Agenda item

The Director of Finance and Section 151 Officer presented the Treasury Management Outturn Report for 2025/26.

Members were advised that the report provided an overview of the Council’s treasury management activity during the previous financial year, including its cash flow position, borrowing arrangements and investment activities. The report also outlined the wider economic backdrop within which treasury management decisions had been undertaken.

Cabinet noted that the report reviewed performance against the Council’s Prudential Indicators and detailed the level of borrowing held by the authority. Members were advised that all borrowing and treasury management activity had remained within the approved prudential limits throughout the year.

It was reported that officers were continuing to review the Council’s overall cash flow position to ensure that appropriate arrangements remained in place to support the Council’s financial resilience. Members were further advised that an updated Treasury Management Strategy and revised cash flow forecasts covering the next twelve months would be developed to support future treasury management decisions.

Members sought clarification regarding the fifteen million pound borrowing facility referred to in the report and whether borrowing had already been undertaken. Officers explained that, following a review of the Council’s cash position towards the end of 2025/26, it had been determined that additional cash was required to manage short-term cash flow pressures. Consequently, borrowing of fifteen million pounds had been undertaken, comprising five million pounds on a short-term basis and a further ten million pounds over a twelve-month period.

Officers advised that the borrowing had been undertaken to support cash flow requirements rather than to address a structural budget deficit. Particular pressures arose at year-end when significant payments continued to be made whilst income from Council Tax collection was reduced.

A further query was raised regarding whether additional borrowing would be required during the current financial year. Officers advised that no additional borrowing was currently anticipated and that the ten million pound loan was scheduled for repayment in March 2027. However, this would be kept under review as part of a wider assessment of the Council’s cash flow requirements.

The possibility of repaying the borrowing early was discussed, however officers explained that loans of this nature would generally be repaid on their maturity date and that early repayment would typically incur financial penalties. This would however be investigated.

Members expressed concern regarding the level of borrowing and sought assurance about the Council’s ability to repay the debt in March 2027. Officers reiterated that the borrowing related to cash flow management and not a lack of overall resources. It was noted that the timing of grant income, capital receipts and expenditure on large capital schemes could create temporary fluctuations in cash balances throughout the year.

Officers advised that further work was being undertaken, with support from treasury management advisers, to improve forecasting and provide a clearer understanding of the Council’s future cash flow position. This would be reflected in future Treasury Management reports and the updated Treasury Management Strategy.

Members noted that the Council had historically operated without significant external borrowing.

The importance of understanding the timing of anticipated income, including capital receipts and other significant funding streams, when assessing the Council’s future cash flow position was highlighted. Officers confirmed that these matters would form part of the ongoing review.

The Portfolio Holder for Finance commented that the report would be referred to Full Council for approval, reflecting the administration’s commitment to transparency, accountability and appropriate Member oversight of the Council’s financial affairs. Members were advised that, given the significance of treasury management activity and borrowing decisions, it was important that these matters were subject to detailed scrutiny and consideration by both Cabinet and Council.

Recommended that

1)       the Council’s Treasury performance for the financial year 25/26 be noted; and

2)       the position in relation to the Council’s Prudential indicators be noted.