Issue - meetings

2.00 p.m.

Report by Director of Finance.

The report sets out the Treasury Management activity undertaken in the financial year 2019/20 in compliance with the CIPFA Code of Practice.  The report includes Debt and Investment activity, Prudential Indicator Outturn, Investment Strategy, and interest receivable and payable for the financial year.

The Committee is RECOMMENDED to note the report, and to RECOMMEND Council to note the Council’s Treasury Management Activity in 2019/20.

Recommendation agreed.

Tim Chapple introduced the report and highlighted that the prudent decisions made in 2020 to increase lending limits has enabled the Treasury Team to secure deposits in other authorities and has therefore secured budgets for 2020/21, and also some way toward 2021/22.

Tim Chapple responded to points raised by members of the Committee as follows:

• The terms of Section 114 preclude any new contractual arrangements and expenditure; however, this does not preclude paying debts.  Therefore, Councils are not expected to ‘go bust’, they are forced into forming a new Council, and any debts and assets are transferred to the new entity so there is no risk to lost capital.  There are no concerns regarding credit, however there are potential timing issues, and these are being monitored within the team.
• Any Council threatening a Section 114 notice would be a political decision to not lend to that council, however until they issue a Section 114 notice, we would take the view that they are underwritten by the government and there is no credit risk.
• For long term and short-term fixed term deposits, there is a hard limit for those deposits, and we have reached those limits for long term. 
• Another option is lending to banks, however lending to other authorities is the preferred option.

Lorna Baxter reassured members that regardless of the extraordinary circumstances, there is no change to the rules and the government are under statute to underwrite these debts.  The government is clear that authorities in exceptional circumstances such as those that have lost income, are working with them to avoid issuing Section 114 notices.  She stated that OCC is confident that any returns will be issued, and these are a lower risk than lending to banks due the risks associated with bailing, and this information can be included in the next report to the Committee.

RESOLVED to note the report, and the RECOMMEND the Council to note the Council’s Treasury Management Activity in 2019/20.