Hammersmith and Fulham Council's Audit Committee reviewed the Treasury Management Outturn Report for the 2025/26 financial year, revealing that while the Council met most prudential indicators, two key borrowing limits were exceeded as part of deliberate strategic choices.

Two individuals reviewing and signing a document, likely related to financial statements or official council business.
Two individuals reviewing and signing a documentSource: Audit Committee papers, 24 September 2026

During the year, the Council repaid nearly £20 million in loans and borrowed an additional £228 million. A significant portion of this borrowing was for the Housing Revenue Account (HRA) to take advantage of an extra 0.4 percent discount. Despite this borrowing, cash balances only increased by £52 million, as the funds were used to finance the capital programme.

Two prudential indicators were not met: the Capital Financing Requirement (CFR) exceeded its approved limit, and the maturity limit for borrowing under 12 months was also breached. The CFR stood at £897m against an indicator of £856m, and 17% of borrowing was due to mature within 12 months, exceeding the approved maximum of 15%. These were described as deliberate strategic choices made to benefit the Medium Term Financial Plan (MTFP).

Phil Rowe and Sophie Hawkins briefed the committee on the report, noting that the Council had opted for short-term borrowing due to current high interest rates. This strategy involves a careful balance between managing refinancing risk and protecting the MTFP budget. The Council is managing the rollover of debt, having mostly utilised to borrow on a fairly heavily amortising basis. The average debt interest on the total debt portfolio was approximately 3.91% at the end of the 2025/26 financial year, with the total debt portfolio standing at £495.8 million.

A risk matrix illustrating the likelihood and impact of various risks, with different risk statuses indicated by symbols.
Risk MatrixSource: Audit Committee papers, 24 September 2026

Officers confirmed that scenario modelling was undertaken and scrutinised weekly to assess the potential impact of global events on inflation and interest rates. The specific events considered included the continued conflict in the Middle East and fiscal concerns at the moment. The modelling indicated that if interest rates remain elevated for an extended period, it puts pressure on the revenue budget, it puts pressure on the viability of the capital program and the HRA business plan.

The committee agreed to note the report, which is available in the public reports pack for the meeting on 24th September 2026.

Public reports pack 24th Sep 2026 Audit Committee