Agenda item

The Executive Councillor for Finance and Resources, Councillor B Mickelburgh to present the Council’s Treasury Management performance for the period 1st April to 30th September 2023.

(The report was considered by the Overview and Scrutiny Panel (Performance and Growth and the Cabinet at their meetings in November 2023).

Consideration was given to a report by the Council’s Director of Finance and Corporate Resources (a copy of which is appended in the Minute Book) providing a six-month update in respect of treasury management activity for the period 1st April to 30th September 2023.

By way of background, the Executive Councillor for Finance and Resources reminded the Council that the 2023/24 Treasury Management Strategy was approved on the 22nd February 2023. He explained that Treasury Management was the management of the local authority’s borrowing, investments and cash flows, its banking, money market and capital market transactions; the effective control of the risks associated with those activities and the pursuit of optimum performance.

Members were then acquainted with the detail of each of the Statements and Appendices within the Treasury Management 6 Month Review report in turn. These included the Council’s Balance Sheet Summary, the Borrowing and Investment Summary, the Council’s Loan Borrowing Schedule, the Treasury Investment Position and details of the Spread of the Council’s investments.

The Executive Councillor reported that discussions had previously taken place regarding the consideration of Environmental, Social and Governance factors in the investment decision making process. However, the ESG market has been rather inconsistent and as a result the Council has adopted the UN Principles for Responsible Investments to provide possible actions for incorporating ESG issues into investment practices.

In terms of the Commercial Property fund, the Executive Councillor reported that his had been suffering due to the downturn in the market since Covid. However, some of the downward movement is covered by the increase in the interest rate return on the Council’s cash balances. It was intended that a broader briefing on this area would be provided to Overview and Scrutiny when Treasury Management was next due to report.

Finally, the Executive Councillor reported that plans to draft a new Commercial Investment Strategy have been postponed until the new financial year as a result of fluctuations in interest rates and changes in market conditions during the summer period.

Following a request for further clarification on the position with the preparation of a new Commercial Investment Strategy from Councillor J A Gray, the Executive Councillor for Finance and Resources explained that it was hoped to commission this work in April 2024 when the Bank of England had indicated their expectations that inflation would start to steady and interest rates would be more consistent. In response to which, Councillor Gray encouraged the administration to start work on reviewing the Strategy as soon as possible to ensure that the District Council were best looking after the assets and estate it had built up over the previous fifty years.

In response to a request for clarification from Councillor P Hodgson Jones regarding the way long term borrowing is being applied to capital assets and how short-term investment is driven by cash reserves, the Executive Councillor for Finance and Resources provided an explanation of the operation of Public Works Boards Loans secured for the Commercial Investment Strategy. With regards to short-term investment within the Treasury Management Strategy, the Executive Councillor explained that the Council’s cash reserves were as such that and with interest rates being at a higher level than they have for some time the need for short-term borrowing was not currently required.