Choice of fixed vs floating interest rate PWLB and bank borrowing 2000-2018

The request was partially successful.

Dear City of Edinburgh Council,

Please provide answers to the following questions in Ms Excel format for your borrowed position between financial years 2000/01 and 2018/19

1) If you borrowed on fixed interest rate terms. How much interest would you have saved if you'd borrowed on floating rate terms?

2) How much has your real capital position changed due to borrowing on fixed rate terms? (If you'd borrowed on floating rates, the answer would be zero)

3) What advice did you take on the choice of fixed vs floating PWLB rates, bearing in mind the PWLB provides both fixed and floating rate loans, and both are priced at market rates?

4) What advice did you take on the choice of fixed vs floating bank loans, bearing in mind banks provides both fixed and floating rate loans, and both are priced at market rates?

5) What is your councils proportion of fixed to floating interest rate debt? and how does this vary from guidance/ best practice?

6) If you chose to restructure and extend the duration of your loans over this period - upon whose advice was such action taken?

7) If you could go back in time, would the majority of your borrowing have been at floating rates instead of fixed rate?

Yours faithfully,

Joel M Benjamin

City of Edinburgh Council

Mr Joel Benjamin

Our ref: 21209

Dear Mr Benjamin

Acknowledgement of Request

Subject: Choice of fixed vs floating interest rate PWLB and bank borrowing 2000-2018

Thank you for your request for information received on 13/11/2018. I can confirm that your request will be processed under the Freedom of Information (Scotland) Act 2002, Environmental Information Regulations (Scotland) 2004, or the INSPIRE (Scotland) Regulations 2009.

You will receive the information requested within 20 working days unless the Council does not hold the information, or there is a reason for it to be withheld. We will write to you in any event. This means we have until 12/12/2018 to respond to your request.

In some circumstances a fee may be payable and if that is the case we will let you know.

If you have any requirements regarding the format any information should be supplied in, e.g. the language to be used, audio, large print and so on, then please let me know.

If you have any queries or concerns, do not hesitate to get in touch. Please quote the reference number above in any future communications.

To promote transparency and accountability, please note it is the Council’s policy to publish all request details and responses made under the freedom of information legislation. This information will be made available through the Council’s website and will not include your personal details. The disclosure log is available at the following link: http://www.edinburgh.gov.uk/homepage/175....

Further information about your rights and accessing information is available on our website at: www.edinburgh.gov.uk

Yours sincerely,

Information Governance Unit
Level 2:1, Waverley Court, Edinburgh EH8 8BG Tel 0131 200 2340
[Edinburgh City Council request email] www.edinburgh.gov.uk

Information Rights Officer 4, City of Edinburgh Council

1 Attachment

Mr Joel Benjamin

 

[1][FOI #532111 email]

 

Our ref: 21209

 

 

Dear Mr Benjamin

 

Freedom of Information (Scotland) Act 2002 - Partial Release of
Information

 

Subject: Bank Borrowing 2000-2018

 

Thank you for your request for information of 13/11/2018, which has been
processed under the terms of the Freedom of Information (Scotland) Act
2002. Unfortunately, the Council is only able to meet part of your
request; this information is released to you now. I shall address each of
your questions in turn.

 

Please note that where the Council is unable to provide you with the
information requested because it is not held by the Council, this letter
constitutes a notice under section 17 of the Freedom of Information
(Scotland) Act 2002.

 

You asked the following:

 

Please provide answers to the following questions in Ms Excel format for
your borrowed position between financial years 2000/01 and 2018/19:

 

Q1. If you borrowed on fixed interest rate terms. How much interest would
you have saved if you'd borrowed on floating rate terms?

 

A1. We do not hold this information.

 

Q2. How much has your real capital position changed due to borrowing on
fixed rate terms? (If you'd borrowed on floating rates, the answer would
be zero)

 

A2. The Council’s capital advances are distinct from external borrowing.
Taking fixed and floating rate borrowing have an equal effect in
addressing the Council’s Capital Financing Requirement.

 

Q3. What advice did you take on the choice of fixed vs floating PWLB
rates, bearing in mind the PWLB provides both fixed and floating rate
loans, and both are priced at market rates?

 

Q4. What advice did you take on the choice of fixed vs floating bank
loans, bearing in mind banks provide both fixed and floating rate loans,
and both are priced at market rates?

 

A3 and A4. Within the Treasury Management Policy Statement and Treasury
Management Strategy report approved by Elected Members, the individual
decisions were taken by officers under delegated authority, taking account
of all the relevant information available including advice provided by the
Council’s Treasury Advisors.

 

Q5. What is your council’s proportion of fixed to floating interest rate
debt? and how does this vary from guidance/ best practice?

 

A5. The following chart shows the source of the Council’s borrowing at 31
March 2018:

We are not aware that there are is any specific guidance or best practice
on the proportion of fixed to variable rate debt other than general
principles.

 

Q6. If you chose to restructure and extend the duration of your loans over
this period - upon whose advice was such action taken?

 

A6. Within the Treasury Management Policy Statement and Treasury
Management Strategy report approved by Elected Members, the individual
decisions were taken by officers under delegated authority, taking account
of all the relevant information available including advice provided by the
Council’s Treasury Advisors.

 

Q7. If you could go back in time, would the majority of your borrowing
have been at floating rates instead of fixed rate?

 

A7. Borrowing decisions were taken in light of the best information,
forecasts and advice available at the time. The question is hypothetical
and therefore outwith the scope of an FOI request.

 

To promote transparency and accountability, please note it is the
Council’s policy to publish all request details and responses made under
the freedom of information legislation. This information will be made
available through the Council’s website and will not include your personal
details. The disclosure log is available at the following link:
http://www.edinburgh.gov.uk/homepage/175...

 

Your right to seek a review

 

I appreciate that our decision may disappoint you and I am sorry that we
have not been able to release all the information you requested on this
occasion. If you are unhappy with the way we have dealt with your request,
you can ask us to review our actions and decisions by writing to:

 

Head of Strategy & Insight

The City of Edinburgh Council

Waverley Court Business Centre 2:1

4, East Market Street

Edinburgh

EH8 8BG or,

Email: [email address]

 

Please note that your request must be in a recordable format (email,
letter, audio tape etc.), and that you have 40 working days upon receipt
of this letter to ask for a review. You will receive a full response to
your review request within 20 working days of its receipt. Please quote
the reference number above in any future communications.

 

If you are not content with the outcome of the review, you can ask the
Scottish Information Commissioner to review our decision. You must submit
your complaint to the Commissioner within 6 months of receiving our review
response. The Commissioner can be contacted at:

 

The Office of the Scottish Information Commissioner

Kinburn Castle

Doubledykes Road

St Andrews

Fife

KY16 9DS

Telephone: 01334 464610

Fax: 01334 464611

Website: www.itspublicknowledge.info/Appeal

Email: [email address]

 

Yours sincerely

 

 

Iain Burden

Information Rights Officer

 

 

Information Governance Unit

Level 2:1, Waverley Court, Edinburgh EH8 8BG Tel 0131 200 2340

[Edinburgh City Council request email]  www.edinburgh.gov.uk

 

 

show quoted sections

References

Visible links
1. mailto:[FOI #532111 email]

Joel M Benjamin left an annotation ()

Internal review - provides borrowing source not % of fixed and floating rate borrowing

Dear City of Edinburgh Council,

Please pass this on to the person who conducts Freedom of Information reviews.

I am writing to request an internal review of City of Edinburgh Council's handling of my FOI request 'Choice of fixed vs floating interest rate PWLB and bank borrowing 2000-2018'.

In relation to Q1 - you claim information on alternative floating interest rates at the time loans were entered into is not held? Please confirm Edinburgh do not a) benchmark & b) retain decisions to borrow? If so how can Council possibly demonstrate value for money through its Treasury decisions?

Appendix 1 of Edinburgh's 2018 Treasury Management Strategy (TMS) provides a comprehensive list of the councils market and PWLB debt, but does not confirm if each loan instrument is fixed, floating or variable rate? http://www.room151.co.uk/wp-content/uplo...

From the information provided in the TMS, £1.22 billion would appear to be fixed rate loans, while approximately £40m (in the form of RBS inverse floater LOBOs) would appear to be floating rate.

Given the billions of pounds of interest payments underwritten by council taxpayers when entering these loans, there is an overwhelming public interest case that all relevant information underpinning borrowing decisions should be made publicly available, to demonstrate that the councils duty to deliver public value for money has been appropriately discharged.

Without providing such information to enable public scrutiny, it is impossible to assess how Edinburgh has complied with the limits set for fixed and floating/variable rate debt under the TMS and reported annually in the councils accounts.

For Q2, to put this question another way which may be easier to understand, by how much has the 'fair value'/ all in repayment cost of the councils fixed/variable rate debt portfolio increased, relative to the face value, and how does this compare to the councils floating rate debt portfolio?

Q3 and Q4 - Where is the advice provided by the councils Treasury Management Advisors? And which company advised the council on its borrowing decision(s)?

Q5 - The image provided gives the source/ type of borrowing, not whether particular loans are fixed or floating interest rate. Please note 'variable' rate loans (i.e. most LOBOs) are not a floating rate loans (with the exception of the councils 4x RBS inverse floaters), but should be more accurately labelled 'callable' loans.

Please provide the proportion of fixed and floating rate debt, as requested.

Q6 Firstly Edinburgh has not confirmed that it has restructured LOBO loan debt between 2000 and 2018? Additionally no advice provided by the (un-named?) Treasury Management Advisors to justify such decisions has been either referenced or provided?

A full history of my FOI request and all correspondence is available on the Internet at this address: https://www.whatdotheyknow.com/request/c...

Yours faithfully,

Joel M Benjamin

Review, City of Edinburgh Council

Dear Mr Benjamin

 

I refer to your recent request for a review of the FOI response issued to
you on 12^th December 2018 about your request on Bank Borrowing 2000 –
2018.

 

Please accept this email as an acknowledgement that your review request
has been received and a response will be issued by 30th January 2018.

 

Regards

Fiona

 

Fiona Smyth| Information Compliance Officer (GDPR) | Information
Governance Unit| Strategy & Insight | Chief Executive  | The City of
Edinburgh Council | Business Centre 2:1, Waverley Court, 4, East Market
Street, Edinburgh, EH8 8BG | Tel: 0131 529 4270 (Ext: 34270)| Email:
[1][email address] |Website: [2]www.edinburgh.gov.uk

 

show quoted sections

References

Visible links
1. mailto:[email address]
2. http://www.edinburgh.gov.uk/

Fiona Smyth, City of Edinburgh Council

Dear Mr Benjamin

 

I write with reference to your recent application for review of the
outcome of your request for information under the Freedom of Information
(Scotland) Act 2002 (“the Act”).  

 

To undertake this review, I have examined all the previous correspondence
relating to your request and have spoken with the Finance Team in our
Resources Service. 

 

In respect of each of the questions in your original request, and the
comments you made in relation to each in your review request, I can advise
as follows:

 

Question 1:         The Council has information on the available options
at the time loans were entered into and analysis and review of the various
options was considered at the time including as part of the audit process
and reporting to Elected Members.  However, this information is no longer
retained as it falls outwith the Councils record retention period for
records of these types.  As such, the initial response to this question is
upheld.

 

Question 2:         The breakdown of the Council’s borrowing showing ‘fair
value’ against ‘face value’ at 31 March 2018 is as follows:

 

Principal Fair
Outstanding Value
Market Debt 62,500,000 110,854,605
LOBO Loans 172,400,000 322,691,332
LOBO Loan - Inverse 40,000,000 102,293,071
Market Debt 274,900,000 535,839,008
Special Debt 1,531,703 1,484,070
PWLB Loan - Maturity 951,273,462 1,263,837,539
PWLB Loan - Annuity 17,834,995 19,312,649
PWLB Loan - EIP 6,197 6,703
PWLB Debt 969,114,654 1,283,156,892
1,245,546,357 1,820,479,970

 

Question 3 and 4:             The Treasury Management Advisors retained
during the period to which the request relates were:

 

                                                2000 – 2003        Sector
Treasury Services Limited

                                                2003 – 2010        Butlers

                                                2010 – 2014        Sector
Treasury Services Limited

                                                2014 – 2018       
Arlingclose Limited

 

Question 5:                         The information previously provided in
response to this question are correct.

 

Question 6:                         The Council restructured / extended
the duration of LOBO loans and also restructured PWLB debt between 2000
and 2007.   As previously advise these decision were made taking account
of all the relevant information available at the time they were made.

 

I trust that the above is of assistance in clarifying our response and in
providing the information you requested where this is held by the
Council. 

 

If you are unhappy with this review outcome or the way we handled your
request and review, you have a right of appeal to the Scottish Information
Commissioner. You must submit your complaint to the Commissioner within 6
months of receiving this review response. The Commissioner can be
contacted at:

 

The Office of the Scottish Information Commissioner

Kinburn Castle

Doubledykes Road

St Andrews

Fife

KY16 9DS

 

Telephone: 01334 464610

Fax: 01334 464611

 

Website [1]www.itspublicknowledge.info/Appeal 

E-mail: [2][email address]

 

Please note that, once the Commissioner provides you with a decision on
any application made to him, you have the right to lodge an appeal against
the decision on a point of law to the Court of Session.

 

 

Regards

 

Fiona Smyth| Information Compliance Officer (GDPR) | Information
Governance Unit| Strategy & Communications | Chief Executive  | The City
of Edinburgh Council | Business Centre 2:1, Waverley Court, 4, East Market
Street, Edinburgh, EH8 8BG | Tel: 0131 200 2340| Email:
[3][email address] |Website: [4]www.edinburgh.gov.uk

 

From: Fiona Smyth On Behalf Of Review
Sent: 07 January 2019 15:14
To: '[FOI #532111 email]'
<[FOI #532111 email]>
Subject: Acknowledgement of Review Request (EDIR:21209)

 

Dear Mr Benjamin

 

I refer to your recent request for a review of the FOI response issued to
you on 12^th December 2018 about your request on Bank Borrowing 2000 –
2018.

 

Please accept this email as an acknowledgement that your review request
has been received and a response will be issued by 30th January 2018.

 

Regards

Fiona Smyth| Information Compliance Officer (GDPR)

show quoted sections

References

Visible links
1. http://www.itspublicknowledge.info/Appeal
2. mailto:[email address]
3. mailto:[email address]
4. http://www.edinburgh.gov.uk/