Issue - meetings

To receive a report from the Executive Director of Resources presenting the Council’s Annual Treasury Management Report for 2019 - 20 in accordance with Treasury Management Practices. 

Council is asked to approve the recommendations in the report. 

It is a regulatory requirement for Council to receive this report by 30 September each year. (Key Decision Reference Number: KD: 5152)

Councillor Maguire moved and Councillor Caliskan seconded the report of the Executive Director Resources presenting the Council’s Annual Treasury Management Outturn Report for 2019-20.

NOTED

1.            The report had been considered by Cabinet on 15 July 2020 and recommended onto Council for approval.

2.            The points raised by Councillor Maguire proposing the report: 

·         The outstanding borrowing to 31 March 2020 was £968.9 including £240m long term borrowing from the Public Works Loan Board (PWLB) which had replaced higher interest loans. 

·         In March 2020 £80m PWLB borrowing was raised with an average rate of 1.45% - loans maturing in 50 years for HRA projects taking advantage of the low interest rate. 

·         Capital financing was £48.9m less than forecast and there had been no debt rescheduling. 

·         The table on the first page of the report summarises the Council position.  Table 1 contains the balance sheet summary, table 2 the Treasury Management Summary, Table 3 the Treasury Management Borrowing Summary, Table 4 Capital Financing Requirements, Table 5 Cost of Borrowing.

·         Capital finance had increased and would increase further to pay for capital projects

·         The Council had 90 loans repayable over 50 years which helps to spread the risk.

·         During the year the Council’s investment balance ranged between £5million and £147 due to timing differences between income and expenditure.

·         Enfield had not invested in out of town shopping centres, an issue that had been highlighted by the Public Works Loans Board, unlike some boroughs

·         Approving the removal of the 75% cap on total aggregate investments would give much needed flexibility and increasing money limits will enable the Council to earn more from cash deposits.

3.            The following highlighted by the Majority Opposition Group:     

·         Concern about the high levels of borrowing which currently stood at nearly £1billion. 

·         Concern that the Council’s money belonged to the people of Enfield and should be spent prudently.  Current debt averaged £3,500 per resident.

·         The view that too much was being spent on projects such as Meridian Water and that the properties being built would be out of the reach of ordinary Enfield people.

·         Concern that £3.2m was being spent from the current revenue account to service the debt.  The view that this should be being spent on day to day services instead.

·         Post Covid, there was a risk that interest rates would increase.

·         Current levels of borrowing were felt to be unsustainable and could lead to financial problems in the future.  The administration was leaving a legacy of debt which would have to be paid back by future generations.  

·         Concern that borrowing had increased by £147m in one year.

·         That the Council should be looking to the private sector as a source of investment, rather than doing things themselves.

·         The view that projects such as Meridian Water, Elizabeth House and Reardon Court were being poorly managed and would have succeeded better if the private sector had been involved. 

·         Commendation for the clarity of the report. 

·         Reprofiling and rescheduling debt was only putting things off into the future, at  ...  view the full minutes text for item 8

To receive a report from the Executive Director of Resources presenting the Council’s Annual Treasury Management Report for 2018 -19 in accordance with Treasury Management Practices. 

It is a regulatory requirement for Council to receive this report by 30 September each year. (Report No: 41) (Key Decision Reference Number: KD: 4926)

Councillor Maguire moved and Councillor Caliskan seconded the report of the Executive Director Resources presenting the Council’s Annual Treasury Management Report for 2018-19.  (Report No:  41)

NOTED

1.            The points raised by Councillor Maguire proposing the report: 

a.  That the Council was required to produce an annual report each year setting out the Council’s debt, borrowing and interest payments.

b.  Outstanding debt to 31 March 2019 was £844.8m an increase of 148m since April 2018.

c.   Borrowing this year has increased by £125.5m with interest payments of £19.6m.  The Council had kept within its borrowing limits.

d.  The Council borrowed money to fund the capital programme.

e.  Tables in the report show the current borrowing, loans taken out, cost of borrowing and debt spread over 50 years.   

f.    Much of the borrowing is taken from the Public Works Loans Board. 

g.  No debt rescheduling was carried out last year.

h.  The Council had provided assistance to schools whose accounts were overdrawn with a revolving credit facility.

i.    When interest rates were low it was cheaper to borrow. 

j.    The current uncertainty arising from BREXIT was being monitored. 

2.            The following highlighted by the Opposition:      

a.    Support for the actions with regard to the schools’ debt.

b.    Praise for the presentation of the report.

c.    Concern about the levels of debt and the view that if the Council borrowed less then they would need less money to service the debt and that this was increasing pressure on the revenue budget and creating problems for the future.

d.    As the Council sets its own borrowing limit it was not difficult to meet it. 

e.    Concern about the consequences of such high debt.  Since 2010 Council debt has increased by £574m and the capital finance requirement gone up by £60m.  Over the next 2 years it would reach £600m.  This was felt to be unsustainable. 

3.            The following highlighted by the Majority Group: 

a.    Thanks for officers and members for the report

b.    Acknowledgement that this was a period with high levels of uncertainty, especially with the issue of BREXIT but that it was appropriate for the Council to strike a balance between borrowing when interest rates were low and achieving cost certainty over the period for which funds were required. 

c.    Making investments now was part of the strategy for the Council’s capital programme and saves money in the future.

d.    It was clear evidence that the Council’s finances were sound and were being managed effectively and efficiently alongside measures for income generation. 

4.            The summing up from Councillor Maguire that the money borrowed was to enable to council to spend to invest, to build houses.  In borrowing they had followed the advice of their external advisors and most of the money had been borrowed from the Public Works Loans Board.  The aim of the Council was to make people’s lives better.

Following the debate, the recommendations in the report were put to the vote and agreed with the following result:

For:  ...  view the full minutes text for item 8