Agenda item

Treasury Management Outturn Report

To note and approve the annual Treasury Outturn Report 2020/21.

Minutes:

Andrew Vallance introduced the report. He explained that there had been slightly less borrowing across the year due to cash balances which was the result of Covid-19 funding from central government. This has been distributed to businesses as business rate grants which had helped to improve cash flow. 70% of borrowing remained short as short money was extremely cheap at the moment. The council was constantly reviewing its borrowing portfolio and at some point officers would look to borrow for 5-10 years at slightly higher rates in order to lock in low rates. Therefore, if it was beneficial the council would move some of its short term borrowing to medium term borrowing. In terms of investment, rates had been low at near 0% which meant that investment income had been low. Andrew Vallance reported that there had been one breach of the counterparty limit for eight days, with £8 million invested in a money market fund where the counterparty limit was actually £5 million. However, money market funds were low risk investments.

 

Andrew Hill had noted that in the mandatory consultation box at the end of the report, 10 out of the 12 officers listed had not been sent the report. He asked what the point of the consultation was if officers did not review the report.

 

Andrew Vallance explained that it depended on each report which specific officers the report was sent to for consideration. The consultation box was under review and would be updated for all reports in due course.

 

Andrew Hill asked about the counterparty limit breach and whether the additional £4 million which had been invested had come from a reserve.

 

Andrew Vallance said that the money should have been invested somewhere else, either in a different money market fund or another bank account.

 

Andrew Hill said that in the report it was mentioned that RBWM held a £100 million sum that was a pure investment. He asked what the investment risk was attached to this amount, was it a low risk asset performing the yield or a poor performing high risk asset. If so, was RBWM going to consider disposing the assets as suggested by CIPFA.

 

Andrew Vallance confirmed it was not an investment in any particular asset, it was just the cash flow consequence of normal business. RBWM did not borrow to invest in terms of yield purposes and it did things in accordance with CIPFA guidance.

 

Councillor Bond asked about Arlingclose and that a duration of 35 days had been mentioned. He asked if that meant that money could only be locked up in these institutions for 35 days.

 

Andrew Vallance said that this was an error in the report and should actually say 365 days.

 

On the counterparty limit being reached, Councillor L Jones asked if Andrew Vallance could confirm whether procedures or the process had been changed as a result, to ensure that it did not happen again.

 

Andrew Vallance explained that the incident had occurred due to a spreadsheet error, appropriate training had been provided to the officers involved.

 

Councillor L Jones said that a number of years ago, Members were told that RBWM would be debt free by 2025. She therefore asked why there was £5 to £10 million worth of debt.

 

Andrew Vallance said that he was not sure how anyone could guarantee that the authority could be debt free, RBWM currently had long term debt.

 

RESOLVED UANIMOUSLY: That the Audit and Governance Committee noted and approved the annual Treasury Outturn Report 2020/21.

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