Agenda item

Mid-Term Treasury Management Report 2022/23 (To Follow)


Wendy Eldridge (Principal Technical Accountant) presented the Mid-Term Treasury Management Report 2022/23 and highlighted the following key points:



the purpose of the report was to update the Committee with progress and changes since the 1st April 2022 and run through compliance with prudential indicators. Arlingclose was used to provide treasury management advice and the Council had taken on board a lot of the information regarding the external context of the current financial situation and economic background;



the report made reference to the impact of the Ukraine war, global inflation and the increased Bank of England rate which at the end of September was at 2.25% - there had been subsequent increases to that. The report referred to the increasing demand with inflation with disposable incomes being squeezed and higher energy bills having a further impact;



at 31 March 2022 the Council had net borrowing of £5.54m – this was presented in the outturn report at a previous Audit and Governance Committee. A summary of the Council’s borrowing at 31 March 2022 and its movements to 30 September 2022 was included – key things to note included the increase in the reduction of the borrowing. At the end of 2021 the Council held cash balances from transferring short term borrowing into long term PWLB borrowing so the Council was able to use those cash balances to reduce the short term borrowing – this was primarily to deal with the risk associated with the increasing interest rates;



table two showed relatively low short term borrowing rates but the levels the Council was currently being exposed to were closer to 4% taking out new short term borrowing in the latter part of the year;



Officers were expecting the LOBO loans to be called in as the interest rates were increasing however one that was due for potential call-in in November wasn’t called in so there was another group of LOBO loans due to be called in at the end of March 2023; there were only four days to repay LOBO loans therefore officers would monitor this situation;



long term borrowing was a fixed long term arrangement, mainly with Barclay’s Bank;



the Council increased its PWLB (Public Work Loans Board) borrowing in April 2022 by £75m which it used to reduce its short term borrowing; the rate secured with that was just under 2.5% - this was done to protect the interest rate risk;



the table on page 12 demonstrated that the interest payable had increased above the amount budgeted for but this had been compensated by the interest received through pooled investments and the money market funds that were held with day to day cash holdings. That was considered a safe increase in investment and had protected the council's risk there;




page 13 of the report onwards highlighted where the council was tracking its compliance against prudential indicators; the Council had complied with all investment limits, operational boundaries, authorised limits and investment portfolio levels.


In response to questions raised it was reported that –



the figures in the ‘total column’ reported in the investments table on page 10 of the report should be included in brackets – that was true of all figures shown in the movement column;



in terms of the prudential indicators, the Council had increased the level of fixed term borrowing. There was expected to be more of a spread between fixed and variable however in light of the changes and the increase with Bank of England rates, the approach taken was to tie in more debt, fixed term to protect those increases;



the Council did not have any investments in any non UK banks;



a written response would be provided to Members upon the impact of the rise in interest rates from 2.75% to in excess of 4% on the Council’s budget for the next 12 months;



in terms of LOBO loan repayments, the Council would seek advice from external advisors if they were called-in for repayment however as they were predominantly quite high interest rate the Council would be keen to repay.


The Committee agreed:



that a written response would be provided to Members upon the impact of the rise in interest rates from 2.75% to in excess of 4% on the Council’s budget for the next 12 months;



to delegate responsibility of signing off LOBO loan repayments to the Section 151 Officer in consultation with the Chair and Vice Chair of the Audit and Governance Committee and the Cabinet Member for Finance;



to note the Mid-Year Treasury Management Report 2022/23 (This is to comply with the CIPFA Code of Practice and discharge our statutory requirement).





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