Treasury Management 2019/20 Outturn

1. Introduction and background

2. 1. The CIPFA Treasury Management (TM) Code recommends that organisations be updated on treasury management activities regularly (as a minimum an Treasury Management Strategy, mid-year and annual performance reports).

1. 2. This report represents the annual performance report for 19/20 and ensures MOPAC is implementing best practice in accordance with the TM Code.

1. 3. The day-to-day management of the treasury management function is delivered by the GLA Group Treasury team under a shared service arrangement. GLA Group Treasury also manages the Group Investment Strategy (GIS), of which the interim 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.

   4. The annual report at Appendix 1 has been prepared by GLA Group Treasury, and provides details of performance against the TM Strategy Statement (TMSS) 2019/20, approved by MOPAC on 25 March 2019 (PCD 552). The report provides a review of investment performance for 2019/20, and reviews specific Treasury Management prudential indicators defined by the Code and approved by the MOPAC in the TMSS.

2. Issues for consideration

Investment

1. 1. The average return on investment was 0.92%. This compares favourably with the London Interbank BID (LIBID) 3-month rate benchmark of 0.64%. This resulted in income of £2.4m.

Debt Management

1. 2. No new long-term borrowing took place in 2019/20. As a result, the long term borrowing decreased by £13.6m, from £316.55m at the start of the year to £302.95m at 31 March 2020.

2. 3. The cost of borrowing was £10.2m. The weighted average cost of borrowing of all long term loans as at 31 March 2019 was 3.34% (3.78% as at 31 March 2019).

Compliance

1. 4. All treasury activities were within the Treasury indicators set in the TMSS, and borrowing was within the borrowing limits set by the Mayor for MOPAC. MOPAC 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 2019/20, alongside best practice suggested by the CIPFA TM Code and Central Government.

Prudential Indicators

1. 5. Appendix 1 includes the maturity profile for the borrowing portfolio, and performance against the Prudential Indicators set as part of the 2019-20 TM Strategy. All indicators were met.

3. Financial Comments

1. 1. The cost of borrowing and the minimum revenue provision for 2019/20 were £10.2m and £33.25m respectively. Interest received in 2019/20 was £2.4m.

4. Legal Comments

1. 1. Under Section 1 of the Local Government Act 2003, MOPAC as a 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.

1. 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.

1. 3. MOPAC’s scheme of delegation provides that the Chief Finance Officer, as the s127 officer, is responsible for the proper administration of the MOPAC’s financial affairs.

5. GDPR and Data Privacy

1. 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

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

7. Background/supporting papers

• • GLA Treasury Management Outturn 2019/20