Agenda item

To receive the Treasury Management – 2025/26 Outturn Report and 2026/27 Update Report.

The Head of Corporate & Capital Finance presented the Treasury Management – 2025/26 Annual Report and the 2026/27 Update Report which set out the details on the outcome of the Treasury Management activities and the position up to 31 May 2026.

Under the Local Government Act 2003 the council was required to produce an annual treasury management review of its activities and this report met the requirement of both the CIPFA Code of Practice on Treasury Management and the CIPFA prudential Code for Capital Finance in Local Authorities. 

During the reporting period it was a requirement that Full Council should receive a report on the annual treasury strategy, a mid-year treasury update report and an annual review following year end and it asked that the report be recommended to Full Council for review.

There was a requirement on Members to review and scrutinise the treasury management policy and activity and in this regard it complied with the relevant requirements.

The council had procured MUFG as its external Treasury Management Advisor and guidance would be sought from MUFG prior to any investment or long-term borrowing and training would be provided for Members similar to that held in January 2026.

During 2025/26, the council had complied with its regulatory requirements and the key prudential and treasury indicators were set out in the report.  Members should note that borrowing could only be undertaken to fund capital investment and this could not support the revenue budget.  The Total value of assets held at 31 March 2026 was £688.6m some £195.9m greater than the total debt outstanding. 

The borrowing strategy for 2025/26 was to borrow temporarily on a short-term basis and, where appropriate, take advantage of interest rates to lock into medium and long-term borrowing.   Capital receipts and borrowing were set out in the report and the council maintained an under-borrowed position during 2025/26.  Eleven new PWLB loans were raised across a mix of one to five years and maturities of PWLB loans totalled £40.3m.   Temporary loads of less than twelve months through the Local-to-Local Market were raised of £197m and one Lender Option Borrower Option (LOBO) Loan was called and the option was taken to repay the loan.

For 2025/26 the Investment Strategy was primarily to ensure the security of capital but remain liquidity balanced.  Investments of surplus cash with HM Treasury’s Debt Management Office gave an average return of 4.91%.

Overall, there was a net pressure of £0.27m realised against the budget for the year.

During 2026/27, the borrowing and investment strategy remained consistent with the previous year and the projected external debt did not exceed the projected CFR or the borrowing limits.

Interest rates drops had not materialised due to the uncertainties in the Middle East and the Bank of England interest rate held at 3.75% and the forecast would remain at its current level until mid-2027.

As at 31 May 2026, no new PWLB loans had been raised and £3.2m  had been repaid.  Temporary loans of £25m had been repaid on maturity and £17.5m of new loans had been raised. 

During the debate, some Members commended the officers on being in an under-borrowed position and for the very positive report which set out the benefits of being able to borrow to generate capital and the benefits that brought forward.  It was asked if there were any areas of vulnerability regarding investments.

The Head of Corporate & Capital Finance addressed the DMADF Account which was an overnight deposit facility.  There was a small balance held in Lloyds each night which had minimal risk.

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.