Co-Chair of Joint Audit and Standards Committee.
At its meeting on 30 November 2020, the Joint Audit and Standards Committee considered Paper JAC/20/3 – Half Year Report on Treasury Management 2020/21. The recommendations set out in the report were accepted.
It was RECOMMENDED TO BOTH COUNCILS:
1) That the Treasury Management activity for the first six months of 2020/21 as set out in the report and Appendices be noted.
2) That it be noted that both Councils’ Treasury Management activity for the first six months of 2020/21 was in accordance with the approved Treasury Management Strategy, and that the Council has complied with all the Treasury Management Indicators for this period.
Note – It is a requirement of the Code of Practice on Treasury Management that full Council notes the Half-Year position.
Minutes:
47.1 The Chair invited the Chair of the Joint Audit and Standards Committee, Councillor Muller to introduce Paper JAC/20/3.
47.2 Councillor Muller provided a summary of the Report and MOVED the recommendations in the Report, which was SECONDED by Councillor Caston.
47.3 Councillor Matthissen questioned the borrowing for CIFCO and Gateway 14, which he felt was large in comparison to other loans, and whether the borrowing from the PWLB for council houses would be more difficult it the Council continued to invest in CIFCO.
47.4 The Assistant Director – Corporate Resources, explained that investment into CIFCO would be completed at the end of this financial year. However, in the next financial year the Council would have to borrow more for Gateway 14 but this would not jeopardise borrowing from the PWLB for housing development as Gateway 14 is primarily an economic regeneration site.
47.5 In response to further questions from Councillor Matthissen, the Assistant Director – Corporate Resources, clarified that if the £50m had not been fully invested into CIFCO by the end of March then no further investments would be made in the new financial year.
47.6 Councillor Mansel asked for clarification for paragraph 2.3 of the report, for the debt yield activity for borrowing rates and whether the Council would not be able to borrow at lower rates. The Assistant Director – Corporate Resources explained that the Council would be able to access loans from the PWLB and that in 2021/22 there would not be anything in the Capital Programme that would be subject to yield activities, so the Council would be able to borrow. Since the announcement about the changes to PWLB lending the rate had been reduced by 1% bringing it back down to competitive levels.
47.7 Councillor Field queried the Schroder Fund performance, which currently was evaluated at £800k less than expected (Page 52, Table 6.2) and if that was a concern for the Council.
47.8 The Assistant Director explained that the investment market had been affected by the Covid-19 pandemic and then detailed how the investment fund was monitored and that if the market value was less than that invested and the investment was sold at that point, the money would have to be taken from the General Fund Budget to cover the loss, but the investment is a long-term one.
47.9 Councillor Eburne referred to Appendix B, page 45 paragraph 2.2, and if the Council had reviewed its housing ambition in the light of the lower rate available and it not whether the Council would be taking advantage of this rate to invest in sustainable housing.
47.10 The Assistant Director – Corporate Resources confirmed that the Council would be able to access the lower rate for housing and that the Housing Revenue Account Business Plan would include this moving forward.
47.11 Members debated the issues and Councillor Stringer asked that it be noted that he would vote for the paper but under protest as he thought that some of the indicators in the report would be detrimental to communities. He did not agree with rushing to complete the investments in CIFCO as indicated in the report.
47.12 Councillor Meyer commented that the CIFCO Board was not rushing to invest money but was applying careful consideration for investments to provide a cashflow to the Council. The investments for CIFCO were paying off and income was being made to the Council.
47.13 Councillor Passmore thought that the Council should have a variety of investments and that ethical investment was important along with providing good returns to the Council.
47.14 Councillor Field supported local investments but in the light of recent performance nationally he had a reasonable concern for the investment performance irrespective of the performance of CIFCO.
47.15 Councillor Muller thanked Members for the debate.
47.16 The Chair put recommendations 3.1 and 3.2 to Members for the vote.
By 28 votes for and 1 vote against, 4 abstentions.
It was RESOLVED: -
1.1 That the Treasury Management activity for the first six months of 2020/21 as set out in the report and Appendices be noted.
1.2 That it be noted that both Councils’ Treasury Management activity for the first six months of 2020/21 was in accordance with the approved Treasury Management Strategy, and that the Council has complied with all the Treasury Management Indicators for this period.
Supporting documents: