Treasury Management Monitoring Report for Quarter Ended 30 June 2023
North Lanarkshire Council · 13 September 2023
Back to Finance and Resources Committee — 13 September 2023 and its agenda
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North Lanarkshire Council Report Finance and Resources Committee Does this report require to be approved? ☐ Yes ☒ No Ref EK/KS/RM/GM Date 13/09/23 Treasury Management Monitoring Report for quarter ended 30 June 2023 From Elaine Kemp, Chief Officer (Finance) E-mail mcnameer@northlan.gov.uk Telephone Ryan McNamee, Finance Manager Executive Summary This report fulfils the key requirements of the Council’s reporting procedures for Treasury Management in accordance with the CIPFA Code of Practice on Treasury Management and the CIPFA Prudential Code for Capital Finance in Local Authorities. It informs on the quarterly Treasury Management activity for the period 1 April 2023 to 30 June 2023 and compliance with the mandatory treasury and prudential indicators. Recommendations It is recommended that the Finance and Resources Committee: (1) Acknowledges the Treasury Management Activity for the quarter ended 30 June 2023 including the performance against the key treasury and prudential indicators. The Plan for North Lanarkshire Priority Improve North Lanarkshire's resource base Ambition statement (25) Ensure intelligent use of data and information to support fully evidence based decision making and future planning
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1. Background 1.1 The Council manages its treasury activities in line with the CIPFA Code ‘Treasury Management in the Public Services’. The Code requires the Council to produce reports on its Treasury Management policies, practices and activities on a regular and ongoing basis. The Council fulfils these obligations, in part, by the preparation of this Treasury Management Monitoring report produced on a quarterly basis, encompassing a review of performance. 1.2 The Council’s “Treasury Management Strategy 2023/2024 and Treasury and Prudential Indicators 2023/2024 to 2025/2026” was approved by Committee at its meeting on 1 March 2023. The Treasury activity undertaken in the first quarter of 2023/24 reflects the key requirements of the Council’s 2023/24 Treasury Management Strategy, with the Public Works Loan Board (PWLB) and Long-term Money Market being the prime source of long-term funds. In terms of investment activity, this is conducted in accordance with the approved 2023/24 investment strategy. 2. Report 2.1 Summary Position 2.1.1 The net overall borrowing position to 30 June 2023 is £866.7m, which is an increase of £28.3m from the position at the 31 March 2023. A detailed breakdown of the net cash movement is shown in column (6) within Appendix 1. 2.2 Borrowing 2.2.1 At the end of the quarter, total external debt amounted to £912.8m which is a reduction of £3.4m, which was primarily due to a reduction in PWLB debt of £4.5m, a £0.1m reduction in energy efficiency loans, and a reduction in lease payments under existing finance lease and PPP obligations of £1.7m falling due for repayment. These were partially offset by additional net temporary borrowing of £3.0m, due to £67.5m of new borrowing being offset by £64.5m falling due for repayment. 2.2.2 The Council’s approach to borrowing is in line with the approved strategy which aims to source long-term borrowing and take advantage of temporary (short-term) borrowing at attractive rates, where possible, as well as using internal cash balances, to meet the principal repayments, daily revenue account requirements and the capital financing requirement, in lieu of future borrowing for capital purposes. The strategy adopted considers interest rate forecasts, the management of carrying costs and the retention of cash balances at appropriate levels, whilst managing the associated investment, interest, and liquidity risk. 2.2.3 The Council made a successful application to the PWLB to access the certainty rate which allows a 20-basis point (bps) (0.20%) discount on loans from the PWLB under the prudential borrowing regime. This will continue to provide the Council with an opportunity to borrow from the PWLB at more beneficial rates until 30 April 2024. 2.2.4 The CIPFA Prudential Code stipulates that local authorities cannot borrow to invest primarily for financial return, deeming it imprudent to make investment or spending decisions which will increase the capital financing requirement resulting in new borrowing, unless it is directly and primarily related to the functions of the Council. The Council is compliant with this requirement. Members should note also that
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PWLB loans are no longer available to local authorities planning to buy investment assets primarily for yield. 2.2.5 Members will be aware interest rates have risen significantly over the past 18 months, increasing materially the cost of both short and long term borrowing. In this quarter, the Bank of England base rate rose from 4.25% at the beginning of April to 5.0% at the end of the quarter, significantly higher than the 1.25% level at the end of June 2022. The rate rose further on 3 August by 0.25% to 5.25% and our advisors forecast this to peak at 5.5% in September 2023. It should be noted that the Council’s short-term borrowing also continued to increase, with the rise in the base rate and short-dated market rates. The average rate on the Authority’s short-term loans at 30th June 2023 was 3.68%. 2.2.6 Gilt yields faced upward pressure since early April following signs that UK growth has been more resilient and inflation stickier than expected. Consequently, PWLB borrowing rates continued to rise over the quarter. On 30th June, the PWLB certainty rates for maturity loans were 5.25% for 10-year loans, 5.36% for 20-year loans and 4.95% for 50-year loans. The equivalent rates at 31st March 2023 were 4.33%, 4.70% and 4.41% respectively. 2.2.7 A new PWLB HRA rate, which is 0.4% below the certainty rate, has been made available from 15th June 2023. This is initially available for a period of one year, to borrow for Housing capital purposes or refinancing existing loans. In conjunction with our treasury advisors, we are undertaking a review of the requirements, to assess the borrowing opportunity for the Council. 2.3 Debt Restructuring 2.3.1 In conjunction with our Treasury advisors, we monitored the economic climate in relation to our financial targets and Treasury Management strategy, for the quarter under review. The interest rates prevailing throughout the period resulted in no beneficial opportunities for debt restructuring/rescheduling of the existing PWLB debt portfolio arising. 2.3.2 The Council continues to hold £3.0m of LOBO (Lender’s Option Borrower’s Option) loans where the lender has the option to propose an increase in the interest rate at set dates, following which the Authority has the option to either accept the new rate or to repay the loan at no additional cost. The rise in market interest rates increases the probability of LOBOs being called, however, no lender exercised their option during the quarter. 2.3.3 Further reports regarding future activity will be presented to Committee as appropriate. 2.4 Investments 2.4.1 Treasury management investments are those that arise from cash flows or treasury risk management activity, that results in balances that need to be invested, until the cash is required for use in the course of business. 2.4.2 At the end of the first quarter of 2023/24, the Council held total investments of £46.0m, which is a net decrease of £31.6m in cash and cash equivalents, primarily due to a £32.0m decrease in short-term investments, as shown within column 6 of the attached Appendix 1. The decrease in short term investments reflects
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repayment of maturing temporary borrowing of approximately £619.7m and undertaking new short-term investments of £587.7m. 2.4.3 At quarter end, the bank overdraft including cash in transit was £7.1m which is a net overdrawn position, a reduction of £0.4m compared to the position of £7.5m reported at the end of the previous quarter. The positive net cash movement primarily reflects a decrease in the value of BACS creditor payment runs compared with the previous period. The bank overdraft primarily represents amounts drawn on the account at the 30 June 2023 comprising £7.0m of net BACS payments outstanding due for clearance within 3 days of the quarter end date, cheques unpresented of £0.3m, partly offset by a balance of £0.2m of cash in transit. 2.4.4 In line with the approved strategy to manage liquidity, the Council maintained a minimum balance of £3.0m available on an overnight basis (instant access), ensuring a prudent level of funds is maintained to meet all service requirements. 2.4.5 On 10 May 2023, the Bank of England base rate increased from 4.25% to 4.50% and then by a further 0.50% to 5.00% on 21 June 2023, to help combat ongoing high inflation and wage growth. The increases in the rate over the period under review, resulted in short-dated cash rates rising commensurately with rates ranging between 4.2% - 4.9% at the beginning of April, a rise of 0.7% for overnight/7-day maturities. There is little noticeable difference between the 7 day and 1-month SONIA (Sterling Overnight Rate) bid rates and generally available investment rates offered by financial institutions and money market funds. Despite this, the Council will endeavour to achieve good performance levels in investment activity. 2.4.6 Overall the Treasury Management team continues to take a prudent approach to investing surplus funds in line with the approved 2023/24 Investment Strategy. Security of investment followed by ensuring sufficient liquidity are key investment criteria governing Council investment decisions. This approach is aligned to the prudent management of liquidity to meet current commitments and future cash demands based on the latest cashflow projections. 2.4.7 However, as demonstrated by the liability benchmark reported at (xi) below and appendix 3 attached, it is anticipated the Council will be a long-term borrower and therefore new treasury investments are primarily made to manage day-to-day cash flows using short-term low risk instruments. The existing portfolio of strategic pooled funds will be maintained to diversify risk into different sectors and boost investment income. Non-Treasury Management Investments 2.4.8 During the quarter, repayments of £0.01m were made in respect of third-party advances in connection with the Cumbernauld Academy DBFM and Greenfaulds DBFM. 2.5 Interest Rate Movements & Other Economic Updates 2.5.1 As advised by our treasury management advisors from the start of the year until May it looked like peak interest rates were in sight as inflation continued to ease. However, only a few weeks later, stronger and more persistent inflation data, particularly in the UK, changed the picture. The UK situation was not welcome news for the Bank of England. GDP growth was weak, confirmed at 0.1% in Q1, although more recent monthly GDP data has somewhat improved. The housing market has stalled, consumer demand is weak but appearing to recover despite
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higher interest rates, labour demand remained strong, with repercussions for wage growth which is accelerating. 2.5.2 As a result of a sharp rise in interest rate expectations, with clearly serious implications for mortgage markets due to higher inflation and wage data, the Bank of England’s Monetary Policy Committee (MPC) reaccelerated monetary policy tightening over the period as per para 2.4.5. The Councils’ treasury advisor has revised its interest rate forecast to reflect further monetary tightening, which would take base rate up to 5.5% in 2023. However, there remains a risk the rates could be even higher, with financial markets forecasting policy interest rates above 6%. June inflation figures were positive, with higher decreases in annual rates than market expectations, however, further increases in the base rate remain likely, but perhaps not to the extent that financial markets were previously pricing. In August, the base rate was subsequently increased by an additional 0.25% to 5.25%. 2.5.3 UK inflation fell from its peak of 11.1% reached in October 2022, but annual headline CPI in May 2023 was higher than the consensus forecast at 8.7% (8.4% expected), largely driven by services inflation, while the annual measure of underlying core inflation rose to 7.1% from 6.8%. Inflationary pressures eased slightly in June with year-on-year headline CPI reported below forecasts at 7.9%, down 0.8% from May, mainly due to fuel price deflation and an easing in food price inflation. Inflation remains high but there are reasons to be hopeful about the near future. The headline CPI rate is forecast to fall further in July figures as the reduction in the retail energy price cap feeds into the equation. Reductions in producer price inflation should also start to feed through to the consumer over the next six months. 2.5.4 April data showed the unemployment 3 month/year rate increased to 3.8%, increasing further to 4.0% in May. Pay growth for April was 6.5% for total pay (including bonuses) and 7.2% for regular pay. However regular pay growth increased further in May to 7.3%, Once adjusted for inflation, growth in total pay and regular pay remains negative. Our treasury advisors view is that May’s data represented a mixed bag for the labour market, but the MPC will likely focus on continuing strong wage growth. In line with recent survey evidence, most signs pointed to looser market conditions; employment growth slowed, and inactivity fell sharply, resulting in a rise in unemployment, and vacancies also continued to decline. While looser conditions should lead to easing wage growth over the rest of the year, MPC members may feel that they don’t have the luxury of waiting and may further increase Bank Rate to dampen demand. 2.5.5 With many mortgages at low fixed rates now systematically being re-set over the next 12-24 months at higher rates at the end of their fixed rate period, it is reported there has been a lagged effect of the feed through of monetary policy on households’ disposable income. The economic slowdown is expected to develop over time and therefore, despite consumer confidence rising, it is likely confidence will be negatively affected at some point. The manufacturing sector contracted during the quarter according to survey data, which will eventually feed into services, whose expansion is slowing. 2.5.6 Financial market sentiment and bond yields remained volatile, the latter continuing their general upward trend as uncertainty and concern over higher inflation and higher interest rates continued to dominate, with concerns over elevated inflation and higher interest rates, as well as the likelihood of the UK entering a recession and for how long the Bank of England would continue to tighten monetary policy.
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2.5.7 Over the period the 5-year UK benchmark gilt yield rose from 3.30% to 4.67%. Over the same timeframe, the 10-year gilt yield rose from 3.43% to 4.39%, whilst the 20-year yield rose from 3.75% to 4.51%. The Sterling Overnight Rate (SONIA) averaged 4.37 over the period. This resulted in the standard PWLB 10 year borrowing rate increasing from 4.53% at the start of the quarter to 5.45% at the end of the quarter, showing a spread of 1.08% between the highest and lowest interest rate which were 4.40% and 5.48% respectively, averaging 4.98%. 2.5.8 Following the increases in the base rate in May and June, short-term borrowing interest rates increased with the short term 7-day offer rate ranging between 4.30% and 5.08% over the period. Taking account of the increase in borrowing rates and advice from our treasury management advisors, it was considered more cost effective in the near term to use a combination of internal resources or to borrow rolling temporary / short-term loans at lower interest rates where possible rather than long term borrowing. This will result in increased temporary borrowing costs for the Council partially offset by increased investment income earned on surplus balances. 2.5.9 The Treasury Management Section will continue to monitor financial and economic policy and their impact upon the Council’s investment and borrowing activity. 2.6 The Prudential Code for Capital Finance in Local Authorities 2.6.1 The Local Government in Scotland Act 2003 requires the Council to undertake its Treasury activities in line with the Prudential Code for Capital Finance in Local Authorities. 2.6.2 Committee, at its meeting on 1 March 2023, approved a report titled, “Treasury Management Strategy 2023/2024 and Treasury and Prudential Indicators 2023/2024 to 2025/2026”. This report detailed a variety of mandatory and local indicators aimed at assisting members to determine that proposed capital investment levels and treasury management decisions satisfied the key requirements of affordability, prudence and sustainability. Performance against key prudential indicators for 2023/24 to date is detailed within Appendix 2. (i) Indicator 1(a) illustrates planned investment on capital expenditure is forecast to be lower than initially anticipated by £3.6m in 2023/24. This reflects an increase of £1.8m in the General Fund capital investment and a reduction of £5.4m for the HRA Mainstream and New Build programmes, primarily due to opportunities presented to buy land and ‘off the shelf’ developments earlier than anticipated during 2022/23. For further information, this is monitored in detail as part of the Council's capital programme reporting mechanisms which will provide spend details including any revisions to the estimates approved in 2023/24. (ii) The mix of resources used to finance the capital expenditure in 2023/24 reflect the updates to the forecast capital investment outlined above. Therefore, the level of in-year borrowing is anticipated to be lower by £12.0m due to a reduction in General Fund and HRA programmes of £9.5m and £2.5m respectively. The forecast level of borrowing also reflects a net increase in capital grants and external contributions of £15.3m with additional funds available to the General Fund and HRA programmes of £10.5m and £4.8m respectively. A reduction of £6.9m of CFCR is also anticipated, an increase in government grants of £7.7m in HRA, and an increase of £0.8m in General Fund.
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(iii) As a result of accounting issues arising from the pandemic recovery, the implementation of IFRS 16 Lease Accounting has been further delayed. Therefore, a restatement of existing liabilities for operating leases to the credit arrangement category will be applied in 2024/25 with an estimated impact of £3.5m. In addition, implementation of the Service Concessions flexibility in 2023/24 on PPP liabilities, and subsequent impact of IFRS16 implementation in 2024/25, is estimated to result in capital investment of £71.4m being recognised in the period to 2024/25. It should be noted that this does not represent cash expenditure and is offset by recognition of associated credit arrangements financing. (iv) Indicator 1(b) – The Council’s cumulative outstanding amount of debt finance is measured by the capital financing requirement (CFR). The CFR is essentially a measure of Council’s underlying borrowing need i.e. capital expenditure which is not resourced by capital grants, receipts or CFCR - and any new borrowing will increase the CFR. (v) The Prudential Code requires the Council’s capital investment to be affordable and prudent. To demonstrate this, a Prudential Margin (the need to borrow versus actual borrowing) is calculated. Indicator 1(c) demonstrates a healthy prudential margin of £293.1m as at 30 June 2023. The timing and profile of external borrowing to replenish cash reserves and balances are being managed, giving full consideration to liquidity, interest rate and refinancing risk, whilst minimising the potential carrying costs. (vi) Indicator 1(d) illustrates that both the overall Authorised Limit and Operational Boundary limits for borrowing and long-term liabilities have not been exceeded, with the maximum borrowing undertaken within the period being well below the approved boundaries. (vii) Indicator 1(e) illustrates the financing costs forecasts as at 30th June for both general fund and HRA as a proportion of net revenue stream. Although capital expenditure is not charged directly to revenue, interest payable on loans, and loan fund and long-term liability repayments are. The net annual charge is known as financing costs; this is compared to the net revenue stream i.e. the amount funded from Council Tax, NDR and government grants. (viii) Indicator 2(a) highlights the proportion of external interest payable by the Council which is fixed and external interest payable which may vary over the term of the borrowing, and which exposes the Council to the effects of interest rate changes. At 30 June 2023 the level of borrowing subject to variability is deemed to be within acceptable levels. (ix) Indicator 2(b) highlights a projected loan charge overspend of £7.2m compared to the initial prudential estimates for 2023/24. This projection takes into account treasury management activity, internal Interest On Revenue Balances (IORB) recharges due to increasing market interest rates, the loans fund holiday flexibility adopted in 2022/23 and decisions of the Policy and Strategy Committee and the Strategic Capital Delivery Group to reprofile the capital programme in response to the significant delivery related challenges. This current loan charge variance is made up of: • A net treasury management overspend of £7.8m is projected (£4.1m General Fund, HRA £3.7m), which is a primarily a reflection of increased internal IORB charges, and incorporates cashflow management techniques adopted, e.g. directing the timing of new borrowing, managing investment security, liquidity
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and interest rate risk. • In 2023/24 it is anticipated there will be reduction in anticipated loans fund advance repayments of £0.6m (£0.5m and £0.1m for the General Fund and HRA respectively). This is primarily due to lower final outturn capital borrowing in 2022/23 than previously forecast. (x) Indicator 2(c) relates to the level of fixed debt due to mature within time periods. The level of debt maturing remains within the upper limits set for each category at the beginning of the financial year. (xi) The Liability Benchmark at Appendix 3 is a new indicator. The Treasury Management Code states that organisations should evaluate the amount, timing and maturities needed for new borrowing in relation to planned borrowing needs, in order to avoid borrowing too much, too little, too long or too short. The liability benchmark is an important tool to help establish whether the Council is likely to be a long-term borrower or long-term investor in the future, and so shapes its strategic focus and decision making. Essentially this benchmark identifies the projection of external debt/borrowing required over the long term to fund approved revenue & capital budgets, while keeping treasury investments at the minimum level required to manage day-to-day cash. (xii) This represents the comparison of the Council’s actual borrowing against an alternative strategy. This utilises the forecasts for Capital Financing Requirement, long-term liabilities, current external borrowing, balance sheet resources i.e. reserves, and that cash and investment balances are kept to a minimum of £30.0m at each year-end to maintain sufficient liquidity but minimise credit risk. (xiii) The Loans CFR (solid light blue) represents the total cost of the capital expenditure plans based on the current profile of the 5-year Capital Programme 2020/2021 to 2025/2026. This reduces over time as scheduled principal repayments are made to the loans fund. The Net Loans Requirement (dotted red line) represents the minimum external borrowing required to fund the current capital expenditure plans assuming all cash reserves and balances are utilised to offset borrowing requirements. The Liability Benchmark (solid red line) represents the estimated borrowing required, taken account of liquidity allowance required of £30.0m to be held to maintain liquidity and to manage day-to-day cashflows. (xiv) The solid grey section shows the maturity profile of current borrowing. The gap between the grey section and the liability benchmark line represents the estimated additional borrowing that is forecast will be required to fund the current capital expenditure plans, via long-term and short-term borrowing options. 31/3/23 Actual £m 31/3/24 Forecast £m 31/3/25 Forecast £m 31/3/26 Forecast £m Loans CFR 1,052.7 1,215.7 1,451.7 1,591.3 less Balance Sheet Resources (387.4) (408.7) (399.5) (401.6) Net Loans Requirement 665.3 807.0 1,052.2 1,189.7 plus: Liquidity Allowance 30.0 30.0 30.0 30.0 Liability Benchmark 695.3 837.0 1,082.2 1,219.7 Existing Borrowing 749.2 593.1 455.1 432.7 New Borrowing Required 0.0 243.8 627.1 787.0
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3. Measures of success 3.1 Overall the approach adopted by the Council’s Treasury Management team during the quarter under review met the key requirements of the 2023/24 Treasury Management Strategy. Prudential indicators have remained in accordance with those approved by Committee on 1 March 2023. The projected final outturn illustrates a healthy prudential margin and borrowing levels that are below sustainable limits, ensuring that the projected capital investment levels remain affordable and sustainable. However, the current financial volatility and increased borrowing costs has resulted in an assessment being undertaken of the potential impact on future years of the current capital programme. This will continue to be monitored to determine if any further review of the programme is required to ensure that it remains sustainably affordable. 4. Supporting documents 4.1 Appendix 1: Loans, Long term Liabilities & Investments as at 30 June 2023 Appendix 2: Summary of Treasury and Prudential Indicators as at quarter ended 30 June 2023 Appendix 3: Liability Benchmark as at quarter ended 30 June 2023 Elaine Kemp Chief Officer (Finance)
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5. Impacts 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality- and-fairer-scotland-duty-impact-assessments Yes ☐ No ☐ 5.2 Financial impact Does the report contain any financial impacts? Yes ☒ No ☐ If Yes, have all relevant financial impacts have been discussed and agreed with Finance? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? Financial impacts are outlined in the report 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts have been discussed and agreed with People Resources? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☒ If Yes, have all relevant legal impacts have been discussed and agreed with Legal and Democratic? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☐ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☐ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact?
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Where the impact identifies a requirement for significant technology change, has an assessment been carried out (or scheduled) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☐ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.9 Risk impact Is there a risk impact? Yes ☒ No ☐ As the Council borrows and invests significant sums of money it is exposed to financial risks including the loss of invested funds and the revenue effect of changing interest rates. Therefore, successful identification, monitoring and control of risk remains central to the Council’s treasury management strategy. Treasury Management activity by its very nature has a number of inherent risks including interest rate, liquidity and refinancing risks. To minimise risk for its treasury management activities the Council adopts and operates in accordance with the guidelines for best practice prescribed within the CIPFA “Treasury Management in the Public Services” Code of Practice and the CIPFA Prudential Code for Capital Finance in Local Authorities. 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex- Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ If Yes, please provide a brief summary of the provision which has been made to ensure there has been appropriate consideration of the particular needs of the Armed Forces community to make sure that they do not face disadvantage compared to other citizens in the provision of public services. 5.11 Children’s rights and wellbeing impact Does the report contain any information regarding any council activity, service delivery, policy, or plan that has an impact on children and young people up to the age of 18, or on a specific group of these? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact and the provision that has been made to ensure there has been appropriate consideration of the relevant Articles from the United Nations Convention on the Rights of the Child (UNCRC). If Yes, has a Children’s Rights and Wellbeing Impact Assessment (CRWIA) been carried out? Yes ☐ No ☐
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LOANS, LONG TERM LIABILITIES & INVESTMENTS AS AT 30 JUNE 2023 Appendix 1 DEBT RESTRUCTURING BALANCE 1-April-23 EARLY REDEMPTION REFINANCING NEW BORROWING / LONG-TERM LIABILITIES PRINCIPAL REPAYMENTS NET CASH MOVEMENTS BALANCE 30-June-23 (1) (2) (3) (4) (5) (6) (7) LONG-TERM LOANS PWLB 449,233,305 0 0 0 (4,530,375) (4,530,375) 444,702,930 MONEY MARKET LOANS 57,000,000 0 0 0 0 0 57,000,000 ENERGY EFFICIENCY LOAN 977,636 0 0 0 (98,006) (98,006) 879,629 507,210,940 0 0 0 (4,628,381) (4,628,381) 502,582,559 SHORT-TERM LOANS TEMPORARY 242,000,000 0 0 67,500,000 (64,500,000) 3,000,000 245,000,000 MUNICIPAL BANK 0 0 0 0 0 0 0 INTERNAL LOANS 6,280 0 0 0 0 0 6,280 242,006,280 0 0 67,500,000 (64,500,000) 3,000,000 245,006,280 LONG -TERM LIABILITIES FINANCE LEASE OBLIGATIONS 1,507,226 0 0 0 (217,922) (217,922) 1,289,305 LONG TERM LIABILITY 165,402,470 0 0 0 (1,534,783) (1,534,783) 163,867,687 166,909,697 0 0 0 (1,752,705) (1,752,705) 165,156,992 TOTAL EXTERNAL DEBT 916,126,917 0 0 67,500,000 (70,881,086) (3,381,086) 912,745,831 INVESTMENTS THIRD PARTY ADVANCES 1,178,234 0 0 0 (9,983) (9,983) 1,168,251 BANKS & OTHER FINANCIAL INSTITUTIONS 83,941,470 0 0 0 0 (31,968,026) 51,973,444 BANK OVERDRAFT INCL CASH IN TRANSIT (7,452,861) 0 0 0 0 357,220 (7,095,641) CASH & CASH EQUIVALENTS 77,666,843 0 0 0 (9,983) (31,620,790) 46,046,053 NET BORROWING 838,460,074 0 0 67,500,000 70,871,103 28,239,704 866,699,778
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Appendix 2 Summary of Treasury and Prudential Indicators as at quarter ended 30 June 2023 1. Prudential Indicators (a) Capital Expenditure Initial Estimate 2023/2024 (£m) Projected Outturn 2023/2024 (£m) Variance 2023/2024 (£m) Forecast 2024/2025 (£m) Forecast 2025/2026 (£m) Capital Expenditure: General Services 167.4 169.2 1.8 216.1 103.7 Capital Expenditure: HRA 131.0 125.6 (5.4) 146.7 153.8 Total spend : Capital Expenditure 298.4 294.8 (3.6) 362.8 257.5 Total spend : Credit Arrangement 49.3 49.3 0.0 13.0 9.1 Total Capital Investment 347.7 344.1 (3.6) 375.8 266.5 Financed By: Capital Grants & Other External Contributions 73.7 89.0 15.3 74.1 61.5 Capital from Current Revenue 27.1 20.2 (6.9) 27.1 27.1 Capital receipts 1.0 10.0 9.0 1.0 1.0 Capital receipts transfer to Capital Fund 0.0 (9.0) (9.0) 0.0 0.0 CFR : Borrowing - General Services 114.7 105.2 (9.5) 163.5 64.3 CFR : Borrowing - HRA 81.9 79.4 (2.5) 96.9 103.6 Credit Arrangements 49.3 49.3 0.0 13.0 9.1 (b) Capital Financing Requirement (CFR) Initial Estimate 2023/2024 (£m) Projected Outturn 2023/2024 (£m) Variance 2023/2024 (£m) Forecast 2024/2025 (£m) Forecast 2025/2026 (£m) General Services 948.5 921.8 (26.7) 1,082.2 1,137.7 HRA 519.5 507.4 (12.1) 591.2 679.9 Total CFR 1,468.0 1,429.2 (38.8) 1,673.4 1,817.6 Movement in CFR 220.9 182.1 244.2 144.2 (c) Gross Debt and the Capital Financing Requirement Initial Estimate 2023/2024 (£m) Projected Outturn 2023/2024 (£m) Variance 2023/2024 (£m) Forecast 2024/2025 (£m) Forecast 2025/2026 (£m) Gross Borrowing : Loan Debt 961.5 922.6 (38.9) 1,195.1 1,348.3 Long-term Liabilites 213.5 213.4 (0.1) 221.4 225.6 Gross Debt 1,175.0 1,136.1 (38.9) 1,416.5 1,573.9 Capital Financing Requirement 1,468.0 1,429.2 (38.8) 1,673.4 1,817.6 Prudential Margin 293.0 293.1 0.1 256.9 243.7 (d) Authorised Limit and Operational Boundary Initial Authorised Limit 2023/2024 (£m) Initial Operational Boundary 2023/2024 (£m) Maximum Borrowing Level Q1 2023/2024 (£m) Borrowing 1,350.0 1,300.0 755.1 Other Long-term Liabilities 235.0 235.0 165.2 Total Debt 1,585.0 1,535.0 920.2 (e) Proportion of Financing Costs to Net Revenue Stream Initial Estimate 2023/2024 (£m) Projected Outturn 2023/2024 (£m) Variance 2023/2024 (£m) Forecast 2024/2025 (£m) Forecast 2025/2026 (£m) General Fund Loan Charges 34.5 38.1 3.6 48.8 55.8 General Fund Finance Lease/PPP Costs 18.0 17.9 (0.0) 16.3 15.3 General Fund : Capital Financing Costs 52.5 56.0 3.5 65.0 71.1 General Fund : Net Revenue Stream 896.2 896.2 0.0 896.2 896.2 Proportion of Financing Costs to Net Revenue Stream - GF 5.9% 6.3% 0.4% 7.3% 7.9% Proportion of Financing Costs to Net Revenue Stream Initial Estimate 2023/2024 (£m) Projected Outturn 2023/2024 (£m) Variance 2023/2024 (£m) Forecast 2024/2025 (£m) Forecast 2025/2026 (£m) HRA Loan Charges 28.0 31.6 3.6 39.6 43.6 HRA Finance Lease/PPP Costs 0.3 0.3 (0.0) 0.3 0.3 HRA : Capital Financing Costs 28.4 31.9 3.6 39.9 43.9 HRA : Net Revenue Stream 148.2 148.2 0.0 155.7 164.8 Proportion of Financing Costs to Net Revenue Stream - HRA 19.1% 21.6% 2.4% 25.6% 26.7%
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Appendix 2 (cont) Summary of Treasury and Prudential Indicators as at quarter ended 30 June 2023 2. Treasury Management Indicators a) Interest Rate Exposures on External Interest Payments Position as at 30/06/2023 (£m) % External Interest Payable on Fixed Rate Loan Debt 34.7 98.1% External Interest Payable on Variable Rate Loan Debt 0.3 1.9% b) Loans Fund Revenue Account Initial Estimate 2023/2024 (£m) Projected Outturn 2023/2024 (£m) Variance 2023/2024 (£m) %age Loans Fund Interest Payments 41.3 49.8 (8.5) (20.6%) Loans Fund Expenses 0.4 0.4 0.0 7.0% Total Loans Interest Payments & Expenses 41.7 50.2 (8.5) (20.3%) Loans Funds Investment Income (1.3) (2.0) 0.7 (53.8%) Total Loans Fund Interest Payments Investment Income & Expenses 40.4 48.2 (7.8) (19.2%) Allocated as follows : Loans Fund Interest Payments Investment Income & Expenses:General Fund 24.0 28.1 (4.1) (16.9%) Loans Fund Interest Payments Investment Income & Expenses:HRA 16.4 20.1 (3.7) (22.9%) Capital Advances Repayments - General Fund 10.5 10.0 0.5 4.7% Capital Advances Repayments - HRA 11.7 11.6 0.1 0.6% Total Capital Advances 22.2 21.6 0.6 2.5% Total Loan Charges 62.6 69.8 (7.2) (11.5%) c) Maturity Structure of Borrowing <12months 12 months to 2 years 2 to 5 years 5 to 10 years 10 to 20 years 20 to 40 years >40 years Upper Limit maturing :Fixed & Variable Rate Debt 15.0% 15.0% 25.0% 30.0% 35.0% 45.0% 30.0% Lower Limit maturing :Fixed & Variable Rate Debt 0.0% 0.0% 5.0% 5.0% 5.0% 10.0% 10.0% Maturity structure at the start of Q1 6.1% 4.1% 13.6% 15.3% 21.7% 34.1% 5.1% Maturity structure at the end of Q1 5.6% 4.3% 13.6% 16.7% 20.3% 34.4% 5.1%
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Appendix 3 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 £m Liability Benchmark - North Lanarkshire Fixed rate loans LOBO loans Loans CFR Liability benchmark Net loans requirement