PCD 1818 Treasury Management Mid-Year Review 2024/25

The Treasury Management Mid-Year Review provides details of MOPAC’s investment and borrowing activities for the period from 1 April 2024 to 30 September 2024 (the Reporting Period) and highlights any relevant issues. 

Returns on MOPAC’s investments during the Reporting Period were £10.68m against an interest receivable budget for the full year of £13.30m (80.30%). 

MOPAC’s external borrowing reduced from £479.55m on 1 April 2024 to £478.75m at 30 September 2024. 

All Treasury activity has been within the boundaries and levels set by the MOPAC Group and set out in the 2024/25 Treasury Management Strategy which was approved on 18 March 2024. 

The Deputy Mayor for Policing and Crime is asked to note the activity and performance on the Treasury Management function for the first half of 2024/25. 

PART I - NON-CONFIDENTIAL FACTS AND ADVICE TO THE DMPC 

1. Introduction and Background 

1. The Treasury Management Strategy for 2024/25 was approved on 18 March 2024 (PCD 1624). This report is submitted in accordance with a requirement under the CIPFA code for Treasury Management which requires the submission of a mid-year report on Treasury Management activities. 

2. This report provides detail of all investment and borrowing activities for the period from 1 April 2024 to 30 September 2024. It provides a comparison of the closing investment and debt positions as at 30 September 2024 with the 2024/25 full year budget and revised 2024/25 full year forecast, where relevant. 

2. Issues for Consideration 

Economic Update and Interest Rates 

1. Due to a number of economic factors, such as the Bank of England’s reduction in the Bank Rate from 5.0% to 4.75% in November 2024 and the outcome of the US Presidential election on 6 November, Link (MOPACs Treasury Management Advisors) have significantly revised their central forecasts for the first time since May.  

2. Link’s central view is that monetary policy is sufficiently tight at present to cater for some further moderate rate cuts, the extent of which, however, will continue to be data dependent. The next reduction in Bank Rate is forecast to be made in February and for a pattern to evolve whereby rate cuts are made quarterly and in keeping with the release of the Bank’s Quarterly Monetary Policy Reports (February, May, August and November). 

3. The table below sets out the PWLB rate forecasts for the Certainty Rate (i.e. the PWLB standard interest rate reduced by 20 basis points, calculated as Gilts plus 80 basis points) which has been accessible to most authorities since 1 November 2012. 

Borrowing Activity 

4. The table below shows the Treasury Management position as at 30 September 2024. MOPAC’s Interim CFO is currently reviewing the need to borrow. 

Investment Activity 

5. MOPAC’s investment balances increased from £7.389m at 31 March 2024 to £331.140m at 30 September 2024. 

6. Returns on MOPAC’s investments during the reporting period were £10.68m against an interest receivable budget for the year of £13.30m, achieving 80.30% against budget. 

CIPFA Prudential Code Indicators and Treasury Management Limits 

7. It is a statutory requirement to determine and keep under review prudential and treasury management indicators for MOPAC. There have been no breaches of the indicators during the first half of 2024/25.     

8. Further detail of performance against the prudential indicators and treasury management limits is included at Appendix One. 

3. Financial Comments 

1. As at 30 September MOPAC received 80.3% of budgeted interest receivable of £10.68 million: 

2. Throughout the period, all treasury activities have been conducted within the parameters of the 2024/25 Treasury Management Strategy Statement (TMSS), alongside best practice suggested by the Chartered Institute of Public Finance and Accountancy (CIPFA) and Central Government. 

4. Legal Comments 

1. The DMPC has the authority to approve the “annual Treasury Management Strategy, which will include details of MOPAC investment and borrowing strategy” see para 4.7 of the MOPAC Scheme of Delegation and Consent. The DMPC approved the 2024/25 Treasury Management Strategy on 18 March 2024. The Treasury Management Strategy sets out the requirement for mid-year reporting which this paper fulfils.  

5. GDPR and Data Privacy  

1. GDPR matters have been discussed with the Data Protection Officer, who has confirmed that no Data Protection Impact Assessment (DPIA) is required for this area of spend. However, the personal details of any individuals or organisations with whom contract is made for the purposes of the engagement will be managed in accordance with MOPAC’s wider Privacy Notice. 

6. Equality Comments 

1. MOPAC is required to comply with the public sector equality duty set out in section 149(1) of the Equality Act 2010. This requires MOPAC to have due regard to the need to eliminate discrimination, advance equality of opportunity and foster good relations by reference to people with protected characteristics.  The protected characteristics are: age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation.  

2. There are no equality and diversity implications arising from this report. 

7. Background/supporting papers  

1. Appendix 1 2024/25 Mid-Year Treasury Management Report