Appendix 2 TM Prudential Indicators - 24.09.2025

Noted · Received for information; no decision followed.

This report sets out the performance of the council's treasury management activity for the first quarter of 2025/26 against benchmarks and the key indicators in the council's Treasury Management Strategy. p2p3

Cash investment balances at 30 June 2025 had fallen by 36% in one year, from £213.7m to £137.2m, while the average investment return of 4.74% was 0.42 percentage points above the benchmark rate. p4

During the quarter the council repaid its only market loan, of £6.450m held with Barclays, early, with a discount of just over £1m calculated in the council's favour. p13

The forecast borrowing requirement for the year is now £93.250m, compared with the original estimate of £70.000m, and after using at least £75.000m of internal resources the council expects it may need around £18.250m of new borrowing to support the capital programme. p14

The report states that the council is operating within the borrowing limits set in the strategy and has headroom to cover any unforeseen borrowing need from the year's capital programme. p22

Show the 6 passages this is based on

• p2Treasury Management Prudential Indicators – Q1 2025/26
• p3The Chartered Institute of Public Finance and Accountancy published the revised Treasury and Prudential codes in 2021, which now requires quarterly reporting of performance against forward looking prudential indicators. The performance of the Council’s treasury management activity, against benchmarks and the key indicators in the Council’s Treasury Management Strategy, as approved by Full Council at its meeting of 11 February 2025, are set out below. Investments
• p4Cash investment balances as at 30 June 2025 have fallen by 36% in one year, from £213.7m at Q1 2024/25 to £137.2m. The average investment return over Q1 was 4.74% performing above the benchmark rate by 42 basis points (or 0.42 percentage points). Performance has improved as a result of reinvesting maturing investments in a duration matched to a peak in the forecast Bank of England (BoE) bank interest rate.
• p13200.142 4.38% During Q1 an opportunity was taken to repay the Council’s only market loan held with Barclays of £6.450m early. The loan was due to mature in 2058/59 and was at a rate of 4.25%. Assistance was provided by Treasury Advisors (MUFG) to arrange a repayment where an appreciable discount was calculated in favour of the Council of just over £1m. Under accounting regulations this discount can be spread over a 10 year period equally to 2034/35.
• p14The table below shows the Q1 forecast of the Capital Financing Requirement (CFR) compared to the estimate within the 2025/26 strategy approved in February 2025. The CFR is expected to give rise to new borrowing requirement of £93.250m by the end of the year, compared to the original estimate of £70.000m following an increased capital programme borrowing need in 2024/25 carried forward. The strategy currently forecasts that the level of reserves and balances in the medium term allows for internal borrowing (using internal resources such as useable reserves or temporary working capital) of at least £75.000m in 2025/26, It is therefore expected that new borrowing of £18.250 may be required to support the capital programme during 2025/26, although the timing of borrowing will be considered in the context of the wider treasury management position and economic environment.
• p22The table below shows that the Council is operating within the Operational Boundary and Authorised Borrowing Limits set within the Treasury Management strategy and has sufficient headroom to cover any unforeseen borrowing need arising from the year’s capital programme.