Agenda item

Treasury Management Outturn Report 2020/21


The purpose of the report was to provide members with an update on the Treasury Management activity of Somerset West and Taunton Council and performance against the Prudential Indicators for 2020/21.


The Treasury management performance during the year reflected the agreed strategy for the Council.


The Council’s treasury management strategy for 2020/21 was approved at Full Council on 19 February 2020. The Council invested substantial sums of money and was therefore exposed to financial risks including the loss of invested funds and the revenue effect of changing interest rates. The successful identification, monitoring and control of risk remained central to the Council’s treasury management strategy.


Treasury risk management at the Council was conducted within the framework of the Chartered Institute of Public Finance and Accountancy’s Treasury Management in the Public Services: Code of Practice 2017 Edition (the CIPFA Code) which required the Council to approve a treasury management strategy before the start of each financial year and, as a minimum, a half-year and annual treasury outturn report. This report fulfilled the Council’s legal obligation under the Local Government Act 2003 to have regard to the CIPFA Code.


These reports were required to be adequately scrutinised by committee before being recommended to the Council. This role is undertaken by the Audit and Governance



The 2017 Prudential Code includes a requirement for local Councils to provide a Capital Strategy, a summary document approved by full Council covering capital expenditure and financing, treasury management and non-treasury investments. The Council’s latest Capital Strategy, complying with CIPFA’s requirement, was approved by Somerset West and Taunton Full Council on 30th March 2021.


Treasury management is defined as:

“The management of the local Council’s cash flows, its borrowings and its

investments, the management of the associated risks, and the pursuit of the optimum

performance or return consistent with those risks”.


Overall responsibility for treasury management remains with the Council with operational responsibility delegated to the S151 Officer. No treasury management activity is without risk; the effective identification and management of risk are integral to the Council’s treasury management objectives.


Commentary relating to the external context and economic analysis by Arlingclose, the Council’s treasury management advisors, can be found in Appendix A to this report.


During the debate the following comments and questions were raised:-


·         The consequences of the limits being exceeded by Arlingclose meant the risks were greater in investments held in money market funds.

·         There was also the risk that investments could encounter negative interest rates or next to no interest.

·         The committee were conscious of the risk elements involved and aware of the movements in the market.

·         It was questioned if the PWLB £105 million loans from the HRA was included in the loans? These were the longer term dated loans. The PWLB included HRA accounts.

·         It was questioned how the Council had responded to volatility and how this would continue to be addressed in the coming year. Regular updates were received to keep officers updated on the risk around Council investments.

·         Controls were in place to ensure future compliance so that limits on investments would not be exceeded.

·         Cashflow was monitored on a daily basis to ensure the best arrangement is achieved for cashflow purposes.

·         Borrowing could be undertaken for the purposes of lending to other parties, this could also be undertaken by the use of reserves if the Council preferred to use surplus funds for this.


The committee noted the Treasury Management activity for the 2020/21 financial year and compliance with the Prudential Indicators.

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