Agenda item

(Report of the Head of Finance & Procurement – Mr Anthony Thomas)

Mr Anthony Thomas (Head of Finance and Procurement) delivered a Presentation on the Mid-Year Treasury Management Report, which covered the projected mid-year (30 September 2020) Treasury Management performance in 2020/21.

The impact of removing the investment in property budget was highlighted and the effect of lower council tax/business rates income and grants.  Mr Thomas said there was a significant collection fund deficit projected in 2020/21 (council tax and business rate income) and said the deficit and grants would impact on the council’s balance sheet at 31 March 2021.  Mr Thomas explained that the government’s mandate suggests that deficits are to be spread over a three-year period and there were indications of further assistance from the government with these collection fund deficits, although no details were yet known. 

The strategic investments current values were illustrated at 31 March, 30 September and 31 October and the projected earmarked volatility reserve figures were explained as held to manage the type of risk.  (Mr Thomas warned that this was very volatile at the moment and a lot of the book loss could either get reduced or increase).

The Treasury Management Practices were reviewed and Mr Thomas said these were all supported by Arlingclose guidance and had been shared recently with the Internal Audit team.  Minor changes had taken place and they had suggested that they be reviewed by this committee and then go to full council for approval.  This was being done so we were compliant with the internal audit recommendations and to ensure the Prudential Indicators were all compliant.

Questions were asked about the collection fund deficit and how Lichfield District Council compared to other authorities, but Mr Thomas said that this was hard to compare as it depended on demographics/nature of business rate payers etc.  Even so, it was felt we were at the lower end of the spectrum of deficit collecting.  In the projections, approximately 5% for non-collections had been assumed based on research undertaken across a cross section of authorities.  Mr Thomas was asked about the investments at other authorities as Croydon LBC had recently been issued with a S.114 noticeand he confirmed we had no investments with that authority and reminded the committee that while upper tier authorities were avoided, all investments would be monitored in the future.  It was noted that the council has an investment with Monmouthshire and yet this was a top tier authority.  Mr Thomas said he believed all authorities in Wales were unitary councils but he agreed to check on this and report back via email to the committee members.  He said he believed that the Welsh government were potentially able to be more financially supportive of local authorities than in England. 

The forecasting spend to date figure was queried and Mr Thomas said some projects had not progressed and this would be revisited, so he anticipated that figure would come down significantly. The investment in the property company income was queried and it was explained that all of the budgets related to the former investment in property.  These budgets had now been removed from the MTFS, although the loan to the property company was still assumed.  However, at this stage the loan had not been requested by the company and therefore the interest receivable assumed in the MTFS would not be receivable.  It was noted that this was a relatively low level value and was only assumed for a five-year period, in line with the terms of the loan agreed by council.  A question was asked regarding investments in call accounts (one with HSBC and one with Lloyds) holding £2m worth of funds.  Mr Thomas explained that it was problematic trying to get counter-parties to take our cash at the moment and so he was trying to place it in a risk-managed level, in terms of the entire portfolio.

RESOLVED:- (1) The Report was reviewed and noted;

(2) The Prudential Indicators contained within the report were reviewed and noted;

(3)  The Committee reviewed and recommended to Council for approval the updated Treasury Management Practices shown at Appendix D.