Agenda item

Council approved the Council’s 2021/22 Investment Strategy in February 2021.  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 £8m in Property Funds (£5m in the Churches, Charities, Local Authorities’ (CCLA) Property Investment Fund and £3m into the HERMES Property Investment Fund). 

•           As at 30 September 2021, the Council’s total investments were estimated to be about £44m with £18m invested in short term call accounts and Property Funds. The remaining £26m was held in the General account. Since the last quarter, additional borrowing of £6.3m had been taken out.  Members requested that a range for total investments be reported in future rather than an end of period figure, which would provide a better understanding of the market.

•           The total income from investments was forecast at £326,000,  mainly achieved from the property funds, which were delivering an average rate of return on investments of between 3.31% and 3.77%. 

•           There was £18.110m of borrowing at 30 September 2021 and the expected Capital Financing Requirement (CFR) was forecast to increase to £64.096m by 31 March 2022.

•           The Council’s capital programme, estimated CFR requirement for 2021/22 and borrowing portfolio were shown in Appendix B to the report. It had been forecast to exceed the operational financial boundary, but this now appeared unlikely due to the slippage in the capital programme.  The projections were being updated and a recommendation for a revised borrowing limit would be made to full Council if required.

•           The budget for rental income from all investment properties was £1,766,780.  This equated to a 6.25% gross return.  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.

•           Economic activity continued to bounce back towards pre-lockdown levels and the support packages announced in the Chancellor’s 3 March 2021 budget statement had either finished or were due to finish by the end of October 2021. It remained to be seen whether there would be a further negative impact on the Council’s cash position, but officers continued to monitor the situation and report back to Members.

•           The Chancellor was due to announce his Autumn budget statement on 27 October 2021, which would also include a three-year spending review statement that could have had a further impact on the Council’s cash position.

•           The Bank of England base rate remained unchanged at 0.10% and Public Works Loan Board rates remained very low, hence the decision to borrow up to the maximum CFR position.

The investment activity during the year conformed to the approved strategy, and the Council had no liquidity difficulties.

RESOLVED: That the report be noted.

(When it first became apparent, Councillor J. Barnes declared a Personal Interest in this matter as Vice-Chairman and 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).

(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).