Agenda item

Trafod adroddiad Cyfarwyddwr y Gwasanaethau Cyllid a Digidol.   

The Head of Finance: Education and Financial Reporting provided the Committee with an overview of the Council’s Treasury Management activity during the first six months of the financial year 2019/20 and the Prudential and Treasury Indicators for the same period.

The Head of Finance explained the report provides Members with the opportunity to scrutinise the six month activity that was reported to Council on 27^th November 2019.

Members were provided with an overview of the general economic environment and were informed that the Bank of England Monetary Policy Committee has maintained the Bank Rate at 0.75% throughout this financial year.

The Head of Finance advised Members that the Council undertook borrowing from the PWLB of £80M when rates had fallen to record lows. The Head of Finance also informed Members that following this, the PWLB raised rates by 1%.

The Head of Finance advised Members that Welsh Government has amended the statutory guidance on Local Government Investments to ensure that risks associated with commercial investments are managed appropriately and noted that the new guidance takes effect from April 2020.

The Head of Finance advised the Committee that no variance is currently being projected for net capital charges, which have a budget for 2019/20 of £18.9M. It was emphasised to Members that this is being achieved despite the challenges faced with investment income and maintaining the Council’s low risk strategy.

Members were advised that during the six months to the 30^th September 2019, the Council operated within its prudential limits as set out in the Prudential Code report approved by Council in March 2019.

Members were also reminded that the Council’s borrowing activity is within its Authorised Limit, nothing that the Authorised Limit represents the limit beyond which borrowing is prohibited.

Discussions ensued and Members put their questions forward.

Councillor Cullwick queried what effect a 0.5% Bank of England base rate would have on the Council. The Head of Finance advised Members that if the base rate decreases, the return on the Council’s investments would decrease proportionally. The Head of Finance added that there would not be a significant impact on the Council’s investment income as the strategy has been to reduce investments of surplus cash.

The Vice Chair referred the Committee to paragraph 4.4 of the report and queried how the UK Consumer Price Index (CPI) compares with the CPI in RCT. The Service Director- Finance & Improvement Services informed Members that the UK CPI rate is used as a baseline and that where costs differ locally, these are taken account of, for example, as part of the annual budget setting process. The Service Director added that there is not an all-encompassing local CPI rate for Rhondda Cynon Taf.

A further query was raised by Councillor Powell in respect of the unemployment rate of 3.9% in the UK and he sought clarification as to the unemployment rate in RCT. The Service Director- Finance & Improvement Services advised Members that employment statistics are included within the Council’s quarterly Performance Reports and noted that such information is based on a sample rather than the whole population of the area.

Following consideration, it was RESOLVED;

1.    To note the content of the report; and,

2.    To receive updated reports in future meetings.