Scottish Borders Council

Agenda item

Annual Treasury Management Report 2020-21

Consider report by Director Finance & Corporate Governance.  (Copy attached.)


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.  


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:



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