Agenda item

Report by the Executive Director of Resources & Section 151 Officer

Throughout this report, the performance for the first quarters of the year to June 2024 is measured against the budget agreed by Council in February 2024.

As at 30 June 2024, the council’s outstanding debt totalled £284m and the average rate of interest paid on long-term debt during the year was 4.39%.  No external borrowing was arranged or repaid during the quarter. The council’s forecast debt financing position for 2024/25 is shown in Annex 1.

The Treasury Management Strategy for 2024/25 agreed in February 2024 assumed an average base rate of 4.75%.

The average daily balance of temporary surplus cash invested in-house was expected to be £462m in 2024/25, with an average in-house return of 4.25%. 

During the three months to 30 June 2024 the council achieved an average in-house return of 5.01% on average cash balances of £466.871m, producing gross interest receivable of £5.829m. In relation to external funds, the return for the three months was £0.527m, bringing total investment income to £6.356m. This compares to budgeted investment income of £4.437m, giving a net overachievement of £1.919m.

At 30 June 2024, the council’s investment portfolio totalled £553.992m.  This comprised £414.000m of fixed term deposits, £42.551m at short term notice in money market funds and £97.442m in pooled funds with a variable net asset value.  Annex 4 provides an analysis of the investment portfolio at 30 June 2024.

Recommendations:

The Audit & Governance Committee is RECOMMENDED to note the council’s treasury management activity at the end of the first quarter of 2024/25.

The Treasury Manager introduced the report. The officer indicated the following:

Throughout this report, the performance for the first quarters of the year to June 2024 was measured against the budget agreed by the Council in February 2024. As of 30 June 2024, the County Council’s outstanding debt totalled £284m and the average rate of interest paid on long-term debt during the year was 4.39%. During the three months to 30 June 2024 the County Council achieved an average in-house return of 5.01% on average cash balances of £466.871m, producing gross interest receivable of £5.829m. The return for the three months was £0.527m, which brought total investment income to £6.356m. This compared to budgeted investment income of £4.437m, which gave a net overachievement of £1.919m.

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In response to Council Members the following was noted:

·       Regarding the discrepancies in the figures, it was an error and should have read minus 10 and not 10. There was one debt paid in July 2024, hence it was minus 10.

·       Corrections will be made to the £513.17 million for the next meeting.

·       In terms of the County Council’s debt as of 30 June 2024, the County Council had not taken on any debt since 2010.

·       Most of the debt that had matured had been on a higher rate therefore the average debt rate was now lower.

·       The loans making up debt total were all historic and tended to be long term for up to 50 years.

·       The Cash balances for the year are forecasted to be lower as a result of the negative Dedicated Schools Grant (DSG) balances that related to High Needs. The DSG balance for the end of 2024/25 which is the cumulative figure was forecasted to be £83.50m which was also the correct figure.

·       Under the investment portfolio, the 5.01% that was achieved in the quarter was 95% made up from other local authority loans. Some authorities are cash positive like Oxfordshire County Council and others are borrowers.

·       In terms of risk, if some councils fail financially their assets and liabilities would be moved over to whichever council took over. There was no risk of losing a deposit.

·       The County Council was protected by the 2003 Local Government Act regarding the failure of councils

·       In terms of the override, if the investments were in negative territory on the balance sheet date, from 2025/26 the deficit would need to be taken to the revenue account.

·       However, a £5milion pound reserve had been created to fill the gap in the revenue account should it be required, as it is ring fenced for that purpose.

·       The forecasted debt as of 31^st March 2025 is £513.71milion, was not a fixed figure and depended on the delivery of the capital programme and the size of the capital financing requirement.

·       The County Council is not planning to take any more external debt but would be using the cash balances to pay for capital in the present and refinance it later with external debt.

RESOLVED that the council’s treasury management activity at the end of the first quarter of 2024/25 be noted.