Issue - meetings

A report that provides members with the opportunity to review the performance of the Treasury Management function of the Council for the first quarter of 2023/24.

The Scrutiny Board received a report, of the Director of Finance that explained the key issues within the 2023/24 Treasury Management Quarter One Review. The consideration of a Quarter One report, was a new requirement with effect from the commencement of the 2023/24 financial year. In considering the report Members were made aware that the report had previously been considered by the Audit Committee, at its meeting on 5^th September 2023 and by the Cabinet on 18^th September 2023.

The Scrutiny Board was informed that from the start of 2023/24, following a competitive tendering process, the Council had changed its treasury management advisors from The Link Group, Treasury Solutions to Arlingclose Ltd. The format of the Treasury Management reports had therefore changed in line with the advice received from Arlingclose Ltd.

The 2021 Prudential Code requires Treasury Management to be reported quarterly from the financial year 2023/24. The presentation of the Treasury Management Quarter One Review 2023/24 would enable scrutiny of the statutory requirements.

The level of capital expenditure formed one of the required prudential indicators.  The 2023/24 projected outturn, based on actual expenditure to month 3 was £103.748m, a reduction of £6.557m compared to the original budget expenditure of £110.305m.  Projects and their associated financing packages will be reprofiled into 2024/25 and future years.  

Capital Grants (£39.962m), capital receipts (£8.295m), Revenue and other resources (£1.063m) and prudential borrowing (£54.428m) were the sources of capital financing of the revised position.

The Council’s underlying need to borrow for capital expenditure is termed the Capital Financing Requirement (CFR).  This figure is a gauge of the Council’s debt position.  Part of the Council’s treasury activity is to address the funding requirements for this borrowing need.  Depending on the capital expenditure programme, the treasury service organises the Council’s cash position to ensure sufficient cash is available to meet the capital plans and cash flow requirements. 

At the end of 2022/23, the CFR was £465.723m, and was forecast for the year 2023/24 to be £503.278m. The estimated quarter one CFR, based on the projected expenditure referred to above is £493.124m.  The decrease is as a result of the reduction in actual capital expenditure in 2022/23 and the projected position in 2023/24.

At the end of June 2023, the Treasury position was such that the net borrowing position was £80.516m.  This was made up of: Total external borrowing £160.996m and: Investments £80.480m

Comparing this to the estimated borrowing CFR (CFR less PFI) of £299.337m means that the Council is estimating to be under-borrowed by £113.341m, compared to actual 2022/23 under borrowed position of £100.338m.

No borrowing or debt rescheduling has been undertaken to date in the current financial year. It is anticipated that if the capital programme expenditure continues as projected then £25m of new borrowing will be required to fund this. The value of new borrowing is well within the approved £54.428m of prudential borrowing in the programme. Furthermore, it is confirmed that the Council operated within the prudential indicators as set out  ...  view the full minutes text for item 9

The Cabinet gave consideration to a report of the Director of Finance which provided Members with details of the performance of the Treasury Management function of the Council for the first quarter of 2023/24 and provided a comparison of performance against the 2023/24 Treasury Management Strategy and Prudential Indicators.

In order to comply with the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on Treasury Management the Council was required to consider the performance of the Treasury Management function.

The report provided an additional update and included a new requirement in the 2021 CIPA code mandatory from 1^st April 2023 of quarterly reporting of the Treasury Management Prudential Indicators.

Options/alternatives considered

In order that the Council complies with the CIPFA Code of Practice it has no other option than to consider and approve the contents of the report.

RESOLVED – That the Treasury Management Quarter one report and the Treasury Management activity and projected outturn be noted and commended to Full Council.