Treasury Mid-Term Report 2021/22
Report of the Cabinet Member Finance
The Cabinet Member Finance introduced the report which formed part of the council’s annual financial monitoring. The report has been reviewed and scrutinised by the Treasury Management Panel which recommends to Council that the comments are noted.
He reflected that following 10 years of austerity and a commitment to fund discretionary services such as leisure and culture, the Council had looked to commercialise its operations wherever possible. With the cost of services at £22m and income from taxation and grants equalling £14m, the void of £8m had to be filled through trading and investment income.
The Cabinet Member highlighted that it was critical to get the right balance between social, environmental, and financial factors and to not lose sight of the fact that the treasury portfolio was diversified to maximise the return to ensure that the £7m costs associated with discretionary services such as leisure and culture could be maintained.
He brought Members’ attention to the fact that exposure to gas and oil investments currently stood at £280k. This was part of the Schroder Income Fund and made up 4% of the £7m invested in Pooled Funds. Given the council’s current climate priorities he assured Council that steps were being taken to ensure our investments are contributing to our goals and the council’s climate commitment. He explained that this investment was part of a £2m pooled fund taken out in 2018 before the climate emergency was declared in Cheltenham. On advice from our treasury advisors, the investment was made for 5-7 years which should provide a long-term return with annual dividend income to support the general fund. He also noted that it was also an equity pooled fund which are very sensitive to changes in the money markets. When there is a significant downturn in the market, for example in the first lockdown, the investment can lose value. The capital value of this fund fell at this time but has recovered some of its lost value and at the end of October it was valued just over £1.5m.
The Cabinet Member expressed the council’s commitment longer term to reduce investment in oil and gas but this needed to be balanced with ensuring we are making the right financial decisions to safeguard our residents, businesses, and communities. The performance of this fund would continue to be closely monitored and when it is financially prudent to do so, the climate implications of how we invest this money in the future would be considered.
Finally, the Cabinet Member Finance explained that treasury management activity continued to perform well, and he wished to thank Officers and Members of the Treasury Management Panel for their work and support in this area.
In response to Member questions the following responses were given :
· The Treasury Management Panel was always looking at the route towards a policy of divestment from particular investments and work was currently ongoing on a broader treasury management policy into which TMP would input.
· Investments in fossil fuels were made prior to the council’s commitments, but they should not happen in the future.
In the debate that followed the Cabinet Member was thanked for this impressive work within the national context; a stable budget and the debt situation was a real achievement.
the contents of the summary report of the treasury management activity during the first six months of 2021/22 be noted.
- 2021_12_06_COU_Treasury_Management, item 10. PDF 541 KB
- 2021_12_06_COU_Treasury_Mid_Term_Appendix 1- Risk Assessment, item 10. PDF 127 KB