Agenda item

Report of the Corporate Director Finance

The Committee received a report on the mid-year review of treasury management activities for 2018/19.  The Director of Finance introduced the report and drew particular attention to:

·                     investment was £100k under budget due to the low rates on offer;

·                     as there had been no external borrowing due to the use of cash reserves, £600k underspend had been used to help budget performance;

·                     there had been some temporary borrowing for capital projects due to the relatively low cost of short-term borrowing..  The strategy going forward was being reviewed.

During discussion on the report, the following principal points were noted in response to comments and questions from individual Members:

·                     the £36.62m principle total investments in table 1 referred to the sum borrowed.  The property portfolio was shown separately as an asset on the balance sheet with an income of £700k in the revenue budget;

·                     the estimate and forecast capital financing requirement for 2018/19 were different because the estimate was based on the information available at the time the budget was set whereas the forecast reflected the position as the year progressed;

·                     the reference to an additional £85m temporary borrowing when there had been a reduction in capital expenditure was due to this being a projection of the capital financing requirement should all investments be taken.  However the Council had under borrowed.  Non HRA did not have the same borrowing gap but note was taken of the Prudential code and affordability of borrowing.  If cash balances held dipped below a trigger point of required working capital of £30million temporary borrowing would take place to regain that level, primarily  through short-term borrowing from other local authorities.  Underspending on capital schemes could be carried forward to the next financial year at which time long-term borrowing could take place;

·                     as the regeneration programme had been under review the provision had been carried forward resulting in a £65k underspend on the capital budget of £71m.  Subsequent to the review, instead of carrying forward this underspend the budget would be reset for 2019/20 to reflect the currently agreed programme.  It was hoped that the forecasting for the next financial year would be more in line with activity;

·                     the loan to West London Waste Authority presented a good return which would be used to maintain investment income;

·                     a negative impact of Brexit was considered unlikely as the counterparties were British Banks and their capital protection would apply;

·                      the cash flow was monitored daily.

The Director of Finance undertook to clarify why table 4 indicated an increase in HRA expenditure from £2,339k to £10,379k whilst table 5 showed no increase in the HRA capital financing requirement from estimate to forecast.  It was agreed that the clarification would be verbally reported to Cabinet the following evening.

An officer undertook to clarify the reasons for the increase in revenue funding in table 4 from an estimate of £7418k to a forecast of £18,492k.

RESOLVED:  That

(1)          the report be noted;

(2)          the Director of Finance verbally report to Cabinet on the reason for the discrepancy between tables 4 and 5 HRA capital expenditure estimate of £2.739k against a forecast of £10380k in table 4.