Skip to main content

Agenda item

Treasury Management Outturn

Purpose

To receive and discuss details of the Council’s Treasury management performance for the period 01 April 2024 to 31 March 2025.

 

Recommendation

That Audit and Governance Committee resolves to:

  1. Consider the Council’s Treasury Management performance for the period 1 April 2024 to 31 March 2025.
  2. Agree any comments to be passed to full Council when considering this item.

 

Minutes:

The purpose of the report was to receive and discuss details of the Council’s Treasury Management Performance for the period 1 April 2024 – 31 March 2025 and to agree any comments to be passed to Full Council when considering the item.

 

The Chair, Councillor Helene Mansilla, introduced the Statutory Annual Treasury Management Report and advised that the report reviewed how the Council has managed its finances, cash flow, borrowing, and investments for the financial year from 1 April 2024 to 31 March 2025. The Council's performance against the Treasury Management Strategy, which was agreed in February 2024, was highlighted alongside compliance with national financial regulations, including the Chartered Institute of Public Finance and Accountancy (CIPFA) Code and prudential indicators.

 

The Deputy Chief Executive and S151 Officer presented the report and informed the Committee that the Council budgeted for £1.2 million in investment income but achieved approximately £1.6 million, exceeding the budget by about £400,000. This surplus attributed to two factors:

 

1.    Interest rates had fallen more slowly than anticipated, keeping investment returns favourable.

2.    Increased Cash Balances: the Council’s cash balance was higher due to a slower than expected capital spending rate, providing more funds for investment.

 

The report demonstrated that the Council performed within the established Treasury Management Strategy. Quarterly updates and a mid-year report provided oversight and adjustments necessary for compliance with CIPFA standards.

A graph on page 39 in the agenda illustrated the income only return achieved by Cotswold District Council compared to other local authorities, indicating a relatively stable position in a fluctuating interest rate environment.

The Deputy Chief Executive and S151 Officer informed that no new borrowing was undertaken during the reporting period. 

The borrowing mentioned in the report related to a previous climate bond of £500,000, with repayment details that outlined short-term and long-term obligations. It was highlighted that the interest rate on the climate bond was approximately 2.15%. 

The current Public Works Loan Board (PWLB) rates indicated significantly higher rates for new borrowings at 6.14% for 50 year loans and around 4.84% for 10-year loans, contrasting sharply with historical low rates of around 1.5%.

Following the introduction of the report from The Deputy Chief Executive and S151 Officer Members of the Committee asked the following questions.

The Deputy Chief Executive and S151 Officer clarified that the Public works Loan Board rate set was in line with historical average rates and aimed to ensure the Council would not incur excessive costs should it need to borrow in the future.

The Committee expressed satisfaction with the higher-than-expected investment income, but it was pointed out that the overall investment value had decreased. The Committee questioned whether it was due to capital reallocations or the performance of the investment funds.

The Deputy Chief Executive and S151 Officer explained that the decrease was primarily attributed to the cash balance available for investments over the reporting period which was influenced by fluctuations in accounts receivable and payable and noted a reported reduction of approximately £75,000 in the capital value of pooled funds, which had not shifted significantly.

The Committee inquired about potential investments in sectors like tobacco or arms manufacturing, expressing interest in the Council's ethical stance on these issues.

The Deputy Chief Executive and S151 Officer confirmed that an assessment was conducted on the Council's investment exposure to such sectors, primarily focusing on environmental, social, and governance (ESG) standards and indicated that the Council actively sought to understand and limit potential investments in ethically questionable areas and agreed to share the findings of this assessment with committee members.

The Committee pointed out that certain phrasing in the compliance section of the report implied non-compliance due to external factors like interest rate movements beyond the Council's control. The Deputy Chief Executive and S151 Officer acknowledged this, noting that it stemmed from required reporting practices and confirmed that efforts would be made to clarify language in future communications.

It was confirmed that The Deputy Chief Executive and S151 Officer would provide members with the report concerning the Council’s exposure to investments in sectors like fossil fuels and military equipment.

Future reports will be updated to include clearer explanations of compliance and performance indicators.

An annual presentation by Arlingclose, the Council’s Treasury Management Advisors, would be organised to enhance understanding of pooled funds and investment strategies.

After discussion the report, the Chair proposed to make the following comments to Full Council.

  • The Audit & Governance Committee commended the Treasury Management Out-turn Report for 2024-25 and expressed satisfaction with the Treasury Management activities as they aligned with the approved strategy, prudential indicators, and statutory guidance. No breaches were identified.
  • The Committee acknowledged the Council’s prudent approach to ensuring internal cash balances were ample to accommodate operational and capital needs while emphasising the importance of security and liquidity in investment practices, especially given market volatility.
  • The Committee recommended that future reports incorporate more clarity regarding expectations for long-term investment performance.

RESOLVED: The Audit and Governance Committee noted the Council’s Treasury Management Performance and agreed comments to be passed to Full Council.

Voting record:

For - 5, Against - 0, Abstentions - 0, Absent/Did not vote - 0

 

Supporting documents:

 

Related Pages