Agenda item

A report with the investment analysis at Annexes A to C was presented, together with commentary from Arlingclose (the Council’s treasury advisors) on the external context for treasury management activity. The report confirmed that, at 31st December 2023:

(i)      total long term treasury investments (over 12 months) amounted to £10.8m

(ii)     short term investments (less than 12 months) amounted to £20.5m

(iii)    the Council also held £16.5m in non-treasury investments, comprising capital loans to specific service providers and limited companies

(iv)    the total amount of Public Works Loan Board (PWLB) loans was £99.4m, comprising £43.4m General Fund loans and £56m Housing Revenue Account loans.

Regarding the Council’s four investment funds (listed below), investment income was forecast to be £649k in excess of budget in 2023/24, although market values represented a carrying loss of £1.3m, a £0.2m improvement from the previous quarter. 

·      CCLA Property Fund

·      Schroders Credit/Bond Fund

·      UBS Multi Asset Fund

·      CCLA Diversification Fund

The 2023/24 surplus had not been factored into the draft General Fund budget and the option of using it to increase the Investment Performance Equalisation Reserve (for mitigating the risk of carrying losses should the ‘IFRS 9 statutory override’ be removed) would have to be considered in due course. Arlingclose were asked to consider advice on the appropriate level to be held in the reserve. This will be considered by Sub-Committee as part of the 2023/24 Outturn reporting. A government decision on the future of the override was not expected until after the next general election.

The report also:

·     explained that the CCLA were proposing to merge its Diversified Income Fund (DIF) with another existing fund under its management, the Better World Cautious Fund (BWCF) - Arlingclose did not foresee any major changes in the risk or return as a result of the conversion; and

·     commented on the discounted Public Works Loan Board interest rate for the HRA, and that fact that, at present, the Council was able to finance HRA loans via internal borrowing.

            R E S O L V E D – that the following be noted:

A.    the Council’s investment and borrowing position at 31^st December 2023 as set out in Annexes A and B;

B.   the Council’s actual performance against the indicators set within the Treasury Management Strategy for 2023/24 in Annexe C;

C.    the commentary from Arlingclose on the external context for treasury management; and

D.    the update on the performance of the Council’s long-term treasury investments.