Prior to presenting the report, the Service
Manager (Resources and Performance) introduced Ben Fiske (Projects
and Capital Manager) who managed the Council’s Treasury Team
and would be attending future meetings.
The Sub-Committee received Report No:
FRS/WS/19/004, which reported on the treasury
management activities for the period 1 April 2019 to 30 September
2019.
The total amount invested at 1 April 2019 was
£42,750,000 and at 30 September 2019 it was
£46,900,000.
The 2019-2020 Annual Treasury Management and
Investment Strategy Statements approved on 19 February 2019, sets
out the Council’s projections for the current financial
year. The budget for investment income
for 2019-2020 was £142,141 which was based on a 0.90% target
average rate of return on investments.
At the end of September 2019, interest earned
during the first six months of the financial year amounted to
£194,249 (average rate of return 0.793%) against a profiled
budget for the period of £71,070 (average rate of return
0.90%) creating a budgetary surplus of £123,179. The surplus related to higher than expected cash
balances due to slippages in the Capital programme and favourable
interest rates secured on investments carried over from the
previous councils.
As at the end of September 2019, a total of
£14.5m had been borrowed internally from available cash
balances. This had meant the Council
had not had any additional borrowing over the long-term £4m
Barclays loan.
The report also included assumptions on
borrowing for the capital projects included within it, alongside
the current £4m external borrowing in respect of the previous
Newmarket Leisure Centre building. This
new borrowing requirement was based around three specific projects,
as per their agreed business cases:
-
West Suffolk Operational Hub, Bury St Edmunds
-
Mildenhall Hub
-
Investing in our Growth Fund.
The report also included a summary of the
capital borrowing budget for 2019-2020; a summary of capital
borrowing for quarter two; borrowing and income –
proportionality; current borrowing and other market considerations
(central government’s announcement on 9 October 2019 to raise
the margin applied to Public Works Loans Board (PWLB) loans by
1%).
At the beginning of the year it was assumed
that the council would need to borrow £63.4m for
investments. However, the forecasted
borrowing assumption had decreased to £39m for the financial
year 2019-2020.
The Sub-Committee scrutinised the report in
detail and asked a number of questions to which comprehensive
responses were provided.
Councillor Victor Lukaniuk referred to the
summary of capital borrowing table and suggested the word
“investments” be replaced with “borrowing”,
so the row at the bottom of the tables reads “total value of
borrowing”, as he felt how it was currently
worded was misleading.
In response to a question raised regarding the
PWLB loan increase, members were informed that even with the 1%,
the councils business cases were still valid as contingencies had
been built-in, just in case there was a change in interest
rates.
Officers explained that the reason for Central
Government increasing the margin applied to PWLB was to curtail
councils from ...
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