Agenda item

Agenda item

Treasury Management Performance

On 09 September the Cabinet will consider a report on Treasury Management Performance 2019/20. The Panel is asked to consider the report, making any recommendations to Cabinet as it sees fit.

Bill Lewis, Financial Accounting Manager, will be at the meeting to present the report.


The Financial Accounting Manager introduced the Treasury Management Annual Report 2019/20. He reported that the Council had fully complied with its Treasury Management Strategy and prudential indicators.

The overall performance for investment and debt reported at the year ending 31 March 2020 was better than had been budgeted for. This was due to slippage in the capital programme resulting in lower debt and higher investments than planned. The reduction in the base rate from 0.25% to 0.1% announced on 19 March 2020 had not impacted the Council’s returns on its long term and money market investments within the reporting period.

The values of the Council’s property funds had seen a reduction at the year-end however this did not represent a loss position for the Council although there was now material uncertainty placed on the value of commercial property and property funds.

Investment rates had fallen since the end of March 2020 meaning the treasury performance would not be as strong in the current financial year however the deferment of capital schemes resulting from the Covid-19 pandemic would provide some mitigation.

A crucial factor for the Council in the current year would be the impacts of the pandemic and the current economic conditions on the Council’s wholly owned companies, particularly the Housing Group (Oxford City Housing Limited and its subsidiaries).

The Head of Financial Services highlighted that the Council had achieved an average return of 1.27% in 2019/20 whereas it was currently only able to secure investment returns of 0.35%. The Council’s cash balances had been impacted by the Council’s response to Covid-19 and a reduction in income in the order of £10m.

The Panel asked a number of questions and in discussion noted the following:

·         The need for careful prioritisation within the capital programme in the current economic climate.

·         The Council was able to achieve good returns by investing in other local authorities prior to the end of March 2020 but this was no longer the case.

·         The Council was planning to refinance a £20m tranche of its external debt which was due to be repaid in March 2021. The Council was currently able to achieve a significantly improved interest rate on this debt but was not planning to borrow in advance of need at the current time.

·         A planned 1% increase to interest rates offered by the Public Works Loan Board was expected to be waived, subject to consultation.

·         The Treasury Management Strategy and the prudential indicators within it had been set in parallel with the budget setting process, prior to the end of the previous financial year, hence table 2 compared the actual capital financing requirement with estimated opening balance.

·         Tables 1 and 2 were incorrectly titled and provided data for the 2019-20 financial year only.

·         Cash had performed better than fixed term investments for the majority of the reporting period, which was unusual. Treasury officers monitored this position closely in order to maximise returns for the Council.

·         The Operational Boundary Limit (para. 20) was set at a level that provided the Council with freedom to borrow in advance of need to fund the items in the capital programme, should it wish to do so. It was a matter of profession judgement as to what level of borrowing would be affordable for the Council both immediately and in future.

·         Members could expect to see a full assessment of the Council’s treasury position in the context of the pandemic and the base rate reduction in the half year treasury performance report in December 2020.

The Panel noted the report and thanked officers for their work.


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