Agenda item

To receive an update on 2025/26 Treasury Management and the 2026/27 Treasury Management Strategy.

The Head of Service: Corporate & Capital Finance presented the Treasury Management Update Report 2025/26 and draft Treasury Management Strategy for 2026/27.

The report set out that the Treasury Management position for 2025/26 up to 31 December 2025 and the proposed Strategy for 2026/27 and that the Committee’s role was to consider the strategy prior to its submission to Full Council.

Members were advised that the report met all statutory reporting requirements and satisfied the requirements of relevant regulations such as the CIPFA Treasury Management Code and the CIPFA Prudential Code for Capital Finance in Local Authorities.

The Committee heard that the Strategy had remained consistent with previous years, focusing on limiting investment exposure, maintaining liquidity, and minimising borrowing costs. Officers highlighted that the Council continued to operate well within prudential indicators and had a strong track record of responsible borrowing and investment. Temporary borrowing and favourable cash flow movements during the year had contributed to a strong financial position.

Members were informed that the Council’s investment portfolio stood at £24.9m, achieving an average return of 4.11% with a strong credit score. Investments made into projects such as NuPlace and the Growth Fund were expected to deliver long?term capital growth and wider financial benefits, including additional council tax and business rates income.

The borrowing strategy adopted by the Council had remained consistent with that in the 2025/26 strategy. Net borrowing stood at £460.4m with an interest charge of 3.8%. During the year, £17.6m of PWLB Loans had matured, with a further £29.9m due before year?end. Temporary loans had been undertaken to meet cash flow requirements, and the authority had taken the opportunity to repay a loan in consultation with treasury advisors. Investments were held mainly in overnight deposits, ensuring funds were readily available and achieved a return.

Section 4.2 of the report set out the 2026/27 Strategy, which aligned with statutory requirements, the Codes of Practice, and the Capital Programme set out within the Medium-Term Financial Strategy. It was anticipated that the Council would need further borrowing during 2026/27 to fund the medium-term capital programme and would adopt a flexible approach to this. Appendix B of the report outlined available borrowing sources, with the Public Works Loan Board remaining the primary option. The Investment Strategy remained focused on minimising investment to reduce counterparty risk and net interest costs. Investment balances would be placed in business reserve instant access and notice accounts, Money Market Funds and short-dated deposits.

The report also included the Minimum Revenue Provision (MRP) statement. Members were informed that under the Local Authorities (Capital Finance) Regulations, where borrowing had been used to finance capital activity, a provision must be made, and recent amendments effective from April 2025 required that no element of the Capital Financing Requirement could be excluded from the calculation.

In line with the Local Government Act 2003, the prudential indicators demonstrated how the authority measured and managed its exposures to treasury risks. These covered capital expenditure and financing plans, the Capital Financing Requirement representing historic and future borrowing need, and confirmation that total debt remained below the forecast requirement.

Operational boundaries set the expected limits for external debt, alongside controls on maximum borrowing levels and the maturity structure of debt to protect against exposure, especially in uncertain periods. Voluntary measures assessing investment risk were also included. Section 6 of the report contained the Treasury Management Policy Statement, confirming adoption of the Code’s key recommendations, arrangements for monitoring treasury practices, interest rate provisions, and the responsibilities of the Section 151 Officer.

Members welcomed the report and expressed appreciation for the high?quality training provided by MUFG. The Committee discussed the importance of ensuring that capital projects continue to deliver social as well as financial benefits and Officers confirmed that most investment activity, such as NuPlace and the Council’s solar farms aligned with wider community and environmental objectives. Members also reflected on the strength of the Council’s asset base, noting that assets significantly outweigh borrowing, providing financial resilience.

In response to questions regarding national guidance changes relating to subsidiary investments, Officers explained the distinction between equity and capital loan elements and the implications for Minimum Revenue Provision calculations. Members also discussed the national audit environment and recent updates to financial reporting requirements affecting local authorities.

Upon being put to the vote it was:

RESOLVED – that:

a)    the treasury management activities to 31 December 2025 (Appendix A) be noted;

b)    it be recommended to Full Council to approve the Treasury Strategy 2026/27 (Appendix B), including the Annual Investment Strategy, together with the Minimum Revenue Provision Statement (Appendix B para 5.0), which will apply from 2025/26 onwards and Treasury Management Prudential Indicators (Appendix Bii); and

c)    the Treasury Management Policy Statement (Appendix B para 6.0) be noted.