Issue - meetings

Recommendation:

·       The Committee notes the Treasury Management End-of-Year Report.

The item was proposed by Councillor Price and seconded by Councillor Giles-Medhurst.

Members sought clarification on oversight of the property investment portfolio and on movements in the Capital Financing Requirement. Written Explanations were promised.

On being put to the vote the motion was declared CARRIED by the Chair of the Council by General Assent.

RESOLVED:

·         The committee notes the Treasury Management End-of-Year Report.

This report concludes the Treasury Management (TM) Reporting cycle, required under regulation, for 2024/25.  It provides a review of TM activities, performance, and the actual prudential and treasury indicators for the year.

The report fulfils the requirement under the relevant codes of practice for the Audit

Committee to give scrutiny to all the required treasury management reports.

It further confirms that the Council has complied with the Treasury and Prudential Indicators for 2024/25.

Following scrutiny by the Audit Committee, the report will be presented to Full Council in October 2025.

Recommendation

That:

The Committee notes the Treasury Management End-of-Year Report.

Councillor Ciaran Reed arrived at 7.34pm.

The Chief Accountant introduced the report.

Members queried discrepancies between the original budget and actual spending, with the officer explaining that unspent funds have been rolled over into the current financial year, as reflected in monitoring statements. The conversion then shifted to clarifying investment terminology, distinguishing between internally managed funds, which involve third party fund managers. Additionally, the discussion addressed risk management, with liquidity risk identified as the primary concern. The officer emphasised the importance of maintaining sufficient liquid cash to meet supplier payments promptly, highlighting day-to-day efforts to balance cash availability without excess.

Members also queried the high cost of the Crematorium (West Herts Crematorium), £5.4 million, and asked about the difference between consolidated fund figures. Officers explained the process of budget carryovers, funded schemes such as the UK Prosperity Housing Fund, and the process of internal borrowing, amounting to £22.7 million. They clarified that this internal borrowing is not a cash flow risk but a strategy to avoid interest costs by using available cash rather than external borrowing. The conversation also touched on the relationship between reserves, Section 106 money and cash flow, emphasising that the authority remains cash positive. Members expressed initial concern about the large sums but acknowledged the explanations provided alleviated those concerns.

Members raised concerns about the potential risks if interest rates remain high for an extended period. The officer responded positively, explaining that the Council is currently cash positive and benefits from higher interest rates, which improve the budget position rather than hinder it. Members also expressed concerns about the broader financial market, particularly UK government debt and its potential negative effects on local government funding and borrowing costs. The officer reassured Members that the Council forecasts to remain net cash positive throughout the medium-term financial strategy, mitigating risks from increased borrowing costs. Additionally, the discussion also touched on the significant increase in investment figures, attributed mainly to the receipt of local authority housing fund money (LAHF), which has been received upfront but not yet spent, which affects the cash position but will eventually be reflected on the balance sheet once the funds are utilised for housing investment. The officer also explained that the initial funding, LAHF1 has been spent on purchasing properties and LAHF2 is allocated for the garage site development currently underway. Additionally, there is a substitute property arrangement with Watford Community Housing, which has been approved by MHCLG. For LAHF3, officers are exploring open market purchases. A comprehensive report covering all LAHF schemes will be presented to Full Council in December.

The Committee noted the Treasury Management End of Year report.

RESOLVED:

That:

The Committee notes the Treasury Management End-of-Year Report.