Agenda item

This report provides an update to the Audit Committee on the Council’s treasury management activities and performance for the quarter ending 30^th June 2025, in accordance with the CIPFA Code.

Mr Sam Masters, Head of Finance (Pensions & Treasury), introduced the report.

The meeting heard:

·         Paragraph 4.13 on page 78 of the agenda papers seemed to state that the saving of £227k was per annum rather than over three years, but this would be double-checked. 

·         The Council had agreed the capital programme at Full Council in March 2025. Both the Q1 report and the Q2 report that would be submitted to Council would be the Budget Update report. 

·         When the budget figures were set within the Treasury Management Strategy Statement, this would be based on the capital pricing that the Council felt it would deliver in-year. Both quarter 1 and quarter 2 would show that the Council was probably too ambitious, would not fully achieve the targets and would be subject to ‘slippage’. Any schemes were likely to take slightly longer. This was why there was an underspend on the borrowing costs shown in the report. The Council was addressing some of this. As part of the Council’s budget process this year, the Council was reviewing all of the capital programme to make sure that it set a capital programme each year that the Council felt was better deliverable and affordable. Hopefully the Council would end up with a capital programme where there was no high levels of slippage referred to in the report.  

·         In a query relating to why the Council was taking on additional borrowing of £70 million if previous money borrowed had not yet been spent, the meeting heard that the Council was spending but not spending at a previously assumed anticipated rate. The Council still had expenditures to fund and had borrowed less than it had originally budgeted for. 

·         The Council was still forecast to spend, on the general fund alone, £150 million. When the Council set the programme back in March 2025, it was felt that the spend would be a lot higher. The Council still forecast a spend of £150 million. The Council was also spending on the HRA as well, so there would always be some borrowing, just not at the level that anticipated. The Council wanted to get to a position where it was setting a budget based on the level of borrowing that it was expecting to do, rather than set too high a budget.

·         The value for money assessment was based on three sub-criteria and what KPMG had to do as auditors was not identify every single issue that that it might find, but to say where there could be a significant weakness in arrangements. This was quite a high bar and the areas identified in the report appeared to constitute potential significant weaknesses. The definition of a significant weakness would be to incur significant financial loss, to have potential reputational damage. When KPMG had looked at governance. It was the case that there were things that could improve but as far as anything individually that could lead to a significant weakness, KPMG had not found anything as part of its risk assessment. This was not to say improvements could not still be made.

RESOLVED:

1. To note the treasury management activity undertaken during the financial year to 30th June 2025 and the performance achieved which is attached as Appendix 1 to this report.

2. To note that all treasury activities were undertaken in line with the approved Treasury Management Strategy.