Issue - meetings

The report sets out the quarter two position for 2025/26 which forecasts an underspend of £0.3m due to the Council’s ability to borrow in the local authority market at lower than budgeted interest rates.

The Assistant Chief Financial Officer (CFO) presented a report, a copy of which had been circulated to each Member and a copy of which appears as Appendix 'B' to these Minutes in the Minute Book.

The report provided an update on the Quarter Two position for 2025/26 in relation to treasury management activities. It included a summary of the current economic climate, an overview of the estimated performance of the treasury function, an update on the borrowing strategy (short and long term), investments and compliance with prudential indicators. The Quarter Two position forecast an underspend of £0.3m due to the Council’s ability to borrow in the local authority market at lower than budgeted interest rates.

The Assistant CFO highlighted that government and local government debt continued to become more expensive despite the reduction in the Bank of England interest rate. He also gave an example of where a loan had been refinanced in September 2024, resulting in a saving of £19million over its lifespan.

The CFO and Assistant CFO provided the following information in response to questions on the report:

• The cost of borrowing from other local authorities usually mirrored Public Works Loan Board (PWLB) rates.

• The list of the Council’s long term borrowings with shorter maturity dates in Table 4 related to the Housing Revenue Account (HRA) pool and was included in the HRA business plan
• Once the PWLB rate came down the Council would move from short to long term borrowing.
• There was currently a reduction in supply and an increase in demand in the local authority market. It was noted that some local authorities would not lend to others particularly where S114 notices had been issued. The Dedicated Schools Grant (DSG) deficits affecting many local authorities were contributing to the increase in demand.
• It was also important to acknowledge the impact of wider geopolitical factors on the market.
• Although not specifically referenced, the DSG formed a substantial part of the £111 million short term borrowings listed in Table 4.

The Committee agreed that it would be helpful to provide a breakdown of debt in diagrammatic/chart form. The Chair invited members to contact her with suggestions on information to be included. She would then collate responses and discuss with the Assistant CFO a resource appropriate way of presenting this in future reports.

In response to the discussion on this report and the previous agenda item, the CFO stated that as part of management reflection on the current position in relation to the DSG and SEND, consideration would be given to whether further letters to MPs and the Government were required, including the offer of support from the Audit and Governance Committee.

RESOLVED that the Audit and Governance Committee notes the reported activity of the Treasury Management function for April to September 2025.

Voting: Agreed with no dissent