Draft report by the Head of Resources (attached).

The Committee considered a report by the Head of Resources (circulated previously) regarding the Statement of Accounts for 2019/20.

The Head of Resources highlighted the following points for the Committee:

·         (Draft) Statement of Accounts for year ended 31st March 2020 (signed 22nd July).

·         Normally the final date for publishing audited accounts was 31st July – this year due to Covid-19 this had been extended to 30th November 2020

·         The External Audit of the accounts (by Grant Thornton) had started on 8th September 2020 with a couple of ‘interim’ audit weeks having taken place in August 2020.

·         Audit Findings Report would be presented to the Governance Committee on 5^th October 2020, with the Accounts formally signed off at Full Council on 7th October 2020.

·         The narrative report sets out the challenges faced and how the Authority aimed to meet those challenges (Medium Term Financial Strategy MTFS) and reviewed the last financial year 2019-20.

·         Quarter 3 position reported at December 2019 forecasted a small net surplus of £6,000.

Favourable variances seen in last quarter since last reported position; most notably additional income through the collection fund, additional investment interest, lower borrowing costs and additional savings achieved throughout our staffing establishment achieved a net budget surplus of £241,000.  The main variances were detailed on the report.

·         It was proposed to allocate the balances into earmarked reserves as followed:

o   (£9,689) Museum Development – For the Museum garden path

o   (£17,144) Office Technology – ICT spend committed to but not paid in 19/20

o   (£46,000) Leisure Centre replacement – Works at Seven Brethren

o   (£18,000) Building Control Partnership reserve – 50% of surplus to protect against loss of income in 20/21

o   (£10,000) Harbour Repairs – Fender repairs

o   (£13,522) Lynton Agency – 19/20 works not completed due to COVID-19

o   (£100,000) Repairs fund – Additional contribution for planned maintenance

o   (£26,260) Legal Services – External Legal Fees

·         Level of Reserves held at 31 March 2020; General Fund of £1.161m 9.3% of net budget) and Earmarked Reserves of £5.395m

·         MTFS 2020-2024 would need to be refreshed and presented to Strategy and Resources in October/November 2020.

·         The original MTFS forecasted cumulative budget gap for 2020-21 to 2023-24 was £0m for 2020-21, £1.781m for 2021-22, £2.110m for 2022-23 and £2.678m for 2023-24.

·         Key Performance Indicators as reported in Quarter 4 Performance and Financial Management report that were presented to Strategy and Resources on 3rd August 2020.

·         The ‘Comprehensive Income and Expenditure Statement’ included a number of “non-cash” accounting entries that were subsequently reversed out so that they did not result in no impact the council tax payer.  End result was zero change in the general fund cash position of the Authority.

·         As per the Movement in Reserves Statement there were £9.7m in usable reserves, £28.9m in unusable reserves = Total net worth of £38.6m on the balance sheet. This was an increase of £11m on the prior year which the Head of Resources outlined the main movements to the Committee.

·         Pension fund net liability reduced by £6m.  The deficit would be made good by increased contributions over the remaining working life of employees; as assessed by the actuary every three years.

The Head of Resources advised that

·         The Covid-19 pandemic had not materially impacted the accounts for 2019-2020 as the lockdown had taken place towards the end of March 2020. However, it had a huge impact on the work of the Authority. Any increased bad-debt provision cost was accounted for within the 2019-20 figures and was included within the overall outturn surplus shown in the financial statements.  It was early days in terms of the recovery and the provisions were estimates however they would be monitored ongoing through 2020-21 and reported as part of in-year monitoring. 

·         The true scale of the impact of the pandemic on the Council’s finances would be felt during 2020-21.  The financial pressure on the Council would be substantial through 2020-21 and beyond even taking into account the emergency Covid-19 funding announced by the Government.   The full impact was difficult to quantify at that stage as it was still unknown how long the pandemic would continue.

·         The Government had provided some additional funding and would recompense towards the losses Councils have seen through their sales, fees and charges. At Quarter 1 position a forecast net budget gap for 2020-21 (taking into account assumed government funding for income losses) of around overall £400,000 net budget deficit had been reported to Members.

·         The Council had both general fund and earmarked reserve balances which it could call upon in 2020-21 to mitigate the economic impact being experienced but this would have much longer term solvency implications for the authority.

In response to questions from the Committee the Head of Resources advised that the current thresholds for Council Tax increases were set at ‘no more than £5 or 3%’ on Band D levels.

The Chief Executive advised the Committee that the Members set the rates/levels charged for each Council Tax band.

The Chair thanked the team for their work over the pandemic, and for the regular updates provided to him as the Lead Member for Resources and Commercialisation.

RECOMMEND that the Statement of Accounts 201920 be approved.