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Agenda item

Treasury Management Mid-Year Report

Purpose

To receive and discuss details of the Council's Treasury Management performance for the period 01 April to 30 September 2025 and Quarter 2 Treasury Management Prudential Indicators

 

Recommendation

That the Audit and Governance Committee resolve to:

  1. Note the Council’s Treasury Management performance for the period 1 April 2025 to 30 September 2025 and the Quarter 2 Prudential Indicators.

2.    Recommend to Council for approval.

Minutes:

The Chair invited the Deputy Chief Executive Officer to introduce the item. The Deputy CEO noted that the report author was present at the Committee and apologised for the atypical formatting of the report, explaining that this was produced as part of the Council’s required information provision to the Chartered Institute of Public Finance and Accountancy (CIPFA) rather than in line with the Finance team’s usual reports for the Committee. The Deputy CEO explained that the Council had benefited from improved returns on investment in 2025 as well as two additional factors – a higher balance for investing via taxation and limited spending, and limited shifting of interest rates from the Bank of England, both of which contributed positively to the Council’s financial position. The officer also noted the only ongoing borrowing being a ‘climate bond’ from circa 2022, which was being actively repaid and was utilised on projects including solar panel installation and electric vehicle charging points within the District. The Council had not undertaken any borrowing during the 2024-2025 period and did not intend to for the remainder of the year.

The Deputy CEO noted that Section 5 referenced externally-managed funds (“pooled funds”, a Cash Plus fund and a Real Estate Investment Trust (REIT)) – and explained that there was some concern regarding the statutory override that existed on the accounting for pooled funds which was due to expire on 31 March 2025, but this had been extended through to 2029. The officer also noted that this would not cover any pooled fund investments made after 1 April 2024 but this caveat did not apply to any of the Council’s current investments, having all been made prior to that date. The Deputy CEO then requested questions or comments from Committee members.

The Committee noted some errors in grammar – page 25 misspelled “diversified”, and Annex A, part 1.3, had a percentage value missing. The report author officer confirmed that these would be corrected.

The Committee queried Table 5, showing the initial value versus current value for all pooled funds. The Committee asked how they should consider an investment that had reduced in overall value despite continuing to provide a dividend to the Council. The Deputy CEO explained that while the total value had decreased, the period from which the investments were initially taken out meant that they had provided, over time, a greater income than their change in value. The officer continued to explain that the pooled funds were also partially selected to diversify the Council’s portfolio in light of limited returns on cash balances, and that the intent of these investments was to hold them long-term, anticipating certain holdings may increase or decrease in value, but that the overall portfolio was expected to, supported by opinions from Arlingclose, stay in the black. Past performance of certain funds did not, in this case, necessarily indicate future performance. The Chair queried how difficult it would be to withdraw Council funds from these investments if it were considered appropriate to do so in future. The Deputy CEO explained that it would depend on the individual funds in question, and whether the other invested parties also did so at the same time, referencing a property developer as a hypothetical, which would prompt the fund to protect its own integrity and make withdrawing more expensive or difficult. The officer summarised the system as there being “a cost to go into these investments and a cost to go out of them”. The officer added that there was around £350,000 earmarked in the eventuality of withdrawal at cost, that there remained a balancing act on protecting the Council from unexpected risk and actively utilising funds on projects within the District.

RESOLVED: The Committee noted the Treasury Management report.

Supporting documents:

 

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