Agenda item

This report summarises the Council’s financial performance for 2014/15, seeks approval to the Annual Governance Statement for 2014/15 and notes the carry forward of capital provision for schemes where costs will be incurred in 2015/16.

The Committee received a report which summarised the Council’s financial performance for 2014/15, sought approval to the Annual Governance Statement for 2014/15 and set out the carry forward of capital provision for schemes where costs would be incurred in 2015/16.  All councillors had been issued with a set of papers at the end of May 2015 setting out the General Fund Summary Position for 2014/15, major budget variances for 2014/15 and the capital expenditure position 2014/15.

The Committee noted the final net expenditure for 2014/15 compared to the forecast position reported in Quarter 3 which anticipated a contribution from the working balance of £85,000. The report highlighted the most significant adverse variances in 2014/15: that in respect of homelessness (£674,000) and salaries (£263,000) were highlighted at the meeting.  The number of households requiring accommodation had been budgeted at 34.  However, this figure had risen significantly throughout the year to 85 at year end.  The adverse variance in relation to salaries was a result of the vacancy target not being fully achieved this year and additional expenditure within parking. However, it was further noted that a significant amount of the salaries budget variance had been matched by a significant favourable variance in respect of income from parking and development control (an unanticipated number of applications had been received in 2014/15).  Subject to audit, the Working Balance as at 31 March 2015 was £3.3m with Strategic Reserves of just under £7m.  This level of reserves was considered appropriate and a review of current balances held on revenue and capital reserves would be reported to the Financial Policy Panel in September 2015.

Provision on bad debts had been increased to £1.2m.  The outstanding debt as at the end of 2014/15 stood at £1.7m and it was considered prudent to continue to strengthen this provision to manage the risk that the Council would not be able to recover debts once Universal Credit came in.  It was further highlighted that, in respect of Pensions, the report should have referenced Note 29 and not Note 18 in the Core Financial Statements and that the net liability was as at 31 March 2015 and not 2014.

It was noted that:

·         The pension scheme was administered by Surrey County Council.  It had to be funded within 20 years and the Council was making significant top up payments to reduce the deficit.  The prognosis on the growth of the deficit was that it was volatile.  However, it was hoped that its growth would be curbed by recent changes to the scheme.  The triannual valuation of the scheme was due next year, which would clarify the position.

·         The Annual Governance Statement had been considered by the Audit, Crime & Disorder And Scrutiny Committee the previous evening and had been approved subject to the correction of minor typographical errors on pages 3, 4 and 5;

·         There was an underspend of £4m on the Capital Programme largely as a result of the rephasing of works in relation to Ewell Court House, earmarked funds being no longer required in relation to the Hollymoor Lane project and difficulties in progressing schemes such as Horton Chapel.  The level of commitment on schemes carried forward into 2015/16 would be reviewed by the Capital Member Group;

·         There had been a drop in capital reserves because there had been no new capital receipts and, even on the basis of very strict critera, the Council was using £0.5m - £1m of reserves per year to fund capital projects;

·         Anticipated New Homes Bonus would be used to boost the Corporate Projects Reserve;

·         The Government had not made it clear whether or not it would be taking on debts in relation to housing benefits overpayments and therefore it was prudent to assume that the Council would be picking up the shortfall on the transfer of the administration of benefits to central government under “universal credit”;

·         It was clear that the Council faced significant financial challenges ahead.  Whilst it was difficult to speculate on the scale of these at this stage (and it hoped that the Council would have a better idea of the financial challenges it faced following the Chancellor’s budget statement in July) it was likely that there would be further substantial reductions in government grant;

·         Funds held in the Personalisation, Prevention and Partnership Reserve could not be transferred into the General Fund.  The money had to be spent on terms agreed by Surrey County Council or refunded it.  It was confirmed that the criteria for securing funding had been tightened up.

·         The draw down from the Insurance Reserve (£63,000) had been used to finance a variety of claims such as subsidence and claims dating back to the Council’s previous insurers, MMI.  The Reserve was used to pay compensation were a claim had not been covered by insurance and assisted in managing any fluctuations in premiums.

Accordingly, the Committee (1) agreed, subject to the correction of minor typographical errors, the Annual Governance Statement attached as an Annexe to this report; (2) Noted the carry forward £3,121,000 provision for capital schemes to be added to the 2015/16 capital programme and (3) agreed that the Capital Member Group review the level of commitment on all schemes carried forward as part of the capital programme review.