Agenda item

To receive the report for information

To accept the report for information

The Investment Manager submitted a report in relation to the actual results of the Council's treasury management during 2020/21, compared with the strategy approved by the Full Council on 5/3/20. It was noted that the Council's borrowing activity was within the limits originally set, and £422,000 of interest had been received on investments, which was higher than the £400,000 within the budget. It was confirmed that there were no defaults by institutions in which the Council had deposited money with.

It was reported that it had been a challenging year with interest rates declining, restrictions on where to invest money along with substantial amounts being processed with the Council administrating over £100 million of Covid-19 grants to businesses. However, the Council had managed to ensure that the investments were secure and had reached the investment income target.

Attention was drawn to the balance sheet and to the details of borrowing activities, highlighting the fact that loans had remained within the strategy to keep borrowing costs low. No long-term loans were made during the year and not much use was made of short-term loans as funding levels had been too high compared to the end of the previous financial year where short-term loans were made due to the uncertainty of the Covid-19 crisis.

In the context of investments, it was reported that the Council had continued to invest with Banks, Cash Market Funds and Pooled Funds, but there was an increase in using Local Authorities as opportunities with banks and similar organisations were very limited, and the cash market rates were very low. It was reiterated that returns had been very low, but that pooled funds had saved the day as they had bounced back following the slump at the end of the 2019/20 financial year. It was highlighted that the value of investments had increased by £0.6 million during the year, with a rate of 5.13% contributing towards the interest income ensuring that there was no deficit against the budget.

In the context of the compliance report and indicators, it was reported that full compliance had taken place separately to the interest rate disclosure. It was highlighted that this disclosure showed a one-year revenue impact of a 1% increase in interest rates, highlighting the serious impact the pandemic has had on investment returns compared to what had been projected at the beginning of March 2020 when the restricted level was set - pre-Covid-19.  It was reiterated that returns on pooled funds had recovered the interest decline.

Gratitude was expressed for the report.

During the ensuing discussion, the following observations were made by members:

·         Although pleased to receive grants, Gwynedd Council has resolved to use its funding to reduce the effects of Covid-19 on Council residents

·         A need to correct the Treasury Management Summary (page 100 of the agenda) to highlight £’000 instead of £m

In response to an observation in the report 'that the duration of investments and number of institutions available to deposit money with has been reduced based on the advice received from Arlingclose', and whether a decline in the credit rate or the advice received was responsible, it was reported that the decision to protect the investments was a combination of both elements and that a cautious approach was needed. In response to a supplementary question in terms of the significant reduction in institutions, it was highlighted that foreign institutions had reduced along with reductions from 90 days to 35 by banks. It was emphasised that the main objective of the Council when investing money was to strike an appropriate balance between risk and returns - by investing prudently, attention would be given to the security and liquidity of its investments before seeking higher rates of returns.

RESOLVED

To accept the report for information