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 a slight increase in the Section 31 grant due in respect of localised business rates for the preceding financial year, which had been subject to reconciliation by CLG.  This had resulted in an additional £0.012m of Section 31 grant being received in 2016/17. The outturn position showed a net expenditure of £55.556m against an updated budget of £55.623m giving a total underspend for the financial year of £0.067m. 

As reported throughout the year, the Service had identified savings at the earliest possible opportunity following the completion of reviews.  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 £2.502m compared with a target of £3.971m, 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 principles of DFM were that any overspends and 50% of any underspends were carried forward into the new financial year, subject to a £25k maximum, other than where a specific business case could be made.  The remaining 50% of any underspend was transferred to the Authority’s general reserve.  The total DFM balance stood at £426k; 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 level of reserves required 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 £3.5m;

•   Other Earmarked Reserves were to fund a specific purpose. The overall reserves level had increased from  £5.7m to £3.5m.

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 surplus on the revenue budget, £0.26m had been transferred into this reserve.  After allowing for these the Authority now held a General Fund balance of £10.4m. 

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 (£2.8m) 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 – 2020/21 included potential drawdowns in excess of £7m which would put this level of reserve at the bottom end of the target range.

In response to a query raised by CC Tomlinson concerning the terminology ‘RDS bounty payments’ (detailed on page 36 - other non DFM variance) the Director of Corporate Services confirmed that this was a previous retention system which provided an incentive for Retained Duty Staff to remain in the Service by paying a sum after 10, 15 and 20 years’ service etc.  The bounty payments had stopped when RDS staff had the opportunity to join the pension scheme.  However, at the time that was introduced personnel had accrued different lengths of service and the rules provided they were entitled to the relevant proportion of the bounty that they had earned when the scheme ceased, which was paid once an individual reached the relative service anniversary.  Hence an earmarked reserve had been set up to meet these costs.

In response to a question from CC O’Toole regarding whether the shortfall in staff had an impact on performance the Chief Fire Officer confirmed that the RDS system was nationally under pressure when you considered trends and availability.  RDS stations were often in a rural area and people now worked further afield and therefore not available within 5 minutes of the station.  Primary employers were less keen to release people and until recently we have had a recruitment freeze.  Nationally there were problems but our RDS availability was one of the best in the country.

RESOLVED: -  That the Committee:-

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

ii.    Note the outturn position on the 2016/17 revenue budget as presented;

iii.   Agree the proposed transfer of £14k to the Devolved Financial Management Reserve;

iv.   Agree the proposed transfer of £97k to the Private Finance Initiative Equalisation Reserve;

v.    Agree the proposed net transfer of £206k from Other Earmarked Reserves and the purpose of these;

vi.   Note the increase of £258k in the General Reserve.