Agenda item

Treasury Management Mid-Year Review 2024/25

To advise on the performance of the Treasury Management function of the Council for the first half of 2024/25 and provide a comparison of performance against the 2024/25 Treasury Management Strategy and the Treasury Management Prudential Indicators.

Minutes:

The Audit Committee received the Treasury Management Mid-Year Review from the Assistant Director of Finance. The Council is required to consider the performance of the Treasury Management function to comply with the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Code of Practice. The report sets out the key Treasury Management issues for Members’ information and review and outlines:

 

· An economic update for the first half of 2024/25 (External Context);

· Net Borrowing and Investments (Local Context);

· A review and updates of the Council’s current treasury management position;

· Council Borrowing;

· Treasury Investment Activity;

· Treasury Performance for the first half of the year;

· Compliance;

· Treasury Management Prudential Indicators.

 

Key areas of the report were highlighted to members such as the Balance Sheet Summary with half-year review forecast figures, the Borrowing and Investment position of the Council.

 

Members queried the increase in interest rates in LOBO Loans and discussed the likelihood of these being called in. Officers explained that given the revised interest rate forecasts outlined in the report, the probability of the LOBO options being exercised is reduced but not eliminated.

 

In response to the information in the report detailing planned expenditure with a view to make future savings Members and Officers discussed the £2m redundancy package and investment into resources such as ICT and the Transformation programme.

 

The report required the Audit Committee

1.     accept the recommendations of the Council’s Treasury Advisers and change the MRP policy

2.     to approve the use of up to £2.000m of capital receipts to fund the costs of voluntary redundancy payments.

3.     3 to approve both the change in MRP policy and the use of flexible capital receipts to fund the costs of voluntary redundancy payments.

 

Members and Officers discussed the change the MRP policy at length with Officers explaining the change and possible implications of it. Officers explained that the change to the policy was a recommendation from an Independent Treasury Advisory and Management service.

 

Upon Member questioning, the External Auditor explained that they were satisfied that the decision to change the MRP Policy was in line with what would be expected for an authority like Oldham. There are arguments for and against the approach, but decisions should be made based on the need of the individual authority.

 

Members queried whether the Change to the MRP Policy had exclusions as the report seemed to indicate that no change would be made to the Chadderton Asset. Officers have clarified this since the meeting and made reference to Paragraph 2.7.4  of the report which explains this- ‘MRP is also currently made on PFI contracts on an annuity rate over the life of PFI contracts.  The rate is calculated from the interest rate implicit in each PFI contract. Where the Council expects to continue to own or retain service benefit from PFI assets after the end of the contract, it is proposed to make MRP over the remaining life of the asset. This will make the policy more consistent with the policy adopted on the Council’s other assets.’.

 

Members questioned the Assistant Director of Finance on the likelihood of bankruptcy for Oldham Council. The Officer explained that 19 Local Authorities have applied for and received exceptional support from Central Government. Oldham are not at the stage of needing to apply for this assistance which can be obtained before reaching the level of a s114 Notice and bankruptcy. There are several stages before reaching bankruptcy.

 

RESOLVED that, the Audit Committee

1.     Note the Treasury Management Mid-Year Review and endorse it going to Cabinet

2.     Accept the recommendations of the Council’s Treasury Advisers and change the MRP policy

3.     Approve the use of up to £2.000m of capital receipts to fund the costs of voluntary redundancy payments.

4.     Approve both the change in MRP policy and the use of flexible capital receipts to fund the costs of voluntary redundancy payments.

 

Supporting documents: