Agenda item

Treasury Management Report - September 2021

Report number: FRS/WS/21/005 was considered by the Financial Resilience Sub-Committee on 8 November 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/21/005, which had been considered by the Financial Resilience Sub-Committee on 8 November 2021.  The Service Manager (Finance and Performance) provided a verbal update on the Sub-Committee’s consideration of the report, which provided a summary of investment activity for the first half of the 2021-2022 financial year.


The 2020-2021 Annual Treasury Management and Investment Strategy 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 on a 0.25% target interest rate of return on investments.


At the end of September 2021, interest earned during the first half of the financial year amounted to £34,122 against a profiled budget for the period of £22,500, a budget surplus of £11,622. 


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 internal was expected to increase over the full financial year, but not by as much as was originally budget for. 


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. 


The Service Manager (Finance and Performance) referred the committee to paragraph 4.5 of the report, which set out the forecast for the council’s Capital Financing Requirement (underlying need to borrow) over the next three years.  The council, along with Arlingclose would continue to explore alternative sources of borrowing to ensure the council was ready to externally borrow in the most advantageous way, when it needed to.


Attached at Appendix 1 to the report was Arlingclose economic and interest rate forecast. 


The Sub-Committee has scrutinised the report on 8 November 2021, 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; and lending monies to other local authorities as set out in the report.


The Performance and Audit Scrutiny Committee scrutinised the report in detail and asked questions to which responses were provided.  In particular detailed discussions were held on external borrowing and what was the councils trigger point in borrowing externally, as inflation was on the rise and interest rates remained historically low. 


In response to a question raised on what the trigger point might be to borrow externally, officers advised that about £23m needs to be returned to central government next year which could be a trigger in exercising the need to borrow externally.


The Committee suggested the council needed to get some interest rate certainty now and should be looking to lock in the low borrowing rates, externalising our underlying need to borrow.  In response, the Cabinet Member for Resources and Property welcomed the Committees comments on external borrowing.


It was then proposed by Councillor Nick Clarke, seconded by Councillor Peter Thompson, and with the vote being unanimous, it was:


          RECOMMENDED: That


1)          Subject to the approval of Council, the Treasury Management Report (September 2021), as contained in Report number: FRS/WS/21/005, be approved.


2)          The Committee recommends to Cabinet the externalisation of our underlying need to borrow in order to manage the Councils interest rate risk exposure.






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