Agenda item

A report with the investment analysis at Annexes A to C was presented, along with commentary from Arlingclose (the Council’s treasury advisors) on the external context for treasury management activity and the performance against the Council’s approved Prudential Indicators for 2024/25. The indicators showed full compliance as at 31 December 2024.

The investment analysis confirmed that, at 31 December 2024:

i)              Total long-term treasury investments (over 12 months) amounted to £8.8 million. This reflected the closure of the UBS Multi-Asset Fund on 16 September 2024, with the funds reinvested in two one-year fixed-rate bonds.

ii)             Short-term investments (less than 12 months) amounted to £19.5 million, including £2.3 million invested in one-year fixed-rate bonds.

iii)           The Council held £20.6 million in non-treasury investments, consisting of capital loans to service providers and limited companies.

iv)           The Public Works Loan Board (PWLB) loans totalled £96.3 million, comprising £43.4 million General Fund loans and £52.8 million Housing Revenue Account loans.

Investment income for 2024/25 was forecast at £1.95m which was £0.45m better than budget.

The report noted the statutory override on pooled investment funds had been extended until 31 March 2025. This allowed the Council to manage fair value movements outside its budgets. A further 1-year extension was the subject of a government consultation. An Investment Performance Equalisation Reserve had previously been established using surpluses from 2022/23 and 2023/24 investment income. This reserve was designed to mitigate capital losses, such as the £738k loss realised upon the closure of the UBS Multi-Asset Fund. The reserve now stood at £412k.

Members asked several questions of Officers, and it was confirmed:

·         the value held in money market funds would fluctuate significantly. This was dependent on whether portions of captured receipts, for example Council Tax, had been paid over to other authorities.

·         the rate at which the Housing Revenue Account (HRA) borrowed from the General Fund fluctuated throughout the year. This was dependent on the average rate of income from investments. Officers would include estimated rates in future reports.

R E S O L V E D – that the following be noted:

A.    The Council’s investment and borrowing position at 31st December 2024 as detailed in Annexes A and B.

B.    The Council’s performance against the indicators set within the Treasury Management Strategy 2024/25 in Annex C.

C.   The commentary from Arlingclose on the external context for treasury management in Annex D.