Agenda item

The report presented the year end outturn position in respect of usable reserves and provisions based on the information reported in the Revenue Outturn, Capital Outturn and Treasury Management Outturn reports.

The Authority approved the reserves and balances policy as part of its budget setting process in February, with the year-end outturn position being reported to Resources committee and included in the statement of accounts.  The previously reported Revenue Outturn, Capital Outturn and Treasury Management Outturn all fed the Authority’s overall reserves position, which was considered by Members as summarised in the report.

General Reserve

These was a non-specific reserve to meet short/medium term unforeseeable expenditure and to enable significant changes in resources or expenditure to be properly managed in the medium term.

The Authority needed to hold an adequate level of general reserves in order to provide:-

·         A working balance to help cushion the impact of uneven cash flows and avoid unnecessary temporary borrowing;

·         A contingency to cushion the impact of unexpected events; and

·         A means of smoothing out large fluctuations in spending requirements and/or funding available.

As a precepting Authority any surpluses or deficits were transferred into/out of reserves to meet future potential commitments.  The Authority’s current general fund balance now stood at £4.2m and was above the minimum target level of £3.75m agreed by the Authority at its budget setting meeting in February. 

Earmarked Reserves

Earmarked reserves were all funds that had been identified for a specific purpose. The overall reserves level had reduced from £9.7m to £9.3m, with the detailed position in respect of the various earmarked reserves considered by Members as set out in the report.

It was also that a number of the reserves were short-term holding reserves and as such it was anticipated (with the exception of the PFI reserve that related to contractual payments) drawing these down to £2m by 2024.

Capital Reserves and Receipts

Capital Reserves had been created from under spends on the revenue budget to provide additional funding to support the capital programme in future years; as such they could not be used to offset any deficit on the revenue budget, without having a significant impact on the level of capital programme that the Authority could support.

Capital Receipts were generated from the sale of surplus assets which had not yet been utilised to fund the capital programme.

The unused capital contribution of £2,671k had been added to Capital Reserves in addition to £9k generated from the sale of vehicles that had been added to capital receipts.  As a result of this the Authority currently held £22.0m of capital reserves / receipts.  The capital programme assumed this would be utilised by 2027.

Provisions

The Authority had two provisions to meet future estimated liabilities:-

·         Insurance Provision, which covered potential liabilities associated with outstanding insurance claims; and

·         Business Rates Collection Fund Appeals Provision, which covered the Authority’s share of outstanding appeals against business rates collection funds, which was calculated each year end by each billing authority within Lancashire based on their assumptions of outstanding appeal success rates, as part of their year-end accounting for the business rates collection fund.

The overall position at year end showed the Authority (excluding draft North West Fire Control balances) holding £36.8m of reserves and provisions, at that level the Treasurer believed these were adequate to meet future requirements in the medium term.

Resolved: - That the Committee: -

i)     noted the utilisation of £485k of earmarked reserves;

ii)    approved the transfer of £2,671k of unused capital to capital reserves;

iii)   noted £9k of capital receipts; and

iv)   noted and endorsed the overall level of reserves and provisions as set out in the report.