Agenda and draft minutes

To confirm as a correct record.

The minutes were approved and signed as a correct record.

The Director of Resources presented a report providing an update on the Council’s investment and borrowing position at 30^th June 2024 and the performance against the Council’s approved Prudential Indicators for 2024/25. The report also set out a decision taken by UBS to close the UBS Multi-Asset Income Fund and the options available to the Council for the returned funding.

The investment analysis, at appendices A and B, confirmed that, at 30^th June 2024:

(i)            total long investments (over 12 months) amounted to £11.0 million, including £2.2 million held with the UBS Multi-Asset Income Fund.

(ii)           short term investments (less than 12 months) amounted to £2.4 million.

(iii)          the Council also held £20.6 million in non-treasury investments, comprising capital loans to specific service providers and limited companies.

(iv)          the total amount of Public Works Loan Board (PWLB) loans was £96.3 million, comprising £43.4 million General Fund loans and £52.8 million Housing Revenue Account loans.

The report also explained the Council were informed by UBS in July 2024 of its decision to close the UBS Multi-Asset Income Fund on 16 September 2024. The Council had invested £3.0 million in the fund in total. The investment had returned £1.1 million income to 30 June 2024, an annualised return of 4.6%. The capital value of the Council’s investment was £2.2 million, an £0.8 million loss on the initial investment. The total return on the fund was £0.3 million, a total return of 10.2% and an annualised rate of 1.2%. The report set out the actions Officers had taken as a result of the UBS notification.

The Director of Resources explained the Government had issued a statutory override which shielded the General Fund from losses in carrying value so long as the Council’s investment stayed with the fund. This was in place until 31 March 2025, and meant the Council was not required (or allowed) to move the losses into the General Fund until 31 March 2026. It was not clear if the Government were going to extend the statutory override. In the last two years, the Council had set aside £1.2m of surplus into an Investment Performance Equalisation reserve, which covered the value of the carrying losses of the Council’s investment in all funds including UBS. UBS closing the fund would cause the £0.8m loss to be realised, but the Director of Resources explained that this would be met from the reserve.

The report set out a number of options for the re-investment of the return. It was noted that, in order to fund the Council’s capital programme, specifically the Council House Building programme, it was expected the Council would need to borrow money during 2025/26. In light of expected interest rate falls over the next 12 months, if the Council were to borrow now, it was likely it would be at a higher than in 2025/26. It was therefore recommended to invest the funds into a short-term fixed-rate bond to give certainty of investment return whilst the money was not  ...  view the full minutes text for item 6.