Agenda item
Annual Treasury Management Report 2020-21
Consider report by Director Finance & Corporate Governance. (Copy attached.)
Minutes:
There had been circulated
copies of the Annual Treasury Management Report 2020-21 by the
Executive Director, Finance & Regulatory Services. The CIPFA Code of Practice on Treasury Management
in the Public Services required an annual report on treasury
management to be submitted to Council following the end of each
financial year and the report highlighted the Council’s
treasury activity undertaken in the year ending 31 March 2021 and
the performance of the Treasury function. Appendix 1 to the report contained the annual
report of treasury management activities for 2020/21 and an
analysis of performance against targets set in relation to
Prudential and Treasury Management Indicators. The performance comparisons reported were based on
the revised indicators agreed as part of the mid-year report
approved on 23 November 2020. This
showed the Council’s borrowing requirement to fund the
capital investment undertaken during 2020/21, how much the Council
actually borrowed against the sums budgeted, and the level of
external debt within approved limits.
During the year, the Council had again, where possible, deferred
borrowing using surplus cash rather than undertake new
borrowing. However, the Council did
undertake temporary borrowing for cash flow purposes amounting to
£15m during the year. Treasury
management activity for the year had been undertaken in compliance
with approved policy and the Code. The
Council remained under-borrowed against its Capital Financing
Requirement at 31 March 2021. In
response to Members’ questions, the Director, Mr Robertson,
advised that, with regard to the capital expenditure being down by
20% and the timing and execution of the
capital programme, this relied heavily on the forecasting of
project managers, and should they be over-optimistic then this in
turn impacted on the treasury management forecast. The programme was also impacted by inflation and
the shortage of construction materials which in turn could impact
on the ability to spend capital funds by March 2022. The Pension & Investments Manager, Ms Kirsty
Robb, confirmed that Link Asset Services, the Councils Treasury
Advisors, would be in attendance at a future briefing to speak to
Members about the capital programme and PFIs in relation to
treasury management. Mr Robertson
further advised that the capital financing requirement was the
amount that still had to be put in place to ensure the capital
programme was fully funded and the gross borrowing noted in the
strategy was the amount already actually borrowed. It was a complicated position to manage the cash
position of the Council with outflows and inflows being reviewed to
a daily basis, to ensure enough liquidity was
maintained. In terms of funding
resources, Ms Robb confirmed that some temporary borrowing had been
carried out with other local authorities, and SBC could also lend
to other local authorities, although traditionally the Council had
not carried out the latter. Each
project within the capital programme had different nuances as to
why it was not in line with forecast and any variances were
reported in the quarterly capital monitoring reports to the
Executive Committee. Mr Robertson added
that the size and complexity of the current capital programme
dwarfed previous ones, and the slippage picture was
complicated. Work was currently
underway to bring forward a 10 year plan for both capital and
revenue which would include assumptions such as the impact of
longer term inflation.
DECISION
NOTED that treasury management activity in the year to 31 March 2021 was carried out in compliance with the approved Treasury Management Strategy and Policy as detailed in the report and in Appendix 1 of the report.
Supporting documents:
- Item No. 08 - Audit - Annual Treasury Management report 2020-21 - Covering report, item 5. PDF 192 KB
- Item No. 08 - Audit - Annual Treasury Management Outturn Report 2020-21 - Appendix 1, item 5. PDF 800 KB