To receive the Annual Treasury Report 2022/23.

The Treasury and Investment Manager, PSPS Limited presented Members with the Annual Treasury Report 2022/23, pages 113 to 138 of the Supplementary Agenda refer.

Members were advised that the Council was required by regulations issued under the Local Government Act 2003 to produce an annual treasury management review of activities and the actual prudential and treasury indicators for 2022/23.  The report met the requirements of both the CIPFA Code of Practice on Treasury Management (the Code) and the CIPFA Prudential Code for Capital Finance in Local Authorities (the Prudential Code).

The report covered the following areas;

• An economic update for the 2022/23 financial year;

• A review of the Council’s investment portfolio for 2022/23;

• A review of the Council’s borrowing strategy for 2022/23;

• Debt position;

• Compliance with Treasury and Prudential Indicators.

Members were invited to put their comments and questions forward.  

·         In reference to the Link Group Interest Rate review, a Member queried the ways in which ELDC made preparations for circumstances where rate estimates had been inaccurate, page 127 of the Supplementary Agenda refers.   In response, the Section 151 Officer advised Members that the Council was naturally buffered from unexpected fiscal events due to being in a net cash position rather than in a net debt position and that ELDC had continued to lock in the benefits for as long as possible.

·         A Member commented on the benefits of observing fluctuations in bank rates and anticipating future events and further queried what lessons had been learned.

·         A Member requested assurance on the status of debt and borrowing in relation to the Council’s Partners and the ways in which ELDC compared with other districts around the country. In response, the Section 151 Officer explained to Members that the overall situation relied on managing volatility and that the Council’s reserves were in a good position to enable the Council to have time to react and plan in adverse situations.  Members were assured that the Council benefited from being a debt free authority and that pressures and challenges greatly varied in other districts.

·         A Member queried whether there had been any specific examples of lessons learned.  In response, the Section 151 Officer advised Members that the occasional need to utilise short-term borrowing to maintain a positive cash flow position had been highlighted, such as in the instance of the early repayment of the Public Works Loan Board (PWLB) borrowing and that the position of the Council was to act prudently and maximise the timing of any opportunities that came forward.

The Section 151 Officer further explained to Members the benefits of having a savings target to prepare, and provided an example where other authorities had experienced negative impacts when their salaries budget had been underestimated in relation to the Pay Award.  

·         A Member commented that more insight and strategic thinking was valuable in relation to the savings target.  In response, the Treasury and Investment Manager explained to Members that in relation to savings and investments, the Council had historically held a surplus at the end of the financial year due to a lag from capital expenditure. 

The Treasury and Investment Manager further advised Members that considerations would be made by the Section 151 Officer on which reserve the surplus would move into and that investment recommendations were constantly being amended following updated forecasts from the Council’s external treasury advisors.

The Treasury and Investment Manager concluded that the Council was currently looking to lengthen the investment duration of the portfolio to take into account the high interest rates and that the full investment period would be considered to maximise value. 

·         A Member queried whether the pay award figure had been budgeted for accurately.  In response, the Section 151 Officer confirmed to Members that the pay award had been budgeted at 3.5% and that this year’s figure was a closer estimate to the confirmed increase.

·         In reference to capital expenditure, a Member stressed the importance of looking after the Council’s assets and ensuring that public conveniences and other assets were maintained to enable better value for money for the public. 

Following which it was,

RESOLVED:

That the report be noted and presented to Full Council for consideration and approval at its meeting on 11 December 2024.