Havering Council's debt portfolio is secured at an average interest rate of 3.70%, despite fluctuations in the Bank of England's base rate and UK inflation during the 2024/25 financial year. The Audit Committee reviewed the Annual Treasury Management Report 2024/25 at its meeting on 8 July 2025, detailing the council's borrowing and investment activities.
Kathy Freeman, Strategic Director of Resources and S151 Officer, presented the report, which highlighted that the authority's long-term debt remains fixed at a favourable rate. This provides stability amidst economic uncertainties. The authority's debt portfolio as of 31 March 2025 is fixed at an average rate of 3.70% with an average duration of 12.6 years.
Key findings from the report:
- Investment income from treasury investments reached £4.2m.
- Interest payable on debt amounted to £16.6m.
- New one-year Public Works Loan Board (PWLB) loans totaling £293m were secured at an average rate of 4.55% between December 2024 and March 2025. These loans refinanced £118m of maturing debt and financed historic capital expenditure.
- Treasury activities remained within the limits and prudential indicators outlined in the Treasury Management Strategy Statement (TMSS) for 2024/25.
- The treasury team exceeded its investment benchmark, achieving a yield of 5.26% compared to the 3-month SONIA (Sterling Overnight Index Average) benchmark of 4.82%.
The report also noted the Bank of England's Monetary Policy Committee (MPC) began easing monetary policy, reducing the Bank Rate from 5.25% in April 2024 to 4.50% by the end of the financial year. UK inflation, as measured by the Consumer Prices Index (CPI), remained range-bound, starting at 2.3%, reaching a low of 1.7% in September 2024, and ending the year at 2.6%, slightly above the Bank of England's target rate of 2%.
The possibility of debt rescheduling was regularly discussed with the council's treasury advisor, MUFG corporate markets. However, current PWLB rules on redemption remain prohibitive and costly.
The authority holds a £7m Lender Option, Borrower Option (LOBO) loan with Danske Bank at a rate of 3.6%. Danske Bank has the option to propose an increase in the interest rate at set dates, while the authority has the option to either accept the new rate or repay the loan at no additional cost.
The full Annual Treasury Management Report 2024/25 is available on the council's website.
