Agenda item

Annual Treasury Management Outturn Report 2021-22


The Chief Officer – Finance, Performance and Change presented a report, the purpose of which was 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.

·         Report on the actual Treasury Management Indicators for 2021-22.


The report provided some background information that included a reminder for Members, that the Council’s treasury management advisors were Arlingclose.


The current services provided to the Council in this arrangement, included:


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


With regards to the present situation, the Chief Officer – Finance, Performance and Change, confirmed that the continuing economic recovery from the coronavirus pandemic, together with the war in Ukraine, rising inflation, and higher interest rates were major issues over the 2021-22 financial year. The Bank Base rate was 0.1% at the beginning of the reporting period. April and May 2021 saw the economy gathering momentum as the pandemic restrictions were eased. Despite the

improving outlook, market expectations were that the Bank of England would delay interest rate rises until 2022. However, continually rising inflation changed that. UK CPI was 0.7% in March 2021 but thereafter steadily increased. Initially driven by increases in energy prices and by inflation in sectors such as retail and hospitality which were reopening after the pandemic lockdowns, at that time increases to inflation were believed to be temporary. However, CPI for February 2022 registered 6.2% year on year, up from 5.5% the previous month, she added.


In terms of more financial context, she explained that having increased the Bank Base rate from 0.1% to 0.25% in December 2021, the Bank of England raised it further to 0.5% in February 2022 and 0.75% in March 2022. In its March interest rate announcement, the Monetary Policy

Committee (MPC) noted that the invasion of Ukraine had caused further large increases in energy and other commodity prices, with the expectation that the conflict will worsen supply chain disruptions around the world and push CPI inflation to around 8% later in 2022.


The Chief Officer – Finance, Performance and Change added, that in August 2021 HM Treasury significantly revised guidance for the PWLB

lending facility. Authorities that are purchasing or intending to purchase

investment assets primarily for yield, or financial return, will not be able to

access the PWLB except to refinance existing loans or externalise internal

borrowing. Acceptable use of PWLB borrowing includes service delivery,

housing, regeneration, preventative action, refinancing and treasury

management. Further information in relation to this was shown at paragraph 4.2.2 of the report.


In terms of Treasury Management Outturn, she advised that a summary of the treasury management activities for 2021-22 was shown in

Appendix A to the report. The Council’s external debt and investment position for 1 April 2021 to 31 March 2022 was shown in Table 1 in the report, and further 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 2021-22 and no debt rescheduling was undertaken as there were no significant savings to be made. However, should the opportunity arise to reschedule any loans at a preferential rate, this would be done. Favourable cash flows have provided surplus funds for investment and the balance on investments at 31 March 2022 was £84.07 million, with an average interest rate of 0.43%. This was an increase from the balances at 31 March 2021, when the balance held as £51.55 million at a weighted average interest rate of 0.21%.


The Table 4 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 2021-22.


In presenting the report the Chief Officer - Finance, Performance and Change, referred to the monies invested with Thurrock Council, as a number of members had raised this matter with the service area.


She clarified that investments had been made with that Council previously and the monies had always been returned to Bridgend County Borough Council in accordance with the agreement made. Members expressed concern regarding the placement of the current loans with Thurrock Council, due to their financial difficulties and sought reassurance that the monies would be returned to the Authority on the due dates.


The Chief Officer - Finance, Performance and Change confirmed that the placement of the funds had been done in accordance with the agreed Treasury Management Strategy and that confirmation has been received from Thurrock Council that the relevant sums will be repaid on the due dates.


RESOLVED:                                  That Council:


  1. Noted the annual treasury management activities for 2021-22.

Noted the actual Treasury Management Indicators for 2021-22 against those approved in the Treasury Management Strategy 2021-22.

Supporting documents: