Agenda item

To report on the Council’s treasury management activities and Prudential Indicators for 2023/24.

RESOLVED that Cabinet -

a)  notes the Treasury Management performance position for 2023/24; and

b)  approves the Prudential and Treasury Indicators for 2023/24.

Cabinet considered a detailed report of the Corporate Finance & Governance Portfolio Holder (A.2), which reported on the Council’s treasury management activities and Prudential Indicators for 2023/24.

It was confirmed that borrowing and investments had been undertaken in accordance with the 2023/24 Annual Capital and Treasury Strategy that had been approved by full Council on 2nd March 2023.

Summary of the Council’s Borrowing Position:

No external borrowing had been undertaken in 2023/24 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 increased greatly during the year due to the continuation of decisions by the Bank of England Monetary Policy Committee (MPC) to increase rates from 4.25% at the beginning of 2023/24 to 5.25% at the end of it. As most investments were fixed for 6 months at a time, the increases did not feed immediately through to the investments held but did allow for a ‘laddering’ of deposits to lock in the increase. Estimated income was increased through the quarterly financial performance and budget reports during the year - from £0.824 million at the start of the year to £3.818 million at the end of the year, with the outturn figure being £4.220 million as set out in the table above.

Members were reminded that the Council continued to hold one property within its Commercial Investment Portfolio, which had a balance sheet value at 1 April 2023 of £0.224 million. This ‘book value’ had been increased by the Council’s appointed valuers to £2.284 million at the end of 2023/24. However, this was an ‘accounting’ valuation and not a direct value that would be achieved on the market if it was sold. In-line with the budget, rental income of £0.228 million had been earned on the property in 2023/24, in line with estimates.

Treasury performance figures for the year were set out in Appendix A to the Portfolio Holder’s report with Prudential Indicators attached as Appendix B to that report.

Cabinet was made aware that Inflation had met the MPC’s target of 2% in early 2024/25, but that underlying inflationary pressures remained, which meant that interest rate reductions were likely to be gradual in nature. The forecast from this Council’s treasury advisors was for interest rates to decline from the current peak of 5.25% to 4.00% in March 2025. As the impact of interest earned from previous higher rates would continue to filter into budgets for the first half of the year, with any reductions being reflected in the latter half, investment income budgets would continue to be reviewed as part of quarterly monitoring reports and as part of medium to long term financial planning.

Members were advised that during the year and subsequent to Birmingham City Council issuing a Section 114 notice, information had been set out in various reports that highlighted the money that had been lent to them as part of this Council’s day to day treasury activities. Of the total amount of £6.000m lent to them, £2.000m had been repaid in February 2024 with the remaining £4.000m repaid in June 2024 in-line with the original terms of the deal. Therefore, no repayments from Birmingham City Council remained outstanding with all sums due now received by this Council.

In order to provide timely / key financial information to Members and to demonstrate compliance with the Treasury Management and Prudential Codes:-

 It was moved by Councillor M E Stephenson, seconded by Councillor Scottand:-

RESOLVED that Cabinet -

a)  notes the Treasury Management performance position for 2023/24; and

b)  approves the Prudential and Treasury Indicators for 2023/24.