Agenda item

Annual Report on Treasury Management

The Committee is asked consider the Treasury Management Annual Report 2022/23


Kathy Oakey, Finance Manager presented the Treasury Management Annual Report, which detailed the performance for the Council’s investment and borrowing activities for 2022/23.


It was explained that the Committee was charged with the governance of Treasury Management and significant sums of money were involved in Treasury Management with a borrowing and investment programme in excess of £300 million. 


It was noted it had been a very volatile year, with the bank base rate rapidly rising to 4.25% by the end of March 2023 and this had made external borrowing more expensive, but allowed the Council to gain on invested income. 


The Council had continued to hold borrowing internally, meaning that investment balances were lower and was saving on interest charges.  For the surplus cash investment the Council achieved an income return of £7.4m (2.5%) which was available to support the Councils Budget. 


The Council had continued to ensure that money invested was diversified over a range of counterparties to minimise risk.  In addition the Council had invested in a number of secured investments, including adding a repo arrangement to the portfolio, whereby the deposit was 100% collateralised.


The Council continued to have a number of more strategic funds whose performance helps to protect the Council against inflationary losses, however with the volatility in the markets, capital values had been down at the end of the year, although all the funds continued to pay consistent dividends. 


It was noted that where funds had suffered from an element of capital loss, the Council could offset this loss in its annual accounts due to a statutory override.  As the funds were considered longer term investments it was expected that this capital loss would be recovered over the next few years.

Despite these longer term investments the Council had maintained liquidity, with the percentage invested for over 12 months being 34.4%.


Members were advised there was a new section in the report on Ethical, Social and Governance (ESG) considerations.  Although there was no developed approach for public sector bodies, it was now considered good practice to take these into account. 


The Committee were informed on the borrowing side early redemption remained expensive during 2022/23, so the Council had not redeemed any loans early during that period, however all maturing loans had been repaid in full (£6.9m) during the year.  It was reported that the overall borrowing requirement had increased from £457.6m to £466.0m and this increase was as a result of unfunded schemes being included in the approved capital programme. 


Members were advised that the Council complied with all the limits set for borrowing and investment as laid down in the prudential indicators shown in Appendix E. 


In response to a question, it was noted that Arlingclose were the Authority’s Treasury Management Advisors and any investment in foreign countries would be in accordance with the appropriate licences.  A member questioned investing in foreign countries who were not on the national list.  The Executive Director of Corporate Resources explained that the Treasury Management function was security, liquidity and yield as detailed at page 89 of the report.  It was noted that these areas were regularly reviewed with the Treasury Management Advisor. 


The Committee noted that the Authority was in a fortunate position to not have to borrow externally and that should be attributed to Cllr Theodoulou’s legacy of repaying long term borrowing, which had ensured the Authority was still in a positive position. 


A member sought clarification that the Authority was compliant with the new bill, the Executive Director of Corporate Resources agreed to take the point away to check and a response would be provided by email.


The Finance Manager added that regular reports were received from the Treasury Management Advisors and decisions were made based on those reports and six-monthly refreshes were conducted to maintain a healthy position. 




That the Committee considered and noted the Treasury Management Annual Report for 2022/23.


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