Agenda item

Purpose: This Authority is required by regulations issued under the Local Government Act 2003 to produce an annual treasury management review of activities and the prudential/treasury indicators for 2024/25. This report meets the requirements of both the CIPFA Code of Practice on Treasury Management and the CIPFA Prudential Code for Capital Finance in Local Authorities (the Prudential Code)

The Committee considered the report (Agenda Item 6) concerning the Annual Treasury Management Review for 2024/25.

The Deputy Section 151 Officer introduced the report and confirmed that the Council had complied with its investment and borrowing strategy, and prudential indicators. In response to a question about why loans from the Public Works Loan Board (PWLB) from 1996, maturing in 2056, had not been paid off early, she indicated that there would likely be high early redemption costs. She assured Members that officers would have assessed the efficiency of both continuing the payments as planned against the penalties of early redemption.

Members also noted the definition of some of the terms presented in the report and that the Council had set limits around how much it would allow itself to borrow as part of the regular budget approval process. The Deputy Section 151 Officer confirmed that the Council had remained within those set borrowing limits.

On a question about if the lack of earmarked reserves for property maintenance could affect a property’s value, the Committee noted that this sinking fund would be helpful but that the Council’s financial position made this untenable. However, the Executive Portfolio Holder for Finance and Resources indicated that some of the capital budget could be used for maintenance but that the current tenants were responsible for repairs until the end of their leases.

The Committee noted that the balance between investments and borrowing would not likely affect the Council’s access to future borrowing as most of this was done through peer-to-peer lending (by other local authorities) or by the PWLB. The Executive Portfolio Holder for Finance and Resources indicated that West Berkshire Council was borrowing about £1,600 per resident, whereas a number of other authorities were borrowing closer to £2,000-£3,000 per resident. He noted that the weighted average cost of borrowing was below 4%, and he also confirmed that the Council’s short-term borrowing was no more than 30 per cent of total borrowing.

The Deputy 151 Officer indicated that in terms of the scale of borrowing, the Council was in receipt of Exceptional Financial Support, there was a budget gap to close, and the amount of interest that the Council had to pay on the capital being borrowed was a pressure on the revenue budget.

In response to a question about why the value of the commercial property portfolio had reduced by around £1m, and why the Council had not moved faster to reduce its exposure, Members noted that this was due to the attractiveness of this type of property having changed over time. In addition, disposal of these properties would also impact on the revenue budget as long term tenants would contribute to this through rent.

Members were assured that the revaluation of the portfolio did not affect the Council’s general fund and, as it was not a revenue pressure, they would not have to find an additional £1m in cuts to services or increase council tax to cover the change.

In response to a question regarding the increase and decrease in value of directly owned properties, the Executive Portfolio Holder for Finance and Resources indicated that this was likely the insurance valuation that the Council had to carry in case of replacement.

As the Committee was satisfied with the report and that the Council complied with its approved strategy and prudential indicators, Members agreed to approve the report.

RESOLVED: That the Committee approve the annual treasury management report for 2024/25 and note that the Council’s plans complied with the investment and borrowing strategy and the prudential treasury indicators for the period.