Issue - meetings

Treasury Management - Annual Report 2021/22

Meeting: 22/06/2022 - Executive, Resources and Contracts Policy Development and Scrutiny Committee (Item 18)

18 Treasury Management - Annual Report 2021/22 pdf icon PDF 499 KB

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The report presented the provisional final outturn for the Local Authority at both Portfolio and Council-wide level for the 2021/22 financial year, including a £290k increase in General Fund balances, subject to the recommendations in the report being agreed.  The report also set out the potential implications of the Council’s financial position for the 2022/23 financial year.


The Chairman welcomed the annual Treasury Management report which outlined £13M revenue that the Local Authority had generated via its investments in the 2021/22 financial year to be reinvested in service provision.  It was noted that a number of the Local Authority’s loans had recently or would shortly mature and, as interest rates were increasing, it was planned to reinvest these funds in short-term investments.  Alternative investments were also used by the Local Authority including the CCLA Local Authority Property Fund, which was a successful low risk, long-term investment that generated significant capital.  A Member underlined the need for the Local Authority to uphold environmental, social and governance standards in its treasury management and the Chairman confirmed that the Local Authority’s investments were all made to banks or other parties based in the UK to which UK rules were applied and regulated by the Bank of England.  The Chairman further noted that the Local Authority had a fiduciary duty to invest in funds with a reasonable rate of return.  A Member welcomed a loan to Project Beckenham which was a very secure loan made in June 2017 at a good rate of interest and had supported the provision of temporary accommodation within the Borough. Another Member recommended caution with regards to future investment in sterling bonds due to current disruptions in the market.


In response to a question from a Member, the Director of Finance explained that from 2018/19, Local Authorities had been required to account for financial instruments in accordance with IFRS9 which required changes in the capital value of pooled fund investments to be recognised in revenue in-year.  Regulations providing a statutory override to reverse the impact of IFRS9 on the Local Authority’s General Fund were subsequently introduced in December 2018 and would expire in March 2023, after which it was intended for movements in value to be recognised in-year.  In preparation for this change and due to the potentially volatile nature of these investments, interest/dividend earnings above 2.5% for 2018/19 and 2019/20 and above 2% for 2020/21 and 2021/22 had been set aside in an Income Equalisation earmarked reserve to protect the Local Authority against unexpected variations in the capital value of these investments and any timing issues as the statutory override ceased.


RESOLVED: That the Portfolio Holder be recommended to:


·  Note the Treasury Management Annual Report for the 2021/22 financial year;


·  Approve the actual prudential indicators within the report; and,


·  Note the publication of the revised Treasury Management and Prudential Codes, with formal adoption required in 2023/24.