Agenda item

Report of the Director for Finance and Corporate Services.

The Service Manager – Finance presented the Council’s assessment by the Council’s Section 151 officer of the Council’s Going Concern Status. Adding, that given the exceptional times due to Covid-19, the requirement for a separate report to confirm the Council’s position as an authority, can continue in operational existence for the foreseeable future.

The Service Manager - Finance highlighted the main factors which underpin the going concern:

·       The Council’s current financial position

·       The Council’s projected financial position

·       The Council’s governance arrangements

·       The regulatory and control environment applicable to the Council as a local authority.

In respect of the Council’s current financial position the Service Manager - Finance reported that the Section 151 officer has assessed that the optimum level of general reserves required by the Council need to be held at or above £1.5m or equal to 5% of the Council’s net operating expenditure. At the 31 March 2021, general reserves held by the Council were at £2.6m.

The Service Manager - Finance reported that as at 31 March 2021 the Council held £34m in the form of cash or short term investments maturing within the next financial year.

In addition, the year end Capital Programme provision totalled £16.13m and the actual expenditure in relation to this provision totalled £9.3m (71% of spend), giving rise to a variance of £6.8m to be carried forward into 2021/22.

It was noted that the balance sheet showed a net worth of £29m which is significantly reduced by the pension liability of £63.2m. However, statutory arrangements for funding the pension deficit assessed by and independent actuary are in place. Overall the Council’s financial position remains healthy.

The Service Manager  - Finance provided the Group with the Council’s projected financial position and balanced budget for 2021/22 as approved at its Council meeting in March 2021.

The Group noted the Council’s Medium Term Financial Strategy (MTFS) which is updated annually and reflects a five-year assessment of the Council’s spending plans and associated funding, including the ongoing implications of approved budgets and service levels and the revenue costs of the Council’s Capital Programme as well as the management of debt and investments. The Service Manager - Finance advised that the Council continues to monitor and report on the impact of Covid-19 on the Council’s finances, and will take any necessary action.

In respect of the Council’s governance arrangements, it was reported that the Council has a well established and robust corporate governance framework which was provided within the Annual Governance Statement within the Statement of Accounts presented to the Group at its meeting on 24 June 2021.

The Service Manager - Finance explained that as a local authority the Council has to operate within highly legislated and controlled environments. Adding that as well as the legal framework and central government control, there are other factors including the role undertaken by External Audit as well as statutory requirements for compliance with bet practice and guidance published by CIPFA and other relevant bodies.

Members of the Group requested that more attention to the detail of given concerns would be helpful and asked whether comparisons to previous years figures could be provided so that the Group could see if there were emerging trends for concern. The Service Manger – Finance reminded the Group that the draft 2020/21 Statement of Accounts is available to members on the Council’s website.

The Chairman requested some clarity with regards to the minimum General Fund Reserve balance of £1.5m and whether this was a statutory amount He also asked whether some assurance could be provided in respect of the pension deficit, adding that the previous year’s balance sheet would be helpful as a comparison.

The Service Manager - Finance explained that the report provided an assessment at a given point in time in the current financial year.

Councillor Stockwood reminded members that they were looking at the assessment of the Council’s Going Concern and that the Statement of Accounts reported at the next meeting of Governance Scrutiny in November will provide more clarity. In addition, members noted that the Council’s financial position was healthy before the pandemic, and still shows a healthy position coming out of the pandemic.

The Chairman established that the information provided in the officer’s report does provide the Group with a positive position in respect of the Council’s Going Concern Status.

Councillor Beardsall and Councillor Simms expressed that they did not support the Officer recommendation.

It was RESOLVED that the Group note the positive outcome of the assessment of the Council’s going concern status for the purposes of the statement of accounts 2020/21.