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Agenda item

Treasury Management Mid-Term Report

Purpose:

To provide Members with an update on Treasury Management activity, the performance of internal and external funds and prudential indicators for the period 1st April 2024 – 30th Sept 2024.

 

Recommendations:

That the Audit and Governance Committee resolves to:

1.    Note the contents of the report

 

Invited:

Sian Hannam - Treasury Accountant

Madhu Richards - Director of Finance

 

Minutes:

Georgina Dyer, Chief Accountant, presented the report that provided Members with an update on Treasury Management activity, the performance of internal and external funds and prudential indicators for the period 1 April 2024 – 30 Sept 2024.

The overall performance of investments in the 6 months to 30 September 2024 was positive, returning interest of £786,307 or 4.81% against a budget of £578,115, and generating an unrealised capital gain of 1.60% or £223,624 in the year to date.

The capital value of pooled funds continued to be affected by prevailing economic conditions in the world markets. Pooled funds were intended to be long term investments where short term fluctuations in the capital value was expected. These funds were being closely monitored by the Council’s Treasury Management adviser (Arlingclose) and they continued to forecast that the capital values would recover over the next 2-3 years as gilts and bond revenue rates start to decline again. The Council had benefitted from higher revenue returns due to the sustained higher Bank of England Base Rate in the first six months of 2024/25.

The report included the new requirement in the 2021 Prudential Code (published by CIPFA), mandatory from 1 April 2023, of quarterly reporting on the treasury management prudential indicators.

The Council complied with the majority of the Prudential Indicators for 2024/25 as set out in the budget approved by full Council in February 2024. Further details could be found in section 7 of the report.

Based on various questions and queries from Members the following points were explained:

·         Notice was served by UBS that one of the pool funds was closing and there would be a crystallised loss which would impact the capital outturn return. However, there would be no penalties incurred.

·         In terms of any benefit from inflation, it was explained that work was being done by a Treasury Management accountant to examine where there would be an extraordinary level and combined effect as there were a mixture of balanced funds. There would be a framework put in place to ensure as interest rates come down the risk would be mitigated; global funds were more difficult to predict and pooled funds were long term investments that needed to be balanced with borrowing.

·         There was net income showed on page 54 which was regarding interest rates which was required to be produced according to CIPFA regulations; there were service investments and commercial investment property. There was a revenue stream from service investments. Queries around the table and what was included in the various categories would be taken offline and an explanation would be sent to Members.

·         The forecast in section 9.7 of the report referred to the capital programme. A significant capital expenditure e.g. waste vehicles would require a Minimum Revenue Provision (MRP).

 

Councillor Carl Rylett proposed that the recommendations be approved and Councillor Andrew Cole seconded. This proposal was agreed by the Committee.

 

RESOLVED that the Audit and Governance Committee AGREED to:

1.    Note the contents of the report.

 

 

 

Supporting documents:

 

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