Agenda item

Consideration was given to a report of the Director of Finance which presented to the Committee the proposed Reserves Policy of the Council for the financial years 2021/22 to 2022/23 and incorporate any views into the final policy.

The Council had developed a strategic approach to the creation and

maintenance of reserves through the development of a Reserves Policy and the presentation of the Policy to the Audit Committee. The aim was to improve the transparency of the level of and the use of reserves.

There had been several reports issued on Local Government Financial Resilience over the last few years and as a response the Chartered Institute of Public Finance and Accountancy released its Financial Resilience Index, most recently in January 2022. This Index placed an increased focus on the level of reserves held by Local Authorities and therefore its ability to be financially resilient. Over the past few years, a small number of Councils had issued notices under Section 114 of the Local Government Finance Act 1988 meaning they were not able to maintain a balanced financial position without the implementation of significant management action and that Government had appointed Commissioners to two Local Authorities in 2021/22.

The global pandemic had continued to have a significant impact on Local

Government and the financial challenges faced by the Council meant a greater reliance would be placed on the availability of reserves.

The 2021/22 to 2022/23 reserves policy had been prepared, following the finalisation of the financial position at the end of 2021/22 and after a risk-based review by the Director of Finance having regard to Corporate Priorities. There were 12 major Earmarked Reserves included in the Policy to align to the presentation of reserves at Note 15 in the Statement of Accounts attached at Appendix 1. As shown in the Appendix and in the Statement of Accounts, the accounts were closed with a balance of Earmarked Reserves of £99.228m (a reduction of £14.284m compared to 2020/21), Revenue Grant Reserves of £10.731m (a reduction of £9.415m) and Schools Reserve of £10.192m (an increase of £0.886m). In total, reserves were £120.150m, an overall decrease of £22.814m.

The level of reserves held at the end of 2021/22, which were detailed within the reserves policy were deemed sufficient to ensure the Council’s financial resilience for 2022/23. Members noted that there was an immediate call on Earmarked Reserves at the start of the year to reflect the use of reserves to balance the budget for 2022/23 of £20.686m (21%) which left a balance of £78.542m. This was comprised of £11.879m of General and Specific Reserves and £8.807m of reserves to support a technical budget adjustment arising from the introduction of Business Rate Reliefs after the 2021/22 budget had been set. In addition, a further £6.000m was to be used to support the revenue budget in 2023/24 with £3.932m being used to support 2024/25, this would leave a remaining balance of £68.609m available for use. As advised in the Policy, there were plans to use other reserves to support corporate initiatives.

RESOLVED that the Reserves Policy for 2021/22 to 2022/23 be noted.