To report on the Council’s treasury management activities and Prudential Indicators for 2025/26.

RESOLVED that -

a)       the Treasury Management performance position for 2025/26 be noted;

b)       the Prudential and Treasury Indicators for 2025/26 be approved; and

c)       an amendment to the Council’s Treasury Management Practices be approved that allows the maximum amount of money that can be invested per money market fund to increase to £6.000m from the current limit of £4.000m.

Cabinet considered a report of the Corporate Finance & Governance Portfolio Holder (A.1) that reported on the Council’s treasury management activities and Prudential Indicators for 2025/26.

It was confirmed that borrowing and investments had been undertaken in accordance with the 2025/26 Annual Capital and Treasury Strategy that had been approved by full Council on 31 March 2025.

Summary of the Council’s Borrowing Position:

Members were informed that no new external borrowing had been undertaken in 2025/26 for either the General Fund (GF) or Housing Revenue Account (HRA).

Summary of the Council’s Investment Position:

Cabinet was made aware that the amount of interest earned from investments had remained at a relatively high level during the year. Although the Bank of England had announced some interest rate reductions during the year, many of the Council’s investments were fixed for 6 months at a time and therefore such reductions did not necessarily feed immediately through to the investment income earned. The rate at the beginning of the year was 4.5%, with modest reductions made over the course of the year, with the rate at the end of March 2026 being 3.75%. Advantages from the Council’s cashflow position had been also seen during the year due to the significant Government grant income relating to the associated major regeneration projects.  Estimated investment income had increased through the quarterly financial performance and budget reports during the year - from £1.806 million at the start of the year to £3.878 million at the end of the year, with the outturn figure being £4.949 million as set out in the table above.

It was reported that the Council continued to hold one property within its Commercial Investment Portfolio, which had a balance sheet value at 1 April 2025 of £2.212 million. This ‘book value’ had been decreased by the Council’s appointed valuers by £0.076 million at the end of 2025/26. 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 £0.237 million had been earned on the property in 2025/26, in line with estimates.

The treasury performance figures for the year were set out in Appendix A with the Prudential Indicators attached as Appendix B.

It was reiterated that responding to inflation continued to be a challenge for the Bank of England with their current forecast suggesting CPI could breach 4.5% in 2026, which was a stark contrast to their earlier forecast which had suggested inflation would reach their target amount of 2% from 2026/27. 

In terms of interest rates, the forecast from the Council’s own treasury advisors was for rates to remain steady at the current level of 3.75% in March 2026 to 3.5% in September 2027. Steady returns were therefore expected throughout 2026/27.

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 are ‘replaced’.

As reflected within the recommendations in this report (A.2), it was proposed to increase the maximum amount that could be invested per money market fund to £6.000m from £4.000m, as set out within the Council’s Treasury Management Practices (TPM’s). This approach would provide Officers with the required additional flexibility when making investment decisions during the year but still set against a proportionate balance with risk.

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

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

RESOLVED that -

a)       the Treasury Management performance position for 2025/26 be noted;

b)       the Prudential and Treasury Indicators for 2025/26 be approved; and

c)       an amendment to the Council’s Treasury Management Practices be approved that allows the maximum amount of money that can be invested per money market fund to increase to £6.000m from the current limit of £4.000m.