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The Committee received report ES/2479 of the Cabinet Member with responsibility for Resources and Value for Money. The Chief Finance Officer explained that the Cabinet Member was delayed and that she would introduce the report in his place. She reminded Members that the Treasury Management Policy Statement for 2024/25 required an Outturn report and
the Treasury Management Policy Statement for 2025/26 required quarterly reporting on
the Treasury Management function to be produced. These reports were to ensure
compliance with the Charted Institute of Public Finance and Accountancy (CIPFA) Treasury
Management Code. She explained that the report reviewed performance of the Treasury Management
function for 2024/25 and mid-point 2025/26. There was also an update to the 2025/26
Investment Strategy for approval of loans to Parish Councils.
The Committee was also reminded that Treasury Management was the management of the Council’s cash flows, borrowing and investments, and the associated risks. The Council had both an investment and borrowing portfolio and was, therefore, exposed to financial risks including the loss of invested funds and the revenue effect of changing interest rates. The successful identification, monitoring and control of financial risk were, therefore, central to the Council’s prudent financial management. Treasury risk management at the Council was conducted within the framework of the Chartered Institute of Public Finance and Accountancy’s Treasury Management in the Public Services: Code of Practice 2021 Edition (the CIPFA Code). The point was made that Treasury Management was about ensuring sufficient cash was available to meet the Council's spending needs, while managing the risks involved with surplus cash being invested until required. Income deriving from these investments was an integrated element of the Council's revenue budget.
Members noted that the 2024/25 Outturn Summary was as follows:
- East Suffolk Council’s short-term Investments totalled £83.10m, long term investments totalled £19.28m and liquidity investments totalled £22.90m at 31st March 2025.
- Total Investments at 31st March 2025 were £125.28m.
- Interest received on investment balances during the year totalled £5.98m against an original budget of £3.15m.
- East Suffolk Council operated within its approved Prudential Indicator Limits for 2024/25.
- No new borrowing had been taken out during the financial year.
The Committee was informed that the 2025/26 Quarter 2 (Mid-Year) Summary was as follows:
- Total investments at 26th August 2025 totalled £155.93m.
- These investments were summarised as Short-Term Investments £69.00m, Long-Term Investments £29.28m and Liquidity Investments £57.65m.
- Interest on Investments on 26th August 2025 totalled £1.10m.
- No new borrowing had been taken out during the current financial year.
- The Council continued to operate its Treasury Management function within the key principles of security, liquidity and yield.
The Chief Finance Officer concluded that the Council had operated its Treasury Management function within the prescribed Treasury Management Policy and Prudential Indicators during the last financial year and also the current financial year to date.
The Chair thanked the Officers for all their work and invited questions from Committee Members.
In response to Councillor Molyneux's query, the Chief Finance Officer explained that the borrowing outturn was only £63m rather than £175m because the Lowestoft Towns Fund Project had been delayed so the finance had been pushed back.
Councillor Byatt queried how soon the next round of Investments were coming up for renewal and the Specialist Accountant explained that a daily assessment was carried out of the Council’s need for instant cash eg to pay County their share of the precepts, and the market was then reviewed to get the best rate for the tranche of investments ending that month. Councillor Byatt expressed concern about ethical investments and asked about assurances when money was loaned to other Local Authorities. The Chief Finance Officer stated that assurance was gained from ArlingClose as to whether the other Authorities were a safe investment or not but it was difficult to know how they would use the funds as it could be for cash flow rather than specific projects.
In response to Mr Jones, the Specialist Accountant stated that ArlingClose had already picked up that CCLA were in the process of being acquired by Jupiter Investment Management but they felt there was nothing to worry about and it was still a sound investment. He also explained that the Council often needed a lot of liquidity eg Council Tax was payable every month and in the second quarter there tended to be less expenditure as projects slowed down and then picked up, then slowed down again in the last quarter. In relation to property investments, the Specialist Accountant explained that the figures shown on page 33 were as at the end of 2024/25 and there was not an update at this point. He added that units 1-3 related to the former Wilko store so the loss was because it had been demolished but it was expected that the value would increase once it was developed.
Councillor Lynch queried what sort of charges there would be on the HRA if the Council borrowed money to build houses. The Specialist Accountant explained that the current rates were as at Friday and were given to the Chief Finance Officer and the Cabinet Members for Resources and Value for Money and Housing regularly. He stated that indications of borrowing rates from PWLB were 4.9% for the short-term and 6.49% for the long-term over 30 years but the rates changed daily. He added that, if the Council did decide to borrow, they would look at potentially splitting the borrowing and variable rate. Councillor Lynch pointed out that the Government yields were going up and the Specialist Accountant confirmed that all the current borrowing was on a fixed rate so there was an amount of certainty for paying it back.
Councillor Langdon-Morris, Cabinet Member for Resources and Value for Money arrived at 6.49pm.
Councillor Lynch queried if the 30 year borrowing costs which had gone up in the last month were the same as the 30 year government yields. The Specialist Accountant responded that they were not as there had been about 1-1.5% change. He clarified that the Council would not necessarily borrow direct from PWLB but could borrow from other Local Authorities at short-term rates but in any case they would look for the best possible rates at the time. Councillor Lynch also queried how the Council could budget if variable rates were chosen for any borrowing as opposed to a fixed rate. The Specialist Accountant acknowledged the point, adding that the Council would probably take all the borrowing at a fixed rate but it depended on the level of risk the Council wanted to take at that time. He added that the Chief Finance Officer had to agree any borrowing and there had to be a robust business case with costs built in. ArlingClose were also asked for their advice on any borrowing.
Councillor Molyneux queried the risk of interest rates going down and the Council not being able to balance the budget. The Specialist Accountant stated that, over the last month or so, where the rates had been due to reduce, an increase of 1-1.5% had been seen due to demand and being market led so it was difficult to predict. He added that he had spoken to brokers and ArlingClose about where they thought the market was going in order to devise a plan and set a prudent budget. The Chief Finance Officer added that, about three years ago, the Council had assumed interest rates would come down and that assumption had not changed but, in the interim, 5.9% had been gained against a budget of 3.1% so budgeting would continue on that basis as a cautious approach. Councillor Molyneux referred to 3.22 of the report and queried why long-term loans had a higher rate of interest than short-term ones and the Chief Finance Officer clarified that these were the rates the Council would have to pay if it borrowed money so it would be more if was over the longer term.
Councillor Byatt asked if there was any update on the 31 March valuation figure in relation to property assets and queried if the properties should be divested if they continued to lose money. The Specialist Accountant responded that the table in the report included properties in Lowestoft and Beccles and he reassured Members that once the redevelopment of the former Wilko site and car park was completed, the value would increase.
On the proposition of Councillor Lynch, seconded by Councillor Back it was
RESOLVED
1. That the 2024/25 Outturn and 2025/26 Report on the Council's Treasury Management activity at Appendix A be approved.
2. That the revised 2025/26 Investment Strategy at Appendix B be approved.
3. That the Treasury Management Practices (TMP’s) at Appendix C be noted.