Issue - meetings

Report of the Director – Finance and Corporate Services

The Finance Business Partner presented the Capital and Investment Strategy Q1 Update for 2025/26.

In relation to the economic forecast, the Finance Business Partner said that inflation had increased over the quarter and interest rates had fallen to 4% and were expected to fall further in quarter 4. She said that the UK economy had marginally expanded but that growth was expected to slow.

In relation to investment income, the Finance Business Partner referred to paragraphs 4.4 to 4.7 and said that interest receipts were projected to exceed what had been budgeted and that the Council exceeded the budgeted average interest rate of 4.06%. She referred to Appendix B which detailed diversified funds which had seen significant fluctuation over the last few years and Appendix C which detailed prudential indicators which showed a current projected underspend.

The Finance Business Partner said that the CFR was the council's underlying need to borrow for capital expenditure and noted the forecast reduction in internal borrowing. In relation to net income from commercial and service investments to net revenue streams, she noted a marginally lower projected figure than expected. In relation to the financing cost to net revenue streams indicator, she said that this indicated that interest receipts exceeded financing costs.

The Finance Business Partner noted that the liability benchmark showed a credit balance which indicated that the Council did not need to borrow over the medium term.

In relation to commercial investments, the Finance Business Partner circulated an updated version of Table 3, as listed below, and explained that it demonstrated a reliance on commercial income which was projected to account for 12.5% of the Council’s total income.

In conclusion, the Finance Business Partner said that the UK economy was still very fluid, with falling interest rates and inflationary pressures and trade tariffs.

Members of the Group asked about the change to Table 3 and the Finance Business Partner explained that the original table had erroneously included the net position on the Crematorium which should not have been included and which was rather calculated as part of the prudential indicator calculations in Appendix C.

It was RESOLVED that Governance Scrutiny Group noted the Capital and Investment Strategy update position as of 30 June 2025.