Agenda item

The Committee heard from the Interim Financial Services Manager who introduced the report. It was confirmed that any comments arising from the review were to be referred to the Council’s Section 151 Officer, the Interim Financial Services Manager, and the Council’s External Auditors, KPMG. The Committee was reminded of its responsibility for approving the Statement of Accounts and any material amendments recommended by the External Auditors.

It was noted that, in accordance with the Council’s constitution, Members would receive specific training on the Statement of Accounts prior to the November 2025 Committee meeting, at which the final audited accounts were scheduled to be presented for approval. It was highlighted that the accounts had been prepared in line with the International Financial Reporting Standards-based Code of Practice and local authority accounting requirements. The accounts had been published on the Council’s website and submitted to the Auditors by the statutory deadline of 30 June 2025.

The Manager reported that KPMG had commenced their audit on 28 July 2025, with the process expected to last five weeks. Their findings were scheduled to be presented to the Committee in November 2025. Clarification was provided regarding the presentation of figures within the accounts, with positive values representing expenditure and negative values (indicated by brackets or minus signs) representing income.

Attention was drawn to the primary statements, which showed an improved balance sheet position of £50.9 million for 2024–25, compared to £42.4 million for 2023–24. It was stated that the improvement of £8.5 million was attributed primarily to increases in long-term asset values, reflected in the revaluation reserve and capital adjustment accounts. The Manager explained that a reduction in the pension fund liability from £10.4 million to £9.8 million had also contributed to the improved position.

The Manager continued, adding that the General Fund Working Balance Reserve had increased to £4.478 million, in line with planned targets and within prudent levels. Earmarked reserves totalled £19.6 million, bringing the overall reserve position to just over £24 million. It was stated that the Council had achieved of a budget surplus for 2024–25. It was also noted that £3.07 million in capital grants remained held at the balance sheet date for schemes scheduled for delivery in 2025–26.

Lastly, it was highlighted that Comprehensive Income and Expenditure Statement showed an accounting surplus on services of £6.339 million, compared to £2.519 million in the 2023-2024. Despite the technical nature of the document, the key message conveyed was that the Council maintained strong reserve levels and a robust medium-term financial strategy, confirming its status as a going concern with no material uncertainty at the time of reporting. The Manager concluded by giving thanks to the Finance Team for their efforts in producing the accounts within the required timeframe.

A Committee Member raised a technical question regarding the calculation of the minimum threshold for the General Fund Balance. The Section 151 Officer responded that the threshold was determined annually by the Council. It was explained that the reserve served as an emergency fund, distinct from earmarked reserves. The Officer continued, explaining that the calculation was based on a range of factors, including total service expenditure, grant income, council tax levels, identified risks, and any outstanding legal matters. It was stated that the current threshold was considered to represent over 10% of net service expenditure and was deemed appropriate in the context of the Council’s risk profile.

Clarification was sought from a Chairman regarding the approval process for the reserve figures included in the Statement of Accounts. It was confirmed by the Section 151 Officer that the reserve levels were reviewed annually and presented to the Corporate Policy and Resources Committee, before being submitted to full Council for approval as part of the budget process. It was therefore noted that the figures were endorsed by Elected Members and could be amended if necessary, subject to Officer advice.

A query was raised regarding changes in settlement funding levels since 2010–11, noting a steady decline until 2021–23, followed by a recent increase of approximately £3 million. The Section 151 Officer clarified that settlement funding figures did not include specific grants such as those received through the Levelling Up Fund. It was confirmed that funding had decreased from over £8 million in 2010–11 to approximately £6 million, even before adjusting for inflation. The recent increase in funding from 2023–24 was attributed to post-COVID pressures and increased demand for a range of different services. It was reported that a new three-year local government grant settlement was expected, which would provide greater financial stability. However, it was acknowledged that the quality of that stability remained uncertain. The Officer confirmed that a business rates reset was anticipated, and the Council’s business rates volatility reserve was expected to mitigate potential impacts. It was stated that local economic growth could positively influence business rates funding, though the broader funding landscape remained unpredictable.

The S151 Officer highlighted the Council’s financial resilience, with strong levels of earmarked and general reserves noted. It was stated that the Council would be able to manage any funding shocks over the three-year settlement period, although longer-term implications remained unclear due to LGR.

Questions were posed by the Chairman regarding the COVID Business Support Grant. It was observed that the grant amount had reduced to a relatively small figure and that income had increased while expenditure had declined. Clarification was requested on whether the grant was being phased out and whether the increase in income was due to repayments.

In response, S151 Officer confirmed that specific details could be provided to the Committee. It was stated that COVID Business Support Grants had been repaid in cases where recipients had been deemed ineligible or where claims had been made in error. It was noted that, although the grant line would likely be removed in future, it would remain in the accounts for the following year as part of the comparative figures for 2024–25. Removal would only occur once the figures had reached zero across all relevant years.

The Chairman then directed attention to the balance sheet on page 110, where short-term debtors totalling nearly £7 million were noted, clarification was therefore requested regarding the assurance of repayment. In response, the Section 151 Officer referred the Committee to note 19 on page 152, which detailed the composition of the debtor balances. It was explained that the larger balances related to Central Government bodies and other local authorities, and were attributed to timing differences such as year-end grant claims and VAT payments; it was confirmed that these amounts were expected to be received.

The S151 Officer continued, explaining that trade receivables had decreased from the previous year and that a robust debt collection policy was in place. Where debts were deemed uncollectible, a provision for expected credit loss had been applied. It was noted that this provision had also decreased, reflecting an overall reduction in debt levels. Assurance was given that all reasonable efforts were made to recover outstanding debts.

The Chairman noted that while trade receivables had declined, balances under ‘other entities and individuals’ had increased. It was suggested that some debts from 2023–24 may have carried over into 2024–25. The Section 151 Officer acknowledged that this was likely, though further detail would be provided at a later stage.

Further comments were made by the Chairman regarding the presentation of earmarked reserves. It was suggested that greater transparency could be achieved by expanding the notes to include specific allocations or by directing Committee Members to the relevant documentation. It was emphasised that Councillors should be fully informed of the nature and purpose of earmarked reserves, particularly as priorities may shift over time.  In response, The Section 151 Officer confirmed that note 11 could be expanded to include a full list of earmarked reserves, categorised under contingency risk, service investment renewals, and strategic priorities.

A Query was made by a Committee Member regarding the balance sheet and associated notes, specifically short-term borrowing and note 18. In response, it was confirmed by the Section 151 Officer that short-term borrowing had remained constant at £10 million for both 2024–25 and 2023–24, while long-term borrowing had also remained unchanged at £14 million. It was stated that the short-term borrowing requirement was attributed to the timing of council tax collection, which was typically received in ten instalments but paid out monthly. This created a cash flow gap in the final months of the financial year, necessitating temporary borrowing.

It was noted by the S151 Officer that the Government was consulting on changes to council tax regulations, with a proposal to make twelve-month instalments the default collection method. If implemented, this change could reduce the need for short-term borrowing at year-end, though it would also result in lower cash availability during the earlier part of the year.

The S151 Officer continued, explaining that long-term borrowing was held with the Public Works Loan Board (PWLB) at very low interest rates, some as low as 1–2%. It was explained that early repayment of these loans would not be financially advantageous due to current refinancing rates being significantly higher, at approximately 6%. Retaining the existing borrowing arrangements was therefore considered more cost-effective. It was confirmed that surplus cash could be invested, often with good returns. It was noted that forward-locking of borrowing was used to mitigate interest rate volatility, particularly in the autumn when demand for borrowing increased among district councils.

The Chairman thanked the Section 151 Officer and the Finance Team, as well as the Council’s External Auditors, for their work in preparing the accounts and ensuring they were completed and published on time. Members were reminded that the accounts would return to the Committee later in the year. In the interim, any questions arising should be submitted to the Finance Team in advance, either for response at the meeting or for circulation in writing.

Having been proposed, seconded, and voted upon, it was unanimously

RESOLVED that the attached Unaudited Statement of Accounts 2024/25 be pre-scrutinised, with any comments from the Committee to be referred to the Section 151 Officer and the Council’s external auditors, KPMG.