To report on the Council’s treasury management activities and Prudential Indicators for 2024/25.

RESOLVED that Cabinet -

(a)   notes the Treasury Management performance position for 2024/25;

(b)   approves the Prudential and Treasury Indicators for 2024/25;

(c)   in respect of the recommendation made by the Resources and Services Overview & Scrutiny Committee through its consideration of the Annual Capital and Treasury Strategy for 2025/26, welcomes and notes that recommendation, and endorses the response thereto of the Corporate Finance and Governance Portfolio Holder, as set out within this report; and

(d)   agrees that no amendments to the Annual Capital and Treasury Management Strategy for 2025/26 are necessary.

Cabinet considered a report of the Corporate Finance and Governance Portfolio Holder (A.3) which reported on the Council’s treasury management activities and Prudential Indicators for 2024/25.

It was reported that borrowing and investments had been undertaken in accordance with the 2024/25 Annual Capital and Treasury Strategy that had been approved by full Council on 19 March 2024.

Summary of the Council’s Borrowing Position:

Cabinet was advised that no new external borrowing had been undertaken in 2024/25 for either the General Fund (GF) or Housing Revenue Account (HRA).

Summary of the Council’s Investment Position:

Members were informed that the amount of interest earned from investments had remained at a high level during the year. Although the Bank of England had announced a number of interest rate reductions during the year, many of the Council’s investments were fixed for six months at a time and therefore such reductions did not necessarily feed immediately through to the investment income earned. Advantages to the Council’s cashflow position had also accrued during the year due to the receipt of significant Government grant income relating to the associated major regeneration projects.  Estimated income had been increased through the quarterly financial performance and budget reports during the year - from £1.985 million at the start of the year to £4.035 million at the end of the year, with the outturn figure being £4.781 million as set out in the table above.

Cabinet was reminded that the Council continued to hold one property within its Commercial Investment Portfolio, which had a balance sheet value at 1 April 2024 of £2.284 million. This ‘book value’ had been decreased by the Council’s appointed valuers to £2.212 million at the end of 2024/25. 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 £0.233 million had been earned on the property in 2024/25, 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.

Members were advised that responding to inflation continued to be a challenge for the Bank of England with their current forecast suggesting CPI to peak at 4.0% in Q2/Q3 2025 before gradually falling back to their target of 2% from 2026/27. In terms of interest rates, the forecast from the Council’s own treasury advisors was for rates to reduce gradually from its current level of 4.0% to 3.75% in March 2026. The impact of interest earned from previous higher rates was therefore expected to continue to filter into budgets for the first half of this year, with any reductions being reflected in the latter half of the year and beyond. Investment income budgets would continue to be reviewed as part of quarterly monitoring reports and as part of the medium to long term financial planning process.

It was reported that in terms of borrowing costs, the outstanding loans currently held by the Council were at fixed rates and were therefore not subject to any short / medium term fluctuations such as those mentioned above. The Council would continue to consider the opportunities from  borrowing internally whilst current market interest rates remained relatively high, which was relevant when existing HRA loans matured and were ‘replaced’.

It was also timely to report the outcome from the consultation on the 2025/26 Annual Capital and Treasury Strategy that had been considered by the Resources and Services Overview and Scrutiny Committee at its meeting held on 9 July 2025. That Committee had resolved that the Committee:

“(a)  thanks Officers for the work dedicated to the Annual Capital and Treasury Strategy; and

(b)   recommends to Cabinet that Councillors be provided with a detailed briefing beforehand prior to considering this item in future.”

Cabinet had before it the response of the Corporate Finance and Governance Portfolio Holder made in relation to the Committee’s recommendation:-

“The Committee’s comments are welcomed, and I echo the thanks to Officers for the associated work they undertake during the year.

The timing and arrangements relating to the suggested briefing is something that would remain within the remit of the Committee and its work programme / meetings rather than requiring the approval of Cabinet. However, the usefulness of a briefing is acknowledged and Cabinet / relevant Portfolio Holders would be happy to support the approach proposed and await any further details from the Committee as it makes the necessary arrangements ahead of their consideration of the item next year.”

To provide timely / key financial information to Members; to demonstrate compliance with the Treasury Management and Prudential Codes; and to note the outcome of the consultation with the Resources and Services Overview and Scrutiny Committee on the Annual Capital and Treasury Strategy for 2025/26:-

It was moved by Councillor Stephenson, seconded by Councillor Barry and:-

RESOLVED that Cabinet -

(a)   notes the Treasury Management performance position for 2024/25;

(b)   approves the Prudential and Treasury Indicators for 2024/25;

(c)   in respect of the recommendation made by the Resources and Services Overview & Scrutiny Committee through its consideration of the Annual Capital and Treasury Strategy for 2025/26, welcomes and notes that recommendation, and endorses the response thereto of the Corporate Finance and Governance Portfolio Holder, as set out within this report; and

(d)   agrees that no amendments to the Annual Capital and Treasury Management Strategy for 2025/26 are necessary.