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Agenda item
Annual Treasury Management Outturn Report 2019/2020
- Meeting of Audit Committee, Thursday, 12th November, 2020 6.00 pm (Item 91.)
- View the background to item 91.
Minutes:
The Assistant Director Financial Services and Revenues (Chief Finance Officer) presented a report to enable the Audit Committee to scrutinise the Treasury Management activities and performance of the last financial year.
The report reviews 2019/20 and generally before the main impact of the COVID-19 crisis. The current crisis has highlighted that good treasury management remains critical. The Council, as a result, has been able to maintain effective management of its money, services and reserves. The Council’s money has been available when required. This has been achieved through the adopted policies and strategies the Council currently has. It is recommended that the policies and practices are not changed for the year - as they are currently proving to be effective.
In the year there was £12million of capital expenditure of which £9 million was financed through borrowing. The council had a small under borrowing position at year end. Paragraph 19, table 4 shows a breakdown of the loans the council has taken. In terms of investment returns, the performance was better than estimated. The interest rates are still at historically low levels but there was a 1% hike in borrowing rates in October 2019 for the PWLB (Public Works Loan Board). The council has not borrowed anything in advance of its need and has not borrowed since the interest rate hike.
The COVID-19 crisis did impact on the investments with CCLA e.g. property Fund. Paragraphs 48, 49 and 50 talk of this impact. These investments are recovering their Capital values and the Council continues to obtain a good revenue return from the dividends – there is no intention to sell these investments.
Within the report there are also details of the investments we have been making including details of the loans to the Hastings Housing Company.
The councillors thanked him for the delivering a detailed report.
Councillors asked about Hastings Housing Company. HBC are lending money for them to buy housing. The company are not repaying the capital loans but have been repaying the revenue loan advanced. When the company started, they were, as expected, in a deficit. They are now in a financial position repay the loan. The interest rate payable by the company is a market rate and this requirement is beneficial to the council as this is higher than currently obtainable in the market.
Councillors asked about the PWLB rates. These rates are set by the Debt Management Office based on policy from central government. The PWLB has a limit on the borrowing they can give out. They raised the interest rates to reduce the levels of borrowing – particularly for purchasing investment properties. The government is currently reviewing how the PWLB is working. There is hope that the rates will drop. The Council’s property portfolio continues to perform well – although a number of tenants are facing difficulties.
Councillors asked about where the council has lent money to other authorities. We lend to other authorities, on a short-term basis when cash flow permit; this is cost-effective for both parties. The Council has been careful who they have lent to.
RESOLVED- (Unanimously)
1. To consider the report – no recommendations are being made to amend the current Treasury Management Strategy as a result of this review.
Reasons for Recommendations
To ensure that members are fully aware of the activities undertaken in the last financial year, that Codes of Practice have been complied with and that the Council's strategy has been effective in 2019-20.
Under the Code adopted the Full Council are required to consider the report and any recommendations made.
Supporting documents:
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