Agenda item

To receive the 2022/23 Treasury Management Annual Report and 2023/24 Update.

The Finance Manager - Corporate & Capital Finance and the Group Accountant presented the Treasury Management – 2022/23 – Annual Report and 2023/24 Update Report which detailed the activity undertaken during 2022/23 and the position to 31 May 2023.

This report met the requirements of both the CIPFA Code of Practice on Treasury Management and the CIPFA Prudential Code for Capital Finance in Local Authorities.

Borrowing could only be undertaken to fund capital investment and not to support the revenue budget which supports the delivery of most Council services. The total value of assets (exc. Infrastructure Assets such as Highways, footpaths, bridges etc and non NuPlace Ltd Long-Term Debtors) held by the Council at 31 March 2023 was £621.7m some £274.5m greater than debt outstanding. (In addition to this, the Council’s infrastructure assets were valued at over £200m.)

The borrowing strategy for 2022/23 had been to borrow temporarily when required and take advantage of low interest rates where possible.  This was a continuation of the strategy adopted in previous years.  Short term borrowing had been undertaken during the year to meet cash flow requirements which had generated a benefit, particularly at the beginning of the year before interest rates began to rise.

The investment strategy for 2022/23 was primarily to ensure security of capital and liquidity balanced with delivering a commensurate rate of return..  The average return on investments for the year was 2.1%, slightly lower than the bench mark, average SONIA rate, of 2.2%. Temporary investments (excluding NuPlace share capital) increased by £2.0m at 31 March 2023 compared to 31st March 2022. This was predominantly due to greater than anticipated Government Grants received and sales ledger receipts.

The Council continued to face financial pressures during 2022/23 due to the cost of living crisis and high inflation.  Cash flow had been monitored to ensure sufficient funds were available to meet the financial obligations.

A net benefit of £3.951m had been made against the budget for the year and this sound overall position had resulted from a mix of cash flow benefits, proactive treasury management activity and the active management of borrowing. 

New borrowing would be required during the remainder of the 2023/24 financial year in line with the approved capital programme.  Due to the forecast that interest rates would continue to rise throughout the remainder of 2023, it was anticipated that the majority of new loans entered into would be relatively short-term.

The Council’s Treasury Advisors were providing regular investment and borrowing updates which included counterparty advice.

The Council made an annual contribution towards Shropshire Council costs on pre-disaggregation debt; debts that occurred prior to the creation of Telford & Wrekin Council.  The contribution during 2022/23 was £1.148m and interest paid averaged 4.7%.

Members welcomed the positive report in the current volatile financial environment and thanked officers for their work.  They were encouraged to see good compliance with indicators and a sensible approach to borrowing.

RESOLVED – that:

a)    the contents of the report be noted;

b)   the performance against the Prudential Indicators be noted; and

c)    the Treasury Management – 2022/23 Annual Report and 2023/24 be  RECOMMENDED TO FULL COUNCIL.