Agenda item

The Committee considered the Treasury Management Mid-Year Review report, which set out the Council’s performance against the approved Treasury Management Strategy and Prudential Indicators 2025/26.

The Head of Finance and Investment advised that the report was presented for Member scrutiny rather than assurance, noting that formal assurance was provided through the CIPFA audit process.  It was explained that the CIPFA Code of Practice focused on three key elements: treasury management practises, governance arrangements, and the management of key financial risks, including investment risk, debt risk and market risk.  Members were advised that the report and its accompanying practices guidance set out how the Council managed large financial transactions and complied with regulatory requirements.

Council’s approach to borrowing and capital finance was discussed, noting that borrowing was treated as a last resort and that capital investment was prioritised to support the Council Plan strategies within defined financial capacity.  It was highlighted that the capital programme for 2025/26 had reduced, resulting in lower capital financing requirements, which were expected to remain below 10% of the net revenue budget line with CIPFA guidance.

The Committee considered the Council’s under-borrowing position, the balance between internal and external borrowing, and the use of fixed rate borrowing to manage interest rate risk.  Members noted that capital finance costs were increasing and sought clarification on the reasons, including the impact of interest rate movements and the level of headroom available should rates rise further.  The Head of Finance and Investment advised that the headroom cost was within the authorised borrowing limits, with borrowing decisions managed prudently to minimise revenue impact.

Cash flow management and investments were discussed, noting that cash balances typically fluctuated to meet operational demands such as Council payroll and statutory services.  It was confirmed that investments were primarily placed with central government or other local authorities to minimise credit risk, while generating interest income to offset capital financing costs.

The Committee considered issues relating to asset condition and capital investment, with the Head of Finance and Investment highlighting the importance of maintaining and repairing assets to manage long-term risk, including insurance implications.  It was confirmed that capital investment included essential works to protect the Council’s asset base, with financing associated with urgent asset-related expenditure.

Members sought further comparative information on the Council’s capital financing position relative to other local authorities and requested additional clarity on the Council’s exposure to LOBO (Lender Option Borrower Option) loans, including when these arrangements were expected to be concluded.

The Head of Finance and Investment emphasised the importance of ongoing transparency and Member understanding of treasury management arrangements, including training and access to supporting information.

AGREED that:

1.     The mid-year Prudential Indicator results for 2025/26 were noted as the Council’s current position in relation to capital finance activities and the overall indebtedness.

2.     The performance of the Treasury Management function against Council’s approved strategy for the 2025/26 financial year to date was noted.

3.     The performance in the year to date was discussed and Members sought any further details or explanations required from Officers to assure themselves that appropriate governance arrangements were in place.

4.     The Head of Finance and Investment would circulate the Council’s Treasury Management Practices to Members.

5.     A future report scheduled for February 2026 would include comparative benchmarking information against other local authorities’ capital financing positions.

6.     Further information on the Council’s LOBO loans, including end dates, would be circulated to Members by the Head of Finance and Investment.