Meeting documents

Draft Statement of Accounts for Buckinghamshire County Council and Pension Fund for the year ended 31 March 2018.

The Chairman welcomed Mr R Ambrose, Director of Finance and Procurement.

Mr Ambrose introduced the Draft Statement of accounts during which the following key points were highlighted:

• The Council was ahead of the deadline for providing the Draft Statement of Accounts.
• Once the accounts had been audited, the Statement of Accounts would be provided to the Committee on 25 July 2018 alongside the Annual Governance Statement.
• 2017-2018 was the final year that the Council would be in receipt of the Revenue Support Grant. Going forward the Council would receive negative funding, commencing at £10.5m 2018-2019, reducing thereafter.
• There was a £2.9M underspend against budget forecast, last year despite pressures, in particular from Adults and Children’s Social Care. This underspend aided the increase of general fund reserves which currently stood at £27.4M.
• The slippage in the capital fund would be reviewed with the aim of reducing this in the future.
• Mr Ambrose thanked Ms R Martinig, Mr L Whitehead, Ms Julie Edwards, Mr P McGovern and all the finance team/ budget managers for their hard work.

The Chairman thanked Mr Ambrose for his presentation.

Mr L Whitehead presented the main accounts and highlighted the following points:

• There would be two major changes to accounting standards for 2018-2019 but neither would have an impact on the statement of accounts.
• The accounts for 2017-2018 were prepared in accordance with the statutory framework.
• Investments in property were diversified with £34.75M invested in commercial properties including Clarion House in Maidenhead and the retail park in High Wycombe.
• The fair value of the investment portfolio had increased by £9M.
• Pension liability had seen a slight decrease from £753.9M to £743.4M.
• The pension fund had an increased net growth of in excess of £24.1M
• A review of the employer contributions took place in 2016-2017 and the employer contribution increased to 26.4% from 22.8%. This would be part of a plan to reduce the underlying deficit over a 15 year period; hence the reduction in liability in the current year
• The Revenue Support Grant (RSG) was at £8M and this year there would be no RSG.

The Chairman thanked Mr Whitehead for his presentation and invited questions from Members.

The Committee raised and discussed the following points:

• A Member asked how the Council would calculate the income that would be set aside for when properties were vacant. Members were advised that 5% of income was set aside and earmarked for such costs including landlord’s fees.
• A Member highlighted that the Capital Budget had missed every target and raised concerns relating to the commercial property investments given current market conditions. Members were informed that due diligence would be carried out on all potential investments including the financial standing of tenants, diversifying investments along with involvement from Carter Jonas and the Cabinet Member. The properties had provided a yield of roughly 6.5% which had exceed the anticipated yield of 6%. Further discussion took place relating to Members concerns about the investment in commercial property. Mr Ambrose agreed to provide Members with statistics and analysis on this matter in order to provide reassurance.

ACTION: Mr Ambrose

The Chairman agreed that an update on commercial properties would be a useful item for a future agenda as Members were keen to know what provisions were in place to effectively manage the risk of borrowing.

ACTION: Ms L Dale

• A Member made the following observations:

The Chairman noted the points raised by the Member and asked the further detail and fuller notes be provided for the meeting to be held on 25 July 2018.

ACTION: Mr Whitehead

• A Member raised concerns about the grouping of the Council’s assets and the valuation against the asset types.
• Level 1 assets were quoted prices, level 2 were observable assets and Level 3 were significant unobservable assets. The Council had available assets at levels 1 and 2 and did not currently hold any assets at level 3. A further discussion took place regarding the classification and valuation of assets and it was agreed that a piece of work would be done to provide Members with further reassurance on this matter.

ACTION: Mr Ambrose

• A Member asked to know more about the movement in the reserve statement and why there had been substantial adjustments. It was clarified that the statement included increases and decreases in valuation as part of a summary of movements but that the net movement had not changed significantly.

The Chairman thanked officers and said that he looked forward to seeing the final accounts. The Chairman requested oversight of any significant changes to the draft accounts prior to the meeting on 25 July.

ACTION: Mr Ambrose

The Chairman welcomed Ms J Edwards, Pensions and Investments Manager. Ms Edwards presented the Pensions Statement of accounts during which the following points were highlighted:

• There had been a change in custodians
• The fund had increase by £127M partly as a result of income £151m. Benefits paid included £85M of pensions, £22M lump sums.
• Net returns on investments totalled £118m.
• Expenses of £19M were incurred.   

The Chairman thanked Ms Edwards for her summary and invited questions from Members:

• Members asked for further commentary on the change in figures between 2017 and 2018. A discussion took place regarding the lack of buoyancy in the market which had resulted in a reduction on returns.
• A Member asked about the substantial increase in the recharge from the Council. An increase in staffing levels would account for some of this increase. It was agreed that further information on the increased operational costs to the fund would be circulated to Members.

ACTION: Ms J Edwards

• In answer to a Member’s query about the potential risks in relation to final salary pensions, Members were informed that only benefits accrued before March 2014 would be final salary pensions; and those accrued after that date would be career average pensions.
• Those who chose to retire early would receive an actuarially reduced amount.

• It was clarified that the Council was the administering authority and that scheduled bodies were other employers enrolled in the scheme, for example Milton Keynes Council, Parish Councils and non-teaching staff in schools and academies.
• A number of the bodies had chosen to make lump sum contributions towards their deficits and while the Council could not encourage lump sum payments the scheduled and admitted bodies have the option to do this.

The Chairman thanked Ms Edwards and the finance officers on behalf of the Committee for the hard work that had gone into the accounts.