Issue - meetings

Purpose of Report

To summarise and review the Council’s treasury management activity and the prudential indicators at 31 December 2023.

CIPFA’s new edition of the Code of Practice for Treasury Management (2021) recommended that Councillors should be informed of Treasury Management activities quarterly (previously twice a year). This report, therefore, ensured this Council was embracing best practice for the scrutiny of capital and investment activity in accordance with the Code of Practice (CIPFA).

Decision

That the Prudential and Treasury Indicators and the actual performance against the Treasury Management Strategy 2023/24 for the quarter ended 31 December 2023 be noted.

Alternative Options Considered and Rejected

None.

Reason for Decision

The prudential system for capital expenditure was well established. One of the requirements of the Prudential Code was to ensure adequate monitoring of the capital expenditure plans, prudential indicators (PIs) and treasury management response to these plans. This report fulfilled that requirement and included a review of compliance with Treasury and Prudential Limits and the Prudential Indicators at 31 December 2023. The Treasury Management Strategy and Prudential Indicators were previously reported to and approved by Council on 28February 2023.

The Council had adopted the CIPFA Code of Practice for Treasury Management in the Public Sector and operated its treasury management service in compliance with this Code and the above requirements. These required that the prime objective of treasury management activity was the effective management of risk, and that its borrowing activities were undertaken in a prudent, affordable and sustainable basis.

It was noted that the Council held £28.315m of investments at 31 December 2023, achieving an average interest rate of 5.64% (2.10% 22/23). Actual interest earned in the 9 months period to 31 December 2023 totalled £1.440m.

It was noted that as at 31 December 2023, the Council held £109.243 million of external borrowing, of which 100% were fixed rate loans.

As at 31 December 2023, the average rate of interest paid during the first 3 quarters of the year on external borrowing was 3.26%.

As part of the Treasury Management Strategy, the Council established a range of Prudential Indicators (in accordance with professional practice) to monitor both Treasury and Capital as the two were intrinsically linked. Details of the performance against the Prudential Indicators was detailed at Appendix A to the officer’s report.

The current economic update from the Council’s treasury advisors (LINK) could be found in Appendix B.

This report highlighted the changes to the key prudential indicators, to enable an overview of the current status of the capital expenditure plans. It incorporated any new or revised schemes previously reported to members. Changes required to the residual prudential indicators and other related treasury management issues were also included.