Cabinet had approved the Council’s 2021/22 Investment Strategy on 8 February 2021; this required regular reports to be presented to the Audit and Standards Committee on the Council’s treasury management activities. In managing these, the Council has implemented the Department of Levelling Up, Housing and Communities investment guidance and followed the Chartered Institute of Public Finance and Accountancy’s Code of Practice on Treasury Management. Investment activity was also reported to Members through the monthly Members’ Bulletin. 

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

·         As at 31 December 2021, the Council’s total investments were estimated to be about £53m with £18m invested in short term call accounts and Property Funds (PF). The remaining £35m was held the General account ( a significant element of which related to cash owed to public bodies, e.g. council tax precepts, shares of business rates).

·         The total income from investments was forecast at £280,000, mainly achieved from the PF, yielding returns of between 3.31% and 3.77%.

·         The pandemic had continued to slow the pace of the Council’s capital programme delivery and expenditure was forecast to be £15.348m in 2021/22.

·         The Capital Financing Requirement (CFR) was estimated to increase to £26.167m by 31 March 2022.

·         The value of outstanding loans was £27.312m of borrowing, meaning the Council now had an ‘over-borrowed’ position of £1.145m for a short period of time until further expenditure was incurred in 2022/23. This was due to further borrowing of £9.3 million taken out at an interest rate of 1.65% in addition to the £6.3 million of new borrowing taken out at 1.78% in the previous quarter, a deliberate decision to take advantage of extremely low interest rates;

·         The ratio of Net Financing Costs to the Net Revenue Stream was expected to be 2.03% based on current forecasts, which was 6.40% lower than the original budget of 8.43%. This was due to the delay in the capital programme delivery.

·         The budget for rental income from all investment properties was £1,817,780; the latest estimated outturn for 2021/22 was £1,915,936;  this equated to a 6.24% gross return. The PIS rental income exceeded the budget due to a lower than anticipated level of voids on the 16, Beeching Road site.

The investment activity conformed to the approved strategy, and the Council had no liquidity difficulties. Whilst economic activity continued its recovery to pre-lockdown levels, the overall situation remained very uncertain.  The cost of energy for domestic customers and commercial entities was set to increase significantly from April 2022 and the price of fuel at the pumps had already begun to rise. An increase of 1.25% percentage points on national insurance was also due in April 2022. Many council taxpayers would receive a £150 rebate on their 2022/23 bills as well as some limited support in relation to scheduled energy bill payments to partially alleviate the financial impact.

The Bank of England had increased the base rate to 0.50% since the last quarter update and further increases were predicted soon.  The current economic uncertainty had been exacerbated by the Russian invasion of Ukraine and its longer lasting impact on the global economic situation was still unclear.

RESOLVED: That the report be noted.