Agenda item

To receive the Treasury Management 2024/25 Annual Report and 2025/26 Update Report.

The Group Accountant gave a brief overview of the Treasury Management 2024/25 Annual Report and set out details on the position for 2025/26 up to 31 May 2025.

The Council was required by the Local Government Act 2003 to produce an annual treasury management review of activities and the prudential and treasury indicators for 2024/25. This report met 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).

During 2024/25, the reporting requirements were that the full Council should receive an annual treasury strategy, a mid-year, treasury update report and an annual review.

Members had been invited to attend at three training sessions during 2024/25 with the latest being in January 2025 prior to the Treasury Strategy being presented and the slides from this training had been circulated to Members for their information to provide background context.

In relation to the Annual Report, during 2024/25, the Council complied with its legislative and regulatory requirements. 

Capital expenditure was below that set out in the Strategy following in year capital programme rescheduling.  Capital Expenditure was funded through a mix government grants, capital receipts, revenue and other external contributions and borrowing.

During 2024/25, an under-borrowed position was maintained. This meant that actual borrowing was lower than the Capital Financing Requirement (CFR).   This was a key Treasury Management and Prudential indicator set by CIPFA.  The maximum borrowing position fell below the authorised and operational boundaries and it was confirmed that the Council had only borrowed to support capital investments and not for front line services.

The borrowing strategy, on a short-term basis, was to take out loans less than one year to take advantage of the market conditions.  Interest rates steadily fell over the medium-term and the Bank of England base rate followed a cut/hold pattern during 2024/25 with a reduction of 0.25% in August, November and February. 

During the year, six new Public Works Loan Board (PWLB) loans were taken out totalling £55m and maturities of PWLB loans totalled £47.9m. A further £270m of temporary loans, through the Local-to-Local Market, were raised, renewed or replaced. During the year, one Lender Option Borrower Option (LOBO) Loan was ‘called’ and the option was taken to repay the loan.

The 2025/26 Borrowing Strategy and Investment Strategy remained consistent with that of the previous year, and the report set out the details in relation to the latest prudential and treasury management projections up to 2026. 

On 31 May 2025, £30m of outstanding temporary loans had been repaid on maturity and £14m of new temporary loans had been raised.  Two new Public Works Loans Board (PWLB) loans had been raised totalling £15m and £2.9m of loans had been repaid.   In total, £40m of PWLB Loans were due to mature during the year.

Surplus cash flows had continued to be invested in H.M Treasury’s Debt Management Account Deposit Fund and Money Market Funds.  The Municipal Investment Loan would support the climate change agenda.

During the debate, some Members asked in relation to the investment strategy if there had been any instances during the period where the SONIA benchmark had not been achieved and in relation to the overall treasury outturn of £1.084m could this be broken down further in relation to cash flow benefit and the re-profiling of capital expenditure.  It was asked if, in relation to compliance with limits, had any limits been close to being breached and, if so, what temporary measures had been taken.  Other Members asked in relation to Treasury Management and reducing the CFR where underlying borrowing needs should not rise indefinitely, what was the definition of indefinitely and what was the forecast percentage of Financing Cost to Net Revenue Stream for 2025/26.

The Group Accountant would look at the benchmarks in relation to over or under performance, but he was not aware that it had dropped below the levels.   The surplus against budget cash flow benefits was intertwined and may be difficult to separate but this would be looked into and the Council had effectively authorised its operation limits and these tended to be highest at year end.  In relation to the reducing the CFR and the term “indefinitely”, the rise in relation to capital spend was taken into consideration and this had been approved in the budget strategy, but this would be taken away and looked in to.  The percentage of the net revenue for 2025/26 was not picked up as part of this report.

RESOLVED – that:

a)    the contents of the report be noted;

b)   the performance against Prudential Indicators be noted; and

c)    the report be recommended to Full Council.