Treasury Management Mid-Year Review
The Principal Accountant (Housing & Exchequer) provided the Committee with a mid-year review update report on treasury management activity undertaken during the period April to September 2021.
The Principal Accountant (Housing & Exchequer) updated Members on the report and highlighted key points:-
- The Treasury Management Strategy Statement was approved by Full Council in February 2021.
- The 2021/22 Capital Programme is just over £73m of which £20m had been spent to date and the current forecast for the year is £45.5m. £18.2m is to be funded from existing resources. External borrowing will be sought with a forecast of £27m. The Capital Finance requirement for the year is approximately £227m. If the operational boundary needs to be amended in regards to The St George’s Centre transaction, this will be discussed with the Chair and Members of the Finance and Audit Committee and in due course will be required to be approved by Full Council.
- Loans totalling £12.4m had been secured from other Local Authorities. The pre-arranged loans, as at 30 September totalled £6m and were secured at a much more beneficial rate than would be achieved if borrowing were to be secured today.
- Investment total £56.5m is split between those funds that are managed internally and externally.
- With regard to investment performance, the Council had outperformed the benchmark for the last six month by 26 basis points.
- In recent weeks, Gravesham had been able to take advantage of the uncertainty of the potential interest rate rise and had secured an investment at 0.415% for £8m. The Council would only have managed a 0.3% has this been invested today.
- As of 30 September, the Council acted in line with all the prudential limits in the Annual Strategy and no breaches had been incurred.
- The report seeks to extend the term deposits with unrated counterparts: ie. Local Authorities, Police Authorities, Fire Authorities and Housing Associations to extend their maturity profile from 2 years to 50 years. This approval for this increase is required to be sought from Full Council in order to lend up to £2m for the Elizabeth Huggins Cottage Charity for the development on the site.
- The capital value of the Property Funds have recovered Covid losses and the capital value of Multi Asset funds are continuing to make steady progress in recovering. The total capital value of all externally managed funds is now above the sum initially invested.
Following Members comments and questions, the Principal Accountant (Housing & Exchequer) highlighted the following:
· It was explained that the latest loans are fixed interest rates and fixed duration. There is a policy in the TMSS which states that the Council will not borrow more than, or in advance of its need, purely in order to profit from the investments of the extra sums borrowed. Currently the inter Local Authority market offers a much better rate than the Public Works Loan Board. Loans that had been taken out recently have been secured from other Local Authorities. Where possible the Council looks to pre arrange borrowing as early as possible as this has worked in the Council’s favour in the past. Regarding the Elizabeth Huggins Cottage Charity some residents had been paid compensation, however this compensation is being facilitated through the trust itself. The Principal Accountant explained that no money has been given to the charity for the construction works. As agreed by Full Council, there is a loan facility in place for up to £2m. The Council and Elizabeth Huggins Cottage Charity has secured monies from Homes England. Loan amounts will only be paid as and when the charity submit a claim along with invoices on behalf of Elizabeth Huggins. Due diligence was carried out on the scheme and it was deemed viable and this will continue to be monitored.
Resolved that the Finance and Audit Committee noted the contents of this report and recommended to Full Council that the amendment to the non-specified investment counterparty criteria as set out in Para 10.5 is agreed.
The Finance and Audit Committee delegated responsibility to the Chair of the Committee to amend the authorised limit and operational boundary as needed in response to the final accounting treatment agreed in respect of the St George’s Centre transaction and make any necessary recommendations to Full Council.
- Treasury Management Mid Year Review 2021-22, item 130. PDF 186 KB
- Appendix 2 - Investments as at 30 September 2021, item 130. PDF 83 KB