Agenda item

To consider and note the report for information

DECISION:

To accept the report for information

The Investment Manager presented a report on the actual results of the Council's treasury management during 2022/23, against the strategy approved by the Full Council on 3 March 2022. It was reported that the year had been a very busy and prosperous one for the Council's treasury management activity as the activity had remained within the constraints originally set. It was confirmed that there were no defaults by institutions in which the Council had deposited money with.

It was reported that £1.8m in interest had been received on investments, which was higher than the £0.4m included in the budget.  It was noted that the interest income was substantially higher than the budget as the budget had been set in a period where the basic rate was 0.75%; by March 2023, it was 4.25%.

On 31 March 2023, the Council was in a very strong position with net investments, which had resulted from a high level of investments and operational capital. This included £57 million of the Ambition Board's funding and £18 million of the Pension Fund. 

In the context of investments, it was reported that the Council had continued to invest with Banks and Building Societies, Financial Market Funds, Pooled Funds, Local Authorities and the Debt Management Office. It was noted that the pooled funds were mid/long-term investments which brought in a very good income level, and with the Council's funding levels healthy, the Investment Unit was considering a further investment in these funds in the near future.

In the context of the compliance report and indicators, it was reported that all activities had complied in full with the CIPFA code of practice and the Council's treasury management strategy - this was good news and showed that there was robust management of the funding. Reference was made to the indicators where it was highlighted that every indicator complied with the expectation except for one (Interest Rates Disclosure). It was explained that this indicator had been set during low interest conditions in March 2022 and, therefore, it was reasonable that the amounts were so different.

Gratitude was expressed for the report.

In response to a question regarding the need to re-set the indicator that did not comply, it was noted that Arlingclose suggested the indicators that should be used. The observation was accepted as a fair one and as the 1% interest condition was now irrelevant to current circumstances, the observation would be highlighted to Arlingclose at their next meeting.

In response to a question regarding borrowing to other Councils, it was noted that the Council continued to do so and to Councils that were safe. It was noted that Arlingclose had a list of those Councils where they should not invest. In response to a question regarding the section 114 notice and the likelihood that councils, which had previously borrowed, would have the right not to repay the loan, it was noted that Arlingclose had confirmed that those Councils would have to repay the loan, which was different to investment arrangements with a private company. It was added that maybe the worst case scenario would be that interest was not repaid, but this would equate to renegotiating the terms of the loan.

In response to an observation about borrowing to local Councils and whether some Councils seemed to be more unstable than others (considering the recent announcement from Birmingham Council noting that it could not balance its budget without support), it was noted that the current list of Councils that should not receive an investment was up-to-date and that the assurance from Arlingclose was verified every morning.

RESOLVED:

To accept the report for information.