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Cabinet resolved to recommend the
Assembly to note:
 
(i)  The Treasury
Management Strategy Statement Mid-Year Review 2024/25;
 
(ii)  The economic update
covering the increase in inflation and the Bank of England Base
Rate changes;
 
(iii)  The pressures currently
impacting Treasury Management (TM) and the Investment and
Acquisition Strategy (IAS) returns, including:
 
· 
Significantly increased short term interest rates impacting on the
Council’s borrowing requirements to support cashflow and
capital programme;
· 
Short-term debt levels which had increased since the last mid-year
update and the proposal to remedy the situation;
· 
Delays to renting of Private Rental units and Disposal of Shared
Ownership units developed by the Council for the Reside group of
companies and high levels of bad debts impacting on revenue income
via lease payments;
· 
Loss of income from commercial holdings due to delays in renting
the assets and further increased borrowing costs due to debt used
to deliver the commercial assets being held for longer than
projected; and
· 
Loss of interest income from BDTP which was unable to meet its
interest payments.
 
(iv)  The value of the treasury
investments and cash balances at 30
September 2024 totalled £11.8m, much of which (£8.8m)
was in the clearing bank account, and consequently the average
deposit rate was just 0.5%;
 
(v)  The value of the
residential loans lent by the Council to Reside at 30 September 2024 totalled £231.6m at an
average interest rate of 2.5%;
 
(vi)  The borrowing incurred for
Private Rented Schemes completed in 2023 would now remain on the
LBBD balance sheet and the properties would be managed by Reside
under operating leases;
 
(vii)  The total of other loans, which
included loans to LEUK, Energy Loans and Working Capital Loans,
totalled £58.8m;
 
(viii)  IAS borrowing at 30 September 2024 totalled £975.8m, with an
additional £295.9m of Housing Revenue Account (HRA) borrowing
and a further £118.5m of General Fund (GF) borrowing, taking
the total borrowing position for the Council to
£1,390.2m;
 
(ix)  HRA interest payable was
forecast to be £11.0m against a budget of £10.8m,
representing an overspend of £0.2m;
 
(x)  HRA debt was now forecast
to rise by circa £1.1m in 2024/25, in line with the
budget;
 
(xi)  Gross interest payable on
IAS and GF borrowing was forecast at £34.376m, which was
being covered by capitalised interest of £10.661m minus
internal charges against commercial schemes of £1.914m,
leaving a net interest payable charge of £25.63m against a
budget of £30.855m, which represented a surplus of
£5.225m;
 
(xii)  Interest receivable from loans,
IAS and treasury activity was forecast to be £17.894m, split
into £5.819m (non-IAS Council loans) from GF investments and
£12.074m of Reside loans and treasury investments and IAS
treasury investments, against a budget of £25.629m,
representing a deficit of £7.735m;
 
(xiii)  IAS operational income was forecast to
be £2.6m, representing a breakeven position, and commercial
income was forecast to be £6.560m against a budget of
£5.907m, representing a surplus of £0.658m;
 
(xiv)  Net surplus from the IAS was
£2.338m and the net surplus from the GF treasury strategy was
forecast to be £0.443m, representing a combined surplus of
£2.781m which was below the target surplus of £5.831m
for the GF, with the deficit to be funded from the IAS reserve
which shall decrease from £33.96m to £30.22m by the
year-end; and
 
(xv)  That in the first half of the
2024/25 financial year, the Council complied with all 2024/25
treasury management indicators.