Agenda item

Report by Executive Director of Resources & Section 151 Officer.

The performance for the three quarters of the year to December 2024 is measured against the budget agreed by Council in February 2024 in this report.

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

The report was presented to the Committee by the Treasury Manager. The Committee was given the following information:

·       The report was for the third quarter of the financial year 2024/25 and set out the position at 31 December 2024.

·       Throughout the report, the performance for three quarters of the year to December 2024 was measured against the budget agreed by Council in February 2024.

·       As at 31 December 2024, the Council’s outstanding debt totalled £271m and the average rate of interest paid on long-term debt during the year was 4.41%. the Council launched a ‘green bond’ in December 2024 aiming to raise £0.5m. No other external borrowing was raised during the quarter, whilst £3m of maturing Public Works Loan Board (PWLB)and £5m of Lender’s Option/Borrower’s Option (LOBO) loans were repaid. The cumulative amount of PWLB and LOBO loans repaid during 2024/25 was £3m and £10m respectively.

·       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 £463m in 2024/25, with an average in-house return on new and existing deposits of 4.25%.

·       During the nine months to 31 December 2024, the Council achieved an average in-house return of 4.74% on average cash balances of £455.652m, producing gross interest receivable of £17.404m. in relation to external funds, the return for the nine months was £2867m, bringing total investment income to £20.372m. this compared to the budgeted investment income of £14.156m, giving a net overachievement of £6.256m.

·       At 31 December 2024, the Council’s investment portfolio totalled £503.390m, this comprised of £390.000m of fixed term deposits, £14.924m at short term notice in money market funds and £98.465m in pooled funds with a variable net asset value.

·       Temporary surplus cash balances included developer contributions, Council reserves and balances and various other funds to which the Council paid interest at each financial year end. The budgeted annual return on these in-house balances for 2024/25 was 4.25% and assumed an average annual in-house cash balance of £361.622m.

·       The actual average daily balance of temporary surplus cash invested in-house was £472.306m for the first three quarters of 2024/25 and the average in-house return was 4.74%, producing gross interest receivable of £17.404m. Gross distributions from pooled funds totalling £2.967m were also realised in the three quarters, bringing total investment income to £20.372m. this compared to the budgeted investment income of £14.116m, giving a net overachievement of £6.256m. this reflected a combination of higher than forecast average cash balances, and higher than forecast interest rates.

·       Cash balances for the year were forecasted to be lower than they otherwise would have been as a result of negative Dedicated Schools Grant (DSG) balances relating to High Needs. The negative DSG balance by the end of 2024/25 was forecast to be £84.20m. This would have an estimated opportunity cost of £3.49m in unearned interest during 2024/25.

·       The council operates a number of instant access call accounts and money market funds to deposit short-term cash surpluses. During the first three quarters of 2024/25 the average balance held on instant access was £82.633m, at an average rate of 4.98%.

·       At 31 December 2024 the total value of pooled fund investments was £98.465m. This has decreased from the last reported value of £98.861m at 30 September 2024.

·       At 31 December 2024, the council’s investment portfolio totalled 503.390m. This comprised £390.000m of fixed term deposits, £14.924m at short term notice in money market funds and £98.465m in pooled funds with a variable net asset value.

Members made the following points:

·       The investments were slightly below the purchase price so good to hold on to these.

·       The Green Bond was a great idea, was there an update? There would be a full report to the next meeting, but the target had been met very quickly with full uptake. This could be extended but needed to be sure that there were enough schemes in the horizon.

Resolved: that the Committee noted the council’s treasury management activity at the end of the third quarter of 2024/25.