The Interim Chief Officer – Finance, Performance and Change submitted a report, in order to:-

· Comply with the requirement of the Chartered Institute of Public Finance and Accountancy’s ‘Treasury Management in the Public Services: Code of Practice’ (the Code) to report an overview of treasury activities for the preceding financial year; and

· Report on the actual Treasury Management Indicators for 2020-21.

By way of background information, she confirmed that Treasury management is the management of the Council’s cash flows, borrowing and investments, and the associated risks. The Council is exposed to financial risks including the loss of invested funds and the revenue effect of changing interest rates. The successful identification, monitoring and control of financial risk are therefore central to the Council’s prudent financial management. 

The Council’s treasury management advisors are Arlingclose. The current

services provided to the Council include:-

·         advice and guidance on relevant policies, strategies and reports

·         advice on investment decisions

·         notification of credit ratings and changes

·         other information on credit quality

·         advice on debt management decisions

·         accounting advice

·         reports on treasury performance

·         forecasts of interest rates

·         training courses

In terms of the economic context (of the report), the Interim Chief Officer – Finance, Performance and Change confirmed that the coronavirus pandemic dominated 2020-21, leading to almost the entire world being in some form of lockdown during the year. This very much had a detrimental effect on finances and in particular interest rates, including that of the Council’s. This had been compounded also by the still ongoing uncertainties surrounding Brexit.

The local authority has administered a number of the Welsh Government Schemes, including payment of over 2,400 business and charity Business Rates Grants worth over £30 million; over 1,700 Lockdown Grants totalling just over £5.4 million; and 4500 Business Restrictions Grants totalling £14.96 million, as well as bearing the upfront costs of additional support required throughout the pandemic in advance of receiving WG funding. This has clearly had an impact on the Council’s cash flow during the year and measures have had to be put in place to manage the significant sums of money flowing into and out of the Council’s bank account, including receiving earlier payments of Revenue Support Grant and interim business grant payments from Welsh Government, making short term deposits until funding is required and increasing our daily BACS limits, to enable more payments to be processed quickly.

In terms of the Treasury Management Outturn for 2020-21, the Council had complied with its legislative and regulatory requirements during 2020-21. The TMS 2020-21 and the Half Year Report were reported to Council on 26 February 2020 and 18 November 2020, respectively. In addition, quarterly monitoring reports were presented to Cabinet during 2020-21, added the Interim Chief Officer – Finance, Performance and Change.

A summary of the treasury management activities for 2020-21, was shown at Appendix A to the report. The Council’s external debt and investment position for 1 April 2020 to 31 March 2021 was shown in Table 1 in the report and more detail was provided in Appendix A section 2, Borrowing Strategy and Outturn, and section 3, Investment Strategy and Outturn. No long term borrowing was taken out in 2020-21 and no debt rescheduling was undertaken as there were no significant savings to be made. However, the loan portfolio will be reviewed during 2021- 22. Favourable cash flows have provided surplus funds for investment and the balance on investments at 31 March 2021 was £51.5 million, with an average interest rate of 0.21%.

Table 2 at Appendix A, detailed the movement of the investments by counterparty types and showed the average balances, interest received, original duration and interest rates for 2020-21.

The Council defined high credit quality as organisations and securities having a credit rating of A- (A3 for Moody’s) or higher and the Council did not invest in any organisation below this level. Appendix B of the report, showed the equivalence table for credit ratings for Fitch, Moody’s and Standard & Poor’s and explains the different investment grades.

There were no long-term investments (original duration of 12 months or more) outstanding as at 31 March 2021. All investments at 31 March 2021 were short term deposits, including instant access and notice accounts.

The TM Code requires the Council to set and report on a number of Treasury Management Indicators. The indicators either summarise the expected activity or introduce limits upon the activity. Details of the estimates for 2020-21 set out in the Council’s TMS, compared to the actual at year end, were shown in section 4 at Appendix A and these reflected that the Council was operating in line with approved limits.

The Deputy Leader confirmed that there were two purposes in order to have in place effective Treasury Management protocols, one to ensure the Council had sufficient funds in place to deal with its day to day business and secondly to ensure that any short term surpluses receive a good rate of return.

RESOLVED:                                 That Council:

1. Approved the annual treasury management activities for 2020-21.

Further approved the actual Treasury Management indicators for 2020-21 against the ones approved in the Treasury Management Strategy 2020-21.