Agenda item

To receive an update on the Council’s Draft Annual Statement of Accounts 2023-24.

(Agenda republished on 10 June 2024 to include the Draft Statement of Accounts)

Ahead of the report being presented to the Committee, the Chair clarified that in accordance with good practice the draft Statement of Accounts 2023-24 were being presented to members for initial consideration and feedback in advance of their main audit which was scheduled to commence on 24 June 2024.

Ben Ainsworth, Head of Finance was then invited to introduce the report presenting the Council’s draft Statement of Accounts 2023-24 following their initial publication.  In considering the report the Committee noted the following key points:

·             The accounts had been published a month earlier than 2022-23 to reflect the earlier statutory deadline for publication on 31 May 2024.  Whilst publication had been slightly delayed beyond the statutory deadline due to additional general fund valuations which had needed to be undertaken compared to recent years, the finance team was commended for their efforts given the shortened timescale for production of the accounts, which had created challenges across the sector.

·             There remained a small amount of work to be completed connected with the valuations, but this was not expected to have a material impact on the final accounts and principally involved the movement of funds between unusable reserves.  It was not anticipated this would have an impact on the planned audit schedule.

·             The inclusion within the Draft Statement of Accounts of a detailed narrative outlining the background, financial context, Medium Term Financial Strategy, Council’s strategic vision and summary of financial performance as an introduction to the core Accounting Statements which set out the Council’s income and expenditure for the year as well as its financial position at 31 March 2024 in compliance with the requirements of the CIPFA Code of Practice on Local Authority Accounting.

·             In focussing on the summary of financial performance, attention was drawn to:

o      the Revenue General Fund Outturn position 2023-24 which whilst reporting a breakeven position had included a transfer from corporate contingency to cover overspends in Resident Services (£11.2m mainly relating to additional pressure in terms of homelessness) and demand led pressures in both the Children and Young People and Care, Health and Wellbeing services with other services showing small underspends;

o      The Core Accounting Statements, with an outline provided of the current position in relation to the Balance Sheet, Movement in Reserves Statement and Earmarked Reserve statements.

o      The Council’s Reserves Strategy which provided the operational framework within which the Council’s reserves were managed and monitored by the Corporate Director of Finance & Resources and Chief Executive including an assessment of the optimum level of general reserves to be held and which recognised the importance of holding adequate reserves to meet the net financial impact of risks facing the Council to ensure the authority was able to continue operating in a financially resilient and sustainable manner.

In response to the update provided the Committee highlighted comments on a number of issues, with the following responses provided:

·             Whilst noting the robust nature of the Balance Sheet further details were sought on the main changes and movements included within the General Fund Financial Outturn position for 2023-24 compared to the original budget along with the use and adequacy of contingences to fund the variances, which officers advised would be clarified as part of the final report on the Statement of Accounts.

·             In response to a query in relation to the funding sources used to support capital projects, Amanda Healy, Deputy Director Investment & Infrastructure, advised that most capital projects were housing schemes where there would be a contract in place based on viability assessments that would be funded by an element of borrowing.  Schemes for affordable housing would also be supported by GLA grants and Section 106 or Community Infrastructure Levy funding could also be used (subject to meeting the necessary criteria for infrastructure) to support the borough’s Capital commitments.  Given issues highlighted in relation to viability and reassessment of some capital schemes due to the current economic climate, members were advised that the potential impact in terms of related grant funding was subject to regular review and (where required) renegotiation in order to avoid any potential claw back of funding.

·             Given the ongoing pressures identified on the Council’s budget relating to homelessness and the cost and supply of temporary accommodation details were sought on the measures in place to mitigate and manage demand and the ongoing associated significant budgetary pressures.  In recognising this as a national and london-wide challenge, members were advised of the specific measures introduced by the Council which had included renegotiation of prices and identification of alternative arrangements for the provision of temporary accommodation as well as the continued efforts to acquire additional properties and increase the supply of new build homes at affordable and social rents in order to increase available supply.

·             In response to a Committee query in relation to the sufficiency of the General Fund Reserves, Minesh Patel, Corporate Director of Finance and Resources (and Section 151 Officer) advised that the amount held (5% of the General Fund Balance) for unrestricted reserves was felt to be sufficient. However, it was noted that given the financial pressures arising through the cost-of-living crisis, inflation and demand for services, the situation would continue to be closely monitored and if necessary, further consideration would be given to how the Council could increase its reserve funds although the challenges in achieving this were recognised given the need to reduce spend in order to accrue the necessary in-year surplus and overall reduction in funding provided by the Government through the Local Government Fund Settlement.

·             In terms of ongoing financial monitoring, members were advised of the quarterly financial forecast updates provided for Cabinet and role of the Budget Assurance Panel with the delivery of individual schemes subject to oversight by the relevant Programme Boards and (for Capital schemes) the Capital Programme Board.  Members were also advised of the reports due to be presented to Cabinet in July 2024 on the Councils 2023-24 Outturn Position; Q1 2024-25 Financial Forecast and Medium Term Financial Strategy which it was noted would also be made available for the Committee to access, as further reference.

·             Following a Committee query in relation to the impact of any slippage in the Capital Programme as a result of the current economic climate and associated impact in terms of the reassessment (where required) of individual scheme viability, members were advised of the affordability review mechanisms established which included not only available funding sources, cost of delivery but also procurement of individual schemes with regular updates also provided for Cabinet including the New Council Homes Programme.

·             In response to a query regarding the basis on which the level of balances held within the Housing Revenue Account (HRA) Reserve had been based compared to the size of housing stock, officer advised they would seek to clarify this as part of the final report on the Statement of Accounts.

·             In noting the difficulties and challenges created by the provision of one-year Local Government funding settlements (with the Government settlement for 2024-25 being the sixth consecutive one year settlement for local government) members supported the ongoing lobbying for the reinstatment of a 2-3 year settlement process, which it was recognised would provide more stability in terms of being able to forward plan as part of the Medium Term Financial Strategy.

The Chair thanked the Finance Team on behalf of the Committee for their continued efforts in finalising the draft accounts ahead of their submission to the external auditors and for what the Committee felt was a particularly useful narrative section to the report. As no further issues were raised the Committee RESOLVED to note the draft Statement of Accounts for 2023-24 in advance of the final version and accompanying External Audit Findings report being presented back to the Committee for formal approval, currently scheduled (subject to completion of the External Audit process) in September 2024.