Issue - meetings

To submit a report by the Head of Function (Resources)/Section 151 Officer.

It was resolved –

•           To note the general policy on reserves and balances adopted on 1 March, 2016, as at Appendix A to the report.

•           To approve the amendments to the general policy on reserves and balances adopted on 1 March, 2016 at Appendix A.

•           To set the minimum level of general balances for 2019/20 as £6.76m in accordance with the Section 151 Officer’s assessment.

•           To plan for an increase in general balances over a 3 to 5 year period in order that the actual level of reserves reaches the minimum level. This increase will be achieved by budgeting for planned annual surpluses.

•           To confirm the continuation of the existing earmarked reserves.

•           To approve the transfer of the Edge of Care reserve from the earmarked reserve to the General Reserves.

The report of the Head of Function (Resources)/Section 151 Officer on the use of reserves and balances was presented for the Executive’s consideration.

The Portfolio Member for Finance reported that the purpose of the report is to set out the Section 151 Officer’s assessment on the level of general balances and reserves for 2019/20 and to make recommendations as to the allocation of general balances for use during 2019/20. The Portfolio Member said that it is appropriate in this context to refer again to the Wales Audit Office’s Audit Letter for the Isle of Anglesey County Council for 2017/18. The Letter highlights the Council’s reserves position noting a recent trend of reduction in the Council’s general fund balance which the Auditor General deems unsustainable and which   the letter notes the Section 151 Officer and the Council have recognised as a risk. The Auditor General advises that “continued careful consideration of reserves balances and how they might be used to support financial plans is particularly important as it is not sustainable to rely on reserves to support ongoing cost of demand led Care/Children’s Services. Once reserves have been depleted, other sources of funds or efficiencies must be identified.” The Auditor General goes on to say that the Executive’s resolution to seek to balance the revenue budget in 2019/20 without resorting to the use of general reserves by making sufficient  savings and ensuring they are achievable, is welcomed.

The Head of Function (Resources)/Section 151 Officer said that at the end of 2015/16 the Council’s general fund balance, its earmarked reserves and schools’ balances stood at in the region of £27m or 22% of the Council’s net budget; by the end of 2018/19 they are forecast to reduce to £15m or 12% of the Council’s net budget. The Officer said that reserves are held as security against unexpected events or unplanned for expenditure; the general reserves were drawn upon in 2017/18 to help meet the cost of over expenditure on the revenue budget; it is likely they will again be utilised for this purpose this year as the 2018/19 revenue budget is projected to be overspent. Funds are also allocated to budgets to  meet the in-year costs of events  e.g. the reserves were used to support a Legacy Team in Children’s Services to deal with historical cases and were also used in 2017 to meet the additional cost of flood damage (outside of the Highways budget) following the severe flooding event in November that year.  The Council’s earmarked reserves are set aside for various specific and known purposes e.g. Insurance reserve to meet the estimate of future claims to enable the Council to meet the excesses not covered by insurance, Grants reserve which holds grant income not yet spent and a reserve for specific one-off projects which span more than one year which are not financed by the revenue budget.

The Head of Function(Resources)/Section 151 Officer said that whilst there is no hard and fast rule as to the level of general balances  ...  view the full minutes text for item 12