive Director of Finance (Section 151 Officer) gave an example of when, from a cashflow point of view, short term borrowing may be undertaken to ensure cash was in the bank on the 20th of the month to ensure the payroll could be made.

In response to concerns, the Executive Director of Finance (Section 151 Officer) explained that treasury staff were experienced as they had borrowed and invested previously however it became difficult when interest rates were low.  As interest rates go up there would be more opportunities and areas to invest in and because the Council followed the security, liquidity, yield element, return of your money was more important than return on your money and understanding the importance of how long to tie the money up for rather than just looking for the best deals.

In response to a query about who makes the decision about whether to invest in variable or fixed rate investments, the Executive Director of Finance (Section 151 Officer) explained that this was set out in the Treasury Strategy that had been approved by Council and that any decision would be taken in consultation with the Council’s Treasury Advisor.  He confirmed that the approach taken would always be to undertake fixed rate borrowing over the long term and although they could use variable rates over the short term, they tended not to do so.

The Executive Director of Finance (Section 151 Officer) confirmed that if the council exhausted its cash reserves it could undertake borrowing to cover it’s day-to-day activities and this would be secured against capital assets however they tried to keep a high level of cash balances in the bank but as this falls away the Council would need to borrow to keep that balance up as they could not borrow to cover revenue expenditure. 

RESOLVED:

a.    To approve the actual 2022/23 prudential and treasury indicators in this report

b.    To note the annual treasury management report for 2022/23