To receive the Treasury Management Outturn 2019-20 report
The Committee received the Treasury Management Outturn 2019-20.
During the discussion of this item, the following points were made:
· During 2019-2020, the Council had adhered to all of its prudential indicators whilst minimising external debt and creating a significant revenue contribution with robust risk management arrangements.
· The Treasury Outturn position was a net £380,000 favourable against the projected budgets.
· Councillor Sargeant asked whether the Table on page 19 was still an estimate. The Head of Finance indicated that it was not and would be corrected.
· Councillor Sargeant commented that the report showed another good year of treasury management. He noted that £1.6million had been brought in through the property investment portfolio.
· Councillor Ross stated that it was interesting to note that the highest average rate of return percentage was from the investment properties.
· In response to a question from Councillor Gee regarding the 5.11% rate of return and investment properties, the Head of Finance indicated that the 5.11% return was on the two investment properties that the Council had run through its treasury management portfolio. These were located outside of the Borough. The Council was not allowed to borrow to fund these properties so treasury investment funds were used to buy these properties. The 5.11% was the gross figure coming in from incomes and the Council then charged a notional rate of interest against those properties to offset the financial impact on residents. The deduction made in terms of the notional rate was 2.75% for the debt financing charges. A minimum revenue provision of 0.667 was also charged. The asset repayment was backed by the value of the asset the Council had as it was classed for investment purposes. The Council was making minimum revenue provision for an anticipated movement in a prudent way should the asset value drop. Councillor Gee commented that the net return was 2.36% and the amount actually released to the revenue account was 1.695%. The Head of Finance emphasised that 2.75% was a notional rate which was likely set high to ensure that all the recovery costs were covered.
· Councillor Gee felt that Table 2, which showed the estimated debt levels, was misleading. The peak debt was not what could be anticipated in 2023, as more debts and projects would likely be taken on.
· Councillor Burgess commented that Table 2 was forwards looking and that she was surprised that there was little reference to the impact of Covid 19 within the report. She was interested to hear the extent the forecasts within Table 2 would have now changed because of the pandemic.
· The Head of Finance indicated that potentially £105million of capital expenditure would be deferred by 12 months due to the impact of the pandemic on the Council’s cash flows. Not all the £105million would be funded by debt; some would be funded by developer contributions. Finance could only work to the Capital Programme as set out for the next 3 years. The debt would increase up to 2023 and would then start to ... view the full minutes text for item 7