Agenda item

Treasury Management Mid-Year Review 2021/22

To present the report of the Director of Function (Resources)/Section 151 Officer.


The report of the Director of Function (Resources)/Section 151 Officer incorporating the mid-year review of treasury management activities and position was presented for the Committee’s consideration.


The Committee was advised that the situation with regard to the economic position as updated in the report had since moved on with inflation continuing on an upward trajectory which in turn creates pressure to increase the Bank Rate. The table at 3.1 of the report provides an interest rate forecast and is accompanied at Appendix 2 by a commentary on the interest rate situation including the significant risks to the forecast from the ongoing pandemic, unresolved Brexit issues and other factors. The Council’s strategy on investment remains unchanged and is based on prioritising the security of capital and liquidity ahead of returns. In the current economic climate it is considered appropriate to keep investments short term to cover cash flow needs but also to seek out value available in periods up to 12 months with high credit rated financial institutions. The Council has made an investment with Flintshire County Council during the first half of the year and has opened accounts with two new approved banks providing better returns.  The Council like many other local authorities is holding a large cash balance which is mostly on short term deposit. Committing to longer term investments needs to be weighed against the probability of interest rate rises.


No further borrowing was undertaken during the first half of the year and it is not anticipated that any additional external borrowing will need to be undertaken during the second half of the year. There will be a borrowing requirement to fund part of the 2021/22 capital programme but this will be undertaken internally by drawing down the Council’s cash balances thereby delaying capital financing costs while the Council’s cash balance can absorb this internal borrowing. It can be confirmed that during the half year ended 20 September, 2021 the Council has operated within the treasury and prudential indicators set out in its Treasury Management Strategy Statement for 2021/22 and no difficulties are envisaged in complying with these indicators for the remainder of the year.


Points of discussion by the Committee were as follows –


  • The pace of expenditure on the capital programme with the capital spend needing to be significantly accelerated in the second half of the year if the capital programme is to be fulfilled and the expenditure profile realised. The Committee was advised that a number of factors can impact on the delivery of the capital programme in any year with the Covid 19 pandemic and a shortage of labour and materials having affected many of the current year’s schemes. A delay in reaching a decision on the reorganisation of the primary education provision in the Llangefni area also affected the progress of the 21st Century Schools Programme leading to a significant underspend. The Council may also be overly optimistic about its capital programme delivery. At the suggestion of the Finance Scrutiny Panel and in order to improve capital planning and delivery, it is intended to bring the capital programme approval process forward to January so that contracts can be finalised sooner allowing work on schemes to be phased over the summer months thereby reducing the likelihood of slippage due to poor weather conditions. With regard to benchmarking capital delivery performance with that of other authorities, whilst differences in scale and capacity make a meaningful comparison difficult the Service could seek out similarly sized authorities to draw a comparison with. As regards having schemes at the ready that can be brought forward quickly to maximise expenditure the capital programme and budget need to be approved by the Executive; additional schemes or amendments to existing schemes would only be   incorporated in the capital programme at the approval of the Executive.


It was resolved to accept and to note the TM mid-year review report 2021/22 without further comment.



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