Agenda item

Report number: FRS/WS/21/003 was considered by the Financial Resilience Sub-Committee on 12 July 2021.

The Service Manager (Finance and Performance) will update the Committee verbally on any issues or recommendations arising from the consideration of this report.

The Committee received Report No: FRS/WS/21/003, which had been considered by the Financial Resilience Sub-Committee on 12 July 2021.  The Service Manager (Finance and Performance) provided a verbal update on the Sub-Committee’s consideration of the report, which summarised the Annual Treasury Management and Financial Resilience Report (2020 to 2021).

The report included tables which summarised the interest earned, and the average rate of return achieved; treasury management investment activity during the year; investments held as at 31 March 2021; capital borrowing budget 2020 to 2021; borrowings and temporary loans.

The budget for investments income in 2020 - 2021 was £131,000 which was based on a 0.65% target average rate of return on investments.  At the end of March 20210 interest actually earned during the financial year totalled £96,767 (average rate of return of 0.354%), against a budget for the year of £131,000, a budgetary deficit of £34,233.  The deficit related to the continued low interest rates as a result of the Covid-19 pandemic which started in mid-March 2020.  The deficit formed part of the financial outturn report presented to the Committee on 27 May 2021 (report number: PAS/WS/21/008). 

The report also included assumptions on borrowing costs for the capital projects included within it and was based around four main projects:

-      West Suffolk Operational Hub;

-      Mildenhall Hub;

-      West Suffolk Operational Hub; and

-      Investing in our Growth Fund.

During the financial year there had been no requirement to borrow externally, due to the Authority’s cash balances, over and above the long-standing £4m loan relating to the Newmarket Leisure Centre.  Therefore, the only interest payable for the year was £169,600 relating to this loan. The total borrowing (expressed as the Authority’s capital financing requirements) between both internal and external (£4m) total £49.4m at 31 March 2021.

The report also included at Appendix A the CIPFA Financial Resilience Index 2021.  The index showed a Council’s position on a range of measures associated with financial risk.  The graphs showed West Suffolk Council within the context of neighbouring Councils within Suffolk.

The Sub-Committee had scrutinised the Annual Treasury Management and Financial Resilience Report (2020 to 2021), and asked questions to which responses were provided.  Discussions were held on the Councils asset base and rental income; and the merits of currently borrowing internally verses externally to fund capital projects.

The Performance and Audit Scrutiny Committee considered the report and asked questions to which responses were provided.  In particular discussions were held on external borrowing, low interest rates and the true cost of borrowing internally verses forgone interest.

In response to a question raised asking why the council had not yet borrowed externally whilst the interest rates were low to fund large projects, officers explained the council was in constant contact with its treasury advisors, Arlingclose about future borrowing.  At present, there was no immediate urgency to borrow externally as internal cash balances were available and the advisors felt current rates available would continue for some time, but the situation was actively being monitored. 

Officers further explained that all capital projects had been evaluated on external borrowing costs, with contingencies being built into each projects business case.

Members did not raise any issues at this time to be brought to the attention of Cabinet. 

It was then proposed by Councillor Victor Lukaniuk, seconded by Councillor Robert Nobbs, and with the vote being unanimous, it was:

          RECOMMENDED:

That subject to the approval of Cabinet and Council the Annual Treasury Management and Financial Resilience Report (2020 to 2021), being Report No: FRS/WS/21/003, be approved.