Report by the Director or Resources Deputy Chief Executive (attached)

The Committee considered a report by the Director of Resources and Deputy Chief Executive regarding the Draft Statement of Accounts 2023/24 (circulated previously).

The Director of Resources and Deputy Chief Executive highlighted the following points for the Committee:

·         The Draft Statement of Accounts were signed-off on 31^st May 2024 by the Chief Financial Officer. As at 3^rd June 2024, around 65 District Councils had theirs signed (of a total 164).

·         External audit works were programmed (by Bishop Fleming) for August/September 2024, with a view to being presented to Full Council in November 2024.

·         The aim was for an ‘Unqualified opinion’.

·         The narrative report covered the external pressures and challenges to the Council in the period up to 2023-24. These included the Covid pandemic, Russia’s invasion of Ukraine, Brexit, double-digit inflation, and cost of living pressures.

·         Despite a reduction in inflation it still presented pressure to the Council’s accounts.

·         The financial pressures have been built into the Medium Term Financial Plan (MTFP).

·         As at 31 December 2023 the Council was forecasting a net surplus of £0.073m against the budget, but with favourable variances in the quarter (such as Business Rate Retention through the Devon-wide pool) the final outturn position was a budget surplus of (£0.630m) against the original budget.

·         The most notable variance to income was £0.760m Business Rates income.

·         Other income was generated through Government Grants, the Building Control partnership and a reduced spend on agency staff.

·         The only certainty in the short term was the potential impact of the Government’s Fair Funding Review and Business Rates Retention changes had now been delayed to 2026/27 at the earliest.

·         The refreshed forecasted cumulative budget gap for 2024/25 was £0m and at 2025/26 £0.487m. From 2026/27 £2.945m, to 2027/28 £3.306m.  This further increased to £3.044m in 2028/29, and £3.263m in 2029/30.

·         In June 2021 Members approved the acquisition of the Green Lanes Shopping Centre (which completed in November 2021). The financial outturn for the centre produced a net return for:

o   2021/22 (£243,600) due to minimal borrowing costs (as these commenced in 2022/23).

o   2022/23 trading position produced a net return of (£291,000), including borrowing costs.

o   2023/24 trading position produced a net return of (£237,000) this included £150,000 from the income volatility reserve due to the financial impact of losing Wilko in August 2023.

·         From the revenue budget surplus of £630,000, it was proposed to set aside the amount into the following earmarked reserves:

o   Corporate Property income volatility reserve - £150,000

o   Insurance Reserve - £280,000 – mitigate 2024/25 higher insurance costs

o   Digital Transformation Financial system reserve - £200,000.

·         The recommended level of general fund balance was 5%-10% of the Council’s net revenue budget. The combination of in year measures and robust budget management saw the Council through the financial pressures and resulted in a general fund reserve balance at 31 March 2024 of £1,238,000, which was a level of 8.4%. This was within the 5-10% levels recommended for an authority of this size.

·         Long term external borrowing remained at the same level as in 2022/23

·         The balance sheet currently showed an £18.2m bottom line. The Movement in Reserves statement covered those changes to the reserves as explained such as capital receipts reserves and capital grants; giving total useable reserves of £17.5m which was an increase on what was held as at 31 March 2023. The Balance sheet shows the Council had net assets of £125m- an £18m increase on 31 March 2023.

·         Financed lease liabilities for the vehicles had increased by £1.3m

·         The Pension fund liability reduced from £14.1m to £8.5m due to changes in financial assumptions in relation to mortality and pension / salary increase assumptions.

In response to questions from the Committee, the Director of Resources and Deputy Chief Executive advised that:

·         The property valuation of Green Lanes had reduced as it took into account the income generation of the properties and, at the time of valuation, the Wilko unit in Green Lanes impacted this overall value. Therefore, the snapshot at that time took that reduced income level into account.  The unit has since been re-let so this valuation would now increase.

·         The Authority was about to go out to tender for works on the new Hub in Green Lanes

·         Other assets, such as Lynton House, would be reviewed to assess the use of space and any income generation possibilities.

·         Reduction in income from car-parking was not due to a reduction in payments received for parking, but from a reduction in the number of fines issued.

·         The refreshed Commercialisation Strategy was yet to be approved by Members although there was little change to the original document.

·         Temporary accommodation costs had reduced in the last quarter although these had since increased again. The authority had purchased its own properties on which Housing Benefit could be claimed – resulting in a net reduction in cost.

The Head of Customer Focus advised that the increase in income from Cremation Services was due to the introduction of a lower fee for local residents looking for a basic cremation service. This service was developed to match the demand for ‘basic cremations’ (ie without a service) which was offered by national companies. These national companies were no longer providing such services in the area.

RECOMMEND that the Draft Statement of Accounts 2023/24 be approved and proceed to Council for consideration.