Havering’s Audit Committee: The £6 million Question

Damian White, Leader of Council, made Martin Goode chair of this committee as a reward. Martin’s four meetings in 2019 lasted three hours 50 minutes, so he isn’t a workaholic.* The Audit Committee is a rubber stamping operation despite its importance.

The 5th September 2019 meeting had a very important report: ‘Annual Treasury Management Report 2018/19’**. It was the centrepiece of the meeting. The report was so complex a glossary was included. The table below is a summary of the outcome for 2018-9 there seems to be an explanatory column missing.
Havering Audit summary docu
Martin’s meeting lasted 80 minutes. If he’d allocated more time he might have queried the ‘missing’ column. The column I think was missing showed how much interest was paid for borrowing and the amount of income received from investments. Let me explain.

Assuming the quoted interest rate is AER*** then:
(1) Borrowings of £240.486M at 3.59% costs Havering £8.633M annually
(2) Investment income on £210.234M at 1.07% earns Havering £2.446M annually
(3) Therefore Roger Ramsey’s borrowing/investment policy loses £6.187M for the people of Havering.

Roger’s policy doesn’t look good unless there’s a technical explanation. Do either Martin or Roger know the cost of retiring debt to take advantage of historically low interest rates? ****

The Treasury Report was one of two major agenda items in Martin’s perfunctory 80 minute meeting. Havering deserves a better, more critically aware Audit Committee than this.

* £7650: Four meetings 30th January- 23rd October 2019 at £2,000 an hour.
** https://democracy.havering.gov.uk/documents/g6207/Public%20reports%20pack%2005th-Sep-2019%2019.00%20Audit%20Committee.pdf?T=10
*** AER means Annual Equivalent Rate
**** loc.cit see especially para 6:1 and 6:2

2 thoughts on “Havering’s Audit Committee: The £6 million Question

  1. Chris

    The long term interest is incurred funding the capital programme , this isn’t just borrowing for investment on the market (which is more the short term investments needed to manage cash flow)

    Still we be interesting to see if anyone responds and whether the Audit committee understand this

    Will post on Havering fabians twitter feed and await response..


    Sent from Mail for Windows 10


    1. I did wonder whether there was a ‘lock-in’ or whether like all other debt it could be paid down early, taking a penalty hit of course. Like I said it is a technical area but there should have been at least an explanatory note. They did bother with a glossary after all.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s