Scarborough Council had more than £53m of “in-house” investments and £35m of loans as of March this year.
A report presented to Scarborough Council’s Audit Committee has set out some of the authority’s current financial commitments, including its current investments and loans.
According to the report, written by council director Nicholas Edwards, the council’s investment returns remained “close to zero, or even into negative territory, for much of 2021/2022″.
For the current financial year, the council had £53.5m of “total investments”, up from the previous financial year when the figure stood at £34m.
Meanwhile, the council had £35.1m of external borrowing spread over five loans, £4m of which is with Barclays while the rest is with the UK Treasury’s own PWLB lending facility.
The report adds that there was an “expectation” that the bank rate would remain at 0.1% until it was clear to the Bank of England “that the emergency level was no longer required”.
Presenting the report’s contents to the audit committee, Kerry Metcalfe, Scarborough Council’s corporate finance manager, said: “We set out that the investments the council made would continue to be driven with an emphasis on security and to ensure that the organisations the council invests with are deemed to be low risk financially.”
However, she added that the strategy meant “in turn, that would result in relatively low levels of financial returns from those investments”.
The council’s assessment also states: “There appears to have been a perfect storm of supply shortages, labour shortages, commodity price inflation, the impact of the war in Ukraine and western sanctions all pointing to inflation being at elevated levels until H2 2023.”
Addressing that point at the meeting, Cllr Rich Maw said: “I really just want to make a comment that inflation rises are not driven by wages, as some would have us believe, but from corporate profiteering.
“Inflation is a big factor, I understand that, and the fact that you have made clear why, in your opinion, we have inflation rises is commendable, so thank you.”
Ms Metcalfe replied that the analysis on interest rates was down to the Bank of England rather than the council’s activities.
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