Agenda item

Report of the Group Director of Operations

The Group Director of Operations submitted a report (previously circulated) to inform Members of important information regarding the regulation and management of the Council’s borrowing, investments and cash-flow.  It is a requirement of the Council’s reporting procedures and by regulations issued under the Local Government Act 2003 to produce an annual treasury management review that covers treasury activity for 2022/23.  The report also sought to approve the Prudential Indicators results for 2022/23, in accordance with the Prudential Code.

The submitted report outlined the circumstances with regard to treasury management for 2022/2023, and stated that it was yet another unprecedented year with regard to treasury management. The invasion of Ukraine, the cost of living crisis and inflation rising to over 10% resulted in the cost of borrowing rising steadily throughout 2022/23, starting the year at 0.75% and finishing at 4.25%. It was reported that this had led to some significant financial challenges during the year, and that these challenges were expected to continue into 2023/24, and although it was acknowledged that returns for cash investments had also increased due to higher interest rates, they still remained below the cost of borrowing.

The submitted report stated that the Council had complied with its legislative and regulatory requirements during 2022/2023, and that the need for borrowing was only increased for capital purposes.

The submitted report stated that at 31st March 2023, the Council’s external debt was £138.014m, which was £11.635m less than the previous year. It was stated that this reduction related to not re-borrowing for matured debt due where possible. It was reported that the average interest rate for borrowing reduced from 2.47% in 2021/22 to 2.41% in 2022/23, and that investments totalled £40.044m at 31st March 2023, in comparison to £63.399m at 31st March 2022, earning interest of 2.88% on short term cash investments, and 1.99% on Property Fund units net of cost.

It was reported that financing costs had been reduced during the year and a saving of £0.194m had been achieved from the original MTFP due to reduced interest charges on debt, as well as increased investment income.

RESOLVED - (a) That the outturn 2022/23 Prudential Indicators within the submitted report, and those in Appendix 1 of the submitted report, be noted.

(b) That the Treasury Management Annual Report for 2022/23 be noted.

REASONS - (a) In order to comply with the Prudential Code for Capital Finance in Local Authorities.

(b) To inform members of the Performance of the Treasury Management function.

(c) To comply with the requirements of the Local Government Act 2003.