Agenda item

Treasury Management 2021/22 Annual Report

This matter is the responsibility of the Portfolio Holder for Communications and Corporate Resources, Cllr Benet Allen


Report Author: John Dyson, Corporate Finance Manager


The purpose of this report is to provide the Committee with an update on the Treasury Management activity of the Council and performance against the Prudential Indicators in respect of the 2021/22 financial year.



John Dyson, Corporate Finance Manager introduced the report:

·       This is an annual report which is brought to this committee before going to Full council and covers the reporting requirements under the Chartered Institute of Public Finance and Accountancy (CIPFA) Prudential Code and the CIPFA Code of Practice on Treasury Management.

·       The committee is asked to note the report which is based on the Council’s treasury management position as at the 31 March 2022.

·       The committee is also asked to endorse the recommendation already formed by the Executive committee to reduce the approved borrowing limit by a sum of £35m in 2022/23. The recommendation is brought to this committee as well because the limit forms part of the Capital Investment and Treasury Strategy which was passed through this committee and then Council in March this year. 

·       The Council employs the services of Arlingclose as Treasury Management advisors, and the report contains their commentary setting out the external context.

·       The report includes tables giving a high-level view of investment and borrowing portfolios as at the year end 31 March 2022.  

·       In the last year there has been the addition of new borrowing to finance the acquisition of the final tranche of commercial investment properties, £75m new or replacement borrowing.

·       The size of our overall borrowing portfolio has grown by £18m year on year.

·       Our investment portfolio amounts to nearly £40m as at 31 March 2022.

·       Arlingclose report that our investment return when compared to their 121 Council clients is 3.87% compared to 2.1%

·       Corrections to be made to table 6 on page 83 and the rate of return column for 31 March 2022. Where it says 1.83% amend to 3.87%. Across similar local authorities amend from 1.18% to 2.38%. Across all local authorities amend from 0.97% to 2.1%. We were very much understating the return we are achieving on our investments overall.

·       One other typographical error paragraph 6.1 on page 79 the first line reads as the council’s net cash investments are £77.03m but this needs to be amended to £79.03m. That then corresponds with table one.


During the debate, discussion took place around:

·       The high rates of interest for some of the Public Works Loans Board (PWLB) loans e.g. where we borrowed at rates of 8.38%, 7.38%, 6.63% and £4.25%, which stand out as being anomalies compared to the rest of the table.  Officers confirmed that the loans referred to were taken out some years ago with some as far back as 1996.

·       Whether the interest rate on the account with National Westminster Bank would increase given interest rates rising generally.

·       What the Buckinghamshire council loan was for and whether it is common to borrow from other Local authorities. 

·       Whether borrowing from another local authority was cheaper than a PWLB loan

·       What happens on vesting day in terms of existing borrowing and investments, including loans totalling £5.069m to local businesses, charities, partnerships and sports clubs.

·       Officers confirmed that borrowing and investment commitments will transfer to the new authority.  Officers are working with the County Council and the other districts to make ensure the optimum position on vesting day, particularly in relation to cash flow

·       Whether the notional average interest rate of 1.5% would be revised given what is happening to the base interest rate.


The Committee resolved to approve the recommendations in the report:


1.    To note the Treasury Management activity for the 2021/22 financial year and compliance with the Prudential Indicators


2.    To endorse the recommendation made by the meeting of the Executive Committee on 20 July 2022 to Full Council to approve a reduction of £35m to the Approved Borrowing Limits in the Capital, Investment and Treasury Management Strategy for 2022/23 reflecting a reduction in capital financing requirement for expenditure no longer required (as referred to in paragraphs 6.33 and 6.34 of this report).


(Proposed by Cllr Simon Coles and seconded by Cllr Ed Firmin)


Supporting documents: