Agenda item

Treasury Management Report (June 2022)

Report number: FRS/WS/22/004 was considered by the Financial Resilience Sub-Committee on 11 July 2022.


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



[Councillor Peter Thompson arrived at 5.58pm during the consideration of this item.]


The Committee received Report No: FRS/WS/22/004, which had been considered by the Financial Resilience Sub-Committee on 11 July 2022.  The Service Manager (Finance and Procurement) gave a PowerPoint presentation which set out the investment activity for the first three months of the 2022-2023 financial year.


The 2022-2023 Annual Treasury Management and Investment Strategy sets out the Council’s projections for the current financial year.  The budget for investment income for 2022 to 2023 was £45,000, which was based on a 0.25% target interest rate of return on investments.


At the end of June 2022, interest earned during the first quarter of the financial year amounted to £90,077.11 against a profiled budget for the period of £11,250, a budget surplus of £78,827.11. 


External borrowing as at 30 June 2022 was £13,875,000, a reduction of £125,000 from 1 April 2022, which relates to the repayment plan for the recent PWLB £10m 40-year loan, with the council’s level of internal borrowing increasing slightly to £41,536,828 as a t 30 June 2022.  Overall borrowing, both external and internal was expected to increase over the full financial year.


The presentation set out cashflow forecasts; PWLB rates and forecast rate trends.


The Service Manager (Finance and Procurement) explained that future reports would include a section on “liability benchmark”.  At the end of 2021 a CIPFA consultation was issued with a proposal to include a new indicator for the “liability benchmark” in the Treasury Management Code.  The liability benchmark was effectively the net borrowing requirement of a local authority, plus a liquidity allowance over the long-term life of any external loans.  This showed the funding position of a local authority after taking into account reserves and the working capital cash position.  It then measured current and committed external borrowing against that need and reflected the current capital programme.


The Sub-Committee had scrutinised the investment activity for 1 April 2022 to 30 June 2022, and asked questions to which responses were provided.


The Performance and Audit Scrutiny Committee considered the report and asked questions to which responses were provided.  In particular discussions were held on forecast rates; interest rates, external borrowing and the Western Way Development.


In response to a question raised on when the interest forecast was made, officers explained that forecasts were done every year as part of the annual budget setting process based on current and predicted interest rates at that point in time.

In response to a question as to whether the council should consider further external borrowing whilst interest rates were still low, officers explained the council could reasonably go out to the market and fix interest rates.  However, the markets were currently volatile and there was the uncertainty of a recession.  Therefore, our external advisors were not recommending any long-term borrowing at this moment in time.


In response to a question raised relating to the £5m loan made to Thurrock Borough Council in December 2021 and the recent article by the “Bureau of Investigative Journalism”, officers advised that the exposure to the council was considered low.  Advice from Arlingclose was that clients with an existing exposure to Thurrock retain all the standard protections for lenders to local authorities.  All authorities, including Thurrock had access to the PWLB for refinancing irrespective of other activity.  Therefore, the risk of lending was at worst a delay in receiving funds back without interest, rather than a loss of principal.


Councillor Robert Nobbs then moved the recommendation, which was duly seconded by Councillor Victor Lukaniuk and with the vote being unanimous, it was




That subject to the approval of Cabinet and Council the Treasury Management Report (June 2022), being Report number: FRS/WS/22/004, be approved.



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