The Sub-Committee received Report number
FRS/WS/21/005, which provided a comprehensive assessment on
investment activities for West Suffolk Council from 1 April 2021 to
30 September 2021.
The Council held investments of
£52,000,000 as at 30 September 2021. Interest achieved in the first half of the
financial year amounted to £34,122 against a budget for the
period of £22,500, a budgetary surplus of
£11,622. Although interest rates
continued to be low as a result of the Covid-19 pandemic, which
started in mid-March 2020, the Council had more cash invested
during the period leading to higher overall interest achieved
despite the lower rates.
External borrowing as at 30 September 2021
remained at £4m with the Council’s level of internal
borrowing increasing slightly to £48,039,000 as at 30
September 2021. Overall borrowing, both
external and internally was expected to increase over the full
financial year, but not by as much as was originally budgeted
for.
Borrowing costs (interest payable and MRP) for
the year were forecast to be £965,804 against an approved
budget of £3,135,850, although this could change if more
external borrowing was undertaken than was currently
forecast. The difference would be
placed in the capital financing reserve to use towards future
interest rate fluctuation.
The 2021 to 2022 Annual Treasury Management
and Investment Strategy Statements sets out the Council’s
projections for the current financial year. The budget for investment income for 2021 to 2022
was £45,000, which was based o a 0.25% target average rate of
return on investments.
The report also included a summary of the
borrowing activity during the period; borrowing strategy and
sources of borrowing; borrowing and capital costs –
affordability; borrowing and income – proportionality;
borrowing and asset yields; CIPFA consultation on prudential code
and market information.
Attached at Appendix 1 to the report was
Arlingclose economic and interest rate forecast.
The Sub-Committee scrutinised the report in
detail and asked questions to which responses were
provided. In particular detailed
discussions were held on the Council preparing itself for external
borrowing by the end of the financial year, whilst interest rates
were at an historic low. Officers
wished to reassure the Sub-Committee that any new borrowing would
be on a repayment basis. Also, the
Council’s Treasury advisors (Arlingclose) continued to advise
the Council that rates were likely to continue to remain low so
there was perhaps not an urgency to externally borrow at the
present time. Any future external
borrowing decision would be made with the best information to
hand.
In response to a question raised relating to
lending monies to other local authorities as set out in the report,
officers explained this was being done on a short-term basis to
assist other local authorities cover their short-term cash flow
needs and advice was taken from the advisors at the time of making
the investments.
In response to a question raised on where the
Council’s cash was invested, officers reassured the
Sub-Committee that where Councils could place money had
significantly reduced and could only be held with secure
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