Agenda item

1.     The item was presented by the Pension Fund and Treasury Investments Manager, Sangeeta Surana. The following key points were highlighted:

        a)     It was explained that the annual refresh reviewed the Council’s use of required indicators and communicators, as outlined in the cover report. At a high level, there had been no changes to the Council’s investment strategy or its prudential indicators relating to security, liquidity, or borrowing. The Council continued to maintain its established approach to treasury management.

        b)     The Council’s Capital Financing Requirement showed a small increase in 2026/27, followed by a gradual decline in subsequent years. This indicated that no new borrowing was anticipated for future capital programmes, and that cash balances were expected to remain sufficient.

        c)     Reserve balances were projected to move slightly and would need to be monitored closely. The Council’s short?term cash balances continued to be invested across a mix of short? and medium?term instruments, with ongoing review to ensure efficient cash?flow management. The general decline in interest rates, despite recent rate?holding decisions by central banks was highlighted to Members.

2.     In answer to Member comments and questions, the following was said:

a)     With respect to repayment of LOBO loans (Lender Option, Borrower Option) the Council would take opportunities to refinance where appropriate, although no immediate concerns regarding cash balances had been identified.

        b)     £75m represented the minimum operational level, acknowledging that liquidity fluctuated throughout the year. Reduced balances were always a possibility, but the revised minimum level was considered appropriate.

        c)     In relation to concerns raised about the performance of the money market and equity funds, with long?term returns were reported at 4.10% and recent returns had been closer to 2.5%, it was clarified

that the funds in question were equity?based pooled funds and had originally been selected during a low?interest?rate environment. They had historically delivered strong returns, but the volatility was acknowledged and it was confirmed that the Council planned to reduce its exposure to these funds over the coming years, following advice from treasury advisors.

        d)     In answer to a question regarding the Council’s unrealised loss position on funds once the IFRS 9 statutory override ended in 2029,

it was explained that the funds’ values fluctuated and that the most recent position (as of February) showed a small, unrealised gain. The situation would continue to be monitored and reflected in future reports.

        e)     A Member reiterated concerns previously raised at the meeting of the County Council regarding the investment strategy.  Another Member wanted the Committee to note his suggestion for investing in oil futures, particularly in response to supply shortages for oil in Central Europe affecting certain markets and urged Member to remain alive to the risks.

3.     RESOLVED Members NOTED the Treasury Management Strategy approved by the County Council on 12 February 2026.

POST MEETING NOTE

The following information was provided after the Committee

meeting by the Pension Fund and Treasury Manager, in answer to a

question asked by a Member at the Committee:

Rationale for change in the limit for minimum balance for 3-month liquidity in the Council’s Treasury Management Strategy:

I can confirm that the Council has an overall minimum liquidity level assessed at £200M. This is the minimum cash balance that should be held at any time to maintain a sustainable level of liquidity. In addition, to help manage liquidity,  there are limits on how much can be invested for greater that One year, and how much should be available in the shorter term (less than 3 months).

The minimum balance for liquidity within three months ensures that we have sufficient cash for immediate day to day requirements but if the limit is too high it also constrains the Council from investing in higher yielding instruments where appropriate. Hence the limit was reduced from £100m to £75m to provide that flexibility.