Co-Chair of Joint Audit and Standards Committee
At its meeting on 31 July 2023, Joint Audit and Standards Committee considered Paper JAC/23/02, Annual Treasury Management Report 2022/23. Paper BC/23/14 now includes all the relevant updated information.
RECOMMENDATION TO BOTH COUNCILS
3.1 That the treasury management activity for the year 2022/23 as set out in this report and appendices be noted.
3.2 That it be noted that both Councils activity was in accordance with the approved Prudential Indicators for 2022/23.
RECOMMENDATION TO BABERGH COUNCIL
3.3 That it be noted that Babergh District Council’s treasury management activity for 2022/23 was in accordance with the approved Treasury Management Strategy, and that, aside from exceeding the net upper limit of interest rate exposure at the end of 2022/23, as mentioned in Appendix C, paragraph 4.1, the Council has complied with all the Treasury Management Indicators for this period.
Minutes:
40.1 The Chairman invited Councillor Bryn Hurren, Co-Chair of the Joint Audit and Standards Committee, to introduce Paper BC/23/14 which was for noting.
40.2 Councillor Hurren explained the purpose of the report which covered the 2022/23 financial year, and PROPOSED the recommendations as detailed in the report.
40.3 Councillor McLaren SECONDED the recommendations.
40.4 Councillor Riley asked for an explanation of why the Council was spending more money than it received, as detailed in table number 7 on page 39 of the report. The Director for Corporate Resources responded that certain assumptions were made regarding interest receivable when setting the budget, and that the rates fluctuate throughout the year leading to variables in the interest rates received. Variances are reported through the Treasury Management Half Year Report.
40.5 Councillor Riley then asked what action would be taken to ensure the situation was not repeated the following year. The Director for Corporate Resources responded that the Treasury Strategy would be presented to Council in January or February 2024, and advised that the Housing Revenue Account (HRA) had performed better than what was detailed in the budget.
40.6 In response to a further question from Councillor Riley regarding the reason why bad debts had been incurred in respect of Funding Circle performance, the Director for Corporate Resources clarified that an element in the portfolio is set aside for this as detailed in the agreement with Funding Circle.
40.7 Following a request from Councillor Davis, Councillor Hurren provided reassurance to residents and Members that the Council was not in a similar financial position as other Local Authorities.
40.8 Councillor Riley asked for clarification on whether the bad debts to date figure was a reserve figure or debts which had been written off. The Director for Corporate Resources confirmed that the figure related to debts which had been written off.
40.9 Councillor Ward referred to recommendation 3.3 in the report relating to the net upper limit of interest rate exposure and asked what the implications of exceeding the £15,000 limit would be. The Director for Corporate Resources advised that there would be penalties, and the indicator was set by the Council at a time when interest rates were lower. This would be reviewed as part of the Treasury Strategy. The Director went on to confirm that interest costs as a ratio to net expenditure were monitored and reported regularly.
40.10 Councillor Riley enquired whether there was any intention to improve lending standards in respect of bad debts. Councillor Hurren assured Members that every effort would be made to manage and recover debts where possible.
40.11 Councillor Riley asked what the Ninety-One Series i Performance was and why the valuation was being downgraded. The Director for Corporate Resources advised that the valuation was set by the markets and reviewed annually. Additional details of the fund would be provided outside of the meeting.
40.12 In response to a question from Councillor McCraw regarding the significance of the figures discussed at the meeting to the overall budget, the Director for Corporate Resources advised that the interest payable was looked at as a proportion of net expenditure and, although subjective, the debt figure was not disproportionate in terms of the overall balance sheet.
40.13 Councillor Maybury commented that due diligence and questioning within the Council helped to keep the finances in order.
40.14 Councillor Hurren expressed thanks to the officers.
40.15 Councillor Ward supported the report and commented that the report should be considered in its entirety.
By a vote of 26 For and 1 Abstention the motion was CARRIED.
It was RESOLVED:
1.1 That the treasury management activity for the year 2022/23 as set out in report BC/23/14 and appendices be noted.
1.2 That it be noted that both Councils activity was in accordance with the approved Prudential Indicators for 2022/23.
1.3 That it be noted that Babergh District Council’s treasury management activity for 2022/23 was in accordance with the approval Treasury Management Strategy, and that, aside from exceeding the new upper limit of interest rate exposure at the end of 2022/23, as mentioned in Appendix C, paragraph 4.1, the Council has complied with all the Treasury Management Indicators for this period.
Supporting documents: