Agenda item

The Committee is requested to consider the Treasury activity summarised in the report and provide comments to the Cabinet as necessary.

Mr Catlow provided members with an overview of the report as well as providing a verbal update regarding the liquidity figures (Appendix B). A summary of key points highlighted is below;

• The balance’s in table one remain high, this is due to the temporary liquidity provided from the government related to the Covid pandemic and will start to be repaid at the beginning 2022.
• Section 4 of the report, there are no reportable exceptions for the period. Because of the increase in funds the Council are using money market funds to a much greater extent. During the last 6 months the Council have implemented the ‘comply or explain’ approach to ESG investing. In July 2021 there was a significant fair value loss, however since then the markets have continued to recover and continued to recover until the end of August. Market sentiment has turned against some of the sectors from September on fears of inflation and interest rate rises. Overall, the long-term trend is to recover the fair value losses related to the pandemic over the medium term.
• Section 5, non-treasury activity this specifically relates to the Council’s direct investments in properties.
• Section 6 compliance report, paragraph 7 sets out the area that is likely to change the most year on year, there is a focus on credential borrowing and the purposes that local authorities use it for. CIPFA will address this in the new code they are consulting on, which is due to be completed in November 2021.
• The update on the liquidity table figures from 31 September are, 7-day liquidity 49% against a benchmark of 48%, 100-day liquidity is 62% against a benchmark of 65% and the maturity is now 29 days against a benchmark of 32 days

The Chairman then invited questions from members, a summary of those asked are below;

• What was the upper financial limit that the Council could invest in strategic investments, £34million currently in invested? The limit was confirmed as £40million.
• Appendix C, regarding the compliance report it was asked why the Council have a time limit on investments. It was explained that this was to do with risk horizon.
• Paragraph 7.4 CIPFA policy changes, it was queried what principal changes were expected? It was advised that the changes were expected to be wide ranging. Highlighting one area Mr Catlow explained that the Council will need to focus its attention on the risks of borrowing to fund investment properties and non-treasury investments.
• It was queried what was the update from CIPFA on the ESG investments? It was confirmed that a consultation update from CIPFA last week stated that, CIPFA are expecting Council’s to set out their approach in terms of assessing risk for ESG as part of future arrangements. A further update on this would be delivered to members after the consultation had been completed.

Cllr Palmer arrived at the meeting.

·Concerns were raised regarding CIPFA to require the Council to recognise capital losses and gains through the income and expenditure account.

·A query regarding investments using monies from the Public Works Loans Board was raised, specifically it was wanted to be known was this a complete ban or may there be some leeway on this? It was confirmed that currently it states that you don’t borrow above your projected need, in terms of the changes and messages they are not keen on Council’s borrowing for any investment purposes.. 

The Chairman then clarified with Mr Catlow that an update on the CIPFA consultation regarding the new codes would be provided to the Committee. Mr Catlow confirmed the Code updates would be confirmed in the upcoming Treasury workshop in December.

The Committee considered and noted the Treasury activity summarised in the report.