Issue - meetings

To consider the Executive Head of Finance’s Report No. FIN2027 (copy attached) which sets out the main activities of the treasury management and non-treasury investment operations during 2019/20.

The Committee received the Executive Head of Finance’s Report No. FIN2027 which set out the main activities of the Treasury Management and non-Treasury Investment Operations during 2019/20, and noted that prudential indicators for the 2019/20 financial year had been updated for all treasury management and non-treasury activity during 2019/20.

The Committee was advised that the report was a statutory requirement under the CIPFA Code of Practice on Treasury Management.  It was noted that, whilst the re-structuring of the investment portfolio during 2018/19 had improved diversification of funds and increased the yield on all treasury management investments by £344,000 from 2018/19, this was less than anticipated due to the down-turn in pooled fund interest at the end of March 2020 caused by COVID-19.  The impact of COVID-19 on the return on investments would be monitored closely in 2020/21.

Members were advised that the treasury team continually reviewed the borrowing strategy, weighing up interest rate levels and risk of refinancing.  During the 2019/20 financial year, short-term interest rates had remained low and were forecast to remain low.  However, borrowing levels had increased, raising refinancing risk.  To mitigate, a proportion of borrowing had been moved to one- and two-year durations. 

In respect of total borrowing, at 31st March, 2020 this was £90m, an increase of £28.8m from the 2018/19 year-end position.  It was noted that the increased level of borrowing had resulted in interest costs increasing by £772,000.

The Committee noted that as at 31st March, 2020 the Council’s non-treasury investments risk exposure was £113.6m of which £72.8m was funded via external loans, whilst the return of non-treasury investments was below the estimated return for 2019/20 due to the cost associated with commercial property being clarified during the financial year and the impact of COVID-19.

During discussion, the Executive Head of Finance responded to questions on investment activity, including investment in commercial property.

RESOLVED: That the Executive Head of Finance’s Report No. FIN2027 be noted.