To report on the Council’s treasury management activities and Prudential Indicators for 2019/20.

RESOLVED that –

(a)    the Treasury Management performance position for 2019/20 be noted; and

(b)    the Prudential and Treasury Indicators for 2019/20 be approved.

The Cabinet gave consideration to a report of the Corporate Finance and Governance Portfolio Holder (A.7) which reported on the Council’s treasury management activities and Prudential Indicators for 2019/20. The Treasury performance figures for the year were set out in Appendix A to the Portfolio Holder’s report with the Prudential Indicators attached as Appendix B to that report.

Cabinet was informed that borrowing and investments had been undertaken in accordance with the 2019/20 Annual Treasury Strategy that had been approved by Council at its meeting held on 26 March 2019.

The Council’s borrowing position was summarised as follows:-

Cabinet was made aware that no external borrowing had been undertaken in 2019/20 for either the General Fund (GF) or the Housing Revenue Account (HRA).

The Council’s Investment Position was summarised as follows:-

It was reported that the amount of interest earned from investments had increased during the year as rates had risen slightly although the bank base rate had remained at 0.75% until 11 March 2020 when, due to the Covid-19 pandemic it had been cut to 0.25%, with a further cut to 0.10% on 19 March 2020. However, compared to historic interest figures, the 2019/20 return still remained relatively low because of the continuing underlying low interest rate environment. The impact of the latest base rate reduction to 0.1% would be felt in 2020/21. Estimated income had increased during the year from the original estimate of £0.336 million to £0.556 million, with the outturn figure being £0.583 million as set out in the table above.

Members were reminded that the Council continued to hold one property within its Commercial Investment Portfolio, which had a balance sheet value at 1 April 2019 of £2.300 million. This ‘book value’ had been reduced by the Council’s appointed valuers to £2.155 million at the end of 2019/20. However, this was an ‘accounting’ valuation and not a direct value that could be achieved on the market if that property was sold. In-line with the budget, rental income of £0.211 million had been earned on the property in 2019/20.

Cabinet’s attention was drawn to the fact that during 2019/20 there had been one occasion when the treasury management limits had been exceeded. The maximum amount that could be invested with a single Local Authority was £6million. However, due to human error that limit had been exceed by £1million when a deal had been agreed with a local authority on 27 March 2020. Efforts had been made to find a replacement counter party, but this could not be readily achieved, so the Council had had £7million with this one borrower from 27 March 2020 until an investment of £2million held with them had matured on 6 July 2020. Given the relatively low risk that investments with other Local Authorities presented, there had been only a very limited credit risk and once balanced with the potential adverse impact on the Council’s reputation in the financial markets if it had tried to withdraw from a deal, the position had been deemed to be acceptable.

Having duly considered the treasury performance for 2029/20 together with the Prudential Indicators for that year:-

It was moved by Councillor G V Guglielmi, seconded by Councillor McWilliams and:-

RESOLVED that –

(a)    the Treasury Management performance position for 2019/20 be noted; and

(b)    the Prudential and Treasury Indicators for 2019/20 be approved.