Issue - meetings

It was resolved –

•           To note that the outturn figures in the report will remain provisional until the audit of the 2019/20 Statement of Accounts is completed and signed off; any resulting significant adjustments to the figures included in the report will be reported as appropriate.

•           To note the provisional 2019/20 prudential and treasury indicators in the report.

•           To accept the Treasury Management Annual Review report for 2019/20, and to recommend it to the Executive without comment.

The report of the Director of Function (Resources)/Section 15 Officer incorporating the Treasury Management Review for 2019/20 was presented for the Committee’s consideration. The review provided a synopsis of the Council’s treasury activities during the 2019/20 financial year including its approach to borrowing and investment.

The Director of Function (Resources)/Section 151 Officer highlighted the following -

•           The external context and the wider factors that have influenced treasury management decisions including the state of the UK economy; interest rate performance during the year; the continued uncertainty over Brexit – especially a no-deal Brexit - and the impact of Covid-19.

•           The internal factors including :

•           The performance of capital expenditure – the table at 3.1 shows the actual capital expenditure and how this was financed. Actual General Fund capital expenditure financed by borrowing was £2m against a projected £7m at the start of the year. The main reason for the underspend was the large underspend on the projects as listed and in particular the £4.547m underspend on 21st Century Schools programme  which has been delayed by further consultation on the schemes in the Llangefni area.

•           Reserves and cash balances – the Council’s cash balances comprise revenue and capital resources and cash flow monies. The Council’s core cash resources are set out in the table at 3.2 of the report and include the Council Fund General Reserve which increased from £5.912m as at 31 March, 2019 to £7.060m as at 31 March, 2020. The Council’s total usable reserves and provisions stood at £31.124m at 31 March, 2020 (compared to £30.078m at 31 March, 2019).

•           Borrowing taken out by the Council – in March, 2020 the Council took out one short-term borrowing with the PWLB to fund planned capital expenditure to the end of the financial year. On 18 March, 2020 the Council made a borrowing of £10m (unplanned at the start of the year) with an interest rate of 2.05% to ensure it had sufficient cash in the bank going into the Covid 19 crisis in light of the uncertainty surrounding that period.

•           Gross borrowing and the Capital Financing Requirement (CFR) – the gross borrowing of £139.2m as at 31 March, 2020 is above the CFR as at 31 March, 2019 but is within the forecast CFR for the following two years (table 3.3.1 refers). The year end-position has exceeded the CFR because of the £10m borrowing taken out in March, 2020; also the global pandemic has meant that capital expenditure in the final month of the year was less than anticipated resulting in external borrowing exceeding the CFR. This is for the short-term as the level of external borrowing will fall below the CFR in 2020/21 as external borrowing is repaid and capital expenditure incurred.

•           Internal borrowing – at the beginning of the year, the internal borrowing position whereby the Council uses its own cash reserves to fund capital expenditure was £6.2m. By taking out the new £10m PWLB loan, the internal borrowing position as  ...  view the full minutes text for item 3