Meeting documents

To be presented by Mr R Ambrose, Director of Finance & Procurement and Ms R Martinig, Accountant

Mr R Ambrose, Director of Finance & Procurement and Ms R Martinig, Accountant presented the report and highlighted the following:

• The draft statement of accounts had been produced 10 days earlier than the previous year.
• After members of the committee had discussed the draft statement of accounts, Grant Thornton, external auditors would begin their audit procedures.  These would be completed by the end of July 2019 and presented to the committee on the 30^th July 2019.
• In the 2018/19 financial year, Buckinghamshire County Council (BCC) had achieved a revenue underspend of £227,000.  This was an achievement due to the tough financial environment, such as reduced funding from central government and financial pressures in Adult Social Care. 
• Since the financial year 2010/11, funding from central government had reduced by 56.3%. The net revenue support grant from government was now zero.
• The General Fund balance at the end of 2018/19 was £26.4 million, with a further £4 million to be contributed as part of the 2019/20 budget.  This will take the General Fund balance up to £30 million, which will mean that the new unitary authority will start in a strong financial position.
• There have been changes to accounting treatment for the Teachers’ Pension Scheme.  The scheme continues to be managed by the Department of Education (D of E), with a small element being the responsibility of BCC. 
• Liabilities that related to BCC had not been included in previous years, but were now included in the overall accounts and amounted to just over £39 million for the financial year 2017/18.
• The balance sheet for the previous financial year showed that the 2017/18 net liability figure was £743 million.  This had been restated in the current financial year, taking the figure on the balance sheet up to £782 million, including the £39 million additional liability. 
• Clarification was given that this would have no impact on the general fund, and was a technical accounting adjustment which would reverse out through unusable reserves.  Going forward these liabilities would be included in the accounts and balance sheet.
• There had been changes made to the CIPFA (The Chartered Institute of Public Finance & Accountancy) Code of Practice on Local Authority Accounting in the United Kingdom, meaning that internal recharges between different operating segments of the authority were no longer allowed. In the context of BCC, this meant recharges between political portfolios. 
• In the financial year 2017/18, Resources had an increase in expenditure of £11.5 million. This was offset by decreases in expenditure in other portfolios such as Education and Skills which had a reduction of £7 million in expenditure. 

The following points were highlighted in response to questions raised by members of the committee:

• In May 2018, BCC had agreed to use £1.2 million of reserves to fund a new plane and patch programme.  Earmarked reserves slightly reduce this.

• The capital finance requirement of local government indicated an underlying requirement to borrow.  External borrowing money would require a 2.5% interest rate which could potentially increase.  This meant that internal borrowing was the optimal way to manage cash flows, and this policy would continue.
• Property valuations had decreased by £11million.  A retail property investment in Aylesbury had a few voids, meaning the valuation had decreased to just under £5 million. The valuation was based on rental income, and new retail lessees were due to begin contracts and would fill the voids. 
• Two new properties had been bought within the current financial year and accounted for £4.5 million.  The properties were doing well and would be closely monitored.  The voids of these properties have not increased since the time of purchase.
• The underspend for the capital budget had increased more than anticipated.  £8 million of the increase was accounted for by the Local Enterprise Partnership (LEP.)  Some slippage was beyond the control of BCC. 
• The slippage of the technology projects was deliberate, as assurance was needed that the strategy was correctly aligned.
• Some projects and schemes such as the Aylesbury Study Centre were put on hold due to the unitary decision.
• Concerns were expressed by Members that budgets set were not realistic, based on historical cases.  It was highlighted that a huge exercise took place around realistic budget setting and some funding was pushed back in a challenge session.  Capital schemes had a mass impact on the overall budget, and it would only take one to slip for there to be a sizeable slippage on the overall budget.  Ongoing work would take place to examine money that was not spent.

The Chairman on behalf of Members of the committee thanked Mr Ambrose and Ms Martinig for the quality of the report its presentation and that it had been produced 10 days earlier than last year which was a significant achievement.