Agenda item

Purpose: This report is to inform Members of the key highlights within the Council’s draft/unaudited 2024/25 financial statements and summarise management’s assessment of the Council’s ability to operate as a going concern. 

The Committee considered the report (Agenda Item 7) concerning the Financial Statements 2024/25 Highlights and Going Concern Assessment.

The Deputy 151 Officer introduced the report and highlighted key elements from the Council’s financial statements and the rationale as to why the Council was still considered to be a going concern.

In response to a question regarding the Council's financial viability and ability to meet its financial obligations, the Deputy 151 Officer indicated that the report had been prepared as a management statement as to why the Council was considered to be a going concern. This reflected the view of Senior Management that the Council could continue to meet its liabilities, with support from EFS. The Council also had a healthy balance sheet of capital assets, which it could draw upon. It was confirmed that this position had not been reviewed by the Audit Team.

Members questioned the terms of the EFS provided by MHCLG, including how they would monitor the Council’s effective use of the funds, what type of loan it was, and if there were any conditions attached to it. In response, the Deputy Section 151 Officer indicated that, although there were no conditions attached to the EFS, Central Government met regularly with the Council to monitor progress on its plans and to see if it was taking prudent financial decisions. In addition, Members noted that EFS was essentially a loan as it was money that would be repaid over 20 years and that the rate of interest charged would be at the rate set by the PWLB – this was in contrast to the historic figure levied against Councils who issued a Section 114 notice which were required to pay the PWLB rate of interest plus one per cent. The Executive Portfolio Holder for Finance and Resources noted that EFS was similar to capital borrowing which had already been undertaken, the Council was not borrowing new money. He indicated that from an accounting perspective, the Council was deferring the payment and booking £20 million worth of revenue expenditure onto the balance sheet as capital expenditure, which would be released over a 20 year period back into revenue.

In response to a question regarding additional clarity on financial governance, the Executive Portfolio Holder for Finance and Resources clarified that there was a bi-monthly financial review panel, and a budgetary savings panel had been set up by the Executive Director -Resources and the Section 151 Officer.

In response to a question regarding Local Government reorganisation and the financial matters, risks, and reserves held by each Council, the Executive Portfolio Holder for Finance and Resources indicated that the Council was in the process of gathering that information, and it would be a part of decision making going forward.

The Committee discussed the effects of the Fair Funding Review 2.0, noting that it would have a potential impact on the business rates received by the Council. In addition, the new calculation of need was also raised as a potential risk as it would be determined by the level of deprivation in the area, although the full impact of this change was yet to be understood.

In response to a question about how there was a reduction in the long-term pension scheme liability, Member noted that pension actuaries had come to this conclusion based on a number of metrics such as life expectancy and population growth. This type of pension liability re-examination was done every few years.

The Executive Portfolio Holder for Finance and Resources confirmed to the Committee that new internal governance arrangements had been put in place to regularly review the budget and scrutinise spending proposals, and that work was also underway into the financial impact of the Ridgeway Local Government Reorganisation proposal.

As Members were satisfied with the report, the Committee agreed to note the Financial Statements 2024/25 Highlights and Going Concern Assessment.