Issue - meetings

Report of the Director – Finance and Corporate Services

The Finance Business Partner presented the Capital and Investment Strategy Monitoring report for mid-year 2023/24, which summarised the capital and investment activities of the council for the period 1 April to 30 September 2023.

The Group were advised that as from 1 November 2023 the Council have a new Treasury Management Advisor, Arlingclose Financial Advisors, who replace Link Treasury Services for the next three years.

The Finance Business Partner advised the Group that economic environment is looking favourable, inflation has fallen and is forecast to fall further. Interest rates remain stable.

With regard to investment income, the Group were advised that whilst the base rate have risen the pooled investment funds have not been positively affected and interest is expected to exceed the budget target. The Group noted that in order to maintain returns on its investments, the council has continued to diversify its investment mix, details of which were provided in Appendix A of the report.

With regards to borrowing and with reference to the Council’s cash balances, the Council continues to internally borrow to fund capital expenditure and does not envisage having to externally borrow during the medium term.

In concluding the Group noted that treasury management continues to be challenging. Inflationary pressures are reducing, and although interest rates are stable, they are forecast to fall over the longer period which will have a negative impact on investment returns. Changes to the accounting codes will also restrict what local authorities can do. The Group were advised that officers will continue to report any significant issues to the governance Scrutiny Group.

The Group were informed that a training session hosted by Arlingclose is being scheduled for Tuesday 23 January which is essential for Governance Scrutiny Group members to attend.

Councillor Calvert asked a specific question relating to the interest return on S106 and CIL contributions and who benefits from this. The Service Manager – Finance explained the interest earned will be forwarded to the recipient of the S106 or CIL agreement, this could be health, education or highways.

Councillor Om referred to the list of investment institutions and questioned why some of the investments were only earning 0.5%. The Finance Business Partner explained that this was the Council’s day-to-day account with immediate access to funds if needed.

It was RESOLVED that the Governance Scrutiny Group approved the Capital and Investment Strategy up-date position as at 30 September 2023.