The Director of Finance introduced the report which provided the Treasury Management mid-year report which set out the treasury management activities for 2023/24, as required by CIPFA’s Code of Practice on Treasury Management. At the Mid-Year point the Treasury Management budget forecast for the year was for a net balanced position. It was anticipated that the use of a one-off Treasury reserve will compensate for an otherwise overspend position which was due to an increase in the interest rate environment, which would impact upon the borrowing costs of the Council. Some of this increase in interest cost would be offset by higher interest generated on Treasury Management investments. This position was incorporated into the Quarter 2 Revenue Monitoring report.

Members were advised that the Council was looking to address its reliance on short-term borrowing which was affected by increasing interest rates and was awaiting a reduction in interest rates before securing longer term borrowing with preferential rates. Furthermore, a number of Lender Option Borrower Option (LOBO) Loans had been recalled by lenders with an option to repay the loan or accept the new rate, and officers were working to settle these loans where possible without incurring a premium.

Members welcomed the reduction in LOBO loans and noted that many local authorities had entered into similar agreements at the time. The Director of Finance undertook to provide the net effect of interest rates on borrowing and lending.

Resolved – That the Treasury Management Mid-Year Report for 2023/24 be noted.