Agenda item

Report of the Deputy Leader and Cabinet Member for Finance and Corporate Services is to follow.

The Committee considered a report and appendix presented by Councillor Thorpe, Deputy Leader and Cabinet Member for Finance and Corporate Services, providing an update on Treasury Management activity during the first quarter of 2025/26.

Councillor Thorpe introduced the report, noting that Treasury Management is a highly technical area that includes monitoring prudential indicators, borrowing arrangements, investment activity and wider economic factors. He highlighted the ongoing uncertainty within global financial markets, including the potential impact of international conflicts and economic conditions on investment returns and borrowing costs.

During discussion, the following questions and comments were raised:

Councillor Pilkington referred to the Council's investment activity and opportunities for revenue generation, seeking clarification on the associated challenges.

In response, Councillor Thorpe explained that national regulations surrounding borrowing to invest have been significantly tightened in recent years. Whilst local authorities had historically undertaken borrowing for commercial investment purposes, such activity is now subject to greater restriction due to the risks involved. He advised that, given current economic conditions and the financial pressures facing councils nationally, the authority's focus remains on prudent investment activity, protecting public funds and securing appropriate returns without engaging in speculative investment. He emphasised that the Council continues to explore opportunities to improve investment returns where appropriate.

Neil Kissock added that the Council does not wish to increase its risk profile in pursuit of additional returns and therefore adopts a cautious approach to investment management.

Councillor Birchmore referred to Table 5 of the report and noted that a number of loans were due to mature during the year. She asked whether the financial implications of refinancing these loans had been factored into the Council's financial planning and whether this could create additional budgetary pressures.

Councillor Rahimov further asked whether refinancing arrangements generally maintain existing loan terms or whether repayment periods are extended where appropriate.

In response, Neil Kissock explained that the Council's borrowing portfolio is largely based on fixed interest rate loans. As loans mature, officers continually review the most advantageous options available in the market to refinance debt where necessary, taking account of prevailing interest rates and long-term affordability considerations. The timing of refinancing decisions is carefully managed to secure the best possible outcome for the authority.

Councillor Chaudhry referred to Table 8 and requested further information regarding the Council's non-financial investments, particularly the loans detailed within the table.

Councillor Thorpe advised that the Council had previously provided loan finance to Manchester Airport as part of its investment arrangements. He explained that returns are received through a combination of dividend income and loan repayments, which continue to contribute towards the Council's overall investment portfolio.

Councillor Roith sought clarification on the loan associated with Bruntwood referenced within Table 8.

Neil Kissock explained that the loan related to the acquisition of the Mill Gate Shopping Centre and formed part of the funding arrangements associated with that investment.

Councillor Rydeheard sought clarification regarding borrowing repayments and asked what measures are in place to prevent borrowing levels increasing unsustainably over time.

In response, Neil Kissock advised that the Council is currently developing its longer-term financial planning arrangements to ensure borrowing remains sustainable. He explained that financing costs are met through the Council's revenue budget, with income generated from assets contributing towards borrowing costs. This helps ensure that debt remains manageable and affordable.

Councillor Rydeheard also asked about the difference between borrowing undertaken through the Housing Revenue Account (HRA) and non-HRA borrowing.

Neil Kissock explained that HRA borrowing operates under different arrangements and can often attract lower borrowing costs. Different statutory and accounting requirements apply, including provisions relating to debt repayment and the treatment of housing assets. As a result, there are distinct differences between HRA and General Fund borrowing in terms of funding arrangements and debt management.

The Chair noted that advance questions had also been received from Councillor Sheppard and Councillor Birchmore and that responses had been circulated to Members prior to the meeting.

It Was Agreed:

·       The report be noted