Joint Audit and Governance Committee

Report of Head of Finance

Vale of White Horse District small

Author: Donna Ross

E-mail: donna.ross@southandvale.gov.uk

SODC cabinet member responsible: Councillor Pieter-Paul Barker

Telephone: 01844 212438

E-mail:  pieter-paul.barker@southoxon.gov.uk

 

VWHDC cabinet member responsible:  Councillor Andrew Crawford

Telephone: 01235 772134

E-mail:  andy.crawford@whitehorsedc.gov.uk

 

To: Joint Audit and Governance Committee; Cabinet; Council

DATE:    31 January by Joint Audit and Governance Committee

              2 February (S) / 3 February (V) by Cabinet

              16 February (S) / 15 February (V) by Council

 

 

 

Treasury management mid-year monitoring report

Recommendations

That Joint Audit and Governance 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.

 

That Cabinet:

3.       considers any comments from Joint Audit and Governance Committee and       recommends council to approve the report.

 

Purpose of report

1.       The report fulfils the legislative requirements to ensure the adequate monitoring of the treasury management activities and that each council’s prudential indicators are reported to their respective council mid-year (i.e. as at 30 September).  The report provides details of the treasury activities for the first six months of 2022/23 and an update on the current economic conditions with a view to the remainder of the year.

Strategic objectives

2.       Managing the finances of the authorities in accordance with the treasury management strategy will help to ensure that resources are available to deliver their services and meet the councils’ strategic objectives.

Background

Treasury management

3.       This report has been written in accordance with the requirements of the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Code of Practice on Treasury Management (revised 2017).

 

4.       The primary requirements of the Code are as follows:

 

·           Creation and maintenance of a Treasury Management Policy Statement which sets out the policies and objectives of the Council’s treasury management activities.

 

·           Creation and maintenance of Treasury Management Practices which set out the way the Council will seek to achieve those policies and objectives.

 

·           Receipt by the full council of an annual Treasury Management Strategy Statement - including the Annual Investment Strategy and Minimum Revenue Provision Policy - for the year ahead, a Mid-Year Review Report and an Annual Report, (stewardship report), covering activities during the previous year.

 

·           Delegation by the Councils of responsibilities for implementing and monitoring treasury management policies and practices and for the execution and administration of treasury management decisions.

 

·           Delegation by the Councils of the role of scrutiny of treasury management strategy and policies to a specific named body.

 

5.       This mid-year report has been prepared in compliance with CIPFA’s Code of Practice on Treasury Management, and covers the following:

 

·           An economic update for the first part of the 2022/23 financial year;

·           A review of the Treasury Management Strategy Statement and Annual Investment Strategy;

·           A review of the Councils’ investment portfolios for 2022/23;

·           A review of the Councils’ borrowing strategy for 2022/23;

·           A review of compliance with Treasury and Prudential Limits for 2022/23.

 

6.       The first main function of the treasury management service is to ensure the councils’ cash flow is adequately planned, with surplus monies being invested in low-risk counterparties, providing adequate liquidity initially before considering optimising investment return. The Treasury Management Strategy determines to whom the councils can lend, and this is the manifestation of their risk appetite.

 

7.       The second main function of the treasury management service is to ensure funding for the Councils’ capital plans.  These capital plans provide a guide to the borrowing need of the Councils, essentially the longer-term cash flow planning to ensure the Councils can meet their capital spending operations. This management of longer-term cash may involve arranging long or short-term loans, or using longer term cash flow surpluses, and on occasion any debt previously drawn may be restructured to meet risk or cost objectives.

 

8.       Accordingly, treasury management is defined as:

 

“The management of the local authority’s borrowing, investments and cash flows, its banking, money market and capital market transactions; the effective control of the risks associated with those activities; and the pursuit of optimum performance consistent with those risks.”

 

9.       The 2022/23 treasury management strategy was approved by each council in February 2022.  This report summarises the treasury activity and performance for the first six months of 2022/23 against those prudential indicators and benchmarks set for the year.  It also provides an opportunity to review and subsequently revise limits if required.  Full council is required to approve this report and any amendments to the Treasury Management Strategy.

 

Treasury Strategy

10.    The approved Treasury Management Strategies for 2022/23 were based on a base rate forecast of 0.25 per cent from April rising to 0.5 per cent in June, with a further increase to 0.75 per cent in the last quarter of the financial year.

 

11.    The global economy has changed significantly since the strategy was agreed.  World central banks have increased base interest rates much faster than forecast in response to global inflation.  At the beginning of the financial year UK base rate was 0.75 per cent; the Bank of England raised the rate by 0.25 per cent at both of its Monetary Policy Committee (MPC) meetings in May and June, with base rate at 1.25 per cent by the end of the first quarter of the financial year.  Further rate increases of 0.5 per cent were agreed by the MPC in August and September, with base rate ending quarter 2 at 2.25 per cent.

 

12.    In-house cash balances were deposited with institutions that met each council’s approved credit rating criteria with security of capital remaining the main objective.

 

Treasury activity

13.    The mid-year performance of the two councils is summarised in the tables below[1]


 

 

South

Treasury investments £000

Non treasury loan £000

Sub Total £000

Property investment £000

Overall total £000

1

Average investment balance

192,723

15,000

207,723

17,870

225,593

2

Budgeted investment income

579

312

891

579

1,469

3

Actual investment income

799

312

1,111

563

1,674

4

surplus/(deficit)  (3) - (2)

220

(0)

220

(15)

205

5

Annualised rate of return

0.83%

4.15%

1.07%

6.30%

1.48%

 

 

Vale

Treasury investments £000

Property investment £000

Overall total £000

1

Average investment balance

130,552

7,121

137,673

2

Budgeted investment income

245

71

317

3

Actual investment income

652

155

807

4

surplus/(deficit)  (3) - (2)

407

83

490

5

Annualised rate of return

1.00%

4.34%

1.17%

 

 

14.  The forecast outturn position as at September 2022, based on known investments and maturities and an estimate for future earnings is shown in the table below:

South Oxfordshire District Council

Vale of White Horse District Council

Annual budget as per MTFP

£1,776,730

£488,820

Forecast outturn

£2,452,520

£1,131,303

Variance against budget

£675,790

£642,483

Borrowing

Nil

Nil

 

 

15.    SODCThe latest estimate is that income receivable on cash investments will be above budget by £0.68 million. This is due to frequent increases in interest rates that were unexpected when the budget was set.   

 

16.    VWHDC.  The latest estimate is that income receivable on cash investments will be above budget by £0.64 million. This is due to frequent increases in interest rates that were unexpected when the budget was set.

 

17.    The forecast outturn is based on the expectation of further interest rate rises in the second half of the financial year as the markets are factoring in further increases in Bank Rate in the autumn.  The estimates may prove to be prudent, depending on the rate of increase and the council’s ability to maximise opportunities to invest with appropriate counterparties at higher rates.    

 

Performance measurement

18.    A list of investments as at 30 September 2022 is shown in Appendices A1 and A2

 

19.    The councils’ performance against benchmarks for the first six months of the year are detailed in Appendices A3 and A4.  All investments were with approved counterparties. The average return on these investments is shown above in the table at paragraph 13. 

 

Treasury management limits on activity

20.    Each council is required by the Prudential Code to report on the limits set each year in their respective Treasury Management Strategies.  The purpose of these limits is to ensure that the activity of the treasury functions remain within certain parameters, thereby mitigating risk and reducing the impact of an adverse movement in interest rates.  However, if the limits set are too restrictive, they will impair the opportunities to reduce costs/improve performance.  The performance against the limits for both councils are shown in Appendices B1 and B2.

Debt activity during 2022/23

21.    During the first six months of 2022/23 there has been no need for either of the councils to borrow.  The Head of Finance will continue to take a prudent approach to the councils’ debt strategies.  The prudential indicators and limits set out in Appendices B1 and B2 provide the scope and flexibility for either of the councils to borrow in the short-term up to the maximum limits, if ever such a need arose within the cash flow management activities of the councils in order to achieve their service objectives.

 

Interest rate forecasts

22.    The Councils’ treasury advisor, Link Treasury Services, has provided the following forecast:

 

23.    The latest forecast on 27 September sets out a view that both short and long dated interest rates will be elevated for a while, as the Bank of England seeks to squeeze inflation out of the economy, whilst the government is providing a package of fiscal loosening to try to protect households and businesses from the ravages of ultra-high wholesale gas and electricity prices.

 

24.    The increase in PWLB rates reflects a broad sell-off in sovereign bonds internationally but more so the disaffection investors have with the position of the UK public finances after September’s ‘fiscal event’.  To that end, the MPC has tightened short-term interest rates with a view to trying to slow the economy sufficiently to keep the secondary effects of inflation – as measured by wage rises – under control, but its job is that much harder now.

 

25.    Our PWLB rate forecasts below are based on the Certainty Rate (the standard rate minus 20bps).’

 

 

 

Climate and ecological impact implications

26.    There are no climate or ecological implications arising from this report. As a
responsible investor, the Council is committed to considering environmental,
social, and governance (ESG) issues, and has a particular interest in taking
action against climate change and pursuing activities that have a positive social
impact.

 

27.      As opportunities to support the climate ambitions of the Council arise, they will be
considered. However, the treasury management function is controlled by statute
and by professional guidelines and the first priorities of treasury must remain
security, liquidity, and yield.

 

Financial Implications

28.    These are covered in the body of the report.

 

Legal implications

29.    There are no significant legal implications as a result of the recommendations in this report.  Compliance with the CIPFA Code of Practice for Treasury Management in the Public Services and the CLG Local Government Investment Guidance provides assurance that the councils’ investments are, and will continue to be, within their legal powers.

 

Conclusion

30.    This report provides details of the treasury management activities for the period 1 April 2022 to 30 September 2022 and the mid-year prudential indicators to each respective council.

 

31.    This report also provides the monitoring information for joint audit and governance committee to fulfil its role of scrutinising treasury management activity at each council.

 

Background papers

·           CIPFA Code of Practice on Treasury Management 2017

·           CIPFA Prudential Code 2017

·           CIPFA Treasury Management in the Public Services Guidance Notes 2018

·           CIPFA statement 17.10.18 on borrowing in advance of need and investments in commercial properties

·           CIPFA Bulletin 02 Treasury and Capital Management Update October 2018

·           Statutory investment guidance where it has been updated in 2018 (English local authorities)

·           Statutory MRP guidance where it has been updated in 2018 (English local authorities)

·           Treasury Management Investment Strategy 2022/23 (South Oxfordshire & Vale of White Horse, February 2022)

 

Appendices

A1 – SODC List of investments as at 30 September 2022

A2 – VWHDC List of investments as at 30 September 2022

A3 – SODC Performance against benchmark

A4 – VWHDC Performance against benchmark

B1 – SODC Prudential Indicators

B2 – VWHDC Prudential Indicators

C1 – Note on Prudential Indicators



 

South Oxfordshire

 

Deposits as at 30 September 2022

 

 

 

 

 

 

 

 

 

 

 

 

Deposit

 

Start

Maturity

 

Counterparty

Type

Principal

Date

Date

Rate (%)

Principality Building Society

Fixed

3,000,000

14/10/2021

14/10/2022

0.23%

Progressive Building Society

Fixed

1,000,000

21/10/2021

21/10/2022

0.35%

Progressive Building Society

Fixed

2,000,000

29/10/2021

28/10/2022

0.35%

Goldman Sachs International Bank

Fixed

4,000,000

29/10/2021

28/10/2022

0.82%

Saffron Building Society

Fixed

2,000,000

02/11/2021

02/11/2022

0.35%

Saffron Building Society

Fixed

1,000,000

05/11/2021

04/11/2022

0.35%

National Counties Building Society

Fixed

3,000,000

05/11/2021

04/11/2022

0.50%

Skipton Building Society

Fixed

3,000,000

15/11/2021

15/11/2022

0.20%

Furness Building Society

Fixed

3,000,000

19/11/2021

18/11/2022

0.50%

Monmouthshire Building Society

Fixed

1,000,000

26/11/2021

25/11/2022

0.40%

West Bromwich Building Society

Fixed

4,000,000

29/11/2021

28/11/2022

0.28%

Saffron Building Society

Fixed

3,000,000

10/12/2021

09/12/2022

0.40%

Blaenau Gwent CBC

Fixed

3,000,000

17/12/2021

16/12/2022

0.18%

Blaenau Gwent CBC

Fixed

4,000,000

04/01/2022

03/01/2023

0.20%

Skipton Building Society

Fixed

4,000,000

04/01/2022

04/01/2023

0.25%

West Bromwich Building Society

Fixed

2,000,000

17/01/2022

16/01/2023

0.55%

Thurrock Borough Council

Fixed

3,500,000

18/01/2022

17/01/2023

0.38%

Cumberland Building Society

Fixed

2,000,000

26/01/2022

26/01/2023

0.62%

Goldman Sachs International Bank

Fixed

5,000,000

22/02/2022

21/02/2023

1.72%

Wokingham BC

Fixed

5,000,000

10/03/2022

09/03/2023

1.10%

Principality Building Society

Fixed

2,000,000

23/03/2022

23/03/2023

1.23%

West Bromwich Building Society

Fixed

2,000,000

23/03/2022

23/03/2023

1.15%

Blaenau Gwent CBC

Fixed

3,000,000

08/04/2022

16/04/2023

0.28%

Thurrock Borough Council

Fixed

5,000,000

19/04/2022

18/04/2023

0.75%

National Counties Building Society

Fixed

1,000,000

29/04/2022

28/04/2023

1.63%

Thurrock Borough Council

Fixed

3,000,000

29/04/2022

28/04/2023

0.75%

Thurrock Borough Council

Fixed

5,000,000

20/05/2022

19/05/2023

0.75%

Blaenau Gwent CBC

Fixed

5,000,000

27/06/2022

26/06/2023

0.50%

Monmouthshire Building Society

Fixed

2,000,000

08/08/2022

08/11/2022

1.65%

Principality Building Society

Fixed

2,000,000

08/08/2022

08/11/2022

1.65%

Principality Building Society

Fixed

1,500,000

09/05/2022

09/11/2022

1.75%

Principality Building Society

Fixed

2,000,000

15/08/2022

15/11/2022

1.75%

Furness Building Society

Fixed

2,000,000

18/08/2022

18/11/2022

1.75%

Thurrock Borough Council

Fixed

3,500,000

22/08/2022

22/11/2022

2.04%

National Counties Building Society

Fixed

2,000,000

26/08/2022

28/11/2022

2.00%

Principality Building Society

Fixed

2,000,000

26/08/2022

28/11/2022

2.00%

Goldman Sachs International Bank

Fixed

4,000,000

01/09/2022

01/09/2023

4.05%

Goldman Sachs International Bank

Fixed

2,000,000

13/09/2022

12/09/2023

4.04%

Uttlesford District Council

Fixed

7,000,000

13/09/2022

12/09/2023

3.00%

National Bank of Kuwait

Fixed

3,000,000

15/09/2022

15/09/2023

4.15%

London Borough of Haringey

Fixed

5,000,000

27/09/2022

26/09/2023

3.00%

Santander

Call

410,170

   

Royal Bank of Scotland

Call

98,866

 

Goldman Sachs

MMF

12,625,000

 

Blackrock

MMF

240,000

 

Total short term investments (<1 yr)

135,874,036

 

 

 

 

 

 

 

 

South Oxfordshire Continued

 

Investments as at 30 September 2022

 

 

 

 

 

 

 

 

 

 

 

Deposit

 

Start

Maturity

 

Counterparty

Type

Principal

Date

Date

Rate (%)

Royal Bank of Scotland

Fixed

2,000,000

18/02/2019

20/02/2023

2.46%

Places for People

Fixed

5,000,000

15/03/2021

15/03/2023

1.00%

Places for People

Fixed

5,000,000

01/04/2021

03/04/2023

1.00%

Places for People

Fixed

2,000,000

10/05/2021

10/05/2023

1.00%

Places for People

Fixed

3,000,000

25/06/2021

23/06/2023

1.00%

Gravesham Borough Council

Fixed

3,000,000

30/11/2021

24/04/2024

0.30%

Gravesham Borough Council

Fixed

3,000,000

31/03/2022

31/03/2027

0.75%

London Boro’ - Barking & Dagenham

  Fixed

5,000,000

14/04/2022

14/04/2025

0.30%

Total long term cash deposits (>1 yr)

28,000,000

 

 

 

 

 

CCLA Property Fund

 

7,602,919

 

 

 

L&G Unit Trust

12,424,595

 

Total lnvestments

 

183,901,550

 

 

 

 

 

Returns shown represent prevailing rates at end Q2 2022.

Above figures exclude SOHA loan


 

 

Vale of White Horse District Council

 

 

Deposits as at 30 September 2022

 

 

 

 

 

 

 

 

 

 

 

 

Deposit

 

Start

Maturity

 

Counterparty

Type

Principal

Date

Date

Rate (%)

Thurrock Borough Council

Fixed

5,000,000

27/09/2021

26/09/2022

0.20%

Saffron Building Society

Fixed

3,000,000

01/10/2021

30/09/2022

0.20%

Cambridge Building Society

Fixed

2,000,000

01/10/2021

30/09/2022

0.25%

Furness Building Society

Fixed

3,000,000

29/10/2021

28/10/2022

0.30%

Goldman Sachs International Bank

Fixed

3,000,000

04/11/2021

03/11/2022

0.91%

Monmouthshire Building Society

Fixed

2,000,000

05/08/2022

07/11/2022

1.65%

West Bromwich Building Society

Fixed

3,500,000

11/08/2022

11/11/2022

1.71%

National Counties Building Society

Fixed

3,000,000

15/08/2022

15/11/2022

1.85%

Metropolitan Housing Trust Ltd

Fixed

3,000,000

16/11/2020

16/11/2022

1.10%

Cambridge Building Society

Fixed

1,000,000

17/08/2022

17/11/2022

1.85%

West Bromwich Building Society

Fixed

2,500,000

29/11/2021

28/11/2022

0.36%

Merthyr Tydfil County Borough Council

Fixed

5,000,000

26/08/2022

28/11/2022

1.62%

Monmouthshire Building Society

Fixed

3,000,000

07/12/2021

06/12/2022

0.38%

Principality Building Society

Fixed

2,000,000

13/12/2021

12/12/2022

0.38%

Goldman Sachs International Bank

Fixed

5,000,000

28/01/2022

28/12/2022

1.09%

Progressive Building Society

Fixed

3,000,000

04/01/2022

03/01/2023

0.35%

Thurrock Borough Council

Fixed

3,000,000

04/01/2022

03/01/2023

0.25%

Close Brothers Ltd

Fixed

3,000,000

21/01/2022

20/01/2023

0.90%

Cumberland Building Society

Fixed

2,000,000

26/01/2022

25/01/2023

0.62%

Goldman Sachs International Bank

Fixed

3,000,000

16/02/2022

15/02/2023

1.68%

Blackpool Council

Fixed

4,000,000

22/02/2022

23/01/2023

0.40%

Goldman Sachs International Bank

Fixed

2,000,000

01/03/2021

01/03/2023

0.37%

Close Brothers Ltd

Fixed

2,000,000

07/03/2022

06/03/2023

1.50%

Nat Bank of Kuwait International

Fixed

5,000,000

14/03/2022

13/03/2023

1.65%

Southern Housing Group

Fixed

5,000,000

19/03/2021

20/03/2023

1.00%

Thurrock Borough Council

Fixed

2,000,000

24/03/2022

23/03/2023

1.17%

Newcastle Building Society

Fixed

3,000,000

09/06/2022

08/06/2023

1.65%

Furness Building Society

Fixed

3,000,000

24/06/2022

23/06/2023

2.50%

National Counties Building Society

Fixed

1,000,000

24/06/2022

23/06/2023

2.40%

Nat Bank of Kuwait International

Fixed

5,000,000

29/06/2022

28/06/2023

2.88%

Newcastle Building Society

Fixed

2,500,000

30/06/2022

29/06/2023

2.10%

Progressive Building Society

Fixed

3,000,000

06/07/2022

05/07/2023

2.40%

National Counties Building Society

Fixed

1,000,000

25/07/2022

24/07/2023

2.45%

Saffron Building Society

Fixed

3,000,000

01/09/2022

31/08/2023

2.75%

National Counties Building Society

Fixed

1,000,000

08/09/2022

07/09/2023

2.98%

Principality Building Society

Fixed

3,000,000

08/09/2022

07/09/2023

2.98%

Goldman Sachs Money Market Fund

MMF

4,590,000

1.670%

LGIM Money Market Fund

MMF

14,000,000

1.670%

Total short-term investments (<1 yr)

124,090,000

 

 

 

 

 

 

 

 

 

Vale of White Horse continued

 

Investments as at 30 September 2022

 

 

 

 

 

 

 

 

 

 

 

Deposit

 

Start

Maturity

 

Counterparty

Type

Principal

Date

Date

Rate (%)

Yorkshire Housing Ltd

Fixed

5,000,000

29/04/2021

28/04/2023

1.00%

Places for People Homes Ltd

Fixed

2,000,000

17/06/2021

16/06/2023

1.00%

Gravesham Borough Council

Fixed

3,000,000

28/10/2021

24/04/2024

0.30%

Rotherham MBC

Fixed

5,000,000

25/06/2021

25/06/2024

escalator

Places for People Homes Ltd

Fixed

1,000,000

29/10/2021

27/10/2023

1.00%

Places for People Homes Ltd

Fixed

2,000,000

21/02/2022

21/02/2024

1.00%

Kirklees Council

Fixed

5,000,000

18/03/2022

18/03/2025

0.80%

LB Barking & Dagenham

Fixed

5,000,000

14/04/2022

14/04/2025

escalator

Gravesham Borough Council

Fixed

3,000,000

16/05/2022

17/05/2027

escalator

Total long term cash deposits (>1 yr)

31,000,000

 

 

 

 

 

CCLA Property Fund

 

2,000,000

 

 

 

 

 

Total lnvestments

 

157,090,000

 

 

 

 

 

 

 

 

 


 

South Oxfordshire District Council

Investment returns achieved against benchmark

 

 

 

 

Benchmark Return

Actual Return

Growth (Below)/above Benchmark

Benchmarks

 

 

 

 

 

 

Bank & Building Society deposits - internally managed (6mths to 30/09)

 

1.70%

1.19%

(0.51)%

3 Month SONIA

L&G UK Index Trust (12mths to 30/09)

 

-4.41%

-4.35%

0.06%

 

FTSE All Shares Index

 

 

 

 

 

 

§  Fixed rate deposits arranged prior to the start of the financial year achieved prevailing market rates at the time of arrangement, which were lower than the market rates available during the first half of 2022-23. Following rises in the base rate during the period some new deposits achieved returns above benchmark, however existing unmatured loans caused a below average benchmark return for the in-house portfolio.

CCLA

Annualised total return performance

 

 

 

Performance to 30 September 2022

1 year

3 years

5 years

The local authorities property fund

14.59%

8.80%

7.69%

Benchmark - IPD property index

13.30%

7.56%

6.97%


§  The CCLA investment is a long-term holding.  The above table shows the performance of the fund as a whole and the longer term performance should be used as a guide to returns achievable in the medium term.

§  South invested £5 million into the fund at inception and in the first six months of 2022/23, earned dividends of £136,806.46.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Vale of White Horse District Council

Investment returns achieved against benchmark

 

 

 

Benchmark return

Actual return

Growth (below)/above benchmark

Benchmarks

 

Internally managed - Bank & Building Society deposits (6mths to 30/09)

1.70%

1.04%

(0.66)%

 

3-month SONIA

 

 

 

 

 

§  Fixed rate deposits arranged prior to the start of the financial year achieved prevailing market rates at the time of arrangement, which were lower than the market rates available during the first half of 2022-23. Following rises in the base rate during the period some new deposits achieved returns above benchmark, however existing unmatured loans caused a below average benchmark return for the in-house portfolio.

CCLA

Annualised total return performance

 

 

 

Performance to 30 September 2022

1 year

3 years

5 years

The local authorities property fund

14.59%

8.80%

7.69%

Benchmark - IPD property index

13.30%

7.56%

6.97%

 

 

§  The CCLA investment is a long-term holding.  The above table shows the performance of the fund as a whole and the longer-term performance should be used as a guide to returns achievable in the medium term.

§  Vale invested £2 million into the fund at inception, and in the first six months of 2022/23 earned dividends of £54,727.49.

 

 

 

 

 

 


 

South Oxfordshire District Council

 

Prudential indicators as at 30th September 2022

 

 

 

2022/23

Actual as at

 

Original Estimate

30-Sep

Debt

£m

£m

Authorised limit for external debt

 

Borrowing

30

0

Other long-term liabilities

0

0

 

30

0

Operational boundary for external debt

 

Borrowing

25

0

Other long-term liabilities

0

0

 

25

0

Interest rate exposures

 

Maximum fixed rate borrowing

100%

0

Maximum variable rate borrowing

100%

0

 

 

Investments

 

Interest rate exposures

 

Limits on fixed interest rates

100%

82%

Limits on variable interest rates

50

33.4

 

 

Principal sums invested > 364 days

 

Upper limit for principal sums invested >364 days

70

28

 

 

 

 


 

 

Vale of White Horse District Council

 

Prudential indicators as at 30th September 2022

 

 

 

 

2020/21

Actual as at

 

Original estimate

30-Sep

 

£m

£m

Authorised limit for external debt

 

Borrowing

30

0

Other long-term liabilities

5

0

 

35

0

Operational boundary for external debt

 

Borrowing

25

0

Other long-term liabilities

5

0

 

30

0

Interest rate exposures

 

Maximum fixed rate borrowing

100%

0

Maximum variable rate borrowing

100%

0

 

 

Investments

 

Interest rate exposures

 

Limits on fixed interest rates

100%

87%

Limits on variable interest rates

100

20.59

 

 

Principal sums invested > 364 days

 

Upper limit for principal sums invested >364 days

45

31

 

 

 

 

 

 


 


Prudential indicators – explanatory note

Debt

There are two limits on external debt: the ‘Operational Boundary’ and the ‘Authorised Limit’.   Both are consistent with the current commitments, existing plans and the proposals in the budget report for capital expenditure and financing, and with approved treasury management policy statement and practices.  They are both based on estimates of most likely, but not worst-case scenario. 

The key difference is that the Authorised Limit cannot be breached without prior approval of the Council.  It therefore includes more headroom to take account of eventualities such as delays in generating capital receipts, forward borrowing to take advantage of attractive interest rates, use of borrowing in place of operational leasing, “invest to save” projects, occasional short term borrowing to cover temporary revenue cash flow shortfalls as well as an assessment of risks involved in managing cash flows. 

The Operational Boundary is a more realistic indicator of the likely position.

Interest rate exposures

The maximum proportion of interest on borrowing which is subject to fixed/variable rate of interest.

Investments

Interest rate exposure

The purpose of these indicators is to set ranges that will limit exposure to interest rate movement. The indicator required by the Treasury Management Code considers the net position of borrowing and investment and is based on principal sums outstanding.

Principal sums invested

This indicator sets a limit on the level of investments that can be made for more than 364 days.

 



[1] For property, the balance shown is the fair value of investment properties as at 31 March 2022.