Agenda item

The Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice for Treasury Management 2021 recommends that Members be updated on treasury management activities at least quarterly. The 2024/25 Treasury Management Strategy states this report will go to the Audit and Governance Committee around December time. This report, therefore, ensures this Council is implementing best practice in accordance with the Code.

During the second quarter to 30 September 2024, the Council complied with its legislative and regulatory requirements, including confirmation that the authorised limit was not breached.

[15 Minutes]

[Councillor Stanley re-declared his Personal Interest in this Item as an employee of Nationwide Building Society]

Upon the invitation of the Chair, the Group Head of Finance and Section 151 Officer presented the report to the Committee. Page 383, paragraphs 4.6 – 4.9 contained a general economic outlook. There was a base rate change in November from 5% to 4.75% and a further cut was anticipated in March 2025 to 4.5% (shown in the table in 4.13). Investments continued to perform very well, and page 391 showed they were performing just above the Council’s benchmark. Paragraph 1.13 (page 391) showed the outturn was expected to achieve around £2.3m in investment income, which was an over achievement of over £400k (Budget £1.9m). The table in paragraph 1.3 (page 388) showed the investments on 30 September 2024 at £50.22m and was broken down into the total amount in various sectors. There was only £42.77m on 31 March 2024 and the increase from March to September was more to do with the timing of payments such as precepts which were paid on 07 October 2024. There had been no change regarding borrowing in quarter 2. The main changes to prudential indicators were shown in the table on page 394. Capital expenditure had reduced from quarter 1 by just under £6m due to some expenditure on the Alexandra Theatre and Bognor Regis Arcade not happening until 2025/26. Arun internally borrowed around £2m worth of capital expenditure, and running balances were used to offset the need to borrow for as long as possible until those funds were needed elsewhere, this meant an under-borrowed position.

The Group Head of Finance and Section 151 Officer explained there had not been a Treasury Management Member Briefing prior to this meeting, as there had been a briefing on Accounts instead, however he would endeavour to provide one in advance of the next Committee meeting.

          The Chair invited questions and it was asked whether the easing in wage growth (paragraph 4.6) would likely be sustained given the national insurance changes, or whether public sector would be immune from that. The Group Head of Finance and Section 151 Officer did not yet know how this would impact ADC. They had estimated the cost of the national insurance increase to £350k, however the policy statement released the previous week stated those costs would be covered. It was unknown whether this would be adequately covered by the grant and a permanent adjustment, or whether this would just be for 2025/26, or deducted from other grants received by government to cover this.

The recommendations were proposed by Councillor Turner and seconded by Councillor May.

The Committee

RECOMMEND TO FULL COUNCIL that

1. the Quarter 2 (mid-year) treasury management report for 2024/25 be noted;

2.  the treasury activity for the quarter ended 30 September 2024, which has generated interest receipts of £1.2m (5.15%) against a budget of £1.9m (4.63%), be noted; and

3. the quarter 2 prudential and treasury indicators for 2024/25 contained in the report, be noted.