Agenda item

F Jump explained that the report consisted of the three reports relating to the last financial year and its closure, showing a summary of the financial performance of the council across revenue and capital for 2022-23. She said this was produced as part of the management accounts, providing more discretion over presentation compared to the statement of accounts, which had to be produced in line with accounting standards. She explained that the audit committee had delegated authority for any final movements to and from council reserves that were required to close accounts, and that was the purpose of the report being presented. F Jump highlighted recommendations relating to the general fund, with a request being made for the surplus to be moved to the council's reserves, and relating to housing revenue, with a small movement to reserves in relation to lift replacement. She also explained that a drawdown of £1.5 million had been requested relating to the HRA (Housing Revenue Account), based on increased demand and inflation, noting that a similar request had been made and approved earlier in the year, but that the end of year position was such that the additional request was being made. The rest of the report was taken as read.

Cllr Birnie referred to page 40, paragraph 1.2, bullet point 2, regarding the HRA reserve, and wondered how much would be left in the reserve after the second drawdown. F Jump confirmed that there would be around £150,000 left, from the original figure of around £2.5 million. In regard to bullet point 4 of the same table, Cllr Birnie asked how much had so far been spent on HGC capital projects. F Jump stated that at the end of 2022-23 around £117,000 had been spent, primarily relating to improvements to the Nickey Line.

Cllr Guest followed up with a question regarding measures that had been taken to prevent such drawdowns recurring. F Jump identified that forecasts for the current year were being made in close collaboration with the housing service to try and avoid it becoming a recurring issue, although demand and rising costs were still there, adding that the quarter one financial report had been taken to scrutiny and cabinet with pressure still expected, but work ongoing to bring the situation in line.

Cllr Reynolds asked how the reserve was replenished, and F Jump explained that it had been through surpluses on the housing revenue account in previous financial years, which seemed unlikely to occur in the current climate.

Following on from Cllr Reynolds question, Cllr Birnie wondered how the situation was going to be managed. F Jump noted that the housing revenue account maintained a working balance of around £2.9 million which was not touched except in emergency situations, and that reserves being referred to were separate to this. Cllr Birnie stated that it would be nice to have a list of actual reserves and expected calls on them, with F Jump highlighting that a list of all general fund revenue reserves was appended to the report, including information on the HRA reserves, although acknowledging that it could be made clearer. N Howcutt agreed the HRA was the biggest financial risk, and that there was no simple solution due to rent being capped by government, so mitigations such as methods of lowering maintenance demand were being explored, with the HRA business plan due to be published in January/February.

Cllr Reynolds queried what would happen in the event of a similar situation this year with less reserve funds than were required, with F Jump explaining that action would be taken before the point where the working balance would need to be touched. N Howcutt added that HRA was a growing, national issue.

Cllr Birnie referred to page 42, 2.6, paragraph 4, regarding a payment of £8 million on the collection fund, and wondered if the government refund of it was automatic, with F Jump briefly explaining the circumstances and concluding that the refund was automatic, but it was via a slightly convoluted mechanism of payments and grants.

Cllr Birnie referred to page 43, 4.2, and asked whether the additional depreciation cost was due to a revaluation or physical expansion of housing stock. F Jump confirmed that it was due to a revaluation.

Cllr Birnie referred to page 45, general fund capital major variances, bullet point 9, and enquired what type of project Aragon Close was. F Jump noted that it was move-on accommodation.

The Chair wondered if there were areas where the HRA transformation programme could be saving money. N Howcutt confirmed it was a well advanced programme under the residence directorate with its own resources and governance structure, and had reported to scrutiny a week ago regarding outputs, including an increase in compliance across housing in terms of housing maintenance and upkeep. It was acknowledged that it was responsible for increased demand to an extent, but highlighted that it was now looking at developing new target operating models and ways of working to provide efficiencies going forward, and N Howcutt suggested that the committee could ask for updates if it was considered that doing so would provide assurance.

There was a brief discussion of training available for council members, with N Howcutt noting that they would work with the member development steering group to develop sessions going forward, and that there would likely to be more training sessions at the audit committee as other subjects were investigated, with risk one that would be touched on this year.

The committee noted the report and agreed the following recommendations:

1.   That the Committee approve the following reserve movement for 2022-23:

·         Transfer to the Savings Efficiency reserve of £250k relating to interest due to the   Council from a loan to West Herts Crematorium.

·         Transfer to the Savings Efficiency reserve of £111k relating to the final surplus position on the General Fund for 2022-23.

·         A transfer to HRA lift reserves of £22k to support the cost of lift replacements in Council HRA properties.

·         A draw down from HRA revenue reserves of £1.459m to balance the outturn position for the Housing Revenue Account for 2022-23.

2.       That the Committee review the Capital Programme Outturn for 2022-23.

3.       That Committee review the balances on earmarked reserves as at 31st March 2023.