The Cabinet of Oldham Council met on 8 September 2025 and approved the Treasury Management Outturn Report for 2024/25, including proposed increases to the Operational Boundary and Authorised Limit regarding Private Finance Initiative (PFI) and finance lease debt liabilities. The Cabinet then commended the report to the full Council.

Treasury Management Outturn Report 2024/25

The Cabinet received the Treasury Management Outturn Report 2024/25 from the Director of Finance, which assessed the council's treasury management activities during the 2024/25 financial year, comparing performance against the Treasury Management Strategy and Prudential Indicators. The report was previously presented to the Audit Committee on 23 July 2025, where it was scrutinised and subsequently recommended for Cabinet approval.

The report highlighted several key aspects of treasury management:

• Economic Update: Analysed the economic conditions of 2024/25, including the impacts of new governments in the UK and US, inflation rates, and GDP growth.
• Treasury Management Position: Reviewed the council's current treasury management position, including borrowing and investment activities.
• Council Borrowing: Detailed the council's borrowing activities, including the types of loans held and the strategies employed to manage interest rate risks.
• Treasury Investment Activity: Outlined the council's investment activities, focusing on balancing security, liquidity, and yield.
• Treasury Performance: Assessed the overall performance of the treasury management function against set benchmarks.
• Prudential Indicators: Monitored and measured various prudential indicators as required by the Chartered Institute of Public Finance and Accountancy (CIPFA) Treasury Management Code.

The report also addressed compliance with CIPFA's Code of Practice on Treasury Management, which mandates quarterly treasury management update reports.

Key Findings and Recommendations

The report highlighted that the council's borrowing was below the Capital Financing Requirement (CFR), indicating an under-borrowed position. This strategy was deemed prudent due to low investment returns and counterparty risks.

A significant point of discussion was the impact of a new accounting standard, IFRS 16, on lease accounting. This standard led to the reclassification of certain leases and a recalculation of PFI lease liabilities, resulting in an increase of £29.922m to £223.812m.

The report included a recommendation to increase the Operational Boundary and Authorised Limit for PFI and finance lease liabilities. The proposed increases were from £183.500m to £230.000m for the Operational Boundary and from £186.000m to £235.000m for the Authorised Limit.

External Environment

The report noted that both the UK and US elected new governments during the period, and their policy decisions impacted the economic outlook. The Chancellor of the Exchequer¹ delivered her Spring Statement in March 2025, following her Budget in October 2024.

The Office for Budget Responsibility² downgraded its predictions for UK growth in 2025 to 1% from 2%. However, it upgraded its predictions for the four subsequent years. Inflation predictions for 2025 were pushed up, to 3.2% from 2.6%, before seen as falling back to target in 2027.

Borrowing and Investments

As of 31 March 2025, Oldham Council held £234.817m of loans, an increase of £53.707m from the previous year. The council also held £47.568m in invested funds.

The council's investment strategy prioritises security and liquidity overoptimising returns, in line with CIPFA guidelines. Investments are primarily made to manage day-to-day cash flows using short-term, low-risk instruments.

LOBO Loans

Oldham Council held £85.500m of Lender's Option Borrower's Option (LOBO) loans. These loans allow the lender to propose an increase in the interest rate at set dates, at which point the council can either accept the new rate or repay the loan. During the year, £50.500m of LOBO loans had annual/semi-annual call option dates, but no lender exercised their option.

As at 31st March 2025 Oldham Council had £39m LOBO loans with call dates within the next 12 months. Of this sum, £14m is held with Dexia Finance over 3 loans, and the remaining £25m is 4 separate loans with four other providers, Danske Bank, KA Finanz, FMS Wertmanagement and KBC Bank. The Call option for the loan with FMS Wetmanagement was called on 31st March with a proposed interest rate of 7.67%. As a result, the Council exercised its option to repay the £5m in full on 7th April 2025.

Treasury Team Performance

The Treasury Team's performance was measured against budget targets and benchmark interest rates. The actual investment rate achieved in 2024/25 exceeded the budgeted rate of 5.00%.

The Section 151 Officer³ reported that all treasury management activities complied fully with the principles in the Treasury Management Code and the council's approved Treasury Management Strategy.

Decision

The Cabinet approved the Treasury Management Outturn Report for 2024/25 and the proposed increases in the Operational Boundary and Authorised Limit for PFI and finance lease debt liabilities. The Cabinet then commended the report to the Council for final approval.