The Council’s 2021/22 Investment Strategy required regular reports to be presented to the Audit and Standards Committee on the Council’s treasury management activities. In managing these, the Council had 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.

The investment activity to date conformed to the approved strategy and the Council had had no liquidity difficulties. Investment activity was also reported to Members through the monthly Members’ Bulletin.  Members noted that the 2021/22 outturn figures were draft and also subject to audit, although no material changes were anticipated at that point in time.

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

•           As at 31 March 2022, the Council’s total investments were approximately £51m, with investments of £18m in Call accounts and Property Funds. The remaining £33m was held the General account, Members were asked to note that a significant element of this balance related to cash owed to other public bodies, e.g. council tax precepts, shares of business rates, unspent Government grants.  Officers reviewed interest rates on accounts daily.

•           The Council’s investments yielded interest income of £350,000 in 2021/22 mainly from its Property Funds, which yielded returns of between 3.41% and 3.68%. The investment portfolio and Property Fund values were detailed in Appendix A to the report.

•           The Council’s Capital Financing Requirement (CFR) showed how much of its capital expenditure was financed by borrowing and it was summarised in Appendix B to the report. The pandemic again slowed the pace of the capital programme delivery in 2021/22 so the CFR only increased by £7.492m against a budget of £48.764m.

•           The value of outstanding loans as at 31 March 2022 was £27.312m.  This was £1.864m higher than the CFR meaning the Council was ‘over-borrowed,’ but this was only for a short period of time until further capital expenditure was incurred in 2022/23. The reason for this was reported previously and related to new borrowing taken out during the last financial year.

•           The ratio of Net Financing Costs to the Net Revenue Stream was 1.74%, which was 6.69% lower than the original budget due to the delay in the capital programme delivery.

•           The Council’s non-treasury investments were detailed in the report and split between existing assets and those purchased through the Property Investment Strategy (PIS).  Non-PIS assets yielded a 5.05% return on investment and PIS assets a 3.17% return.  It was explained that the difference in yields was because non-PIS assets had no outstanding financing costs attached to them.  Appendix D gave further detail, including the total cost of purchase as well as running costs.

•           The Bank of England’s announcement since the previous report to increase the base rate to a 13 year high of 1%, (increased by a further 0.25% more recently) had been mirrored by an increase in the Public Works Loans Board lending rates, which would make future borrowing more expensive.  Officers would continue to monitor closely any future changes and factor them into the Council’s Medium-Term Financial Plan, which would be reported to Members later in the financial year.

•           Other economic issues such as the recent procurement of a new electricity supply contract, the cost of living crisis possibly impacting council tax collection rates and global events, such as the Russian invasion of Ukraine, could have significant impact on the Council.

Members congratulated the Chief Finance Officer on his foresight to borrow in advance at low interest rates.

The investment activity 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-Chair and Company Executive Director for the Council’s Housing Company 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 Chair and Company Executive Director for the Council’s Housing Company and in accordance with the Members’ Code of Conduct remained in the meeting during the consideration thereof).