Agenda item

The Sub-Committee was presented with a summary of the Council’s investment and borrowing position as per Appendix A and Appendix B , together with updates on the following three matters:

     Statutory override update

    This referred to the ‘override’ of usual accounting practice, which meant that gains and losses in the capital value of investments did not impact on the revenue budget. The Government had still not decided whether to extend, amend or remove the override beyond 31^st March 2023.

    Officers had responded to a Government consultation in August, advocating that the override should be made permanent as it represented the lowest risk to the revenue budget and enabled options to change the mix of investment portfolios if deemed appropriate. The previous analysis of TDC’s investment options in light of whether or not the override continued (submitted to the 17^th June meeting) was re-presented.

     Cash flow strategy and Funding Circle loans

Members were advised that the use of redeemed proceeds from Funding Circle had been under continual refinement since the adoption of a more robust, software-based approach to cash flow forecasting. In this respect, the Council had updated its cash flow projections to 30th September 2023 and a detailed 12-month cash flow analysis had been circulated to members of the Sub-Committee separately. In accordance with advice from Arlingclose (the Council’s treasury advisors) cash balances, including redeemed Funding Circle proceeds, were being used to both:

·      avoid or delay the need to borrow to fund the capital programme; and

·      invest in money market funds.

This would remain the case whilst PWLB loan rates were in the region of 5%, as it represented a positive yield on the cash balances whilst avoiding undue risk.

Prudential Indicators

Performance data against the Council’s prudential indicators (PIs) was presented.

The Chief Finance Officer confirmed that the internal auditors had recently upgraded their assurance opinion on the Council’s arrangements for treasury management from ‘limited’ to ‘reasonable’. Outstanding actions were to comply with key recommendations, namely training for Members; the provision of performance information to the Sub-Committee regarding PIs; and more regular reconciliation of investment balances to the finance system. 

In response to Members’ questions, the Chief Finance Officer advised that:

·     Officers were endeavouring to obtain current information from Funding Circle about redemption proceeds arising from the repayment of its peer-to-peer loans.

·      Information would be provided to members of the Sub-Committee to inform them about how Council’s £3M investment holding with UBS was being applied.

·      Arlingclose had recommended that TDC should consider whether surplus returns from money market funds (generated via rising interest rates) should be allocated to a financial reserve to mitigate against other potential budgetary deficits. The Sub-Committee supported this approach which would ultimately be discussed by the Strategy & Resources Committee, pending confirmation of the surplus position at outturn.

·      Arlingclose had confirmed that the method of calculating revenue yields from money market funds (i.e. forecast return ÷ Net Asset Value) reflected the industry standard.

            R E S O L V E D – that:

A.   the Council’s investment and borrowing position at 30^th September 2022, as set out in Annexes A and B, be noted;

B.    the update on the future of the statutory override be noted;

C.   the update on the Council’s cash flow position and review of the use of redeemed proceeds from Funding Circle loans be noted; and

D.   the update on the Council’s performance against its prudential indicators, as set in the Capital, Investment and Treasury Management Strategy for 2022/23, be noted.

A C T I O N S: