Agenda item

2020/21 Treasury Update Report and 2021/22 Treasury Management Strategy


The Finance Manager gave an update on treasury management for the current year and the Treasury Management Strategy for 2021/22.  Arlingclose, the Council’s independent advisors had held a seminar for committee members prior to the start of the meeting which covered the key considerations.  The strategy had allowed the Council to take advantage of low interest rates on borrowing and there had been gains of £20m over the last five years.  With regard to longer term borrowing the PWLB reduced their rates by 100 basis points in November 2020, which was beneficial to the Council.  The interest rates included in the Council’s 2020/21 budget and proposed 2021/22 budget were greater than all of the current PWLB rates so the Council had a very robust treasury strategy in place.  The report also set out Prudential Indicators associated with Treasury Management and the Council’s minimum revenue provision which was required through regulation and was in line with previous years.  If any changes were made to the Treasury Management Strategy prior to going to Cabinet or Full Council it would be circulated to Committee Members for information.


The Group Accountant gave a brief overview of the portfolio position as at the 31 December 2020.  The report also provided the economic background including interest rates and the Government’s quantative easing programme and gave an indicative base rate for the interest rate going forward.  Temporary borrowing had been undertaken on a local authority to local authority basis with no PWLB borrowing taken out during 2020/21 and any investments were generated through cash flow activity.  The Treasury Management Strategy going forward for the year ahead was a continuation from 2020/21 and followed regulatory requirements.  There was little change in the borrowing strategy with short term borrowing currently being undertaken when required.  Reviews enabling the Council to lock into longer term borrowing when the conditions were right whilst maintaining security and retaining access to liquid funds were ongoing.  Under the Markets Finanical Instruments Directive (MIFID) the Council would remain a professional client as they had done since it was introduced and were compliant with the regulatory position in setting a balanced budget.  The 2021/22 MRP Statement was set out and was in line with previous years.  Monitoring, reporting and training were continuing as set out in the Codes.  Arlingclose would continue as the Council’s Treasury Management advisors for a further twelve months and Prudential Indicators for 2020/21-2024/25 were set out in the report.


During the debate some Members asked what were the views on inflation rates going forward and if they would creep up higher than expected and what was the impact on interest rates.


The Group Accountant explained that Arlingclose had predicted that the interest rate would remain at 0.1% until the first quarter of 2024.


Upon being put to the vote it was:-




a)    the treasury management activities for the first half year be noted;


b)   the Treasury Management Policy Statement be noted and;


c)      the Treasury Strategy, including the Annual Investment Strategy for 2021/22 together with the associated Treasury Prudential Indicators and the Minimum Revenue Provision Statement, which will apply from 2020/21 be recommended for approval at Cabinet and Full Council.

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