Agenda item

Treasury Management Mid Year Report 2020-21 (Agenda item 11)

Report of Maxine O’Mahony, Executive Director for Strategy & Governance.


The Chief Accountant advised that this report, reported on the activity for the current year thus far.


The main area to note was the lack of investment returns.  Although the interest rate was 0.1% the Council was struggling to get anymore than 0.01% hence the very low returns.


The Council also had much higher balances of cash than expected mainly due to the Government grants of which over £30m had been paid to the Council from the start of April 2020 to deliver grants to small businesses, retail, hospitality and leisure facilities. Many balances had to be kept for a short period of time that had proved difficult to find investment counterparties particularly when the Government DMO started to charge negative interest rates for any balances held for less than a week. However, on occasion, deposits had to be placed with the Debt Management Office (DMO) at a negative interest rate (i.e. the Council was charged to place the funds) but the total cost to date was approximately only £50.  The Chief Accountant was pleased to inform Members that since then, the Council had managed to open a few more accounts and therefore funds were no longer being placed at negative rates.


The Council also took the little discretion it had on the Policy and had a £6m balance with one local authority where limits were normally £5m just through to February to help manage some of the excess cash in the short term.


Appendix A of the report contained the commentary from the Council’s Treasury Advisors that was more up to date in comparison to the previous report. 


During the year, the Capital Programme had been amended and some of the projects had been moved into the next financial year as part of the approved budget mainly due to pressures on staff and resourcing in respect of the pandemic earlier in the year.


Councillor Kybird, the Vice Chairman of the Governance & Audit Committee asked if there were any risks in placing monies with other local authorities. Members were informed that lending with other local authorities was classed as very low risk due to them legally having to pay back all its debts.


The Chairman hoped the Council had not invested its cash in the two authorities that were having issues around their financial stability.  Members were informed that it had not.


Councillor Birt drew attention to page 64 of the agenda pack in particular the capital expenditure by Service.  He had noticed a great deal of variance that the Council was moving around particularly under Commercialisation and Place and he wondered what confidence the Council had in these figures and how much this might change as it moved forward.


The Chief Accountant advised that this was the best estimate at the time, and she agreed with Councillor Birt that these numbers would most probably change particularly with the larger value projects. However, at the time of writing these were best estimates of the time frame as was dependent on so many factors going into the new year such as local lockdowns and enhanced restrictions, all would have impact and was difficult to predict.


The mid-year report and information on treasury activity was otherwise noted.

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