Issue - meetings

Report by the Chief Finance Officer.

18.1     The Chief Finance Officer introduced the report. He outlined that the overriding consideration is that the level of reserves are sufficient to mitigate risk, in its various forms, and to allow for transformation and organisational change. The Robustness Statement in appendix 2 outlines the risks that are taken into account as part of the assessment of the level of reserves needed in the RPPR process. Appendix 4 shows the future plans for reserves at this point in time, but these may change as part of RPPR process.

18.2     The Committee asked if the Council has enough reserves to cope with the move from Rate Support Grant (RSG) to business rate retention funding, and the possibility that the amount of revenue from business rate retention is less than expected.  The Chief Finance Officer outlined that the Medium Term Financial Plan (MTFP) has been set out on the basis that the Council does not fully know the impact of business rate retention and the withdrawal of RSG, so the reserves reflect this position. The Council has enough reserves to cope with this situation, but cannot be certain what the impact will be in the longer term.

18.3     The Chief Operating Officer added that reserves can only be used once, and the issue of business rate retention will be ongoing. So it is not possible to give an assurance that reserves can cope with this funding change in the longer term.

18.4     The report sets out the amount of useable reserves as a percentage of the net revenue budget that ESCC has in comparison with our South East Seven neighbouring authorities (table 1, paragraph 2.7 of the report). ESCC’s useable reserves as percentage of net revenue are 17.4%. This compares with the average County Council 30%; London Boroughs 58%; Outer London Boroughs 44%; and Metropolitan Councils 40%.

18.5     The Committee asked if the move to a Core Offer of statutory services increases risk.  The Chief Operating Officer outlined that the move to a Core Offer addresses the increased risks from the reduction in central Government funding and as such de-risks service delivery. The Chief Finance Officer added that the reserves are held to mitigate the impact of change, and there is an assessment of the risk of moving to the Core Offer. Financial, service and transformation risks are embedded in our approach. So under the Core Offer, if departments have identified increased risk as part of transformation, then the Council will take this into account when assessing the level of reserves.

18.6     The Committee asked for clarification on the term ‘useable reserves’. The Chief Finance Officer explained that useable reserves is an entry in statement of accounts that incorporates all reserves that have been listed,  as well as carry forwards, under regulation IAS20, of underspent departmental  grants. The figures in appendix 3 and 4 do not include unspent grants, so the figure for useable reserves in the statement of accounts is slightly higher.

18.7     The Committee considered that the level of contingency  ...  view the full minutes text for item 18