To receive the report for information
Decision:
To accept the
report for information
Minutes:
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
Supporting documents: