Issue - meetings

Report of the Director - Finance and Corporate Services

The Chairman introduced the Capital and Investment Strategy item and noted that Cipfa recommendations had changed to recommend that this information be reported quarterly, with this being the mid-term report.

The Service Manager for Finance presented the Capital and Investment strategy Mid-year Report 2022/23, which summarised the Council’s capital and investment activities for the period 1 April to 30 September 2022. She confirmed that the previous update had been presented to Members of the Group at the meeting on 1 November 2022.

In relation to the economic forecast, the Service Manager for Finance said that inflation was currently at 10.1% and forecast to reach 12% in the next few months. Interest rates were currently at 3% and forecast to peak at 5.2% by March 2023.

In relation to investment income, the Service Manager for Finance said that whilst the Council had budgeted to receive £673k in investment income in Q1, this had been revised to become £1.3m due to increases in interest receipts. She said that the Council had received an average interest rate of 2.16% across its diversified investment portfolio and that the rate received depended on when the investment was made, with investments made earlier in the year earning lower interest. Short-term investments were currently preferred, to benefit from the increasing interest rates. She explained that the Council had a greater spread of investment durations now than this time last year when there had been a greater need to hold more cash for liquidity purposes. She noted that £40.8m of investments related to funds held in relation to Section 106 and CIL Agreements. The Service Manager for Finance added that the Council was showing good average interest rates compared to Sterling Overnight Index Average (SONIA) rates for investments of longer duration.

The Service Manager for Finance said that as there was currently a deficit on the capital value of the Council’s diversified funds and so the Council had earmarked funds from this year and last year’s efficiencies savings as mitigation.

The Service Manager for Finance explained that as the Council did not eternally borrow, borrowing liability limits were of less relevance, noting that the Council’s liability benchmark currently stood at $41m. She, said, however, that the Council’s internal need to borrow had increased slightly due to a delay in capital receipts from Hollygate Lane.

In relation to prudential indicators, the Service Manager for Finance said that there was no change from Q1 and that capital underspend was projected to be circa £6m, primarily due to Support from Registered Housing Providers, Bingham Hub and re-profiling of expenditure on other operational land and buildings. The financing costs to net revenue stream showed an improved position due to higher investment returns and higher interest rates. She added that the expected investment position was higher due to rephasing of the capital programme and additional S106 monies.

In relation to Capital Financing Requirement (CFR), the Service Manager Finance said that the position would be greater than predicted due to the delayed receipt  ...  view the full minutes text for item 22