Agenda item

To consider a report by the Director for Digital, Sustainability and Resources, copy attached as item 7.

Before the Committee was a report from the Director for Digital, Sustainability & Resources, copies of which had been circulated to all Members and copies are attached to the signed copy of these Minutes as Item 7.

The report asked Members to note the Treasury Management mid-year performance for Adur and Worthing Councils at the 30 September 2021, as required by regulations issued under the Local Government Act 2003.

A Member highlighted the ESG money market fund, outlined in paragraph 4.3.1, stating that it was great to see the Council’s investing money in this way - in both ethical and environmental market funds. The Member sought clarification in relation to the Council’s pensions as to whether these were still run through West Sussex County Council. Officers advised that the Pension Fund Investments were still governed by West Sussex County Council who had a panel that reviewed investments. The Councils had a representative on the panel and it was noted that environmental investments were considered by the panel.  

Another Member highlighted that there was another bank the Councils could borrow from, the UK Infrastructure Bank, and sought clarification as to whether this had been considered. Officers advised that the Councils would consider using the bank in situations where they had qualifying projects.

The Committee sought reassurance about reporting on the Treasury Accounts. Officers advised that the vast majority of the Councils’ debts were fixed which helped manage refinancing risk (the risk of interest rates going up). Active conversations were being held to consider fixing an even greater proportion of the Councils’ debts in order to manage interest rates. Inflation was a risk to the Councils budgets, Officers allowed for a figure of 2% in the medium term financial plan. If inflation rose above 2%, particularly pay inflation, it would have serious financial consequences. This was always highlighted as a risk in the financial forecasts. It didn’t directly impact the Treasury Management Budget, which was driven much more by the interest rate itself. Officers were trying to mitigate to the best of their ability the risk of higher borrowing rates. When it came to investments, there would be some gain, as investment returns had been very low over the past few years. The Councils currently received around 0.1%, if not lower, when placing funds.       

A Member sought clarification in relation to the Local Authorities Property Fund, referenced in paragraph 4.3.5 of the report, asking whether it could be used to build homes in the local area. Officers advised that the Local Authorities Property Fund was a cash fund.The Councils were not investing directly, the Councils were investing their resources in a fund which invested in property. Investments needed to be held in the fund for the longer term, as this was where the biggest advantage was in terms of return. This investment returned around 3.8%, the greatest return in the Councils’ portfolios.    

Resolved

The Joint Governance Committee noted the report, including the recommendations for additions to the counterparties contained in section 4.3, and did not wish to refer any comments or suggestions to the Joint Strategic Committee meeting on the 7th December 2021.

The Joint Governance Committee noted that the contract for Treasury advice was due for renewal on 1 April 2022 and that the Chief Financial Officer would be re-procuring the contract.