• Home
  • About
  • Subscribe
  • Conference
  • Events Calendar
  • Webcast151
  • MOTB
  • Log In
  • Register

Room 151

  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews

Inter-authority lending rockets by £2bn

0
  • by Colin Marrs
  • in 151 News · Treasury
  • — 11 May, 2017

Photo: Stux/Pixabay, CC0

Inter-authority lending leapt 40% to almost £7bn in 2016/17, as local authorities continued to lose patience with bank and building society deposits, and certificates of deposit.

Annual figures released by the Department of Communities and Local Government (DCLG) show that investments with other local authorities stood at £6.979bn, up £2bn from £4.980bn the previous year.

Meanwhile, deposits in building societies and banks dropped by £2.1bn from £16bn to £13.9bn, while certificates of deposit held with banks and building societies dropped from £1bn to £765m.

David Green, client adviser at treasury adviser Arlingclose, said: “The fall in bank and building society deposits and CDs is a combination of people managing bail-in risk and being fed up with the very low returns.

“Nearly every other investment option has a better risk-reward balance.”

The DCLG figures illustrate a surge of loans between councils in the final quarter — around half the annual rise came between January and March this year.

Inter-authority lending now makes up 19% of total local authority investment — more than double the proportion in 2010/11, when it stood at just 8.8%.

Earlier this year, Greater London Authority chief finance officer Luke Webster said that he thought the amount of inter-authority lending could go higher still.

He told delegates at the CIPFA’s Treasury Management Network Annual Conference: “If we had some means of sharing information a bit better I would like to see the amount go above 50%.”

He said that to increase the volume of authority-to-authority lending to those levels would require a more detailed knowledge of each organisation and a degree of consolidation of treasury management functions. But, he added: “Just market forces can get us to quite a high level anyway.”

Elsewhere in the latest figures, investment in treasury bills plummeted from £2.2bn to £671m, of which a significant proportion came from Transport for London reducing its exposure from £1.3bn to £481m over the year.

Loans to public corporations (which includes loans to local authority subsidiaries and other public bodies, rose from £715m to £1bn.

Much of this rise was attributable to Northumberland County Council raising its exposure from £237m to £413m.

In 2013, the council agreed to lend a local NHS trust £100m to end its PFI contracts for hospital building projects.

In the money market fund category, which takes in all pooled investment funds including property funds, investments rose from £5.3bn to £6.3bn.

Get the Room151 Newsletter

Share

You may also like...

  • James Bevan: Global growth outlook for 2017 James Bevan: Global growth outlook for 2017 20 Dec, 2016
  • Settlement must address ‘precarious’ local government finances 15 Dec, 2020
  • Hammond rejects estimated size of ‘so-called’ council funding gap Hammond rejects estimated size of ‘so-called’ council funding gap 25 Apr, 2019
  • Interest rate rises will demand tough choices of treasurers Interest rate rises will demand tough choices of treasurers 13 Feb, 2014

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 3 hours ago

    How can local government ‘build back better’?: Beverley Gower-Jones looks at the options for driving small business entrepreneurship in clean technologies. Innovation is essential for local authorities to save money and reduce emissions, it is the… dlvr.it/RtT3nS pic.twitter.com/bSMB6OG70t

    Room151 6 hours ago

    Helen Randall: Spelthorne report places spotlight on ‘controls’: Fresh criticism of Spelthorne Council raises the question of what “good” controls look like when negotiating a property deal. Spelthorne Council’s continuing debacle over property… dlvr.it/RtSPhy pic.twitter.com/9uCOJgBcH6

    Room151 6 hours ago

    Step-out strategies: Hitting the sweet spot between liquidity and ultra-short duration: Sponsored article: Jemma Clee describes how an ultra-short duration strategy can help local authorities enhance returns. Despite the expectation of a low, and… dlvr.it/RtSPZb pic.twitter.com/pdXPpv5lcN

    Room151 1 day ago

    What role will climate change have on the pricing of government bonds?: Sponsored article: Kerry Duffain finds that “vulnerability and resilience to climate change” have a significant impact on the cost of government borrowing. Ardea Investment… dlvr.it/RtNKv7 pic.twitter.com/wDjT31x4Yt

    Room151 2 days ago

    ESGenius: Slashing emissions will fuel green growth for decades: Sponsored article: Velislava Dimitrova argues that a big enough investment could mean transition to a low, or no, carbon economy can become a reality. The world needs to slash carbon[...] dlvr.it/RtKZJp pic.twitter.com/cd8S3ijERl

    Room151 2 days ago

    Prudential code: “Not perfect, but its heart is in the right place”: The new Prudential Code offers revised rules for borrowing. Nikki Bishop is sceptical it will work while Gary Fielding offers his support. Nikki Bishop I have been asked to give[...] dlvr.it/RtKZFh pic.twitter.com/OriN28lXcb

    Room151 3 days ago

    Tremendous report from @MarkSandford3 citing @room_151 no fewer than six times (despite what the @lgcplus fact checking/counting dept might tell you) #localgov commonslibrary.parliament.uk/research-brief… 1/5

    Room151 1 week ago

    Dan Bates: Capitalisation directions are not the only tool for rebuilding finances: Dan Bates argues deep seated problems are contributing to a rush for capitalisation directions. For some time now we have been reading that a number of councils are in… dlvr.it/RspKff pic.twitter.com/xRRsgVim9u

    Room151 2 weeks ago

    Is local government funding “broken”?: Andrew Hardingham looks at the underlying issues that caused more than a third of respondents in the Room151/CCLA treasury survey to say that the funding system for local govenrment is[...] dlvr.it/RsYhsg pic.twitter.com/plNp7Ayys6

  • Categories

    • 151 News
    • Agent 151
    • Blogs
    • Chris Buss
    • Cllr John Clancy
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Forum
    • Funding
    • Graham Liddell
    • Ian O'Donnell
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • LGPSi
    • Mark Finnegan
    • Recent Posts
    • Resources
    • Richard Harbord
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Treasury
    • Uncategorized
  • Archives

    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story Solar Bond investments: A lightbulb opportunity for council investment
  • Next story Capita appoints ex CFO amid sale rumours

© Copyright 2021 Room 151. Typegrid Theme by WPBandit.