To receive and review the Mid-Term Treasury Report 2025-2026.

The Portfolio Holder for Finance presented the Mid Term Treasury Report 2025/26 as at 30 September 2025 (attached at Appendix A) to provide Members with an update on Treasury Management performance and activity to ensure best practice was maintained.

During his introduction of the report, the Portfolio Holder for Finance outlined the background to the report and referred Members to Appendix 1 detailed at  pages 159 to 174 relating to the Treasury Management Strategy Statement and Annual Investment Strategy which covered the following areas:

·       An economic update for the first half of the 2025/26 financial year;

·       The outlook for the remainder of the financial year along with interest rate forecasts;

·       A review of the Treasury Management Strategy Statement and Annual Investment Strategy;

·       The Council’s capital expenditure, as set out in the Capital Strategy, and prudential indicators;

·       A review of the Council’s investment portfolio for 2025/26;

·       A review of the Council’s borrowing strategy for 2025/26;

·       A review of compliance with Treasury and Prudential Limits for 2025/26.

Key information was highlighted as follows:

·       The Council’s underlying need to borrow for capital expenditure on 30/9/25 increased to £11.6m, page 164 of the Agenda refers.

·       On 30/9/25 investments totalled £51.2m and loans to Invest East Lindsey £3.7m,  pages 169 and 170 of the Agenda refer.

·       In addition, the Council had investments in property funds totalling £19.3m at cost.  The fair value of these funds on 30/9/25 based on net asset value was £17.2m, page 172 of the Agenda refers.

·       Bank Base Rate started the year at 4.50% and had reduced to 4.00% by the end of September 2025.

·       The overall rate of return achieved on investments during the first half of the financial year was 4.085%, page 173 of the Agenda refers.

Positively, at Quarter 2 investment income, less management fees and interest payable showed net income of £1.805m compared to the original budget of £1.067k, a favourable variance of £738k.  The outturn for the year was predicted to be £3.101m against a budget of £2.128m, a favourable variance of £973k, Table – Section 10 page 174 of the Agenda refers.  The liquidation distributions of £260k from the M&G property fund which were included in these figures would be used to finance a corresponding Minimum Revenue Position charge.

Members were invited to put their comments and questions forward.

A Member thanked officers for the report and stated that from what they had seen, the Council appeared to be well managed and financially sound, which they considered a credit both to the Council and to the finance team.  The Member referred to the loss on property fund investments noted on page 171 of the Agenda referred and commented that it highlighted the importance of investing only in areas that were well understood.

The Leader of the East Lindsey Independent Group commented that it was interesting to see how the Council’s funds were invested and paid tribute to the quality of reports produced by the Treasury and Investments Manager (PSPS) Limited, noting that they were clear, informative and readable.  The Member expressed particular interest in the investment of £2 million with the Police and Crime Commissioner for Hertfordshire, remarking that they had been unaware that such investments were possible.  They noted that only local authorities were permitted to invest in other local authorities and that these were considered secure investments.  The Member concluded by stating that the reports were always valuable in showing financial movements and projections.

The Leader of the Council responded and considered that the report provided a valuable overview of the Council’s financial position and the wider external factors influencing it.  He thanked Members for their supportive comments and noted that the Council had a long?standing track record of strong financial management.  He added that this continued to be supported by effective Portfolio Holders, the Section 151 Officer and the wider officer team.

RESOLVED

That the contents of the report attached at Appendix A to the report referred be noted.