Agenda item

The Treasury Management Mid-Year Report 2021-22.

The Committee considered the Treasury Management Mid-Year Report 2021-22.

During the discussion of this item the following points were made:

·       The Mid Year report was the second of the Treasury Management reports presented to the Committee and on to Council, over the year.

·       The Mid Year report was at the 30 September 2021 and gave a summary of where the Council was with its Prudential Indicators and the likely outturn at the end of the financial year in terms of level of debt, level of borrowing, and the return on investments.

·       Prudential indicators had been made clearer following previous observations made by the Committee.

·       Members were reminded that the report was no longer considered by the Executive but went direct to Council from the Audit Committee.

·       Councillor Loyes referred to the less internal funded borrowing under the Council’s Net Indebtedness and asked for further information.  The Assistant Director Finance commented that at the time of the Outturn Report borrowing had exceeded the capital financing requirement.  The Council was working to reverse the level of over borrowing to where the Council was potentially one third internally borrowing funded and two thirds external funded borrowing.  At year end the position was £190million of internal funded borrowing, by repaying elements of debt when receipts had been available to repay it and reducing the level of internal investments.

·       In response to a question from Councillor Loyes regarding the difference between the HRA figures the Assistant Director Finance explained that this related to a change in financing costs against the actual revenue stream in the HRA.  A reduction in the ratio was a good news story.

·       Councillor Gee referred to revaluation losses and losses on sale.  She questioned how much this year and the previous year had gone through the income and expenditure account, reducing income available to spend on services.  The Assistant Director Finance indicated that the Treasury report was based on the availability and returns the Council was taking from the investment strategies.  The investments, assets and the income and expenditure account were part of the Statement of Accounts.  Any money generated from investment activity over and above the cost of financing the investment activity became available for services to residents.

·       The revaluation for Carnival Pool was operational, land and buildings and not investment properties.

·       Minimum revenue provision for investment properties was currently running at 10% over 15 years.  If an extraordinary reduction in the value of the properties was seen the Council would need to make a voluntary revenue provision through the accounts to ensure that any devaluation on the properties was covered.

·       Minimum revenue provision was discussed in detail.

·       Councillor Shepherd-DuBey commented that capital expenditure for forthcoming years had been reprofiled and questioned how this had been achieved.  She was informed that this was part of capital monitoring.  When the Council monitored its capital expenditure programme for the year and set its capital budgets going forwards for the next few years, the amount spent on capital impacted on the amount needed to be borrowed as a Council.  The Capital Monitoring reports considered by the Executive contained details of what capital programmes had been reprofiled.

·       The contents of “Table A”, as set out in the report, showed the net benefit per council tax band D equivalent, from the income generated less the financing costs on all borrowing to date equated to £36.62 per band D for 2021/22.  Councillor Loyes asked how likely it was that this figure would change.  The Assistant Director Finance commented that it may change depending on fluctuations in the Bank of England base rate.  The Chief Accountant indicated that the Council was not forecasting to take any further external borrowing until March.

RESOLVED:  That the Audit Committee supports the Treasury Management Mid-Year Report 2021-22, recommends it to Council and notes:

1)    that all approved indicators set out in the Treasury Management Strategy have been adhered to;

2)    the contents of “Table A”, as set out in the report, which shows the net benefit per council tax band D equivalent, from the income generated less the financing costs on all borrowing to date equates to £36.62 per band D for 2021/22. This income is used by the Council to continue to provide priority services for the borough residents.

3)    As at the end of September 2021, the total external general fund debt was £416m, which reduces to £120m after taking into account cash balances (net indebtedness); External debt is forecast to reduce to £266m by the end of the financial year.