Agenda item

The Council is required by regulations issued under the local Government Act 2003 to produce regular reports on treasury and debt management operations during the financial year. This report meets the requirements of the CIPFA Code of Practice on Treasury Management (the Code).

The Deputy Leader introduced the report, pointing out the position of the global economy and the difficulties faced in finances.  There was a balance required between investing funds and utilising funds on public services to benefit the district’s residents.

Treasury Management was the term used to cover the Council’s borrowing and investment strategies.  In line with the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on Treasury Management the Council had adopted a treasury management policy statement that required regular reports on treasury and debt management operations during the financial year.  Additionally, under part 1 of the Local Government Act 2003, the Council was required to have regard to the Prudential Code for capital finance including the setting of Prudential Indicators.  Relevant treasury management indicators were incorporated into the Treasury Management Strategy 2023/24 approved by Council on 1 March 2023.

This report provided a review of treasury management for the period ended 30 June 2023 and reviewed current developments.  The following elements were covered by the report:

• A review of debt management operations

• A review of investment operations

• An update on the treasury management Prudential Code Indicators

No additional borrowing was required during the first quarter of 2023/24.  All current Council borrowing was with the Public Works Loan Board (PWLB) and the average rate of interest paid on the debt portfolio was 2.47%.

As at 30 June 2023, the Council had short-term borrowing, which was defined as borrowing due to be repaid within 365 days, of £3.221m.  This would be repaid in instalments of £1.611m on 28 September 2023 and 28 March 2024. The average annual rate of interest on these loan repayments was 3.03%.

The average size of the investment portfolio for the 3-month period was £68.611m compared to an average portfolio size of £90.996m during the same period in 2022/23.  The decrease in the portfolio was due to the repayment of COVID-19 business grants following the reconciliation of the schemes and the payment of the Council Tax Rebate grant to eligible households during 2022/23.

As at 30 June 2023 the Council held short term investments of £77.891m (specified investments) and £3m (non-specified investments).  The Treasury Management Strategy stipulated that the Council should not ordinarily hold more than 35% of investments as non-specified and this was adhered to during the first quarter of 2023/24.

In the period ended 30 June 2023, £34.0m of short-term fixed deposits were placed; £25.0m of investments matured within this same period.  In the period ended 30 June 2023, there were no long-term fixed deposits placed and no long-term fixed deposits matured.

Prudential Code indicators for 2023/24, 2024/25 and 2025/26 were approved by Council on 1 March 2023 as part of the Treasury Management Strategy 2023/24.

Members raised the following points during discussion:

·            What mitigation was available to the Council to counteract the reduction in value of investments due to high inflation?

·            A Member thanked the Officers for their work in unenviable circumstances and acknowledged that the effort must continue to save money and reduce ongoing costs.

The Assistant Director of Finance informed Members that when investments were placed, the best rates available were secured whilst ensuring we meet our cashflow requirements.  Investments were placed in accordance with advice provided by Council advisors Link Group and meet the security, liquidity and yield requirement.  Interest rates were no better if secured over a longer term.  Forecast interest rate information provided by our advisors is also considered when making decisions regarding the duration of investments.

It was proposed, seconded, and AGREED that the Committee noted and approved the content of the Quarter 1 review of treasury management activity for 2023/24.