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

The request was partially successful.

Dear Glasgow City 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

Customer Care Centre, Glasgow City Council

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Dickson, John (Revenues), Glasgow City Council

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Financial Services

Glasgow City Council

City Chambers,

Glasgow G2 1DU

Phone 0141 287 8186

Fax 0141 287 9568

Email:
[1][email address]

 

Our RQST
Ref 6780404

 

5 December 2018

 

Mr Joel Benjamin

 

 

 

Email :   [FOI #531495 email]

 

 

 

Dear Mr Benjamin,

Request under the Freedom of Information (Scotland) Act 2002

 

Thank you for your email received on 9 November 2018 requesting that the
following information be provided to you:

 

“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?

 

The Council is treating your request as a request under the Freedom of
Information (Scotland) Act 2002.

 

Before replying to your enquiry, I am to advise you, the Freedom of
Information (Scotland) Act 2002, provides a general right of access to
information held by public authorities which are held in a accepted
recorded format. It does not make provision for views or opinions.

 

The information you have requested and which can be provided is detailed
below :

 

 

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

 

Ø  Glasgow City Council does not hold the information you have requested,
neither does anyone else hold the requested information on our behalf.
Accordingly and in terms of section 17(1) of the act, we are unable to
comply with this aspect of your request.

 

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)

 

Ø  Glasgow City Council does not hold the information you have requested,
neither does anyone else hold the requested information on our behalf.
Accordingly and in terms of section 17(1) of the act, we are unable to
comply with this aspect of your request.

 

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?

 

Ø  In making decisions about borrowing required to finance the capital
investment programme and daily cash flow, a number of factors are taken
into account:

o The Treasury Management Strategy and Annual Investment Strategy report
o Treasury Management Policies
o Assessed risk including interest rate risk, liquidity risk,
counter-party risk, refinancing risk, legal and regulatory risk etc.
o Prevailing market conditions and interest rate forecasts
o Balance between fixed and variable debt
o Maturity profile of existing and future debt
o Prudence
o Impact of borrowing on the debt servicing costs
o Potential for restructuring
o Requirement for expert advice

 

 

 

 

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?

 

Ø  In making decisions about borrowing required to finance the capital
investment programme and daily cash flow, a number of factors are taken
into account:

o The Treasury Management Strategy and Annual Investment Strategy report
o Treasury Management Policies
o Assessed risk including interest rate risk, liquidity risk,
counter-party risk, refinancing risk, legal and regulatory risk etc.
o Prevailing market conditions and interest rate forecasts
o Balance between fixed and variable debt
o Maturity profile of existing and future debt
o Prudence
o Impact of borrowing on the debt servicing costs
o Potential for restructuring
o Requirement for expert advice

 

 

 

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

 

Ø  Over the time period from 2000/01 to 2018/19, the average ratio of
fixed to variable debt has been 61% to 39%.  These figures assume that all
LOBOs are potentially variable due to call dates and that short-term debt
is variable due to turnover

 

 

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

 

Ø  As detailed in the Council’s Treasury Management Strategy we use
external treasury management advisors who would provide advice and
recommendations for any proposed loan restructure. However, the Council
would be responsible for any decision relating to the restructuring or
re-financing of any debt.

 

 

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

 

Ø  Glasgow City Council does not hold the information you have requested,
neither does anyone else hold the requested information on our behalf.
Accordingly and in terms of section 17(1) of the act, we are unable to
comply with this aspect of your request.

 

 

 

The Council accordingly feels that it has complied with your request.
However, if you are dissatisfied with the way Glasgow City Council has
dealt with your request you are entitled to require the Council to review
its decision. Please note that for a review to take place you must:

 

·         Lodge a written requirement for a review within 40 working days
of the date of this letter

·         Include a correspondence address and a description of the
original request and the reason why you are dissatisfied

·         Address your request to the ;

 

Director of Governance and Solicitor to the Council

Glasgow City Council

City Chambers

George Square

Glasgow G2 1DU

 

Email: [2][email address]

 

You will receive notice of the results of the review within 20 working
days of receipt of your request. The notice will state the decision
reached by the reviewing officer as well as details of how to appeal to
the Scottish Information Commissioner if you are still dissatisfied with
the Council’s response. You must request an internal review by the Council
before a complaint can be directed to the Scottish Information
Commissioner. For your information at this stage, an appeal can be made to
the Scottish Information Commissioner by contacting her office as follows
if you do remain dissatisfied with the outcome of the Council’s review
decision -

 

Address: Kinburn Castle, Doubledykes Road, St Andrews, KY16 9DS.

Email: [3][email address]

Telephone: 01334 464610

You can also use the Scottish Information Commissioner’s online appeal
service to make an application for a decision:

[4]www.itspublicknowledge.info/appeal

 

Please note that you cannot make an appeal to the Scottish Information
Commissioner until you have first requested an internal review by the
Council.

.

If you wish to submit a complaint to the Council in relation to the manner
in which it has handled your request for information then you can do by
requesting that the Council review its decision. Details of how to request
a review are set out in the above paragraph “Right of Review”.

 

Yours sincerely

 

 

John Dickson

Senior Disclosure Officer

 

Glasgow - UK Council of the Year 2015
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Joel M Benjamin left an annotation ()

Over the time period from 2000/01 to 2018/19, the average ratio of fixed to variable debt has been 61% to 39%