Agenda item

To review the draft 2018-19 Annual Statement of Accounts and outturn.

4.1       Dave Hodgkinson (Director of Corporate Finance & Property) and Gerald Almeroth (Executive Director of Finance Resources) submitted the draft Annual Statement of Accounts for the 2018/19 financial year. The report included a detailed commentary of the key sections of the financial statements.

4.2       The General Fund revenue position had seen a net outturn of £3.916m underspend against an approved budget of £187.641m, which would increase general reserves to £62.783m and increase financial resilience to withstand any short-term funding shortfalls arising from the Fair Funding Review and Spending Review. The Housing Revenue Account (HRA) revenue outturn was a surplus of £4.678m, against a budgeted surplus of £6.993m. The General Fund capital outturn represented a gross expenditure underspend of £54.858m against budget and a net underspend of £44.571m. The total value of the Pension Fund as at 31st March 2019 was £1.403bn; with an allocation of 9% within property; 1% in infrastructure; 69% in equities; and 21% in fixed income. Variances and overall reduction in cash investments had been due to changes in business rates and spend on the capital programme; and the changes in assets had reflected City Hall being included in investments. Although the accounting valuation of the Fund was done every year, the actuarial valuation of the pension fund was carried out every three years and was due in June 2019. The external audit of the City Council’s financial statements (Council and Pension Fund) was ongoing, and progress would be reported separately.     

4.3       The Committee commented on the length of the Statement of Accounts, and the City Council’s external auditor confirmed that the document needed to meet the requirements of Chartered Institute of Public Finance & Accountancy (CIPFA), and that the City Council was working with CIPFA to be able to produce a more understandable and less complex set of accounts. It was hoped that a more slimmed down version would eventually be possible.

4.4       The Committee discussed the HRA and underspend on housing, and noted the disconnect between the rise in demand for housing and the drop in the purchase of properties which could provide temporary accommodation. The Director of Corporate Finance & Property commented that not enough properties of the right standard, cost and level were being found that could be supported by a sound business case. Members asked whether the area that was being considered for housing needed to change, and the Director confirmed that this was being reviewed. The Committee noted that pressures in areas such as housing currently existed across all local authorities.

4.5       The Committee commented on the pattern of underspend in the Capital Programme and suggested that while some issues were out of the City Council’s control, others may be more operational.

4.6       Members commented on the overspend in Children & Family Services, and noted the increase in the number of looked after children. The Director of Corporate Finance & Property acknowledged that this was a challenge and potential risk that needed to be managed through budget and a range of service strategies; and that this had become a key lobbying issue as Home Office funding was not covering costs.

4.7       The Committee discussed borrowing, and noted that the City Council had used internal resources to fund capital expenditure rather than having to borrow. Other issues discussed included the costs associated with the retro-fitting of the waste fleet; the reduction in the number of non-domestic rating appeals compared to last year; the overspend on legal services; and targets for treasury income.

4.8       The accounts would be presented for formal sign off by the Committee at the next meeting on 17 June 2019.

4.9       RESOLVED: That the draft Annual Statement of Accounts for the 2018/19 financial year be noted

ACTIONS:

1.         That details be given of any penalty payment that may be incurred from the re-profiled retro-fitting of the waste fleet to meet the requirements of London’s Ultra Low Emissions Zone.  (Action for Dave Hodgkinson - Director of Corporate Finance & Property)

2.         That more detail be provide on the £1.5m gained following a dispute with a contractor. (Action for Dave Hodgkinson - Director of Corporate Finance & Property)