Agenda item

The Chairman welcomed the Corporate Finance Team Leader and congratulations on her appointment to the role and return to the council. Members then heard from the Corporate Finance Team Leader regarding the Mid-Year update for Treasury Management Indicators in accordance with the Local Government Act 2003. It was explained that the report provided updates on progress against the treasury management strategy which was approved by Council in March 2025 for 2025/26.

The report was required to comply with the CIPFA code of practise on treasury management and to keep Members updated with the current situation.

It was highlighted that the report had been written during a time where core inflation  had slightly reduced, and Bank of England interest rates had reduced which had followed a period of both higher inflation and relatively high interest rates. The report contained commentary on the Council’s treasury position and also included commentary on the economy by the Council’s treasury advisors MUFG Corporate Markets. It was noted that since the report was written the UK base rate had held at 4%.

Members were advised that interest rates had been reducing with more reductions forecast in the medium term, however the Council was receiving additional investment income as shown in the quarterly monitoring reports. This was because of reduced capital expenditure and higher cash balances than forecast. With interest rates reducing and forecast to reduce further, it made the decision to borrow difficult, as the Council did not want to find itself locked into a high rate loan when the base rate decreased. For this reason, where borrowing had been required for cashflow purposes, short term loans had been used.

Members were advised of the movements in the Council’s prudential indicators which had changed as a result of a revised capital programme for 2025/26, as outlined in the quarter two budget monitoring report. The Corporate Finance Team Leader reported there had been no breaches of the Council’s prudential indicators in the first half of the year.

Attention was directed to section three of the report, showing an economics update which had been supplied by the treasury advisors MUFG Corporate Markets, which was useful to understand the national and international context within which the Council was operating when undertaking its treasury activities. Additionally, appendix B provided the latest list of approved countries for investment as at 30 September, however, typically the Council only invested within the UK.

Members were asked to recommend the report and approval of the revised prudential indicators at sections 5.2, 6.1 and 6.2 to Full Council.

In response to a question regarding the likelihood of choosing to invest outside of the UK, it was explained that options were reviewed, however in taking a prudent approach and to manage cash flow, the preferred stance was to invest short-term and within the UK.

A Member of the Committee reiterated previously made comments regarding the achievements of the Finance Team, whilst also noting that the pending Local Government Reorganisation (LGR) could see the positive account balances being merged with other councils. This would potentially minimise the benefit to West Lindsey. He supported the sound financial decision making, however suggested that it may be wise to consider spending some funds ahead of LGR. The Chairman and Members of the Committee indicated their agreement with those concerns.

Having been proposed, seconded, and voted upon, it was

RESOLVED that it be RECOMMENDED to Full Council to note the report, the treasury activity and recommend approval of the revised prudential indicators at sections 5.2, 6.1 and 6.2.