Agenda item

To receive the Treasury Management 2023/24 Annual Report and 2024/25 Update.

The Finance Manager - Corporate & Capital Finance and the Group Accountant presented the Treasury Management 2023/24 Annual Report and 2024/25 Update which gave details of the outcome of Treasury Management activities for 2023/24 and detailed the position for 2024/25 to 31 May 2024.

The requirements of both the CIPFA Code of Practice on Treasury Management, (the Code), and the CIPFA Prudential Code for Capital Finance in Local Authorities, (the Prudential Code) had been met.

At 31 March 2024 borrowing was £371.3m, which reflected the approved Capital Programme, and investments were £17.9m.  The borrowing strategy was to undertake temporary borrowing when required and review opportunities for longer-term borrowing when interest rates and opportunities were favourable.  The report showed that the level of borrowing was below the capital financing requirement at year end which demonstrated the council had not borrowed more than was required for capital purposes. 

The investment strategy for 2023/24 was primarily to ensure security of capital and liquidity balanced whilst delivering a commensurate rate of return.  The investments made in 2023/24 were set out in the report and were placed with low risk counterparties to safeguard funds.  The net benefit against the budget in 2023/24 was £1.3m which was a sound overall position.

The strategy for 2024/25 remained consistent with that outlined in the 2024/25 Treasury Strategy, which was agreed for approval at Full Council on 29 February 2024.

A summary of key points in relation to Treasury Management and how this compared to the previous year’s outturn position was set out in the report.  It also gave details of the interest rate, new borrowing to support the capital budget, the valuation of non-current assets, compliance with indicators, treasury management debt and the treasury management portfolio. 

The Bank of England Base Rate had continued to increase during 2023/24, due to the battle to bring down inflation, reaching 5.25% in August then remained constant through the remainder of the year.  Inflation was on a downward trajectory, but this had not been as swift as had been projected but had reached 2% in May 2024. 

Six PWLB loans had been entered into with a variety of amounts and durations.  The average borrowing rate rose from 2.65% to 3.39% due to the cost of temporary loans increasing.  The average return rate for investments was 4.89% against an average benchmark of 4.96%.

An overall net benefit of £1.336m was made against the budget for the year and had resulted from a mix of cash flow benefits plus the reprofiling of capital spend into future years.

The Council made an annual contribution towards Shropshire Council costs on pre disaggregation debt.  The contribution in 2023/24 was £1.143m and interest paid averaged 4.1%.

No new leases were entered into during the 2023/4 financial year.

An update for 2024/25 was provided, covering the period 1 April to 31 May.  This included a summary of the borrowing and investment positions and confirmation that the Council had operated within Prudential Indicators and limits set. 

During the debate, some Members thanked the team for their reassurance that the council had tight controls in relation to council debt and income.  This was a testament to their hard work.

RESOLVED –

a)    the report be RECOMMENDED TO FULL COUNCIL;

b)   the report be noted; and

c)    the performance against Prudential Indicators be noted.