(Strategic Director Corporate and Section 151 Officer) To consider and provide comment on the treasury management annual outturn report 2020/1.
The Interim Chief Financial Officer, C Hartgrove reminded the Committee that three year Treasury Management Strategy was considered by the Committee on 28 January 2019 and agreed by full Council on 21 February 2019, this report was the outcome of that strategy for 2021/22 and it considered investment, borrowing and performance against relevant indicators.
Borrowing at had increased from £224.5m to £261.7m in the year to 31 March 2021, £23m of the borrowing was short term borrowing from other local authority and the remainder was long term borrowing exclusively form the Public Works Loan Board (PWLB). Investments had reduced from £24.7m to £11.8m during the same period, £9.1 m was held in Money Market Funds and £2.7m in the Council’s main bank account. Non-treasury investments were detailed, commercial property investments were £147.3m up from £138m the previous year, with a net income of £6.8m an increase from £6.2m the previous year. Prudential and treasury management indicators were met, excepting the investment limit of £3m which was breached due the impact of Covid on the anticipated cash requirements and the receipt of major government funding allocation.
The Committee queried if there was an inconsistency on the short term borrowing increasing by £48.7m in the treasury management summary (Table 2 of the report) and the short term borrowing position (table 3 of the report) increasing by £9m, and if repayment was required after the 83 days maturity. Loans were repayable at maturity, these could be agreed to be rolled over as they would be replaced.
Post meeting update
“the two tables are correct and were showing different things. Table 2 provided an analysis between long-term and short-term borrowing whereas Table 3 analysed the borrowing by lender. The big ‘difference’ relates to a substantial variable rate loan that is due to mature in March 2022. Because that loan is within 12 months of maturity, it’s classification changes from long to short term borrowing, but of course the lender remains constant; this is what created the impression of an apparent inconsistency”
The Committee asked why borrowing was high, what the interest rates were and how much was paid in interest. The majority of borrowing was taken out in 2012 as part of the housing subsidy settlement when local authorities took on external borrowing, there were a range of different, mainly fixed, rates of interest that reflect the time the loan was taken out, and absolute figure would be provided.
Post meeting update
“The following sums in interest were paid in 2020/21:
· General Fund - £1,084,537
· Housing Revenue Account £5,403,235
· Total - £6,487,772”
The Committee sought clarity on the refinancing of a loan that matured in March 2022s. The loan would be redeemed and the nett position would be that this loan would reduce and there would be a lower interest rate by refinancing through short term loans.
The Committee asked in the unlikely event that there was no access to short term borrowing could long term funds be used or money be taken back from Qualis. The Committee was advised that was highly improbable that lending could not be accessed through short term inter authority borrowing or PWLB, and that money from Qualis could not be called back as this would be in breach of a legal agreement.
The Committee noted the Treasury Management Outturn Report for 2020/21 and recommended to full Council.