Agenda item

(To receive a report from Karen Tonge, Treasury Manager, which details the treasury management activities and performance for Quarter 1 of 2021/22 to 30 June 2021)

Consideration was given to a report by the Treasury Manager, which invited the Board to note the Treasury Management Performance for Quarter 1 to 30 June 2021/22 and pass on any comments to the Executive Councillor for Resources, Communications and Commissioning.

The Board was advised that interest rates had remained low as had been forecasted in the strategy; long term rates were at their lowest point at the end of August and the first forecast of short term base rate was now forecast to be in June 2023.

The recent inflationary pressure had seen markets predict an increase in short term base rate as early as February 2022.

The Council's cash balances remained high and the borrowing requirement was estimated to be around  £90m.

The Executive Director – Resources made reference to the work that was on-going around the Chartered Institute of Public Finance and Accountancy (CIPFA) Treasury Management code of practice and Prudential Code, and confirmed that the changes in the codes would have minimal impact on the borrowing and investment operations of Lincolnshire County Council.

Members were encouraged to attend the Treasury Management training event organised for November 2021 that would ensure members were adequately trained and well skilled when considering treasury management  information. This being a new requirement of the new CIPFA Treasury Management Code. 

Members considered the report and during the discussion the following points were noted:

·         The way in which the market was reacting to a potential increase in interest rates provided possible opportunities for the Council to secure long term investments at higher rates  over  benchmark levels. It was part of usual treasury management practices to assess the market and take advantage of advice where possible.

·         Providing local authorities could demonstrate they had practiced good governance and risk management when undertaking investments for commercial activities, there should be minimal impact as a result of the changes to the CIPFA code of conduct. CIPFA and the Government were aiming to target authorities which were carrying out high risk activity purely to create a return. 

·         The Board suggested that commercial investments within local authorities must provide an added benefit for local areas, such as investing in jobs or wealth creation. 

·         There was much uncertainty surrounding the Government's budget announcement, with efficiencies expected.  The Executive Director – Resources informed the Board that following the recent announcements around social care reform, it was understood that there would be potential flexibilities within the adult care precept as well as potential for a review on business rates resets, which Lincolnshire County Council relied on heavily.

·         The Leader of the Council echoed the comments made by the Executive Director – Resources. It was likely that savings would need to be made within the Council. For rural counties the reintroduction of highways maintenance funding was important as it had been cut this year creating additional budgetary pressures. It was hoped that a further announcement on what would be included within the Budget would be made by the end of the calendar year.

·         Members emphasised the need for fairer funding for rural counties and were disappointed to hear the rumours that the fairer funding deal was likely to be deferred.

·         The Treasury Management Strategy for borrowing and investments was  set according to budget levels. Borrowing to other Local Authorities fell under the Council's Investment Policy withing the Strategy and  was not directly related to the budget settlement.

RESOLVED:

That the report be noted;

That a summary of the comments be passed on to the Executive Councillor for Resources, Communications and Commissioning.