Agenda item

The Committee received a cover report and the Treasury Management Statement for 2019/20 – 2021/22 for comments, prior to its submission to Corporate Committee and Full Council for final approval. The following arose from discussion of the Treasury Management Statement:

a.    The Committee was advised that the Strategy identified £670m of new borrowing over the next three years, which was approximately split into a third for the HRA and two-thirds for the General Fund. In light of the lifting of the HRA debt cap, there had been significant expansion of the capital programme.

b.    The Committee sought clarification about the term ‘unplanned cash flow shortages’ as set out in the report. In response, officers outlined that the organisation handled around £1 billion in income and expenditure over the course of a 12 month period, and that whilst a great deal of work was done to forecast cash flow there were inevitably fluctuations in cash flow levels. Officers reassured the Committee that the organisation would not run out of money as a result.

c.    The Committee sought assurance about the pressure on revenue accounts arising from the Council significantly increasing its levels of borrowing. Officers advised that interest rate costs and the costs of increased borrowing were factored into the MTFS. The Committee noted that parts of the capital programme were predicated on making savings as a result of the introduction of those schemes. Officers elaborated that of the new schemes identified in the Capital Programme; 16% were core funded, 75% were self-funding and therefore predicated on savings, and 9% were based on external funding.

d.    In response to a question, officers agreed to circulate further information in relation to the interest costs arising from the borrowing set out in the TMSS. (Action Thomas Skeen).

e.    In response to a question around the interest rates involved in borrowing money from the Public Works Loan Board, the Committee was advised that the PWLB was widely recognised as having the lowest borrowing costs on the market for local authorities.

f.     In relation to a question around LOBO loans, officers advised that there was very little chance of the lenders increasing the borrowing rates in the short to medium term, whilst interest rates remained low.

g.    In response to a question, officers acknowledged that the authority was fairly risk averse in its investment strategy. This was linked to the fact that the Council held very low levels of cash reserves. The Committee noted that, in contrast to some other London local authorities, Haringey limited the amount of money invested through commercial banks and exposure to bail-in as a result.

h.    The Committee sought clarification around charges for  Minimum Revenue Provision (MRP) overprovision. The Committee noted that the Council was currently on a MRP holiday which created savings within the revenue budget. Officers agreed to circulate a response to members with further information in relation to the historic overprovision of MRP. (Action: Thomas Skeen).

RESOLVED

     I.        That the proposed updated Treasury Management Strategy Statement for 2019/20 – 2021/22 was scrutinised and comments provided prior to its presentation to Corporate Committee and Council for approval.