Agenda item

To note.  

The Executive Member for Finance submitted a report for Executive's consideration. The report provided information on the Council’s Prudential Indicators for 2025/26 and reviewed Treasury Management performance against the approved Treasury Management Strategy for the year.

Executive was advised that the Council was required to approve annually a Treasury Management Strategy and a set of Prudential Indicators in accordance with the Local Government Act 2003 and the Chartered Institute of Public Finance and Accountancy (CIPFA) Codes of Practice. Members heard that these arrangements regulated the affordability, sustainability and prudence of the Council’s capital financing activities and ensured that borrowing and investment decisions were undertaken within an appropriate governance framework.

The Executive noted that no prudential or treasury management indicators approved for 2025/26 had been breached during the financial year. Members were informed that borrowing requirements during the year had been lower than originally anticipated due to slippage on capital schemes, with borrowing of £12.665 million compared to the original budget assumption of £17.085 million. The Council’s Capital Financing Requirement (CFR) at 31 March 2026 stood at £307.810 million.

Members heard that the Council remained in an under-borrowed position of £27.221 million, equivalent to 8.8% of the Capital Financing Requirement. This approach involved the use of internal cash balances instead of external borrowing and was reported to generate revenue savings by reducing borrowing costs. Consequently, the Council’s total external debt at 31 March 2026 was £280.589 million.

The Executive was advised that the majority of the Council’s debt was held with the Public Works Loan Board, with loans structured to broadly match the life expectancy of the assets being financed. Members also noted that short-term borrowing from other local authorities had been used where appropriate to support liquidity requirements whilst maintaining flexibility in relation to long-term borrowing decisions. 

The Executive noted that all cash investments had been made in accordance with the Council’s approved creditworthiness criteria and were generally invested with central government or other local authorities. Interest of approximately £1.1 million had been earned on temporary cash investments during 2025/26. Members heard that all investments had been repaid on time and that treasury management activity throughout the year had remained compliant with the approved strategy.

Members were further advised that £50 million of new external borrowing had been undertaken during the year, comprising £45 million from the Public Works Loan Board and £5 million from another local authority. This had been offset by debt repayments, resulting in an overall increase in external debt of £27.147 million during the year. Officers confirmed that all borrowing decisions had been authorised in line with treasury management policies and had been undertaken in consultation with external advisers.

The Executive heard that the Council had complied with all requirements of the CIPFA Prudential Code and Treasury Management Code. It was noted that treasury management activity had been undertaken in a prudent, affordable and sustainable manner and that officers continued to proactively manage borrowing and investment portfolios with support from the Council’s treasury advisers. 

OPTIONS

There were no other options submitted as part of the report.

AGREED that Executive:

1.     Note the Prudential Indicators for 2025/26 as the Council’s year-end position in relation to capital finance activities and overall indebtedness detailed in tables 1–5 of the report.

2.     Note the performance of the treasury management function against the Council’s approved Treasury Management Strategy for 2025/26 detailed in paragraphs 4.33–4.38 of the report.

REASONS

The recommendations would fulfil compliance with the CIPFA Prudential Code for Capital Finance for local authorities; compliance with the CIPFA Treasury Management Code for local authorities and compliance with the Local Government Act 2003 Section 1 in relation to borrowing.