Agenda item

To report on the Council’s treasury management activities and Prudential Indicators for 2022/23.

RESOLVED that -

a)  the Treasury Management performance position for 2022/23 be noted; and

b)  the Prudential and Treasury Indicators for 2022/23 be approved.

Cabinet considered a report of the Leader of the Council & Portfolio Holder for Corporate Finance and Governance (A.2), which reported on the Council’s treasury management activities and Prudential Indicators for 2022/23.

Members were reminded that borrowing and investments had been undertaken in accordance with the 2022/2023 Annual Capital and Treasury Strategy that had been approved by full Council at its meeting held on 29 March 2022.

Summary of the Council’s Borrowing Position:

Cabinet was advised that no external borrowing had been undertaken in 2022/2023 for either the General Fund (GF) or Housing Revenue Account (HRA).

Summary of the Council’s Investment Position:

It was reported that the amount of interest earned from investments had increased greatly during the year due to the successive bank base rate rises of either 0.25% or 0.50% from 0.75% at the start of 2022/23 to 4.25% at the end of the year. As most investments were fixed for 6 months at a time, the increases had not fed immediately through to the investments held but had allowed for a ‘laddering’ of deposits to lock in the increase. Estimated income had increased through the quarterly financial performance and budget reports during the year - from £0.087 million at the start of the year to £1.150 million at the end of the year, with the outturn figure being £1.630 million as set out in the table above.

Cabinet was aware that the Council continued to hold one property within its Commercial Investment Portfolio, which had a balance sheet value at 1 April 2022 of £2.108 million. This ‘book value’ had been increased by the Council’s appointed valuers to £2.364 million at the end of 2022/23. However, this was an ‘accounting’ valuation and not a direct value that would be achieved on the market if it was sold. Rental income of £0.224 million had been earned on the property in 2022/23, in line with estimates.

As reported to Cabinet in November 2022, during 2022/23 the Treasury Management limit of £1.000 million that could be held across the Council’s various current accounts on any one day had been exceeded on 24 June 2022, when a total of £1.074 million had been held across the various current accounts. This was due to the unexpected receipt late in the day on 24 June 2023 of £0.130 million which had been expected on 27 June 2023 and there had been insufficient time to move the money to an alternative bank account/investment.  On 2 August 2022, the limit for the bank current accounts had again been exceeded with £1.007 million held, due to the unexpected receipt late in the day of a payment from a developer of Section 106 monies of £0.177 million. Although Planning informed Finance of when they billed for Section 106 payments, in practice they were rarely paid to us on the day expected, which had the case in this instance. As no prior notification of this payment had been received, no alternative arrangements could be made in time. In response to those two occurrences, additional ‘headroom’ was now provided against the relevant current accounts held with Lloyds Bank PLC in order to enable more money to be received into the accounts without the risk of exceeding the limit.

In addition to the above, an adjustment / intervention had also been required in respect of the amount held within Money Market Funds during the year.

Cabinet was made aware that the impact of inflation was continuing in 2023/24, with further interest rate rises in May and June 2023, such that the bank base rate was now 5% and that the latest interest rate forecast from the Council’s treasury management advisers suggested a further increase to 5.5% in autumn 2023 and then steady reductions in the rate during 2024/25 and 2025/26. Investment income budgets would be reviewed as part of the quarterly Financial Performance Reports and long-term financial planning processes.

In order to demonstrate compliance with the Treasury Management and Prudential Codes:-

It was moved by Councillor M E Stephenson, seconded by Councillor I J Henderson and:-

RESOLVED that -

a)  the Treasury Management performance position for 2022/23 be noted; and

b)  the Prudential and Treasury Indicators for 2022/23 be approved.