Agenda item

Consideration was given to a report of the Director of Finance on the Treasury Management Review for 2019/20.

The Council was required by regulations issued under the Local Government Act 2003 to produce an annual treasury management review of activities and the actual prudential and treasury indicators for 2019/20.  The report met the requirements of both the CIPFA Code of Practice on Treasury Management (the Code) and the CIPFA Prudential Code for Capital Finance in Local Authorities (the Prudential Code).

During 2019/20 the minimum reporting requirements were that the full Council should receive the following reports:

·         An annual treasury strategy in advance of the year (approved 27 February 2019)

·         A mid-year (minimum) treasury update report (approved 8 January 2020)

·         An annual review following the end of the year describing the activity compared to the strategy (this report).

The regulatory environment placed responsibility on members for the review and scrutiny of treasury management policy and activities.  This report was therefore important in that respect, as it provided details of the outturn position for treasury activities and highlighted compliance with the Council’s policies previously approved by members.

The Council confirmed it had complied with the requirements under the Code to give prior scrutiny to the treasury strategy and the mid-year update.  The Audit Committee was charged with the scrutiny of treasury management activities in Oldham and was, therefore requested to review the content of this annual report prior to consideration by Cabinet and Council (to ensure full compliance with the Code for 2019/20).

During 2019/20, the Council had complied with its legislative and regulatory requirements.  The key actual prudential and treasury indicators, which detailed the impact of capital expenditure activities during the year, with comparators were detailed in the report. Actual capital expenditure was less than the revised budget estimate for 2019/20 presented within the 2020/21 Treasury Management Strategy report which was considered at the Council meeting of 26 February 2020.  The outturn position was significantly less than the £84.332m original capital budget for 2019/20 as approved at Budget Council on 27 February 2019.

During the course of the year, the Capital Programme had seen substantial rephasing.  A number of major schemes including a number of schools’ schemes in the Children’s Services Directorate had been rephased.  The Asset Management (Education) Essential Condition Works provision was realigned into future years to align with other works being undertaken at schools.  Housing Revenue Account (HRA) schemes were re-phased into 2020/21 to align with the latest HRA Strategy.  In addition, the ‘Creating a Better Place’ Strategy required a number of existing regeneration projects to be reviewed and rephased to align to the long-term vision of the strategy.  Also, during the year, the IT Capital Strategy, the Strategic Roadmap, had been reviewed.  The outcome was a rephasing of resources which ensured that the Council’s future IT offer took account of new innovations in IT and created efficiencies that would complement future ways of working.

Borrowing of £20m was undertaken during the year.  Member training on treasury management issues was undertaken on 1 October 2019 in order to support Members and senior members of staff in their scrutiny role.

The report also detailed other prudential and treasury indicators.  The report summarised the following:

·         Council’s capital expenditure and financing during the year;

·         Impact of this activity on the Council’s underlying indebtedness (the Capital Financing Requirement);

·         Actual prudential and treasury indicators;

·         Overall treasury position identifying how the Council has borrowed in relation to this indebtedness, and the impact on investment balances;

·         Summary of interest rate movements in the year;

·         Detailed debt activity; and

·         Detailed investment activity.

The Director of Finance confirmed that the statutory borrowing limit (the authorised limit) had not been breached.

The challenging investment environment of previous years, namely low investment returns, continued in the 2019/20 financial year.

Members congratulated the Finance Team on the hard work in the completion of the accounts.

Members sought and received clarification on the capital expenditure.  Members were informed that capital receipts were constantly reviewed.  The level of capital receipts was linked to disposals.  There was some slippage which could be related to maximising potential return for the Council and for due process to be followed.  There was no particular challenge around the non-delivery in terms of receipts, however the 2020/21 position would be different due to the pandemic as activity around disposal had significantly reduced.  Members were provided information on the use of the capital grant.

Members sought and received clarification on the loans and leases.  The members were also provided with an update on the reprofiling of the capital programme which included the Creating a Better Place programme, rephasing into future years and the IT strategy.

RESOLVED that:

1.         The actual 2019/20 prudential and treasury indicators presented in the report be approved.

2.         The Annual Treasury Management Report for 2019/20 be approved.

3.         The Treasury Management Review 2019/20 report be commended to Cabinet.