Agenda item

Treasury Management Update


Council approved the Council’s 2021/22 Investment Strategy in February 2021 (Minute CB20/99 refers).   The Investment Strategy required regular reports to be presented to this Committee on the Council’s treasury management activities. Members were also reminded that investment activity was also reported through the Members’ Bulletin. In managing its treasury management activities, the Council followed the Ministry of Housing, Communities and Local Governments’ investment guidance and the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Code of Practice on Treasury Management (revised 2017). 


The report provided an update on a number of areas as follows:


           The Council made its own investments through the use of call and deposit accounts with major financial UK institutions. It also held investments totalling £8 million in Property Funds (£5 million in the Churches, Charities, Local Authorities’ (CCLA) Property Investment Fund and £3 million into the HERMES Property Investment Fund). 

           The Council held £32.3m of investments at 30 June 2021. The total income from investments was forecast at £350,000, which was £26,000 higher than the budget.  The largest returns were from the Council’s property funds, which were delivering an average rate of return on investments of between 3.64% and 4.14%.  However, Members noted that the ongoing pandemic crisis could adversely affect future returns.

           There was £11.810 million of borrowing at 30 June 2021 and the expected Capital Financing Requirement (CFR) was £66.419 million.

           The Council’s capital programme, estimated CFR requirement for 2021/22 and borrowing portfolio were shown in Appendix B to the report. Members noted that the Capital Programme was in the process of being updated to reflect the 2020/21 outturn and other changes.

           The Council invested in the economic regeneration of Rother through its Property Investment Strategy (PIS) and Members were updated with the expected income from the non-Treasury Investments.

           The budget for rental income from all investment properties was £1,766,780.  This was made up of £800,480 for the existing assets and £966,300 for the properties purchased through the PIS. 

           This equated to a 6.25% gross return on the value of all properties including those purchased under the PIS. Rent arrears arising as a result of the pandemic had so far been minimal, but economic conditions remained challenging and further write-offs could not be ruled out.

           Lockdown restrictions continued to be eased across the country as it returned to economic normality. However, various support packages announced in the budget statement on 3 March 2021 had either finished or were due to finish by October 2021, which could adversely impact the Council’s cash position in terms of reduced Council Tax and Business Rates income and increased Housing Benefit claims.  The Chancellor’s budget statement in March 2021 also indicated a cut of £4 billion on public service expenditure, which could have serious implications for the Council’s future financial position.

           The Bank of England base rate remained unchanged at 0.10% and Public Works Loan Board rates had also reduced in recent weeks.  Rates were still extremely attractive should the Council need to borrow to finance capital expenditure in the near term.


The investment activity during the year conformed to the approved strategy, and the Council had no liquidity difficulties. The investment environment for treasury activities remained difficult with absolute returns continuing to be low. The diversification into Property Funds had increased the net overall return but was less liquid and carried greater capital risk than other investments.


RESOLVED: That the report be noted.


(When it first became apparent, Councillor Thomas declared a Personal Interest in this matter as a Company Executive Director for Alliance Homes (Rother) Ltd. and in accordance with the Members’ Code of Conduct remained in the meeting during the consideration thereof).

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