Agenda item

Treasury and Prudential Indicator Management Report - Quarter 2

To consider and provide a recommendation to Cabinet on the proposals set out in the attached report.


Jane Fineman, Head of Finance, Procurement and Parking introduced the report that updated Members on investments held by the Council and the interest received from those investments for the period 1 April to 30 September 2020.


Discussion and responses to Members questions included the following:


-       The projected interest from investments and bank interests for 2021 was £446k, a reduction on the budget of £187k.  This was unchanged from quarter 1. 

-       Overall, the expected interest projected was 1.04% compared to the budget of 1.81%.

-       The Council’s opening investment position however was stronger than forecast due to a number of cash flows unrelated to Covid-19.  These included Capital Projects being delayed or removed from the Capital Programme during 2019/20, a surplus held on the Collection Fund as at the 31 March 2020 of £2.5m, a number of large s106 amounts being held on the balance sheet and £842k surplus transferred to the General Fund for 2019/20.

-       As a result of the Pandemic on 27 March 2020, Government paid the Business Rate Reliefs related to 2021.  £2.2m would have normally been spread over the whole of 2021.

-       Government also deferred monthly instalments of £4.5m of Business Rates for the first 3 months of the year.

-       To alleviate pressure on reserves a number of schemes had been delayed until at least April 2021.  This would also increase cash flow available for this year.

-       Overall, the amount the Council had to invest this year was higher than forecast.  This was despite the negative effect of Covid-19 on income levels and cash flow.

-       The Bank of England interest rate remained at 0.1% and another rise was not expected in the next 2 years.

-       The Council was keeping its investments short term or holding them in its current account as there was little incentive to invest longer and forecasting incoming and outgoing cash was far more difficult than usual. 

-       In July, the Council repaid £1m of the PWLB loan. 

-       The value of the £9m investment with the Property Fund as at 30 September 2020 was £10.05m.

-       The £92m included in the Report that related to the Calverley Square project related to the Council’s external debt management limit.  That limit was set by Full Council every year as part of the Treasury Policy and Strategy.  The Council would have the opportunity in February 2021 to amend the figure.  As such the figure remained until Full Council wished to make an amendment to that figure.

-       Negative interest rates were not something the Council had considered.  The Councils funds were held in a Lloyds Bank account that had no provision in the contract for them to charge any more than they were currently charging.  As such for the term of the existing contract the Council could not go into negative interest.  There was also the option for the Council to extend the existing contract should that be beneficial to the Council.

-       A calculation of whether the £20m received from PWLB had cost the Council money or whether the Council had made from it had not been done. 


RESOLVED – That the recommendations to Cabinet set out in the report be supported.

Supporting documents: