Agenda item

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

The report of the Director of Function (Resources)/Section 151 Officer incorporating the draft Comprehensive Income and Expenditure Statement for 2021/22 and the draft Balance Sheet as at 31 March, 2022 was presented for the Executive’s consideration. The report also provided more detailed information on the Council’s general balances and earmarked reserves including the proposed use of reserves and balances in 2022/23 and subsequent years.

Councillor Robin Williams, Portfolio Member for Finance, Corporate Business and Customer Experience in presenting the report said that it sets out the draft main financial statements for the 2021/22 financial year and provides a summary of the Council’s general balances and earmarked reserves. In accordance with the regulations, the draft financial statements were signed by the Council’s Responsible Financial Officer on 17 June, 2022 well within the 31 August, 2022 requirement for the signing of the draft accounts (the accounts timetable having again been extended for 2021/22 in recognition that the pandemic may still have an impact on local authority staff resources) and the audit of the accounts has commenced. It is planned that the audit will be completed over the summer with the final audited accounts being approved by the 30 November, 2022 extended deadline.

Based on the draft accounts which may be subject to change once the audit and final accounts have been completed, the Council’s General Fund Balance as at 31 March, 2022 was £12.050m which equates to 8.2% of the net revenue budget for 2021/22. The Executive has set the minimum level of the General Fund Balance at 5% of the net revenue budget which would equate to £7.4m meaning that the General Fund Balance exceeds the minimum value by £4.650m. The Executive has approved £500k of the general reserve to be spent on highway improvements and £261k will be transferred to service reserves in line with the service reserve policy approved in 2019/20. The draft general reserve after these commitments is £11.289m

Councillor Robin Williams cautioned that the Council will not be sitting on its reserves; the Council’s  budgets are likely to come under increasing pressure in the current year as the  cost of living crisis affecting the nation similarly impacts the Council in rising service, fuel and material costs driven in part by the high rate of inflation. Addressing this as well as other challenges such as increased demand could mean the Council having to draw on its reserves which is why they are held in the first place – to provide contingency to meet financial challenges of this kind and ensure the Council’s financial position remains sound.  Councillor Robin Williams referred to the journey which the Council has been on financially over the past four years from when Audit Wales expressed concern about the level of its reserves to the far more robust position it finds itself in presently putting it in a good place to meet those challenges.

The Director of Function (Resources)/Section 151 Officer highlighted that the draft Statement of the Accounts for 2021/22 is available on the Council’s website and that the accounts are currently being audited meaning the figures therein could change. He clarified that the Comprehensive Income and Expenditure Statement at Appendix 2 shows the cost of providing services in the year on an accounting rather than funding basis and does not provide a fair reflection of the Council’s financial position. A number of adjustments have therefore to be made to the accounts in order to show the amount that is funded by Council Tax. The report sets out the purpose and use of the reserves held by the Council and confirms the Council’s improved position compared to a few years ago with the draft General Reserve after commitments, now standing at £11.2m which is significantly above the Council’s minimum set balance of £7.9m. The Council is therefore in a strong position to deal with the financial challenges it is likely to face this year and beyond. The Section 151 Officer said that he was satisfied with the Council’s financial position including its level of reserves.        

It was resolved –

·         To note the draft unaudited main financial statements for 2021/22 (Full draft Statement of the Accounts 2021/22 is published on https://www.anglesey.gov.wales/documents/Docs-en/Finance/Statement-of-Accounts/2021-2022/Draft-statement-of-accounts-2021-2022.pdf)

·         To note the position of general balances of £12.050m and to approve the creation of the new earmarked reserves noted in Table 4 of the report which amount to £9.371m.

·         To note Appendix 4 and to approve the balance of £23.181m of total earmarked reserves for 2021/22 (£14.079m in 2020/21). This is £9.102m higher than 2020/21 and is made up of £9.371m of new reserves as recommended above and £0.269m change to existing reserves (though this is made up of near compensating increases and decreases to existing reserves).

·         To note the school balances position of £7.827m.

·         To note the HRA balance of £12.333m

·         To approve the increase in the Service Reserves by £0.261m to £1.625m in accordance with the Service Reserves Policy agreed in 2019/20 as per Appendix 1, Table 3 of the report.