Agenda item

Treasury Management - Half Year Report 2021-22


The Interim Group Manager – Chief Accountant presented a report which updated the Governance and Audit Committee on the mid-year review and half year position for treasury management activities and treasury management indicators for 2021-22 and highlight compliance with the Council’s policies and practices which had been reported to Cabinet and Council.


He explained that the Governance and Audit Committee had been nominated to be responsible for ensuring effective scrutiny of the Treasury Management Strategy (TMS) and policies. During the 2021-22 financial year to date, in addition to the regular treasury management reports to Cabinet and Council, the Governance and Audit Committee received the Annual Treasury Management Outturn Report 2020-21 in July 2021. Further background was at section 3 of the report.


The Interim Group Manager – Chief Accountant stated that the Council had complied with its legislative and regulatory requirements during the first half of 2021-22. The TMS 2021-22 was approved by Council on 24 February 2021 with the Half Year Report presented on 20 October 2021. A summary of the treasury management activities for the first half of 2021-22 was attached as table 1 in Appendix A.


The Interim Group Manager – Chief Accountant explained that at the start of the financial year, the Council received two instalments of Welsh Government core funding (Revenue Settlement Grant) during April at £12.6 million per instalment and was able to carry forward additional grant funding from 2020-21. As a result, the balance on investments at 30 September 2021 was £79.84 million with an average rate of interest of 0.06%. This was a significant reduction from the same time last year when the average rate was 0.24% and showed the impact of the reductions in interest rates as a result of the pandemic.


He added that the Council had not taken long-term borrowing since March 2012. The TMS 2021-22 anticipated that the Council would need to borrow £30.37 million during the year, however, this was on an assumption that the Council would have £43 million held in usable reserves that it could use in the short term to finance expenditure. As at 31 March 2021 the Council’s usable reserves stood at £114 million, an increase from £83 million as at 31 March 2020, which was not foreseen when the TMS was approved. The Council received £20.6 million from the Welsh Government Hardship Fund, which was more than had been anticipated during the year, as well as further additional grants from Welsh Government in the final quarter of 2020-21 of £8.9 million and capital receipts during the year of £2.9 million, as reported to Council in the Revenue Budget Outturn 2020-21 report on 23 June 2021. Further information was at section 4 of the report.


The Interim Group Manager – Chief Accountant highlighted table 4 of Appendix A which detailed the movement of the investments by counterparty types and shows the average balances, interest received, original duration and interest rates for the first half of 2021-22. Details of the estimates for 2021-22 set out in the Council’s TMS, against current projections, are shown in Appendix A and these showed that the Council was operating in line with the approved limits.  He drew Members’ attention to table 2 of Appendix A which highlighted the liability benchmark. This outlined what the Council may need to borrow to finance the capital programme.


He added that the Council defines high credit quality as organisations and securities having a credit rating of A- or higher and Appendix B shows the equivalence table for credit ratings for Fitch, Moody’s and Standard & Poor’s and explains the different investment grades.


The Lay Member asked in relation to the Council’s reserves what the increase was. The wording in the report led her to believe there was an increase in around £70 million, but only £30 million was shown.


The Interim Deputy Head of Finance stated that the wording had caused confusion and that the increase was in fact around £30 million from the previous year.


The Chairperson asked about the date in the report on page 117, number 3. Could the date be updated from 30th September 2020 to 30th September 2021.


RESOLVED: that the Committee noted the report. 



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