Agenda item

The Group Director of Operations submitted a report (previously circulated) to provide important information regarding the regulation and management of the Council’s borrowing, investments and cash-flow, as 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 and outlined treasury activity for 2023/24.

The report also sought Members approval of the Prudential Indicators results for 2023/24 in accordance with the Prudential Code.

It was reported that the financial year 2023/24 was another unprecedented year with regard to treasury management.  With the invasion of Ukraine, the cost of living increases and inflation rising to over ten per cent, the cost of borrowing had risen steadily throughout 2022/23, starting the year at 4.25 per cent and finishing at 5.25 per cent. It was expected that the challenges would continue into 2023/24 with the cost of borrowing continuing to rise and, although the returns for cash investments have also increased due to higher interest rates they still remain below the cost of borrowing.

The submitted report summarised the capital expenditure and financing for 2023/24; the Council’s overall borrowing need; the Treasury position as at 31 March 2024; prudential indicators and compliance issues; the economic background for 2023/24; a summary of the Treasury Management Strategy agreed for 2023/24; and performance and risk benchmarking.

The report explained that the Councils external debt was £152.878m which is £14.864m more than the previous year, this increase relates to the progression of various capital schemes and the rise in costs of these schemes due to inflationary pressure. Financing costs had been reduced during the year and a saving of £0.735m had been achieved from the original Medium-Term Financial Plan.

Discussion ensued on net borrowing and the monies owed back to the Council from the Tees Valley Combined Authority, the value of the Property Fund, the reason for the higher than approved Capital Financing Requirement outturn, the Treasury position on Property Fund Borrowing, the return on short-term investments, the delay in receiving a revised cashflow for the Joint Venture and the ‘cost of carry’ which remained during the year on long-term borrowing that was not immediately used to finance capital expenditure.

RESOLVED – (a) That the 2023/24 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 2023/24 be noted.

(c) That the submitted report be forwarded to Cabinet and Council in order for the 2023/24 Prudential Indicators to be noted.