Agenda item

Report of the City Treasurer.

4.1       The Committee had before it a report on the draft Statement of Accounts for 2016-17.  The chairman announced that the publication of the papers did not meet the statutory deadline.  These were circulated to the committee at the earliest opportunity once the external auditors had completed the necessary work to be able to report to members the findings from the audit of the accounts.  He agreed to accept the report and its appendix as a matter of urgency.

4.2       Steve Mair, City Treasurer, summarised the key items arising from the Statement of Accounts.

4.3       The Committee was informed that the Council prepared its final accounts for 2016-2017 and submitted them to the Council’s external auditors, Grant Thornton, in four working days – three days earlier than in the previous year.  Grant Thornton provided a draft opinion on these accounts by the 9^th of May, also three days ahead of the prior year performance. The setting of such a challenging timeframe not only sets the Council apart from all other public bodies (and 95% of the FTSE-100), but allows financial management resources to be quickly focussed on supporting services in concentrating on the future rather than the past.

4.4       Members acknowledged the achievement and thanked the City Treasurer, Finance team and the internal and external auditors for their work.

4.5       The committee noted that the General Fund revenue position had seen a net outturn of £17.201m underspend against approved budget.  Members also noted that as set out in the 2017/18 Budget Setting and Council Tax Report, dependent upon outturn being as then forecast, £10 million of the overall General Fund net underspend would be used to assist in alleviating the pension fund deficit. 

4.6       In response to questions regarding how the £10 million figure was arrived at, the City Treasurer explained that the Council has a significantly underfunded Pension Fund.  Without the current course of action being taken it would have taken the Council over 35 years to eliminate the deficit while incurring very significant interest costs.  In discussion with DCLG officials it had been indicated that there was the possibility that future legislation may require local authority pension funds to achieve a balanced position within 20 years.  Given the above issues the Council had decided as part of a wider recovery plan to invest 3 one-off sums of £10 million if the financial position each year end allowed for this.

4.7       The report included an overview of the principal reasons behind the variances for each Cabinet portfolio.  The committee welcomed the explanations which it considered should be included in future quarterly finance monitoring reports.

4.8       With regard to the general fund capital outturn, members noted that approximately one third of the key projects contributing to the net underspend against the 2016/17 approved budget related to maintenance and improvement works.  The committee has previously expressed concern regarding slippage in the capital programme.  Members questioned the ability of service areas to produce robust forecasts and whether the Council has sufficient staff with the appropriate skill-set to deliver projects.  The committee highlighted the cumulative impact of the Council persistently missing capital programme targets.  The City Treasurer advised that the finance team was heavily engaged with the services to address this.  In addition the Chief Executive had commissioned work to support the delivery of the Council’s capital programme. 

4.9       In respect of the balance sheet, members noted a significant movement in the financial year around short term investments (£228,146,000), short-term creditors (£211,652,000) and long term borrowing (£181,358,000).  The committee asked and received an explanation for the variances including the link between the movement in short term investments and short-term creditors.

4.10    Members acknowledged that the annual accounts were extensively slimmer than the previous year.  The City Treasurer explained that the earlier closure of the 2016/17 accounts continues to derive from the Council’s commitment to continual improvement in its financial management.  Accelerated closure of the accounts has given the council an opportunity to play a primary role in the development of accounting practices that aim to simplify the accounts process and make them transparent to the public.  Members raised a number of queries and advised that they would inform the City Treasurer directly if that there were any minor specific issues that they considered might require amendment.

4.11    RESOLVED: 

1.         That the draft 2016-2017 Statement of Accounts be noted.

2.         That the proposed £10m contribution towards the pension fund deficit recovery be noted.

4.12    ACTIONS:

1.            The committee would like details of the cumulative impact of the capital programme underspend over the last 5 years (Action for: Steve Mair, City Treasurer)