Treasury Management 2018/19 Outturn

Reference code: 
PCD 604
Date signed: 
16 September 2019
Authorisation name: 
Sophie Linden, Deputy Mayor, Policing and Crime

Executive summary

The Deputy Mayor for Policing and Crime is asked to note the performance of the Treasury Management function in 2018-19. In 2018-19 investment income was £1.2m at an average rate of return of 0.84%, 0.15% above the benchmark.  Debt interest expenditure was below budget at £7m. Total long-term external borrowing increased from £143m to £316.55m by 31 March 2019.  The weighted average borrowing rate of all long-term loans (weighted by size of loan and the rate of interest paid) at 31 March 2019 was 3.78% 
All investment and borrowing activity during 2018-19 was undertaken within the guidelines and objectives set out in the relevant policy and investment and borrowing strategies.
 

Recommendation

The Deputy Mayor for Policing and Crime is recommended to note the 2018/19 treasury management outturn results. 

Non-confidential facts and advice to the Deputy Mayor for Policing and Crime (DMPC)

1.    Introduction and background

1.1.    The Chartered Institute of Public Finance and Accounting Code of Practice on Treasury Management (CIPFA TM Code) recommends that organisations be updated on treasury management activities regularly (at least a Strategy, Mid-year and Annual performance reports). This report therefore meets these requirements with regard to an annual report, and ensures MOPAC is implementing best practice in accordance with the TM Code.  

1.2.    The day to day management of the treasury management function is delivered by the GLA Group Treasury team under a shared service arrangement with the GLA. GLA Group Treasury also manages the Group Investment Strategy (GIS), of which the MOPAC Chief Finance Officer is a syndicate director. By being part of the GIS MOPAC’s cash balances are pooled with other funds which allows greater investment options, improves diversification, liquidity and returns.  

1.3.    The annual report at Appendix 1 has been prepared by GLA Group Treasury, and provides details of performance against the Treasury Management Strategy Statement (TMSS) 2018/19, approved by MOPAC on 26 March 2018 (PCD 330). The report provides a review of investment performance for 2018/19, and reviews specific Treasury Management prudential indicators defined by the Code and approved by the MOPAC in the TMSS.

2.    Issues for consideration

Investment

2.1.    The average return on investment was 0.84%. This compares favourably with the London Interbank BID (LIBID) 3-month rate benchmark of 0.69%. This resulted in income of £1.2m.  

Debt Management

2.2.    As planned new long-term borrowing took place in 2018/19.  A sum of £200m new long-term borrowing was accessed from the Public Works Loan Board (PWLB) in January 2019, and there was scheduled repayments of existing debt. As a result, the long-term borrowing increased by a net £173.55m, from £143m at the start of the year to £316.55m at 31 March 2019.

2.3.    The cost of borrowing was £7.0m.  The weighted average cost of borrowing of all long-term loans as at 31 March 2019 was 3.78% (4.33% as at 31 March 2018). 

Compliance

2.4.    All treasury activities met the Treasury indicators set in the TMSS, and borrowing was within the borrowing limits set by the Mayor for MOPAC.  MOPAC’s Chief Finance Officer (CFO) confirms that, based on reporting and assurances from the GLA shared service function, throughout the period all treasury activities have been conducted within the parameters of the TMSS 2018/19, alongside best practice suggested by the CIPFA TM Code and Central Government. 

Prudential Indicators.

2.5.    Appendix 1 includes the maturity profile for the borrowing portfolio, and performance against the Prudential Indicators set as part of the 2018-19 TM Strategy.  All indicators were met.

3.    Financial Comments

3.1.    The cost of borrowing and the minimum revenue provision for 2018/19 were £7m and £25.7m respectively.  Interest received in 2018/19 was £1.2m.  

4.    Legal Comments

4.1.    Under Section 1 of the Local Government Act 2003, MOPAC as local authority defined under s23 of that Act, may borrow money for any purpose relevant to its functions under any enactment, or for the purpose of the prudent management of its financial affairs. 

4.2.    The Mayor is required under s3 of the Local Government Act 2003 to determine how much money the GLA and each functional body (which includes MOPAC) can afford to borrow. In complying with this duty, Regulation 2 of the Local Authorities (Capital Finance and Accounting) (England) Regulations 2003 requires the Mayor to have regard to the Prudential Code for Capital Finance in Local Authorities when determining how much MOPAC can afford. 

4.3.    MOPAC’s scheme of delegation provides that the CFO, as the s127 officer, is responsible for the proper administration of the MOPAC’s financial affairs.

5.    GDPR and Data Privacy 

5.1.    This report does not use personally identifiable data of members of the public therefore there are no GDPR issues to be considered.

6.    Equality Comments

6.1.    There are no equality or diversity implications arising from this report.

7.    Background/supporting papers

7.1.    GLA Treasury Management Outturn 2018/19. 
 


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