Issue - meetings

Report of the Cabinet Member for Finance and Assets

The Cabinet Member for Finance and Assets said regulations require the council to review and scrutinise the treasury management activities undertaken each year, including investments and borrowing to fund key projects and programmes.  The report provides details of the outturn position for treasury activities for the first six months of financial year and how activities are compliant with council’s policy approved by Members in March 2023.  Members will note that general fund borrowing costs are higher than forecast in the 2023-24 budget, driven by Bank of England base rate being 1% higher than predicted when the budget was approved in February 2023.  He confirmed that the vast majority of borrowing is at fixed rates, not subject to recent rate rises and volatility, but as an example, the land purchase at West Cheltenham and ongoing capital commitments are currently being funded by temporary short-term borrowing as fixed rate lending is higher than forecast for the coming 24 months.

He said that work is ongoing as part of the 2024-25 budget process to review borrowing and minimise the risk on additional pressures.  Officers check interest rates on a daily basis and will determine the optimum opportunity to fix in what is currently a challenging market place, alongside maximising the opportunity to deliver capital receipts.

He concluded by saying that the report was presented and discussed at Treasury Management Panel, is supported by Cabinet colleagues, and is therefore recommended to Council.

In response to Members’ questions, the Cabinet Member for Finance and Assets confirmed that:

-       it has always been the council’s intention to sell its holdings in the Shroder Income Maximiser Fund when prudent to do so. The fund has reduced its exposure to fossil fuel investments and is losing money at the moment;

-       all borrowing is the council’s capital commitment, with £38-42m of its capital investment for land purchase at Golden Valley, and additional borrowings the development of the scheme. Added together, the council’s commitment is around £150m, with £20m from the government.

There was no debate on this item.

RESOLVED THAT: 

-       the contents of this summary report of the treasury management activity during the first six months of 2023/24 is considered and noted.

Report of Cabinet Member for Finance and Assets, Councillor Peter Jeffries

RESOLVED THAT:

the contents of the summary report of the treasury management activity during the first six months of 2023/24 be noted and recommended on to Council.

The Cabinet Member for Finance and Assets introduced his report, saying that regulations require the council to regularly review and scrutinise the treasury management activities undertaken each year, to include the investments we hold as well as the borrowings we have taken out to fund key projects and programmes. He said this report is important as it provides details of outturn position for treasury activities for the first six months of this financial year and outlines how activities are compliant with the council’s policies previously approved by members in March 2023.

He said the report shows that we are still experiencing pressure in our budget as a result of the rise in the Bank of England rate in the first five months of the year, which has specifically impacted our temporary borrowing we currently hold which is more exposed to rate changes. These pressures are also reported in the Q2 monitoring report which is also on the agenda..

He assured members that work is ongoing as part of the 2024/25 budget process to review our borrowing and minimise the risk of additional pressures being created when existing fixed rate loans expire and may attract much higher interest in new or temporary deals.

He said the report has been presented and discussed at the Treasury Management panel, and with colleagues’ support this evening, it will be recommended onto Full Council.

There were no questions or comments from Members.

RESOLVED THAT:

the contents of the summary report of the treasury management activity during the first six months of 2023/24 be noted and recommended on to Council.