Agenda item

Consider mid-term report by Executive Director Finance & Regulatory on the Council’s Treasury Management activities undertaken during first half of financial year 2020/21 for review and scrutiny prior to Council approval.   (Copy attached.)

3.1       There had been circulated copies of a report by the Executive Director Finance & Regulatory presenting the mid-year report of treasury management activities for 2020/21 in line with the requirements of the CIPFA Code of Practice, including Prudential and Treasury Management Indicators, and seeking comments from Audit and Scrutiny Committee prior to consideration of the report by Council.  This provided a mid-year report on the Council’s treasury activity during the six month period to 30 September 2020 and demonstrated that Treasury activity in the first six months of 2020/21 had been undertaken in full compliance with the approved Treasury Strategy and Policy for the year. Appendix 1 to the report contained an analysis of the performance against the targets set in relation to Prudential and Treasury Management Indicators, and proposed revised estimates of these indicators in light of the 2019/20 out-turn and experience in 2020/21 to date for Council approval.  The Pension & Investments Manager, Kirsty Robb, highlighted the main points of the Council’s Capital Expenditure and Financing summarised in the Appendix to the report.  She referred to the element of slippage in the capital programme as a result of COVID-19.  Detailed explanations of the movements within the planned expenditure had been reported in the ongoing monitoring reports, the last of which was to the Executive Committee on 17 November 2020.  Due to the overall financial position with the effect of COVID-19 on the capital programme and the higher than normal cash level held, Ms Robb explained that there had been no new external borrowing undertaken so far this year.  It was anticipated that borrowing of £10m would be undertaken during the remainder of the financial year.

3.2       The Executive Director Finance & Regulatory and Ms Robb answered Members’ questions and gave further detailed information where requested.  In terms of investments and opportunities to invest surplus balances in the short term, the Executive Director Finance & Regulatory gave assurance that the Council deposited surplus funds only in triple A rated institutions and the priorities when looking at money market funds were security, liquidity and yield in that order. The Chairman asked a question about the Loan Charges estimate contained in the Council’s Financial Plan and whether the interest element of the Council’s PFI contracts was included in those Loan Charges. The Executive Director Finance & Regulatory explained that accounting for PFI was undertaken separately and under different regulations controlled nationally.  Ms Robb offered to provide clarification to the Chairman of how the estimated loan charges figure of £19.111m was calculated.  In terms of the PFI contracts the interest rate was fixed for the life of the 25 year contract.  There was a facility for re-financing but this was the responsibility of the contractor, with the Council being entitled to a share of any subsequent re-financing gain. The Chairman suggested that it would be helpful to have a paper presented at the next Audit Committee meeting with a summary of the facts relating to the financial elements of the PFI contracts and to explore any opportunities to make national representations through COSLA to change the regulations.

DECISION

AGREED:-

(a)        to note that treasury management activity in the six months to 30 September 2020 was carried out in compliance with the approved Treasury Management Strategy and Policy; and

(b)       that the Treasury Management Mid-Year Report 2020/21, as contained in Appendix I to the report, be presented to Council for approval of the revised indicators; and

(c)        to request the Executive Director Finance & Regulatory bring a briefing paper on the financial elements of PFI contracts, including any changes being sought on the national regulations.