Agenda item

Treasury management mid-year monitoring report 2022/23

To receive a report from the head of finance.

Minutes:

The committee considered the treasury management mid-year monitoring report 2022/23 which was presented by the head of finance. This report detailed the council’s treasury activities for the first six months of 2022/23, provided an update on the current economic climate, and looked ahead to treasury activities for the remainder of the year.

 

The head of finance also confirmed that, as depicted in the table in paragraph 14 of the report, forecast investment is likely to exceed budget expectations due to the interest rates rise as this was not foreseen when the budget was set. In addition, the head of finance confirmed that neither South Oxfordshire or the Vale of White Horse District Councils borrowed during the first half of the year, there was no borrowing forecast for the rest of the year, and that both councils remained within all prudential indicators and counter party limits.

 

Members then asked the head of finance about Thurrock Council, to whom both South and Vale District Councils had lent money to and had recently entered into economic difficulties. In response, the head of finance confirmed that, as Thurrock Council remained a government backed entity, he had been advised by the council’s treasury management advisers that all councils are viewed as being on the same level of risk and so there was not expected to be any issues with the loans, as councils are required to honour all their financial commitments.

 

In addition, it was confirmed that the forward deal of lending previously agreed with Thurrock has been mutually agreed to be withdrawn. Overall, the head of finance confirmed that all of the owed maturities were received on time, and he anticipated no problems with future repayments.

 

The committee then asked about the difference between the current rate of interest charged on a loan from the money markets and from the Public Works Loan Board (PWLB) (the government agency that lends to local government bodies). In response, the head of finance clarified that the PWLB rates were linked to the governments gilt yields and not the Bank of England’s base rate, as the money markets were. In practice this meant that the PWLB normally was the lowest rate local councils could borrow from. However, due to the recent increases in interest rates it could seem that a loan taken out before the rate increase with the PWLB was less competitive than one taken from the monkey markets. However, when interest rates fell again, the head of finance said that the loan may look might competitive again. It was emphasised however, that neither council has borrowed in the past half year or was predicted to need to borrow from the remainder of the year.

 

Members also inquired about the councils’ investments, primarily about the CCLA pooled property fund (who possess a wide portfolio of property in different areas and sectors) in which the head of finance confirmed to the committee that the councils had acted in accordance with the strategy at all times. It was emphasised however, that treasury management investments were separate from capital investments and therefore if the councils invested in a housing association that would be because it met the investment criteria as a suitable counterparty under the strategy and not due to its output or because it has some geographic link.

 

Overall, the committee was satisfied with the report and agreed to recommend that it be approved by cabinet and the council.

 

 

South Oxfordshire District Council RESOLVED: that the committee:

 

  1. notes the treasury management mid-year monitoring report 2022/23.
  2. is satisfied that the treasury activities are carried out in accordance with the treasury management strategy and policy.

 

And that they recommend that the cabinet:

  1. consider the comments from the Joint Audit and Governance Committee and recommend that the council approve the report.

 

Vale of White Horse District Council RESOLVED: that the committee:

 

  1. notes the treasury management mid-year monitoring report 2022/23.
  2. is satisfied that the treasury activities are carried out in accordance with the treasury management strategy and policy.

 

And that they recommend that the cabinet:

  1. consider the comments from the Joint Audit and Governance Committee and recommend that the council approve the report.

 

Supporting documents:

 

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