Mr Kevin Bartle, Interim Corporate Director for Resources and Section 151 Officer, and Mr Allister Bannin, Head of Strategic and Corporate Finance presented the Treasury Management Outturn Report for 2020-21.

Mr Bannin stated the Outturn report for 2020-21 set out how the Council’s investments had performed, in relation to the Treasury Management Strategy and the Key Prudential Indicators that had been agreed by the Council in February 2020. He said £2.74M had been invested as set out in Appendix 1, which provided information on the outstanding investments as at 31^st March 2021.

He said the Council had received £2.4M in investment income, which was slightly above the revised budget of £2.3M but lower than the 2019 performance when £5.4M was achieved. He said this was due to the impact of the pandemic as well as an historic low Bank of England base rate.

With respect to pooled funds, the value of these had dropped to £69.4M at the end of 2019/20 due to the impact of the pandemic on the economy however had bounced back to £76M as at the end of 2020/21. Mr Bannin said the Council’s total return on investments were higher than the benchmark group of local authorities. He said an average credit rating of A+ on the portfolio which was in line with the average of the other local authorities and above the minimum target of A-.

In respect to borrowing, we had repaid a Public Work Loan Board (PWLB) loan of £765K on its maturity date. Mr Bannin said this reduced the total borrowed from £72.3 M to £71.5M as at 31^st March 2021.

In response to questions and comments from Members the following was noted:

• Members stated the summary at page 61 of the agenda was useful. In respect to the total of returns, the strategic corporate funds did well in 2020/21 and for that reason the Council had acquired a higher return than other local authorities.
• In reference to page 67 of the agenda, the Council was not looking to borrow but would look at all the options when deciding the capital programme. The council’s exposure to cash levels varies day to day but the Council does have access to funds when required.
• Regarding the consultation mentioned at paragraph 3.9, the Council does link with other organisations such as London Councils to respond to consultations. Mr Bartle said CIPFA were looking to tighten the code and make the regulations more stringent in regard to how much local authorities can borrow and for them not to make a profit from consequent investments using borrowed funds.
• Councillor Wood asked for clarity regarding the £5M loaned to Slough Borough Council and if this money was safe. Mr Bartle confirmed it was not at risk. He said no local authority had gone bankrupt and said the Government had bailed them out. He said the money was borrowed prior to the problems experienced by Slough and was due to be returned within the next two weeks. Mr Bartle said he was confident this would happen.  (note post Audit Committee meeting; the loan has now been fully repaid by Slough Council in accordance with the terms of the loan).
• Referring to table 3, page 67, Councillor Wood asked why the Banks fixed term rate was 4.34%. He said this was high and asked if this could be reduced? Mr Bartle responded stating decisions taken at the time, without knowledge of what would happen in the future, in relation to interest rates, meant sometimes a higher rate is agreed. He said the Council would have had advice at the time of the borrowing. Mr Bartle said it was difficult to subsequently renegotiate a reduced rate of interest especially as there would be penalties to do so. He said Treasury Management always reviewed the loans taken and considered if it was worth reprofiling the loans however in most cases this was not advisable due to the punitive penalties.

The Audit Committee RESOLVED to:

1. Note the contents of the treasury management activities and performance against targets for the year ending 31 March 2021.
2. Note the Council’s investments as set out in Appendix 1. The balance as at 31 March 2021 was £273.9m.