Issue - meetings

Rob Mahon, Service Director, Financial Services, to present

Natalia Govorukhina, Head of Corporate Finance, presented the 2026-27 quarter 1 review as recommended by CIPFA (Chartered Institute of Public Finance and Accountancy) Code of Practice for Treasury Management 2021.  The submitted report detailed performance against Treasury Management activities as well as incorporating the needs of the Prudential Code to ensure adequate monitoring of the capital expenditure plans and the Council’s Prudential Indicators.

It was also explained that it was a requirement that any proposed changes to the 2026/27 Prudential Indicators were approved by Council.

The monitoring, as set out in Appendix A, highlighted the key changes to the Council’s capital activity (the PIs) and the actual and proposed Treasury Management activity (borrowing and investment).  The review indicated performance had not changed from that set out in the approved Treasury Management Strategy. 

Reference was made to the key messages for investments, borrowing and governance.

With regard to investments, the primary governing principle remained security over return and the criteria for selecting counterparties continued to reflect this.

The Council would maintain its strategy of being under-borrowed against the Capital Financing Requirement (CFR).  The Council had refinanced £50M of temporary borrowing in the year to date. 

It was anticipated that further short term borrowing would be required before the end of 2026/27.  As reported previously, the Council would predominantly adopt a short term borrowing strategy to cover this borrowing need in anticipation of lower interest rates in the medium term.  There was a discounted rate with the PWLB for borrowing long term funds specifically for Housing Revenue Account purpose.  This was available until March 2027.  Depending upon the prevailing interest rate position, the Council may utilise this rate for some long term borrowing, however, the borrowing position would remain under review.

Whilst the Council’s approach to Treasury Management in recent years, utilising short-term borrowing, had generated significant savings for the Council, it was essential to achieve balanced budgets, the future outlook was more challenging. There was increased uncertainty around the future direction of interest rates as markets responded to the recent conflict in Iran. 

The Council had undertaken £50M of temporary borrowing in the year to date of which £20M was refinanced with the existing lender. 

The continuing approach to Treasury Management had been discussed with the Council’s external Treasury Management Advisers, MUFG, who had confirmed this was a prudent approach given current market conditions.  MUFG would continue to monitor borrowing rates and inform the Council if there were opportunities to borrow at advantageous rates.

It was noted that this was Natalia’s last meeting as she was leaving the Authority.  Joshua Amahwe would be taking over Natalia’s role.

Resolved:-  (1)  That the report be received and the contents noted.

(2)  That the Committee’s thanks be placed on record and Natalia wished all the best in her future employment.