Agenda item

Treasury Management Mid-Year Report 2021/22

Reference from Cabinet.


Prior to the consideration of the report, a Member (Minute 202 also refers) stated that one of his questions on the Statement of Accounts at the last meeting had not been answered by the external auditor in the written response provided after the meeting, which was also sent to all Members of the Committee.  The Director of Finance and Assurance agreed to follow this up and the Member undertook to provide the relevant correspondence to her. He would continue to raise this question until he was satisfied that it had been answered.


The Committee then went to consider the substantive item.


The Committee received a Reference from Cabinet entitled ‘Treasury Management Mid-Year Report 2021/22’ together with the report of the Director of Finance for review.  The report provided an update on the Council’s Treasury Management activity in 2021/22, presented performance to 30 September 2021 in accordance with the Council’s Treasury Management Practices and in compliance with the CIPFA Treasury Management Code of Practice.  The Council had complied with all elements of the Treasury Management Strategy Statement (TMSS) as the treasury management function. 


The Director of Finance and Assurance introduced the report and informed the Committee that Treasury Management activity had been kept to a minimum, no borrowing had taken place and that cash balances had been managed well and in a prudent manner.  In addition, the Capital Programme had been managed carefully, there was sufficient cash flow and the interest rate on small investment had been maintained.


The Director responded to questions in relation to the Treasury Management Services offered by the GLA (Greater London Authority) – page 18 of the agenda, paragraph 5 referred – and assured Members that this would be in place for 1 April 2022.  It would include the Council transferring its investment balances into the GLA Group Investment Syndicate (GIS).  She explained that:


-                 the GLA would invest the Council’s cash balances which would provide a better return for the Council due to the pooling of investments.  The Council would monitor its Treasury Management activity but the GLA would oversee the investments


-                 the Council would also be able to access borrowing if required, such as for its Regeneration Programme(s).  The Council would retain its  Treasury Management activities.  A key factor of using the GLA Service would be to access strategic advice and support


-                 currently, the Council held its cash balances in bank accounts which accrued interest but by joining the TMS offered by the GLA, a better return would be available to the Council.  The Council did not have the capacity to move its money frequently in order to receive a better rate of return.  It was intended to initially join the TMS for a period of six months and leave if there were no benefits.  It was important to note that other support would be available by joining the TMS, such as expertise and advice and the benefits were expected to outweigh the costs.  The cost of joining would be in the region of £50k but, if the Council were to appoint its own TM adviser, the cost would be substantially more


-                 the Director noted a Member’s concern that the GLA was in deficit but assured him that the money would not be going to the GLA but held as a separate fund.


Members asked additional questions of the Director of Finance and Assurance and she responded as follows:


-                 the Council would not be borrowing £240m as indicated by a Member but the Capital Financing Requirement (CFR) – pages 21 and 22 of the agenda – gave an indication of what the Council would have to borrow if the Capital Programme was funded through debt.  The Council used some of its own cash balances to fund the Capital Programme, which was also funded by government grants and capital receipts.  The use of cash balances ensured that the Council did not have to borrow any money – external debt – to progress its Capital Programme until internal funds had been exhausted which would then require external borrowings


-                 authorised borrowing/limits – a series of boundaries were calculated and there was a requirement to operate within those boundaries and based on how much money was put in the capital budget.  The Council needed to ensure that it could pay the money back even if the boundary was not reached.  The boundary was a cap that should not be exceeded


-                 capital financing costs were set when the Capital Programme was agreed.  There was a correlation between the setting of the Capital programme and what the Council wanted to invest in and whether it could afford to do so.  Both the Council’s Capital Programme and the Revenue Budget were linked in terms of affordability


-                 she would provide a written response in relation to Table 1 on page 19 of the agenda in respect of the capital expenditure on the Community Directorate’s budget which appeared to have risen by 30% from the original estimate.  She would have to peruse the Capital Monitoring Report prior to providing a response


-                 she would provide a fuller written response in relation to Table 2 on page 20 of the agenda which showed that the Capital Grants had fallen dramatically from their original estimate.  The Director provided an example that there had been a fall in the money received from the TfL (Transport for London) for LIP (Local Implementation Plans) funding as a result of which some schemes had not progressed.  A Member asked why it had been necessary for the forecast to have changed.  The Director informed the Committee that the forecast had been built on the information available at the time and the revised estimate was where it was not possible for schemes to proceed.  The reduction in the original and the revised estimates covered a number of schemes.  She agreed to provide further information in relation to questions relating to the structuring


-                 she would provide Members with a profiling schedule of each individual loan from the PWLB (Public Works Loan Board) in relation to Table 9.9 on page 25 of the agenda


-                 the West London Waste Authority would be expected to pay back the loan referred to in paragraph 9.4, page 24 of the agenda.  The Council was receiving £1.2m per year in interest.  The Director undertook to provide a written response in relation to the year point in relation to the £15.8m.  She explained that the capital sum of £15m was outstanding and remained the same but the Council was receiving the interest element.  The principal amount would now be repaid and therefore the interest received would be less but she would clarify the situation.  The term of the loan was 25 years at an interest rate of 7.604% on a reducing balance basis


-                 the CCTV would not be paid from the Community Budget but it would be capital investment – revenue costs from the revenue budget.


Prior to concluding the discussion on the report, the Chair reminded officers that responses were required in relation to some of the questions asked at the meeting, such as on the Community Budget, Revision of Outturn and Profiling of Debt Loan.


Having reviewed the report and in noting that responses would be received in writing from officers, it was


RESOLVED:  That the report be noted.

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