Issue - meetings

To provide Members with an update on Treasury Management performance and activity to ensure best practice is maintained (report of the Director of Finance (Section 151 Officer) enclosed.

Consideration was given to the report of the Director of Finance (Section 151 Officer) which provided members with an update on Treasury Management performance and activity to ensure best practice is maintained.

The Treasury and Investments Manager (PSPS) summarised the Treasury Management Update (at Appendix 1) which included the following main areas:

• Economic Update with commentary provided by MUFG Corporate Markets - it was noted that the Monetary Policy Committee (MPC) had met earlier on the day of current meeting, which had resulted in no changes to interest rates;
• Interest rate forecasts - the ongoing situation in the Middle East was expected to affect future interest rate forecasts which would be reflected in the Q4 Treasury Report 2025/26;
• Annual Investment Strategy – the Council’s investments had increased to £39m due to receipt of grant funding of around £17m;
• Borrowing;
• Debt Rescheduling – the Director of Finance (Section 151 Officer) provided a verbal update on this aspect at the end of this item;
• Net Treasury Position; and
• Compliance with Treasury and Prudential Indicators (with indicators shown in tables at Appendix 1A)

Members considered the report and made the following comments:

• Members referred to point 5 and asked whether the Council’s fixed?rate borrowing shown as maturing in March 2062 was repayable in instalments or as a single sum.
  • The Treasury and Investments Manager (PSPS) responded that the Public Works Loan Board loan was taken out on a 50?year term and that the full balance was repayable at the maturity date.

• Members referred to point 7 and queried what actions had been taken to safeguard the combined favourable net treasury position  from volatility in the final quarter of the financial year.
  • The Treasury and Investments Manager (PSPS) advised that forecasts were based on projected cash balances and prevailing interest rates, and that both cash flows and market conditions were monitored continually to ensure forecasts remained robust.

• Members queried potential implications for the Council should interest rates remain higher than had been forecast, or increase further.
  • The Treasury and Investments Manager (PSPS) responded that, as a result of situation in the Middle East, the anticipated MPC reduction in the interest rate to 3.5% had not taken place and short term interest rates had risen considerably. Whilst many councils were looking to borrow funds at this period, SHDC was in a relatively advantageous position as a net lender, with fixed?rate borrowing protecting it from increases, while higher interest rates would potentially increase investment income as investments matured.

• Members queried the continued holding of a negligible balance with a Swedish bank shown in the investment portfolio, noting the lower return.
  • The Treasury and Investments Manager (PSPS) advised that the majority of funds had been withdrawn due to the low interest rate. A small balance had been retained to keep the account open in case rates improved, thereby avoiding the need for a lengthy re?onboarding process.

• Members requested that the issue dates for Welland Homes loans be included within future reports.
  • The Treasury  ...  view the full minutes text for item 54