Report attached

Kathy Freeman, Strategic Directorpresented the report that outlined the performance of the treasury management function that was approved by Full Council on 1 March 2024. The report covered the delivery of the TMSS in 2023/24, activity on treasury managed investments and borrowings and the associated monitoring and control.

The CIPFA TM Code required that authorities report on the performance of the treasury management function to Full Council at least twice per year (mid-year and at year-end). The Authority’s Treasury Management Strategy Statement (TMSS) 2024/25 was approved by Full Council on the 1 March 2024.

It was explained that the Authority had borrowed and invested sums of money as part of activities through its treasury management activities and would be exposed to changes to interest rates on its investments which would also impact on the cost of borrowing to fund its capital programme.

The Council provided an annual report and a Treasury Management Strategy every year as part of the budget setting process. A mid-year report was also provided to look at the formants against that strategy, in terms of how the Council was doing in that year. The final of the three reports was a backward look of the performance of the prior year and to demonstrate that the Authority had acted in accordance with the policy that they set out for themselves. In terms of the key highlights section on page 115, there were a number of indicators, the debt position, what the yield was, what the investment income

was and also the interest payable.

The report broadly set out a number of key sections including the economic outlook and looking backwards for the last financial year, notably the increase in the Bank of England base rate and the PWB rate and how that increased in line with the base rates, which could be seen on graph one of the report on page 117. It was also noted that the report set out how the Council's borrowing strategy was adhered to and section three of the report further set out the detail of the debts and the amount of interest paid. Page 119 set out details of the compliance with the Council investment strategy. Appendix A displayed how the Council set out the maturity of the borrowing profile and the terms of the investment and the security rating of who the money was invested with.  Lastly, the report illustrated that the Council operated within the operational and authorized limits in terms of borrowing which was vital that there was no breach in the operational or the authorized limits in borrowing terms.

Members asked various questions around the Lender Option Borrower Option (LOBO) and Kathy explained that assessment was made as and when offered a buyout option to determine whether or not it was cheaper to keep the LOBO or whether to buy out of it, consideration was relative to the interest rate and if the Council would be able to borrow for that equivalent sum.

It was also explained that the Council budgets as if all of the capital program was going to be fully spent. They then had to budget for interest costs and debt repayment costs on the assumption that they were going to fully spend the capital program and what's contributed towards the reduction and overspend last year was because they haven't fully spent the capital program.

The budget was then brought down by the overspend quite significantly because of the slippage in the capital program and thereby it had reduced the capital financing costs and the cost that had been set aside for the repayment of the debt which had helped to contribute to the overspending. It was not great for the delivery of the capital programming perspective; however, from a financial perspective, it had supported the Council’s overall situation.

RESOLVED that the Committee:

1.    Noted the content of treasury management activities and performance against targets for the financial year 2023-24 as detailed in the report.