Agenda item

To consider Item 13

The Principal Accountant presented to Members the Treasury Management Performance report 2021/22 Quarter 3. The accrued interest earned for 2021/22 Quarter 3 was £30k, which was £7.5k higher than the budget set for the same period. The Authority had achieved the budget set for the full financial year 2021/22 by Quarter 3 and was projected to achieve in the region of £38k interest in total by the end of the financial year.

In terms of investments, as at 30 December 2021, the Authority had £16.5m invested in various counterparties including, banks, buildings societies, money market funds and current accounts. It was anticipated by 31 March 2022 funds invested would be in the region of £14m plus the current account balance, approximately totalling £15m. The reason for the reductions in Quarter 4 was due to two deals maturing in February and March 2022 and not being re-invested, to ensure the Authority could meet its short-term expenditure requirements.

As Members would see from the Investment Chart, the Authority had deals maturing on frequent bases, again to ensure it could meet its short term expenditure requirements. In May 2022 the Authority had a PWLB loan due to be repaid. The value of this loan was £620k and cash had been made available to repay this loan when due. The repayment does not impact the revenue budget.

In terms of the next financial year, at the Authority meeting on 16 February 2022, Members approved the Treasury Strategy for 2022/23. This strategy had no significant changes compared to the strategy for this financial year. The Bank of England’s Monetary Policy Committee (MPC) had increased the base rate in February 2022 to 0.50%. However, the investment income budget set for 2022/23 would remain at £30k. The next review date on interest base rate was 17 March 2022. The reason for this was because the Authority had a number of investments that were made prior to the last two base rate increases and were maturing during 2022/23. Therefore, the Authority would not see the benefit of the base rate increases for the full year and it was also not prudent to rush into increasing the budget without knowing if the interest rates were going to continue at a stable rate. Any additional income above the set budget would be welcome and if the investment income was sustainable for future years, this would be reflected as part of the next MTFP.

Finally, the cashflow position would continue to be monitored on a regular basis to ensure the Authority could meet the short-term expenditure requirements and be able to maintain adequate liquidity.

A Member asked why a loan was being paid off this year.

The Deputy Director of Finance and Assets advised that the loan was actually coming to its maturity and needed to be paid back.

A Member asked for some clarity on the investment strategy and all the counterparties being low risk, should the Authority look at better performers to invest in although they may be higher risk.

The Principal Accountant advised that with regard to counterparties, the Authority can only invest a maximum of £5m or 30% of its total portfolio with one counterparty. Officers speak to various brokers who give the Authority good rates and information on who was performing better etc. Also, officers meet with treasury advisers on a regular basis to discuss what rates were available and what’s happening in the market.

The Principal Accountant advised that when he produced the next report he would add ratings.

RESOLVED –

That the Treasury Management Performance 2021/22 – Quarter 3 report be noted.