Agenda item

The Committee gave consideration to a report presented by the Financial Services Manager (Deputy S151), regarding the annual review of usable reserves for 2025/26. Members were asked to consider the reserves held by the council to ensure whether they were still required, and whether the balance was appropriate and provided financial resilience for the council. Members were directed to the table at appendix A of the report, which listed the current and forecast balances against each reserve, including all approved use of and contribution to reserves.

It was noted that, although not yet approved, the table also included the £8m previously considered by Members to be provisionally allocated to fund future priorities. The Committee heard that the Corporate Plan was under development and, once finalised, a separate report would be brought to Members to discuss the specific allocation of the £8m to align to corporate priorities.

Members heard that usable reserves totalled £28.6m as at the end of 2024/25, with the forecast balance as at 31 March 2031 being £18m. Whilst there was no prescribed level of reserves the council should hold, the level should not be excessive. The total forecast balance of usable reserves of £18m equated to approximately 96% of the revenue base budget requirement for 2025/26, which, in theory, meant the council could operate for a year from reserves if there were a catastrophic event. It was highlighted that the general fund balance was not earmarked for a specific purpose but was available for emergency or unforeseen events. The balance had been reviewed against the Council’s budget requirement and was proposed to hold between £2 and £2.5m, which was no change from the current approved balance.

The Committee thanked the Financial Services Manager for the well presented report, and extended thanks to the financial services team as a whole, for the work they did to maintain the council in a stable financial position.

Members discussed in detail the potential impact of the upcoming Local Government Reorganisation (LGR), highlighting the desire to use available monies for the benefit of the West Lindsey residents whilst the council remained in existence. Several Members raised concerns that the positive balances in West Lindsey would be used under LGR to offset inherited negative balances of other local authorities. The Section 151 Officer acknowledged the concerns raised, noting the need to balance the desire to spend to benefit residents, with the need to maintain prudent accounting.

The predicted timescale for LGR was discussed, with Members noting a number of unrelated decisions which had been recently overturned by the Government. It was recognised that, whilst plans for LGR continued to progress, it would be unwise to take action to spend reserve balances if there was any uncertainty around the future of the council. It was suggested that available funds could be better used to ensure the longevity of capital assets, meaning residents would continue to benefit from availability of community services regardless of which authority was in place.

With Members of the Committee agreeing that funds should be used to benefit the district as far as possible ahead of LGR, the recommendations as contained within the report were proposed, with an additional recommendation moved. This was “that the council revisits this scenario as and when necessary”. The two printed recommendations, and the proposal for a third recommendation, were duly seconded.

On taking advice from the Senior Democratic Services Officer and S151 Officer, the Chairman suggested that the additional recommendation re amended to read “that the council revisits this scenario within a six month period”. Both the proposer and seconder were in agreement with the amendment. On taking the vote, it was unanimously agreed that the third recommendation be included.

With all Members in agreement, a Member of the Committee wished it to be a matter of record that the need for a review was entirely aimed at external sources, there was no implied doubt of West Lindsey District Council officers, with the operation within the council being regarded as ‘perfection’.

In sharing his agreement with those comments, and having had all three recommendations proposed and seconded, the Chairman took the vote. It was unanimously

            RESOLVED that

a)    a general fund balance of between £2.0m and £2.5m be maintained; and

b)    the reserves held by the Council, and their levels as detailed in Appendix A, had been duly considered; and

c)    this scenario be revisited within a 6 month period.