Agenda item

The report set out the revenue outturn position, which fed into the Income and Expenditure Statement within the main Statement of Accounts and the impact of the revenue outturn position on the Authority’s reserves.

The annual budget for the year had been amended to reflect the increased Section 31 grant due in respect of localised business rates.  At the time of setting the precept/budget the Section 31 grant was based on estimated figures which were then updated once final numbers were known, and which this year had resulted in an additional £0.23m of Section 31 grant being received.  The outturn position showed a net expenditure of £57.49m against an updated budget of £56.97m giving a total underspend for the financial year of £0.52m.  It was noted that this position included additional costs associated with the December floods of £0.177m, offset by a Bellwin claim for funding of £0.063m.

As reported throughout the year, the Service had identified savings at the earliest possible opportunity following the completion of reviews, and therefore held vacancies in advance of planned future establishment reductions, utilising this underspend to pay off a further £3.2m against the LGPS deficit during the year.  The final position within individual departments was set out in Appendix 1 with major variances summarised in the report.

The report identified total in-year efficiency savings of £5.2m compared with a target of £3.4m, performance exceeded the efficiency target, largely as a result of staffing savings made and procurement savings in respect of contracts let during the year.

The Authority held 3 specific revenue reserves: Devolved Financial Management, PFI Equalisation and Other Earmarked Reserves.  The impact of the year end position on the reserves was set out in a table, as now presented and the following was noted: -

·        Devolved Financial Management (DFM) reserves enabled budget holders to carry forward any surplus or deficit from one financial year to the next, giving greater flexibility in managing budgets thereby optimising the use of available financial resources and facilitating better value for money. The total DFM balance stood at £414k; full details by department were set out in Appendix 2;

·        The PFI Equalisation Reserve was used to smooth out the annual net cost to the Authority of both PFI schemes and would be required to meet future contract payments.  The reserve level was reviewed each year to ensure it was sufficient given changes in forecast inflation and interest rates.  The reserves had been updated during the year, resulting in a revised balance of £3.4m;

·        Other Earmarked Reserves were to fund a specific purpose. The report highlighted all the earmarked reserves, their value and specific purpose.  The overall reserves level had increased to £5.7m;

In addition, the General Reserve carried forward all surpluses and deficits that arose in year and was designed to cover uncertainties in future years’ budgets; to meet short-term loss of funding and to provide flexibility in terms of medium-term financial planning.  As a precepting Authority any surpluses or deficits were transferred into/out of reserves in order to meet future potential commitments, and as such the balance of the deficit on the revenue budget, £0.5m had been drawn down from this reserve.  After allowing for these the Authority now held a General Fund balance of £10.2m (18% of the net 2016/17 budget). 

On an annual basis the Treasurer was required to report on the adequacy of reserves, given the risks faced by the Authority setting out the minimum (£3.0m) and maximum (£10.0m) level of reserves considered appropriate.  Based on this position the current level of general reserves was slightly in excess of this, however the draft revenue and capital budgets for 2017/18 – 2019/20 included potential drawdowns in excess of £7m which would put this level of reserve at the bottom end of the target range.

RESOLVED: - That the Committee:-

    i.       Agree the virement in respect of Section 31 grant receivable;

   ii.       Note the outturn position on the 2015/16 revenue budget as presented;

 iii.       Agree the proposed transfer of £43k from the Devolved Financial Management Reserve;

  iv.       Agree the proposed transfer of £147k to the Private Finance Initiative Equalisation Reserve;

   v.       Agree the creation of a £1m earmarked reserve to fund potential penalties associated with the future repayment of Public Works Loan Board debt;

  vi.       Agree the proposed net transfer of £824k from Other Earmarked Reserves and the purpose of these;

 vii.       Note the decrease of £478k in the General Reserve.