Issue - decisions

Mid Year Treasury Management Report

25/11/2020 - Mid Year Treasury Management Report 2020-21

The Committee considered a report to the Strategy and Resources Committee on 2nd November 2020 by the Head of Resources together with a minute extract (circulated previously) regarding the Mid-Year Treasury Report 2020-21.


The Head of Resources advised that the report had already been subject to consideration by the Strategy and Resources Committee on 2nd November 2020.


He highlighted the following points to the Committee:


·         The updated Treasury Management Strategy Statement and Annual Investment Strategy Update confirmed a reduction in the proposed borrowing requirement of £1.6m.

·         The Revised Prudential Indicator figure of £7.169m was lower than the original estimate due to a number of capital projects, including the Leisure Centre, moving to the 2021-22 financial year. The spend had been re-profiled to the next 2021-22 financial year. This was an improvement of the forecasted figures which were now not expected to exceed £2.25m on external debt.

·         The forecasted borrowing was below the allowed limits and were operated within the Treasury Strategy.

·         The Authority may need to take on a low level of capital borrowing. Internal borrowing would be achieved from the Authority’s own cash reserves in order to delay any requirement for external borrowing for as long as possible in order to reduce costs.

·         The Council’s capital financing requirement (CFR) for 2020-21 was £7.2m. The forecast for 2021-22 showed this increasing by £9.9m (with the bulk of the Leisure Centre spend in the year) giving a total CFR of £17m.

·         The rate of Business Rate Collections may reduce over the next financial year due to the impact from the pandemic

·         Bank rates were currently low (0.1%) and expected to remain so for some time. This resulted in limited investment returns. The Authority had earned £0.041m interest on investments in 2020-21 however the majority of this had been earned within the first two financial quarters of the year. 


In response to questions, the Head of Resources advised;


·         Where some banking institutions were currently offering negative interest rates, this did mean that the investors were being charged on such investments  North Devon Council did not have any investments with products with negative interest rates.  The situation was being monitored and investments could be moved to alternative products if required.

·         There were opportunities to borrow funds while the borrowing rates were low. These funds could be used to fund commercial projects.


RESOLVED, that the decisions and recommendations of the Strategy and Resources Committee be endorsed.


17/11/2020 - Treasury Management Strategy Statement and Annual Investment Strategy: Mid Year Review Report 2020/21

The Committee considered a report by the Chief Financial Officer (circulated previously) regarding the Treasury Management Strategy Statement and Annual Investment Strategy Mid Year Review Report 2020/21.


The Exchequer Manager highlighted the following:


·         The Treasury Management Strategy Statement (TMSS) for 2020/21 was approved by this Council on 26th February 2020.

·         The underlying TMSS approved previously required revision in the light of economic and operational movements during the year as detailed in paragraph 4.1 of the report.

·         The Council’s Capital Position (Prudential Indicators) as detailed in paragraph 4.2 of the report.

·         Changes to the Prudential Indicators for the Capital Financing Requirement, External Debt and Operational Boundary as detailed in paragraph 4.3 of the report.   The forecast Capital Financing Requirement had reduced by circa £1.6m from the original estimate. The majority of this reduction related to the slippage in the Leisure Centre capital project with the spend re-profiled into future years.

·         The forecast operational boundary has reduced by £6m. Delays to the capital programme expenditure, stronger reserve forecasts and the strategy of postponing or delaying external borrowing means that the external borrowing position was not now expected to exceed £2.25m this financial year.

·         Limits to borrowing activity as detailed in paragraph 4.4. of the report.

·         Borrowing strategy as detailed in paragraph 4.5 of the report, which remains to delay external borrowing whilst we can use internal cash flow balances.   The current forecast for next financial year (2021/22) shows CFR increasing by £9.9m with the bulk of the Leisure centre spend in year, giving a total CFR of £17m. This would potentially require £14.5m of external borrowing in addition to internal borrowing.

·         Annual Investment Strategy as detailed in paragraph 4.8 of the report.   As shown by the interest rate forecasts in Appendix A, it was now impossible to earn the level of interest rates commonly seen in previous decades as all investment rates were barely above zero now that Bank Rate was at 0.10%.  The Council held £24.7m of investments as at 30 September 2020 (£16.25m at 31 March 2020).    The Council’s budgeted investment return for 2020/21 was £50,000. As at 30th September 2020 £40,689 investment interest was earned in the half-year period. 

·         Economic and Interests Rates as detailed in Appendix A.





The changes to the prudential indicators be approved;



The report and the treasury activity be noted.