The report of the Executive Director of Resources (Section 151 Officer) is attached.

Contact:  James Walton (01743) 258915

The Committee received the report of the Executive Director of Resources (Section 151 Officer) which provided Members with an economic update for the first six months of 2024/25, along with reviews of the Treasury Strategy 2024/25 and Annual Investment Strategy, the Council’s investment portfolio for 2024/25, the Council’s borrowing strategy for 2024/25, any debt rescheduling taken and confirmed compliance with Treasury and Prudential limits for 2024/25, as agreed by Full Council.

The Executive Director of Resources (Section 151 Officer) introduced and amplified his report.  He informed the Committee that in terms of relative performance, there was £22m held in investments and £311m held in borrowing, which was not a high level of borrowing and had been coming down over the last few years as borrowing was paid off as it matured and had not been replaced.  In addition, when borrowing had been required for the capital programme, they had internally borrowed, and he explained the reasons for doing so.  This had however led to those cash balances being significantly lower than 2-3 years ago and so they would be looking to undertake external borrowing (in the order of £100m) over the remainder of this financial year, which was in line with the Treasury Strategy and Prudential Indicators, and not as a result of the Council’s financial position.

In response to a query, the Executive Director of Resources (Section 151 Officer) reiterated that the borrowing being undertaken was to externalise existing borrowing that had been undertaken internally based on the capital programme approved by Council and he reassured the Committee that there were no plans to borrow speculatively outside of the Capital Programme/Strategy. 

In response to a query, the Executive Director of Resources (Section 151 Officer) explained how the £0.977m savings on interest payable had been generated and confirmed that the saving was not over the length of the loan but just in this financial year.  He thought that this figure was included within the £1,059m referred to in paragraph 5.3 of the report but that he would check and confirm to the Committee.  He explained that routine changes to the Authorised Boundary were reported to the Audit Committee as well as Cabinet and Council along with an explanation of why they were changing.  It then allowed Council to agree the Mid-Year Strategy which authorised the change in the Authorised Boundary.  He went on to explain that although there was a degree of delegation a change of any magnitude would need Council approval.

In response to a further query, the Executive Director of Resources (Section 151 Officer) agreed to provide Members with a written explanation of the calculations done by the Treasury Team in terms of the Capital Finance Requirement (CFR).  There was some confusion as the amount being borrowed was less than the CFR figure and the Executive Director of Resources (Section 151 Officer) explained that the Council would not necessarily borrow the full amount of the CFR.

Following a question about how the Medium Term Financial Strategy (MTFS) could be addressed when the amount of borrowing to be undertaken would be unknown by the end of March 2025, the Executive Director of Resources (Section 151 Officer) explained that the amount of expected borrowing had been built into the Minimum Revenue Provision (MRP) over the last two years however, as it had not been undertaken a saving had been made and if less was borrowed than budgeted for that would also lead to a saving as less interest would have to be paid.

RESOLVED:

To agree the Treasury Strategy activity as set out in the report.

To recommend to Council the revision to the Prudential Indicators as set out in section 9 of the report.

To note that the changes to prudential indicators reflect the reduction of internal cash balances and the need to externalise debt; this was a straightforward liquidity requirement unrelated to other financial matters and would have been required at this time regardless of the wider financial position.

To note that provision for additional borrowing costs in revenue budgets was included in the 2024/25 budget.