The Council’s Investment Strategy required regular reports to be presented to the Audit and Standards Committee on its 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 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 report provided an update on a number of areas as follows:

•     As at 30 June 2022, the Council’s total investments were about £37m with £18m invested in short term call accounts and Property Funds. The remaining £19m was held in 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 £532,000 in 2022/23, mainly achieved from the Property Funds, yielding returns of between 3.52% and 3.72%.

•     Due to the recent increases in interest rates, higher than expected returns (£190,000) were predicted to be gained from call accounts.  The investment portfolio and Property Fund values were detailed in Appendix A to the report.

•     The pandemic again slowed the pace of programme delivery in 2021/22 however, it had already accelerated in the first quarter of 2022/23 and was expected to continue doing so throughout the year.  Members noted that the capital programme would again be reviewed for affordability as part of the Medium-Term Financial Planning process, which was more urgent than in previous years due to the current economic situation.

•     The value of outstanding loans was £27.152m of borrowing, well below the Council’s forecast CFR of £85.657m; the difference would decrease as the programme delivery accelerated and the Council’s borrowing requirement increased.

•     The ratio of Net Financing Costs (NFC) to the Net Revenue Stream was predicted to be 5.69% by the end of the financial year, which is 6.13% lower than the original budget. This was due to the delay in the capital programme delivery and the additional investment income achieved from the Property Funds and interest on call accounts, which reduced the NFC. 

•     The budget for rental income from all investment properties was £1,969,165; the Quarter 1 forecast income was £2,569,865.  The additional Non-Property Investment Strategy (PIS) rent income shown in the report was due to the rental income from the second floor of Amherst Road.  The additional PIS rent income was due to the purchase of Buckhurst Place.  Both leases were agreed after Council had approved its budget. Appendix D to the report gave more detail on those properties purchased as part of the PIS.

•     Recent borrowing had been maximised due to the low interest rates rather than to finance specific asset acquisitions.

There had been no significant developments since the draft 2021/22 Treasury Management update reported to the Committee on 20 June 2022.  However, the economic outlook remained extremely uncertain and difficult to predict. Officers would continue to monitor closely all economic activity and report any major changes to Members at the earliest opportunity.

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

RESOLVED: That the report be noted.