MD2572 2018/19 Treasury Management Outturn & 2019/20 Mid-Year Report

Type of decision: 
Mayoral decision
Code: 
MD2572
Date signed: 
14 January 2020
Decision by: 
Sadiq Khan, Mayor of London

Executive summary

This decision outlines the Greater London Authority’s investment activities for the financial year ending 31 March 2019 as well as activities for mid-year to 30 September 2019.

The report is submitted in accordance with a requirement under the Treasury Management in the Public Services Code of Practice (The Code), issued by the Chartered Institute of Public Finance and Accountancy (CIPFA), which requires the submission of an annual report on the performance of the treasury management function, on the effects of the decisions taken and the transactions executed during the reporting period.

Decision

That the Mayor notes the following:

• the Treasury Management activities and the performance against its benchmark in the year 2018/19 and first half of the 2019/20 financial year;
• the balance of investments as at 31 March 2019 and 30 September 2019;
• the outstanding loan balances as at 31 March 2019 and 30 September 2019;
• the acquisition of London Treasury Limited (LTL) by the GLA; and
• that all Treasury activities in the reporting period have been within the boundaries and levels set by the Authority.

Part 1: Non-confidential facts and advice

Introduction and background

The purpose of this Decision Form is to note:

• both borrowing and investment activities of the treasury function under delegated authority for the financial year 2018/19 and mid-year to 30 September 2019;
• the 2018/19 Treasury Outturn performance against the Treasury Management Strategy Statement (TMSS) approved under MD2274 (amended under MD2445);
• the 2019/20 mid-year performance against the Treasury Management Strategy Statement (TMSS) approved under MD2458; and
• the acquisition of London Treasury Limited (LTL) by the GLA approved under MD2303.

No action arises from this decision, unless the Mayor wishes to raise any issues or provide feedback on the information contained herein.

Summary of performance

Returns on cash balances for the financial year 2018/19 equated to £19.79m, against a Treasury Budget of £13m, an outperformance of 34.0% in 2018/19. In 2019/20, the mid-year return was £14.98m against a half year budget of £6.85m.

Investment balances for the GLA were £2,772.25m as at 31 March 2019 and £3,488.27m as at 30 September 2019.

The debt portfolio increased from £3,798.04m at the start of 2018/19 to £4,255.12m at the end of the year. It then increased to £4,726.31m at 30 September 2019.

All treasury management activities were carried out in accordance with the approved Treasury Management Strategy Statement (TMSS).

During 2018/19:

• the GLA acquired a Financial Services Market Act 2000 authorised subsidiary company called London Treasury Limited (LTL) (MD2303); and
• the TMSS was amended in Q4 of 2018/19 (MD2445).

Equality comments

Under Section 149 of the Equality Act 2010, as a public authority, the Mayor of London must have ‘due regard’ to the need to eliminate unlawful discrimination, harassment and victimisation as well as to advance equality of opportunity and foster good relations between people who have a protected characteristic and those who do not.

There are no direct public sector equality duty implications arising directly from this report.

Other considerations

Key risks and issues

Increasing the level of borrowing is a key risk. The GLA entered into a loan agreement for a total of £1.3bn with the Department for Transport (DfT) as part of the funding for Crossrail Limited’s cost overruns identified in December 2018. A total of £728m was drawn from the amount during the reporting period.

Links to Mayoral strategies and priorities

Effective management of long-term financing is key to the delivery of the Mayor’s capital spending plans, in particular funding obligations in respect of Crossrail and the Northern Line Extension.

Effective and prudent cash management is essential to protect the GLA against loss of capital and ensure adequate liquidity to meet spending obligations and aspirations.

Financial comments

Financial considerations are addressed throughout the report.

Planned delivery approach and next steps

The Decision Form is for the Mayor to note the Treasury Management activities over the reporting period.


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